N. C. Kapoor v. Divisional Forest Officer — 1971 DIGILAW 561 (ALL)

ORDER C.S.P. Singh, J. - The Petitioner who is a forest contractor, by this writ petition challenges the order of the Divisional Forest Officer, Bahraich dt. 24-9-1971 by which he revoked the auction of boulders and bajri of lot No. 90, 91 and 94 of West Nishangara Range, Katerniaghat, distt. Bahraich made by the Asstt. SDO Nanpara on 4-8-1971. 2. The facts necessary for the decision of the writ petition may now be stated. The State of UP in exercise of its powers conferred on it by Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957, framed the U.P. Minor Minerals (Concession) Rules, 1963. Rule 23 of the Rules provided for the notification of the area for auction. Rule 24 empowers the State Govt. by notification in the U.P. Gazette to withdraw any area notified Under Rule 23 from the system of lease by auction. Rule 27 prescribes the procedure for auction. Since the issues involved in this petition turn to a great extent on the interpretation to be put up on Rule 27, the same may be reproduced: 27. Procedure for auction--The following shall be the procedure for grant of auction leases: (a) At least thirty days before the auction is to be held, the Distt. Officer shall notify, in the manner given below, the date, time and place of auction and the terms and conditions of the lease-- (i) copies of a notice giving the above particulars shall be put up on the notice board at the office of the Distt. Officer and at some convenient place close to the area; (ii) a copy of the notice shall be sent to the Gaon Sabha or any other local authority in whose jurisdiction the area is situate; (iii) the notice shall be published by beat of drum in the locality where the area is situate; and (iv) in any other manner considered suitable by the Distt. Officer. (b) The Distt. Officer may appoint any officer subordinate to him as the Presiding Officer of the auction. (c) The details of the area and the terms and conditions of the lease shall be read out to the intending bidders at the time of auction. (d) Any person intending to bid shall deposit Rupees one hundred with the Presiding Officer in advance as earnest money. (c) The details of the area and the terms and conditions of the lease shall be read out to the intending bidders at the time of auction. (d) Any person intending to bid shall deposit Rupees one hundred with the Presiding Officer in advance as earnest money. (e) On completion of the auction, the result shall be announced and the provisionally selected bidder shall immediately deposit 25 per cent of the amount of bid for one year, as security for execution of the lease and due observance of its terms and conditions and an equal amount as first instalment of royalty. The bid shall not be treated as accepted unless confirmed by the State Govt. or such other authority who may be authorised by the State Govt. to grant the lease. (f) The earnest money shall be refunded at the end of the auction except that which was deposited by the provisionally selected bidder, in whose case it will be adjusted towards security. (g) The Presiding Officer shall submit the papers to the Distt. Officer who shall, unless he is himself authorised to grant the lease, forward them to the State Govt. or to the Officer authorised by it to grant the lease. After the auction is held, Rule 28 envisages the grant of a lease to the highest bidder. It, however, empowers the State Govt. to accept the bid of any other person on a consideration of certain circumstances with which we are not concerned at present. Rule 29 provides for the execution of a lease deed in form MM6. This lease has to be executed within a period of one month of the receipt by the bidder of the order about the acceptance of the bid or within such further period as the authority competent to grant the lease may allow him to do. In case such lease is not executed on account of any default on the part of the bidder, the State Government is authorised to revoke the bid and to forfeit the security amount. The power of confirmation given Under Rule 27(e) to the State Govt. or such other authority nominated by the State Govt. was in the present case conferred on the Divisional Forest Officer by Govt. Order No. 3369M/18-F-M-68, 63 dated 16-1-65. The area in dispute was duly notified Under Rule 23 of the Rules for being leased out by auction. The power of confirmation given Under Rule 27(e) to the State Govt. or such other authority nominated by the State Govt. was in the present case conferred on the Divisional Forest Officer by Govt. Order No. 3369M/18-F-M-68, 63 dated 16-1-65. The area in dispute was duly notified Under Rule 23 of the Rules for being leased out by auction. During the hearing of the petition, I asked the Standing Counsel to produce the relevant records relating to the matter and the records have been produced. From a perusal of the record, it transpires that the Divisional Forest Officer wrote a letter to the Distt. Officer that the area fell within reserved forest and previously the auction for stone and bajri was being conducted by the Divisional Forest Officer, but in view of Rule 27(b) of the aforesaid Rules, the same had now to be conducted by the Distt. Officer or such other officer as may be appointed by them in that behalf and inasmuch as it had been agreed with the Distt. Officer and the Divisional Forest Officer that the area had to be auctioned, an authorisation may be sent by the Distt. Officer to him to act as the Presiding Officer of the auction, as envisaged by Rule 27(b) of the Rules. The Divisional Forest Officer included the area in the auction list published by him, which fixed 23rd and 24th July, 1971 as the date of the auction. The Distt. Land Reforms Officer, on 23-7-1971, wrote a letter to the Divisional Forest Officer that the relevant notification, on the basis of which the auction was being made should be sent to him, so that further action may be taken. The Divisional Officer by his letter dated 23-7-1971 sent the relevant notification and sent another letter of date requesting him to take early action in the matter, as the work of irrigation department was in progress in the area and the period of lease had already expired on 30-7-1971. The Distt. Officer fixed the date of auction for 4-8-1971 and appointed Sri Inder Deo Singh, Asstt. Sub Divisional Officer, Nanpara to be Presiding Officer for the auction. The Range Officer seems to have issued a notice informing the persons interested of the date of auction. Copies of these were sent to Sri M.C. Kapoor, Asstt. The Distt. Officer fixed the date of auction for 4-8-1971 and appointed Sri Inder Deo Singh, Asstt. Sub Divisional Officer, Nanpara to be Presiding Officer for the auction. The Range Officer seems to have issued a notice informing the persons interested of the date of auction. Copies of these were sent to Sri M.C. Kapoor, Asstt. Engineer, Irrigation, as also to the Hindustan Company, which as appears from the statement made on behalf of the State Govt. was one of the contractors of the Irrigation Department. The auction was thereafter held by the Sub Divisional Forest Officer on 4-8-1971 and the bid of the Petitioner was the highest. He made a total bid of Rs. 91,050/- for lots Nos. 90, 91 and 94 which are the subject matter of dispute in the petition. The Petitioner thereafter gave a cheque for Rs. 9,150/- in the name of Range Officer, Katerniaghat and the same was accepted by the Asstt. SDO, Nanpara, distt. Bahraich. This amount was thereafter deposited in the account of the State. It transpires that the Irrigation Department wanted -the auction to be cancelled, for one Malkhan Singh, Executive Engineer, Sarda Sahayak Khand Bahraich, wrote a letter on 13-8-1971 to the Divisional Forest Officer, who had the power to confirm the lease that the auction should not be confirmed and the Department was prepared to pay the auction money as the material comprised in lots were urgently required by it. A copy of this letter was also sent to the Conservator of Forests. Another letter was sent by one Sri G.K. Mishra, Superintending Engineer, VIII Circle, I.W. Lucknow to the Chief Engineer for taking up the matter with the State Govt. for cancellation of the notification, for including the area for the purposes of it being leased out and reserve it in favour of the Department. It had also been pointed out in this letter that in the last working season an amount of Rs. 1,20,000/- had been paid as royalty and in the present season the estimate was in the neighbourhood of Rs. 2,00,000/-. Thereafter, the matter was taken up before the State Govt. A telegram dated 9-9-1971 was sent by the State Govt. to the Distt. Officer Bahraich for taking steps for ensuring that the auction was not accepted by the Divisional Forest Officer. 2,00,000/-. Thereafter, the matter was taken up before the State Govt. A telegram dated 9-9-1971 was sent by the State Govt. to the Distt. Officer Bahraich for taking steps for ensuring that the auction was not accepted by the Divisional Forest Officer. The Divisional Forest Officer had, however, confirmed the bid about four days earlier i.e. on 5-9-1971. This bid was, however, confirmed subject to the contractor depositing the full security amount as envisaged by Rule 27(e) of the Rules. This amount was 25 per cent of the amount of the bid. As has already been seen, the contractor had already deposited an amount of Rs. 9,150/- i.e. 10 per cent of the bid money and after receiving the letter of the Divisional Forest Officer dated 5-9-1971, he obtained a treasury challan from the Divisional Forest Officer being challan No. 14 and deposited an amount of Rs. 14,000/- on 7-9-1971 through the challan in the State Bank of India. Thereafter, the Petitioner was given form No. MM6 which is the form on which the lease has to be executed for signature and both the Petitioner and the Divisional Forest Officer who was the confirming authority signed the form. The Petitioner alleges that he went to make the deposit of first instalment on 11-9-1971 but the said amount was not accepted by the Respondents and he was also prevented from working the mines. The Divisional Forest Officer seems to have been contracted by the Distt. Officer after he had received the telegram from the State Govt. and the Divisional Forest Officer by his letter dated 7-9-1971 informed him that he had already confirmed the bid and further that the acceptance would not create any obstruction in the working of the irrigation Department. The Distt. Officer thereafter wrote a letter on 14-9-1971 to the Under Secretary, Industries Department drawing his attention to the fact that the bid had already been confirmed by the Divisional Forest Officer and pointed out that inasmuch as no valid agreement had been executed the State should issue the necessary direction for the cancellation of the lease. The Under-Secretary, Industries Department sent a communication on 14-9-1971 to the Distt. Officer Bahraich, asking him to suggest to the Divisional Forest Officer to rescind his confirmation of the lease. The Under-Secretary, Industries Department sent a communication on 14-9-1971 to the Distt. Officer Bahraich, asking him to suggest to the Divisional Forest Officer to rescind his confirmation of the lease. Coming now to what transpired between the contractor and the Divisional Forest Officer, it appears from the record, that the Divisional Forest Officer had by his letter dated 10-9-1971 written to contractor that the contract should be on water-mark paper and should be stamped and without the necessary stamps being affixed, the agreement will not be executed. It does not appear that the Petitioner was not willing to comply with this order, but the Divisional Forest Officer who seems to have been acting under the orders of the State Govt. issued an order on 24-9-1971, which the Petitioner alleges was received, by him in October, cancelled the approval of the auction for lots Nos. 90, 91 and 94, on the ground that the Petitioner had not complied with the legal requirements for confirmation of the bid made by him. The auction in respect of only three lots was cancelled i.e. lots Nos. 90, 91 and 94. Lot No. 93 was excluded. Counsel for the Petitioner has urged that the Divisional Forest Officer had no authority under the Rules to cancel the Lots. In the alternative, it has also been contended assuming that he had such a power, the lease could not be cancelled without any notice to the Petitioner and that the order has been passed on extraneous consideration. 3. The second contention raised by the learned Counsel for the Petitioner is amply substantiated by a decision of the Supreme Court in The D.F.O South Kheri v. Ram Sanehi Singh (C.A. No. 1638 of 1969 Dt. 15-1-1970). In that case, the Respondent had purchased the right to cut timber for the period 1-11-1965 to 31-10-1966 from forest lots in the Mailani and Gola Ranges of South Kheri. On 10-1-1967, the Divisional Forest Officer, South Kheri Division, passed an order that the sleepers 'against the tally' dated 29-10-1966 in the allotment of 1965-66 season being 'wrong', since they were cut in the month of November 1966, do stand cancelled and that the sleepers be 'passed against' the tally after getting the hammer-marks cancelled and be reinstated against the allotment for 1966-67 season. By that order the timber which the Respondent claimed had been actually removed by him, with the sanction of the forest authorities under the tally dated 29-10-1966, was to be treated as if it was removed in November 1966. One of the contentions on behalf of the State was that since the dispute arose out of the terms of the contract and the Divisional Forest Officer under the terms of the contract had authority to modify any action taken by a subordinate forest authority, the remedy of the Respondent was to institute an action in the civil court and that the writ petition was not maintainable. The Supreme Court did not accept this contention and observed as under: But in the present case the order is passed by a public authority modifying the order or proceeding of a subordinate forest authority. By that order he has deprived the Respondent of a valuable right. We are unable to hold that merely because the source of the right which the Respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of a writ. In view of the judgment of this Court in K.N. Guruswamy Vs. The State of Mysore and Others, AIR 1954 SC 592 , there can be no doubt that the petition was maintainable, even if the right to relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power. The Supreme Court also came to the conclusion that the order could not be passed without an opportunity being given to the Petitioner. Referring to this aspect of the matter, it placed reliance on an earlier decision in State of Orissa Vs. Dr. (Miss) Binapani Dei and Others, AIR 1967 SC 1269 where in it has been held that even administrative orders which involve civil consonance have to be passed consistently with the rule of natural justice. Their Lordships observed as under: The Divisional Forest Officer in the present case set aside the proceeding of a subordinate authority and passed an order which involved the Respondent in considerable loss. The order involved civil consequences. Their Lordships observed as under: The Divisional Forest Officer in the present case set aside the proceeding of a subordinate authority and passed an order which involved the Respondent in considerable loss. The order involved civil consequences. Without considering whether the order of the Divisional Forest Officer was vitiated because of irrelevant considerations, the order must be set aside on the simple ground that it was passed contrary to the basic rules of natural justice. 4. In the present case, there is no suggestion that any opportunity was given to the Petitioner before passing the impugned order and as such the order of the Divisional Forest Officer revoking the confirmation is patently wrong and deserves to be quashed on this ground alone. 5. Counsel for the State has, however, urged that the jurisdiction of this Court should not be exercised in favour of the Petitioner inasmuch as the order of confirmation passed by the Divisional Forest Officer was without jurisdiction and that being so, the Petitioner should not be permitted to get the advantage of a wrong order. I am unable to accept the submission made by the Standing Counsel. The Supreme Court in the case referred to above after coming to the conclusion that the order was passed in violation of the principles of natural justice, quashed the order on that ground alone and did not think it necessary to examine the validity or otherwise of the order. It appears that where a clear breach of the principles of natural justice is established, normally, it is not necessary to examine the justifiability of the order passed unless of course it is established that the Petitioner has no legal right to maintain the petition. In the present case, it is difficult to hold that the Petitioner had no semblance of legal right, a breach of which could form the foundation of the petition Under Article 226 of the Constitution. The Petitioner made a bid at the auction and was a highest bidder. Thereafter, he deposited certain sum of money which was accepted by the Respondents. Thus it cannot be said that there has not been any violation of any legal right of the Petitioner. This apart, the contention of the Standing Counsel does not appear to be sound on merits. 6. Thereafter, he deposited certain sum of money which was accepted by the Respondents. Thus it cannot be said that there has not been any violation of any legal right of the Petitioner. This apart, the contention of the Standing Counsel does not appear to be sound on merits. 6. The order of confirmation passed by the Divisional Forest Officer has been attacked by the Standing Counsel on the ground that there has been a breach of Rule 27(a), inasmuch as the auction was not notified 30 days prior to the holding of the auction and that the copies of the notice fixing the date of auction was not sent to the Gaon Sabha. Further that the earnest money as provided by Clause (d) of Rule 27 had not been deposited by the Petitioner and lastly that the Petitioner had not deposited 25% of the amount of the bid after the auction as required by Rule 27(e). It is said that breaches of these conditions rendered the auction invalid and that being so, the order of the Divisional Forest Officer confirming the auction was void and without jurisdiction. 7. Coming to the purported breach of Rule 27(a) of the UP Minor Minerals (Concession) Rules, 1963, by this Rule, the District Officer is required to notify thirty days in advance, the date, time and place of auction and the terms and conditions of the lease. Clause (a)(ii) of the above Rule requires a notice to be sent to the Gaon Sabha. It is alleged that none of these steps have been taken and as such the auction is vitiated. Clause (a) of Rule 27 is divided into four subparts. The first part requires that the copies of the notice giving the particulars should be put up on the notice board at the office of the District Officer and at some convenient place close thereto, Clause (ii) requires the notice to be sent to the Gaon Sabha or to any other local authority in whose jurisdiction the area is situate. Clause (iii) requires the notice to be published by beat of drum in the locality where the area is situate; and Clause (iv) requires the notice to be published in any other manner considered suitable by the Distt. Officer. Clause (iii) requires the notice to be published by beat of drum in the locality where the area is situate; and Clause (iv) requires the notice to be published in any other manner considered suitable by the Distt. Officer. The purposes of these sub-clauses seem to be to ensure proper publication in order to attract sufficient number of bidders, so that a proper bidding may take place at the auction. In para. 18(a) of the counter-affidavit, which is sworn on the basis of the record, it is stated that the auction notice was issued by the Distt. Officer on 30-7-1971 while the auction was held on 4-8-1971 and that a copy of the auction notice was also not sent to the Gaon Sabha as required by Clause (ii) of Rule 27(a). It is not understood what meaning should be attributed to the word 'issue' as used in that paragraph of the counter-affidavit, for Rule 27 does not require a notice to be issued to any other person except the Gaon Sabha. For all that is required by sub-Clause (a) of Rule 27 is notification and Sub-clauses (i), (iii) and (iv) of Sub-clause (a) of Rule 27 set out the manner of effecting such a notification. It is not stated anywhere that the auction was not notified by beat of drum in the locality where the area is situate and that being, so, it cannot be taken that there was no publication by beat of drum in the locality. If that has been done, the mere fact that the copy of the notice was not sent to the Gaon Sabha or to any other local authority would not vitiate the auction, for the object of the Rule would be satisfied by the notice being published by beat of drum, as in that case the Gaon Sabha or the local authority would have due notice. 8. Coming to the requirement of 30 days notice before the date of the auction, it appears that in case where the auction, has been a fair one and the interest of the State Government has not been prejudiced by due publication not being made before the auction, it would not stand vitiated on this ground alone. In this case as has been seen that there is no allegation that the bid was not adequate, or that any prejudice had been caused to the State. In this case as has been seen that there is no allegation that the bid was not adequate, or that any prejudice had been caused to the State. Thus the auction in the circumstances cannot be held to be vitiated on this score. The breach of the rule does not render an auction void in all cases, in the absence of prejudice to the State. 9. In respect of breach of Clause (d) of Rule 27, which requires the deposit of an amount of Rs. 100/- as earnest money, as also the failure of the Petitioner to deposit 25% of the amount of bid immediately after the auction, counsel for the Respondent has referred to two decisions of the Supreme Court in Ramchandra Spg. and Wvg. Mills Vs. Bijli Cotton Mills and Others, AIR 1967 SC 1344 and Manilal Mohan Lal Shah v. Sardar Sayed Ahmad Sayed Mahmed AIR 1954 SC 394. In this latter case, their Lordships of the Supreme Court were concerned with the consequences of a breach of Order 21 Rules 84, 85 and 86 CPC which require the deposit of 25% of the purchase money immediately on a person being declared as a purchaser. It was held that if the auction purchaser is not a decree-holder and does not pay the balance within fifteen days of the sale, the non-compliance of these provisions renders the sale void and in fact there is no sale at all. The decision of the Supreme Court in Ramchand Spinning and Weaving Mills v. Bijli Cotton (P) Ltd. Hathras (supra) is to the same effect. These decisions has, however, to be read in the context of the CPC and specially Order 21 Rule 86 CPC which is to the effect that if default is made in the payment within the period mentioned, the deposit made by the auction purchaser may in the discretion of the court be forfeited and the property has to be re-sold and the defaulting auction-purchaser forfeits all claims to property or to any part of the same. The decision of their Lordships of the Supreme Court is based on a consideration of Order 21 Rule 86 and it cannot be predicated that the sale would have been held to be a nullity in the absence of Order 21, Rule 86 Code of Civil Procedure. The decision of their Lordships of the Supreme Court is based on a consideration of Order 21 Rule 86 and it cannot be predicated that the sale would have been held to be a nullity in the absence of Order 21, Rule 86 Code of Civil Procedure. In the present case, there is no such provision for cancellation of the auction in case the auction purchaser does not deposit immediately an amount of 25% of the bid. So far as Rule 27(e) of the aforesaid Rules is concerned, which requires an amount to be deposited as earnest money, counsel for the Respondent has not drawn my attention to any decision with reference to any other enactment which lays down that such a rule is mandatory. The consequences of breach of various parts of Rule 27 have not been set out and as such after the confirmation of the auction Under Rule 27(a), the auction cannot be treated as a nullity. I am further of the view that the provisions of Rule 27(e) are only directory and the breach of these Rules if any cannot render the auction a nullity. It may be that if there has been a breach of these Rules, the State Govt. or the Officer authorised in this behalf refuse to confirm the lease, but once confirmation has taken place, the State Govt. cannot rescind the confirmation on the ground that there has been a breach of any of the provisions of Rule 27. 10. Be that as it may, there is another ground which disentitles the State Govt. to raise the plea that the auction was a nullity. The provisions of Rule 27(a), (d) and (e) appear to have been enacted for the benefit of the State and it is well settled that where there is a provision which is for the benefit of a person, the same can be waived. In the present case, the Addl. SDO who was exercising the powers of the Distt. Officer did not insist that the auction be held after the expiry of thirty days and neither did he insist that the auction purchaser should deposit the earnest money. He permitted the Petitioner to bid at the auction without a period of thirty days expiring from the date of the notice, as also without insisting on the deposit of earnest money. He permitted the Petitioner to bid at the auction without a period of thirty days expiring from the date of the notice, as also without insisting on the deposit of earnest money. The Petitioner was permitted to deposit only 10% of the bid money and the Divisional Forest Officer confirmed the auction subsequently on 5-9-1971, subject to the deposit of full security by the contractor. This the contractor did on 7-9-1971 and the money was accepted by the State Govt. In these circumstances, it is clear that the objection which the State Govt. could have to the procedure adopted at the auction had been waived by the appropriate authorities. 11. This apart, the State Govt. by accepting money from the Petitioner in respect of the bids is estopped from taking up the stand that the auction was a nullity and that the order of confirmation made u/s 27(e) of the Rules could be rescinded. The Petitioner changed his position to his detriment by parting with a substantial sum of money and this he did at the instance of the appropriate authorities brings about an estoppel and prevents the State from raising the plea which it now seeks to raise. The principle that there cannot be an estoppel against the statute, does not apply where a particular provision of law is for the benefit of the State and it is clear from its conduct that it has chosen not to insist on performance of such provisions. 12. This consideration apart, it appears that the order passed by the Divisional Forest Officer was not a bonafide order. From the record of the case which has already been referred to earlier, the order came to be passed on the representation made by the Irrigation Department to the State Govt. and is the result of the advice of the State Govt. for rescinding the order of confirmation as the Irrigation Department wanted to work the stone and bajri in the area. Thus the order passed by the Divisional Forest Officer is a mere facade for the real reason for the cancellation of the confirmation of the auction. The order as such cannot stand. The State Govt. has subsequently withdrawn the area from the auction in exercise of its power Under Rule 24. Thus the order passed by the Divisional Forest Officer is a mere facade for the real reason for the cancellation of the confirmation of the auction. The order as such cannot stand. The State Govt. has subsequently withdrawn the area from the auction in exercise of its power Under Rule 24. This it could not do, so far as the Petitioner is concerned for the area once having been auctioned and the same being confirmed it could not be withdrawn Under Rule 24. 13. The petition is as such allowed. The order of the Divisional Forest Officer dated 24-9-1971 (Annexure "B") to the petition is quashed and the notification dated 7-10-1971 issued by the State Govt. shall be inoperative against the Petitioner. This order shall, however, not prevent other persons including the State from quarrying in the disputed area in accordance with condition No. 7 of the sale list, which has been filed along with the petition. There shall, however, be no order as to costs. The question relating to the disposal of the amount of Rupees one lac deposited by Respondent No. 2 with the Registrar of this Court shall be put up for consideration on 6-1-1972 by which time the State Govt. should file a statement showing the amount of material quarried upto 31-12-1971 from the disputed area.