TMI Blog1985 (5) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... m K.B. Rohtagi and H.N. Salve,. For the Respondent : P.P. Rao, Arun Madon, R. Venkataramani, A Marriarputtam, L.N. Sinha, Attorney General and R.N. Poddar JUDGMENT DESAI, J. As the matter brooked no delay, when the arguments were concluded, the Court pronounced the order which reads as under - "The appeal is allowed and the decision of the High Court of Punjab and Haryana at Chandigarh in L.P.A. No. 1232 of 1982 dated September 15, 1982 as well as the decision of the learned Single Judge in Civil Writ Petition No. 2321 of 1981 dated August 30, 1982. The writ petition filed by the present appellant succeeds. The order of the Director of Industries dated May 25, 1981 granting a quarry lease to M/s Pioneer Crushing Co. (respondent No. 4) in respect of Serai Khawaja Plot No. II Quarry (except the area of Green Field colonies) for the period ending with 31st March, 1984 is quashed and set aside. The first respondent the State of Haryana and the second respondent the Director of Industries are directed under and subject to the relevant provisions of the Haryana Minor Minerals (Vesting of Rights) Act, 1973 read with Punjab Minor and Mineral Concession Rules, 1964 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ath did stand in need of justification because the end product justified interference. The very outcome would provide the raison d'etre for the exercise of power. Yet to bow to the tradition to convince the protagenis of reasoned orders, these are the reasons. Factually matrix first. The State of Haryana in exercise of the power conferred upon it by Haryana Mioner Minerals (Vesting of Rights) Act, 1973 ('1973 Act' for short) grants lease for winning minor mineral vestige in it. The grant of the lease is regulated by Punjab Minor Mineral Concession Rules, 1964 ('Rules' for short) in their application to the State of Haryana. A notification was issued on December 26, 1980 specifying that minor mineral quarries at various places in Faridabad District would be auctioned on February 20, 1981. At the auction held on that day, appellant-Ram Shyam Company gave the highest bid for Sarai Khawaja Plot No. II in the amount of Rs 1,52,000 p.a. The presiding Officer conducting the auction accepted the bid but the State Government did not confirm the same. A fresh auction was notified to be held on May 4, 1981. The appellant participated and gave the bid for the same plot, his highest bid ris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous to refer in some details what transpired at the hearing of this appeal in this Court. Let us at once recapitulate what happened in the court because that by itself provides a tell-tale piece of evidence compelling the court to interfere and set aside the impugned order. Mr. L.N Sinha, learned Attorney General raised a sort of a preliminary objection that this Court should not assist the syndicalists to join hands to deprive the State of its legitimate revenue. Then he made a pertinent observation a interposing an objection when Mr. Sorabjee, learned counsel for the petitioner was making his submissions. The question posed was: if the Court interferes and quashes the grant in favour of the fourth respondent, the only option open to the court would be to direct a fresh auction. He posed the further question that if at the time of re-auction, the highest bid does not reach upto Rs 4,50,000 p.a. for which the lease is granted to the fourth respondent, would the Court make good the loss ? Apart from the rhetoric of the question, the issue raised was of primary importance. We, therefore, asked Mr. Sorabjee whether his client is willing to make an affidavit incorporating therein that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted for acceptance, by the authority competent to grant the contract.' Rule 29 confers power on the Presiding Officer to reject or accept any bid or tender without assigning any reason to the bidders or tenderers. However, where the highest bid or tender is rejected, the reason shall however, be reported to the Government. Rule 30 provides for notifying of the proposed auction on the notice board of the Director, Mining Officers and at least in one newspaper having wide circulation in the locality nearest to the area in question in the regional language as also in the Government Gazette. Sub-cl. (4) of sub-r. (2) of Rule 30 provided that 'no bid shall be regarded as accepted unless confirmed by Government.' Rule 58 confers power on the Government to relax any of the provisions of the Rules in the interest of mineral development or better working of the mine. Before we deal with the larger issue, let me put out of the way the contention that found favour with the High Court in rejecting the writ petition. The learned Single Judge as well as the Division Bench recalling the observations of this Court in Assistant Collector of Central Excise v. Jainson Hosiery Industries rejected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be sufficient to set aside the judgment of the High Court. Turning to the merits of the case, the arguments covered a much larger canvass than was anticipated when the hearing opened. It was submitted that India being a Sovereign Socialist Secular Democratic Republic, the property of the Union or of the Slate is socialist property which would imply that it is community property and every citizen of this country has vital interest in its effective use and legitimate disposal. It was never disputed nor could it have been disputed that minerals vest in the state. The minor minerals vast in the State where the land from which they are to be extracted is situated and minerals other than minor minerals vast in the Union. 'Minor minerals' have been defined in The Mines and Minerals (Regulation and Development). Act, 1957 to mean, 'building stores, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral.' Minor minerals vest in the state in which the land is situated. The first respondent State of Haryana notified that an auction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any one else. But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song. On the other hand, disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare State may be able to expand its beneficient activities by the availability of larger funds. This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose, one such being to achieve the goals set out in Part IV of the Constitution. But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market econo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther observed that the object of holding the auction is generally to raise the highest revenue. The Government is entitled to reject the highest bid if it thought that the price offered was inadequate. But after rejecting the offer, it is obligatory upon the Government to act fairly and at any rate it cannot act arbitrarily. Following this line of thought, in Kasturi Lal Lakshmi Reddy v. State of Jammu Kashmir and Anr. while upholding the order of the Government of Jammu Kashmir dated April 27, 1979 allotting to the second respondent 10 to 12 lacs blazes annually for extraction of resin from the inaccessible chir forests in Poonch, Reasi and Ramban Divisions of the State for a period of 10 years on the terms and conditions set out in the order, observed as under: "Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement. What happened in this case must open the eyes both of the Government as well as the people at large. How an uncontrolled exercise of executive power to deal with socialist property in which entire community's interest was sacrificed so as to cause huge loss to the public exchequer would have gone unnoticed but for the vigilance of the appellant who no doubt is not altruistic in its approach but its business interests goaded it to expose the unsavoury deal. Conceding that on weighty and valid considerations, the highest bid can to rejected by the State one such which can be foreseen is that the highest bid does not represent the adequate market price of the concession, yet before giving up the auction process and accepting a private bid secretly offered, the authority must be satisfied that such an offer if given in open would not be outmatched by the highest bidder. In the absence of such satisfaction, acceptance of an offer secretly made and sought to be substantiated on the allegations without the verification of their the truth, which was not undertaken, would certainly amount to arbitrary action in the matter of distribution of State largesse which by the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was present at the auction and who did not bid-not that it would make any difference if he had, for the fact remains that he made no attempt to outbid the appellant. If he had done so it is evident that the appellant would have raised his own bid. The procedure of tender was not open here because there was no notification and the furtive method adopted of setting a matter of this moment behind the backs of those interested and anxious to compete is unjustified. Apart from all else, that in itself would in this case have resulted in a loss to the State because, as we have said, the mere fact that the appellant has pursued this with such vigour shows that he would have bid higher. But deeper considerations are also at stake, namely, the elimination of favouritism and nepotism and corruption: not that we suggest that occurred here, but to permit what has occurred in this case would leave the door wide open to the very evils which the Legislature in its wisdom has endeavored to avoid. All that is part and parcel of the policy of the Legislature. None of it can be ignored. We would there- fore in the ordinary course have given the appellant the writ he seeks. But, owing to the time whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o interpret constitutional provisions, including those like Articles 32 and 226, with a view to see that effective policing of the corridors of power is carried out by the court until other ombudsman arrangements-a problem with which Parliament has been wrestling for too long- emerges. I have dwelt at a little length on this policy aspect and the court process because the learned Attorney General challenged the petitioner's locus standi either qua worker or qua citizen to question in court the wrong doings of the public sector although he maintained that what had been done by the Corporation was both bona fide and correct. We certainly agree that judicial interference with the administration cannot be meticulous in our Montesquien System of separation of powers. The court cannot usurp or abdicate, and the parameters of judicial review must be clearly defined and never exceeded. If the Directorate of a Government company has acted fairly, even if it has faltered in its wisdom, the court cannot, as a super-auditor, take the Board of Directors to I l task. The function is limited to testing whether the administrative action has been fair and free from the taint of unreasonableness and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state property in public interest must be by such method as would grant an opportunity to the public at large to participate in it, the State reserving to itself the right to dispose it of as best subserve the public weal. Viewed from this angle, the disposal of the contract pursuant to the letter by the fourth respondent to the Chief Minister is objectionable for more than one reason. The writer has indulged into allegations, the truth of which was not verified or asserted. The highest bidder whose bid was rejected on the ground that the bid did not represent the market price, was not given an opportunity to raise his own bid when privately a higher offer was received. If the allegations made in the letter influenced the decision of the Chief Minister, fair-plan in action demands that the appellant should have been given an opportunity to counter and correct the same. Application of the minimum principles of natural justice in such a situation must be reading the statute and held to be obligatory. When it is said that even in administrative action, the authority must act fairly, it ordinarily means in accordance with the principles of natural justice variously described as fair pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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