Nand Kishore Saraf Vs. State of
Rajasthan & ANR [1965] INSC 45 (24 February 1965)
24/02/1965 DAYAL, RAGHUBAR
DAYAL, RAGHUBAR GAJENDRAGADKAR, P.B. (CJ) RAMASWAMI, V.
CITATION: 1965 AIR 1992 1965 SCR (3) 173
CITATOR INFO :
E 1985 SC1147 (15)
ACT:
Rajasthan Minor Mineral Concession Rules,
1959, Rules 36(7), 59--Auction for the grant of royalty collection
contract--Whether obligatory on Government to accept highest bid--Whether
preference can be shown to workers' cooperative societies against highest bidder.
HEADNOTE:
The appellant offered the highest bid at the
auction for the grant of royalty collection contract on January 21, 1964.
Respondent No.2 a cooperative society of workers was also one of the bidders.
Resportdent No. 2 made an application on March 5, 1964 to the Government
stating therein that the appellant had not deposited 25 Dee cent of the bid
amount as security within the time prescribed by Rule 36(7) of the Rajasthan
Minor Mineral Concession Rules, 1959, and that it was prepared to take the
royalty collection contract on the highest bid as made by appellant.
On the above application the State Government
made an order in favour of Respondent No. 2. The appellant thereupon filed a
writ petition in the High Court which was dismissed. He was however granted a
certificate of fitness.
In appeal it was contended that the
Government had merely to confirm the highest bid at the auction by way of
formality and was not competent to sanction the contract in favour of someone
who had not offered the highest bid at the auction.
HELD: (i) The appellant had admittedly failed
to deposit 25 per cent of the bid as security in compliance with the provisions
of Rule 36(7). The rules did not contemplate adjustment of security deposited
for an earlier period as the appellant claimed. He therefore lost whatever
claim he could have had for the final acceptance of his bid by Government and
therefore could not question the grant of the contract to any other person by
the. Government. [175 B-C] (ii) Nothing in Rule 36 requires the Government to
accept the highest bid by formally confirming it. The Government has discretion
to confirm the bid or not to confirm it. Further Rule 59 provides for the
relaxation of any provision of the rules in the interest of mineral development
or better working of the mines. [176 A-B] (iii) The view taken by the
Government in preferring Respondent No. 2 to the appellant cannot be said to be
arbitrary or without any justification. The cooperative society is of the
laborers who work in the mines and the benefit of the contract would go to the
labourers. In view of the spirit underlying Rule 59, Government could therefore
relax any such rule which could in any way come in the way of" its
granting the contract to Respondent No. 2. [176 D-F] (iv) The time for which
the contract was granted was shortly to come to an end, and it would not be
desirable even if the appellant was right to interfere with the contract. [176
G] K.N. Guruswamy v. State of Mysore, [1955] 1 S.C.R. 305, relied on.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 79 of 1965.
Appeal from the judgment and order dated
August 5, 1964.
of the Rajasthan High Court, Jodhpur, in D.B.
Civil Writ Petition No. 536 of 1964.
L,/B(D)SCI-13 174 Sarjoo Prasad, J.B.
Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant.
M.M. Tewari, K.K. Jain and R.N. Sachthey, for
respondent No. 1.
B.B. Tawakley and K.P. Gupta, for respondent
No. 2. The Judgment of the Court was delivered by Raghubar Dayal, J. This
appeal, on certificate granted by the Rajasthan High Court, is against the
dismissal of the appellant's writ petition under Art. 226 of the Constitution
praying for the issue of a writ of certiorari to the State of Rajasthan,
respondent no. 1. for the canceling and setting aside of its order dated April
1, 1964 granting the contract for collecting royalty on building stones
excavated from certain area to respondent no. 2, Dharti Dan Shramik Theka
Sahkari Samiti Ltd., a cooperative society. The appeal arises in these
circumstances.
The appellant offered the highest bid at the
auction for the grant of royalty collection contract on January 21, 1964.
Respondent no. 2 was also one of the bidders, but stopped after offering a bid
of Rs. 33,000. The final bid of the appellant was for Rs. 42,200. The State
Government made the order in favour of respondent no. 2 on an application made
by it on March 5. 1964. stating therein that the appellant had not deposited 25
per cent of the bid amount as security immediately after the completion of the
auction in accordance with r. 36(7) of the Rajasthan Minor Mineral Concession
Rules, 1959, hereinafter called the rules, and as per the terms and conditions
of the Auction Notification and that it was prepared to take the royalty
collection contract on the highest bid of Rs. 42,200. It was further stated in
the application that respondent no. 2 was a cooperative society of the laborers
who themselves worked on the mines of the area and therefore in view of
Government's policy it should receive preference to an individual bidder. It
was further stated that the benefit accruing out of the contract of royalty
collection would be shared by the labourers and workers themselves which would
go a long way to improve their socioeconomic conditions and thus ultimately
would ameliorate the conditions of the workers who were working hard in
quarries since long.
The contention for the appellant is that the
Government had merely to confirm the highest bid at the auction by way of
formality and was not competent to sanction the contract in favour of someone
who had not offered the highest bid at the auction.
Rule 34 of the rules provides that royalty
collection contracts may be granted by the Government by auction or tender for
a maximum period of two years after which no extension was to be granted. The
procedure for auction is provided by r. 36. Sub-rule 175 (5) thereof provides
that no bids shall be regarded as accepted unless confirmed by Government or
the competent authority and sub-rule (7) provides that on completion of the
auction the result will be announced and the provisionally selected bidder
shall immediately deposit 25 per cent of the amount of bid for one year and
another 25 per cent as security for due observance of the terms and conditions
of the lease or contract. It is admitted for the appellant that on completion
of the auction he did not deposit 25 per cent of the bid as security in
compliance with the provisions of sub-r. (7). He therefore lost whatever claim
he could have had for the final acceptance of his bid by Government and
therefore cannot question the grant of the contract to any other person by the
Government.
The appellant urges that he held such royalty
collection contract for the year 1963-64 and had deposited Rs. 9,250 as
security for the due performance of that contract. On February 12, 1964, over
three weeks after the auction, he submitted an application to the Mining
Engineer, Jaipur, stating that he had been continuously taking contract for the
last three years and that he was depositing Rs. 1,300 and that the balance of
the security amount required, i.e. Rs. 9,250 be adjusted against Rs. 9,250 with
the Government in connection with the earlier contract. This letter was not
replied to. The request made in this letter could not possibly be accepted. The
earlier contract was to continue up to March 31, and the security money had to
remain with the Government upto that date. It is only after March 31, that
anything could be said with some definiteness as to how much of the security
money in deposit would be available to the contractor. Paragraph 2 of the Form
of Agreement of Collection of Royalty on Minor Minerals, prescribed under the
rules, and set out in the Schedule to the rules, states that the agreement
shall remain in force for a period commencing from first April of a year and
ending on March 31 of the next year on which the period of the contract would
expire and that the security would be refunded on the termination of the
contract. Para 6 of the Form provides that for the due fulfillment of the terms
and conditions of the contract the Contractor shall deposit 25 per cent of the
contract money in advance as security which will be refunded on the termination
of the contract. The appellant alleged that there was a practice of adjusting
previous security amounts towards the security for the next contract. The
practice is denied on behalf of respondent no. 1 and the practice against the
provisions of the rules cannot be recognized as of any binding effect. It may
be mentioned here that the representation which the appellant made to the State
Government on April 6, 1964, made no reference to his depositing the security
by depositing Rs. 1,300 and by making a request for the adjustment of the
balance from the security amount already in deposit and indicates that he too
did not consider the request for adjustment of the amount acceptable.
176 There is nothing in r. 36 of the rules
which may lead to the conclusion that the Government has to accept the highest
bid by formally confirming it or that it cannot grant the contract to any
person other than one who had bid the highest. A bid is not regarded as
accepted unless it is confirmed by Government. The Government has therefore
discretion to confirm the bid or not to confirm it. Further, r. 59 provides for
the relaxation of any provision of the rules in the interest of mineral
development or better working of mines.
There is the letter dated February 14, 1962
from the Director of Mines and Geology, to All Mining Engineers on the subject
of encouragement of cooperative mines and states that cooperative societies
ought to be encouraged for mining work also as per directive of the Government
of India.
Respondent No. 2 addressed a letter to the
Director of Mines and Geology and referred to Government policy for the
encouragement of cooperative societies in connection with royalty collection
contracts. The order of Government dated April 1, 1964, after referring to the
appellant's offering the highest bid, stated that the Government was satisfied
that the Society, respondent No. 2, was a suitable party for the grant of the
said contract. The view taken by the Government in preferring respondent No. 2
to the appellant for the grant of the contract cannot be said to be arbitrary
or without any justification. The cooperative society is of the labourers who
work in the mines and it is obvious that any benefit arising out of the
contract would go to the labourers and thus improve their economic position. In
view of the spirit underlying r. 59, Government could therefore relax any such
rule which could in any way come in the way of its granting the contract to
respondent no. 2.
We therefore hold that the Government was
competent to give the contract to respondent no. 2 it being not bound to accept
the highest bid at the auction, though usually it accepts such bids.
Another consideration which is decisively
against the appellant is that the contract for the collection of royalty for
the year 1964-65 is shortly to come to an end and it would not be desirable,
even if the appellant's contentions were acceptable, to interfere with that
contract.
Reference, in this connection. may be made to
the decision of this Court in K.N. Guruswamy v. State of Mysore(1) where the
appellant was refused a writ solely on the ground that it would have been
ineffective, the period of the impugned contract coming to an end after about a
fortnight of the order of this Court. That was a case where on merits the Court
was of opinion that the writ should have been issued.
We therefore dismiss the appeal and order the
parties to bear their own costs.
Appeal dismissed.
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