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2008 DIGILAW 564 (RAJ)

State of Rajasthan v. Naresh Kumar

2008-02-22

R.M.LODHA, RAGHUVENDRA S.RATHORE

body2008
JUDGMENT 1. - The State Government and its functionaries have taken exception to the order dated 20th January, 2006 passed by the Single Judge, whereby he allowed the writ petition and directed the present appellants to refund the earnest money deposited by the original petitioner within a period of three months from the date of the order, failing which the appellants were made liable to pay interest @ 6% on the amount of earnest money until actual payment was made. 2. For the sake of convenience, we shall refer the parties as arrayed in the writ petition. 3. On 11.03.1996, the auction was held by the Mining Engineer, Neem Ka Thana for the royalty connection in respect of areas and minerals specified in the advertisement dated 01.12.1995. The period of contract was to be operational for two years from 01.04.1996 to 31.03.1998. As per the terms of advertisement, the petitioner deposited earnest money for participation in the auction. The highest bid was given by one Subhash son of Kana Ram in the sum of Rs. 91,00,000/-. The next bid was by the petitioner in the sum of Rs. 82,00,000/-. It appears that the highest bidder Subhash did not deposit the requisite bid amount and security although he was provisionally selected bidder in terms of Rule 34(g)(vii) of the Rajasthan Minor Mineral Concession Rules, 1986 (for short, the 'Rules of 1986'). On 29.03.1996, the Mining Engineer, Neem Ka Thana informed the petitioner that he was second highest bidder for Rs. 82,00,000/- and called upon the petitioner to deposit an amount of Rs. 6,83,334/- towards first instalment in advance and a sum of Rs. 10,25,000/- towards security. It is pertinent to notice here that although the petitioner was called upon to deposit the amount on 29.03.1996, on the next day i.e. 30th March, 1996, an agreement was entered into with one Hari Singh for royalty collection for subject area. On 18.04.1996, the petitioner was informed that the earnest money to the extent of Rs. 4,15,000/- has been forfeited as he failed to deposit the amount of first instalment in advance and security and that the amount of Rs. 4,15,000/-has been forfeited out of the earnest money and the remaining amount of Rs. 85,000/- may be withdrawn by him. By the communication dated 09.08.1996, same thing was reiterated by the Mining Engineer, Neem Ka Thana. 4,15,000/- has been forfeited as he failed to deposit the amount of first instalment in advance and security and that the amount of Rs. 4,15,000/-has been forfeited out of the earnest money and the remaining amount of Rs. 85,000/- may be withdrawn by him. By the communication dated 09.08.1996, same thing was reiterated by the Mining Engineer, Neem Ka Thana. Constrained thereby, the petitioner approached this Court and challenged the legality of the forfeiture of the earnest money in the sum of Rs. 4,15,000/-. 4. The State Government and its functionaries contested the writ petition and justified their stand by submitting that since the petitioner was provisionally selected bidder being the second highest bidder, by not depositing the first instalment in advance and the security. the earnest money was liable to be forfeited under Rule 34(k) read with 34(g)(vii) of the Rules of 1986. 5. The Single Judge after hearing the parties held that in so far as second highest bidder is concerned, he may or may not be selected as provisionally selected bidder under Rule 34(g)(vii) and, therefore, the earnest money deposited by the petitioner could not have been forfeited. The State Government and its functionaries were, thus, directed by the order dated 20th January, 2006 to return the earnest money to the petitioner within three months, failing which they were asked to pay interest @ 6%. It is this order i.e. impugned in the appeal. 6. The two documents placed alongwith the writ petition viz., Annexure-3 dated 19.03.1996 and Annexure-5 clearly demonstrate lack of bonafides on the part of the Mining Engineer, Neem Ka Thana in issuance of notice dated 29.03.1996 to the petitioner calling upon him to deposit advance first instalment of Rs. 6,83,334/- and a security deposit of Rs. 10,25,000/- being second highest bidder even when he had on 19.03.1996 informed the Director, Mines and Geological Department, Rajasthan that the earnest money deposited by the petitioner has been refunded and that contract needs to be continued with the existing Contractor Hari Singh and as a matter of fact an agreement was entered into with Hari Singh on 30th March, 1996 itself. In his communication dated 19.03.1996 addressed to the Director, Mines, the Mining Engineer, Neem Ka Thana has in unmistakable terms represented that earnest money deposited by the petitioner has been refunded and that the bid amount cannot fetch more than Rs. 39,76,000/-. In his communication dated 19.03.1996 addressed to the Director, Mines, the Mining Engineer, Neem Ka Thana has in unmistakable terms represented that earnest money deposited by the petitioner has been refunded and that the bid amount cannot fetch more than Rs. 39,76,000/-. He also opined that as a short term measure, the contract be given to Hari Singh for a royalty amount of Rs. 39,76,000/-. In this view of the matter where was an occasion for the Mining Engineer, Neem Ka Thana asking the petitioner by the communication dated 29.03.1996 to deposit first instalment in advance in the sum of Rs. 6,83,334/- and security amount in the sum of Rs. 10,25,000/-. Moreso in the communication dated 29.03.1996, the Mining Engineer, Neem Ka Thana has not at all stated that petitioner has been selected provisionally. What has been informed to the petitioner is that he is the second highest bidder and that he must deposit the first instalment in advance and the security amount. The lack of bonafides on the part of the Mining Engineer, Neem Ka Thana is writ large in offering the contract to Hari Singh on the one hand and asking the petitioner to deposit the first instalment in advance and security deposit without selecting him bidder provisionally on the other. The demand, thus, raised vide notice dated 29.03.1996 and the forfeiture of earnest money by the order dated 18.04.1996 and 09.08.1996 are unsustainable. 7. Besides that, under Rule 34(k) of the Rules of 1986, earnest money deposited under clause (d) of Rule 34 would be forfeited if the provisionally selected bidder fails to deposit the amount of bid or security deposit as required under clause (g). We have already noticed that the communication dated 29.03.1996 did not indicate that petitioner was selected provisionally. Rule 34 clauses (g) and (k) read thus "34(g) On completion of auction,the result will be announced and provisionally selected bidder shall immediately deposit the security money and bid amount in advance as under : (i) If the yearly bid amount does not exceed Rs. 10,000/- it shall be immediately deposited in full. (ii) If the yearly bid amount exceeds Rs. 10,000/- but does not exceed Rs. 10 lakhs, 25% of the bid amount shall be deposited immediately as first quarterly installment. Other quarterly installments shall be deposited in advance on the date specified in the agreement. 10,000/- it shall be immediately deposited in full. (ii) If the yearly bid amount exceeds Rs. 10,000/- but does not exceed Rs. 10 lakhs, 25% of the bid amount shall be deposited immediately as first quarterly installment. Other quarterly installments shall be deposited in advance on the date specified in the agreement. (iii) If the yearly bid amount exceeds Rs. 10 lakhs, it shall be recovered in twelve monthly installments but the first installment shall not be less than Rs. 2.50 lakhs and shall be deposited [before execution of the agreement]. The remaining, bid amount shall be deposited in eleven equal monthly installments by 10th of each month in advance : [Provided that where mining lease is granted by auction, 25% of the bid amount shall be deposited before the execution of agreement as the first quarterly installment. Other quarterly installments shall be deposited in advance on the dates specified in the agreement.] (iv) If the yearly bid amount does not exceeds Rs. 10 lakh, security deposit shall be 25% of the bid amount. (v) If the yearly bid amount exceeds Rs. 10 lakh, security deposit shall be Rs. 2.50 lakh or 12.5% of bid amount whichever is more. [Provided that where mining lease is granted by auction, the security deposit shall be 25% of the bid amount.] (vi) The security money shall be adjusted in the last installment if the contract is completed without any lapse on part of the contractor. (vii) The highest bidder in the auction, shall be provisionally selected bidder for grant of the contract : Provided that where the highest bidder fails to deposit the bid amount and/or security as mentioned in this clause, the second highest bidder may be selected as provisionally selected bidder, if the bid amount of the second highest bidder is not less than 10% of the bid amount of the first bidder : Provided further that where the second bidder fails to deposit the amount of bid and/or security, the third highest bidder may be selected to as provisionally selected bidder, if the bid amount of the third bidder is not less than 10% of the bid amount of the first bidder]. .............. .............. (k) If the provisionally selected bidder fails to deposit the amount of bid [or security deposit] as required under clause (g) of this rule earnest money deposited under clause (d) of this rule shall be forfeited to the Government a TKI Mining Lease or Royalty Collection Contract shall be re-auctioned as per rules." 8. It will be seen from Rule 34(g)(vii) that the highest bidder in the auction is selected bidder provisionally for grant of contract. If the provisionally selected bidder fails to deposit the bid and or security, the second highest bidder may be selected as provisionally selected bidder if the bid amount of the second highest bidder is not less than 10% of the bid amount of the first bidder. That second highest bidder is not mandatorily selected as provisionally selected bidder is apparent from the use of the word 'may'. He has to be selected as provisionally selected bidder and informed accordingly. The material on record neither shows nor suggests that the petitioner was selected provisionally selected bidder. As a matter of fact under Rule 34(h)(1), earnest money is liable to be refunded immediately at the conclusion of the auction to all excepting the person whose bid is provisionally accepted. At the conclusion of the auction, surely the bid of the petitioner was not accepted. It was the bid of the highest bidder that was provisionally accepted. Therefore, the earnest money deposited by the petitioner was liable to be refunded immediately at the conclusion of the auction and it is for this reason that the Mining Engineer, Neem Ka Thana represented to the Director, Mines that the earnest money deposited by the petitioner has been refunded. 9. Seen from any angle, the forfeiture of earnest money deposited by the petitioner by the Mining Engineer, Neem Ka Thana cannot be sustained. In this view of the matter, the order of the Single Judge asking the present appellants to refund the earnest money deposited by the petitioner is just and proper justifying no interference in the Appeal by us. 10. We record and accept the statement of Mr. Banwari Lal Avasthi, Additional Government Counsel that the amount of Rs. 4,15,000/- towards earnest money shall be refunded to the sole respondent within one month from today. 10. We record and accept the statement of Mr. Banwari Lal Avasthi, Additional Government Counsel that the amount of Rs. 4,15,000/- towards earnest money shall be refunded to the sole respondent within one month from today. We observe that if the aforesaid amount is not refunded to the respondent within afore-stated time, the interest directed by the Single Judge shall be paid by the appellants to the respondent and that amount of interest shall be recovered by the State Government from the Mining Engineer, Mines and Geology Department, Neem Ka Thana, District Sikar. 11. Appeal is dismissed with no order as to costs.Appeal Dismissed. *******