Jharkhand High Court
Sociedade De Fomento Industrial ... vs State Of Jharkhand on 22 April, 2022
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No.5069 of 2021
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1. Sociedade De Fomento Industrial Pvt. Ltd., Vila Flores da
Silva, Erasmo Carvalho Street, Margao, South Goa,
Goa-403601.
2. Mr. Auduth Timblo
... ... Petitioners.
Versus
1. State of Jharkhand, through its Secretary (Mines & Geology),
Project Building, Dhurwa, Ranchi.
2. Director (Mines), Directorate of Mines & Geology, Jharkhand,
Nepal House, Doranda, Ranchi.
... ... Respondents.
With
W.P.(C) No.5152 of 2021
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1. Sociedade De Fomento Industrial Pvt. Ltd., Vila Flores da
Silva, Erasmo Carvalho Street, Margao, South Goa,
Goa- 403601
2. Mr. Auduth Timblo
... ... Petitioners.
Versus
1. State of Jharkhand, through its Secretary (Mines & Geology),
Project Building, Dhurwa, Ranchi
2. Director (Mines), Directorate of Mines & Geology, Jharkhand,
Nepal House, Doranda, Ranchi.
3. MSTC Limited, Plot no.CF-18/2, Street No.175, Action Area 1C,
New Town, North 24 Parganas, Kolkata, West Bengal-700156.
... ... Respondents.
CORAM: HON'BLE MR. JUSTICE RAJESH SHANKAR
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For the Petitioners : Mr. Yashraj Singh Deora, Advocate
[In W.P.(C) No.5069 of 2021]
Mr. Gopal Jain, Sr. Advocate &
Mr. Salona Mittal, Advocate
[In W.P.(C) No.5152 of 2021]
For the Respondent-State : Mr. P.A.S. Pati, G.A.II
(In both cases)
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CAV on 08.04.2022 Pronounced on 22.04.2022
Rajesh Shankar, J.:
This judgment is being pronounced through virtual mode.
1. Both these writ petitions have been filed for issuance of direction
upon the State Government to proceed with the second round of
auction in accordance with the Mineral (Auction) Rules, 2015
(hereinafter to be referred as 'the Rules, 2015') as amended by
Mineral (Auction) Amendment Rules, 2017 (hereinafter to be referred
as 'the Rules, 2017').
W.P.C No. 5069 of 2021:
2. The brief facts as stated in the writ petition is that the State of
Jharkhand issued Notice Inviting Tender (in short 'NIT') on
30.10.2019 inviting bids in order to carry out e-auction for granting
mining lease of Dudhapat Toli, Nathpur, Salgi & Chulhamati Bauxite
Block having concession area of 322.859 acres in which the last date
for sale of tender documents was fixed as 18.11.2019. Pursuant to
the issuance of tender document a pre-bid conference of the bidders
was held on 03.12.2019 wherein the queries were responded thereto
and published by the Government on 10.12.2019. The petitioner no.
1 purchased the tender document on 08.11.2019 and submitted its
bid on 13.12.2019, however, subsequent to the first round of
auction, the State Government vide notice dated 27.01.2020 decided
to annul the process of first attempt of auction for grant of mining
lease of the aforesaid block. Thereafter, the State Government vide
NIT dated 28.01.2020 invited offers for the said block in which the
last of sale of tender documents was fixed as 12.02.2020. The
petitioner no.1 once again expressed its desire and purchased the
tender document on 10.02.2020, which was duly submitted on
09.03.2020 along with bank guarantee of Rs.7,42,32,182/- as bid
security in favour of the State. In the meantime, pre-bid conference
of the bidders was held on 27.02.2020. Thereafter, due to outbreak
of Covid-19 pandemic, the State Government issued a corrigendum
dated 25.03.2020 informing the bidders that the auction of the
mineral block in question would be kept in abeyance until further
notice. The State Government vide letter no. 669 dated 02.06.2020
informed MSTC to upload the corrigendum on its website enclosing
revised time table of auction of mining lease of the said block,
whereby the date of announcement of the technically qualified
bidders was shifted from 07.04.2020 to 15.06.2020 and the date of
opening of initial price offer was shifted from 13.04.2020 to
22.06.2020. The electronic auction for final price offer was to be
conducted thereafter on 24.06.2020 as opposed to the original date
of 16.04.2020. The preferred bidder was to be announced by
24.06.2020 and the subsequent stages were to be followed
thereafter. In furtherance of the changed time table, the Director,
Mines, Jharkhand, Ranchi vide letter dated 10.06.2020 informed all
the concerned authorities that the declaration of the technically
qualified bidders would be done on 15.06.2020 for which a meeting
of the Tender Evaluation Committee was scheduled to be held on
11.06.2020. Though, as per the time lines provided under the tender
document, the E-auction and submission of final price offer were to
be conducted on 24.06.2020 however till filing of the writ petition,
the said auction was not conducted without assigning any reason
thereof.
During the pendency of the present writ petition, the Director
Geology, Department of Mines & Geology, Government of Jharkhand
vide letter dated 21.01.2022, notified the annulment of NIT dated
28.01.2020 (wrongly typed as 30.10.2019, as claimed by the
respondents).
W.P.C No. 5152 of 2021:
3. Brief facts as stated in the writ petition is that the State of Jharkhand
issued NIT on 25.10.2019 inviting bids in order to carry out e-auction
for grant of mining lease of Lodhapat Jobhipat & Hethilodha Bauxite
Block having concession area of 75.193 hectares in which the last
date of sale of tender documents was 18.11.2019 and last date of
opening of tender was fixed as 17.12.2019. Pursuant to issuance of
the tender document, a pre-bid conference of the bidders was held
on 04.12.2019 wherein the queries were responded thereto and
published by the State Government on 10.12.2019. The petitioner no.
1 purchased the tender documents on 08.11.2019 and submitted its
bid on 13.12.2019, however, subsequent to the first round of
auction, the State Government vide notice dated 27.01.2020 decided
to annul the process of first attempt of auction for grant of mining
lease of the aforesaid block. Thereafter, the State Government vide
NIT dated 28.01.2020 invited offers for the said block and the
petitioner no.1 once again expressed its desire and purchased the
tender document on 10.02.2020, which was duly submitted on
09.03.2020 along with bank guarantee of Rs.8,16,18,726/- as bid
security in favour of the State. Thereafter due to outbreak of Covid-
19 pandemic the State Government issued a Corrigendum dated
25.03.2020 and informed the bidders that the auction of the
aforesaid mineral block would be kept in abeyance until further
notice. The State Government vide letter no.705 dated 08.06.2020
informed MSTC to upload the corrigendum on its website regarding
revised time table of auction of mining lease of the said block,
whereby the date of announcement of the Technically qualified
bidders was shifted from 07.04.2020 to 15.06.2020 and the opening
of initial price offer was shifted from 13.04.2020 to 22.06.2020. The
electronic auction for final price offer was thereafter to be conducted
on 24.06.2020 as opposed to the original date of 16.04.2020. The
preferred bidder was to be announced by 24.06.2020 and the
subsequent stages were to be followed thereafter. In furtherance of
the changed time table, the Director, Mines, Jharkhand, Ranchi vide
letter dated 10.06.2020 informed all the concerned authorities that
the declaration of the technically qualified bidders would be done on
15.06.2020 for which a meeting of the tender evaluation committee
was scheduled to be held on 11.06.2020. Though, as per the time
lines provided under the tender document, the E-auction and
submission of final price offer were to be conducted on 24.06.2020,
however no action was taken to finalize the said auction.
4. During the pendency of W.P.(C) No. 5152 of 2021, the Director
Geology, Department of Mines & Geology, Government of Jharkhand
vide letter dated 27.12.2021 notified the annulment of NIT dated
28.01.2020 (wrongly typed as 30.10.2019 as claimed by the
respondents) and thereafter issued a fresh NIT dated 28.01.2022 for
Lodhapat Bauxite Block having concession area of 0.752 sq. k.m. and
thereafter the petitioners filed I.A No. 1008 of 2022 seeking stay of
the said NIT. This court took up the said interlocutory application on
14.03.2022 and disposed of the same observing inter alia that there
was no need to pass an interim order, since counter affidavits had
already been filed by the State respondents in both the writ petitions
and the same would be heard on merit on an early date.
5. Mr. Gopal Jain, learned senior counsel, appearing on behalf of the
petitioners in W.P.(C) No. 5152 of 2021 submits that the Parliament
under entry 54 List I of 7th Schedule of the Constitution of India has
enacted the Mines and Minerals (Development & Regulation) Act,
1957 (hereinafter to be referred as 'the Act, 1957'). Section 10B(3),
(5) and (7) of the said Act, 1957 provides procedure for auction and
grant of mining lease in respect of any notified mineral existing in
any notified area as prescribed by the Central Government. Section
13(2)(qqe), (qqf) of the Act, 1957 confer power on the Central
Government to make rules in respect of the terms, conditions and
procedure for auction and grant of mining lease. The Rules, 2015
which have been framed under the aforesaid provisions therefore,
oust the legislative as well as executive power of the State
Government to do anything contrary to it, rather the State
Government conducting auction under the provisions of the Act, 1957
and the Rules, 2015 has to strictly exercise power in the manner
conferred by the statute. It is well settled that where law requires a
thing to be done in a particular manner, the same must be done in
that manner alone. The discretion of the State to annul an auction
where sufficient numbers of bidders are not available is limited only
to the first attempt of auction in terms of sub-rules (9) and (10) of
Rule 9 of Mineral (Auction) Rules, 2015 as inserted by the Rules,
2017. Similarly, the discretion to either conduct the auction process
de-novo with a separate set of terms and conditions or to conduct
the second attempt of auction with the same terms and conditions is
available only on annulling the first attempt of auction in terms of
clear and plain language of sub-rules (11)(a), (11)(b) and (12) of
Rule 9 of Rules, 2015 as inserted by the Rules, 2017. The State
having exercised the option under Rule 9(11)(b) of Rules, 2015 as
inserted by the Rules, 2017 was bound to complete the second
attempt of auction even if the requisite number of bidders was not
available in terms with the mandatory language of 2nd proviso to the
sub-rule (12) of Rule 9 of the Rules, 2015 as inserted by the Rules,
2017.
6. It is further submitted that as per clear and plain language of second
proviso to sub-rule (12) of Rule 9 of the Rules, 2015 as inserted by
the Rules, 2017, the use of word "shall" indicates that the State is
mandated to proceed with the second round of auction even if there
are less than three technically qualified bidders. The intent of the
legislature not to confer any discretion on the State to decide to
continue or not with the second attempt of auction is evident from
the history of the legislation. Mischief should not have a place in any
provision of the statute. The 'Mischief Rule of Interpretation' or
'Heydon's Rule' is for preventing the misuse of provisions of the
statute, which is now a well-recognised canon of interpretation of
statute.
7. It is further contended by the learned Senior Counsel that sub-rules
(4) to (12) of Rule 9 as they stand now, were inserted vide
amendment dated 30.11.2017 in place of the earlier sub-rule (4) of
Rule 9. In terms of the un-amended sub-rule (4) of Rule 9, at least
two rounds of auction were to be made to achieve three or more
bidders. As also, the State had the discretion from the 3rd attempt
onwards either to accept the bids even if the requisite number of
bidders were not available or to proceed with further attempts of
auction. However, Rule 9(12) as inserted in Rules, 2015 by the Rules,
2017 clearly indicates that limited discretion is vested in the State to
the extent of Rule 9(11) only and if the State decides to proceed with
the second attempt, the auction process has to be mandatorily
completed irrespective of the number of bidders. As submitted above
the mischief rule is a well-recognized principle of interpretation of
statute. The very fact that the central legislature has substituted the
discretion of the State with a compulsion to proceed and complete
the auction in the second attempt suggests that the legislature is
seeking to balance the main object of the Act, 1957 to develop the
mines and minerals with the requirement to grant State largesse
through a transparent and fair manner. The stand of the State that it
has decided to proceed with the auction de novo as during the 2nd
attempt there was only a sole bidder, is in the teeth of the provisions
of the Rules, 2015 as amended in the year 2017.
8. In support of the aforesaid contention, Mr. Jain puts reliance on the
judgment rendered by the Hon'ble Supreme Court in the case of
State of Kerala & Others Vs. Kerala Rare Earth and Minerals
Ltd. and Others reported in (2016) 6 SCC 323 wherein it has
been held that the Parliament has taken under its control the
regulation and development of mines in the manner provided under
the Act, 1957 in public interest. It has also been held in the said case
that wherever the MMDR Act provides for a particular thing to be
done in a particular manner, it should be done in that manner alone.
According to Mr. Jain, the State is seeking to indirectly achieve
something which was not possible directly.
9. It is further contended by learned Senior Counsel that even if the
numbers of interested parties are lower than three in first round of
the second attempt of auction i.e. even if there is a single interested
party which satisfies the conditions of technical bid and initial price
offer requirement, the State must proceed with the auction. The
State of Maharashtra, in a similar situation, has proceeded with and
concluded the auction of 3 leases/blocks wherein there was a sole
qualified technical bidder. In said cases, the letters of intent have
already been issued and the preferred bidders have already initiated
the process to obtain the required clearances. It is also submitted
that except the petitioner no.1, no other person has expressed
interest in the block in question. The petitioner no.1 was the sole
company which purchased the tender documents in both the first and
second attempts. Apart from the petitioner no.1, two other
companies had though purchased the tender documents in the first
attempt of auction, they never submitted their bids. Further in the
second attempt of auction, except the petitioner no. 1 no other party
even purchased the tender documents. The said fact clearly shows
that there was no other interested party to mine the block in
question. Learned senior counsel further submits that the expectation
of the State is in the form of reserve price and as such the
requirement of putting the block to auction stands satisfied if a party
offers an amount higher than the reserve price. The reason for
removing the restriction in the second attempt is to give effect to the
main object and purpose of the MMDR Act, 1957 which is the
development of mineral resources in the country.
10. It is further submitted that admittedly in the present case the State
has exercised power under the Act, 1957 and Rules, 2015 to put
Lodhapat Bauxite Block to auction. The first attempt of auction was
unsuccessful as the requisite number of bids, as required under Rule
9(9) of the Rules, 2015 were not available and as such the mandate
under Rule 9(10) had to be complied by the State and was so done
on 27.01.2020 when the 1st attempt of auction was annulled.
11. Mr. Jain also submits that the very basis of issuance of 3rd NIT is
erroneous and as such the same is nonest in the eyes of law. It is
submitted that 3rd NIT has been issued on the premise that the 2nd
attempt stands allegedly nullified, however the same is not true. The
order dated 27.12.2021 seeks to annul the NIT dated 30.10.2019
which admittedly was the 1st attempt of auction and already stood
annulled on 27.01.2020. The 2nd attempt of auction dated
28.01.2020, therefore, continues to operate and has to be taken to
its logical conclusion in accordance with law.
12. The learned Senior Counsel further contends that the letter dated
27.12.2021 issued by the Director Geology, Department of Mines and
Geology, Government of Jharkhand clearly show that in fact there
has been no annulment of the second attempt of auction which was
conducted in terms of NIT dated 28.01.2020. The State Government
by the aforesaid letter has simply annulled the first attempt of
auction which already stood annulled on 27.01.2020. Bare perusal of
the said letter shows that there has been absolutely no application of
mind and the State Government in a hurried manner, after filing of
the writ petition, has issued the said letter without even considering
that the first attempt of auction was made vide NIT dated
25.10.2019 and not vide NIT dated 30.10.2019 as stated in the said
letter. The State Government has no power to annul the second
attempt of auction if single technically qualified bidder is available
and the State has to complete the process in terms with the mandate
of Rule 9(12) of the Rules, 2015 as inserted by the Rules, 2017. It is
further submitted that as the second attempt of auction is yet to be
concluded, issuance of fresh NIT by the State Government for
Lodhapat Bauxite Block cannot be sustained on the doctrine of
consequential and dependent orders. The language of sub-rule (12)
of Rule 9 of Rules, 2015 [as amended by GSR 1469(E) dated
30.11.2017] is clearly mandatory in nature which requires the State
Government to complete the second attempt of auction by
proceeding to the second round of auction even in case the number
of technically qualified bidders is less than three. The petitioner no.1
has been found technically qualified under the Rules as well as the
terms and conditions of the tender. The initial price offer of the
petitioner no.1 is greater than the reserve price and as such it is
technically qualified. The petitioner no.1 being the sole bidder, is
legally entitled to be allotted the lease of the block in question.
13. Mr. Yashraj Singh Deora, learned counsel, appearing on behalf of the
petitioners of W.P.(C) No. 5069 of 2021 has adopted the argument of
Mr. Gopal Jain, leaned senior counsel, appearing on behalf of the
petitioners of W.P.(C) No.5152 of 2021. He, however, adds that the
stand of the respondents that the first attempt of auction was held
on 28.01.2020 and not on 30.10.2019 is contrary to record. The
tender evaluation committee had evaluated the tender received
under the NIT in question on 17.12.2019 and had recommended for
annulment of the first round of auction as no technical bid was
received till the schedule bid date of first attempt of auction.
Similarly, the notice issued by the State of Jharkhand annulling the
first attempt clearly shows that it was the first attempt of auction
process which was being annulled. Rule 9(4) of Rules, 2015 mentions
that the auction shall comprise of "attempts of auction" and each
attempt would consist of first round of auction and second round of
auction. Moreover, sub-rule (10) of Rule 9 provides for annulling of
first attempt of auction if the number of technically qualified bidders
is less than three. Rule 9 is related with bidding process and has to
be read in totality from which it is evident that sub-rule 10 will come
into play in the given facts of the case as well, in which auction was
attempted, and bid was submitted by the petitioner no.1. Moreover,
sub-rule (10) of Rule 9 will also come into play even in the event of
no bid being submitted. The State Government cannot improve its
stand on affidavit and has to sustain its action based on the record of
the case. In the present case, no document has been produced
before this Court to defend the stand as has been taken in the
counter-affidavit.
14. Mr. Deora also puts reliance on the judgment of the Hon'ble Supreme
Court rendered in the case of Mohinder Singh Gill Vs. Chief
Election Commissioner, reported in (1978) 1 SCC 405, wherein
it has been held that when a statutory functionary makes an order
based on certain grounds, its validity must be judged by the reasons
so mentioned and cannot be supplemented by fresh reasons in the
shape of affidavit before the Court otherwise, an order bad in the
beginning may, by the time it comes to court on account of a
challenge, gets validated by additional grounds later brought out.
15. Per contra, Mr. P.A.S Pati, learned G.A.II, appearing on behalf of the
respondents submits that the petitioner had only submitted the
physical copy of the technical bid, though the same was required to
be submitted on electronic platform of MSTC by it. Hence, the
Technical Evaluation Committee in its meeting dated 17.12.2019
observed that no technical bid was received till the schedule due
date. Therefore, the same cannot be considered as 1st attempt of
auction. As per recommendation of the Technical Evaluation
Committee, 1st round of auction was annulled on 27.01.2020 on
account of no bid having been received and fresh tenders were
issued for both the blocks in question. The tender evaluation
committee opened the tender on 16.03.2020 and found the petitioner
no.1 as single bidder. The Committee in its meeting dated
11.06.2020 recommended that since the petitioner no.1 was the
single bidder, permission of the State Government would be taken for
opening of financial bid and further course of auction would be
decided accordingly. Later on, the State Government decided to go
for fresh auction denovo as there was a single bid only. The tender
was subsequently annulled as per order of the State Government
which was notified vide letters dated 27.12.2021 and 21.01.2022.
The decision for annulment of the tender of the blocks in question is
based on the consideration that huge resources of the Bauxite is
involved and therefore better participation of the bidders in auction
will be in the interest of mineral/revenue of the State. Had the tender
been finalized on the basis of single bid, it would have caused
substantial loss of premium/mineral revenue to the State exchequer.
Hence, the action taken for annulment of the tenders is in larger
public interest. Under the said circumstance, these writ petitions are
liable to be dismissed. It is further submitted that there is a
typographical error in the letter dated 21.01.2022 wherein the date
with the signature was wrongly put as 21.01.2021 in place of
21.01.2022.
16. The learned counsel for the respondents puts reliance on the
judgment rendered by the Hon'ble Supreme Court in the case of
State of Jharkhand & Others Vs. CWE-SOMA Consortium,
reported in (2016) 14 SCC 172, wherein it has been held that a
writ court does not sit as a court of appeal, rather merely reviews the
manner in which the decision has been made. The Government must
have freedom of contract. However, the decision must not only be
tested by the application of Wednesbury principles of reasonableness
but must also be free from arbitrariness not affected by bias or
actuated by mala fide.
17. In the case of State of Punjab & Others Vs. Mehar Din,
reported in 2022 SCC OnLine SC 250, as has been relied upon by
learned counsel for the respondents, it has been held that the
acceptance of the highest bid is always subject to the conditions of
holding public auction and the right of the highest bidder is always
provisional to be examined in the context of different conditions in
which the auction has been held.
18. Mr. Deora in rejoinder argument submits that the contention of the
learned counsel for the respondents regarding typographical error
committed in the letter dated 21.01.2022 is an afterthought and
contrary to record. If there was any typographical error, the
respondents were under obligation to specifically inform the same to
the petitioner no.1 in terms with clause 8(e) of the NIT, which
provides that "technical bids shall be deemed to be under
consideration immediately after the submission and until such time
the State Government makes official intimation of award/rejection to
the bidders". Admittedly, till date no such communication has been
received by the petitioners. Thus, the State Government was under
legal obligation to inform the petitioner no.1 about annulment of the
tender. Since second attempt of auction has not been annulled as
yet, the petitioners are entitled to be declared successful in the
auction for the said block. It is further contended that bank
guarantees of Rs.7.42 crores continues to be held by the State
Government which was submitted under the second attempt of
auction and no personal communication has been received by the
petitioner no.1 till date informing it about cancellation of the tender.
19. Mr. Jain, in reply to the argument of the learned counsel for the
respondents, puts reliance on the judgments of the Hon'ble Supreme
Court rendered in the cases of M/s Star Enterprises and Others
Vs. City and Industrial Development Corporation of
Maharashtra Ltd. and Others, reported in (1990)3 SCC 280;
Kalu Ram Ahuja and Another Vs. Delhi Development
Authority and Another, reported in (2008)10 SCC 696; and
Mahabir Auto Stores and Others Vs. Indian Oil Corporation
and Others, reported in (1990)3 SCC 752 and submits that even
in purely contractual matters, the State is obligated to provide
reasons which have to satisfy the test of reasonableness so as to
deprive a person of any State largesse or a contract which it was
entitled to obtain under law. In the present case, the State has to
strictly comply with the provisions of the statute and cannot seek to
wriggle out of its obligations. As such the judgment relied upon by
the respondents pertaining to cancellation of bids by the State
Government do not come into play and are not applicable.
20. Heard the learned counsel for the parties and perused the materials
available on record. The petitioners have sought direction upon the
respondents to proceed with the second round of auction, however,
as per the counter affidavits filed in both the writ petitions the State
Government has annulled the second NITs published on 28.01.2020
for both the blocks. So far as Lodhapat Bauxite Block [subject matter
of W.P.(C) No. 5152 of 2021] is concerned, a fresh NIT has already
been issued.
21. The main contention of learned counsel for the petitioners of both
the writ petitions is that as per the mandate of sub-rules (10) and
(11) of Rule 9 of the Rules, 2015, as amended by the G.S.R. 1469(E)
dated 30th November, 2017, if during auction process, the technically
qualified bidders are found less than three, then the first attempt of
auction is to be annulled and the State will have discretion either to
commence the auction process de novo with separate set of terms
and conditions or to conduct second attempt of auction wherein the
terms and conditions shall remain the same. It has further been
contended that as per second proviso to sub-rule (12) of rule 9 of the
Rules, 2015 as inserted by the Rules, 2017, if the State Government
chooses to conduct the second attempt of auction, then the same
shall continue to the second round of auction even if the technically
qualified bidders are less than three. According to the learned
counsel for the petitioners, the respondents after annulling the first
attempt of auction had exercised their discretion to conduct the
second attempt of auction and as such in view of second proviso to
sub-rule (12) of rule 9 of the Rules, 2015 as inserted vide Rules,
2017 are bound to continue with the second round of auction and
they cannot escape from such provisions of the Rules, 2015 which
are clear and unambiguous.
22. To counter the said argument of the learned counsel for the
petitioners, the learned counsel for the respondents has submitted
that in pursuance of the first NIT issued for the both the blocks, no
bidder had submitted its bid through electronic mode and as such
fresh NITs were issued by the respondents in response to which the
petitioner no.1 submitted its technical bid through electronic mode
which was found as single bid. As such, the State Government has
decided to annul the said auction process and has decided to issue to
a fresh NIT for auction of the said blocks.
23. To appreciate the rival contentions of learned counsel for the parties,
it would be appropriate to refer relevant provisions of the Rules, 2015
(as amended by the Rules, 2017), dealing with the bidding process
which reads as under:-
"9. Bidding Process.-
(1) Subject to the provisions of rule 5, the State Government shall
issue a notice inviting tender, including on their website, to
commence the auction process and such notice shall contain brief
particulars regarding the area under auction, including,-
(a) particulars of the area identified and demarcated using total
station and differential global positioning system divided into forest
land, land owned by the State Government, and land not owned by
the State Government; and
(b) estimated mineral resources and brief particulars regarding
evidence of mineral contents with respect to all minerals discovered
in the area during exploration in accordance with the provisions of
the Minerals (Evidence of Mineral Contents) Rules, 2015.
(2) The tender document issued by the State Government shall
contain,-
(a) geological report pursuant to the Minerals (Evidence of Mineral
Contents) Rules, 2015 specifying particulars and estimated quantities
of all minerals discovered in the area; and
(b) revenue survey details of the area identified and demarcated
using total station and differential global positioning system divided
into forest land, land owned by the State Government, and land not
owned by the State Government.
(c) the schedule date of commencement of production in case of
auction in mining lease in respect of an area having existence of
mineral contents established in accordance with rule 5 of the
Minerals (Evidence of Mineral Contents) Rules, 2015.
(3) The bidders shall be provided a fixed period, as notified by the
State Government, to study the tender document and such reports
and the bidding process shall commence only on expiry of such
period.
(4) The auction shall be an ascending forward online electronic
auction and shall comprise of attempts of auction with each attempt
of auction consisting of a first round of auction and a second round of
auction.
(5) In the first round of auction, the bidders shall submit,-
(A) a technical bid comprising amongst others, documentary
evidence to confirm eligibility as per the provisions of the Act and the
rules made thereunder to participate in the auction, bid security and
such other documents and payments as may be specified in the
tender document; and
(B) an initial price offer which shall be a percentage of value of
mineral dispatched.
(6) Only those bidders who are found to be eligible in accordance
with the terms and conditions of eligibility specified in rule 6 and
whose initial price offer is equal to or greater than the reserve price,
referred to as "technically qualified bidders", shall be considered for
the second round of auction.
(7) The highest initial price offer amongst the technically qualified
bidders shall be the floor price for the second round of online
electronic auction.
(8) The technically qualified bidders shall be ranked on the basis of
the descending initial price offer submitted by them and the
technically qualified bidders holding the first fifty percent of the
ranks (with any fraction rounded off to higher integer) or the top five
technically qualified bidders, whichever is higher, shall qualify as
qualified bidders for participating in the second round of electronic
auction.
Provided that if the number of technically qualified bidders
is between three and five, then all the technically qualified bidders
shall be considered as qualified bidders:
Provided further that in the event of identical initial price
offers being submitted by two or more technically qualified bidders,
all such technically qualified bidders shall be assigned the same rank
for the purposes of determination of qualified bidders and in such
case, the aforementioned fifty percent shall stand enhanced to the
extent of tie occurring within the first fifty percent.
Illustration
In the event there are a total of ten technically qualified bidders, and
each technically qualified bidder submits different initial price offer,
then the technically qualified bidders shall be considered to be
qualified bidders and the total number of qualified bidders shall stand
increased by two.
If three such technically qualified bidders submit the same initial
price offer and are ranked in first fifty percent of the total number of
ranks, then, all the three technically qualified bidders shall be
considered to be qualified bidders and the total number of qualified
bidders shall stand increased by two.
9. Where the total number of technically qualified bidders is three or
more, the auction process shall proceed to the second round of
auction which shall be held in the following manner, namely:-
(i) the qualified bidders may submit their final price offer
which shall be a percentage of value of mineral dispatched and
greater than the floor price:
Provided that the final price offer may be revised till the
conclusion of the auction as per the technically specifications of the
auction platform;
(ii) The auction process shall be annulled if none of the
qualified bidders submits a final price offer on the online electronic
auction platform;
(iii) the qualified bidder who submits the highest final price
offer shall be declared as the "preferred bidder"
immediately on conclusion of the auction.
(10) Where the total number of technically qualified bidders is less
than three, then no technically qualified bidder shall be considered to
be qualified bidder and the first attempt of auction shall be annulled.
(11) On annulment of the first attempt of auction, the State
Government may decide to -
(a) commence the auction process de novo with a separate set of
terms and conditions and reserve price as it may deed fit and
necessary; or
(b) conduct the second attempt of auction
(12) In case the State Government decides to conduct the second
attempt of auction as per clause (b) of sub-rule (11), the terms and
conditions of the second attempt of action shall remain the same as
in the first annulled attempt of auction.
Provided that the highest initial price offer of the technically qualified
bidders if any in the first annulled attempt shall be the reserve price
in the first round of the second attempt.
Provided further that the bidding shall continue to the second round
even in case the number of technically qualified bidders is less than
three."
24. Thus, the State Government has to issue NIT to commence the
auction process providing fixed period to the bidders to study the
tender documents and the bidding process will commence after
expiry of the said period. Every auction comprises of attempts of
auction and each attempt of auction having two rounds i.e. first
round and second round. In the first round, the bidders have to
submit their technical bids as well as initial price offer and only those
bidders who satisfy the eligibility condition and whose initial price
offer is equal to or greater than the reserve price are to be
considered as technically qualified bidders. If the technically qualified
bidders are three or more, then the auction process shall proceed
with the second round, however, when the technically qualified
bidders are less than three, then the first attempt of auction is to be
annulled whereupon the State Government has two options; either to
commence the auction process de- novo with separate set of terms
and conditions and reserve price as may be deemed fit and necessary
or to conduct the second attempt of auction. If the State Government
proceeds with the second attempt of auction, the terms and
conditions shall remain same and the highest initial price offer of the
technically qualified bidders, if any, in the first annulled attempt shall
be the reserve price in first round of the second attempt of auction.
In the second attempt of auction, the bidding shall continue even if
the technically qualified bidders are less than three.
25. Reverting back to the cases in hand. When the first NITs were issued
on 25.10.2019 and 30.10.2019, none of the bidders submitted their
technical bid and the initial price offer on the electronic platform of
MSTC as was provided under Clause 8 of the NIT. The petitioners
though submitted their technically bid physically, the same was not
treated as valid by the respondents. The tender evaluation committee
having found that no technical bid was submitted within the
stipulated time, recommended for annulling the first attempt of
auction. On recommendation of the tender evaluation committee, the
State Government annulled the first attempt of auction and
subsequently issued fresh NITs dated 28.01.2020.
26. The contention of the learned counsel for the petitioners is that by
issuing the second NITs dated 28.01.2020, the State initiated second
attempt of auction. In support of the said contention the learned
counsel for the petitioners have referred the recommendation of the
tender evaluation committee wherein the committee having observed
"As no technical bid was received till the scheduled bid due date, the
Tender Evaluation Committee recommended for annulment of the
first attempt of the auction process." had recommended for second
attempt of auction.
27. This court is not convinced with the said argument of the learned
counsel for the petitioners. Sub-rules (10), (11) and (12) of the rule 9
of Rules, 2015 as inserted by the Rules, 2017 are the provisions to be
applied in the situation when there are "technically qualified bidders
less than three" and in such eventuality the highest initial price offer
of the technically qualified bidders are taken as reserve price for the
second attempt of auction. However, if there is no technically
qualified bidder, then there is no question of second attempt of
auction. In the cases in hand also, the State Government had issued
fresh NITs after annulling the first attempt of auction.
28. The learned counsel for the petitioners have tried to impress upon
this Court that the second NITs dated 28.01.2020 were actually the
second attempt of auction as the terms and conditions of the said
NITs were same as those of the first NITs. This court is of the view
that on annulling the first NITs, it was upon the discretion of the
Government either to change the terms and conditions or go with the
same terms and conditions. Only when the State Government
chooses to initiate second attempt of auction, it is mandatory not to
change the terms and conditions.
29. Now, it would also be important to examine the recommendation of
the tender evaluation committee in both the cases to proceed for
second attempt of auction after observing as follows:-
"As no technical bid was received till the scheduled bid due date,
the Tender Committee recommended for annulment of the first
attempt of the auction process."
30. This Court is of the view that the said recommendation was not in
consonance with the provision of the Rules, 2015 as amended in the
year 2017 and thus will not create any right upon the petitioners. It is
also found that the tender evaluation committee had recommended
to conduct second attempt of auction by referring Rule 9(4)(a)(iv) of
Rules, 2015 which was already amended by that time. Moreover, it
was the State Government who had to take final decision on the
recommendation of the tender evaluation committee keeping in view
the relevant provisions of law. The petitioners have failed to bring on
record any document which suggests that the State Government had
conducted second attempt of auction after annulling the first NITs on
27.01.2020. On bare perusal of the notifications issued for annulling
the first NITs, it appears that the same only refers that the first
attempt of auction were annulled in view of the Rules, 2015. There is
nothing on record to show that the second NITs issued for auction of
both the blocks in question were actually the second attempt of
auction. That apart, from the scheme of the auction process provided
in Rules, 2015 as amended by the Rules, 2017, it would be evident
that fresh NIT is not issued for second attempt of auction as once the
auction process starts by issuing NIT, it comprises of "attempts of
auction" and for the second attempt of auction, the highest initial
price offer made in the first attempt of auction is regarded as reserve
price.
31. This court finds justification in the stand taken by the respondents in
the counter affidavits filed in both the writ petitions to the effect that
the NIT dated 30.10.2019 (W.P.C No. 5069 of 2021) and NIT dated
25.10.2019 (W.P.C No. 5152 of 2021) cannot be treated as first
attempt of auction since no technical bid was received on the
electronic platform of MSTC as was provided in Clause 8.1 of the NIT.
The bids of the petitioner no.1 of both the writ petitions filed
physically cannot be treated as valid technical bids. Pursuant to the
NITs dated 28.01.2020, the petitioner no.1 had filed its technical bids
on the electronic platform and was declared as single bidder and thus
the same was annulled in the interest of the revenue of the State.
32. Mr. Gopal Jain, learned senior counsel, has relied on the judgment
rendered by the Hon'ble Supreme Court in the case of Nathi Devi
Vs. Radha Devi Gupta, reported in (2005) 2 SCC 271, wherein
it has been held as under:-
"13. The interpretative function of the court is to discover the true
legislative intent. It is trite that in interpreting a statute the court
must, if the words are clear, plain, unambiguous and reasonably
susceptible to only one meaning, give to the words that meaning,
irrespective of the consequences. Those words must be expounded in
their natural and ordinary sense. When the language is plain and
unambiguous and admits of only one meaning, no question of
construction of statute arises, for the Act speaks for itself. Courts are
not concerned with the policy involved or that the results are
injurious or otherwise, which may follow from giving effect to the
language used. If the words used are capable of one construction
only then it would not be open to the courts to adopt any other
hypothetical construction on the ground that such construction is
more consistent with the alleged object and policy of the Act. In
considering whether there is ambiguity, the court must look at the
statute as a whole and consider the appropriateness of the meaning
in a particular context avoiding absurdity and inconsistencies or
unreasonableness which may render the statute unconstitutional."
33. Mr. Jain has further put reliance on the judgment of the Hon'ble
Supreme Court rendered in the case of Bihar MICA Exporters
Association Vs. State of Jharkhand, reported in 2012 SCC
OnLine Jhar 608, wherein it has been held as under:-
"52. A statutory Rule while ever subordinate to the parent statute, is
otherwise to be treated as part of the statute and as effective. The
Rules made under a statute must be treated for all purposes of
construction or obligation exactly as if they were in the Act and are to
be of the same effect as if contained in the Act, and are to be
judicially noticed for all purposes of construction or obligation.
Therefore, statutory Rules made pursuant to the power entrusted by
Parliament are law made by Parliament within the meaning of Article
302 of the Constitution of India."
34. Mr. Deora, learned counsel, has also put reliance on para-34 of the
judgment of the Hon'ble Supreme Court rendered in the case of J.
Jayalalithaa and Others Vs. State of Karnataka & Others,
reported in (2014) 2 SCC 401, wherein it has been held as
under:-
"34. There is yet an uncontroverted legal principle that when the
statute provides for a particular procedure, the authority has to
follow the same and cannot be permitted to act in contravention of
the same. In other words, where a statute requires to do a certain
thing in a certain way, the thing must be done in that way and not
contrary to it at all. Other methods or mode of performance are
impliedly and necessarily forbidden. The aforesaid settled legal
proposition is based on a legal maxim expressio unius est exclusio
alterius, meaning thereby that if a statute provides for a thing to be
done in a particular way, then it has to be done in that manner and in
no other manner and following any other course is not permissible."
35. The proposition laid down in the aforesaid cases will, however, not
help the case of the petitioners, rather the same justifies the
impugned action of the State Government. As explained above, there
was no "technically qualified bidder" in the first NITs for both the
blocks and as such there was no question of second attempt of
auction. The factual context of the cases suggests that there has
been no deviation from the literal meaning of the relevant provisions
of the Rules, 2015 as amended by the Rules, 2017. By applying the
ratio laid down in the aforesaid cases, this court is of the view that
any recommendation made by the tender evaluation committee
contrary to the provisions of Rules, 2015 cannot be accepted as no
one can be allowed to take benefit of the recommendation of the
tender evaluation committee which is in the teeth of the provisions of
the Rules, 2015 as amended by the Rules, 2017.
36. One of the arguments of Mr. Deora, learned counsel is that there has
been no annulment of the second attempt of auction which was
conducted in terms with NITs dated 28.01.2020, rather the State
Government has simply annulled the first attempt of auction which
already stood annulled on 27.01.2020. Learned counsel for the
respondents while countering the said argument has submitted that
there is a typographical error in the letters dated 21.01.2022 and
27.12.2021 and the date of tender in both the letters may be read as
28.1.2020 in place of 30.10.2019. I find some justification in the
argument of the learned counsel for the respondents. Since the first
NITs were already annulled on 27.01.2020, there was no reason to
again issue letter of annulment of those first NITs. Moreover, a fresh
NIT has already been issued for Lodhapat Bauxite Block which
substantiates the argument of the learned counsel for the
respondents that the NITs dated 28.01.2020 for both the blocks have
been annulled.
37. So far the decision of the State Government to cancel the 2 nd NITs
dated 28.01.2020 on the ground that petitioner no.1 has been found
as the single bidder is concerned, it would be appropriate to refer
the judgment of CWE-SOMA Consortium (Supra.), wherein Their
Lordships have held as under:-
"20. Admittedly, in the pre-bid meeting held on 24-3-2014, ten
tenderers have participated. After conclusion of the pre-bid meeting
on 24-3-2014, as a result of stringent conditions prescribed in
Clauses 4.5(A)(a) and 4.5(A)(c), only three tenderers could
participate in the bidding process and submit their bids. As noticed
earlier, upon scrutiny two were found non-responsive. In our
considered view, the High Court erred in presuming that there was
adequate competition. In order to make the tender more competitive,
the Tender Committee in its collective wisdom has taken the decision
to cancel and reinvite tenders in the light of SBD norms. As noticed
earlier, the same was reiterated in a subsequent meeting held on 9-7-
2014. While so, the High Court was not justified to sit in judgment
over the decision of the Tender Committee and substitute its opinion
on the cancellation of tender. Decision of the State issuing tender
notice to cancel the tender and invite fresh tenders could not have
been interfered with by the High Court unless found to be mala fide
or arbitrary. When the authority took a decision to cancel the tender
due to lack of adequate competition and in order to make it more
competitive, it decided to invite fresh tenders, it cannot be said that
there are any mala fides or want of bona fides in such decision. While
exercising judicial review in the matter of government contracts, the
primary concern of the court is to see whether there is any infirmity
in the decision-making process or whether it is vitiated by mala fides,
unreasonableness or arbitrariness."
38. Thus, if the government decides to cancel any tender and issues a
fresh one on the ground of lack of adequate competition and to make
it more competitive in the interest of revenue, the said decision does
not require interference under writ jurisdiction of the High Court
unless the same is found to be mala fide or arbitrary. In the cases in
hand, the petitioners have not alleged any mala fide against the
government and have also failed to make out any case of
arbitrariness against the respondents.
39. In view of the aforesaid factual and legal position, I do not find any
merit in both the writ petitions and the same are, accordingly,
dismissed.
(Rajesh Shankar, J.)
Sanjay/AFR
