M/S. Shanti Construction vs State Of Odisha And Others
2023 Latest Caselaw 1873 Ori

                  ORISSA HIGH COURT: CUTTACK
AFR
                       W.P(C) No. 20402 of 2022

      In the matter of an application under Articles 226 and 227
      of the Constitution of India.
                               ---------------

M/s. Shanti Construction Private Limited ..... Petitioner

-Versus-

      State of Odisha and others          .....       Opp. Parties


           For Petitioner   :    Mr. Yasobant Das, Sr. Advocate
                                 along with Mr. S. Mohanty,
                                 Advocate

           For Opp. Parties :    Mr. P.P. Mohanty,
                                 Addl. Government Advocate
                                 (O.P. Nos.1 & 2)

                                 Mr. D.P. Nanda, Sr. Advocate.
                                 along with M/s. R.K. Kanungo,
                                 (Mrs.) S. Moharana, S.Panda,
                                 A. Acharya, (Ms.) P. Roy and
                                 A. Dash, Advocates.
                                 (O.P. No.3)

      P R E S E N T:

THE HONOURABLE DR. JUSTICE B.R.SARANGI AND THE HONOURABLE MR JUSTICE M.S. SAHOO

Date of Hearing and Judgment :: 01.03.2023 // 2 //

DR. B.R. SARANGI, J. The petitioner-company, which was one of the

bidders for grant of Khaira Mahanadi Sand Quarry under

Tangi-Choudwar Tahasil on long term lease of five years,

has filed this writ petition seeking direction to opposite

party no.2 to issue Form-F in its favour in accordance with

the requirements of Orissa Minor Minerals Concession

Rules, 2016 ("OMMC Rules, 2016" for short) by cancelling

the Form-F issued in favour of opposite party no.3.

2. The facts leading to filing of the writ petition are

that the Tahasildar, Tangi-Choudwar-opposite party no.2

issued advertisement no. 4828/2022 dated 11.07.2022

under Annexure-1 inviting bids for grant of Khaira

Mahanadi Sand Quarry in Mouza-Khaira under Tangi-

Choudwar Tahasil appertaining to Plot No. 1145 (P), Khata

No. 540 (AAA) measuring an area of Ac.12.00 on long term

lease of five years. As per the said notice, the interested

bidders were required to submit their bids by filling up the

Form-M, as provided under the OMMC Rules, 2016, and

send it by registered post/speed post or may submit the

same in the drop box by 5:00 pm of 18.07.2022. The // 3 //

petitioner-company, in pursuance of the auction notice

under Annexure-1, participated in the auction proceeding

through its authorised representative-Banabihari Kanungo

by submitting Form-M before opposite party no.2 on

18.07.2022. After scrutiny of the documents and Form-M

submitted by the applicants, opposite party no.2 intimated

the petitioner that it had quoted highest amount, i.e.

Rs.2127.27, but its bid was rejected due to "non

submission of required documents". Therefore, opposite

party no.3, who had quoted Rs.1250.00, was selected as he

had complied with all the requirements pursuant to the

advertisement in question.

2.1 As per the advertisement under Annexure-1, the

participants were to attach the following six documents

with Form-M:-

"i. Application fees i.e. Rs. 1000/- in the shape of treasury challan to Head of Account 0853. Non- ferrous Mining and Metallurgical Industries-102- Minral Concession Fees, Rents and Royalties- 0217 receipts under Odisha Miner Minerals Concession Rules- 02021 Collection of Fees, Rents and Royalty.

ii. It is mandatory for all applicants to submit the security deposit in the shape of royalty and additional charge, 5% of MGQ per annum in // 4 //

shape of a demand draft to the Tahahsildar, Tangi, Chowdwar in a closed envelope.

iii. The map and complete description of the leased land.

iv. Affidavit to be filed in regard to non-pendency of any revenue, sairat, sand mines or any other dues.

v. As per Rule 27(4) (iv) of OMMC Rules, 2016, the applicants will submit the MGQ royalty andalso submit the additional charges or file the income tax return of 18 months.

vi. Submit the other description about the scientific knowledge and capability, financial status and description of the instruments which the applicant have."

2.2 As per clause-v of the advertisement, an

applicant, in terms of Rule 27(4)(iv) of the OMMC Rules,

2016, is required to submit bank guaranty for a period of

18 months taking into consideration the MGQ, Royalty and

Additional Charges, etc. or he has to file the previous year

income tax return. The petitioner had not complied with the

said clause, even though it had quoted the highest price.

Therefore, the bid of the petitioner was rejected due to non-

submission of the required documents and Form-F was

issued in favour of opposite party no.3. Hence, this writ

petition.

// 5 //

3. Mr. Yasobant Das, learned Senior Advocate

appearing along with Mr. Satyabrata Mohanty, learned

counsel for the petitioner vehemently contended that since

the petitioner is a company, it had submitted the balance

sheet of the previous year, instead of producing the

previous year's income tax return and, as such, the bid of

the petitioner should not have been rejected on the ground

of non-submission of income tax return of the previous

year. In such view of the matter, rejection of the bid of the

petitioner due to non-furnishing of the documents cannot

be sustained in the eye of law and the order rejecting the

bid of the petitioner is liable to be set aside. The petitioner

having quoted highest price of Rs.2127.27, its bid should

have been knocked down in its favour in the interest of

revenue of the State. It is further contended that in a tender

matter augmentation of revenue of the State being the

prime consideration, if the petitioner had quoted highest

price of Rs.2127.27, in that case the bid should have been

settled in its favour, instead of going for opposite party

no.3. The technicality of non-furnishing of previous year's

income tax return should not have stood in the way of // 6 //

augmentation of revenue of the State. To substantiate his

contention, Mr. Das, learned Senior Advocate has placed

reliance on the judgment of the apex Court in the case of

Ram And Shyam Company v. State of Haryana and

Ors, AIR 1985 SC 1147 : 1985 (Suppl-1) SCR 541 and of

this Court in the case of Dusmant Mallick v. State of

Odisha and others (W.P.(C) No. 12879 of 2020) and batch

decided on 26.08.2020.

4. Mr. P.P. Mohanty, learned Additional

Government Advocate appearing for the State-opposite

parties vehemently contended that the bid submitted by the

petitioner, having not adhered to the conditions stipulated

in the advertisement, was found to be defective one, when it

was scrutinised in presence of the petitioner's

representative, and the same was accordingly rejected, for

which no fault can be found with the opposite party-

authority. It is further contended that the petitioner, being

an assessee, is coming within the ambit of Section 44AB of

the Income Tax Act and, as such, it had to furnish the

previous year's income tax return in compliance of Rule // 7 //

27(4)(iv) of the OMMC Rules, 2016. For non-furnishing of

the required documents, the bid submitted by the petitioner

was not taken into consideration, even though it had

quoted highest price. Thereby, the authority is well justified

in rejecting the bid of the petitioner, as the same had been

filed without providing required documents as per the

advertisement issued.

5. Mr. D.P. Nanda, learned Senior Advocate

appearing along with Mrs. Sarita Moharana, learned

counsel for opposite party no.3 vehemently contended that

since the bid of the petitioner was defective one, the

opposite party-authority is well justified in rejecting the

same. It is further contended that in the bid process there

were 20 applicants and, as such, if any application

submitted by any bidder is not in conformity with the

requirements, the same has to be rejected. One Amiya

Kumar Sahu was also one of the applicants whose bid was

rejected for the selfsame reason. Therefore, on the basis of

available competitive bids, opposite party no.3 having

submitted bid amount of Rs.1250.00, his bid was accepted // 8 //

being in compliance of all the requirements. Thereby, no

illegality or irregularity has been committed by the

authority in settling the source in question in favour of

opposite party no.3. As such, he sought for dismissal of the

writ petition.

6. This Court heard Mr. Yasobant Das, learned

Senior Advocate appearing along with Mr. Satyabrata

Mohanty, learned counsel for the petitioner; Mr. P.P.

Mohanty, learned Additional Government Advocate

appearing for opposite parties no.1 and 2; and Mr. D.P.

Nanda, learned Senior Advocate appearing along with Mrs.

S. Moharana, learned counsel for opposite party no.3 in

hybrid mode and perused the record. Pleadings have been

exchanged between the parties and with the consent of

learned counsel for the parties, the writ petition is being

disposed of finally at the stage of admission.

7. It is of relevance to note that in exercise of

powers conferred by Sub-section (1) of Section 15 of the

Mines and Minerals (Development and Regulation) Act,

1957 and in supersession of the provisions contained in the // 9 //

Odisha Minor Mineral Concession Rules, 2004, except as

respects things done or omitted to be done before such

supersession, the State Government made a rule for

regulating the grant of mineral concessions in respect of

minor minerals and for the purposes connected therewith,

called "Odisha Minor Mineral Concession Rules, 2016".

Chapter-IV of the OMMC Rules, 2016 deals with grant of

quarry leases. Rule-27 of the OMCC Rules, 2016 reads as

under:-

"27. Grant of quarry lease:-- (1) The area of the quarry lease shall be delineated and notification inviting application(s)for grant of quarry lease(s) through auction shall be published in two daily newspapers, at least one of which shall be a State level and other having wide publicity in the area, where the lease is located and such notification shall be published at least fifteen days before the intended date of inviting applications and shall contain the date and time within which applications shall be received.

(2) The notice inviting applications for grant of quarry lease shall be issued by the Competent Authority and shall specify the minimum guaranteed quantity of the minor mineral to be extracted in a year by the applicant and the minimum amount of additional charge payable for the same as determined under sub-rule (14). (3) In case the mining plan or Environment Clearance for the proposed lease has been obtained by the Competent Authority, this fact, along with the cost of obtaining thereof shall be recoverable from the selected bidder which shall also be mentioned in the notice.

(4) Subject to other provisions of these rules for settlement of quarry lease, the intending applicant // 10 //

may apply to the Competent Authority in a sealed cover for grant of quarry lease for such area or areas in Form-M in triplicate accompanied by the following documents and particulars, namely:--

(i) Treasury challan showing deposit of one thousand rupees (non-refundable) towards the application fee;

(ii) An affidavit stating that no mining due payable under the Act and the rules made thereunder, is outstanding against the applicant;

(iii) Proof of payment of earnest money equivalent to five percentum of the minimum amount of additional charges specified in the notice and the amount of royalty, both calculated on the basis of minimum guaranteed quantity for one whole year for the minimum guaranteed quantity of minor mineral to be extracted in one full year; and

(iv) a solvency Certificate or Bank guarantee valid for a period of eighteen months for an amount not less than the amount of additional charge offered and the royalty payable for the minimum guaranteed quantity for one whole year and a list of immovable properties from the Revenue Authority.

(5) Subject to the provisions of these rules, the quarry lease shall be granted in favour of the applicant who has quoted the highest rate of additional charge:

Provided that, if more than one applicant have quoted the highest rate of additional charge, then the applicant shall be selected by draw of lots.

(6) The selected bidder shall be intimated by the Competent Authority within seven days in Form-F about the selection and terms and conditions of the lease.

(7) Within fifteen days of such intimation, the selected bidder shall be required to convey his acceptance of the terms and conditions and to deposit an amount which shall be calculated in // 11 //

such a way that it shall be equivalent to one-fourth of the total amount of royalty and additional charge and the amount of contribution payable to the District Mineral Foundation on the annual minimum guaranteed quantity, taken together, reduced by the amount of earnest money, which, along with the earnest money, shall be held as interest-free security deposit.

(8) The selected bidder shall also deposit the costs of obtaining the mining plan and environmental clearance approvals, in case those have been obtained by the Competent Authority (non- refundable) before executing the lease deed.

(9) In the event of default by the selected bidder, the Competent Authority may issue intimation as specified in sub-rule (6) to the next highest bidder who shall then be required to convey his acceptance and to make the security deposit calculated in the manner mentioned in subrule (7).

(10) If the second highest bidder has quoted unusually low price in comparison to the highest bidder of the same source or other sources in the vicinity, the competent authority may bring it to the notice of the Controlling Authority, who after proper verification and with due justification may cancel the bid and direct for fresh auction.

(11) If the second highest bidder does not convey the acceptance within the time stipulated for such acceptance, or if the Controlling Authority has cancelled the bid under sub-rule (10), fresh notice inviting application for grant of quarry lease shall be issued with the approval of the next higher authority.

(12) Immediately after compliance of the foregoing provisions by the selected bidder, the earnest money of the unsuccessful bidders shall be refunded and the bank guarantees, if any, furnished by them, shall stand discharged.

(13) The selected bidder shall be required to execute quarry lease in Form-N within three weeks from the date of intimation of his selection, if the approval of the mining plan and environment // 12 //

clearance has been obtained before auction, and in other cases, three months from the date of intimation, failing which, the intimation shall stand cancelled and the security deposit shall stand forfeited: 34 Provided that the Controlling Authority may, for genuine and sufficient reasons, extend the said period, if it is satisfied that the delay in execution of lease deed is not due to reasons attributable to the selected bidder.

(14) Security deposit shall be refunded after expiry of the lease period if the lessee has fulfilled all conditions of lease and in case of violation of any of the conditions of lease, the security deposit shall be forfeited in whole or in part by the Competent Authority.

(15) The minimum amount of additional charge to be quoted shall be such as the Competent Authority, in consultation with the Controlling Authority, decide and specify in the notice inviting applications for grant of quarry lease: Provided that the minimum amount of additional charge so fixed should not be less than 5% of the rate of royalty.

(16) The Collector or the Conservator of Forest, as the case may be, shall have power to cancel the bid duly recording the reasons thereof, if he is not satisfied with the publicity, participation of bidders and amount of additional charge quoted.

(17) Where the lessee, who has quoted the highest rate of additional charge, dies after deposit of the amount specified under rule 42 or after execution of lease deed by him, such deposit or deed shall be deemed to have been made or executed by the legal heir or legal representative, if they so like."

8. Pursuant to the advertisement issued under

Annexure-1, including the petitioner, twenty applicants had

participated in the bid process and as per the conditions

stipulated in the advertisement each of the bidders had to // 13 //

furnish the relevant documents within the time specified.

On scrutiny of the bids received in pursuance of the

advertisement under Annexure-1, the bid submitted by the

petitioner was found to be not in compliance with the

provisions contained in Rule 27(4)(iv) of the OMMC Rules,

2016, as it had not furnished the income tax return of the

previous financial year. Admittedly, the petitioner had

furnished the previous year's balance sheet of the company

while submitting its bid, which was not the requirement to

be furnished along with the bid. If for any reason the

petitioner could not be able to produce the document with

regard to the previous year's income tax return, in that case

it could have furnished the bank guarantee having its

validity for a period of 18 months. The petitioner having not

done so, due to non-compliance of the requirement, the bid

of the petitioner was rightly rejected by the opposite party-

authority.

9. The scope and power of the Court to interfere

with a contractual matter is well justified in various

judgments of the apex Court, namely, Tata Cellular v.

// 14 //

Union of India, AIR 1996 SC 11; Master Marine Service

(P) Ltd. v. Metcafe & Hodgkinson (P) Ltd., (2005) 6 SCC

138; Sterling Computers Ltd. v. M & N Publications

Ltd., (1993) 1 SCC 445; M/s. B. S. N. Joshi and Sons Ltd

v. Nair Coal Services Ltd., AIR 2007 SC 437; Reliance

Airport Developers (P) Ltd. v. Airports Authority of

India, (2006) 10 SCC 1.

10. In Raunaq International Ltd. v. I.V.R.

Construction Ltd., (1999) 1 SCC 492, the apex Court had

occasion to consider a case of paramount importance of

government contract and in paragraphs-9, 10, 26 and 27 of

the judgment held as under:-

"9. The award of a contract, whether it by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations which are of paramount importance are commercial considerations, and the same would be: (1) The price at which the other side is willing to do the work;

(2) Whether the goods or services offered are of the requisite specifications;

(3) Whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfill the requirements of the job is also important;

// 15 //

(4) The ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;

(5) Past experience of the tenderer and whether he has successfully completed similar work earlier; (6) Time which will be taken to deliver the goods or services; and often (7) The ability of the tenderer to take follow-up action, rectify defects or to give post- contract services".

10. ........... The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer for poor quality of goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in re-doing the entire work - thus involving larger outlays of public money and delaying the availability of services, facilities or goods......" "............. where rational non-discriminatory norms have been laid down for granting of tenders, a departure from such norms can only be made on valid principles. The award of contract cannot be by stopping the performance of the contract so awarded, there is a major detriment to the public because the construction of two thermal power units is held up on account of the dispute".

11. In view of the facts and law, as discussed above,

it can be safely concluded that since the petitioner had not

adhered to the conditions stipulated in the advertisement,

the opposite party-authorities are well justified in rejecting

its bid. Thereby, this Court is not inclined to entertain this

writ petition, as the same merits no consideration.

12. It is to be noted that the award of contract,

whether by a private party or a public body or the State, is

essentially a commercial transaction. In arriving at a // 16 //

commercial decision, considerations which are of

paramount importance are commercial considerations, and

the same would be the price at which the other side is

willing to do the work. This being the prime consideration,

keeping in view the fact that even though the petitioner had

quoted Rs.2127.27, as because its bid was defective, the

source in question was proposed to be settled with opposite

party no.3 who had quoted only Rs.1250.00 and since there

is a huge difference between the price quoted by the

petitioner vis-à-vis opposite party no.3, this Court is of the

considered opinion that if the source in question is settled

in favour of opposite party no.3, then there will be a huge

loss to the State exchequer. Therefore, before

settling/executing the deed in favour of opposite party no.3,

the opposite party no.2-Tahasildar, Tangi shall do well to

call upon opposite party no.3 to match the highest price

offered by the petitioner in the interest of the State

exchequer and public at large. If opposite party no.3 accepts

the highest price offered by the petitioner, it shall be open to

opposite party no.2 to settle the source in question in

favour of opposite party no.3, otherwise he shall take // 17 //

necessary steps in accordance with law so as to fetch better

price for the source in question.

13. With the above observation/direction, the writ

petition stands disposed of. However, there shall be no

order as to costs.

                                           (DR. B.R. SARANGI)
                                                 JUDGE

M.S. SAHOO, J.    I agree.


                                             (M.S. SAHOO)
                                                 JUDGE



       Orissa High Court, Cuttack
       The 1st March, 2023, Arun/GDS