Patna High Court
M/S Balaji Enterprises vs The State Of Bihar on 2 May, 2024
Author: Purnendu Singh
Bench: Purnendu Singh
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.11678 of 2023
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M/s Balaji Enterprises a Proprietorship Firm having its Registered Office at
Babu Bazar, Ara, Bhojpur through its Signing Authority Sri. Chandan Kumar,
aged about 35 years, Gender- Male, Son of Sri Ashok Kumar, resident of
Village and Post Pareo, P.S. Bihta, District- Patna- 802160.
... ... Petitioner/s
Versus
1. The State of Bihar through the Chief Secretary, Government of Bihar, Old
Secretariat Building, Patna.
2. The Additional Chief Secretary-cum- Commissioner Mines, Department of
Mines and Geology, Government of Bihar, Vikas Bhawan, Bailey Road,
Patna.
3. The District Magistrate, Sheikhpura.
4. The Mineral Development Officer, Sheikhpura.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr. Suraj Samdarshi, Advocate
Mr. Jai Vardhan Narayan, Advocate
For the Mines Department: Mr. Naresh Dixit, Spl. P.P. Mines
For the State : Mr. Gyan Prakash Ojha ( GA- 7 )
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CORAM: HONOURABLE MR. JUSTICE PURNENDU SINGH
C.A.V. JUDGMENT
Date : 02-05-2024
Heard Mr. Suraj Samdarshi alongside Jai Vardhan
Narayan, learned counsel appearing on behalf of the petitioner,
Mr. Gyan Prakash Ojha, learned GA-7 appearing on behalf of
the State and Mr. Naresh Dixit, learned Spl. P.P appearing on
behalf of Mines Department.
2. The petitioner has prayed for following relief(s) in
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
2/40
paragraph no. 1 of the writ petition:
"I. Issuance of directions, orders or writs in the
nature of certirorari setting aside the order dated 14.07.2023
passed by the Mines Commissioner, Department of Mines
and Geology, Bihar in Appeal No. 01/2023 whereby and
whereunder the Appeal filed by the petitioner agianst the
order dated 23.01.2023 passed by the Collector, Sheikhpura
was rejected and the order passed by the Collecotr,
Sheikhpura was upheld cancelling the princpal approval vis
a vis Letter of Intent (LOI) for stone Block No. 27 situated
at Mauza Hazaratpur Mandro Chandi, Thana Sheikhpura,
District-Sheikhpura in an utmost arbitrary manner against
the spirit of Rule 28 of the Bihar Minerals (Concession,
Prevention of Illegal Mining, Transportation & Sotrage)
Rules, 2019 without appreciating the fact that the petitioner
had taken all necessary steps for grant of Environmental
Clearance and is not responsible for delay in execution of
the formal lease and a security deposit in the tune of Rs.
2,90,00,000/- (Two Crore Ninety Lakh) has also been
ordered to be forfeited and the Collector, Sheikhpura has
further been directed to take necessary steps for re-auction
of the Stone Block No. 27 situated at Mauza Hazaratpur
Mandro Chandi, Thana Sheikhpura, District-Sheikhpura as
per the present applicable rules and regulations.
II. Issuance of directions, ordes or writs in the
nature of mandamus directing the respondents not to annul
the settlement of Block Stone of the petitioner firm by
cancelling the Principal Approval vis a vis Letter of Intent
(LOI) for Stone Block No. 27 situated at Mauza Hazaratpur
Mandro Chandi, Thana Sheikhpura, District-Sheikhpura and
allow the petitioner to submit the environmental clearance,
payment of instalments and other payments and all other
necessary documents so that Form B be executed in between
the Petitioner and the Respondent in accordance with law.
III. Any other relief or reliefs for which the
petitioner may be deemed entitled to."
BRIEF FACTS
3. The petitioner is a proprietorship firm registered
under the Ministry of Micro, Small and Medium Enterprises
having (Registration No. UDYAM-BR-08-0002321) and is
running in the name of M/s Balaji Enterprises,
4. Pursuant to a Notice Inviting Tender (NIT)
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
3/40
issued under the seal and sign of the District Magistrate,
Sheikhpura for settlement of 9 Stone Blocks, the petitioner had
participated in the auction proceeding conducted on 18.03.2017,
in which, he was declared the highest bidder for Stone Block
No. 27, situated at Mauza Hajratpur, Mandro Chandi
appertaining to Khata no. 296 and Plot No. 2068 (P) areas 12.50
acres at District Sheikhpura, at a highest bidding amount of 29
crores.
5. A Letter of Intent (LOI) vide Letter No. 783
dated 21.09.2017, was issued in favour of the petitioner by the
District Magistrate, Sheikhpura. As per the terms and conditions
of the Letter of Intent (LOI), the Stone Block was settled in
favour of petitioner for 5 years from the date of execution of
lease deed. Further, the petitioner was required to make payment
of 10% of the bid amount as security deposit, submission of
Form B within 120 days from the date of LOI, mining plan,
environmental clearance and other payments as per the LOI
(Annexure -P2). However, Environmental Clearance could not
be granted due to non submission of DSR.
6. It is the specific case of the petitioner that the
District Magistrate, Sheikhpura has passed order contained in
Memo No. 73 dated 23.01.2023, annulling the "In Principal
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
4/40
Approval" granted in favour of the petitioner for Stone Block
No. 27 situated at Mauza Hajratpur, Mandro Chandi
appertaining to Khata no. 296 Plot No. 2068 (P) measuring
areas 12.50 acres at District Sheikhpura and the earnest money
in the tune of Rs.2,90,00,000/- was directed to be forfeited
(Annexure- P23). It was rejected on the ground that there has
been delay of five years and three months on the part of the
petitioner.
7. Aggrieved by the order of the District
Magistrate, Sheikhpura dated 23.01.2023, the petitioner
preferred statutory appeal before the Commissioner of Mines,
Bihar and vide order dated 14.07.2023 passed in Appeal No.
01/2022, the Commissioner Mines has rejected the appeal filed
and upheld the order of the DM, Sheikhpura. Further, the
Commissioner issued direction to the DM, Sheikhpura for
arranging a re-auction of the Stone Block. (Annexure- P24)
SUBMISSIONS
8. Learned counsel for the petitioner submitted that
LOI was issued on 21.09.2017. The petitioner, vide letter dated
10.08.2018
(Annexure- P4) had requested the Mineral
Development Officer, Sheikhpura for inspection of the disputed
Stone Block No. 27, situated at Mauza Hajratpur, Mandro
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
Chandi appertaining to Khata no. 296 and Plot No. 2068 (P)
areas 12.50 acres at District Sheikhpura by the Circle Officer,
Ariari and for a report thereto on six issues that were required to
be answered and inquired into.
i. Whether the applied area is recorded as pahad
and gair majarua in the column of type and Khata respectively
in the revenue records of the Government?
ii. Whether the applied area comes within the
schedule area or not?
iii. Whether the applied area is a forest land or not?
iv. Whether any river, educational institute, hospital
exists within 500 meters of the applied area?
v. Whether any archaeological structure of national
importance exists within 500 meters of the applied area?
vi. Acreage and type of applied area?
9. Reminder applications were also sent to the
department by the petitioner vide letter dated 22.09.2018 and
17.07.2019. (Annexure- P4)
10. It has been further informed that vide letter
dated 11.08.2018, the Divisional Forest Officer, Jamui was
requested for providing information regarding National Park,
Forest Land and Wild Life Sanctuary, required for grant of the
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
Environmental Clearance, and in response vide Letter No. 1285
dated 14.08.2018, the Divisional Forest Officer, Jamui, had
informed that the district of Sheikhpura had no wild life and the
nearest Wild Life Sanctuary is located at Bhim Bandh situated
under the jurisdiction of Munger Forest Division, Munger and
relevant information may be sought from the Munger Forest
Division (Annexure- P6). The Mining Plan was approved in
favour of the petitioner vide Letter No. 3695 dated 13.09.2018,
by the Department of Mines and Geology, Government of Bihar
(Annexure- P3 to the writ petition), after a lapse of 12 months
since the date of LOI. The petitioner, vide letter dated
26.12.2019 and 27.12.2019, addressed to Mineral Development
Officer, District Mining Officer, Sheikhpura had made a request
for grant of Environmental Clearance Certificate viz-a-viz in
regard to providing clearance of 500 meters radius and
Inspection Certificate from the Circle Officer, Ariari (Annexure-
P7 to the writ petition).
11. It has further been informed that the petitioner
had submitted an application dated 28.01.2020, for approval of
the Terms of Reference (TOR) before the Member Secretary,
State Environmental Impact Assessment Authority (SEIAA),
Bihar, for the proposed mining block No.27, along with From I,
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
Principle Feasibility Report (POR), proposed TOR for the Stone
Mining under B1 Category and other necessary documents in
the prescribed format. The petitioner vide Letter dated
29.01.2020 informed the Mineral Development Officer, District
Mining Officer, Sheikhpura about the submission of documents
for obtaining environmental clearance to the SEIAA, Bihar.
(Annexure - P9) Thereafter, the petitioner once again made
request to the Mineral Development Officer, District Mining
Officer, Sheikhpura for making available the 500 meters radius
letter, vide letter dated 31.01.2020 and in the same letter, the
petitioner also acknowledged that Circle Officer (CO) letter vide
Patrank- 82 dated 24.01.2020 (Annexure- P10 to the writ
petition) was received by him.
12. The petitioner again reminded vide a letter
dated 28.02.2020, to the Member Secretary, SEIAA, Bihar for
revision of TOR and its rectification in view of the error in the
approved mining plan. The petitioner also requested for
granting him permission to start Baseline Data Monitoring from
March to May 2020(Annexure- P11 to the writ petition). In
respect of obtaining the Cluster Certificate (500 Meters radius
certificate) from the Mineral Development Officer, District
Mining Officer, Sheikhpura, the petitioner had wrote another
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
letter dated 07.03.2020 (Annexure- P12 to the writ petition).
13. Learned counsel further informed that the
petitioner had requested the Member Secretary, Bihar State
Pollution Control Board, for convening public hearing and had
deposited the requisite amount in the form of demand draft on
account of fee for public hearing. The public hearing was
scheduled on 24.04.2021, but was deferred to 17.12.2021, due
to COVID 19 pandemic. Thereafter, the public hearing was held
on 17.12.2021 and several suggestions were given. The
petitioner, vide letter dated 30.06.2022 had informed the
Mineral Development Officer, District Mining Officer,
Sheikhpura about the public hearing and also mentioned therein
that District Survey Report (DSR) was required for obtaining
environmental clearance and the same had not been issued to
him. Learned counsel submitted that instead, a Show Cause was
issued by Mineral Development Officer, District Mining
Officer, Sheikhpura vide Letter No. 733 dated 06.07.2022,
demanding explanation from the petitioner for the delay in
obtaining the environmental clearance and warned him of
annulment of the LOI and forfeiture of the security deposit as a
result of failure to do the needful (Annexure- P17). The reply to
this show cause was filed by the petitioner on 01.08.2022
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
(Annexure - P18). Subsequently, petitioner received another
show cause issued by Mineral Development Officer, Sheikhpura
bearing Letter No. 954 dated 11.08.2022, directing the petitioner
to submit his reply within one week, giving reasons, as to why,
the LOI should not be cancelled and the security deposit be
forfeited in lieu of failure to submit the environmental clearance
installment amount and other amounts as well as documents and
Form B (Annexure- P19). The petitioner, in response, had filed
his reply to the show cause on 22.08.2022 (Annexure- P20).
Thereafter, The District Magistrate vide Letter No. 1068 dated
01.09.2022, again directed the petitioner to submit his
explanation, as to why, the "In Principal Approval" granted in
favour of the petitioner be cancelled and the earnest money be
forfeited for not complying with the directions of the
Department as far as submission of the environmental clearance
was concerned (Annexure - P21).
14. Learned counsel for the petitioner submitted
that the DSR of Sheikhpura Stone Mineral prepared by the
Institute of Environment & Eco-Development, Patna which had
been submitted to the Under Secretary, Mines & Geology
Department, Government of Bihar contains the details of list of
LOI Holders in the district along with its validity. The details of
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
petitioner's LOI has been listed at Sr. No. 17 at internal Page
No. 17, but the details about the Location of the Mining Lease
(i.e Latitude & Longitude) has not been mentioned and as such
the DSR for the petitioner's Stone Block No.17 remained
incomplete as would appear from Annexure- P25 to the writ
petition being published without providing the geo-coordinates
of the proposed mining site. Due to the said discrepancy, the
environmental clearance could not be obtained by petitioner
from SEIAA within time and as a result, the SEIAA could not
issued environmental clearance without specifying the geo-
coordinates. Learned counsel emphatically submitted that no
reason has been assigned in the impugned order as to why, the
respondent has not given any reason why details of geo-
coordinates was left blank in the DSR and submitted that on this
sole ground the SEIAA has not given the Environmental
Clearance to the petitioner.
Respondent's Arguments
15. Per Contra, learned counsel for the respondent
submitted that as per the Mining Plan issued vide Letter no.
3695 dated 13.09.2018, by the Department, under Clause 04 the
petitioner was required to furnish 'Environmental Clearance', as
well as, other documents and requisite deposits for execution of
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
mining lease. Since the petitioner failed to do so even after lapse
of about 05 years and 03 months from the date of in principal
approval in petitioner's favour, the annulment of 'Principal
Approval' and forfeiture of security deposit is therefore
justified.
16. He further submitted that the petitioner took
more than one year from the date of approval of mining plan,
i.e. 13.09.2018, after he had submitted his application before the
Mining Development officer, Sheikhpura to get report from the
Circle Officer concerned for the mining site for a circular area
of 500 meters inspite of the fact that and the Report was made
available to the petitioner on 25.01.2019 within 28 days of his
submission of application. Petitioner presented his application
before the State Environment Impact Assessment Committee
(SEIAA) on 28.01.2020 and before the Bihar State Pollution
Control Board on 29.01.202, and it shows the deliberate delay
and latches on petitioner's part. The explanation provided by the
petitioner in reply to the show cause issued by the Collector,
Sheikhpura vide Letter No. 1068 dated 01.09.2022, was found
to be unsatisfactory. In support, learned counsel submitted that
as per the provision of Rule 25(1) of the Bihar Minor Mineral
Rules, 1972, the mining lease is required to be executed within
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
120 days from the date of approval and according to Rule 28 of
the Bihar Minor Minerals (Concession, Illegal Mining, and
Storage) Rules, 2019 it can be extended for further period of
120 days to 180 days. As per Clause 06 of the tender
Documents, the responsibility to obtain environmental clearance
lies upon the settlee/auctioneer. Learned counsel, on these
grounds, submitted that petitioner has failed to abide by the
terms and conditions of LOI and "In Principle Sanction Order".
Learned Special P.P. Mines although don't deny that the DSR
relating to the Block No. 27 don't contain Geo-Coordinates,
which is important for issuance of Environmental Clearance.
ANALYSIS
17. Heard the parties.
18. Nowadays, the ecological imbalances and the
consequent environmental damage has become alarming due to
reckless mining operations.
19. In M.C. Mehta Vs. Union of India & Ors.,
(2006) 11 SCC 582, the Apex Court directed the Monitoring
Committee to inspect the mining activity being carried on in the
area in question and report the impact, if any, of continuing
mining activity on the environment and the safeguards, if any,
adopted to minimize the adverse effects on the environment and
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
any other suggestions relevant to the issue of impact of mining
activity on degradation of the environment.
20. In T.N. Godavarman Thirumulpad (104) Vs.
Union of India & Ors., (2008) 2 SCC 222, the Apex Court
held that adherence to the principle of sustainable development
is now a constitutional requirement. The courts are required to
balance development needs with the protection of the
environment and ecology. It is the duty of the State under the
Constitution to devise and implement a coherent and
coordinated programme to meet its obligation of sustainable
development based on inter-generational equity.
21. In my opinion, imposing reasonable restriction
in the interest of general public and reasonable restriction on
exercise of rights enshrined under Article 19(1)(g) is
unassailable in view of Article 19(6) of the Constitution of
India. Any development has to be sustainable. The rights of the
petitioner to carry on mining operations are subjected to the
directives under Article 48A and fundamental duties enshrined
under Article 51A(f) and 51A(g) which are also supreme and
cannot be violated under the guise of rights under Article 19(1)
(g).
22. It is admitted that the petitioner had
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
participated in bidding process and he was declared highest
bidder on 18.03.2017, and the LOI was issued bearing Letter
No. 783 dated 21.09.2017. The Mining Plan was approved vide
Letter No.3695 dated 13.09.2018, by the Under Secretary,
Department of Mines and Geology, Government of Bihar and as
per Clause 04, the petitioner was required to furnish
environmental clearance as well as other documents and
deposits for execution of mining lease.
23. The petitioner had filed his detailed
representation on 09.09.2022 before the District Magistrate,
Sheikhpura, who had found the representation to be
unsatisfactory and passed order contained in Memo No. 73
dated 23.01.2023 (Annexure-P23 to the writ petition) directing
for forfeiture of the security deposit and to take steps for re-
auction, and the same was affirmed by the Commissioner of
Mines, Bihar vide order dated 14.07.2023 passed in Appeal No.
01/2022, by which earnest money to the tune of
Rs.2,90,00,000/- was forfeited annulling the settlement granted
in favour of petitioner on ground of delay and latches that even
after lapse of 05 years and 03 months, the petitioner failed to
produce the Environmental Clearance and the installment
amount and other amount, as well as, requisite documents for
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
execution of Form-B, which is in violation of Rule 28 of the
2019 Rules.
24. There is no discussion in the order about non
mentioning of geo-coordinates. The Commissioner of Mines,
Bihar in his order dated 14.07.2023, has observed in paragraph
no. 11 that in light of the Order passed by the Hon'ble Supreme
Court in Civil Appeal No. 3661-3662/2020 dated 10.112021, the
DSR is to be prepared by the Sub-Divisional Level Committee,
which will be reviewed by the State Expert Assessment
Committee (SEAC) and post approval action is to be taken by
the State Environment Impact Assessment Authority (SEIAA).
This procedure would have to followed to re-prepare the DSR as
desired by the appellant, which may take about 6 to 12 months
and even if the appellant is given more time, he will not be able
to complete the actual mining work as he will be able to start
only after about a year. In paragraph no. 12, it has been stated
that since the time the public auction was conducted i.e on
18.03.2017, six and a half years have lapsed. After such long
time there have been changes in the demand and supply of stone
minerals and related market parameters. Hence, in such a
situation it would not be appropriate from the revenue point of
view to give more time to the appellant on the basis of the
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
highest bidder after delay of six and half years. The
Commissioner has dealt with the procedure for preparation of
District Survey Report (DSR), but he has not appreciated the
fact that it is the Department, which has defaulted in providing
details of geo-coordinates in the DSR, which is relevant for
issuance of Environmental Clearance. In the counter affidavit,
the ground taken for denying the settlement of stone mines is
that in accordance with Clause 06 of the tender documents, the
responsibility to obtain environmental clearance is of the
petitioner.
25. It has not been denied in the counter affidavit
that the petitioner had already submitted the requisite documents
having been approved by the competent authority in regard to
mining plan. The public hearing was also undertaken by the
competent authority and the suggestions were accepted and
incorporated for the working improvement of the site. It is
admitted that the Divisional Forest Officer, Jamui vide Letter
No. 1285 dated 14.08.2018 (Annexure P5 to the writ petition),
had informed that the district of Sheikhpura had no wild life and
the nearest Wild Life Sanctuary is located at Bhim Bandh
situated under the jurisdiction of Munger Forest Division,
Munger and relevant information was to be given by the
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
Munger Forest Division (Annexure- P6). The petitioner had
made repeated request to Mineral Development Officer,
Sheikphpura for grant of Cluster Certificate of 500 meters
radius (DMO Letter) and Inspection Certificate from the Circle
Officer, Ariari (CO Letter) which is evident from his letters
dated 10.08.2018, 22.09.2018, 17.07.2019, 26.12.2019,
27.12.2019, 29.01.2020, 31.01.2020 and 07.03.2020.
26. The main objective of the preparation of DSR
is to identify areas of aggradations or deposition where mining
can be allowed; and identification of areas of erosion and
proximity to infrastructural structures and installations where
mining should be prohibited and calculation of annual rate of
replenishment and allowing time for replenishment after mining
in that area. As per Clause 06 of the Tender Documents, the
responsibility to obtain Environmental Clearance lies upon the
settlee/auctioneer. The earnest money and security deposit has
been deposited by the petitioner. DSR is necessary for issuance
of Environmental Clearance. The petitioner has alleged that the
DSR of Sheikhpura Stone Mineral prepared by the Institute of
Environment & Eco-Development, Patna which had been
submitted to the Under Secretary, Mines & Geology
Department, Government of Bihar does not contain the details
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
about the Location of the Mining Lease (i.e. Latitude &
Longitude) and as such the DSR for the petitioner's Stone Block
No. 27, situated at Mauza Hajratpur, Mandro, Chandi is
incomplete (Annexure- P25). The petitioner alleges that due to
failure on part of the authorities concerned i.e. Department of
Mines, in providing the geo-coordinates of the proposed mining
site, the environmental clearance could not be obtained by
petitioner from SEIAA in the required time, as SEIAA could not
have issued environmental clearance without specifying the
geo-coordinates.
IMPORTANCE OF GEO-CORDINATES IN DSR
FOR ISSUANCE OF ENVIRONMENTAL CLEARANCE.
27. Geo-coordinates play a crucial role in obtaining
environmental clearance for mining projects due to several
reasons. Geo-coordinates provide precise location data, aiding
in the identification of potential mining sites. This helps in
assessing the environmental impact of the proposed mining
activity accurately. Geo-coordinates help in conducting
comprehensive Environmental Impact Assessments (EIAs) by
providing accurate spatial information about the mining area
and its surrounding environment. This includes identifying
sensitive ecosystems, water bodies, habitats of endangered
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
species, and other environmental features that could be affected
by mining activities. Geo-coordinates help establish baseline
data about the environmental conditions of the proposed mining
site before any operations begin. This data is essential for
monitoring and assessing changes in environmental parameters
over time. It also facilitates detailed mapping and planning of
mining operations, allowing for the precise delineation of
mining boundaries, extraction zones, waste disposal areas, and
buffer zones. This aids in minimizing environmental
disturbances and optimizing resource utilization. Accurate geo-
coordinates demonstrate compliance with regulatory
requirements and help authorities monitor and enforce
environmental regulations effectively. Geo-coordinates enable
stakeholders, including local communities and environmental
organizations, to visualize the exact location and extent of
proposed mining activities. This promotes transparency and
facilitates meaningful public consultation during the
environmental clearance process. Geo-coordinates are essential
for designing effective mitigation measures and monitoring
plans to minimize the environmental impact of mining
activities. By precisely identifying sensitive areas and potential
environmental risks, proactive measures can be implemented to
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
mitigate adverse effects on the environment.
28. Overall, geo-coordinates play a vital role in
the environmental clearance process for mining projects by
providing accurate spatial information that is essential for
assessing environmental impacts, planning operations, ensuring
regulatory compliance, and promoting sustainable mining
practices. In absence of the same, it becomes difficult to
determine the suitability of a specific area for the purpose of
mining.
29. The Hon'ble Supreme Court in the State of
Bihar Vs. Pawan Kumar & Ors. (Civil Appeal No. 3661-3662
of 2020) decided on 10th November, 2021 taking note of
observation and in the judgment of at paragraph 10 in Special
Leave Petition (C) No.19628-19629 of 2009, in the matter of
Deepak Kumar etc. Vs. State of Haryana and Others reported
in (2012) 4 SCC 629 has held that prior to any auction process it
is mandatory to have a valid DSR.
30. The observation made by the Hon'ble
Supreme Court of India in State of Bihar and Ors vs. Pawan
Kumar and Ors etc (Civil Appeal No. 3661-3662 of 2020)
decided on 10th November, 2021 considered the essentiality
and prerequisite of DSR and held as follows:
"8. It cannot be in dispute that though the
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
developmental activities are not stalled, the
environmental issues are also required to be addressed. A
balanced approach of sustainable development ensuring
environmental safeguards, needs to be resorted to. At the
same time, it also cannot be ignored that when legal
mining is banned, it gives rise to mushroom growth of
illegal mining, resulting into clashes between sand
mafias, criminalisation and at times, loss of human lives.
It also cannot be disputed that sand is required for
construction of public infrastructural projects as well as
public and private construction activities. A total ban on
legal mining, apart from giving rise to illegal mining,
also causes huge loss to the public exchequer.
9. Taking into consideration these
aspects of the matter, we propose to issue certain interim
directions.
10. The Tribunal, in Satendra Pandey
[Satendra Pandey v. Ministry of Environment, Forest &
Climate Change, 2018 SCC OnLine NGT 2388] , has
found that the Notification dated 15-1-2016, which
provided environmental clearance to be given by the
District Environment Impact Assessment Authority
(hereinafter referred to as "the DEIAA") was not in
consonance with the judgment of this Court in Deepak
Kumar v. State of Haryana [Deepak Kumar v. State of
Haryana, (2012) 4 SCC 629] . The Tribunal therefore in
Satendra Pandey [Satendra Pandey v. Ministry of
Environment, Forest & Climate Change, 2018 SCC
OnLine NGT 2388] , had directed Ministry of
Environment, Forest and Climate Change (hereinafter
referred to as "MoEF and CC") to take steps to revise
the procedure laid down in the Notification dated 15-1-
2016. It is to be noted that MoEF and CC, in accordance
with the directions of the Tribunal, had issued
Enforcement and Monitoring Guidelines for Sand Mining
(hereinafter to referred to as "the 2020 Guidelines") in
the month of January 2020. (Emphasis Supplied)
11. Chapter 4 of the 2020 Guidelines
deals with identification of possible sand mining sources
and preparation of DSR. It will be relevant to refer to
Clauses 4.1.1(a), (o) and (p) of the 2020 Guidelines:
"4.1. Identification of possible sand
mining sources and preparation of District Survey Report
(DSR)
4.1.1. Preparation of District Survey
Report.
(a) District Survey Report for sand
mining shall be prepared before the auction/e-
auction/grant of the mining lease/Letter of Intent ("LoI")
by Mining Department or department dealing the mining
activity in respective states.
(o) Potential site for mining having its
impact on the forest, protected area, habitation, bridges,
etc. shall be avoided. For this, a Sub-Divisional
Committee may be formed which after the site visit shall
decide its suitability for mining. The list of mining lease
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
after the recommendation of the Committee needs to be
defined in the following format given in as Annexure II.
The Sub-Divisional Committee after the site visit shall
make a recommendation on the site for its suitability of
mining and also records the reason for selecting the
mining lease in the Patta land. The details regarding
cluster and contiguous cluster needs to be provided as in
Annexure III. The details of the transportation need to be
provided as in Annexure IV.
(p) Public consultation--The
comments of the various stakeholders may be sought on
the list of mining lease to be auctioned. The State
Government shall give an advertisement in the local and
national newspaper for seeking comments of the general
public on the list of mining lease included in the DSR.
The DSR should be placed in the public domain for at
least one month from the date of publication of the
advertisement for obtaining comments of the general
public. The comments so received shall be placed before
the Sub-Divisional Committee for active consideration.
The final list of sand mining areas [leases to be granted
on riverbed & patta land/khatedari land, de-siltation
location (ponds/lakes/dams), M-Sand Plants (alternate
source of sand)] after the public hearing needs to be
defined in the final DSR in the format as per Annexure V.
The details regarding cluster and contiguous cluster
needs to be provided in Annexure VI. The details of the
transportation need to be provided in Annexure VII."
12. It could thus be seen that in
accordance with the 2020 Guidelines, the DSR is
required to be prepared before the auction/e-
auction/grant of mining lease by Mining Department or
Department dealing with mining activity in the respective
States. It is further provided that the potential site for
mining having its impact on the forest, protected area,
habitation and bridges should be avoided. For this, a
Sub-Divisional Committee is required to be formed
which, after the site visit, is required to decide regarding
the suitability of the sites for mining. The Sub-Divisional
Committee is further required to record its reasons for
selecting the mining lease in the patta land. Various
details are required to be given in the annexures
appended to the said policy.
13. It is further to be noted that
Appendix X of the Notification dated 15-1-2016, issued
by MoEF and CC also provides for composition of the
Sub-Divisional Committee:
"A Sub-Divisional Committee
comprising of Sub-Divisional Magistrate, Officers from
Irrigation Department, State Pollution Control Board or
Committee, Forest Department, Geology or Mining
Officer shall visit each site for which environmental
clearance has been applied for and make
recommendation on suitability of site for mining or
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
prohibition thereof."
14. It is to be noted that with the
advent of modern technology, various technological
gadgets like drones and satellite imaging, etc. can be
used for identification of the potential sites and
preparation of the DSR and also to check misuse and
unauthorised mining.
15. We further find that when the 2020
Guidelines as well as the notification issued by MoEF
and CC of 2016 itself provide for constitution of Sub-
Divisional Committees comprising of the officers of the
State Government from various Departments for
identification of the potential sites for mining, there
would be no necessity of the DSRs being prepared
through private consultants as directed by the Tribunal in
the impugned order [Pawan Kumar v. State of Bihar,
2020 SCC OnLine NGT 2848] . The Sub-Divisional
Committee consists of various officers from Revenue
Department, Irrigation Department, State Pollution
Control Board, Forest Department and Geology and
Mining Department of the State Government. They are
better equipped to visit the sites and prepare the draft
DSR for the district concerned. Apart from that,
preparation of DSR through private consultants would
also unnecessarily burden the public exchequer. We are
therefore of the view that the direction in that regard
issued by the Tribunal requires to be modified. We are
further of the considered view that until the DSRs are
finalised and granted approval by SEAC and SEIAA, it is
appropriate that certain necessary arrangements are
permitted so that the State can continue with legal mining
activities. This apart from preventing illegal mining
activities, would also ensure that the public exchequer is
not deprived of its share in legalised mining.
16. We therefore find it appropriate to
substitute the directions issued by the Tribunal vide
judgment and order dated 14-10-2020 [Pawan Kumar v.
State of Bihar, 2020 SCC OnLine NGT 2848] , with the
following directions:
16.1. The exercise of preparation of
DSR for the purpose of mining in the State of Bihar in all
the districts shall be undertaken afresh. The draft DSRs
shall be prepared by the Sub-Divisional Committees
consisting of the Sub-Divisional Magistrate, Officers
from Irrigation Department, State Pollution Control
Board or Committee, Forest Department, Geological or
Mining Officer. The same shall be prepared by
undertaking site visits and also by using modern
technology. The said draft DSRs shall be prepared within
a period of 6 weeks from the date of this order. After the
draft DSRs are prepared, the District Magistrate of the
district concerned shall forward the same for
examination and evaluation by SEAC. The same shall be
examined by SEAC within a period of 6 weeks and its
report shall be forwarded to SEIAA within the aforesaid
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
period of 6 weeks from the receipt of it. SEIAA will
thereafter consider the grant of approval to such DSRs
within a period of 6 weeks from the receipt thereon.
16.2. Needless to state that while
preparing DSRs and the appraisal thereof by SEAC and
SEIAA, it should be ensured that a strict adherence to the
procedure and parameters laid down in the policy of
January 2020 should be followed. (Emphasis Supplied)
16.3. Until further orders, we permit
the State Government to carry on mining activities
through Bihar State Mining Corporation for which it may
employ the services of the contractors. However, while
doing so, the State Government shall ensure that all
environmental concerns are taken care of and no damage
is caused to the environment."
31. In accordance with the guidelines, the DSR is
required to be prepared before the auction/e-auction/grant of
mining lease by Mining Department or Department dealing with
mining activity. It provides the potential site for mining having
its impact on the forest, protected area, habitation and bridges
should be avoided. For this, a Sub-Divisional Committee is
required to be formed which, after the site visit, is required to
decide regarding the suitability of the sites for mining. A Sub-
Divisional Committee comprising of Sub-Divisional Magistrate,
Officers from Irrigation department, State Pollution Control
Board or Committee, Forest department, Geology or mining
officer shall visit each site for which environmental clearance
has to be applied for and make recommendation on suitability of
site for mining or prohibition thereof.
32. The petitioner had applied for issuance of
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
Environmental Clearance Certificate after having submitted
required clearances but till date the matter has been kept
pending by the department due to want of geo-coordinate details
in DSR. The details of Geo-coordinate has been brought on
record by way of Annexure-25 to the writ petition.
33. One cannot lose sight of the fact that despite
there being delay and latches on part of the petitioner, the
respondents too erred in not issuing the geo coordinates of the
concerned Stone Block in the DSR, which also added to the
duration of delay in obtaining environmental clearance.
34. Now to decide whether order dated
23.01.2023 passed by the District Magistrate, Sheikhpura and
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
order dated 14.07.2023 passed by the Mines Commissioner, are
sustainable. I must reiterate that it is well settled principle of law
that earnest money is part of purchase price when the
transaction goes forward, it is forfeited when the transaction
falls through, "by reason of all a failure of the vendee".
35. The Bihar Minerals (Concession, Prevention
of Illegal Mining, Transportation & Storage) Rules, 2019
provides for forfeiture of security deposit in the event of failure
on the part of successful bidder. The relevant part of the
aforesaid Rule is produced hereinafter:
"22. .... (c) Amount equivalent to 10[ten
percent] of auction amount as security which
shall be adjusted with the last installment of
auction amount if the mining leaseholder is not
otherwise defaulter in payment. In case of
unsuccessful bidder the security deposit shall be
refunded by the Collector.
(6) Failure on the part of the successful bidder.-
In case the successful bidder fails to deposit the
required security deposit along with other
payable taxes within the prescribed time limit as
referred to in the prevailing notification of the
State Government in this regard, his security
deposit shall be forfeited and a fresh settlement
process through public auction shall be
initiated."
36. Rule 28 of the Bihar Mines Minerals
(Concession Illegal Mining and Storage) Rules, 2019 provides
that lease deed can be executed within 180 days from the date of
approval of settlement auction
37. In the present case, whether due to not
furnishing of the Environmental Clearance "in principle
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
sanction order" can be cancelled and Security Deposit can be
forfeited, which has already been issued in favour of the
petitioner after the petitioner has fulfilled procedure prescribed
and has furnished the documents required, whether judicial
review of the action taken by the respondents is permissible.
38. It is well settled that a writ is not remedy for
enforcing contractual obligation. Equally, the existence of
alternative remedy does not affect the jurisdiction of Court to
issue writ, but ordinarily it would be a good ground for refusing
to exercise jurisdiction under Article 226 of the Constitution of
India. In the case at hand, the extra-ordinary jurisdiction is being
invoked by this Court on the ground that order passed by the
Mines Commissioner, Bihar and District magistrate, Sheikhpura
are arbitrary as they have not dealt with the issue of non-
providence of the geo-coordinates in the DSR, and are silent on
the issue of query by the SEIAA, although the same has been
referred in the order of the learned Commissioner, which is part
of the writ application at Annexure- P24, wherein the Mines
Commissioner, Bihar has recorded that SEIAA has raised
objections with regard to pre-feasibility report, environmental
impact assessment and geo-coordinates.
39. The Apex Court in the case of South Eastern
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
Coalfields Ltd. v. S. Kumar's Associates AKM (JV), (2021) 9
SCC 166, has observed as follows:-
"22. We would like to state the issue whether a
concluded contract had been arrived at inter se
the parties is in turn dependent on the terms and
conditions of the NIT, the LoI and the conduct of
the parties. The judicial views before us leave
little doubt over the proposition that an LoI
merely indicates a party's intention to enter into a
contract with the other party in future. [Dresser
Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1
SCC 751; Rajasthan Coop. Dairy Federation
Ltd. v. Maha Laxmi Mingrate Mktg. Service (P)
Ltd., (1996) 10 SCC 405] No binding
relationship between the parties at this stage
emerges and the totality of the circumstances
have to be considered in each case. It is no doubt
possible to construe a letter of intent as a binding
contract if such an intention is evident from its
terms. But then the intention to do so must be
clear and unambiguous as it takes a deviation
from how normally a letter of intent has to be
understood. This Court did consider in Dresser
Rand S.A. case [Dresser Rand S.A. v. Bindal Agro
Chem Ltd., (2006) 1 SCC 751] that there are
cases where a detailed contract is drawn up later
on account of anxiety to start work on an urgent
basis. In that case it was clearly stated that the
contract will come into force upon receipt of
letter by the supplier, and yet on an holistic
analysis--it was held that the LoI could not be
interpreted as a work order.
23. Similarly if we construe the documents as
discussed in the judgment of this Court in
Jawahar Lal Burman case [Jawahar Lal Burman
v. Union of India, (1962) 3 SCR 769 : AIR 1962
SC 378] it is unequivocally mentioned that
"contract is concluded by this acceptance and
formal acceptance of tender will follow
immediately on receipt of treasury receipt". Thus,
once again, it has been stipulated as to at what
time a contract would stand concluded even
though it was later subject to deposit of the
security amount. It was in these circumstances
that the requirement of security deposit was
treated not as a condition precedent but as a
condition subsequent. We have to also appreciate
the nature of contract which was for immediate
requirement of the full quantity of coconut oil to
be supplied within 21 days. It was also explicitly
mentioned in the LoI itself that any failure to
deposit the stipulated amount would be treated as
a breach of contact. This is not the case here,
where the consequence was simply forfeiture of
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
the bid security amount, and cancellation of the
"award" and not the "contract".
24. If we compare the aforesaid scenario in the
present case, the period for execution of the
contract was one year. The respondent worked at
the site for a little over the month, facing certain
difficulties--it is immaterial whether the same
was of the own making of the respondent or
attributable to the appellants. No amount was
paid for the work done. The respondent failed to
comply with their obligations under the LoI. It is
not merely a case of the non-furnishing of
performance security deposit but even the
integrity pact was never signed, nor work order
issued on account of failure to execute the
contract. We are, thus, of the view that none of
the judgments cited by the learned counsel for the
appellants would come to their aid in the
contractual situation of the present case. The
judgments referred by the learned counsel for the
appellants, Jawahar Lal Burman case [Jawahar
Lal Burman v. Union of India, (1962) 3 SCR
769 : AIR 1962 SC 378] and Dresser Rand S.A.
case [Dresser Rand S.A. v. Bindal Agro Chem
Ltd., (2006) 1 SCC 751] , if one may say so are
not directly supporting either of the parties but
suffice to say that to determine the issue what has
to be seen are the relevant clauses of the NIT and
the LoI.
25. On having discussed the non-compliance by
the respondent of the terms of the LoI we turn to
the NIT. Clause 29.2 clearly stipulates that the
notification of award will constitute the formation
of the contract "subject only" to furnishing of the
performance security/security deposit. Thus, it
was clearly put as a precondition and that too to
be done within 28 days following notification of
the award. The failure of the successful bidder to
comply with the requirement "shall constitute
sufficient ground for cancellation of the award
work and forfeiture of the bid security" as per
Clause 30.2. If we analyse Clause 34 dealing
with the integrity pact the failure to submit the
same would make the tender bid "as not
substantially responsive and may be rejected".
40. In Shrijee Sales Corporation v. Union of
India reported in (1997) 3 SCC 398, it was observed that once
public interest is accepted as the superior equity which can
override individual equity the principle would be applicable
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
even in cases where a period has been indicated for operation of
the promise. If there is a supervening public equity, the
Government would be allowed to change its stand and has the
power to withdraw from representation made by it which
induced persons to take certain steps which may have gone
adverse to the interest of such persons on account of such
withdrawal. Moreover, the Government is competent to rescind
from the promise even if there is no manifest public interest
involved, provided no one is put in any adverse situation which
cannot be rectified. Similar view was expressed in Pawan
Alloys and Casting (P) Ltd. v. U.P.SEB [(1997) 7 SCC 251] and
in STO v. Shree Durga Oil Mills [(1998) 1 SCC 572] and it was
further held that the Government could change its industrial
policy if the situation so warranted and merely because the
resolution was announced for a particular period, it did not
mean that the Government could not amend and change the
policy under any circumstances. If the party claiming
application of the doctrine acted on the basis of a notification it
should have known that such notification was liable to be
amended or rescinded at any point of time, if the Government
felt that it was necessary to do so in public interest.
41. It is now well settled that a letter of intent
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
merely indicates a party's intention to enter into a contract with
the other party in future. A letter of intent is not intended to bind
either party ultimately to enter into any contract. The Apex
Court, while considering the nature of a letter of intent,
observed thus in Rajasthan Co-operative Dairy Federation
Ltd. v. Maha Laxmi Mingrate Marketing Service (P) Ltd :
[(1996) 10 SCC 405]:
" The letter of intent merely
expressed an intention to enter into a contract.
There is no binding legal relationship between the
appellant and respondent 1 at this stage and the
appellant was entitled to look at the totality of
circumstances in deciding whether to enter into a
binding contract with Respondent 1 or not".
42. Lease is a contract. But in a lease, a lessor,
allows the other party, the lessee, use of the property for a
period of time in exchange for consideration usually a monthly
sum of money, and the original owner ultimately retains title to
the property.
43. In above view, it has to be also considered, as
to whether, the petitioner can duly be held responsible for any
delay in obtaining the Environmental Clearance and has violated
the terms of the LOI.
44. The legal right that can be enforced must
ordinarily be the right, who complains of infraction of such right
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
and approaches the Court for relief as regards the same. A "legal
right", means an entitlement arising out of legal rules. Thus, it
may be defined as an advantage, or a benefit conferred upon a
person by the rule of law. The expression, "person aggrieved"
does not include a person who suffers from a psychological or
an imaginary injury;a person aggrieved must therefore,
necessarily be one, whose right or interest has been adversely
affected or jeopardized. In Laxminarayan R. Bhattad v. State
of Maharashtra, (2003) 5 SCC 413 the Apex Court held that
"the manner in which a statutory authority had understood the
application of a statute would not confer any legal right upon a
party unless the same finds favour with the Court of law dealing
with the matter."
45. It is also well settled principle of law that apart
from the statutory duty it is incumbent upon every authority to
give reasonable opportunity of hearing to affected parties before
passing any order having civil consequences. The Apex Court in
the case of Chairman State Bank of India and Anr. v. M.J.
James reported in (2022) 2 SCC 201 in paragraph nos. 28 and
29 has held as under :-
"28. Traditional English law recognised and valued the
rule against bias that no man shall be a judge in his own
cause i.e. nemo debet esse judex in propria causa; and
the obligation to hear the other or both sides as no
person should be condemned unheard i.e. audi alteram
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
partem. To these, new facets sometimes described as
subsidiary rules have developed, including a duty to give
reasons in support of the decision. Nevertheless, time and
again the courts have emphasised that the rules of
natural justice are flexible and their application depends
on facts of each case as well as the statutory provision, if
applicable, nature of right affected and the
consequences. In A.K. Kraipak v. Union of India [A.K.
Kraipak v. Union of India, (1969) 2 SCC 262] the
Constitution Bench, dwelling on the role of the principles
of natural justice under our Constitution, observed that
as every organ of the State is controlled and regulated by
the rule of law, there is a requirement to act justly and
fairly and not arbitrarily or capriciously. The procedures
which are considered inherent in the exercise of a quasi-
judicial or administrative power are those which
facilitate if not ensure a just and fair decision. What
particular rule of natural justice should apply to a given
case must depend to a great extent on the facts and
circumstances of that case, the framework of law under
which the enquiry is held and the constitution of the body
of persons or tribunal appointed for that purpose. When
a complaint is made that a principle of natural justice
has been contravened, the court must decide whether the
observance of that rule was necessary for a just decision
in the facts of the case."
29. Legal position on the importance to
show prejudice to get relief is also required to be
stated. In State Bank of Patiala v. S.K. Sharma [State
Bank of Patiala v. S.K. Sharma, (1996) 3 SCC 364] a
Division Bench of this Court distinguished between
"adequate opportunity" and "no opportunity at all"
and held that the prejudice exception operates more
specifically in the latter case. This judgment also
speaks of procedural and substantive provisions of law
embodying the principles of natural justice which,
when infracted, must lead to prejudice being caused to
the litigant in order to afford him relief. The principle
was expressed in the following words : (SCC p. 389,
para 32)
"32. Now, coming back to the
illustration given by us in the preceding paragraph,
would setting aside the punishment and the entire
enquiry on the ground of aforesaid violation of sub-
clause (iii) be in the interests of justice or would it be
its negation? In our respectful opinion, it would be
the latter. Justice means justice between both the
parties. The interests of justice equally demand that
the guilty should be punished and that technicalities
and irregularities which do not occasion failure of
justice are not allowed to defeat the ends of justice.
Principles of natural justice are but the means to
achieve the ends of justice. They cannot be perverted
to achieve the very opposite end. That would be a
counterproductive exercise.
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
46. In the above background, the question arises,
as to whether, the amount of security deposited could have been
forfeited when agreement was not entered and the subsequently
also the contract was not executed. As the security deposit is
made for ensuring satisfactory completion of contract and
default in that process shall entail forfeiture thereof, in other
words performance guarantee. Before addressing upon the
aforesaid question, it is considered apposite to refer to the
judgment of Hon. Supreme Court in the matter of Saurabh
Prakash Vs. DLF Universal Ltd. (2007) 1 SCC 228; wherein,
distinction has been drawn and explained between words earnest
money and security deposit in the context of contractual matter
and consequence flows therefrom. For ready reference para 42
& 43 of the aforesaid judgment is quoted hereinbelow:-
"42. The distinction between a security and an earnest
money has also been pointed out by this Court in Maula
Bux v. Union of India [(1969) 2 SCC 554] in the
following terms:
"4. Under the terms of the agreements the amounts
deposited by the plaintiff as security for due performance
of the contracts were to stand forfeited in case the
plaintiff neglected to perform his part of the contract. The
High Court observed that the deposits so made may be
regarded as earnest money. But that view cannot be
accepted. According to Earl Jowitt in Dictionary of
English Law at p. 689; "Giving an earnest or earnest-
money is a mode of signifying assent to a contract of sale
or the like, by giving to the vendor a nominal sum (e.g. a
shilling) as a token that the parties are in earnest or have
made up their minds". As observed by the Judicial
Committee in Kunwar Chiranjit Singh v. Har Swarup,
AIR 1926 PC 1,:
"Earnest money is part of the purchase price when the
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
transaction goes forward; it is forfeited when the
transaction falls through, by reason of the fault or failure
of the vendee."
In the present case the deposit was made not of a sum of
money by the purchaser to be applied towards part
payment of the price when the contract was completed
and till then as evidencing an intention on the part of the
purchaser to buy property or goods. Here the plaintiff
had deposited the amounts claimed as security for
guaranteeing due performance of the contracts. Such
deposits cannot be regarded as earnest money."
43. Referring to Section 74 of the Indian Contract Act, it
was observed:
"There is authority, no doubt coloured by the view which
was taken in English cases, that Section 74 of the
Contract Act has no application to cases of deposit for
due performance of a contract which is stipulated to be
forfeited for breach, Natesa Aiyar v. Appayu Padayachi;
Singer Manufacturing Company v. Raja Prosad; Manian
Pattar v. Madras Railway Company. But this view is no
longer good law in view of the judgment of this Court in
Fateh Chand case. This Court observed at p. 526:
"'Section 74 of the Indian Contract Act deals with the
measure of damages in two classes of cases: (i) where the
contract names a sum to be paid in case of breach, and
(ii) where the contract contains any other stipulation by
way of penalty,' 'The measure of damages in the case of
breach of a stipulation by way of penalty is by Section 74,
reasonable compensation not exceeding the penalty
stipulated for.' "
The Court also observed:
"It was urged that the section deals in terms with the
right to receive from the party who has broken the
contract reasonable compensation and not the right to
forfeit what has already been received by the party
aggrieved. There is however no warrant for the
assumption made by some of the High Courts in India,
that Section 74, applies only to cases where the aggrieved
party is seeking to receive some amount on breach of
contract and not to cases whereupon breach of contract
an amount received under the contract is sought to be
forfeited. In our judgment the expression "the contract
contains any other stipulation by way of penalty"
comprehensively applies to every covenant involving a
penalty whether it is for payment on breach of contract of
money or delivery of property in future, or for forfeiture
of right to money or other property already delivered.
Duty not to enforce the penalty clause but only to award
reasonable compensation is statutorily imposed upon
courts by Section 74. In all cases, therefore, where there
is a stipulation in the nature of penalty for forfeiture of an
amount deposited pursuant to the terms of contract which
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
expressly provides for forfeiture, the court has
jurisdiction to award such sum only as it considers
reasonable, but not exceeding the amount specified in the
contract as liable to forfeiture, and that, "There is no
ground for holding that the expression 'contract contains
any other stipulation by way of penalty' is limited to
cases of stipulation in the nature of an agreement to pay
money or deliver property on breach and does not
comprehend covenants under which amounts paid or
property delivered under the contract, which by the terms
of the contract expressly or by clear implication are
liable to be forfeited."
47. In the present case, the contract for mining
lease did not come into existence. The earnest money was
deposited and the security amount was also deposited for
guaranteeing due performance of contract. Section 74 of the
Indian Contract Act deals with the measure of damages in two
classes of cases:
(i) where the contract names a sum to be paid in
case of breach, and (ii) where the contract contains any other
stipulation by way of penalty than reasonable compensation not
exceeding the penalty stipulated for is statutorily imposed.
48. Firstly, considering the fact that the
petitioner having furnished all the documents merely on the
ground of delay caused, which cannot be said to have happened
solely on the part of the petitioner in obtaining certificates from
different departments and Ministry, interference is called
considering the fact that mining lease did not come into
existence due to non submission of Environmental Clearance in
absence of DSR giving details of Geo-coordinate in respect of
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
the Block No. 27 allocated in favour of the petitioner albeit with
much delay.
49. So far as, the delay in execution of lease
deed is concerned, the same could not be executed due to non
furnishing of Environmental Clearance, which admittedly could
not be issued because the DSR of year 2016 did not contain the
details of Geo-Coordinates in respect of the mining Block No.
27 and it can not be considered to be fault of the petitioner
alone. Admission in this regard by the Special P.P. Mines also
support the reason of delay due to defective DSR in respect of
the petitioner wanting details of Longitude and Latitude. I am of
the considered opinion that the lease deed could not be executed
due to the lapses on the part of the both the parties. I find that
the order dated 23.01.2023 passed by the District Magistrate and
the order dated 14.07.2023 passed by the Mines Commissioner
are required to be interfered by this Court.
50. Secondly, it is known that the entire globe
faced COVID-19 pandemic because of Force Majeure from
2020 till the date the Standard Operation Procedure (SOP) being
relaxed in view of the judgment dated 10.11.2021 passed by the
Apex Court.
51. In above view of the facts and
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
circumstances, settled principle of law and discussions made
hereinabove, I am of the opinion that the contract for mining
lease did not come into existence and the security deposit in the
tune of Rs. 2,90,00,000/- could not be forfeited when the
transaction fell through for no fault on part of the petitioner, as
such, the order dated 23.01.2023, passed by the District
Magistrate, Sheikhpura as contained in Memo No. 73 and order
dated 14.07.2023 and consequential order of the Mines
Commissioner, Department of Mines & Geology, Government
of Bihar, Patna, upholding the order of District Magistrate,
Sheikhpura dated 23.01.2023, whereby In Principal
approval/settlement has been annulled and security deposit of
Rs.2,90,00,000/- has been forfeited, cannot be sustained are
hereby set aside and quashed.
52. I direct the competent authority-cum-District
Magistrate to finalize the DSR and, thereafter, extend the time
and issue work order followed by final settlement of the contract
of lease within a period of six weeks from the date of passing of
this order.
53. It must be taken note of the fact that already
more than six years have lapsed and no third party right has
been created, therefore, the Competent Authority-cum-the
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
District Magistrate and the Additional Chief Secretary,
considering that proposal has been submitted by the Proponent
of Project (PP) before the SEIAA and considering the said
proposal in detail as would appear from Letter dated 9 th July,
2020 for considering of 'Term of Reference' (TOR),
hereinabove petitioner having satisfied, the Competent
Authority is required to take decision for issuing modified
D.S.R. giving the Geo-coordinate expeditiously without further
delay. The authorities concern must abide by the direction
contained in paragraphs no. 16, 16.1, 16.2 and 16.3 in Pawan
Kumar (Supra) to submit the modified DSR Report
expeditiously to the SEIAA, for taking appropriate action as
required, so that Environmental Clearance Certificate can be
issued for starting the mining activity after having complied
with all the requisite formalities within a period of six weeks.
54. The SEIAA too should not delay in taking
decision to issue Environmental Clearance Certificate forthwith.
55. In any case, the above exercise is required to
be carried out by the petitioner and respective respondents well
within a period of eight weeks from the date of communication
of this order.
56. Accordingly, the present writ petition is
Patna High Court CWJC No.11678 of 2023 dt.02-05-2024
disposed of.
57. There shall be no order as to costs.
(Purnendu Singh, J)
Niraj/-
AFR/NAFR A.F.R.
CAV DATE 20.03.2024
Uploading Date 02/05/2024
Transmission Date N/A
