DEBIDUTTA MOHANTY vs. RANJAN KUMAR PATTNAIK

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION   CIVIL APPEAL NO. 4939 of 2022 Debidutta Mohanty           .. Appellant      Versus Ranjan Kumar Pattnaik & Ors.                .. Respondents J U D G M E N T M. R. Shah, J. 1. Feeling   aggrieved   and   dissatisfied   with   the   impugned judgment and order passed by the High Court of Orissa at Cuttack in Writ Petition (Civil) No.16437 of 2021 by which the Signature Not Verified High Court has allowed the said writ petition preferred by the Digitally signed by R Natarajan Date: 2023.03.03 16:50:11 IST Reason: respondent no.1 herein and has set aside the order passed by 2 the Collector, Cuttack dated 24.03.2021 by which the lease in favour   of   the   original   writ   petitioner   was   cancelled   and consequently the lease in favour of the original writ petitioner has been revived, the original respondent no.5 before the High Court has preferred the present appeal. 2. The facts leading to the present appeal in nutshell are as under: 2.1 That an auction notice for grant of the lease in question was published on 08.01.2018.  Clause 5 of the auction notice stated that the bidder should submit a solvency certificate from the Revenue Officer which amount should not be less than   the   royalty   and   the   additional   charges   fixed   for   the source.  The bidder was also required to submit the details of the movable properties.   The auction notice referred to the Orissa Minor Minerals Concession Rules, 2016 (hereinafter referred to as ‘OMMC Rules, 2016’).   The respondent no.1 – original writ petitioner participated in the tender process and submitted his application along with a Solvency Certificate dated 07.12.2017 issued by the Tehsildar, Narasinghpur.  The 3 above solvency certificate was issued despite the above order passed by the Sub­Collector, Athagarh on 06.12.2017.  At this stage, it is required to be noted that an order was passed by the   Sub­Collector,   Athagarth   on   06.12.2017   specifically stating   that   a   solvency   certificate   be   issued   in   favour   of “Gurukrupa   Charitable   Trust,   Chairman   of   Village Kendupali”.     However,   the   Tehsildar   issued   the   solvency certificate in favour of the original writ petitioner individually who at the relevant time was the Chairman of the Trust.  The said solvency certificate was enclosed with the original writ petitioner’s bid. 2.2 When the bids were opened, the highest bid was of one Sukanti Sahoo, the original writ petitioner was the second highest bidder and the appellant herein – original respondent no.5 ­ Debidutta Mohanty was the third highest bidder.  The bid of the first highest bidder Sukanti Sahoo was cancelled as she   was   found   to   be   a   defaulter.     Since   the   original   writ petitioner   was   the   second   highest   bidder   a   letter   dated 08.05.2019 was issued to him asking him to communicate his 4 willingness to operate the sand sairat at Rs.142 per cubic meter which was the rate quoted by the highest bidder.  On the   same   date,   the   original   writ   petitioner   submitted   his willingness.  He was then asked to execute a lease deed.  The original   writ   petitioner   then   deposited   Rs.26,28,450/­   and complied with the requirements.  That Sukanti Sahoo filed the Writ   Petition   (C)   No.9023   of   2019   before   the   High   Court questioning the cancellation of her bid and the selection of the original writ petitioner.   Initially the High Court granted the order of status quo which came to be vacated subsequently. Thereafter   the   present   original   writ   petitioner   filed   Writ Petition (C) No.22660 of 2019 in the High Court for a direction to   the   competent   authority   i.e.   the   Tehsildar,   Sadar   for execution   of   the   lease   deed   in   his   favour.     Thereafter   on 01.01.2020, a lease deed came to be executed in his favour. That   thereafter   a  second   writ  petition  came   to  be   filed  by Sukanti  Sahoo  against  the  grant  of   lease   in  favour   of  the present original writ petitioner being Writ Petition (C) No.951 of 2020.  Initially the High Court stayed the operation of the 5 lease deed executed in favour of the original writ petitioner. However, thereafter the stay came to be vacated clarifying that the   operation   of   the   lease   would   be   subject   to   the   final outcome of the pending writ petition. 2.3 That thereafter the appellant herein Debidutta Mohanty filed the Writ Petition (C) No.3326 of 2021 in the High Court questioning   the   solvency   certificate   issued   in   favour   of respondent no.1 herein – original writ petitioner.   The said petition came to be disposed of by the High Court vide order dated 04.02.2021 directing the Collector, Cuttack to consider his representation.   While the matter was pending with the Collector, the appellant herein filed Writ Petition (C) No.14241 of 2021 which came to be disposed of on 19.04.2021.  In the said order, it was noted that on 08.03.2021, the Tehsildar, Narasinghpur had cancelled the solvency certificate produced by respondent no.1 herein with his bid and that against the said cancellation order, an appeal had been filed before the Collector.     A  direction   was   issued   to   the   Collector   to   also dispose   of   the   representation   of   the   appellant   herein 6 questioning   the   solvency   certificate   which   was   issued   in favour   of   the   original   writ   petitioner,   not   later   than 12.05.2021.     In   the   meanwhile,   the   respondent   no.1   was permitted to operate the sairat and then it was stopped at the instance of the Tehsildar. On 02.03.2021 a letter was written by the Tehsildar, Narasinghpur to the Sub­Collector, Athagarh stating   that   the   respondent   no.1   herein   –   original   writ petitioner   was   the   Chairman   of   the   Gurukrupa   Charitable Trust.  He had filed an application for issuance of a solvency certificate in his own name, but since he was the Chairman of the Gurukrupa Charitable Trust, the solvency certificate that had to be issued in the name of the Trust was issued in his name.  It was stated therein that the notice had been issued to   the   party   and   necessary   steps   have   been   taken   for correction of the said certificate. 2.4 Subsequently, another letter was sent by the Tehsildar on   08.03.2021   to   the   Collector,   Cuttack   stating   that   the earlier solvency certificate issued in favour of the original writ petitioner   –   Respondent   no.1   herein   stood   cancelled   and 7 another certificate was asked to be issued in favour of the “Gurukrupa   Charitable   Trust,   Chairman   of   Village Kendupali”. 2.5 That meanwhile, on 29.01.2021, the original respondent no.1 herein ­ original writ petitioner wrote to the Tehsildar, Sadar Cuttack to substitute/exchange the solvency certificate given with his bid with another one in the value of Rs.4.6 crores which had been issued on 27.01.2021.  That thereafter on   the   representation   made   by   the   appellant   herein,   the Collector   cancelled   the   lease   in   favour   of   respondent   no.1 herein ­original writ petitioner by observing and concluding that the solvency certificate which was required to be issued in favour of the “Gurukrupa Charitable Trust Chairman of Village Kendupali”, was issued in the name of respondent no.1 and therefore, the solvency certificate had not been issued following the stipulated provisions of the law and hence, the utilization of the same by respondent no.1 herein ­ original writ petitioner in auction of the sairat is illegal.   The order passed  by   the  Collector   dated   24.03.2021  was   the   subject 8 matter of the present writ petition before the High Court at the instance of Respondent no.1 herein. 2.6 Before   the   High   Court   it   was   the   case   on   behalf   of respondent no.1 herein ­ original writ petitioner that under the   provisions   of   the   OMMC   Rules,   2016   the   competent authority in regard to minor minerals is the Tehsildar and therefore, the lease deed could not have been cancelled by the Collector.  It was also the case on behalf of the original writ petitioner ­ respondent no.1 herein that he rectified the defect of not furnishing a solvency certificate in his own name.   It was   submitted   that   it   is   true   that   earlier   the   solvency certificate should have been issued in the name of the Trust of which he was the Chairman, however, on 29.01.2021 itself he had   written   to   the   Tehsildar   for   substituting   the   solvency certificate submitted with the bid with another issued in his own name and, therefore, even the said defect stood cured.  It was submitted that without taking note of this, the Collector had cancelled the lease. 9 2.7 The writ petition was opposed by the State as well as the appellant herein ­ original respondent no.5.  It was submitted on behalf of the appellant herein that the bid submitted by respondent no.1 herein ­ original writ petitioner was  ab initio void and should never have been accepted since it was not accompanied by a valid solvency certificate in the name of the original writ petitioner.  It was submitted that the document that was enclosed as a solvency certificate was in fact not correctly issued and was contrary to the express order of Sub­ Collector.  It was submitted that as the bid of the first highest bidder ­ Sukanti Sahoo was earlier cancelled and the original writ petitioner was the second highest bidder whose lease has been rightly cancelled by the Collector, being the third highest bidder the lease ought to have been granted in his favour. 2.8 By the impugned judgment and order and having opined that the initial solvency certificate was issued in favour of the original writ petitioner which was issued in the name of the original writ petitioner, though required to be issued in the name of the Trust, was a bona fide error which subsequently 10 came to be cancelled and even a fresh solvency certificate was issued in favour of the original writ petitioner, the Collector had erred in cancelling the lease deed in favour of the original writ petitioner.  The High Court also has observed that under the OMMC Rules, 2016, the competent authority in terms of Schedule (IV) who can cancel the lease deed, is the Tehsildar and   therefore,   the   competent   authority’s   power   under   the OMMC   Rules,   2016   would   not   have   been   straight   way exercised by the Collector in the first instance.  Therefore, the High   Court   by   the   impugned   judgment   and   order   has   set aside the order passed by the Collector cancelling the lease deed in favour of the original writ petitioner. 2.9 The impugned judgment and order passed by the High Court quashing and setting aside the order passed by the Collector, Cuttack dated 24.03.2021 cancelling the lease in favour of the original writ petitioner ­ respondent no.1 herein is the subject matter of the present appeal at the instance of the original respondent no.5 – third highest bidder. 11 4. Shri R. Basant, learned Senior Advocate has appeared on behalf   of   the   appellant   and   Shri   A.N.S.   Nadkarni,   learned Senior Advocate has appeared on behalf of Respondent no.1. 4.1 Shri   Basant,   learned   Senior   Advocate   appearing   on behalf of the appellant has vehemently submitted that in the facts and circumstances of the case the Division Bench of the High Court has materially erred in quashing and setting aside the order passed by the Collector, Cuttack dated 24.03.2021 cancelling the lease in favour of respondent no.1 herein. 4.2 Shri   Basant,   learned   Senior   Advocate   has   further submitted   that   the   High   Court   has   materially   erred   in observing   and   holding   that   the   initial   subject   solvency certificate   which   as   such   was   in   the   name   of   Gurukrupa Charitable Trust, but was used by respondent no.1 in his individual capacity in order to participate in the tender was a genuine   mistake   and   not   a   deliberate   act   and   therefore   a rectifiable defect. 4.3 It is submitted that it is an admitted position that the property belonged to the Gurukrupa Charitable Trust and was 12 not owned by respondent no.1.  It is submitted that therefore, the subject solvency certificate used by respondent no.1 in his individual capacity in order to participate in the tender was an exercise in fraud which rendered his bid non­est and void  ab initio. 4.4 It is  submitted  that  the  High  Court has   not properly appreciated   the   fact   that   it   was   the   modus   operandi   of respondent no.1 to attempt to pass off the property of the Trust as his own property inasmuch as the self­same subject solvency certificate had been misused by respondent no .1 in another tender and detecting the fraud played, the Tehsildar and   the   Sub­Collector   had   disqualified   him   from   the   said tender. 4.5 It   is   further   submitted   that   the   High   Court   has materially erred in applying Rule 51(7) of the OMMC Rules, 2016.     It   is   submitted   that   the   said   Sub­Rule   shall   be applicable   only   in   a   case   where   there   is   a   breach   of   any condition of the lease deed, whereas in the instant case there 13 has been a breach of the auction/tender call notice and the Rules governing bids.  4.6 It   is   further   submitted   that   the   High   Court   has materially   erred   in   holding   that   the   competent   authority under the OMMC Rules, 2016 was the Tehsildar and therefore the   Collector   could   not   have   been   approached   in   the   first instance   despite   being   aware   that   there   were   allegations against the Tehsildar of conspiring with respondent no.1. 4.7 Shri   R.   Basant,   learned   senior   counsel   appearing   on behalf of the appellant has further submitted that the High Court has materially erred in taking into consideration the subsequent   conduct   on   the   part   of   respondent   no.1   in obtaining the fresh solvency certificate. It is submitted that what   was   required   to   be   considered   was   the   solvency certificate at the time of bid and not the subsequent solvency certificate. 5. Present   appeal   is   vehemently   opposed   by   Shri   A.N.S. Nadkarni,   learned   Senior   Advocate   appearing   on   behalf   of respondent no.1.  It is submitted that as rightly observed and 14 held by the High Court the initial solvency certificate dated 07.12.2017   issued   in   favour   of   Respondent   no.1   was   by mistake and instead of Gurukrupa Charitable Trust, the same was issued in favour of Respondent no.1 being the Chairman of Trust. 5.1 It is submitted that thereafter respondent no.1 himself made   an   application   for   substitution   of   the   solvency certificate.  That thereafter respondent no.1 obtained the fresh solvency certificate in his favour which came to be permitted to be substituted/filed.  Therefore, it cannot be said that the initial solvency certificate produced by respondent no.1 along with the bid was non­est and void   ab initio as sought to be   contended on behalf of the appellant. 5.2 It is further submitted that even otherwise the power to cancel the lease deed would vest with the Tehsildar who is the competent authority under Rule 51(7) of the OMMC Rules, 2016.  That in the present case the lease deed was cancelled by the  Collector and  therefore, the  High Court  has rightly observed  and held  that the  order passed by  the  Collector, 15 Cuttack cancelling the lease was without authority under the Law. 5.3 It is further submitted that even during the pendency of the present proceedings not only the lease period has expired but even subsequently the fresh lease deed has been executed pursuant   to   the   impugned   judgment   passed   by   the   High Court. 6. We   have   heard   learned   Senior   Counsel   appearing   on behalf of the respective parties at length. 7. By the impugned judgment and order the High Court has set aside the order passed by the Collector, Cuttack dated 24.03.2021   cancelling   the   lease   which   was   in   favour   of respondent no.1 herein  inter alia  on the grounds that: (i)  the order passed by the Collector cancelling the lease deed was without authority under the law as under Rule 51(7) of the Rules, 2016 the Tehsildar is the competent authority to cancel the lease deed; 16 (ii)   That the original solvency certificate dated 07.12.2017 produced by respondent no.1, produced along with the bid was issued in his favour by mistake. 7.1 Now so far as the finding recorded by the High Court that   the   order   passed   by   the   Collector   dated   24.03.2021 cancelling the lease deed was without authority under the law inasmuch as the competent authority to cancel the lease deed under Rule 51(7) of the Rules, 2016 would be Tehsildar is concerned, it is required to be noted that the Rule 51(7) shall be applicable in case of breach of any condition of the lease deed.     The   present   case   is   not   a   case   of   breach   of   any condition of the lease deed, but a case of producing invalid solvency   certificate   at   the   time   of   submission   of   the   bid. Therefore, Rule 51(7) shall not be applicable at all to the facts of the case at hand. 7.2 It   is   also   required   to   be   noted   that   in   fact   Collector passed the order dated 24.03.2021 pursuant to the directions issued by the High Court directing the Collector to take an appropriate decision on the representation/(s) made by the 17 appellant.   Under   the   circumstances   the   High   Court   has materially erred in holding that the order dated 24.03.2021 passed by the Collector cancelling the lease deed was without authority under the law.  8. Now so far as the findings recorded by the High Court that   the   original   Solvency   Certificate   dated   07.12.2017   in favour of respondent no.1 was a mistake and there was no other mala fide intention is concerned, it is required to be noted that despite the fact that Gurukrupa Charitable Trust was   the   owner   of   the   property   and   on   the   said   basis   the solvency certificate was claimed, the respondent no.1 made an application for issuance of the solvency certificate in his own name   ­   in   his   individual   capacity.     The   Sub­Collector, Athagrah vide communication dated 06.12.2017 as such had specifically directed the Tehsildar to issue the certificate in the name of Gurukrupa Charitable Trust. However, despite the same   the   Tehsildar   issued   the   solvency   certificate   dated 07.12.2017   in   favour   of   respondent   no.1   in   his   individual capacity, which as such cannot be said to be by mistake.  If 18 the   communication   by   the   Sub­Collector,   Athagarh   dated 06.12.2017 addressed to the Tehsildar would not have been there   and   the   Tehsildar   would   have   issued   the   solvency certificate   in   favour   of   respondent   no.1   in   his   individual capacity as he was the Chairman of the Trust then one can understand such a mistake.  However, in the present case the Sub­Collector, Athagarh specifically directed not to issue the solvency certificate in favour of respondent no.1 herein in his individual   capacity   and   specifically   directed   to   issue   the certificate in the name of Trust.  Under the circumstances it cannot   be   said   that   the   original   solvency   certificate   dated 07.12.2017 was issued in favour of respondent no.1 in his individual   capacity   by   mistake.     It   appears   that   the respondent   no.1   deliberately   and   willfully   obtained   the solvency   certificate   in   his   own   name   though   the   property belonged   to   the   Trust   and   the   solvency   certificate   was required   to   be   issued   in   the   name   of   the   Trust.     He misused/used the solvency certificate dated 07.12.2017 for his own benefit illegally and submitted the same along with 19 his bid and on the basis of the said solvency certificate he got the lease bid.  Under the circumstances, the bid by using the solvency certificate dated 07.12.2017 by respondent no.1 was non­est   and   void     and   therefore,   the   lease   in   his ab   initio favour on the basis of such solvency certificate was rightly cancelled by the Collector. 8.1 At this stage it is required to be noted that subsequently the respondent no.1’s application on 29.01.2021 permitting him   to   substitute   the   solvency   certificate   was   not   on   the ground that the initial solvency certificate dated 07.12.2017 which was issued in his individual name was by mistake.  The reason given was that the other partner may claim over the earlier   solvency   certificate   and   therefore   we   intend   to substitute/exchange the fresh solvency certificate which was obtained against the other properties. 8.2 At   this   stage   it   is   required   to   be   noted   that   the respondent no.1 used the very solvency certificate in another tender and the Tehsildar and the Sub­Collector disqualified the respondent no.1 from the said tender.   20 8.3 Under the circumstances as such the respondent no.1 misused the solvency certificate dated 07.12.2017 which as such was illegally issued in his individual capacity/name as though the same was required to be issued in the name of Gurukrupa Charitable Trust. At this stage it is required to be noted   that   subsequently   the   solvency   certificate   dated 07.12.2017 has been cancelled by the Tehsildar vide order dated 08.03.2021 which has attained the finality. 8.4 Now so far as the submission on behalf of respondent no.1 that subsequently respondent no.1 obtained the fresh solvency   certificate   which   was   sought   to   be substituted/exchanged is concerned, it is required to be noted that   what   is   required   to   be   considered   is   the   solvency certificate   produced   along   with   the   bid   and   not   the subsequent solvency certificate. 9. Now so far as the submission on behalf of respondent no.1 that thereafter pursuant to the impugned judgment and order passed by the High Court a fresh lease deed has been issued is concerned, at the outset, it is required to be noted 21 that in the order dated 18.05.2022 it is observed by this Court that the fresh lease deed, pursuant to the impugned judgment and order shall be subject to the ultimate outcome of the present SLP/appeal and/or further orders that can be passed by the court in the proceedings. 10. In view of the above and for the reason stated above, we are of the opinion that the High Court has committed a very serious error in quashing and setting aside the order dated 24.03.2021 passed by the Collector, Cuttack cancelling the lease   deed   which   was   in   favour   of   respondent   no.1. Consequently, the impugned judgment and order passed by the High Court deserves to be quashed and set aside and is accordingly quashed and set aside. The order passed by the Collector, Cuttack dated 24.03.2021 cancelling the lease deed which was in favour of respondent no.1 is hereby restored. On  the  impugned  judgment and   order  being  set  aside  the fresh lease deed in favour of respondent no.1 also deserves to be set aside and is accordingly set aside. 22 Present appeal is accordingly allowed.   However, in the facts and circumstances of the case, there shall be no order as to costs.   …………………………………J.             (M. R. SHAH) …………………………………J.     (B.V. NAGARATHNA) New Delhi,  March 3, 2023