Display PDF.php 5 1 (2)

HIGH COURT OF JAMMU AND KASHMIR
AT JAMMU
Reserved on : 26.08.2020
Pronounced on: 30.09.2020
LPA No. 53/2020(Jammu)

(EMG-LPA No.2/2020)
EMG-CM No.4/2020
(Through Video Conferencing from
Jammu)
Rakesh Kumar Choudhary .....Appellant

Through :- Mr. Vikram Sharma, Advocate
(On Video Conference from his residence
at Jammu)
Mr. Sunil Sethi, Sr. Advocate

with
Mr. Ravi Abrol, Advocate
(On Video Conference from their residence
at Jammu)
V/s
Union Territory of J&K and Others .....Respondent(s)
Through :- Mr. F. A. Natnoo, AAG

(On Video Conferencing from the High
Court at Jammu)
LPA No. 56/2020 (Jammu)

(EMG-LPA no.5/2020)
EMG-CM no.13/2020 (for
interim relief)
(Through Video Conferencing)
.....Appellants
Chaman Lal
Through :- Mr. P. N. Raina, Sr. Advocate with

Mr. J. A. Hamal, Advocate.
(On Video Conferencing from office)
V/s
State of J&K (Now Union Territory of

J&K) & Others .....Respondent(s)

(On Video Conferencing from the High
Court at Jammu)
2
LPA No.61/2020 (Srinagar)

CM Nos.1978 & 1977/2020
Srinagar)
M/s Usman Construction and others .....Appellant

Through :- Mr. Altaf Naik, Senior Advocate
(On Video Conferencing from High Court
at Srinagar)
V/s
Union Territory of J&K and Others .....Respondent(s)

at Jammu)

CM Nos.1979, 1980
& 1981/2020
Srinagar)
M/s Mohammad Ashore and others .....Appellant

Through :- Mr. Hakim Suhail Ishtiaq,
Advocate
(On video conference from High Court at
Srinagar)
V/s
Commissioner/Secretary to Government
and Another .....Respondent(s)

at Jammu)
LPA no.63/2020(Srinagar)
CM Nos.1982, 1983
& 1984/2020
Srinagar)
Mohammad Farooq Lone & Others .....Appellants
Through :- Mr. Hakim Suhail Ishtiaq,

Advocate
(On video conference from High Court at
Srinagar)
V/s
Union Territory of J&K & Others
LPA No.53/2020 & connected appeals Page 2

3
.....Respondent(s)
at Jammu)

CM Nos.1936, 1937 & 1938/2020
(Through Video Conferencing from Srinagar)
Vikar Ahmad Dar …...Appellants
Through:- Mr. Z. A. Shah, Sr. Advocate

(On video conferencing from High Court at
Srinagar)
v/s
State of J&K and others …..Respondent(s)
Through:- Mr. F. A. Natnoo, AAG

(On video Conferencing from High Court at
Jammu)
LPA No. 58/2020 (Jammu)

(EMG-LPA No.7/2020)
EMG-CM Nos.16/2020
(Through Video Conferencing from Jammu)
Nagar Singh …...Appellants

Through:- Mr. Abhinav Sharma, Advocate
(On video conferencing from his office at
Jammu)
v/s
State of J&K and others …..Respondent(s)
Jammu)
LPA No. 77/2020 (Srinagar)

CM No.2361/2020
(Through Video Conferencing from Srinagar)
Shahnawaz Ahmad Bhat & anr. …...Appellants

Through:- Mr. Vivek Sharma, Advocate
(On video conferencing)
v/s
Union Territory of J&K and others …..Respondent(s)
Jammu)

4
Coram:
HON’BLE THE CHIEF JUSTICE

(On Video Conference from High Court at Srinagar)
HON’BLE MR. JUSTICE SANJAY DHAR, JUDGE
(On Video Conference from High Court at Srinagar)
JUDGMENT
Per Gita Mittal, CJ.
“6. Rivers, Forests, Minerals and such other resources

constitute a nation's natural wealth. These resources are not to
be frittered away and exhausted by any one generation. Every
generation owes a duty to all succeeding generations to develop
and conserve the natural resources of the nation in the best
possible way. It is in the interest of mankind. It is in the interest
of the Nation. It is recognised by Parliament. Parliament has
declared that it is expedient in the public interest that the Union
should take under its control the regulation of mines and the
development of minerals. It has enacted the Mines and Minerals
(Regulation and Development) Act, 1957.”
(Ref: (1981) 2 SCC 205, State of Tamil Nadu vs. Hind

Stone and Ors)
“9. Natural resources are ‘public goods’ and the

Doctrine of Equality must guide the State in determining the
actual mechanism for distribution of natural resources. It
takes into account the rights and obligations of the State vis-
à-vis its people and the demands that the people be granted
equitable access to natural resources and they are adequately
compensated for the transfer of these resources for public
domain and regulation of rights and obligations of the State
vis-à-vis private parties seeking to acquire the resources
which demands that the procedure adopted and distribution is
just and transparent.”

5
[Ref: Original Application No.360/2015,

National Green Tribunal Bar Association v.
Virendra Singh (State of Gujarat) and
connected applications decided on 26.07.2019.
(Page 141, Paras 9, 10 & 11)]
1. By way of the instant appeal, a challenge is laid to the common judgment
dated 1st May, 2020, passed by the learned Single Judge dismissing 16 writ
petitions filed before both the Wings of this Court inter alia challenging the
communication of the Department of Industries and Commerce of the Government
bearing No.Ind/legal-239/2018 dated 26.02.2019 conveying the approval of the
competent authority to the scrapping of the open auction carried under the J&K
Minor Minerals Concession, Storage, Transportation of Minerals and Prevention
of Illegal Mining Rules, 2016 and providing further that fresh auctions would be
carried out only through e-auction mode.
2. To avoid conflict of adjudication, a direction was made for clubbing of the
writ petitions and placing them before one court, with parties and counsels to be
joined on video conferencing, wherever necessary. After detailed hearings, the writ
petitions were decided by the common judgment dated 1st May, 2020. Aggrieved
thereby the above letters patent appeals came to be filed before both Wings of this
Court, which were directed to be consolidated for hearing and adjudication.
3. In view of the Covid-19 restrictions, these appeals have been heard on video
conferencing with this Bench holding court in the Jammu Wing. Learned Senior
Counsels as well as other counsels have made submissions from Srinagar and
Jammu on video conferencing.
4. It is noteworthy that after hearing in the rest of the appeals had concluded
and the matter was reserved for judgment on 30th June, 2020, another LPA
No.77/2020 came to be filed which was listed before the Court first time on 21 st

6
August, 2020. On that date counsel for the respondent could not be joined on
account of connectivity issues. The matter was accordingly listed on 26 th August,
2020 when counsel for the parties were heard and judgment reserved.
Headings
5. We propose to consider the several propositions placed by the parties in

seriatim. For expediency, we set down hereunder the headings under which we
have considered the challenge.
Sr. No. Headings Paragraph

Nos.
I. Judicial consideration of issues concerning mining 6-45
of minor minerals and Notifications of MOEF&CC,
Government of India
II. Relevant statutory provisions and the Rule position 46-47
so far as erstwhile State of Jammu and Kashmir
(now Union Territory of Jammu & Kashmir and
Ladakh)
III. Defiance of the law-Rule 104A - a special provision 48-94
in Jammu & Kashmir
IV. Chronology of relevant events, submissions of 95-201
appellants
V. Appeals pressed on grounds which were not urged 202-229
before the Ld. Single Judge, examination of
official records, opportunity to meet the same
VI. The consideration by the Government which lead 230-272
to the decision to scrap the auctions of 2017,
issuance of the communication dated 26th
February, 2019 and the Amendment to the Rules
VII. The Working of Rule 104A 273-295
VIII. An important ‘subsequent’ fact-conduct of e- 296-311
auctions
IX. Scope of judicial review in administrative action 312-327
and matters relating to award of contract/ tenders/
auctions
X. Can the Issue as to whether there is a concluded 328-344
contract be decided in writ proceedings?
XI. Whether in these cases there was a concluded 345-399
contract of the respondents with appellants and
whether time was of essence of the contract?
XII. Whether the respondents had the power to waive 400-438
or to extend time for compliance with the
conditions prescribed in the Rules as notified in
the LoI.

7
XIII. Whether processing of Environmental Clearances 439-486

was delayed by the respondents and impact
thereof
XIV. Whether the respondents had made a representation 487-509
and promise to the appellants and would stand
estopped from withdrawing from it?
XV. Cancellation of the entire auction process- 510-539
permissibility & validity
XVI. Failure to issue notice to show cause-whether 540-567
violation of principles of natural justice-impact on
impugned decision
XVII. Failure to give reasons-non compliance with 568-589
principles of natural justice- whether impacts
present cases
XVIII. Whether any remedial steps with regard to the 590-621
illegal mining- cost of reparation and compensation-
quantification and apportionment of liability?
XIX. Writ petitions liable to be dismissed for suppressio 622-628
veri
XX. Whether the issuance of the Letter of Intent (LoI) 629-655
resulted in grant of ‘quarrying licence’ or a
‘prospecting licence’
XXI. Whether any mining lease at all stands granted? 656-661
XXII. Whether the Learned Single Judge has failed to consider the Rule 662-664
55 (10) of SRO 105? If so, effect thereof
XXIII. Refund of the bid amount-enitlement to in the 665-675
facts of case
XXIV. Submission that the amendment to the Rules was 676-680
prospective and the pending applications of the
appellants had to be considered in accordance
with the unamended provisions
XXV. Conclusions 681
XXVI. Result 682
I. Judicial consideration of issues concerning mining of minor

minerals and Notifications of MOEF&CC, Government of India
6. Mining Activity, undertaken primarily for commercial reasons, has a far
reaching and irreversible impact on the environment. Minor minerals are declared
in Section 3(e) of the Mines and Minerals (Development and Regulation) Act,
1957 to include building stones, gravel, ordinary clay, ordinary sand other than
sand used for prescribed purposes, and any other mineral which the Central
Government may, by notification in official gazette declare to be a minor mineral.

8
These minor minerals are extracted in large quantities with devastating
consequences and has been the subject matter of authoritative judicial
pronouncements by the Supreme Court of India as well as the National Green
Tribunal.
7. So as to put the matter in perspective, and to understand the context, it is
essential to look into the law laid by the Supreme Court of India and orders passed
by the National Green Tribunal which have not only controlled parties but led to
legislations and Government notifications on matters relating to mining of
minerals with which this case is concerned.
8. So far as the relationship between the parties and their rights and obligations
are concerned, the statute which has a bearing is the Mines and Minerals
(Development and Regulation) Act, 1957. This statute aims at conservation and
the prudent and discriminating exploitation of minerals. (Ref.(1981) 2 SCC 205,
State of Tamil Nadu v. Hind Stone and Ors.).
9. So far as the framing of Rules in terms of Section 15 of the Mines and
Minerals (Development and Regulation) Act, 1957 is concerned, on 10th of April,
1962, the Government of Jammu & Kashmir issued the Jammu and Kashmir
Minor Mineral Concession Rules 1962 vide SRO 58 of 1962. These rules of 1962
did not contain any provision for Environmental Clearance and contracts for
mining were given on ‘first come first served’ basis.
10. On the 27th January, 1994, the Government of India issued a notification
SO60(E) laying down pre-requisite condition of having environmental clearance
(‘EC’ for brevity) for projects relating to major minerals. This was followed by a
notification SO133(E) dated 14th September, 2006 superceding the earlier

9
notification in many regards while laying down the requisite conditions of having
ECs for projects provided therein.
11. Removal of minor minerals/boulders/gravels/quarries etc from river beds is
recognized as a major cause of environment degradation. It is also considered a
threat to bio-diversity resulting from bed degradation, sedimentation, destruction
of riverine vegetation, erosion, pollution of water sources, amongst other
consequences thereof. Sand mining has also been regarded, as one of the causes of
environmental degradation as has been researched in several studies. It is also an
established fact that over the years, India’s rivers and riparian eco-systems have
been badly effected by the alarming rate of unrestricted sand mining resulting in
destruction of natural habitats, the riverine ecology and instability of surrounding
physical infrastructure. Indiscriminate sand mining on river beds also results in
increased river water salinity which stifles the breeding environment of aquatic life
and obstructs migration.
12. Mining Activity by its very nature envisages compliance with environment
protection and subordinate legislation. In this regard, Mr. F. A. Natnoo, learned
AAG has placed a notification dated 14th September 2006 of the Ministry of
Environment and Forests issued under Section 3(2)(1)(v) of the Environment
(Protection) Act, 1986 and Rule 5(3)(d) of the Environment (Protection) Rules,
1986, mandating the requirement of prior Environmental Clearance (‘EC’
hereafter for brevity) from the Central Government for certain construction
projects under clause (2); and the constitution of a State Level Environment
Impact Assessment Authority (referred to as ‘SEIAA’) constituted by the Central
Government under Section 3(3) of the Environment (Protection) Act, 1986. Clause
(4) has details about the categorization of projects and activities. In Clause (5), the

10
Expert Appraisal Committees (EAC) at the Central Government level and State
Expert Appraisal Committees (SEAC) at the State and UT level was mandated to
screen and appraise projects or activities. Clause (6) of the notification provides for
the nature of applications for Prior EC. Clause (7) provides the manner in which it
should be processed. Furthermore, Clause (8) provides for grant or rejection of the
prior EC, while clause (9) of the notification provides for validity of the EC.
13. A proposal of auctions by the auction notice dated 3rd June, 2011 for
excavation of minor minerals / boulders / gravel/ sand quarries in areas not
exceeding 4.5 ha in each case in different districts of Haryana was assailed before
the Supreme Court. This challenge was decided on 27th February, 2012 by the
judgment reported at (2012) 4 SCC 629, Deepak Kumar and anr. V. State of
Haryana.
14. In this case, it was contended that the Environment Impact Assessment
(EIA) Notification dated 14th September 2006 of the Ministry of Environment,
Forests and Climate Change (MOEF&CC) was being flouted by breaking
homogenous areas into land pieces of less than 5 ha in the States of Uttar Pradesh,
Rajasthan and Haryana. As the notification did not prescribe the requirement of EC
for areas less than 5 ha., no EIAs were being effected for what actually combined
into large tracts of land.
15. In its pronouncement on 27th, February, 2012, Deepak Kumar, the Supreme
Court noted the sharp increase in the demand for mining in and near stream beds
and its impact in the following terms:
“9. Extraction of alluvial material from within or near a stream bed

has a direct impact on the stream’s physical habitat characteristics.
These characteristics include bed elevation, substrate composition
and stability, instream roughness elements, depth, velocity, turbidity,

11
sediment transport, stream discharge and temperature. Altering these

habitat characteristics can have deleterious impacts on both instream
biota and the associated riparian habitat. The demand for sand
continues to increase day by day as building and construction of new
infrastructures and expansion of existing ones is continuous thereby
placing immense pressure on the supply of the sand resource and
hence mining activities are going on legally and illegally without any
restrictions. Lack of proper planning and sand management cause
disturbance of marine ecosystem and also upset the ability of natural
marine processes of replenish the sand.”
(Emphasis by us)
16. The Supreme Court noted that Section 15 of the Mines and Minerals
(Development and Regulation) Act, 1957 empowered the State Governments to
make rules in respect of minor minerals. While proposals of mining of major
minerals typically underwent EIA and EC procedures, similar attention had not
been given in case of minor minerals, since the EIA notification of 1994 of the
Central Government did not apply to this mining. Furthermore, under the ambit of
the EIA notification of 2006, it was only mining of minerals with a lease area of 5
ha and above which required prior EC.
17. It was noted by the Supreme Court that the attention of the Ministry of
Environment, Forest and Climate Change (MOEF&CC hereafter) was drawn to the
several instances across the country involving damage to lakes, river beds and
ground water leading to drying up of water beds and causing water scarcity. It was
also brought to notice that this happened on account of quarry/mining leases and
mineral concessions granted under the Mineral Concessions Rules framed by the
State Governments. The environmental impact of mining of minor minerals was
being neglected on account of the area being small despite the fact that the
collective impact in a particular area over a period of time could be significant.

12
18. The concerns on account of the impugned auction notices having been
issued without a study of the environmental impact of these auctions is noted in
Para 11 of the judgment as follows:
“11. We find that it is without conducting any study on the possible

environmental impact on/in the riverbeds and elsewhere the auction
notices have been issued. We are of the considered view that when we
are faced with a situation where extraction of alluvial material within
or near a riverbed has an impact on the river’s physical habitat
characteristics, like river stability, flood risk, environmental
degradation, loss of habitat, decline in biodiversity, it is not an
answer to say that the extraction is in blocks of less than 5 ha,
separated by 1 km, because their collective impact may be significant,
hence the necessity of a proper environmental assessment plan.”
(Emphasis by us)
19. The Supreme Court had also noted that vide order dated 24th March 2009,
the MOEF&CC had constituted a Core Group under the Chairmanship of the
Secretary (Environment and Forests) to look into all aspects of the impact on the
environment associated with the mining of minor minerals. This Core Group had
submitted a report on 29th January 2010 wherein it was clearly indicated that the
operation of the mines of minor minerals needed to be subjected to the same strict
regulatory parameters as that which applied to mines of major minerals. It also
indicated that the definition of ‘minor minerals’ per se required a re-look. In its
report, the Core Group had recommended that the States and UTs should see that
the mining of minor minerals is permitted only under a strict regulatory regime and
is carried out only under an approved framework of a mining plan which should
provide for reclamation as well as rehabilitation of people in the mined areas.
20. It appears that the Ministry of Mines, Government of India had also sent out
a communication dated 16th May 2011 called the ‘Environmental Aspects of

13
Quarrying of Mining Minerals –Evolving of Model Guidelines’ on the 30th June
2011. Draft Rules being the Minor Minerals Conservation and Development Rules,
2010, had also been put on the website.
21. In Para 24 of the pronouncement of Deepak Kumar, the Supreme Court
observed that ‘the Model Rules of 2010 issued by the Ministry of Mines are very
vital from the view point of the environment, ecology and bio diversity and
therefore the State Governments have to frame proper rules in accordance with
recommendations under Section 15 of the Mines and Minerals (Development and
Regulation) Act, 1957.
22. Grave concern was expressed by the Supreme Court in the following terms.
“25. Quarrying of river sand, it is true, is an important economic

activity in the country with river sand forming a crucial raw material
for the infrastructural development and for the construction industry
but excessive instream sand and gravel mining causes the degradation
of rivers. Instream mining lowers the stream bottom of rivers which
may lead to bank erosion. Depletion of sand in the streambed and
along coastal areas causes the deepening of rivers which may result
in destruction of aquatic and riparian habitats as well. Extraction of
alluvial material as already mentioned from within or near a
streambed has a direct impact on the stream’s physical habitat
characteristics.
26. We are of the considered view that it is highly necessary to have
an effective framework of mining plan which will take care of all
environmental issues and also evolve a long-term rational and
sustainable use of natural resource base and also the bio-assessment
protocol. Sand mining, it may be noted, may have an adverse effect
on biodiversity as loss of habitat caused by sand mining will affect
various species, flora and fauna and it may also destabilise the soil
structure of river banks and often leaves isolated islands. We find
that, taking note of those technical, scientific and environmental

14
matters, MoFF, Government of India, issued various

recommendations in March 2010 followed by the Model Rules, 2010
framed by the Ministry of Mines which have to be given effect to,
inculcating the spirit of Article 48-A and Article 51-A(g) read with
Article 21 of the Constitution.”
(Emphasis by us)
23. While considering the environmental impact on various rivers and adverse
effects on bio-diversity on account of the proposed quarrying, mining and removal
of sand (a minor mineral) from instream and upstream of several rivers across the
country, the Supreme Court in Deepak Kumar, issued several directions. In paras
28 and 29, the Supreme Court directed the Central Government as well as State
Governments in the following terms:
“28. The Central Government also should take steps to bring into
force the Minor Minerals Conservation and Development Rules,
2010 at the earliest. The State Governments and UTs also should take
immediate steps to frame necessary rules under Section 15 of the
Mines and Minerals (Development and Regulation) Act, 1957 taking
into consideration the recommendations of MoFF, Secretary, Ministry
of Mines, New Delhi; Ministry of Water Resources, Central
Government Water Authority; the Chief Secretaries of the respective
States and Union Territories, who would circulate this order to the
Department concerned.
29. We, in the meanwhile, order that leases of minor minerals
including their renewal for an area of less than five hectares be
granted by the States/ Union Territories only after getting
environmental clearance from MoFF. Ordered accordingly.”
(Emphasis supplied)
A period of six months was granted to give effect as above.

15
24. In view of the law laid down by the Supreme Court in Deepak Kumar, EC
was mandatorily required for all concessions, be it temporary licence or a quarry
licence or grant of a mining lease.
25. So how was the judgment of the Supreme Court complied with?
26. In purported compliance of the order dated 27th February 2012 in Deepak
Kumar and 13th January 2015 of the National Green Tribunal (NGT hereafter),
amendments were effected by the Central Government to the Environment Impact
Assessment Notification 2006 dated 14th September 2006 in exercise of the powers
under Sections 3(2)(i) and Section 3(2)(v) of the Environment (Protection) Act,
1986 and Rule 5(3) of the Environment (Protection) Rules, 1986.
27. The Central Government issued a notification dated 15th January, 2016
(amending the notification dated 14th September, 2006) constituting a District
Level Environment Impact Assessment Authority (DEIAA) under Sub section (3)
of Section 3 of the Environment (Protection) Act, 1986. Rule 3A(6) was included
in the notification constituting the District Level Expert Appraisal Committee
(DEAC). The DEAC was mandated to screen, scope and appraise projects or
activities in Category A, B1, B2 and B2 projects of minor minerals. Para 5 of the
notification dated 14th September, 2006 was substituted and amended to read that
the “same Expert Appraisal Committees at the Central Government, SEACS at the
State or Union Territory level and DEAC at the district level shall screen, scope
and appraise projects or activity in category ‘A’, ‘B1 and B2’ and ‘B2’ projects
for mining of minor minerals of lease area less than and equal to five hectare
respectively.” A provision for mandatory prior EC in all cases to be made by the
project proponent in the prescribed format was included in para 6.

16
28. In Para 7(iii), preparation of District Survey Report (DSR for brevity) for
sand mining or river bed mining and mining of other minor minerals was
prescribed.
29. Amendment in the notification to include qualifications and terms for the
Experts in DEIAA and DEAC were prescribed in Appendix VII while the
procedure for preparation of DSR was provided in Appendix X.
30. Mr. F. A. Natnoo, ld. AAG has drawn our attention to the procedure
prescribed which required that a survey is to be carried out by the DEIAA with the
assistance of the Geology Department or the Irrigation Department or the Forest
Department or the Public Works Department or the Ground Water Boards or the
Remote Sensing Department or the Mining Department etc in the district.
31. For the first time, the procedure for EC for mining of minor minerals,
including for cluster mining, was prescribed at Appendix XI. This was clearly in
terms of the pronouncement of the Supreme Court in Deepak Kumar.
32. It is pointed out that most of the appellants before us fall in the category of
0-5 ha while some are in the less than 10 ha category. As per Appendix XI, this
activity fell in the B2 category. EC was required for their mining activity which
was to be appraised and granted by the DEIAA/DEAC.
33. So far as the projects which were between 25-50 ha are concerned, approved
Mining Plan, [Environment Management Plan (EMP for brevity)] as well as EC
was mandatory which was to be considered and granted by the SEAC/SEIAA.
34. On 6th January, 2016, the erstwhile State of Jammu & Kashmir vide SRO
103 issued the Jammu and Kashmir Minor Mineral Concession, Storage,
Transportation of Minerals and Prevention of Illegal Mining Rules, 2016.

17
35. This was followed with a notification SO141(E) dated 15th January, 2016
issued by the MOEF&CC, Government of India, in compliance of the aforesaid
decision of the Supreme Court in Deepak Kumar’s case.
36. Mr F. A. Natnoo, ld. AAG, has also drawn our attention to the notifications
dated 20th January 2016 and 1st July 2016 amending the aforesaid notification
dated 14th September, 2006 issued by the MOEF&CC.
37. The notifications dated 15th January, 2016, 20th January, 2016 and 1st July,
2016 were challenged before the NGT, Principal Bench, New Delhi by way of
O.A.186/2016, Satendra Pandey v. Ministry of Environment, Forest & Climate
Change and anr. and several connected petitions. The challenge was inter alia
premised on the ground that, in the notification, the B Category projects and
activities as stood originally, had been broken into B-1 and B-2 category activities.
Mining of minor minerals for areas from 25 ha to 50 ha was within the B-1
category and between 0-25 ha was in B-2 category.
38. The grievance was that in this manner the notification dated 15th January
2016 exempted the B-1 category from the rigour of compliance of obtaining the
EIA and approval of EMPs. Whereas in the notification of 2006, these were
necessary for all activities from 5-50 ha. It was contended that this was contrary to
the mandate of the Deepak Kumar.
39. Additionally, it was complained that projects classified in the B.2 category
of 0-5 ha under individual and cluster category, stood exempted from the
requirements of preparing an EIA and EMP and that those more than 5 ha and less
than or equal to 25 ha, had been exempted from preparing EIA Report which was
also beyond what was provided in the notification of 2006. The submission was
that EIA/EMP was an integral and critical component of EC whereby potential

18
impact and risk of a project could be assessed and mitigation measures formulated
and adopted in the EMP.
40. The NGT considered the matters at length and in Para 9 & 10 of its order
dated 13th September 2018 is Satendra Pandey holding as follows:
“9. Upon consideration of the fact and circumstances set out in the
original application and upon hearing the Ld. Counsel for parties, we
find that the impugned Notification dated 15th January, 2016 is not
consistent with the decision of the Hon’ble Supreme Court in the
case of Deepak Kumar (supra). We find substance in the submissions
of the Ld. Counsel for the applicant that while breaking category B of
the mines to B-1 & B-2 may not per se be bad, it certainly dilutes the
stringent requirement of lease areas up to 25 ha being exempted
from the necessity of submitting EIA and EMP for grant of
Environmental Clearance. It is undisputed that the impugned
Notification is issued with the object to comply with the directions
passed in the case of Deepak Kumar (supra).
xxxxx
41. The NGT considered the impact of illegal riverbed mining on the banks of
River Subarnarekha in Odisha in O.A. No. 173/2018, Sudarsan Das v. State of
West Bengal and ors. We notice the proceedings in the case a little later hereafter.
42. The NGT also considered (in Satendra Pandey, 13-09-2018) the
requirements under the Sustainable Sand Mining Management Guidelines, 2016
prepared by the MoEF&CC. While considering the correctness of the prescriptions
made in the notification dated 15th January 2016 with regard to the splitting of
areas, exemptions from EIAs and public hearings, observed as follows:
“12. The only contention that require for us to consider in this case is
as to whether the Notification dated 15th January, 2016 would satisfy
the spirit of the directions issued in the case of Deepak Kumar
(supra). As already noted, EIA Notification dated 14th September,

19
2006 under the Schedule provided there to require all mining lease
area of equal to and up to 50 ha to seek Environment Clearance
requiring to submit EIA for appraisal from the SEIAA.
13. The impugned Notification dated 15th January, 2016, however,
would clearly indicate that Category B has been split into category B1
and B2 and again, category B2 has been further split into areas of 0-5
ha and 5-25 ha. Xxxx
15. Introduction of such procedure, in our view, is clearly not
consistent with the directions contained in the case of Deepak Kumar
(supra) and the spirit behind such direction. By the provision, mining
area up to from 5ha to 25 ha has been completely exempted from the
EIA and Public Consultation. For areas of 5 ha and below, apart
from the exemption, it has been made only subject to a separate
procedure of preparing a District Survey Report (DSR).These
provisions quite apparently are more mine-centric rather than
striving a balance between mining and environment especially with
regard to Form-1M which needs to be made more elaborate
incorporating environment related aspects.xxxx
17. Thus, even according to the Sustainable Sand Mining
Management Policy issued by the MoEF & CC, by dispensing with
Public Hearing, the judgment of the Hon’ble Supreme Court in the
case of Deepak Kumar (supra) will stand defeated.”
(Emphasis by us)
43. The NGT also emphasized the parameters for consideration of the fitness of
an area for mining while preparing the District Mining Plan and Report vis-à-vis
the EIA. The importance of public hearing for EIA was also highlighted thus:
“18. We also find that parameters for consideration while preparing

District Mining Plan (DMP) and District Survey Report (DSR)are
only for the purpose of ascertaining whether an area is fit for mining
which are quite different from the parameters laid down for EIA.
The consideration of the view point of the public by keeping DSR in

20
public domain is not a substitute of Public Hearing for consideration

of the view point of the public for EIA.
xxx xxx xxxx xxxx
21. Dispensing with the requirement of Public Hearing which forms

a part of the Public Consultation under Stage-III of the
Environmental Clearance process under EIA Notification,2006 for
areas measuring 0 to 25 ha for individual mine areas and in cluster
situation where public hearing has been provided, has resulted in
gross dilution of EIA Notification dated 14th September, 2006. Such
dilution would, in our view, result in its misuse by unscrupulous
elements and the situation would revert back to the lawless state
prevailing prior to the decision in the case of Deepak Kumar (supra).
Stringent measures are, therefore, necessary if the rampant
exploitation of the minor minerals is to be curbed. This apparently
was also the view of the Hon’ble Supreme Court in the case of Deepak
Kumar (supra).”
(Emphasis by us)
44. On 13th September, 2018, the NGT finally directed as follows:
“22. For all these reasons, we direct that the procedure laid down in
the impugned Notification be brought in consonance and in accord
with the directions passed in the case of Deepak Kumar (supra) by (i)
providing for EIA, EMP and therefore, Public Consultation for all
areas from 5to 25 ha falling under Category B-2 at par with
Category B-1 by SEAC/ SIEAA as well as for cluster situation
wherever it is not provided; (ii) Form-1M be made more
comprehensive for areas of 0 to 5 ha by dispensing with the
requirement for Public Consultation to be evaluated by SEAC for
recommendation of grant EC by SEIAA instead of DEAC/DEIAA;
(iii) if a cluster or an individual lease size exceeds 5 ha the EIA/EMP
be made applicable in the process of grant of prior environmental
clearance; (iv) EIA and/or EMP be prepared for the entire cluster in

21
terms of recommendation 5 (supra) of the Guidelines for the purpose

of recommendations 6, 7 and 8 thereof; (v) revise the procedure to
also incorporate procedure with respect to annual rate of
replenishment and time frame for replenishment after mining
closure in an area; (vi) the MoEF & CC to prepare guidelines for
calculation of the cost of restitution of damage caused to mined-out
areas along with the Net Present Value of Ecological Services
forgone because of illegal or unscientific mining.
24. It is reiterated that any attempt to split the lease area for the
purpose of avoiding the applicable regulatory regime shall be viewed
seriously. This in our view will be in the interest of the environment as
deliberated in detail in the case of Deepak Kumar (supra) and would
also satisfy the Precautionary Principle and the Principle of
Sustainable Development contemplated under Section 20 of the
National Green Tribunal Act, 2010.
25. The MoEF & CC shall, therefore, take appropriate steps to revise
the procedure laid down in the impugned Notification dated 15th
January, 2016 in terms of the above directions and observations so
that it is conformity with the letter and spirit of the directions passed
by the Hon’ble Supreme Court in Deepak Kumar (supra).The
applications stand disposed of.”
(Emphasis by us)
45. The impact of the judgment dated 13th September 2018 of the NGT was that
all ECs became required to be granted by the SEIAA instead of DIAA [Direction in
para 22(ii)] and public consultation for all areas of 5-25 ha falling in B2 category
at par with category B1 by the SEAC/SEIAA instead of DEAC/DEIAA, was made
mandatory.

22
II Relevant statutory provisions and the Rule position so far as

erstwhile State of Jammu and Kashmir (now Union Territory of
Jammu & Kashmir and Ladakh)
46. Before undertaking an analysis of the factual background and the issues
arising in these appeals, let us consider the relevant statutory provisions of the
Mines and Minerals (Development and Regulation) Act, 1957, (hereafter referred
to as the ‘Act’) as well as the applicable Rules framed thereunder as applicable to
the former State of Jammu & Kashmir, now Union Territory of Jammu &
Kashmir, against the background of the aforenoticed authoritative and binding
pronouncements of the Supreme Court of India as well as the NGT, and in the
context of the directions and notifications of the Central Government. This Act
was promulgated on 28th of May, 1957 and extended to the whole of India. Section
15 and 23 thereof enabled the State / Union Territory Governments to make rules
regarding minor minerals. We extract the relevant provisions hereunder which
have a bearing on our consideration.
“Section 3. Definitions.- In this Act, unless the context otherwise

requires:-
Section 3(a) “lease area” means the area specified in the mining lease
within which mining operations can be undertaken and includes the
non-mineralised area required and approved for the activities falling
under the definition of mines as referred to in clause (i).
Section 3(c) “mining lease” means a lease granted for the purpose
of undertaking mining operations, and includes a sub-lease granted
for such purpose.
Section 3(d) “mining operations” means any operations undertaken
for the purpose of wining any material.
Section 3(f) “prescribed” means prescribed by rules made under this
Act.

23
Section 3(g) “prospecting licence” means a licence granted for the

purpose of undertaking prospecting operations.
Section 3(ga) “prospecting licence-cum-mining lease” means a two
stage concession granted for the purpose of undertaking prospecting
operations followed by mining operations.
Section 3(h) “prospecting operations” means any operations
undertaken for the purpose of exploring, locating or proving mineral
deposits.
Section 4. Prospecting or mining operations to be under licence or
lease.- (1) No person shall undertake any reconnaissance,
prospecting or mining operations in any area, except under and in
accordance with the terms and conditions of a reconnaissance permit
or of a prospecting licence, or, as the case may be, of a mining lease,
granted under this Act and the rules made thereunder:
Provided that nothing in this sub-section shall affect any
prospecting or mining operations undertaken in any area in
accordance with the terms and conditions of a prospecting licence or
mining lease granted before the commencement of this Act which is in
force at such commencement:
Provided further that nothing in this sub-section shall apply to
any prospecting operations undertaken by the Geological Survey of
India, the Indian Bureau of Mines, [the Atomic Minerals Directorate
for Exploration and Research] of the Department of Atomic Energy of
the Central Government, the Directorates of Mining and Geology of
any State Government (by whatever name called), and the Minerals
Exploration Corporation Limited, a Government company within the
meaning of [clause (45) of Section 2 of the Companies Act, 2013(18 of
2013), and any such entity that may be notified for this purpose by the
Central Government]:]
[Provided also that nothing in this sub-section shall apply to
any mining lease (whether called mining lease, mining concession or
by any other name) in force immediately before the commencement of
this Act in the Union Territory of Goa, Daman and Diu.]

24
[(1-A) No person shall transport or store or cause to be

transported or stored any mineral otherwise that in accordance with
the provisions of this Act and the rules made thereunder.]
No [reconnaissance permit,] prospecting licence or mining
lease shall be granted otherwise than in accordance with the
provisions of this Act and the rules made thereunder.
[(3) Any State Government may, after prior consultation with
the Central Government and in accordance with the rules made under
Section 18, [undertake reconnaissance, prospecting or mining
operations with respect to any mineral specified in the First Schedule
in any area within that State which is not already held under any
reconnaissance permit, prospecting licence or mining lease].
Section 4-A. Termination of prospecting licences or mining lease.-
(1) Where the Central Government, after consultation with the State
Government, is of opinion that it is expedient in the interest of
regulation of mines and mineral development, preservation of natural
environment, control of floods, prevention of pollution, or to avoid
danger to public health or communications or to ensure safety of
buildings, monuments or other structures or for conservation of
mineral resources or for maintaining safety in the mines or for such
other purposes, as the Central Government may deem fir, it may
request the State Government to make a premature termination of a
prospecting licence or mining lease in respect of any mineral other
than a minor mineral in any area or part thereof, and , on receipt of
such request, the State Government shall make an order making
premature termination of such prospecting licence or mining lease
with respect to the area or any part thereof.
(2 ) Where the State Government is of opinion that it is expedient in

the interest of regulation of mines and mineral development,
preservation of natural environment, control of floods, prevention of
pollution or to avoid danger to public health or communications or to
ensure safety of buildings, monuments or other structures or for such

25
other purposes, as the State Government may deem fit, it may, by an

order, in respect of any minor mineral, make premature termination of
prospecting licence or mining lease with respect to the area or any
part thereof covered by such licence or lease.
(3) No order making a premature termination of a prospecting
licence or mining lease shall be made except after giving the holder of
the licence or lease a reasonable opportunity of being heard.
Section 7- Periods for which prospecting licences may be granted or

renewed:-
(1) The period for which a [reconnaissance permit or] prospecting
licence may be granted shall not exceed three years.
(2) A prospecting licence shall, if the State Government is satisfied
that a longer period is required to enable the licencee to complete
prospecting operations be renewed for such period or periods as that
Government may specify:
Provided that the total period for which a prospecting licence is
granted does not exceed five years;
Provided further that no prospecting licence granted in respect of a
mineral included in [Part-A and Part-B to] the First Schedule shall be
renewed except with the previous approval of the Central
Government.]
Section 9- Royalties in respect of mining leases.―(1) The holder of a

mining lease granted before the commencement of this Act shall,
notwithstanding anything contained in the instrument of lease or in
any law in force at such commencement, pay royalty in respect of any
1 [mineral removed or consumed by him or by his agent, manager,
employee, contractor or sub-lessee] from the leased area after such
commencement, at the rate for the time being specified in the Second
Schedule in respect of that mineral.
(2) The holder of a mining lease granted on or after the
commencement of this Act shall pay royalty in respect of any 1
[mineral removed or consumed by him or by his agent, manager,

26
employee, contractor or sub-lessee] from the leased area at the rate

for the time being specified in the Second Schedule in respect of that
mineral.
2 [(2A) The holder of a mining lease, whether granted before or after
the commencement of the Mines and Minerals (Regulation and
Development) Amendment Act, 1972 (56 of 1972) shall not be liable to
pay any royalty in respect of any coal consumed by a workman
engaged in a colliery provided that such consumption by the workman
does not exceed one-third of a tonne per month.]
(3) The Central Government may, by notification in the Official
Gazette, amend the Second Schedule so as to enhance or reduce the
rate at which royalty shall be payable in respect of any mineral with
effect from such date as may be specified in the notification: 3
[Provided that the Central Government shall not enhance the rate of
royalty in respect of any mineral more than once during any period of
4 [three years].
Section 15 Power of State Governments to make rules in respect of

minor minerals - (1) The State Government may, by notification in the
Official Gazette, make rules for regulating the grant of [quarry
leases, mining leases or other mineral concessions] in respect of
minor minerals and for purposes connected therewith.
[(1-A)] In particular and without prejudice to the generality of the
foregoing power, such rules may provide for all or any of the following
matters, namely:-
(a) The person by whom and the manner in which, applications for
quarry leases, mining leases or other mineral concessions may be
made and the fees to be paid therefor;
(b) The time within which, and the form in which, acknowledgement
of the receipt of any such applications may be sent;
(c) The matters which may be considered where applications in
respect of the same land are received within the same day;

27
(d) The terms on which, and the conditions subject to which and the
authority by which quarry leases, mining leases or other mineral
concession may be granted or renewed;
(e) The procedure for obtaining quarry leases, mining leases or
other mineral concessions;
(m) The reports and statements to be submitted by holders of quarry
or mining leases or other mineral concessions and the authority to
which such reports and statements shall be submitted.
47. The provisions of the Jammu and Kashmir Minor Mineral Concession
Storage, Transportation of Minerals and Prevention of Illegal Mining Rules,
2016 which have been relied upon before us, for expediency, are extracted below:
Chapter I-Preliminary
“ xxxx Rule 2(xi) Competent Authority means the authority
competent to grant of mining lease under rule 42 of these rules.
Rule(xii) Competitive Bid means an amount offered by the
participants in the open auction under these rules.
Rule 2(xxii) Environment Management Plan (EMP) means a plan
submitted by Lessee or Licencee falling in a cluster which is prepared
by Recognized Qualified Person approved by the Environment
Committee of Government of Jammu and Kashmir for providing
environmental safeguards.
Rule 2(xxiii) Excavation means extraction or digging and or
collection/removal of minor minerals from any land, river, nallah,
canal or hillock.
Rule 2(xxxiii) Letter of Intent (LoI) means a Letter of Intent issued to
the successful bidder on acceptance of the bid/application for grant of
a mining lease, quarry licence.
Rule 2(xxxvi) Minor Mineral Block means an area not less than 05
hectares and nor more than 50 hectares in a continuous stretch of
land/water body, having defined limits with the evidence of one or
more minor minerals than can be feasibly exploited.

28
Rule 2(xxxvii) Minor Mineral Plot means an area not less than 01
hectares and not more than 05 hectares in a continuous stretch of
land/water body, having defined limits with the evidence of one or
more minor minerals that can be feasibly exploited.
Rule 2(xxxviii)Minor Concession means a Mining Lease, Mining
Licence, Quarry Licence, Short Term Permit and Disposable Permit
in respect of minor mineral permitting the mining of minor mineral in
accordance with these rules.
Rule 2(xL) Mining Lease means a lease granted under these rules to
undertake excavation and to carry away any minor mineral specified
therein.
Rule 2(xLii) Mining Plan means a plan prepared by a Recognized
Qualified Person (RQP) on behalf of mineral concession holder of
minor mineral and includes progressive and final mine closure plans
duly approved under these rules and without which mining activity
cannot be undertaken.
Rule 2(xLviii) Open auction/e-auction Open Auction or e-auction
means bidding by the competitors online or through physical presence
before the auction committee for grant of mineral concessions.
Rule 2(Liv) Quarry means any area declared as such by the Director
or Officer Incharge as authorized by the Government in this behalf.
Rule 2(Lv) Quarry Licence means a licence granted under these
rules to excavate minor mineral from any specified mineral deposit or
plot.
Rule 2(Lxv) Unauthorized Mining means any mining operation
undertaken without any valid mineral concession granted under the
Act and rules made thereunder.
Chapter II Grant of Minor Mineral Concession
Rule 6. Mining Plan as a pre-requisite to the grant of minor mineral
concession.-
(1) No person shall be granted any minor mineral concession in any
area under these rules unless a mining plan is submitted and approved
under the provisions of these rules:

29
Provided that no such plan shall be required for short term

permit or disposal permit as defined in these rules.
(2) No person shall commence mining operations for minor
minerals in any area except and in accordance with a mining plan
approved under these rules.
Rule 11. Registration of Recognized Qualified Person (RQP).-

(1) No person shall be registered as a Recognized Qualified Person
by the Director, unless he possesses.-
(i) a degree in Mining Engineering or a postgraduate degree in
Geology granted by a University established or incorporated by or
under an Act of the Parliament or Act of State Legislature or any
institution recognized or incorporated by the University Grants
Commission established under section 4 of the University Grants
Commission Act, 1956 (3 of 1956) or any qualification equivalent
thereto granted by any University or Institution outside India and
possessing a professional experience of five years of working in a
supervisory capacity in the field of mining or mineral administration
after obtaining degree; or
(ii) a three year full time diploma certificate in Mining Engineering
awarded by a State Technical Education Board or a University or
Authority recognized by the Govt. of India and possessing professional
experience of 10 years of working in a supervisory capacity in the field
of mining or mineral administration after obtaining the diploma.
(2) Any person possessing the qualification and experience as
prescribed under sub-rule(1) may apply to the Director, for
registration as a Recognized Qualifying Person along with a fee of
Rs.10,000/- (Rupees ten thousand only).
(3) The Director may, after making such enquiry as deemed
appropriate, grant or refuse registration and where registration is
refused, the Director shall record the reasons therefore in writing and
communicating the same to the applicant.
(4) The registration granted under sub-rule (2) shall be valid for a
period of 10 years.

30
(5) The registration can be renewed on filing of application and

deposit of such fee as may be prescribed, from time to time, for a
further period of 10 years.
Rule 12. Approval of Mining Plan/Scheme of Mining.
(1) The Government or any Officer authorized by the Government

in this behalf shall approve the mining plan or such modified mining
plan or scheme of mining with or without any modification within a
period of forty-five days from the date of receipt or submission of such
application for approval of mining plan or modified mining plan or
scheme of mining, as the case may be.
(2) The officer authorized by the Government for purposes of
approving the mining plan/scheme under sub-rule (1) shall possess the
qualifications as prescribed under clause (XLVII) of rule 2 of the
rules.
Chapter III-Environmental safeguards
Rule 13. Protection of Environment.- Every holder of minor
mineral concession shall take all possible precautions for the
protection of environment and control of pollution while conducting
mining operations in the minor mineral concession area:
Provided that the concessionaire shall submit the Environment
Clearance from the District Environment Committee in respect of his
minor mineral concession area as per the notification issued by
Ministry of Environment and Forests (MoEF), GoI from time to time.
Provided that no such clearance shall be required in case of
Short Terms/Disposal Permit issued to the State Government/Central
Government agencies.
Rule 15. Environment Management Plan for Cluster of Quarries.

(1) For a cluster, Environmental Management Plan shall be
collectively prepared by the minor mineral concessionaire of the
cluster through a recognized qualified person and submitted to the
District Environment Committee for final approval by the Government
or the authorized officer of the Government in this behalf separately.

31
(2) Environment Clearance is to be sought from the Ministry of

Environment, Forest and Climate Change (MoEFCC), Government of
India in case of mining area/cluster is 50 hectares or more and from
the State Level Environment Impact Access Authority (SIEAAs) for
such areas/clusters less than 50 hectares, as per Impact Assessment
Notification, 2006 with amendment of 2009 and memorandum issued
by MOEFCC, GoI of May 18, 2012 for areas less than 5 hectares and
such other amendments as may be notified from time to time.
Chapter IV-Grant of Mining Leases
Rule 26. Restriction on grant and renewal of Mining Lease.––
(1) No Mining lease shall be granted by the competent
authority unless the authority is satisfied that there is evidence to show
that the area for which the lease is applied for has occurrences of
minor mineral.
(2) No lease shall be granted or renewed by the competent authority
unless there is a mining plan duly approved under these rules and
environmental clearance has been obtained by the applicant
irrespective of the size of the mining area.
Rule 27. Procedure for grant of mining lease.––Any minor mineral
deposits may be granted for a mining lease by the Competent Authority
for a period of not less than 05 years but not exceeding 15 years
depending upon the nature of the mineral deposit:
Provided that where minerals are deposited I the State land, the
lease shall be granted after following an open auction process as
provided under Chapter-VI of these rules excluding:
Provided also that where the minerals are not deposited in the
State and, permission shall be granted to the owner of the (Private
Land) or his authorized representative for mining/extraction only after
fulfilling the criteria provided under the provisions of these rules –
(i) the quarry areas ancestrally occupied and certified by the
revenue authorities in this regard; and
(ii) areas earmarked for operation by such public sector
undertaking as the Government may direct:

32
Provided further that Director shall constitute one or more

Committees for identification of minor mineral blocks having an area
not less than 05 hectares but not more than 10 hectares which shall be
put to open auction after approval from the competent authority.
Rule 28. Application for grant or renewal of mining lease of
minor minerals.-
(1) Every application for grant of mining lease shall be made to the
authorized officer in Form ML1.
(2) Every application for renewal of mining lease shall be made to
the authorized officer at least 12 months before the date of expiry of
such lease in Form ML2.
(3) Every application made under sub-rules (1) and (2) above shall
be accompanied by, -
(i) a non-refundable fee of Rs.50,000/ ;
(ii) a plan of the area on suitable scale connecting one or more of
the corner pillars with a fixed reference point in vicinity with accurate
bearings and distances and descriptions of the area applied for and
incorporated with title verification of the land;
(iii) a copy of No Due Certificate from officer authorized by the
Government in this behalf:
Provided that where any injunction has been issued by the Court or
any other authority staying recovery of any dues, the non-payment
thereof shall not be treated as a disqualification for the purpose of
granting or renewing the lease:
Provided further that No Due Certificate shall not be required where
a person has furnished an affidavit certified by a Civil Court to the
satisfaction of the department stating that he or any member of his
family does not or did not hold a mining lease or any other type of
mineral concession and no dues or the department are outstanding
against him or any member of this family.
(iv) an affidavit giving particulars of mineral-wise area already held
under mining lease/prospecting licence/quarry licnence, -
(a) by the applicant; or

33
(b) with any person having joint interest; or

(c) already granted but not yet executed/registered; or
(d) already applied but not yet granted.
(v) Income Tax Clearance Certificate/Income Tax Return of the
previous year;
(vi) Copy of ADHAR Card and PAN Card.
Rule 31. Renewal of Mining Lease applications and mining
leases. – The competent authority may refuse or grant or renew any
mining lease subject to reasons to be recorded and communicated to
the applicant in writing.
Rule 40. Execution of Lease.-
(1) Where the lease has been granted or renewed under these rules,
the lessee shall pay demarcation fee, deposit the security alongwith
one quarterly installment of annual dead rent and submit requisite
stamps for execution of formal lease deed in Form ML10 within 30
days from the date of issue of order of grant.
(2) The lease deed shall be executed within three months from the date
of issue of order of grant and the Director shall sign the lease.
(3) The lease deed shall be got registered by the lessee within a period
of one month from the date of execution of the lease deed and
registered lease deed shall be submitted immediately to the Director.
(4) Where the grantee fails to comply with the provisions of sub-rules
(1), (2), & (3) above, the order granting the lease shall be deemed to
have been revoked and amount of security and dead rent deposited by
him shall stand forfeited:
Provided that if the grantee applies before expiry of 30 days specified
in sub-rule (1) for extension of time for completing the formalities
mentioned therein, the competent authority may allow further time not
exceeding 30 days it is is satisfied that there are sufficient reasons to
believe that the grantee is not responsible for the delay in the
execution/ registration/submission of lease deed. The competent
authority may permit the execution/registration/ submission and return
of the lease deed within a reasonable time after expiry of aforesaid

34
period subject to payment of penalty @ 10% of annual dead rent for

every month of delay or part thereof.
(5) After the registration of duly executed lease deed under sub rule
(2) the Director or the Officer authorized by the Government shall
make arrangements at the expenses of the lessee for demarcation of
the granted area:
Provided that where the competent authority feels it necessary to
demarcate the area before issuing an order of grant for mining lease,
it may ask the applicant to deposit the demarcation charges as may be
determined within time specified by him and get the area demarcated:
Provided further that if the applicant fails to deposit demarcation
charges within the period specified in this regard by the competent
authority, the order for grant of lease shall stand cancelled.
Rule 42 Authority to granting Mining Lease. - The authority to
grant mining lease renew/terminate/transfer shall be Director for an
area up to 10 hectares.
Chapter V-Grant of Quarry Licence
Rule 44 Procedure for grant of Quarry Licence. - Any minor
mineral deposits which in the opinion of the Director are to be
operated under Quarry Licence, he may grant such licence for a
minimum period of the years which may extend up to five years. The
lease/quarry licence shall be renewed after expiry of five years and the
area shall be put to auction after expiry of the period of lease/licence:
Provided that where minerals are deposited in the State Land,
the lease shall be granted after following an open auction process as
provided under Chapter-VI of these rules excluding:
Provided also that where the mineral does not vest with the
Government (State Land), the licence for mining/extraction shall be
granted to the owner (Private Land) or his authorized representative
after fulfilling required conditions and procedure as provided under
these rules.
(i) The quarry areas ancestrally occupied and certified by the
revenue authorities in this regard; and

35
(ii) areas earmarked for operation by such public sector

undertaking as the Government may direct:
Provided further that the Director shall constitute one or more
Committee for identification of minor mineral plots having a minimum
area of 1 hectare and not exceeding 05 hectares which shall be put to
open auction after approval from the Competent Authority.
CHAPTER-VI Auction
Rule 52 Grant of Mining Lease/Quarry Licence.-Mining leases
and quarry licences shall be granted only through a process of open
auction by the authority competent to grant lease/licence:
Provided that the mining leases through open auctioin up to 5
hectares shall be granted only to permanent residents of Jammu and
Kashmir State and above 5 hectares, preference will be given to State
subject either individually or in Joint Venture with non-residents.
Rule 53 Auction Committee.- In each district grant of mining
concessions shall be conducted through auction by a Committee
consisting of following officers:-
1. Dy. Commissioner (Chairman)

concerned or an
officer authorized by
him not below the
rank of Additional
Deputy
Commissioner
2. Superintending (Member)
Engineer (R&B) or
an officer authorized
by him not below the
rank of Executive
Engineer
3. District Treasury (Member)
Officer
4. Executive Engineer (Member)

(I&FC)
5. Officer of the (Member)

department not
below the rank of

36
Deputy
Director/Mining
Engineer
6. Officer Incharge of (Member)
the department of the
concerned district
Rule 55 Terms and conditions for grant of Mineral Concession

through auction.-
“(1) The auction of mineral concession area shall be conducted at the
District headquarter of the concerned district by the Chairman of the
auction committee in presence of its members.
xxxxxxxx xxxxxxxxxxx xxxxxxxxxxxx
(6) The Chairman shall conduct the auction in the peaceful manner
and may direct any bidder to leave the auction premises in the event of
misbehavior during the course of auction and shall reject his bid or, if
necessary, debar him for a period of three years from the date of
misbehaving for grant of any Concession under these rules including
forfeiture of earnest money deposited by such bidder.
(7). On completion of the bid process i.e. fall of the hammer, the
Chairman may provisionally accept or reject the highest bid offered or
received during the auction proceedings and shall send his
recommendations to the Director. The highest bidder shall have to
deposit 50% of the bid amount after completion of the auction
process:
Provided that in case the auction proceedings are not conducted

under the Chairmanship of Deputy Commissioner, the
recommendations as required under clause (6) above shall be made
with the approval of the Dy. Commissioner concerned.
(8) No highest bid shall be regarded as accepted unless approved

by the Director in case the highest bid is up to Rs.150.00 lacs and by
the Government in case the highest bid is above Rs.150.00 lacs.

37
(9) Once a bid is provisionally accepted, Director shall issue Letter

of Intent (LoI) to the concerned bidder to complete the formalities as
required for the grant of mining lease or quarry licence under these
rules within a period of six months including deposition of
remaining bid amount. The concerned bidder shall not extract or
allow any extraction till such mining lease or quarry licence is
granted.
(10) The bid amount offered by the successful bidder shall be

considered as guarantee amount for grant of such mineral
concession.”
III Defiance of the law-Rule 104A - a special provision in Jammu &

Kashmir
48. There is one additional and unique event which took place in the erstwhile
State of Jammu and Kashmir. The order dated 27th February 2012 of the Supreme
Court of India in Deepak Kumar was forwarded by the Additional Registrar of the
Supreme Court of India to the then State Government. Steps were to be taken to
comply with the orders of the Supreme Court; the Report of 2010 of the
MOEF&CC and the Model Guidelines framed by the Ministry of Mines.
Deliberations commenced in the concerned Departments of the State which
continued from 2012 to 2016. Draft Rules though framed, remained under
consideration for several years interse the various authorities. We find that issues
relating to minor mineral’s concessions were receiving close attention in the
Geology and Mining Department which was concerned with the matter.
49. The respondents have placed their original file No.IND/Legal-27/2013-II
before us. From these records of the respondents with regard to the Rules, we find
a statement of Financial Commissioner (I&C) dated 12th February 2015 (at page 49
to 51) of the note sheet in the file, to the effect that State of Jammu and Kashmir

38
stood “endowed with mineral resources covering an area of 13334 sq. Kms, out of
which 60% are reported to be commercially viable for mining of various
minerals.”
50. With regard to the nature of the State’s mineral wealth, para 141[part of the
above noting dated 12.02.2015 of the Financial Commissioner (I&C)] in the note
sheet while forwarding the Draft Rules is enlightening. It is to the following effect:
“141. The Department of Geology and Mining, Jammu & Kashmir,

was established in 1960 to identify/locate minerals like Limestone,
Gypsum, Marble, Lignite, Granite, Bauxite, Coal, Magnesite, Slates,
Sapphire, Dolomite, Borax, Graphite, Quartzite etc. A number of
Cement based Industries as well as units for manufacture of plaster of
Paris, Marble and Granite cutting units, have been established in the
State. The Geology and Mining Department is authorized to receive
the royalty on the extraction of major as well as minor minerals as per
the scheduled rates, fixed by the Central Government in respect of
major minerals and State Government in respect of minor minerals.
There are large minor mineral deposits available within the State with
huge potential for commercially viable exploration and industrial
use.”
51. Vide SRO 58 of 1962 dated 10th April 1962, J&K Minor Mineral
Concession Rules, 1962 were framed and issued. These Rules also governed grant
of short term quarry permits, contracts in respect of the minor minerals and
royalty collections besides containing provisions for grant of certificates of
approval, prospecting licences and mining leases.
52. Interestingly, as noted above, these Rules prescribed grant of these licences
on ‘first come first served basis’ and were made as per the needs at that point of
time. For instance, the rate of royalty at the time of notification dated 10 th April

39
1962 had to be calculated as per mules, horses and donkeys which, with passage of
time, had become redundant and meaningless.
53. Before the Srinagar Wing of this Court, the issue of non-compliance with
the judgment of the Supreme Court was also raised inter alia in PIL no.
1553/2011, Sofi Arif Maqbool v. State and others; PIL no. 10/2012 and OWP no.
461/2011.
54. In Sofi Arif Maqbool, the Court granted limited time period for
formulation/issuance of these rules.
55. After a detailed deliberation, the rules which were finalized i.e. Jammu &
Kashmir Minor Minerals Concession, Storage, Transportation of Minerals and
Prevention of Illegal Mining Rules, 2015, were assigned the number SRO 98
dated 31st March 2015 but not issued or published. These Rules were subject to
amendment with regard to conferment of powers for grant of leases, fixation of
royalty and other terms.
56. Thereafter SRO 3 of 2016 dated 06th January 2016 notified the Jammu and
Kashmir Minor Minerals Concession, Storage, Transportation of Minerals and
Prevention of Illegal Mining Rules, 2016 after seeking inputs from the relevant
departments, in exercise of power conferred by Section 15 read with Section 23-C
of the Mines and Minerals (Development and Regulation )Act, 1957.
57. This Government Order was assailed before this Court in OWP
No.283/2016, Surat Singh v. State of J&K and anr, complaining that these Rules
were unconstitutional.
58. We stand informed that almost four years after the pronouncement of the
Supreme Court in Deepak Kumar, the J&K State Government withdrew SRO 3 of
2016 dated 1st January, 2016 and on 31st March 2016, by a notification SRO 105

40
issued the J&K Minor Minerals Concession, Storage, Transportation of
Minerals and Prevention of Illegal Mining Rules, 2016 (Rules of 2016 hereafter).
By virtue of Rule 108 of these Rules, the Jammu and Kashmir Minor Mineral
Concession Rules, 1962 and the Jammu & Kashmir Minor Minerals Concession,
Storage, Transportation of Minerals and Prevention of Illegal Mining Rules, 2003
were repealed.
59. As per SRO 105, a mining lease/quarry licence could be granted only by an
open auction. These Rules were issued after inputs/ concurrence from Finance,
Forest and Irrigation and Flood Control Departments and approval by the then
Governor.
60. After the notification of the above Rules of 2016, an unusual discussion is to
be found in the original record which led to the issuance of Rule 104 A as a
transitory provision in the Rules. The file contains a noting dated 7th April 2016
(page 115) of the Deputy Secretary, I& C to the following effect:
“322. Noting from para 318 onwards.

It may be mentioned here that J&K Minor Mineral
Concession Rules notified vide SRO 105 dated 31-03-2016 where-
under every mining leases/quarry licences are to be granted through
open auction only. The Department have already conveyed approval
for conducting of auction of Minor mineral blocks of various districts
of the State.
324. The Director, G&M has requested that since the process will
take considerable time because the successful bidder has to obtain
several clearances/approvals like Mining Plan, Environmental
Clearances etc, therefore, Directorate of G&M may be authorized to
issue permission to the existing quarry holders/extractors/consumers
including projects of National/State importance and also to royalty
from carriers on spot for a period of one year as a breathing period.

41
Since rules does not permit such breathing time, it needs relaxation
by the competent authority.”
(Emphasis by us)
61. Based on this noting, a draft amendment to the Rules was prepared
proposing a transitory provision to be incorporated in the J&K Minor Minerals
Concession, Storage, Transportation of Minerals and Prevention of Illegal
Mining Rules, 2016 allowing the department to issue necessary permission for
extraction of minor minerals to existing quarry licencees, extractors and consumers
and also for transportation of such minerals on royalty basis for a period of six
months or till grant of concession under the Rules of 2016.
62. We find a noting of the Law Department in para 329 dated 15th April 2016
that the purpose of this draft was to ‘allow breathing period of six months to the
department to switch over to the new regime which required open auction of
minerals’.
63. It appears that the learned Advocate General of the State considered the
issue in the light of the pronouncement of the Supreme Court dated 27 th February
2012 and opined as follows:
“In my opinion, the proposed SRO, if approved, should only by way

of one time exception, that too as a last resort under the compelling
circumstances otherwise its continuation would in breach of the
guidelines of the Hon’ble Supreme Court of India. I am also of the
opinion that the maximum period during which Rule 104-A may
remain operative should not exceed more than eight weeks from the
date of its commencement.”
64. We are appalled that violation of an authoritative and binding judgment of
the Supreme Court could be legally advised. Despite admitted knowledge of the

42
clear dicta of the Supreme Court, with impunity the Government of Jammu and
Kashmir vide SRO 133 of 2016 dated 20th April 2016 (page 350 CF) effected a
crucial amendment to the Rules of 2016 by inserting the following as Rule 104-A
in the Rules of 2016:
“104-A. Transitory Provision – As a transitory measure and in

order to ensure uninterrupted supply of minor minerals to the
consumers, the department may issue permission valid up to 31st of
July, 2016 for extraction of minor minerals to any existing quarry
holder or to any person extracting such minor minerals or for
transportation of such minerals on royalty basis.”
(Emphasis by us)
65. The above Rule thus permitted short term permits with compliance with the
explicit requirements of sanctioned mining plans and EC against payment of
advance royalty to:
(i) the existing quarry holders;
(ii) Or any other person extracting such minor minerals.
(iii) On spot collection of royalty at check points against the actual
dispatches from any person transporting such minor minerals.
66. Noticeably the only purpose of this transitory provision was to ensure
‘uninterrupted supply of minor minerals to the consumers’.
67. Unfortunately the respondents did not follow even the advise of the
Advocate General dated 27th February 2012 that Rule 104A should only be a “one
time exception”. In brazen defiance of the law, the respondents proceeded to issue
orders extending Rule 104-A as follows:
S. No. By SRO No. & date Rule 104-A

extended up to
(i) SRO 269 dated 12.8.2016 31st March 2017

43
(ii) SRO 163 dated 03.04.2017 30th June 2017

(iii) SRO 265 dated 30.06.2017 30th September 2017
(iv) SRO 375 dated 11.09.2017 31st December 2017
(v) SRO 31 dated 23.01.2018 31st March 2018
(vi) SRO 161 dated 06.04.2018 30th June 2018
(vii) SRO 164 dated 11.04.2018 30th June, 2018
(viii) SRO 424 dated 20.09.2018 31st December 2018
(ix) SRO 93 dated 01.02.2019 28th February 2019
68. Rule 104-A has, therefore, not been treated as a transitory provision so far as
the categories of persons covered thereunder are concerned but actually enables
extraction and transportation of the minor minerals without completion of the
prescribed process, preparation of mining plan and without obtaining EC.
69. In a noting dated 30th August 2017 (in paras 465-466 of the official
record), it is observed that the department has obtained approval of the Chief
Minister for the extension of the transitory provision with effect from 01.04.2017
till 31.03.2018 and it was decided that the transitory provision “shall be issued in
a phased manner to bring pressure on subordinate staff to complete the auction
process”.
70. Completely untenable grounds for extension of its validity thus are found on
the official record. The respondents have utilised the shield of interim orders in
OWP No. 572/2016, M/s Upkar Stone Crusher and other v. State and anr., and
their inability to conduct auctions for proposing to extend the provisions from 1st
April 2017 to 31st March 2018. Whereas efforts ought to have been made to seek
final adjudication in Upkar Stone Crusher.
71. Interestingly, one of the note sheets dated 10th April 2018 (para 544, page
161 of the Govt. file) notes that the recommendation was for extension of the
transitory provision in favour of successful bidders having approved mining plans

44
‘ancestrally occupied quarry belts/clusters and for emergent nature works/projects
of the State and national importance and not to all persons.’
72. Para 545 thereafter records that “due to oversight the transitory provision
has been extended to all existing quarry holders or any person extracting such
minor mineral or for transportation of such minerals on royalty basis”.
73. In view thereof, another significant development deserves to be noted. It is
important to note that a Govt order SRO 164 dated 11th April 2018 was issued by
the official respondents in purported exercise of powers under Section 15 read with
Section 23-A of the Act of 1957 expanding the applicability of Rule 104 A. This
order directed that the existing Rule 104-A shall be substituted by the following:
“104-A. Transitory Provision – As a transitory measure Rule 104-A is

extended upto 30th June, 2018 in favour of the successful bidders
having approved mining plans, ancestrally occupied quarry
belts/clusters and for emergent nature works/projects of Central and
State Government to lift and transport minor minerals on royalty
basis in order to ensure uninterrupted supply of minor minerals to the
consumers”.
(Emphasis supplied)
Thus, the benefit under Rule 104A was extended to “successful bidders”
and “ancestrally occupied quarry belts/ clusters”, again in blatant violation of the
law.
74. Mr Sethi, learned Senior Counsel, represents eight persons who had filed
CMP No.1038/2020 in OWP No.363/2019 before the learned Single Judge seeking
impleadment as party respondents on the ground that they were vitally interested in
the outcome of the writ petitions for that they favour the decision of the
Government to allot mining leases only by e-auction. The applicants were
permitted to intervene in the matter. For this reason we have also permitted

45
intervention by these applicants and heard Mr Sunil Sethi, Senior Advocate, on
their behalf.
75. Mr Sunil Sethi, ld. Senior Counsel, has challenged the authority, power and
jurisdiction of the then State Government to enact Rule 104-A.
76. Mr Sunil Sethi, has placed reliance on the pronouncement of the Rajasthan
High Court dated 9th April 2019 in Civil writ No. 2996 of 2018, Bajri Lease Lol
Holders Welfare Society & Ors. Vs. State of Rajasthan & Ors. In this case, a
challenge was laid to the vires of sub rule 4 of Rule 5 of the Rajasthan Minor
Mineral Concession Rules 2017 which provided that in cases covered by Rule 5,
the conditions of Letter of Intent (LoI) including execution and registration of the
mining lease, shall be fulfilled within a period of one year from the date of
commencement of the Rules of 2017 failing which the right of the LoIs shall be
forfeited and in such cases it would not be mandatorily for the Government to issue
any order in this regard.
77. The rules were amended by the Government of Rajasthan after the judgment
of the Supreme Court in Deepak Kumar in 2017. The pivotal question which was
considered by the court was whether the LoI issued in favour of the petitioners who
were successful bidders under the Rules of 1986, created any vested right in their
favour which though protected under Rule 5 (2) of the rule, was adversely effected
by Rule 5 (4) which restricted the time limit for fulfillment of the conditions of the
LoI within a period of one year from the date of commencement of the Rules of
2017. On failure of the bidder to comply with the LoI terms, the rules postulated
forfeiture of the application fee, premium amount and performance deposit
automatically. Placing reliance on the pronouncement of the judgment Rishi Kirin

46
Logistics Private Limited; Bhushan Power and Steel Limited Hind Stone and
Ors., the Rajasthan High Court was of the view that the Rule 5(3) and 16(4)
postulated opportunity of hearing on the question of forfeiture of the application
fee on account of non-fulfillment of the conditions of the LoI within the stipulated
period. It was held that as such rule 5 (4) of the rules of 2017 deserves to be
declared as constitutionally valid and the writ petition was dismissed.
78. Mr Abhinav Sharma, ld. counsel has pointed out that the judgment of the
Division Bench of the Rajasthan High Court stands assailed before the Supreme
Court of India by way of SLP(C) No. 3486/2020 and an interim order dated 20th
February, 2020 has been passed therein.
79. Rule 104A was relied upon by the appellants before the Ld. Single Judge in
support of their submission that once the respondants had realized the difficulty in
obtaining EC, it was unfair to scrap the whole process in one go without good
reason. In para 75 of the impugned judgment, the Single Judge, while discussing
the impact of substitution of Rule 104A as issue No. (vi), has held that Rule 104A
was not only in violation of the provisions of the Act of 1957 and the rules framed
thereunder but was a clear affront to the Environment (Protection) Act, 1986 and
the Rules framed thereunder.
80. It has been urged by all Counsels appearing in these appeals that there was
no challenge to the constitutionality and legality of Rule 104-A in the writ petitions
and that the learned Single Judge had no jurisdiction to comment as above thereon.
This submission is to be noted only for the purposes of rejection.
81. It is urged that the respondents were supporting the incorporation and
working of Rule 104A on court record. Our attention is drawn by Mr P.N. Raina,
ld Senior Counsel to a response of the official respondents in OWP 1176/2018,

47
Radha Krishan and others vs Union of India & others defending the validity of
Rule 104 A in the following terms:
“xxiv. That it is respectfully submitted that since the auction process

in terms of the new scheme enunciated vide SRO 105 of 2016 was to
take time and in order to ensure uninterrupted supply for
developmental works of State and Central Government agencies
besides feeding raw material to the minor mineral based units, the
Government of Jammu and Kashmir has brought amendment to the
extent of incorporating a transitory provision in the shape of Rule
104-A vide SRO 133 of 20.04.2016 thereby authorizing the answering
respondent-Department to issue permission valid upto 31st of July,
2016 to any existing quarry holder or to any person extracting such
minor minerals on royalty basis. It is submitted that the time frame
fixed in the aforesaid SRO’s No. 269, 163 and 265, 375 & SRO No.31,
came to be extended, copies whereof are enclosed herewith and
marked as Annexure-XXI collectively. It is submitted that the
extensions as above were continued by virtue of the aforesaid SRO’s
till March, 2018.”
(Emphasis by us)
82. The above defence of their actions by the respondents to Radha Krishan is
of no legal consequence or effect.
83. We are informed that during the pendency of the writ petitions before the
Ld. Single Judge, the petitioner in OWP No. 1176/2018 Radha Krishan v. Union of
India, filed an application being CM 677/2020 seeking withdrawal of the petitioner
on the ground that petitioners were no more interested in prosecuting the matter. In
this background, on 3rd February, 2020, the writ petition was dismissed as
withdrawn.
84. We have extracted above the relevant statutory provisions. We find that
Section 4(1) of the Mines and Minerals (Development and Regulation) Act, 1957

48
(Act of 1957) unexceptionally prohibits undertaking any reconnaissance,
prospecting or mining operations in any area except under and in accordance with
the terms and conditions of a mining lease granted under the provisions of the Act.
85. So far as grant of mining lease is concerned, Section 4(2) absolutely
prohibits grant of a mining lease otherwise than in accordance with the provisions
of the Act and the Rules thereunder. Rule 26(2) also prohibits grant of a lease
unless mining plan is approved and EC obtained. The Rules of 2016 have been
notified in exercise of powers conferred under Section 15 read with Section 23C of
the Statute which contain specific prohibition to grant of mining lease without
ECs. There is an explicit bar under Rule 55(9) to the effect that the bidder whose
bid is provisionally accepted “shall not extract or allow any extraction till such
mining lease” has been granted.
86. We have examined Section 15 of the Act of 1957, which empowers the State
Government to make the rules in respect of mining and minerals for regulating the
grant of mining lease or other mineral concessions with regard to the matters
enumerated thereunder. Additionally, Section 23C enables the State Government
to make rules for preventing illegal mining transportation and storage of minerals.
It is well settled that any rules made under Section 15 and 23C have to be in
consonance with the spirit, intendment and purpose and most importantly, the
specific provisions of the statute Rules made in exercise of statutory power and
cannot override specific prohibitions contained therein.
87. The working of Rule 104 A results in grave loss to public interest inasmuch
as environmental degradation is the consequence of the mining activity
undertaken, without EC, by a bidder utilizing the shield of Rule 104-A. The Rule
provides no mechanism for restitution in the event of ultimate rejection of the bid.

49
88. The very issuance of Rule 104-A enabled illegal mining activity by bidders
only for a period of six months. Certainly, it could also not have been extended in
the manner in which it has been extended.
89. The statutory provisions did not enable or empower the erstwhile State
Government to issue a rule in the nature of rule 104-A. The State Government did not
have the legislative competence to effect such amendment to incorporate Rule 104 A in the
Rules or extend the same.
90. In this regard, the manner in which mining and quarrying operations without
EC were being carried on in Jammu and Kashmir has been specifically noted by
the NGT also in its orders, which has specifically intervened in the matter.
91. Clearly Rule 104-A which enables mining activity to be undertaken while a
lease is being processed, even without EC is ultra vires the Act of 1957. It is in the
teeth of the judgment of the Supreme Court. It is in contradiction with rules 26(2)
and 55(9) of the very Rules wherein it stands incorporated.
92. The appellants are thus unable to point out as to how Rule 104-A is not an
affront to the provisions of the Act of 1957, the Rules of 2016; , the Mining and
Mineral Rules, 2016, violation of the decision of the Supreme Court in Deepak
Kumar and the repeated directions of the NGT extracted above whereby the
carrying out of mining and quarrying activities without EC is specifically and
strictly prohibited.
93. The learned Single Judge was conscious of and has also noted the fact that
Rule 104-A was not under challenge in the writ petitions. The learned Single Judge
was bound to examine the statutory provisions as also the rules in their entirety and
was not only justified but has correctly observed that Rule 104-A was in the teeth
of the requirement of the law. We completely agree with the learned Single Judge

50
that this Rule was contrary to the statutory provisions and has enabled bidders as
the appellants to indiscriminately exploit the minerals without compliance of the
requirement of law and, as held on issue (vi) in para 75 of the impugned judgment
that Rule 104A was an affront to the Environment Protection Act.
94. We shall consider the working and also the significant impact of the Rule
104 A on the conduct of the appellants later in this judgment.
IV Chronology of relevant events, submissions of appellants
95. As per the objections filed by the respondents in the writ petitions after the
issuance of SRO 105 of 2016, a process of identification of 231 minor mineral
blocks in various districts of the State was undertaken. After such identification,
respondents issued identical public notices on various dates in 2016 of the open
auctions to be conducted for grant of mining leases of minor minerals in the
mineral blocks.
96. For expediency, we extract as a sample the relevant portion of one such
auction notice issued by the Department of Geology and Mining as hereunder:
“Government of Jammu & Kashmir

Officer Incharge Geology & Mining Department (Member Secretary)
District Kupwara
Auction Notice
On behalf of the Governor of Jammu & Kashmir the open auction for
grant of Mining lease of Minor Minerals for a period of 05 years, as
per Jammu & Kashmir Minor Concessions, Storage, Transportation
of Minerals and Prevention of Illegal Mining Rules 2016 (SRO 105)
dated 31.03.2016) shall be conducted in the office of the Deputy
Commissioner, Kupwara (Chairman) on 11/12/2017 at 02.00 PM. The
details of the Minor Mineral blocks for open auction are as under:-
xxxx xxxx xxxx xxxxx xxxxx

51
The auction document (TERMS & CONDITIOINS) for conduct of

open auction and grant of Mining Lease alongwith plan of area can
be obtained from the office of the undersigned on any working day
during the office hours till 09/12/2017, against a cash payment of
Rs.1000/= (Non-Refundable)
DIPK-9663/17
Sd/-Office Incharge
Geology & Mining Department (member Secretary)
Distr. Kupwara.”
97. The auction notices published by the Department of Geology and Mining
clearly notified inter alia the following ‘Important Conditions’:
“A) Important Instructions:

xxx xxx xxx
m) On completion of the bid process i.e. fall of the hammer, the
Chairman may provisionally accept or reject the highest bid offered
or received during the auction proceedings and shall send his
process:
Provided that in case the auction proceedings are not concluded
under the Chairmanship of Deputy Commissioner, the
recommendations as required above shall be made with the approval
of the Dy. Commissioner concerned.
xxx xxx xxx
C) Procedure of Auction:-
xxxxx
iv) On completion of the bid process i.e. fall of the hammer, the
Chairman may provisionally accept or reject the highest bid
offered/received during the auction proceedings and shall send his
process.

52
v) The complete process shall be video graphed and kept in safe

custody for at least three years.
D) Terms of Auction
(i) The Bidder whose bid is provisionally accepted, Director
shall issue Letter of Intent (LoI) to complete the formalities as
required for the grant of Mining Lease or Quarry Licence under
these rules as the case may be within a period of six months,
including deposition of remaining bid amount.
xxxxxx
E) Condition of Lessee: Every mining lease shall be subject to the
following conditions:
xxx xxx xxx
(ix) The lessee shall commence mining operations within
three months from the date of execution of the lease and thereafter
carry on such operations effectively in a manner which will ensure
safety of labourers, conservation of mineral, removal of over burden
and its process dumping, storage, drainage of water and removal of all
valuable minerals from the mines in accordance with rules.”
(Emphasis by us)
98. Open auctions of 270 minor mineral blocks were conducted in the year
2017-18 while in 2018-19, open auctions of 12 minor mineral blocks were put to
auction pursuant to public notices.
99. Every aspect of the above auctions was challenged in this Court. One such
writ petition being OWP No.1176/2018 titled Radha Krishan and others v. Union
of India, was filed laying a challenge to the vires of Rule 52 and Rule 27 of the
Rules of 2016 (promulgated vide SRO 105 of 2016 dated 31st March 2016). Radha
Krishan sought the following reliefs in this petition:
“(a) Certiorari, to quash and set aside Standard Aution Document for
grant of mineral lease/ Quarry Lease issued by the respondent State for
being illegal, arbitrary and violative of Article 19(1)(g) of Constitution
of India.

53
(b) Writ of Mandamus for declaring Rule 52, sub rule (2) of Rule 27 of
J&K Mineral Concession, Storage, Transportation of Minerals and
Prevention of Illegal Mining Rules, 2016 vide WRO 105 of 2016 dated
31.03.2016 as ultra vires the Constitution of India, Notification issued
by Central Government, being contrary to the judgment of the Apex
Court in Deepak Kumar’s case with a further writ of mandamus for
declaring all the actions taken in pursuane of Auction document for
grant of Minor Mineral Concession and directing the respondents to
frame rules while strictly complying with the EIA Notification dated
14.09.2006 issued by the Ministry of Environment and Forest,
Government of IIndia and the directions issued by Hon’ble Supreme
Court vide judgment dated 27.02.2011 in Deepak Kumar and Ors Vs
State of Haryana and ors.
(c) Certiorari, to quash and set aside SRO 164 of 2018 dated
11.04.2018 with respect to J&K Minor Mineral, Storage,
Transportation of Minerals and Prevention of illegal Mining Rules,
by the issuance of writ, order or direction in the nature of certiorari.
(d) Certiorari, to quash and set aside by issuance of writ, order or
direction in the nature of certiorari.”
(Emphasis by us)
100. It was contended by Radha Krishan that under Rule 52, the mining leases
and quarry licences are permitted to be granted only through the process of open
auction by the competent authority. The petitioner submitted that in terms of the
definition given in Rule 2(xLViii), open auction/e-auction had been defined to
mean bidding by various bidders online or through physical presence before the
Auction Committee for grant of mineral concession. The petitioner submitted that
Rule 52 excluded grant of mining licences through e-mode which, on date, was the
most potent and transparent mode of distribution of largesse by the State to avoid
formation of cartels.

54
101. On a prima facie consideration of this objection, an interim order dated 19th
June 2018 was passed in Radha Krishan directing that “no licence of mining
leases and quarries shall be granted by the competent authority, otherwise than by
e-mode auction”.
102. In another petition being OWP No.2648/2018 titled Sarweshwar Sharma
and another v State of J&K and others, the entire process including the transitory
provision benefit whereof was being allowed to successful bidders, was
challenged. An interim order dated 26th December, 2018, was passed seeking a
detailed response from the respondents in permitting extraction of minor minerals
contrary to the mandate of the judgment in Deepak Kumar’s case and in violation
of provisions of SRO 105.
103. It is an undisputed position before us that so far as the appellants are
concerned, they were found to be the highest bidders in auctions with regard to
different blocks of minor minerals in terms of Rule 55(9) and their bids were
provisionally accepted. Thereafter the respondents issued a LoI on different dates
to each of the appellants. The LOIs were in identical terms.
104. Inasmuch as the entire case of the respondents rests on these Letters of
Intent, we extract one such communication hereunder:
“Subject:- Auction of approved Minor Mineral Blocks in District,

Jammu and Letter of Intent (LoI) thereof.
Whereas, Auction of approved Minor Mineral Blocks of
District, Jammu was conducted by District Auction Committee under
the Chairmanship of Dy. Commissioner, Jammu on 26/27th December,
2017.
Whereas, in the said auction you have emerged as
highest bidder in respect of Minor Mineral Block No.-61(5/36),

55
Chauki Chaura Downstream Chagial Bridge covering an area of 5.28

hectares in District, Jammu.
Whereas, Chairman District Auction Committee (Dy.
Commissioner, Jammu) has approved the highest bid amount offered
by you to the tune of Rs.40.00 lacs i.r.o the said Minor Mineral Block.
Whereas, under Rule 26(2) of the Jammu and Kashmir
Minor Mineral Concession, Storage, Transportation of Minerals and
Prevention of Illegal Mining Rules, 2016, Mining Plan and
Environmental Clearance is mandatory for grant of Mining Lease.
Whereas, the highest bid amount for the said Minor
Mineral Block offered by you has been provisionally accepted by the
Chairman, District Auction Committee (Dy. Commissioner, Jammu)
Now, therefore in view of the above and as per Rule
55(9) of these rules, the Letter of Intent (LoI) is issued with the
direction to submit Approved Mining Plan and Environmental
Clearance besides, deposition of remaining 50% bid amount within a
period of 06 months, enabling this office to grant mining lease in
your favour for extraction of minor minerals from the above said
block.”
(Emphasis supplied)
105. Apart from the three pre-conditions stipulated in the LoI, in view of the
directions made by the NGT and Guidelines issued by the State Pollution Control
Board, a letter dated 12th November, 2019 was issued by the Jammu & Kashmir
Pollution Control Board to the effect that no extraction of minor minerals be
carried out from the auction blocks without EC.
106. Unfortunately, none of the appellants were able to ensure compliance with
the three pre-requisites for grant of mining leases. Not a single appellant deposited
the 50% of the balance amount within six months from the issuance of LoIs to
them.

56
107. Though mining plans were gotten approved by most of the appellants,
however, not a single appellant got the EC from the concerned authorities in due
time.
108. The only appellants who were able to get the EC are the appellants in LPA
No. 64/2020, Vikar Ahmad Dar v. State of Jammu and Kashhmir and others.
This was also grossly belated. We shall consider the impact of this fact later in this
judgment.
109. On 26th February, 2019, a decision was taken by the authorities vide
communication No. IND/Legal-239/2018 to scrap the entire open auction process.
This communication reads thus:
“Government of Jammu and Kashmir

Industries & Commerce Department
Civil Secretariat, Jammu.
The Director,
Geology and Mining Department,
J&K Jammu.
No:-IND/Legal-239/2018 Dated: 26.02.2019
Sir,
I am directed to refer your letter no.203/MCC/DGm/MMB/7731
dated 07.02.2019 regarding the subject cited above and to convey the
following approval of the competent authority:
i) Open auction carried out under the 2016 has been scrapped and
fresh aucion be carried out, only through e-auction mode.
ii) Till the time fresh allotments are made, the existing mechanism
would continue.
iii) Procedure of mining plan approval, fixation of reserve bid
amount and frequency of royalty deposition would be addressed
by issuing directions under the existing Rules.
Yours faithfully,
Sd/-

57
(Mohammad Ayaz)
Under Secretary to Government
Industries & Commerce Department”
(Emphasis supplied)
110. The appellants have heavily relied on the letter dated 7th February, 2019
referred to in the above communication submitting that there is no connection
between the two.
111. This was a communication dated 7th February, 2019 addressed by the
Directorate of Geology and Mining Jammu to the Principal Secretary, Industries
and Commerce Department in the light of the consideration for e-auction of minor
mineral blocks, forwarding the status of auction in the left out districts of Kathua,
Doda, Ramban of the Jammu Province and Srinagar, Baramulla and Bandipora of
the Kashmir Province. A brief note on the aspect of conduct of e-auctions in the
districts was also enclosed for perusal. We extract the letter dated 7th February,
2019 hereunder as well:
“Government of Jammu and Kashmir

Directorate of Geology and Mining, Jammu.
The Principal Secretary to Govt.,

Industries and Commerce Deptt,
Civil Secretariat, Jammu.
No. 203/MCC/DGM/MMB/773 Dated:7.02.2019
Subject:- E-auction of Minor Mineral Blocks
Sir,
Kindly find enclosed herewith status of auction in left out

Districts i.e. Kathua, Doda, Ramban of Jammu Province and Srinagar,
Baramulla and Bandipora of Kashmir Province. A brief note on

58
conducting of e-auction in the said Districts is also enclosed for kind

perusal.”
Yours faithfully
Sd/-
Encl:- 5 Lvs Geology & Mining
J&K Govt. Jammu”
112. The above decision was followed with a communication bearing No.
IND/Legal-23/2018 dated 27th of March, 2019 issued by the Department of
Industries and Commerce of the Government of the Union Territory of Jammu &
Kashmir directing that the State/ Central Government agencies can undertake
mining activities from the un-auctioned blocks on royalty basis.
113. The existing mechanism with regard to the transitory provision in favour of
the successful bidders was extended with effect from 1st of March, 2019 upto 30th
of April, 2019. SRO 279 of 2019 was issued in this regard.
114. On 15th April, 2019, yet another communication bearing
No.IND/Legal/27/2013-II was issued allowing the mining of minerals by those
who had succeeded in the open auctions wheresoever such open auction had been
held, under close departmental supervision and under the supervision of the
Deputy Commissioner concerned.
115. In those districts where open auctions had not been conducted, it was
directed to allow mining under departmental supervision on first come first served
basis.
116. The above mining had to be interdicted as the Jammu & Kashmir Pollution
Control Board issued a stern letter dated 12th November, 2019
(SPCB/NGT/60/019/134-37) to the Director, Geology & Mining Department in the
light of the directions of the NGT as well as the Central Pollution Control Board
guidelines.

59
We extract this communication in extenso as below:
“With regard to your response under reference at ii to this office

Notice at reference No.i above, it is clear that out of 554 minor
mineral blocks, no block is fully compliant with the law governing
environmental protection on one count or the other as none is
consented by the Board while as only 15 minor mineral blocks have
the Environmental Clearance.
Secondly, as per your report, 231 blocks have been auctioned in open
auction and 5 in e-auction while as LOI in respect of 224 auction
minor mineral blocks has been issued in favour of successful bidders.
It may be clear from above that extraction of minor minerals from the
auctioned blocks has been permitted by your department dehorse of
law as one of the blocks is consented by the Board under Section 25
and 21 of the Water (Prevention & Control of Pollution) Act, 1974 and
Air (Prevention & Control of Pollution) Act, 1981 respectively, while
as only 15 such blocks have Environmental Clearance. It may be also
clear that most of the successful bidders carry out the mining
operation in absence of proper mining plan, thereby permission of
your department for mining is not only in brazen violation of laws
governing environmental protection but highly detrimental for
ecosystem and environment, as no scientific method in absence of
approved mining plan is adopted for extraction of minor minerals.
Interim arrangement made under communication No. IND/Legal/27/
2013-II dated 15-04-2019 for extraction of minor minerals can no
way be substitute to statutory requirements discussed above.
Since the activity permitted by your department is violative of laws
governing environmental protection and in clear defiance of the
directions of Hon’ble Supreme Court of India and Hon’ble NGT,
you are hereby directed to:-

60
i) Stop for auctioning such minor mineral blocks which are not
consented by the Board or have no prior Environmental Clearance
of the site.
ii) Rescind the permits approved/ ordered forthwith granted to the

successful bidders which do not have Environmental Clearance and
consent of the Board or either of the two.
iii) Ensure no extraction of minor minerals from today is done in

the state iin defiance of laws governing environmental protection.
Needless to clarify that in the event of your failure to comply with the
above said directions, you shall become liable for prosecution as well
as Environmental compensation on the basis of Polluter Pays’
Principle in light of the Hon’ble NGT directions and CPCB
guidelines.
For immediate compliance under intimation within a week’s time.”
(Emphasis by us)
117. The scrapping of the open auctions carried out under the Rules of 2016 and
the decision to conduct fresh auction through E-auction mode was challenged by
the appellants in both wings of the High Court in the following writ petitions:
S.No. Writ petition number Title LPA No.
Srinagar Wing
01. OWP No.363/2019 Ashaq Hussain Paddar and 58/2020
WP(C) No.1057/2019 others. v. State of J&K and
others (Only petitioner No. 5
filed appeal
02. OWP No.243/2019 Mohammad Iqbal Lone v.
State of J&K and others.
03. OWP No.259/2019 Vikar Ahmad Dar v. State of 64/2020
J&K and others.
04. OWP No.290/2019 M/s Usman Constructions 61/2020
and others v. State of J&K
and others.
05. OWP No.344/2019 Mohd. Farooq Lone and 63/2020
others v. State of J&K and

61
others.
06. OWP No.477/2019 Mohammad Ashore Mir and 62/2020
others v. State of J&K and
others.
07. OWP No.517/2019 Abid Hussain Mir and others

v. State of J&K and others.
08. OWP No.2294/2018 Tariq Ahmad Sheikh v. State
of J&K and others.
09. WP(C) No.2410/2019 Rouf Rashid Bhat and others
v. State of J&K and others.
10. WP(C) No.2642/2019 Abdul Majeed Dar v. State of
J&K and others.
11. WP(C) No.3893/2019 Ashaq Hussain Paddar and
others v. UT of J&K and
others.
12. WP(C) No.67/2020 Abdul Rashid Bhat and
others v. UT of J&K and
others.
13. WP(C) No. 86/2020 Javid Ahmad Rather v. UT of
J&K and others.
S.No. Writ petition number Title LPA No.
14. WP(C) No.181/2020 M/s S. J. Constructions v. UT

of J&K and others.
17. OWP No.517/2018 Shahnawaz Ahmad Bhat & 77/2020
anr. v. UT of J&K and others.
Jammu Wing
15. OWP No.325/2019 Rakesh Kumar Choudhary v. 53/2020
State of J&K and others.
16. WP(C) No.563/2020 Rakesh Kumar Choudhary v.
UT of J&K and others.
118. On the 13th March, 2019, in OWP no. 325/2019, the Ld. Single Judge
directed the Registrar Judicial to solicit orders for listing of the cases in both
Wings before the same Bench. As a result, these writ petitions were clubbed for
hearing before a Single Bench (Sanjeev Kumar, J) in Jammu. After detailed
hearing, by a judgment dated 1st May, 2020, the learned Single Judge has
dismissed the writ petitions. Aggrieved thereby some of the writ petitioners have
filed the present Letter Patent Appeals which have been consolidated for hearing.

62
119. We have heard Mr Z. A. Shah, Mr P. N. Raina, Mr Altaf Naik learned
Senior Advocates, Mr Vikram Sharma, Mr J. A. Hamal, Mr. Abhinav Sharma,
Advocates for the appellants, and Mr F. A. Natnoo, ld. AAG, for the respondents,
at length in these matters.
Let us now briefly examine the facts of each of the appellants.
(i) LPA No. 64/2020, Vikar Ahmad Dar v. State of Jammu and
Kashhmir and others (represented by Mr. Z. A. Shah, Senior
Advocate).
120. This appeal arises out of OWP 259/2019. This appellant had participated in
an auction for grant of mining lease of minor minerals in District Kulgam
conducted pursuant to the auction notice published by the Department of Geology
and Mining in the daily newspaper Greater Kashmir on 17th September 2017. The
appellant claims to have deposited earnest money worth Rs. 1.5 lakh for each
block prior to his participation. In the auctions which were held on 25th September
2019, the appellant was declared the highest bidder in two blocks and he deposited
amount of 50% of the bid amount.
121. As per Rule 55(9) of the Rules, the respondents issued LoIs dated 5th
October 2017 in respect of the two blocks regarding which the appellant had
emerged highest bidder informing him that his bid had been ‘provisionally
accepted’ by the Chairman, District Auction Committee (Deputy Commissioner
Kulgam). The LoI also notified that under Rule 26(2) of the Jammu and Kashmir
Minor Mineral Concession, Storage, Transportation of Minerals and Prevention of
Illegal Mining Rules, 2016, mining plan and EC was mandatory for grant of
mining leases.

63
122. The appellant was directed to submit the above two, besides ‘depositing
remaining 50% bid amount within a period of six months’ to enable the
respondents to grant mining lease to the appellant.
123. It has been contended by Mr. Z. A. Shah, Senior Advocate that so far as the
appellant was concerned, he was able to complete the three requirements laid down
in the LoI. It has been pointed out that despite the impugned order passed on 26 th
February 2019, the Director, Department of Geology and Mining sent 15
‘complete files’ to the Government with the recommendation to grant permission
to grant mining leases to these 15 persons.
124. It is the submission of Mr. Shah that the NGT had also passed an order
imposing a requirement of getting clearance from the Pollution Control Board
before undertaking mining. A Circular dated 25th November 2019 stood issued by
the Pollution Control Board notifying the parties of this requirement. The
submission is that on 27th December 2019, the appellant even obtained this consent
from the Pollution Control Board.
125. It is submitted that the impugned order dated 26th February 2019 issued by
the Government merely states that the auction had been scrapped. No specific
order cancelling the bid of the appellant has been passed.
126. Mr. Shah, Senior Advocate has vehemently urged on behalf of this appellant
that the power to refuse grant of a lease is vested only under Rule 31 of the Rules.
Rule 31 envisages that the refusal of the application would be by the ‘competent
authority’ and requires reasons for the refusal to be recorded and communicated to
the applicant. Against the refusal, the remedy of an appeal to the Government is
provided under Rule 85 of the Rules.

64
127. The grievance is that the order discloses no reasons at all and as a result, the
appellant stands deprived of his statutory remedy of appeal provided under Rule 85
of the Rules.
128. The order dated 26th February 2019 is also assailed on the ground that the
same is vague, suffers from non application of mind and that the cancellation of his
bid was not communicated to the appellant. The submission is that in any case the
appellant had fulfilled all the requirements under Rule 26(2) of the Rules and that
appellant had vested right to grant of lease.
129. Mr. Shah, has contended at length that if the order was issued in exercise of
statutory powers, the same is bad for the reason that the doctrine of audi alteram
partem was violated and also the order failed to record any reasons. In support of
this ground, reliance has been placed on the pronouncement of the Supreme Court
reported at (1990) 3 SCC 280, Star Enterprises v. City and Industrial
Development Corporation of Maharashtra Ltd. (paras 9 & 10), and (2007) 2
SCC 181, Rajesh Kumar and others v. Dy. CIT and others (para 29).
130. The submission is that even if the order was issued in exercise of
administrative power, it remained illegal for failure to comply with the principles
of natural justice.
131. It has been contended that the respondents have failed to disclose the
material on which the impugned order was premised.
132. It is submitted that the order dated 26th February 2019 clearly stated that the
order shall operate prospectively and e-auctions would be conducted in future. As
another limb of the submission, it is contended that SRO 101 issued on 7th March
2019, which effected a prospective amendment to the Rules of 2016, cannot be the

65
basis of enbloc cancellation of the earlier auctions and bids including that in which
the appellant had participated and stood declared highest.
133. Challenging the affidavit filed by the respondents disclosing the
observations of the various authorities, it is pointed out that the Government
notings inter alia suggest that the reserve price which has been fixed was too low;
that the bids fetched were also not of the value which they ought to have fetched. It
is submitted that so far as the reserve price is concerned, the same is fixed under
Rule 54 of the Rules by the Government and the appellant has no role to play in
the same and that no fault can be attributed to the bidders for the same.
134. With regard to the suggestion in the government file of ‘cartelization’, it is
submitted that this submission is not based on any material.
135. It is further objected that the learned Single Judge has seen the records of the
respondents behind the back of the appellant and that the impugned judgment of
the learned Single Judge premised on such record was therefore bad in law.
136. Mr Shah submits that the impugned order refers to the competent authority.
So far as the ‘competent authority’ is concerned, the Rules prescribe Director,
Geology and Mining as the competent authority to grant mining leases on 5
hectares of land. A grievance is made that the order dated 26th February 2019 has
not been issued by the Director.
137. It is pointed out that the scrapping of the auctions appears to have been done
by the Government whereas, under the rules, the competent authority to refuse the
grant of the application was the Director of the Department of Geology and
Mining. The submission is that under Rule 85(2), appeal lay to the Government.
Therefore in the instant case, the order has not been passed by the competent
authority but by the appellate authority. Placing reliance on the pronouncement of

66
the Supreme Court reported at AIR 1952 SC 16, Commissioner of Police Bombay
v. Gordhandas Bhanji, it is submitted that such an order is not sustainable.
138. So far as the challenge pressed before us to the judgment of the ld. Single
Judge by the appellant on grounds which were never urged before the learned
Single Judge is concerned, Mr. Z. A. Shah, Senior Advocate has relied on the
precedent reported at (2015) 7 SCC 561 (para 36), Ariane Orgachem Private
Limited v. Wyeth Employees Union and Others, to submit that it is permissible.
139. Mr. Shah, also defended the introduction of Rule 104-A into the Rules on
the 20th April 2016 (effective till 31st March 2017 and the subsequent amendments
extending it from time to time). The submission is that it is not open to the
respondents to say that this rule was ultra vires the main statute. It is pointed out
that the appellant was not even in picture when this rule was framed and that Rule
104-A itself discloses the reason for its incorporation which was to ensure that a
supply chain of the minor minerals was in place and that permission under Rule
104-A was granted only for a limited period, such extension lastly being up to 28th
February, 2019.
140. Mr. Shah has urged that by the grant of the permission under Rule 104-A of
the rules, it has to be held that the Government extended the time for completion of
formalities under the LoI.
141. It is not disputed before us that the respondents filed similar objections
explaining the circumstances in which they took a similar stand.
142. Mr. Z. A. Shah, Senior Counsel, as well as other counsels, have also
submitted that even the counter affidavit filed by the respondents, discloses no
reasons at all to support the passing of the impugned order and that none of the
reasons suggested in the government notings are mentioned.

67
(ii) LPA No. 56/2020 (EMG- LPA No. 5/2020), Chaman Lal v. State of
J&K (represented by Mr. P. N. Raina, Sr. Advocate assisted by Mr.
J. A. Hamal, Advocate).
143. This appellant was arrayed as petitioner No. 3 in OWP No. 363/2019 had
submitted bids for the 17 blocks in the Reasi District. His bids for Rs. 64.22 lakhs,
were provisionally accepted being the highest. The appellant deposited the amount
of Rs. 32.50 lakhs at the drop of the hammer. The LoI on terms similar to those
issued to Vikar Ahmad Dar (as extracted in the factual narration) was issued to the
appellant on 11th October 2017. The prescribed period of six months for
compliance of the aforenoted three conditions expired on 10th April 2018
without this appellant complying with any of the conditions.
144. Appearing on behalf of the appellant, Mr. P. N. Raina, ld Senior Advocate
has submitted that the non deposit of the balance amount was immaterial inasmuch
as a statutory contract came into existence the moment appellant’s bid was
accepted. The submission of Mr. Raina has been that the entire field was covered
by legislation.
145. Mr. P. N. Raina, Senior Advocate has assailed the finding of the learned
Single Judge that the LoI created no rights and that even if the conditions had been
fulfilled, still there was no absolute right in favour of the bidder. In support of this
submission, reliance has been placed on the pronouncement of the Supreme Court
reported at (2017) 2 SCC 125 (Para 24), Bhushan Power and Steel Limited v. S.
L. Seal, Additional Secretary, Steel and Mines and others.
146. Mr F. A. Natnoo, ld. AAG, has pointed out to the facts which were before
the Supreme Court in (2017) 1 SCC 568 : Bhushan Power and Steel Limited v. S.
L. Seal, Additional Secretary, Steel and Mines and others. The facts have been

68
noted in para 22.1. While in para 22.3, the Supreme Court has noted that the
formalities stood completed in that case. It is not the position in the present case.
147. It is additionally urged that the appellant’s case before the ld Single Judge
was a challenge to the cancellation of only his bid. It is submitted that the ld Single
Judge has erred in not answering this challenge, and, instead, erroneously held that
the scrapping of the auction was a policy decision which could not be challenged.
148. The submission is that the relations between the parties were governed by
statutory provisions and the rules which were in the nature of delegated legislation.
Mr. Raina has vehemently contended that policy is a prerogative of the executive,
only in the absence of legislation and therefore the action of the respondents was
completely misplaced in the present case.
149. Taking the submission made by Mr. Z. A. Shah, Senior Advocate on this
aspect further, it is submitted that SRO 161 on 7th March, 2019, was issued by the
Govt. amending the statutory rules. It is submitted that there was therefore a
‘policy’ decision. For the reason that the writ court found that this amendment was
prospective, it is contended that the same could not have effected the petitioners
rights.
150. The submission of Mr. Raina that the ld Single Judge in Para 56 had framed
issue nos. 2 and 3 and returned a finding that none of the parties could be blamed
for delay in processing of the EC and, further, in para 58 of the impugned
judgment, held that the doctrine of frustration of contract cannot apply. It is urged
that, therefore, it had to be held that time was not of the essence to the contract.
151. Mr. P. N. Raina, ld. Senior counsel has also submitted that SO 1533 dated
14th September 2006 was issued by the Govt. of India whereunder ECs were
processed which was followed by another notification dated 15th January 2016

69
wherein the District Level Environment Committee was provided for. It was
submitted before us that, pursuant to the judgment in 2016 by the NGT, the Govt.
of India issued a notification in 2019 amending the prescribed conditions. In this
background, it was Mr. Raina’s contention that the respondents/lessor were always
aware that the conditions could not be complied with and that Rule 55(9) could not
be complied with within six months, and for this reason as well, time was not of
the essence to the contract. Mr. P. N. Raina, Ld. Senior Counsel, has contended
that Sections 55 and 56 of the Contract Act deserved to be brought into operation
for extending the period of compliance of the conditions.
152. In support of the submission that time was not of essence, Mr. Raina has
relied on the pronouncement of the Supreme Court reported at (1984) 3 SCC 634
(Paras 10 & 11), State of Haryana v. Lal Chand and (2011) 12 SCC 18 (Pr. 25),
Saradamani Kandappan vs. S. Rajalakshmi and others.
153. Mr. Raina has vehemently urged that the requirements for grant of mining
lease are to be found in Rules 6, 13 and Rule 26 of the Rules of 2016. Under rule
6, a mining plan has to be got approved while rule 13 postulates EC. Rule 26
speaks of only these two requirements. The submission is that no payment has
been prescribed under the rules. Defending the failure of the appellants in
depositing the balance 50% of the bid amount, it is submitted that making of this
payment was not a requirement under any statute, and, that the failure to do so,
was not so sacrosanct as to result in cancellation of the bid. Therefore, the
appellant could not have been denied the mining lease for failure to deposit the
balance payment.
154. Much stress has been laid by Mr. P. N. Raina, Sr. Advocate on the defence
set out by the respondents to the writ petition OWP no. 1176/2018, Radha

70
Krishan and others v. U.O. I. and others. This writ petition was filed by Radha
Krishan and some others challenging the auction in which the appellants had
participated. It is submitted by Mr. Raina that the respondents had staunchly
defended the legality of their action in holding the public auctions.
155. Mr Raina has placed heavy reliance on the counter affidavit filed by the
respondents therein submitting that the respondents have staunchily defended their
actions as lawful. For expediency, we extract the respondents’ defence of the
auctions (in consideration before us) and their action, by way of their counter
affidavit to the writ petition as follows:
“xi. That it is respectfully submitted that the Government of Jammu

and Kashmir on due deliberation of every aspect of the mining of
minor minerals and its effect on the environment has brought the
aforesaid rules vide SRO 105 of 2016. It is submitted that a detailed
plan has been worked out keeping in view the safeguard required for
protecting the natural resources. The block-wise extraction plan has
been prepared for the first time and a detailed study of all the river
beds have been conducted with great efforts of the committee
constituting technical experts in the field. A copy substantiating of the
above fact is enclosed herewith and marked as Annexure-IV.
xi. That it is submitted that after issuance of SRO 105 of 2016, the
answering respondent-department initiated the process of carving out
of minor minerals blocks in various districts of the State and in this
respect vide order issued under endorsement No. MEJ/L/EC/2016-
17/61-70 dated 26.04.2017, team of officers for both the provinces
viz. Kashmir Province and Jammu Province, who were nominated
for assisting the District Environment Impact Assessment Authority
(DEIAA in short) for facilitation in preparation of District Survey
Reports in the aforesaid context. Copy of the aforesaid order dated
26.04.2017 isenclosed herewith and marked as Annexure-V for kind
perusal of the Hon’ble Court.

71
xii. That it is submitted that the Committee of Officers in respect of

various districts as detailed above in Annexure-V above, has taken
into consideration the provisiosn of SRO 105 of 2016 relating to
various aspects for creation of minor minerals blocks and on detailed
survey of the areas concerned have prepared plan for minor
minerals blocks and it is only the areas which were falling within the
criteria as envisaged under SRO 105, the same were duly marked in
the plan so prepared in respect of each such area. As an example, the
answering respondent is placing on record one of such plan showing/
detailing of prepareation of minor minerals blocks in respect of an
area falling in Chenab Area (JERRI Area) of District Reasi, enclosed
herewith and marked as Annexure-VI, for kind perusal of this Hon’ble
Court. It is submitted that the same has been prepared in respect of
each such area which was found falling within the criteria for creation
of minor minerals blocks in whole of the State.
In the above context, the answering respondent further
places on record the following details in respect of minor minerals
blocks created in respect of each district of Jammu Province, enclosed
herewith as Annexure-VII for kind perusal of the Hon’ble Court.
xvi. That it is submitted that after conclusion of the aforesaid
process in respect of the identification and creation of minor
minerals blocks as per the criteria envisaged under SRO 105 and
exercise of minimum reserve price of each block, the same was
further submitted for approval to the higher authorities which was
accordingly communicated by the Competent Authority. The above
fact is further substantiated from the copies of communications dated
19.07.2017 and 10.07.2017 in respect of one of the district of the State,
which process was conducted in respect of each district, enclosed
herewith and marked as Annexure-XII for kind perusal of this
Hon’ble Court.
xvii. That it is submitted that accordingly on approval of the
aforesaid process by the Competent Authority, the auction notice in
respect of each district for grant of mining lease in respect of minor

72
minerals blocks identified for such districts were issued by the

concerned District Mineral Officer. Copy of one of such auction
notice in respect of district Reasi is enclosed herewith and marked as
Annexure-XIII for kind perusal of the Hon’ble Court.
xviii. That it is submitted that after conduct of the auction
proceedings, Deputy Commissioner of the concerned District in the
capacity of Chairman of the Auction Committee has submitted the
record relating to the auction proceedings which include the bid
sheets in respect of each block with 50% amount of bid offered for
grant of mining lease in favour of the successful bidder. The above fact
is further substantiated from the copy of communication No.
PS/DC/Rsi/160/2405-07 dated 27.09.2017 received from one of the
Chairman of District Auction Committee i.e. District Reasi is enclosed
herewith and marked as Annexure-XIV, for kind perusal of this
Hon’ble Court.
xx. That it is relevant to submit here that one of the relevant factor
which has to be taken into consideration for grant of mining lease to
the successful bidder in terms of the guidelines/notification of the
Ministry of Environment & Forest and Climate Change of Government
of India, environmental clearance from District Environment Impact
Assessment Authority (DEIAA) and State Environment Impact
Assessment Authority (SEIAA) in respect of mining blocks less than an
area of five (05) hectares and above five (05) hectares respectively.
Copy of the guidelines/notification is enclosed herewith and marked as
Annexure-XVII for kind perusal of this Hon’ble Court.
In the above context, it is further relevant to bring to the notice
of this Hon’ble Court that after conclusion of the process of bid, the
answering respondent-department in terms of the aforesaid guidelines
has to prepare the District Survey Report (DSR) and submit the same
to Deputy Commissioner of the concerned District, which has to be
notify by the said authority for calling objections within twenty one
(21) days and if the process relates to an area less than five (05)
hectares, the DEIAA shall have to issue Environmental Clearances.

73
However, if the area concerned is above five (05) hectares, the same
has to be further recommended to the SEIAA.
It is submitted that in the instant case the answering respondents
immediately after conclusion of the bid process has prepared the
District Survey Report in respect of such districts where the bid
process was initiated and concluded and further in terms of the
aforesaid guidelines/notification of the Ministry of Environment &
Forest and Climate Change of Government of India has submitted the
same to the concerned Chairman of DIEAA, who in turn after due
publication in official website of the said authority, has further
proceeded in the matter and has granted Environmental Clearance
in respect of all such cases where no objection has been received and
where the area was less than five (05) hectares, the said authority has
further recommended the cases of such successful bidder for grant of
environmental clearance to the SEIAA, where no objection was
found to have been raised and where the area was above five (05)
hectares. The above fact is further substantiated from the copy of one
of the survey report submitted by the answering respondent No.2,
enclosed herewith and marked as Annexure-XVIII for perusal of this
Hon’ble Court.
xxi. That it is submitted that as on date the position in respect of the
pendency of matter for grant of environmental clearance by the
aforesaid authority i.e. DEIAA and SEIAA regarding each district of
Jammu Province is further detailed in the chart, which shall be further
explained during the course of arguments, enclosed herewith as
Annexure-XIX for perusal of this Hon’ble Court.
xxii That it is submitted that since the answering respondent
department as detailed herein above has taken all the requisite steps
for streamlining the process and bringing the same within the fold of
directives passed by the Hon’ble Supreme Court in the matter of
grant of minor minerals mining lease but because of the delay caused
due to the conclusion of process for grant of environmental
clearance by the aforesaid authority viz DEIAA and SEIAA, the

74
answering respondent was thus under compulsion to resort the

transitory provisions as detailed below to fulfil the public demand and
also the mega projects of State as well as Central Agencies.”
(Emphasis by us)
156. It is Mr Raina’s submission that in this background the action in cancelling
the bid of the appellant by the respondents was completely arbitrary and illegal and
the impugned judgment of the ld Single Judge sustaining the same was also
erroneous.
157. Mr. Raina has drawn our attention to the finding of the learned Single Judge
in para 34 of the impugned judgment that the amendment to the rules by the State
to the effect that only e-auction would be conducted is prospective. It is pointed
out that the respondents have not assailed this judgment.
158. It is further submitted that the auction was admittedly lawful and the policy
decision to amend the rules having been held to be prospective, thus neither the
auction in which the appellant had participated nor the LoI issued to the appellant
could have been cancelled.
159. Ld Senior Counsel has also submitted that the aspect of grant of mining
leases was covered by the statute enacted by the Parliament of India and the Rules
stood framed thereunder by the State Government. There was thus no scope at all
for executive interference in such covered matters and that the action of the
respondents in effecting the amendment was clearly illegal and contrary to the
constitutional scheme.
160. Reliance was placed by Mr. P. N. Raina, ld Senior Counsel on the
pronouncement reported at (2015) 13 SCC 233, Rishi Kiran Logistics Private
Limited v. Board of Trustees of Kandla Port Trust and others.

75
(iii) Submission in LPA No.58/2020 Nagar Singh v. State of J&K

(represented by Mr Abhinav Sharma, Advocate)
161. The appellant had filed OWP No.363/2019 as petitioner no.5 (the petition
was titled as Ashaq Hussain Padder and others v. State of J&K and others).
162. Bids submitted by the appellant-Nagar Singh were provisionally accepted as
highest in respect of 27 blocks. In respect of these three LoIs were issued on 16th
December 2017 with the period of six months expiring on 15 th June 2018 while 24
LoIs were issued on 26th February 2018 with the period of six months expiring on
25th August 2018.
163. It is admitted before us that in respect of the applicants for which LoIs dated
26th February 2018 were issued, the appellant submitted his mining plan on 10th
April 2018 which was approved by the respondents within two days on 12 th April
2018.
164. This appellant has admittedly not cared to deposit 50% of the balance
amount till date.
165. In the writ petition, it is not disclosed whether the EC was applied for or
when, if it was so done. However, Mr. Abhinav Sharma, ld. counsel, has drawn our
attention to two letters, one letter dated 14th March 2018 which was addressed to
three persons including the appellant-Nagar Singh wherein reference was made to
the application of Mr. Nagar Singh for grant of EC for river bed mining project.
This letter was followed by a letter dated 18th April 2018 on the same subject. The
impact of these letters shall be considered later in this judgment. However, the
admitted position is that EC has not been granted to this appellant.

76
166. Appearing for the appellants, Mr. Abhinav Sharma has contradictorily set up
a plea that under Rule 6, a mining plan was the only pre-requisite for grant of
quarrying licence and that no EC was required to be obtained by the appellant. It
is submitted that by issuance of LoI, a “quarrying licence” stood granted to the
appellant.
167. In support of his submission, Mr. Sharma has relied on Chapter V of the
Rules of 2016 dealing with grant of quarry licence and Rule 43 thereof.
(iv) LPA No. 61/2020 (EMG LPA No. 41-A/2020, M/s Usman
Constructions and others v. State and others (argued by Mr.
Altaf Naik, Senior Advocate).
168. The four appellants in the instant appeal had filed OWP 290/2019. They
were the highest bidders for different mining blocks in Districts Kulgam, Jammu,
Poonch, Udhampur. For expediency, we may note that the earliest LoI issued to
them was on 30th August 2017 while the last was of 16th December 2017,
stipulating the six month periods for compliances, the earliest of these expiring on
1st March, 2018, while the last was 15th June 2018.
169. These appellants have complained that despite their fulfilling the
stipulations of the LoI, the respondents issued the impugned order dated 26th
February 2019 in gross violation of their rights whereby the entire auction of the
minor mineral blocks conducted in 2017 was cancelled.
170. The appellants had assailed the scrapping of the auction by way of writ
petition which was registered as OWP No. 290/2019 in the Srinagar Wing which
came to be clubbed with other matters raising the same challenge, all of which
were rejected by the common judgment dated 01st May 2020 of the learned Single
Judge. Aggrieved thereby, the appellant has filed the instant appeal contending that

77
the learned Single Judge has not examined all the provisions and the rules which
were relevant and has left out vital aspects from his consideration.
171. Mr. Naik, ld Senior Counsel has contended that the learned Single Judge has
failed to consider the impact of Rule 55(10) which mandates that if the bid amount
stood deposited, the bidder would be entitled to grant of the mining lease and that
this sub rule states that the bid amount offered by the successful bidder shall be
considered as a guarantee amount for the grant of the mineral concession.
172. Ld Senior Counsel has urged that the learned Single Judge has erred in the
observations made with regard to Rule 104-A of the Rules. The submission is that
this was a transitory provision which was not challenged but was supported by the
respondents who extended its application from time to time. It is contended that
the learned Single Judge has erred in application of the doctrine of frustration
which was not at all attracted in the present case.
173. In response to the observations in the notings in the official file that reserve
price was low, Mr. Altaf Naik, Senior Advocate has contended that the reserve
price stands fixed by the Government in terms of Section 9 of the Act. It is
submitted that the bidders have no concern, involvement or choice in that matter.
174. Mr. Altaf Naik would also submit that in the judicial precedent from
Rajasthan as was placed by Mr. Sunil Sethi, Senior Counsel, the petitioners in
whose favour LoIs had been issued by the Government, were permitted to
undertake mining activities.
175. So far as the appellants’ plea in LPA 61/2020 (Usman Constructions and
others) that they had fulfilled the conditions under the Rules and the LoI are
concerned, we have carefully scrutinized the record of this appeal. We find that out
of the four appellants, only the appellant No.1-M/s Usman Constructions (with

78
the six months from LoIs’ expiring on 4th April 2018 and 15th May 2018) deposited
the balance 50% of the bid amount on 29th June 2018 for two blocks which was
forwarded to the Director on 3rd July 2018 and the appellant No.4-Shabir Ahmed
Sheikh (with the six months expiring on 4th April 2018 and 15th May 2018)
deposited the balance 50% of the bid amount on 29th June 2018 which was
forwarded to the Director on 3rd July 2018. EC stood granted to the appellant No.1
on 11th April 2018 for his two blocks, again after the expiry of the six month
deadline for those blocks. The appellant No. 4 was granted EC for only one block
on 11th April 2018. These deposits and clearances were clearly way beyond the
period of six months given to the appellants.
176. We shall consider the impact of belated compliance of the required
conditions hereafter and also as to whether the respondents had the power to
condone the delay.
177. The other two appellants in LPA 61/2020 (namely Sajad Ahmad Shan and
Balbir Singh) have not complied with any of the conditions of the LoI.
(v) LPA No. 62/2020 (EMG-LPA No. 50-A/2020), M/s Mohammad

Ashore Mir and ors v. UT of J&K and others (represented by Mr.
Hakim Suhail Ishtiyaq, Advocate).
178. The appellants in LPA No.62/2020 had filed the writ petition OWP No.
477/2019. They had participated in auctions held on 8th and 14th November 2017
with regard to mining blocks in District Pulwama, were found to be highest
bidders and had deposited the 50% of the bid amount on the fall of the hammer.
179. LoIs were issued to Mohd. Ashore Mir, appellant No.1 and Manzoor Ahmed
Mir, appellant No.2 on 7th December 2017 with the period of six months expiring
on 6th June 2018 while the LoI was issued to Mohd. Shaban Bhat-appellant no.3 on
26th December, 2018, with the six months expiring on 25th June, 2019.

79
180. The mining plans of the appellants 1 and 2 got approved on 11th January
2018.
181. The appellant No. 3 Mohd. Shaban Bhat did not bother to even submit the
mining plan within prescribed period. He obviously has no approved mining plan
in his favour.
182. None of these appellants have till date even applied for EC. They have also
not deposited the 50% balance amount.
183. Learned counsel for these appellants has staunchly contended that the
issuance of the LoIs resulted in coming into existence of a statutory contract
because the LoI stood issued pursuant to the statutory provisions and the rules
framed thereunder. Once such contracts came into existence, they could have been
scraped only after compliance with the requirements of Rule 31 of the Rules.
184. Learned counsel contended that consequently the scrapping of the bids could
not have been effected without issuance of notices to show cause and grant of
hearing to them, therefore, was in violation of principles of natural justice.
185. Ld counsel has vehemently contended that the communication dated 26th
February 2019 was completely misconceived and without jurisdiction. Ld. counsel
would submit that this letter has been addressed to the Director, Department of
Geology and Mining of the then State of J&K by an Under Secretary of the State
Government. It is urged that this letter appears to be a response to a letter dated 7th
February 2019 which had been addressed by the Director, Department of Geology
and Mining.
186. Ld counsel would submit that the letter dated 7th February 2019 had merely
referred to the status of the auctions which were to be held in three districts
Kathua, Doda and Ramban of Jammu and Srinagar, Barmulla and Bandipora in the

80
Kashmir Province which had been left out of the previous auctions. Mr Naik
would submit that this communication did not relate to the auction or the bids of
the appellants, that the letter nowhere mentions scrapping of the auction which had
been held in 2017.
187. The submission is that Government orders have to be issued in accordance
with the Transactions of Business Rules. Ld counsel vehemently contended that
this letter dated 26th February 2018 was neither a government communication nor
was it in the nature of an order made in accordance with law.
188. The further submission is that the different clauses in the communication
were contradictory to each other. Ld. Counsel submits that the letter dated 26th
February 2019 shows that the government was cognizant of the auctions of 2017 as
is evident from clause (2) thereof which have stated that till fresh allotment,
‘existing mechanism would continue’. The existing mechanism was the mode of
open auctions.
vi) LPA No. 53/2020 (EMG-LPA No. 2/2020, Rakesh Kumar

Choudhary v. U.T. of J&K and others (represented by Mr.
Vikram Sharma, Advocate.)
189. This appeal has been filed by a single appellant- Rakesh Kumar Choudhary
(writ petitioner in OWP No.325/2019), contending that he was found the highest
bidder in auctions held for mining blocks held on 13 th September 2017 in District
Rajouri and on 13th December 2019 in district Samba. So far as the 22 blocks in
Rajouri for which he was provisionally found to be the highest bidder, were
concerned, LoIs were issued on 5th October 2017 with the six months expiring on
4th April 2018. For 21 mining blocks in District Samba, LoIs were issued to the
appellant on 21st December 2018 with the six months expiring on 20th June 2019.

81
190. The appellant submitted mining plans for District Rajouri on 27th February
2018 which was approved within six days on 3rd March 2018. In respect of the
Samba District, he submitted mining plans on 30th January 2019 which was
approved within two days on 2nd February 2019.
191. Appearing for the appellant, Mr. Vikram Sharma, ld counsel submits that he
adopts all the arguments made by learned Senior Counsels in the connected
appeals. Mr. Sharma, clarified that the writ petitioners had challenged only the first
clause in the communication dated 26th February, 2019 and that they did not
challenge clause (2) of the letter which was in fact the continuation of Rule 104-A
of the Rules. It is submitted that the first clause was perse arbitrary.
192. Mr. Vikram Sharma, Advocate has submitted that under Rule 26(2), there
are only two prerequisites for grant of mining lease, the first being approval of a
mining plan and the second was grant of EC.
193. Ld. counsel has supported the submissions further adding that not only had
the LoI been issued to this appellant but his mining plan also stood approved. The
contention is that as such, the moment the mining plan stood approved under rule 6
of the Rules, the bidder became entitled to grant of mining lease. In addition, Mr.
Sharma submits that the highest bidder was permitted under rule 104-A to
undertake mining activity subject to payment of royalty as chargeable in
accordance with Section 9 of the enactment. The bidders having paid royalty, had
moved ahead from the stage of issuance of the LoI. It is Mr. Sharma’s submission
that upon grant of the permission under Rule 104-A, a binding contract between
the parties had come into existence.
194. Rakesh Kumar, the appellant in LPA 53/2020 does not inform us as to the
date when he applied for the EC. We are informed by Mr. F. A. Natnoo, AAG that

82
as per the web portal of JKEIAA, the applicant had submitted the application for
EC in respect of the three mining blocks in Rajouri on 28 th February 2019; for 10
blocks on 27th September 2019; for two blocks on 28th September 2019; for three
blocks on 10th October 2019 and for three blocks on 11th October 2019.
195. So far as the District Samba blocks are concerned, some applications for the
clearance were made on various dates i.e. 11th, 16th, 17th, 19th and 20th September
2019. Thus, the appellant has for the first time applied for the mandatory and most
essential EC more than one year after the expiry of the period of six months from
the issuance of the LoI.
(vii) LPA No. 63/2020, Mohd. Farooq Lone and others v. State of J&K
and others. (represented by Mr Hakim Suhail Ishtiaq, Advocate)
196. The appellants in this case were co-petitioners in OWP No. 344/2019 and all
of them had participated in the auction held for grant of mining leases of minor
minerals in different blocks in District Kupwara.
197. The respondents have disclosed that the bids of the appellants being found
highest, LoIs each dated 4th January 2018, were issued to all of them. The period of
six months, from the issuance of these LoIs, was expiring on 3rd July 2018.
198. Mining plans were submitted by these appellants on different dates. We find
that the respondents have promptly responded to the submission of mining plans
wheresoever they were submitted by the bidders/appellants. Approvals appear to
have been accorded within one to three days of submission of the plan.
199. The facts on record establishes that most of the appellants chose to sit over
the matter of obtaining ECs and most of them did not even bother to apply for the
same. Out of the 15 appellants in this appeal, only 5 appellants have submitted
their applications for ECs on various dates between 2nd and 6th June 2018.

83
200. None of these appellants have bothered to deposit the balance 50% of the
bid amount which, in terms of the LoIs, was to be deposited within a period of six
months from the issuance of the LoI.
(viii) LPA No.77/2020 Shahnawaz Ahmad Bhat & Mohd Ayoub Bhat v.
Union Territory of J&K and others:
201. These appellants had filed OWP No.517/2018 as petitioners 7 and 8 and
claim to have been found the highest bidders for grant of mining leases in auctions
held on 26th May, 2018, for mineral blocks in Shopian. LoIs dated 29th November,
2018 were issued to them with the period of six months expiring on 28th may,
2019. The appellants claim to have completed formalities without delay for
seeking EC. No dates are forthcoming in either the appeal filed before us or the
writ petition. These appellants have also claimed that EIA Reports could not be
prepared because of default on the part of the respondents who had failed to submit
the DSRs of the blocks to the authorities. These appellants assail the judgment of
the learned Single Judge on the very grounds as have been pressed in the other
appeals. The respondents dispute the completion of formalities by these appellants.
The remaining bid amount has not been deposited.
We now examine in seriatum the various issues which arise in these appeals
under the following headings:
V Appeals pressed on grounds which were not urged before the Ld.
Single Judge, examination of official records, opportunity to meet
the same
202. Before examining the contentions of the appellants, it is necessary to note
two preliminary issues.

84
203. The issues pressed before this court in appeal were never raised before the
learned Single Judge. We are thus being called upon to test the correctness of the
view taken by the learned Single Judge on points and issues which were never
raised before the learned Single Judge. Is it permissible for us to do so?
204. In response, it has been urged by the appellants that they are arguing
questions of law which can be raised at any stage in the proceedings and that the
present appeal is an extension of the writ petition.
It has also been contended before us by the appellants that in case any of the
grounds finds favour, the matter may be remanded for consideration afresh to the
ld Single Judge.
205. A similar question was raised before the Supreme court in the
pronouncement reported at (2015) 7 SCC 561 (para 36), Ariane Orgachem
Private Limited v. Wyeth Employees Union and Others which has been placed by
Mr. Z. A Shah, Senior Advocate before us.
206. Reliance also stands placed on the pronouncement of the Privy Council in
the case reported at 1892 AC 473 (PC), Connecticut Fire Insurance Co. v.
Kavanagh, wherein it is observed as follows:
“36.1. In Connecticut Fire Insurance Co. v. Kavanagh [1892 AC 473

(PC)], Lord Watson has observed as under: (AC p. 480)
“… When a question of law is raised for the first time in a court of
last resort, upon the construction of a document, or upon facts either
admitted or proved beyond controversy, it is not only competent but
expedient, in the interests of justice, to entertain the plea.”
(emphasis supplied)
The aforementioned view of the Court of Appeal has been relied upon
by this Court in Gurucharan Singh v. Kamla Singh [(1976) 2 SCC
152] . Therefore, with regard to the abovementioned aspect regarding

85
the plea of the competency of the Deputy Labour Commissioner to

pass an order of refusal to make a reference, although is being raised
before this Court for the first time, is based on admitted facts. Hence,
in accordance with the view taken by the Court of Appeal
in Connecticut Fire Insurance Co. case [1892 AC 473 (PC)] and this
Court in Gurucharan Singh case [(1976) 2 SCC 152] , the argument
advanced by the first respondent Union deserves to be considered by
this Court.”
(Emphasis by us)
207. This view was relied upon by the Supreme court in (1976) 2 SCC 152,
Gurcharan Singh v. Kamla Singh; (2013) 6 SCC 278, V.L. S. Finance Ltd. v.
Union of India and (2010) 9 SCC 157, Greater Mohali Area Development
Authority v. Manju Jain.
208. In (2011) 12 SCC 695, National Textile Corporation Ltd. v. Naresh Kumar
Badri Kumar Jagad, it was held by the court that a new question raising a pure
legal issue for which no enquiry proof is required, can be raised at any stage.
Following these principles in Ariane Orgachem Private Limited’s case, the
Supreme Court rejected objection similar to the one raised before us.
209. In the present case, so far as facts are concerned, there is no dispute at all. In
fact the appellants have accepted the correctness of the facts stated by the
respondents with regard to their bids and subsequent conduct. Furthermore, the
submissions which are being raised for the first time are legal pleas. All such pleas
therefore can be examined by this court hearing the challenge assailing the
judgment passed by the writ court.
Whether the decision of the Learned Single Judge is contrary to the stand
of the respondents in court

86
210. There is another objection which needs to be noticed herein. A submission
was made by Mr. Z. A. Shah, Sr. Advocate, Mr. P. N. Raina, Sr. Advocate and Mr.
Abhinav Sharma, Advocate that the respondents have not made any complaint
against the appellants in their counter affidavits. It is further submitted that no
grounds in support of their decisions were laid out in the counter affidavit.
211. The appellants have assailed the judgment of the learned Single Judge on the
ground that the court has travelled beyond the pleadings of the parties and has
delivered a judgment dehors the pleadings. In support of this submission, learned
counsel appearing for the appellants in LPA No. 50/2020 has placed reliance on the
pronouncements reported at AIR 1953 SC 235 M/s Trojan & Co. Ltd. Vs. Rm. N
N Nagappa Chettiar; AIR 2002 SC 665 Om Prakash Gupta vs. Ranbir Goel: AIR
2005 SC 3165 Ishwar Dutt vs. LAC; AIR 2010, SC 1299 State of Maharashtra
vs. Hindustan Construction Company Private Limited and AIR 2011 SC 1127
(paras 18 to 20) Kalyan Singh Chouhan vs. C. P. Joshi;
212. Let us first examine the objections filed by the respondents in opposition to
the writ petition before the Ld. Single Judge. We were informed that respondents
filed identical responses to all writ petitions. For expediency, we extract relevant
portion of the objections filed by the respondents to OWP No.259/2019 Vikar
Ahmad Dar vs. State, hereunder:
“Preliminary objections
xxxx xxxx xxxxx
xii) That it is relevant to submit that the answering respondents-
Geology & Mining Department in order to ensure uninterrupted
supply of minor minerals for development of the State and Central
Government Agencies, besides effecting the various units has brought
amendment to the aforesaid SRO to the extent of incorporating

87
transitory period in the shape of Rule 104-A vide SRO 33 of 2016

thereby authorizing the concerned authorities to issue permission valid
up to certain dates, even by virtue of SRO 104 dated 06-04-2018 has
further extension of aforesaid transitory provision, the extraction was
allowed by the successful bidders which process came to be extended
from time to time by virtue of various SROs, such extension whereof
has come to an end on 28-02-2019. It is relevant to submit that during
the aforesaid period various writ petitions also came to be filed by
various persons challenging the standard auction documents as well
as rule 52 of SRO 105 of 2016, wherein this Hon’ble Court in OWP
No. 1176/2018 titled Radha Krishan and ors vs UOI and others vide
interim order dated 19-06-2018 has passed the following directions;
“…. Meanwhile, subject to objections and till next date of
hearing, it is provided that no licence for mining lease and quarries
shall be granted by the competent authority, otherwise than by the
mode of e-auction.”
xiii) That similarly in another petition bearing OWP No.
2648/2018 titled Sarweshwar Sharma and another v State of J&K
and others also came to be filed challenging the whole process
including the transitory provision allowed in favour of the successful
bidders, wherein this Hon’ble Court vide order dated 26-12-2018 has
sought detailed response from the State in allowing extraction of
minor minerals contrary to the mandate of judgment passed by the
Hon’ble Apex Court in Deepak Kumar’s case (supra) and also
contrary to the provisions of SRO 105 of 2016.
xiv) That it is submitted that the answering respondents
keeping in view the aforesaid facts and circumstances more
particularly the fact that out of total 321 mining blocks where the
process was issued, majority of the successful bidders have failed to
submit the environmental clearance within time prescribed in terms
of the aforementioned provision of SRO 105 and even beyond that as
well despite having even issued notice to them and also keeping in
view the aforesaid interim directions as on due consideration allowed

88
to each such aspect of the matter, more so the process being allowed
to continue contrary to the mandate of judgment of Hon’ble Apex
Court in Deepak Kumar’s case (supra), has thus vide order
impugned dated 26-02-2019 decided to scrap the process of open
auction directed in the year 2016 with further directions that the
process of functioning shall be carried out through e-auction mode.
In this context, it is further submitted that the answering respondents
in the meanwhile has also allowed substitution of the word “Open
Auction” as figuring in Rule 52 with “e-auction” by way of issuance
of SRO 161 dated 07-03-2019.
xv) That it is submitted that the petitioner herein, who was
amongst few successful bidders in the State, who had obtained
environmental clearance but in view of the aforesaid facts and
circumstances more particulars when majority of successful bidders
have failed to submit the environmental clearance and also because
of the interim directions restraining for issuance of any licence
without e-tendering, the answering respondent has thus taking into
consideration all the facts and circumstances detailed above directed
for scrapping of the process and further the process to be allowed to
e-tendering only. It is submitted that the petitioner admittedly has not
been granted any licence, as such, the petitioner has got no vested
right in him, either to challenge the order/decision impugned or to
seek continuation, more so such bald assertions/contentions which are
misconceived both in law as well as on facts.
In light of the aforesaid submissions, the present writ petition
filed by the petitioners is not maintainable and deserves to be
dismissed.”
213. In the parawise response to the writ petition, the respondents have stated as
follows:
“2-17. Averments made in paras 2 to 17 to the extent of that the

same relates to initiation of open auction process, conduct thereof and
the petitioner herein having remained successful bidders in the said

89
process, submission of mining plan and also depositing of 50% of the

bid amount, the same is not disputed. However, it is submitted that in
terms of the aforesaid provision of SRO 105 of 2016 read with the
contents of letter of intent (LOI) issued in favour of the successful
bidders, the successful bidders were required to submit the
environmental clearance from the competent authority to the
answering respondents-Geology & Mining Department which the
majority of successful bidders have failed to submit within the
prescribed period of six months and even beyond the said date as
well. Further in view of challenge thrown to Rule 52 as well as
standard auction document in the aforementioned writ petition and
also the interim directions passed by this Hon’ble Court in the above
titled writ petition and further the fact that the whole process was
found continued against the mandate of the judgment passed in
Pardeep Kumar’s case, the answering respondent thus taking into
account all the facts and circumstances has directed the scrapping of
the process and further allowing the process through e-tendering
only for which the answering respondent has even allowed
amendment to Rule 52 of SRO 105 of 2016. Therefore, none of the
rights of petitioner can be held to have been violated while passing the
decision/ order impugned dated 26-02-2019 by the answering
respondents.
18. Averment made in para 18 and so called grounds sought to be
urged under sub paras (A) to (I) need no further response in view of
the detailed submissions made herein above to which the answering
respondents shall refer to and rely upon. However, it is reiterated that
since the majority of successful bidders have failed to submit the
environmental clearance in terms of the mandate of aforementioned
provision of SRO 105 and the contents of letter of intent (LOI) issued
in favour of the successful bidders and further in view of the restraint
order passed by this Hon’ble Court in the afore titled writ petition, the
competent authority after considering the facts and circumstances in
totality including the interim directions passed by the Hon’ble Court

90
in the afore titled matters as well as mandate of the judgment of

Hon’ble Supreme Court in Pardeep Kumar’s case, has thus taken a
conscious decision for scrapping the open auction process carried
out in the year 2016 and directed for carrying out fresh auction
process through e-auction mode. The contentions/assertions to the
contrary sought to be projected by the petitioner under these ground
paras being incorrect are thus denied vehemently.”
(Emphasis by us)
The above extract makes it amply clear that short of extracting from their
official file, the respondents have taken the stand which was accepted and found
favour with Ld. Single Judge. These very contentions have been considered by us.
214. The pronouncement in AIR 2011 SC 1127 Kalyan Singh Chouhan vs. C. P.
Joshi was rendered in an election dispute, wherein the rules of pleadings apply
strictly and it was held by the Supreme Court that pleadings and particulars are
required to enable the court to decide the rights of the parties in the trial. It was
observed that pleadings are more to help the court in narrowing the controversy
involved and to inform the parties concerned of the question in issue, so that the
parties may adduce appropriate evidence on the said issue. The court reiterated the
well settled legal proposition that “as a rule relief not founded on the pleadings
should not be granted”. Therefore, it was held that a decision of a case cannot be
based on a ground outside the pleadings for the parties. In so holding, the Supreme
Court placed reliance on the precedents in Trojan & Co. Ltd; Om Prakash Gupta;
Ishwar Dutt and Hindustan Constructions Company Pvt. Ltd.
215. There can be no dispute at all with these well settled principles. However,
we are unable to agree with the objection on behalf of the appellants that the ld.
Single Judge has rendered the impugned judgment outside of the pleadings.

91
216. We have considered the concealment of material facts on the part of the
appellants and also the deliberate misjoinder of parties to persuade the court to
grant the relief to them when they were completely disentitled to do so. It is the
appellants who have failed to give the details or the extent of their breaches and
failure to comply with the Rules and the terms of the LoI.
217. The learned Single Judge has relied primarily on the statutory provisions,
the Rules as also the terms notified to the appellants under the LoIs and the
admitted violations by the appellants. This objection, therefore, is noted only for the
sake of rejection.
Opportunity to meet contents of official record
218. A vehement objection also stands made on behalf of all the appellants that
the ld. Single Judge examined the official records of the respondents and has
premised the impugned judgment thereon without the appellants having had
benefit of knowing the contents thereon.
219. On the other hand, Mr F. A. Natnoo, ld. AAG, has explained that the
original record was produced in support of the Govt. reply to the writ petitions and
the communications from the respondents. Mr. Natnoo has submitted that the
record was available in open court before the Ld. Single Judge right from the
beginning when the hearings commenced before the learned Single Judge. It is
submitted that none of the appellants even made a request to the learned Single
Judge for an opportunity to examine the same.
Mr Natnoo has further submitted before us that several queries were put to
the appellants on the basis of the original record and responses elicited. Mr.
Natnoo has submitted that no objection whatsoever was raised by and on behalf of

92
the appellants to the above procedure at any point of time. The objection of the
appellants to the procedure followed by the Ld. Single Judge is also unfounded.
220. This bunch of appeals was consolidated for hearing which commenced on
27th May, 2020. During the course of submissions on 28th May, 2020, it was also
contended that there was no material to support the Government action and order.
221. Appearing for the respondents, Mr Natnoo, disputed the contentions of the
appellants and submitted that the Government action and order was valid and in
accordance with law. In the objections, as extracted above, reference was made to
“taking into account all the facts and circumstances” and “conscious decision for
scrapping the open auction carried out in the year 2016” and “carrying out fresh
auction process through the e-mod.” The communication dated 26th February,
2019 also refers to approval of the “competent authority” and scrapping of the
open auction carried out under the Rules of 2016.
222. An objection of the appellants was pressed that the order is not in
accordance with Rules 11 and 12 of the Transaction of Business Rules. It is
noteworthy that the appellants did not challenge the decision of the Government
dated 26th February, 2019 whereby it was decided to grant mining leases by e-
mode. So far as rejection of an application is concerned, the same is provided
under the Rules of 2016. Mr. Natnoo, has further urged that the decision of the
respondents was taken in public interest to ensure compliance of the directions of
the Supreme Court and the NGT as also the notifications of the MOEF&CC of the
Government of India.
223. The order of scrapping and approval was not in the writ records before us.
Having regard to the contents of the communication dated 26th February, 2019 and

93
the above averments in the reply of the official respondents, in order to take a view
in the matter, we had deemed it necessary to examine the original record. Fairness
demanded that the appellants be granted an opportunity to examine the same and
make submissions thereon.
224. In order to obviate any prejudice to the appellants, by our order dated 20th
May, 2020, we had directed the respondents to produce before us all original
records which had led to the issuance of the communication dated 26th February,
2019. The respondents were directed to file an affidavit placing on record the
approval which was referred to in the communication dated 26 th February, 2019
and copies of the extract of the relevant portion of the original record as well as
connected documents. The respondents were directed to give full details of the
manner in which the matter had been processed. This affidavit was directed to be
filed in LPA No.62/2020 and copy thereof served upon counsels appearing in all
the appeals who were given liberty to file response thereto.
225. The respondents had filed an affidavit dated 28th May, 2020. However, by
the order dated 29th May, 2020, this was rejected as incomplete and the
respondents were directed to file a fresh affidavit with liberty to the appellants to
respond thereto.
226. In compliance of the above, the respondents filed an affidavit dated 30th
May, 2020 of Shri Manoj Kumar Dwivedi, Commissioner/ Secretary to
Government, Industries and Commerce Department, placing the relevant extract
from the official file No. IND/Legal-239/2018 before us.

94
227. A response dated 01.06.2020 has been filed by Vikar Ahmed Dar (appellant
in LPA No. 64/2020) contending that the consideration by the Principal Secretary
(I&C) was based on no material.
228. We were also of the view that these appeals raise matters which do not
brook any delay. For this reason, we have permitted the appellants to press the
several grounds which are considered hereafter and examined the affidavits and the
records of the respondents.
229. Ld. Senior Counsels and counsels for the appellants appearing in these cases
have addressed submissions in detail as well as Mr. F. A. Natnoo, ld. AAG on
these affidavits and the records of the respondents at length.
VI The consideration by the Government which lead to the

decision to scrap the auctions of 2017, issuance of the
communication dated 26th February, 2019 and the
Amendment to the Rules.
230. Before us, all the appellants have contended that there was no material
before the respondents and that the impugned action stands taken and the decision
made without application of mind. It is further contended that the respondents
placed no pleadings even before the learned Single Judge to oppose the writ
petition or explain their action or stand.
231. The record shows that the filing of OWP 1176/2018 Radha Krishan vs.
Union of India and the passing of the order dated 19th June, 2018 therein catalyzed
the authorities into taking a close look into the entire matter of grant of mining
lease and quarries.
232. It appears that another writ petition- OWP No. 1249/2018, was filed by
Subash Chandra and anr in the Jammu Wing contending that notices issued vide
No. DIP/J/3008/18 dated 27th June 2018 were issued in violation of the above

95
order dated 19th June 2018 in OWP No. 1176/2018 Radha Krishan v. Union of
India. While issuing notice by the order dated 2nd July 2018, the learned Single
Judge had directed that ‘the impugned public notice dated 27th June 2018 (supra)
and all proceedings pursuant thereto shall stay and no auction shall be held/or
acted upon.’
233. This writ petition was directed to be listed along with OWP No. 1176/2018.
234. We may note that Subash Chander was the petitioner No. 2 in OWP No.
1176/2018. Instead of bringing the above fact regarding the notice dated 27th June
2018 by way of an appropriate application to the notice of the Bench seized of that
writ petition, the strange practice of filing a second writ petition appears to have
been followed.
235. In OWP No.2648/2018 Sarweshwar Sharma and others, the ld. Single
Judge by the order dated 26th December, 2018, while asking the State to explain its
position vis-à-vis Rule 104A, the transitory provision, passed the following order:
“Considering the importance of the matter, I request the learned

Advocate General of the State to assist this Court on the next date of
hearing. It is, however, made clear that although I am of the prima
facie view that the Transitory Provision does not in any manner
absolve the successful bidders to obtain environmental clearance
based upon the Transitory Provision, yet the issue will be considered
after an appropriate response is filed through the office of learned
Advocate General. In case, the response is not satisfactory, on the next
date of hearing, it may become necessary to permit the successful
bidders to conduct their minor mineral operatioins only if they have in
their possession an appropriate environmental clearance report. The
pendency of the present petition, therefore, would not prevent the
successful bidders, in the meantime, to get clearance, as require.”
(Emphasis supplied)

96
This writ petition is still pending.
The above order shows the concern of the court with the matter of ECs
which were mandatory.
236. Vide a letter dated 4th July 2018, the Directorate of Geology and Mining,
J&K proposed amendments in SRO 105 in the light of the order dated 19 th June
2018 in OWP No. 1176/2018 Radha Krishan v. Union of India (which stood
clubbed with PIL no. 6/2016 Peoples Forum v. State and anr).
237. The Directorate of Geology and Mining in the Department of Industries and
Commerce, while taking steps to contest the OWP No. 1176/2018, also took up the
matter of Rule 52 of SRO 105 i.e. the Rules of 2016 and explored the possibility of
making ‘e-auctions’ a permanent method for auctions in the future.
238. The interim orders of this court in OWP No. 1176/2018 also led to the
Department of Industries and Commerce taking up the matter of development of
software, training staff, etc for conducting e-auctions.
239. It appears that in the light of the observations in the interim order dated 19th
June 2018 in Radha Krishan facts and figures were called for by the authorities in
the Department.
240. Mr. Natnoo has placed the Government file bearing No. IND/Legal-
239/2018 from the office of the Principal Secretary to the Government, Industries
and Commerce Department before us. It appears that the Directorate of Geology
and Mining had moved a proposal for amendment of the Rules, on which, after
examination, a draft notification stood vetted by the Department of Law, Justice &
Parliamentary Affairs (Para 17 & 18, noting dated 18th July 2018, N/4). The file
contains a detailed extract of the amendments which were proposed by the
Directorate of Geology and Mining including a tabulation of the rules requiring

97
amendment; the matter in principle; the existing statutory provisions and rules; the
proposed provisions and the justification for the same.
241. On 9th August 2018, comments of the Additional Secretary, Law were
obtained on this amendment.
242. The opinion of the Advocate General was sought on the following question:
“10. Whether the order of the Hon’ble High Court dated 19th June
2018 is applicable to the cases where e-auction process as already
concluded?”
243. On 10th December 2018 (page 178 of the Govt file), the Advocate General
opined as follows:
“In cases, the auctions prior to issuance of the aforementioned order

have been concluded i.e. the licences have already been granted, then
the order of the court would be deemed to be prospective in nature but
in case licences have not been granted till the date of passing of the
order dated 19.06.2018, then in that eventuality, it has to await the
final order of the court and the matter needs to be contested before the
court as the order dated 19.06.2018 is interim order and that too
subject to objections and till next date of hearing.”
244. So far as existing bidders were concerned, the proceedings for the issuance
of the mining leases stood interdicted by the interim order dated 19th June 2018.
245. It is also noteworthy that so far as the appellants are concerned the period of
six months as required by the Rules and LoIs for compliance of the conditions
thereunder was long over.
246. While examining the thrust of OWP 1176/2018, that the open auction was
fraught with cartelization/ intimidation, on 2nd January, 2018, the Principal
Secretary directed the Director (Geology and Mining) as follows:

98
“54. Seen. In the meanwhile, the main thrust of the petition is that
open auction is fraught with danger of cartelization/intimidation. I
have directed Dir (G&M) to put up information for each auction, in
formatted manner, to make an assessment regarding the
transparency aspect by 7th FN to me please, with the information from
Dir (G&M).”
247. The details of the minor minerals blocks and their auctions were submitted
by the Director of Geology and Mining, J&K Govt, Jammu under cover of a letter
dated 7th January 2019 to the Principal Secretary to Govt, Industries and
Commerce Department, Civil Secretariat, Jammu.
248. On 8th January 2019, the Additional Secretary (L) observed that in view of
the directions of the High Court to grant mining leases/licences by the mode of e-
auction, an amendment in SRO 105 may be considered by replacing the word
‘open auction’ with ‘e-auction’ to enable the Geology and Mining Department to
conduct auction of the un-auctioned blocks through e-auction mode.
This information was placed before the Principal Secretary as directed.
249. After an in-depth consideration of the material on file, the Principal
Secretary (I&C) of the Department concerned has proceeded to record the
following noting on the 8th February, 2019:
“58. In the Writ Petition No. OWP No. 1176/2018 titled Radha
Krishan S/o Bram Dev Vs Union of India, the Hon’ble High Court
has directed that no licence shall be granted other than by mode of
e-auction (refer Para 4).
59. The Department has carried out open auction of Mineral Block
from September 2017 onwards and the details are placed across. The
Gist (FLAG ‘X’) indicated that the successful bidders in a number of
blocks is same person. In this regard, a complaint was also received
and report has been obtained from Director (Geology and Mining)

99
(FLAG ‘Y’). It is noted that while apparently rules for open auction
have been followed but the highest bid shows very wide variation
even though minimum reserve bid (decided by the Department taking
potential into account) is of the same order. Also, it seems minimum
reserve bid has been fixed too low. The Government has received a
total of Rs.12.24 Crore by means of open auction of 231 (file placed
below IND/legal/27/2013-II) Mineral Blocks across the State while in
Districts of Kathua, Doda, Ramban, Baramulla, Bandipora &
Srinagar, the auction did not take place at all, and not of any cogent
reasons.
60. The Mineral Rules 2016 (Rule 52) mentions the mode of grant
of lease/licence only through process of open auction. These is no
doubt that e-auction would allow more competition and will address
the issue of cartelization and intimidation. Hence there is need to
immediately make necessary change in the Rules. The other changes
proposed in the Rules are of routine nature that need not detain us but
this change needs to be effected immediately, following the due
process.
61. As for the open auction undertaken by the Department; the
advice of the Ld. Advocate General has been sought by the Law
Department on the following question:-
Whether the order of the Hon’ble High Court dated 19.06.2018
is applicable to the cases wherein auction process has already been
concluded”.
The Ld. Advocate General has opined that in case licence have
not been granted till 19.06.2018, the matter needs to be contested
before the Hon’ble High Court.
62. It may be seen that the successful bidders have not yet
obtained Environmental Clearance despite lapse of more than a year
since they were allowed mining (subject to approval of mining plan).
Notices were issued by the Department to get Environmental
Clearance but they have approached the courts and have, it is learnt

100
from the Advocate, got relief as they claim the SEIAA is not in place
and that they are not at fault.
63. Looking at the entire grant of issues, it would be most
appropriate to scrap the open auction that had been carried out in
2017-18 onwards and instead go, for fresh auction, with the mode of
e-auction. Though that would entail returning the bid amount to
successful bidders but it is expected that e-auction would fetch much
higher amount of revenue for the Government. Moreover, it would
ensure transparency and also compliance to the directions of the
Hon’ble High Court.
64. It is therefore proposed that:-
i. Mineral Rules 2016 be amended suitably to indicate e-
auction as the only mode of lease/licence.
ii. Open auction carried out under the 2016 Rules be scraped
and fresh auction be carried out, only through e-auction.
iii. Till the time fresh allotments are made, the existing
mechanism would continue. This would require extension of
transitory provision by some time.
iv. Procedure of mining plan approval, fixation of reserve bid
amount and frequency of royalty deposition would be addressed by
issuing directions under the existing Rules.”
(Emphasis by us)
250. The noting dated 8th February, 2019 was considered by the Advisor on 11th
February, 2019 as per the forwarding note recorded in para 66. It was thereafter
sent for the views of the new Principal Secretary, Industries and Commerce
Department, who recorded noting on 14th February, 2018 as para 67 of the file
endorsing further course of action as recommended at note 64 and 65 and
recording that the e-auction was to be conducted irrespective of the status of the
proceedings for EC by the successful bidders of the open auction observing that
the bidding process in 2017 was not without possibility of

101
cartelization/intimidation. The above proposal was finally approved by the Advisor
on 18th February, 2018 as per para 68.
251. The above decision was conveyed by way of the communication dated 26th
February 2019 issued by the Department of Industries & Commerce to the
Director, Geology and Mining Department. We have extracted this letter above.
This communication thus only conveys the decision of the respondents.
252. As a result of the above consideration and decision, a the draft notification
was scrutinized and approved by the Department of Law, Justice and
Parliamentary Affairs leading to the issuance of the notification SRO 161 on the
7th March 2019 making the following amendments in Rules of 2016.
“1. clause (xLvii) of rule 2 shall be substituted by the following:-

“(xLviii) “e-auction” means bidding by the competitors online
for grant of mineral concessions;
2. In clause (xiii), (xxx) of rule 2, 27, 44 and 52 for the words
“open auction” wherever appearing, the words “e-auction” shall be
substituted.”
253. Mr. Z.A. Shah, learned Senior Counsel has submitted that the reserve price
for the auction was fixed under Rule 54 by the Government. In the noting dated 8th
February, 2019 in para 59, it has been noted that the reserve price was too low,
while in para 60, there is reference to the possibility of cartelization. Learned
Senior Counsel would contend that the counter affidavit filed before the court does
not disclose the reasons which weighed with the Government for scrapping of
auction as informed by the communication dated 26th February 2019.
254. We have extracted the counter affidavits of the respondents above and noted
that the respondents had made out their case therein. In any case, in view of the fact

102
that no rights had accrued in favour of the appellants, such objection is not available
to the appellants.
255. The consideration by the State Government has been placed on affidavit
before us and opportunity has been granted to the appellants to consider and
respond to the same.
256. The appellants have vehemently contended the respondents suggestion that
there was cartelization is without any basis. However, we have found that the
decision of the respondents is based on material and consideration.
257. We may note that in the official record, the material received by the
authorities pursuant to the Noting dated 2nd January, 2019 from the Director,
Geology and Mining regarding the Jammu Province runs in a tabulation of 9 pages
giving complete details of the auctions and the material received from Kashmir is a
tabulation which runs into 35 pages.
258. We find that the Principal Secretary (I&C) had the complete details of the
proceedings of the auction and the manner in which the bidding had taken place;
the highest bids obtained and the names of the bidders therein.
259. In the instant case as well, Mr F. A. Natnoo has drawn our attention to the
manner in which the bidding took place.
260. The material on record as above before the decision was taken, shows that
while the bid for one block out of a group of blocks auctioned may be considered
to be reasonably above the reserve price, the remainder of the bids by the same
person/ bidder are only notionally/ insignificantly above the reserve price as noted
by the authorities. The material also supports the Government observation that the
successful bidder in a larger number of blocks was the same person. These factors
have led to the authorities forming the view of possible cartelization.

103
261. So far as the view regarding cartelization is concerned, similar facts were
before the Supreme Court in (1972) 2 SCC 36 : State of Orissa v. Harinarayan
Jaiswal, wherein the Court also considered the issue as to whether an opinion by
the Government with regard to collusion among the bidders and adequacy of the
price would be subject to judicial review. In Para 13 of the judgment, the Supreme
Court has observed as followed:
“…….. The High Court erroneously thought that the Government was
bound to satisfy the Court that there was collusion between the
bidders. The High Court was not sitting on appeal against the order
made by the Government. The inference of the Government that there
was a collusion among the bidders may be right or wrong. But that
was not open to judicial review so long as it is not proved that it was
a make- believe one. The real opinion formed by the Government
was that the price fetched was not adequate. That conclusion is taken
on the basis of Government expectations. The conclusion reached by
the. Government does not affect any one's rights. Hence, in our
opinion the High Court misapplied the ratio of the decision of this
Court in Barium Chemicals Ltd. and anr. v. Company Law Board and
ors.[1966 Supp SCR 311] and Rohtas Industries Ltd. v. S. T. Agarwal
[(1969) 1 SCC 325] .”
(Emphasis supplied)
262. In Harinarayan Jaiswal, the Supreme Court was called upon to consider the
bindingness on the authorities of the highest bid received in an auction. We may
usefully advert to the observations of the Supreme Court in this case which read as
follows:
“13. xxxx. As held by this Court in Cooverjee Bharucha’s case

(supra), one of the important purpose of selling the exclusive right to
sell liquor in wholesale or retail is to raise revenue. Excise revenue
forms an important part of every State’s revenue. The Government is
the guardian of the finances of the State. It is expected to protect the

104
financial interest of the State. Hence quite naturally, the legislature

has empowered the Government to see that there is no leakage in its
revenue. It is for the Government to decide whether the price offered
in an auction sale is adequate. While accepting or rejecting a bid, it
is merely performing an executive function. The correctness of its
conclusion is not open to judicial review. We fail to see how the plea
of contravention of Art. 19(1)(g) or Art. 14 can arise in these cases.
The Government’s power to sell the exclusive privileges set out in s.
22 was not denied. It was also not disputed that those privileges could
be sold by public auction. Public actions are held to get the best
possible price. ‘Once these aspects are recognised, there appears to
be, no basis for contending that the owner of the privileges in
question who had offered to sell them cannot decline to accept the
highest bid if he thinks that the price offered is inadequate.- There is
no concluded contract till the bid is accepted. Before there was a
concluded contract, it was open to the bidders to withdraw their bids-
see Union of India and ors. V. M/s. Bhimsen Walaiti Ram [(1970) 2
SCR 594]……..”
(Emphasis by us)
263. A similar rejection of a bid/ tender where the highest bids were marginally
higher than reserve price was considered by the Supreme Court in the judgment
reported at 2016(1) SCC 724 : State of Punjab v. Bandeep Singh & Ors. In this
case, the Director, Industries and Commerce Department, in a noting dated 18th
June, 2004 had opined that the bids should not be confirmed as highest bids
offered were only marginally higher than the reserve price. The two respondents/
petitioners who were highest bidders and had deposited the earnest money together
with 25% of the auction bid which was admittedly only marginally higher the
reserve prices fixed by the competent authority. Without conveying reasons to the
appellants for not accepting their bid, the decision was taken by the respondents to
re-auction the properties.

105
264. The Supreme Court referred to an earlier pronouncement reported at 2004(8)
SCC 611 : Anil Kumar Srivastav v. State of UP and the view taken by the Madras
High Court in 1968 SCC (online) Madras 226 : B. Sushila v. Saraswathi Ammal,
to the effect that notwithstanding the fixation of an upset price and notwithstanding
the fact that the bidder has offered an amount higher than the reserved stock upset
price, the sale is still open to challenge on the ground that the property has not
fetched proper price and that the same be set aside. It was noted that this principle
was also upheld in Ram Kishan v. State of UP while cautioning that the
Government did not have a carte blanche; it cannot take any decision, it chooses; it
cannot take a capricious, arbitrary or prejudice decision. Its decision must be
informed and impregnated with reasons. In para-8 of Bandeep Singh, the Supreme
Court observed that “the presence of cartelization or “pooling” could be a reason
for cancellation of an auction process. In addition, a challenge on the ground
that the property has fetched too low a bid when compared to the prevailing
market price, would also be valid and permissible provided this approach has
been uniformly adhered to.”
265. Sufficiency of material before the authorities and the extent of their
consideration is completely beyond the pale of judicial review. The view that we
are taking finds strength from the observations of the Supreme Court in the
judgment reported at (1974) 2 SCC 687 (at page 694), M. A. Rashid v. State of
Kerala wherein the Supreme Court sustained the decision of the State Government
finding that there was material on record and that the opinion was not based on any
matter extraneous to the scope and purpose of the statutory provisions and also
that reasonable grounds existed for believing the existence of the state of affairs.

106
The court also found that the decision was in public interest. The following
observations in the above judgment would guide our consideration:
“21. The State Government found on materials that use of machines

affected the availability of retted coconut husks for equitable
distribution at fair prices. The notification is on the consideration of
relevant and useful material. The opinion of the State Government
cannot be said to be based on any matter extraneous to the scope and
purpose of the relevant provisions of the statute. The materials
supporting the subjective satisfaction indicate that there are
reasonable grounds for believing that the prescribed state of affairs
exists and a course of action is reasonably necessary for the given
purpose of equitable distribution of coconut husks at fair prices.
22. The notification is issued after due care and caution on the basis of
reliable and sufficient data obtained by proper investigation and
enquiries. The Government took notice of Section 38 of the Defence of
India Act. The Government became satisfied about the public interest.
The notification does not interfere with the avocations and enjoyment
of property any more than is necessary for those purposes of equitable
distribution of husks at fair price to the traditional sector.”
(Emphasis supplied)
266. Before us, there is no challenge to the authority of the respondents, to effect
the amendment to the rules or changes in the policy. There is not a single
allegation of malafide in the decision which has been taken by the respondents by
any of the appellants. No appellant has challenged the jurisdiction of the
respondents to change the policy.
267. Only a limited challenge is laid as to the cancellation (“scrapping”) of the
pending process for which auctions were held in 2017 in which the appellants were
declared highest bidders.
268. In any case, it is not open to this court in exercise of power of judicial
review to look into the view and decision of the official respondents, especially a

107
policy decision, or to conduct the nature of enquiry which Vikar Ahmad Dar-
appellant is calling upon this court to conduct.
269. Even if the reserve price had been fixed by the Government, it does not
stand prohibited from re-examining the same and voicing a concern that the same
was low.
270. The contention on behalf of the appellants that for intimidation of a possible
bidder, physical presence of a person is necessary, is completely misconceived. In
today’s time of e-communication, physical presence to intimidate any person is not
necessary.
271. So far as the contention on behalf of the appellants that there was no
material on record of the respondents is concerned, the same is, therefore, factually
unfounded. What stands established from the record produced before us is that
there was material on record to suggest the possibilities noted by the authorities.
Given the information and data collected on Government record and examined in
the detailed notings, it is manifest that the competent authorities have applied mind
to the relevant material before taking the well considered decision purely in public
interest.
272. The decision of the respondents therefore is based on facts, arrived at after
application of mind to the relevant material, is in public interest and cannot be
overruled on any legally tenable grounds.
VII The Working of Rule 104A
273. We have grave doubts that a person who has merely participated in an
auction for grant of mining lease could be covered within the meaning of the
expression ‘existing quarry holders’ or ‘person extracting such minor minerals’ as
incorporated in Rule 104 A.

108
274. A reading of the transitory provision contained in Rule 104A further shows
that the provision directs that the department ‘may’ issue permission for extraction
of minor minerals. It is certainly unassailable that the department is required to
accord consideration for issuance of permission. The use of the expression ‘may’
shows that even if he could be considered as covered under the categories
mentioned in the Rule, no person has an absolute right to the permission
contemplated under. Rule 104-A also does not enable the categories of persons
mentioned therein to ipso facto be entitled to undertake mining operations under
Rule 104-A.
275. The records of the instant case reveal a shocking state of affairs.
276. We have queried Mr. Natnoo and called upon him to place before us the
grant of permissions to any person enabling the extraction and transportation of
minor minerals envisaged as in Rule 104A.
277. Mr. Natnoo was unable to point out a single instance of consideration of any
person for grant of the permission under Section 104A.
278. We have asked the respondents for the details of the auctions conducted and
details of the mining leases which have been executed since the date 20th April
2016, when Rule 104A was incorporated. Nothing is forthcoming.
279. Our scrutiny of the record produced would also show that the respondents
neither have the practice of nor follow any procedure for grant of formal
permission as contemplated under Rule 104A.
280. Before us, the appellants have contended that after their bids were
provisionally accepted and LoIs issued, they have effected mining of the minor

109
minerals and paid the prescribed royalties. These appellants submit that in the
acceptance of these payments of royalty, is the accordance of tacit permission to
the bidders to mine for minerals.
281. A very interesting submission has been made by Mr. Raina before us. In
LPA 56/2020 Chaman Lal vs. State of J&K. It has been submitted that the
appellants have greatly contributed to public interest and during this period having
paid a whopping amount of Rs. 1,23,55,400/- towards royalty.
282. Mr. F. A. Natnoo, AAG has given the following details of the royalties paid
by all the appellants:
S. No. Appellant Appellant No. in LPA No. Mineral extracted Total Royalty
in metric tonnes Paid
(MT) (Rs. in lacs)
1. M/s Usman Appellant No. 1 Nallah Muck 2493 2.055

Constructions in LPA No. 41-A/2020 in Nallah Boulder 2270
Abdul Gani Lone OWP 290/2019 Titled Crushing Boulder 3325
Usman Constructions & Sand 590
Others V/s State and Others RBM 8670
Total 17348
2. Sajad Ahmad Shan Appellant No. 2 Nallah Muck 1050 0.975
in LPA No. 41-A/2020 in Nallah Boulder 1075
OWP 290/2019 Titled Crushing Boulder 896
Nallah Bajri 300
Total 4881
3. Balbir Singh Appellant No. 3 Nallah Muck 507435.16 199.85
OWP 290/2019 Titled Sand 194640
Usman Constructions & Nallah Bajri 23171.43
Others V/s State and Others
Total 806346.50
4. Shabir Ahmad Shiekh Appellant No. 4 Nallah Muck 160 2.058
OWP 290/2019 Titled Crushing Boulder 350
Total 1770
5. Rakesh Kumar Appellant No. 1 Nallah Muck/RBM 1263353 574.70

Choudhary in LPA No. 02/2020 in Nallah Boulder 287125
OWP 325/2019 Titled Sand 689101
Rakesh Kumar Choudhary Nallah Bajri 82035
V/s State and Others Total 2321614
6. Mohd. Ashore Mir Appellant No. 1 -- --
in LPA No. 50-A/2020 in
OWP No. 477/2019 titled
Mohd. Ashore Mir and

110
7. Manzoor Ahmad Mir Appellant No. 2 -- --

8. Mohd. Shaban Bhat Appellant No. 3 -- --
9. Vikar Ahmad Dar Appellant No. 1 Nallah Muck 3690 4.716
in LPA No. 64/2020 in Nallah Boulder 3296
OWP 259/2019 titled Vikar Crushing Boulder 8770
Ahmad Dar V/s State and Sand 2449
Others RBM 19160
Nallah Bajri 925
Total 38284
10. Nagar Singh Appellant No. 1 Nallah Muck 315920 143.60
in LPA No. 07/2020 titled Nallah Boulder 71800
Nagar Singh V/s UT of J&K Sand 172320
and Others RBM 885
Nallah Bajri 20514.29
Total 580554.29
(MT) (Rs. in lacs)
11. Chaman Lal Appellant No. 1 Nallah Muck 287254.99 130.57

in LPA No. 05/2020 titled Nallah Boulder 65285.23
Chaman Lal V/s UT of J&K Sand 156684.54
and Others RBM 885
Nallah Bajri 18652.92
Total 527875
12. Mohd. Farooq Lone Appellant No. 1 Nallah Muck 4788 3.697
In LPA No. 63/2020 in
OWP 344/2019 titled Mohd.
Farooq Lone and others V/s
State and Others
13. Riyaz Ahmad Sofi Appellant No. 2 Nallah Muck 800 0.20
in LPA No. 63/2020 in OWP
344/2019 titled Mohd.
State and Others
14. Ajaz Ahmad Magray Appellant No. 3 Nallah Muck 7000 1.750
State and Others
15. Tariq Majnoon Mir Appellant No. 4 Nallah Muck 4160 1.04
State and Others
16. Riyaz Ahmad Bhat Appellant No. 5 Nallah Muck 8440 2.11
State and Others
17. Tanveer Ahmad Mir Appellant No. 6 Nallah Muck 368456 9.211
State and Others

111
18. Ab. Hamid Mir Appellant No. 7 Nallah Muck 17568 4.392
State and Others
19. Abdul Ahad Wani Appellant No. 8 Nallah Muck 7256 1.814
State and Others
20. Nazir Ahmad Mir Appellant No. 9 Nallah Muck 10360 2.59
State and Others
21. Mohd. Amin Bhat Appellant No. 10 Nallah Muck 2752 0.688
State and Others
22. Rahil Mohiuddin Dar Appellant No. 11 Nallah Muck 3944 0.986
State and Others
(MT) (Rs. in lacs)
23. Tariq Ahmad Sheikh Appellant No. 12 Nallah Muck 28200 7.055
State and Others
24. Shakeel Ahmad Bhat Appellant No. 13 Nallah Muck 15820 3.955
State and Others
25. Firdous Ahmad Mir Appellant No. 14 Nallah Muck 7520 1.88
State and Others
26. Ab. Rashid Lone Appellant No. 15 Nallah Muck 5840 1.46
State and Others
27. Shahnawaz Ahmad Appellant No. 1 Nallah Muck 970 0.242
Bhat in LPA No. 77/2020 titled
Shahnawaz Ahmad Bhat
and Others V/s UT of J&K
and Others
28. Mohd. Ayoub Lone Appellant No. 2 Nallah Muck 970 0.242
in LPA No. 77/2020 titled
Shahnawaz Ahmad Bhat
and Others V/s UT of J&K
and Others
283. Our attention is drawn to the Schedule-I to the Rules of 2016 whereby the
Rates of Royalty of Minor Minerals [Rule 38(1(i)(ii), 50(I), 70] have been

112
prescribed by the Govt. So far as nallah boulders, bajri, sand are concerned, the
rates stretch from Rs. 20/MT for nallah boulders to Rs. 30/MT for screened sand.
For ordinary nallah sand and nallah which has been extracted by the appellants,
royalty stands fixed at Rs.25/MT.
284. We made an attempt to assess the value of the extracted material. Mr Sunil
Sethi, ld. Senior counsel, appearing for the interveners has informed us that so far
as the cost of a single tipper of the minor mineral (sand) is concerned, the miner
sells the same @ Rs. 15000/ per tipper. At the above rate of royalty, against
payment of royalty of rupees one lakh by a bidder, the quantity of minerals which
would have been mined would be to the tune of 4000 tonnes. Assuming that one
tipper carries a load of 5 tonnes, then 4000 tonnes translated into 800 tippers.
These 800 tipper loads, at the rate would have earned Rs 15000/ tipper would thus
fetch Rs. 15000 x 800 = 1,20,00,000.00 to the bidder, that too on a very rough
estimate.
285. The above tabulation manifests the extent to which the appellants have thus
exploited the minor minerals without the required formal order permitting them to
do so, most importantly without EC.
286. Mr Sunil Sethi, has submitted that the second clause of the communication
dated 26th February 2019 to the effect that the existing mechanism would continue
was also contrary to the prohibition contained in Section 4 of the Act of 1957 as
well as the pronouncement of the Supreme Court in Deepak Kumar and cannot be
permitted.
There is merit in this submission.

113
287. We have noted above that the last extension of Rule 104-A was upto 28th
February, 2019. Did the extraction of minor minerals by the bidders (present
appellants) of 2016 auctions cease thereafter?
288. It appears that in the writ petitions which were filed, the learned Single
Judges of the Court granted interim orders in favour of the writ petitioners/
appellants. For instance in OWP 259/2019, filed by Vikar Ahmad Dar, an interim
order dated 13th March, 2019 was passed restraining the respondents from acting
upon the condition No.1 of the impugned communication dated 26.02.2019. An
interim order dated 1st April, 2019 was passed in OWP 363/2019 filed by Ashaq
Hussain Padder (Nagar Singh was petitioner no.5 in this order). Similar orders
were passd in the other writ petitions as well.
289. We are informed that utilizing the shield of the second clause of the
impugned letter dated 26th February, 2019 and the interim orders by Ld. Single
Judges in the writ petitions, these bidders continued with their illegal activity.
290. In this background, it appears that the J&K Pollution Control Board was
compelled to address a letter dated 12th November, 2019 to the Director of the
Geology and Mining Department (extracted above). This letter contains a reference
to a previous notice dated 16th October, 2019 from the Pollution Control Board to
the authority and its response dated 21st October, 2019. The letter dated 12th
November, 2019 from the J&K Pollution Control Board speaks volumes about the
manner in which the Geology and Mining Department of the Government of
Jammu and Kashmir has conducted itself. This letter interalia directed the
respondents to ensure that no extraction of minor minerals “from today” is done in
the State in defiance of the laws governing environmental protection.

114
291. The respondents now had no choice but to comply with the communication
from the Pollution Control Board. It is noteworthy that none of the appellants have
challenged the letter dated 12th November, 2019.
292. We have before us a copy of one application being IA No.7798/2019 in
OWP No.363/2019 which was filed on 24th December, 2019 by the respondents
seeking modification of the interim order dated 1st of April, 2019 passed by the
Court in OWP. Along with this application, the afore noticed orders of the NGT
and a copy of the letter dated 12th November, 2019 of the J&K Pollution Control
Board had been filed. It appears that no order came to be passed on this
application.
293. We may note that we have no information from these appellants as to
whether they complied with the directions contained in the letter dated 12th April,
2019.
294. The learned Single Judge has observed in para 74 of the impugned judgment
that he did not have the above information with regard to the extent of the
environmental degradation caused by indiscriminate mining operations carried out
by the appellants under the shield of Rule 104-A. We have attempted above an
estimation of the extent of mining undertaken by the appellants, the impact
whereof would need a scientific evaluation by experts.
295. While deriving such huge commercial profits, these appellants have
deprived the State of valuable financial resources in terms of the unpaid balance
bid amount which was to be paid within a period of six months of the issuance of
the LoI. Clearly, instead of serving public interest, these appellants have in fact
caused grave loss to public interest.

115
VIII An important ‘subsequent’ fact-conduct of e-auctions
296. After the passing of the impugned judgment dated 1st May, 2020, the
respondents put all the blocks to e-auction pursuant to public notices issued
between 27th May, 2020 to 1st June, 2020. For the e-auctions, the respondents had
fixed reserve prices which were either almost equal to or way higher than the
reserve prices fixed for the auctions of 2016/2017.
297. Some of the instant appeals had been filed and were under consideration
before us. We had declined any interim orders interdicting the e-auctions. We are
informed that these auctions stand concluded.
298. We have been informed that the appellants unconditionally and unreservedly
participated in the e-auctions and submitted bids.
299. Mr. Natnoo, has placed before us a comparative tabulation of the details of
the minor mineral blocks relating to the minimum reserve prices’ and the highest
bids offered in the open auctions in 2017 as well as in the e-auction conducted in
2020. It is submitted by Mr. Natnoo, ld AAG that copies of these documents have
been furnished to all the counsels.
For expediency we extract hereunder some of these details.
S. Name of appellant Block Area in Open Auction E-Auction

No no. hactare
Minimum Highest Minimu Highest
Reserve Bid m Bid
Bid (Rs.in offered Reserve offered
lacs) (Rs.in Bid (Rs. (Rs. in
lacs) in lacs) lacs)
District Poonch
1 Appellant No.3 in 4 8.86 4.41 4.61 15.95 55.75
LPA No.41-A/2020
titled Usman
Constructions &
Ors. V. State and
others
2 -do- 8 6.09 3.13 3.50 10.96 108.36

116
3 -do- 9 8.80 4.38 4.82 15.84 60.14
4 -do- 18 7.00 0.77 0.85 12.60 37.00
5 -do- 20 6.25 0.68 16.01 11.25 80.25
District Rajouri
6 Appellant No.1 in 1/1 8.61 5.52 6.25 17.05 150.25
LPA No.02/2020 in
OWP 325/2019 titled
Rakesh Kumar
Choudhary V/s State
and ors.
7 -do- 1/2 7.89 5.04 6.00 15.62 80.52

8 -do- 1/5 9.51 5.09 5.80 18.83 226.53
9 -do- 2/1 7.37 2.72 3.80 14.59 72.09
10 -do- 2/2 9.52 3.13 4.25 18.85 85.65
11 -do- 2/6 9.34 3.06 4.10 18.49 73.89
12 -do- 3/4 9.61 3.10 3.90 19.03 167.93
13 -do- 3/5 9.62 3.10 4.00 19.05 201.85
14 -do- 3/7 8.36 3.00 3.90 16.55 143.15
No no. hactare
Reserve Bid m Bid
District Kishtwar
15 Appellant No.1 in III/2 2.00 0.33 1.00 3.60 111.70
LPA No.02/2020 in
OWP 325/2019 titled
Rakesh Kumar
Choudhary v. State
and Ors.
District Jammu
16 Appellant No.1 in 5/6 9.90 1.25 26.01 22.95 300.25
LPA No.07/2020
titled Nagar Singh V.
UT of J&K and Ors.
17 -do- 5/7 9.98 1.10 25.40 23.13 226.93

18 Appellant No.3 in 5/21 9.67 3.10 5.71 21.24 100.14
LPA No.41-A/2020
in OWP 290/2019
titled Usman
Constructions &
Ors. V. State and Ors.
19 -do- 5/23 9.98 3.20 4.76 21.92 120.12

20 -do- 5/32 9.80 1.20 2.25 21.52 45.12
21 Appellant No.1 in 1/7 9.25 1.0 13.00 21.44 40.04
LPA No.07/2020
titled Nagar Singh

117
V. UT of J&K & Ors.

22 -do- 5/3 9.94 1.50 170.00 23.04 308.44
23 -do- 5/4 9.32 1.25 141.00 21.60 285.60
24 -do- 5/13 8.69 0.70 1.00 19.08 38.38
25 -do- 5/29 9.89 2.00 3.00 21.72 44.12
District Reasi
26 Appellant No.1 in 7 9.60 4.51 5.26 24.54 70.74
LPA No.05/2020
titled Chaman Lal v.
UT of J&K & Ors.
27 -do- 10 6.28 1.39 1.65 16.05 58.25
28 -do- 13 9.80 2.16 2.60 25.05 103.25
29 -do- 14 9.51 2.10 2.60 24.31 125.01
30 -do- 15 9.08 2.01 2.51 23.21 128.71
31 -do- 16 8.20 1.81 2.50 20.96 101.36
District Samba
32 Appellant No.1 in 1/4 9.23 4.67 5.00 21.93 161.23
LPA No.02/2020 in
OWP 325/2019 titled
Rakesh Kumar
Choudhary v. State
& Ors.
No no. hactare
Reserve Bid m Bid
33 -do- 1/5 9.51 4.81 5.10 22.60 100.20
34 -do- 1/6 9.58 4.84 5.50 22.76 125.06
35 -do- 1/11 9.66 4.89 5.60 22.95 120.15
36 -do- 1/13 9.98 5.05 5.75 23.71 285.41
37 -do- 2/2 6.80 14.65 18.75 17.05 785.05
38 -do- 2/4 9.59 20.65 21.00 24.05 328.35
39 -do- 3/1 9.28 14.78 16.00 23.37 205.57
40 -do- 3/2 9.23 14.90 16.50 23.15 130.35
41 -do- 3/3 9.55 15.21 16.50 23.95 201.15
District Kulgam
42 Appellant No.1 in 12 4.46 2.10 2.20 6.82 84.32
LPA No.41-A/2020
in OWP 290/2019
Titled Usman
Constructions & Ors.
V. State & Ors
43 Appellant No.4 in 18 4.09 2.0 2.20 6.25 128.85

LPA No.41-A/2020
in OWP 290/2019
titled Usman
Constructions &
Ors. V. State & Ors.
44 Appellant No.2 in 19 9.52 4.40 4.70 14.55 111.15

LPA No.41-A/2020

118
in OWP 290/2019
titled Usman
Constructions &
Ors. V. State & Ors.
45 Appellant No.1 in 22 4.27 2.0 2.20 6.53 56.93
LPA 64/2020 in
OWP 259/2019 titled
Vikar Ahmad Dar
V. State & Ors.
46 In LPA No.41- 23 9.09 4.20 4.75 13.90 137.00
47A/2020 in OWP
290/2019 titled
UsmanConstruction
s & Ors. V. State &
Ors.
District Kupwara
48 Appellant No.1 in 5 4.33 2.10 2.50 6.60 76.80
LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. V. State &
Ors.

No no. hactare
Reserve Bid m Bid
49 Appellant No.5 in 6 3.39 1.70 2.00 5.20 134.00
LPA No.63/2020 in
OWP No.344/2019
titled Mohd. Faroq
Lone & Ors. V. State
& Ors
50 Appellant No.6 in 7 9.76 1.20 1.50 14.90 156.30

LPA No.63/2020
titled Mohd. Farooq
Lone & Ors v. State
and others.
51 Appellant No.7 in 8 8.29 1.00 1.20 12.70 81.80

LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. Vs. State &
Ors.
52 Appellant No.8 in 9 9.40 1.10 1.30 14.40 125.20

LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. V. State &
Ors.
53 Appellant No.9 in 10 10.00 1.20 1.40 15.30 133.20

119
LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. Vs. State &
Ors.
54 Appellant No.10 in 11 2.41 0.30 0.50 3.70 108.30
LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. Vs. State &
Ors.
55 Appellant No.11 in 12 4.20 0.50 0.70 6.40 64.20
LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. Vs. State &
Ors
56 Appellant No.12 in 14 6.38 3.60 3.90 10.40 177.70
LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. Vs. State &
Ors
No no. hactare
Reserve Bid m Bid
57 Appellant No.13 in 15 2.73 1.50 1.90 4.20 100.80
LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. Vs. State &
Ors
58 Appellant No.13 in 16 8.89 4.60 5.10 13.60 101.60
LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. Vs. State &
Ors
59 Appellant No.14 in 17 8.82 4.60 5.00 13.50 118.40

LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. Vs. State &
Ors
60 Appellant No.15 in 18 10.00 5.20 5.60 15.30 31.50
LPA No.63/2020 in
OWP 344/2019 titled
Mohd. Farooq Lone
& Ors. Vs. State &
Ors
61 Appellant No.11 in 19 3.39 1.80 2.20 5.20 56.70
LPA No.63/2020 in

120
OWP 344/2019 titled

Mohd. Farooq Lone
& Ors. Vs. State &
Ors
District Shopian
62 Appellant No.2 in 19 9.68 2.30 3.00 14.7988 54.0988
LPA No.____/ 2020
titled Shahnawaz
Ahmad Bhat & Ors.
V. UT of J&K & Ors.
District Pulwama
63 Appellant No.2 in 1 4.62 2.66 35.10 7.10 225.50
LPA No.50-A/2020
in OWP No.477/2019
titled Mohd. Ashore
Mir & Ors. V. State
& Ors.
64 Appellant No.1 in 2 4.63 2.60 32.00 7.10 370.00
LPA No.50-A/2020
in OWP No.477/2019
titled Mohd. Ashore
Mir & Ors. V. State
& Ors.
No no. hactare
Reserve Bid m Bid
65 Appellant No.3 in 4 4.07 2.30 31.10 6.20 237.90
LPA No.50-A/2020
in OWP No.477/2019
titled Mohd. Ashore
Mir & Ors. V. State
& Ors.
300. The working of the e-auctions manifests that the decision to auction mining
leases by e-mode was in the best interest of the State and has certainly lead to
maximization of the revenue.
301. The outcome of these e-auctions illustrates and underlines another huge
deficiency in the available capacities as well as capabilities of the Union
Territory of Jammu and Kashmir. The above tabulation reveals an
astounding state of affairs. For instance, with regard to Block 8 in District
Poonch, whereas in the open auction of 2016 the appellant no.3 in Usman
Constructions & Others v. State of J&K, had submitted the highest bid of Rs.

121
3.50 lakhs (against reserve price of Rs.3.13 Lakhs) in the e-auction for the
same block, he has offered a bid of Rs. 108.36 lakhs (against the reserve price
of Rs. 10.96 lakhs).
302. With regard to Block 2/2 in District Samba, in the open auction of 2016,
Rakesh Kumar Choudhary (appellant no.1 in LPA 2/20) had submitted the
highest bid of Rs.18.75 lakhs (against reserve price of Rs. 14.65 lakhs). Now in
the e-auction he has offered the highest bid of Rs. 785.05 lakhs (against
reserve prices of Rs. 17.05 lakhs).
303. In his affidavit dated 1st June, 2019, Vikar Ahmad Dar has stated that the
notings in para 63 of the official file to the effect that e-auction would fetch higher
amount of revenue than the open auction, is merely a speculation. The above
figures establish the truth in what was apprehended by the Government authorities.
304. The above tabulation in fact establishes some more critical factors.
305. The first is that the suspicion of the respondents that cartelization controlled
the earlier auction was not unfounded. The levels of the highest bids fetched in
the e-auction; their ratios vis-à-vis the reserve prices and the highest bids for those
very blocks by the same bidder in earlier auctions of 2016/2017.
306. We find a second important aspect which needs to be urgently addressed.
The fixation of the minimum reserve price for grant of mining leases in
accordance with Rule 54 of the Rules of 2016, by the respondents regarding the e-
auctions is not optimal or realistic. It appears to be much lower than the market
price and hence detrimental to public interest as well as the fiscal interest of the
Union Territory.
307. Even though the respondents appear to have raised the minimum reserve
price for conducting e-auctions in 2020 from the reserve price fixed for open

122
auction conducted in 2016, still from the bids which have been fetched, it appears
that the prices are unrealistically low.
308. It is evident, therefore, that the respondents do not have the expertise or the
capacity to evaluate the optimum level at which the reserve prices ought to be
fixed. In the e-auctions of 2020 though the bids are much higher than the bids of
2017, still there may be possibility of even higher bids.
309. It appears that a professional and qualified agency is urgently needed to
examine this matter and advise the respondents as grave financial prejudice results.
310. The terms and conditions on which auctions are conducted do not
incorporate basic reservations ensuring public interest and efficiency in the
responses of bidders and deserve a professional relook.
311. Clearly very urgent measures are needed to secure the financial interests of
the Union Territory and hence public interest.
IX Scope of judicial review in administrative action and matters

relating to award of contract/ tenders/ auctions
312. It is necessary to conduct an examination on the limits of the powers of
judicial review of the writ court in such matters. The appellants have called upon
us to examine the decision of the respondents in scrapping an entire auction. Is it
permissible for this Court to conduct judicial review into the questions urged?
313. It has been held in a catena of judgments that in exercise of its power of
judicial review, into state action, be it legislative, executive, administrative or
quasi judicial, the court is not entitled to consider the correctness of the decision on
its independent judgment and the exercise of power of judicial review by the court
is limited to considering the ‘reasonableness’ of the finding reached by the
authority which must be on application of mind to all relevant matters and in good

123
faith. We may usefully extract the following observations of the Supreme Court in
the judgment reported at (1990) 3 SCC 233 (at page 252), Sri Sita Ram Sugar Co.
Ltd v. U. O. I:
“46.Any arbitrary action, whether in the nature of a legislative or

administrative or quasi-judicial exercise of power, is liable to attract
the prohibition of Article 14 of the Constitution. As stated in E.P.
Royappa v. State of Tamil Nadu & Anr., [ 1974) 4 SCC 3 : 1974 SCC
(L&S) 165 : (1974] 2 SCR 348], "equality and arbitrariness are sworn
enemies; one belongs to the rule of law in a republic while the other,
to the whim and caprice of an absolute monarch." Unguided and
unrestricted power is affected by the vice of discrimination: Maneka
Gandhi v. Union of India & Anr., [1978] 1 SCC 248, 293-294 ; AIR
1978 SC 597]. The principle of equality enshrined in Article 14 must
guide every state action, whether it be legislative, executive, or quasi-
judicial: Ramana Dayaram 'Shetty v. The International Airport
Authority of India & Ors., [1979] 3 SCR 1014 at 1042; Ajay Hasia &
Ors. v. Khalid Mujib Sehravardi & Ors.. [1981] 1 SCC 722 and D.S.
Nakara & Ors. v. Union of India, [1983] SCC (L&S) 145].
47.Power delegated by statute is limited by its terms and subordinate

to its objects. The delegate must act in good faith, reasonably, intra
vires the power granted, and on relevant consideration of material
facts. All his decisions, whether characterised as legislative or
administrative or quasi-judicial, must be in harmony with the
Constitution and other laws of the land. They must be "reasonably
related to the purposes of the enabling legislation". See Leila
Mourning v. Family Publications Service, [411 US 356, 36 L Ed.
2d318]. If they are manifestly unjust or oppressive or outrageous or
directed to an unauthorised end or do not tend in some degree to the
accomplishment of the objects of delegation, courts might well say,
"Parliament never intended to give authority to make such rules; they

124
are unreasonable and ultra vires". per Lord Russel of Killowen, C.J. in
Kruse v. Johnson, [1898] 2 Q.B. 91, 99: 78 LT 647].
48. The doctrine of judicial review implies that the repository of
power acts within the bounds of the power delegated and he does not
abuse his power. He must act reasonably and in good faith. It is not
only sufficient that an instrument is intra vires the parent Act, but it
must also be consistent with the constitutional principles: Maneka
Gandhi v. Union of India, [1978] 1 SCC 248, 293-94 : AIR 1978 SC
597] (SCC pp. 314-315).
49.Where a question of law is at issue, the Court may determine the

rightness of the impugned decision on its own independent judgment. If
the decision of the authority does not agree with that which the Court
considers to be the right one, the finding of law by the authority is
liable to be upset. Where it is a finding of fact, the Court examines
only the reasonableness of the finding. When that finding is found to be
rational and reasonably based on evidence, in the sense that all
relevant material has been taken into account and no irrelevant
material has influenced the decision, and the decision is one which any
reasonably minded person acting on such evidence, would have come
to, then judicial review is exhausted even though the finding may not
necessarily be what the Court would have come to as a trier of fact.
Whether an order is characterised as legislative or administrative or
quasi-judicial, or, whether it is a determination or law or fact, the
judgment of the expert body, entrusted with power, is generally
treated as final and the judicial function is exhausted when it is
found to have "warrant in the record" and a rational basis in law:
See Rochester Tel. Corp. v. United States, [1939] 307 U.S. 125, 83 L.
Ed. 1147. See also Associated Provincial Picture Houses Ltd. v.
Wednesbury Corporation, [1948] 1 K.B. 223 : (1947) 1 All ER 498].

125
50.As stated by Lord Hailsham of St. Marylebone L.C., (H.L.) in Chief

Constable of the North Wales Police v. Evans, [1982] 1 WLR 1155 at
1160-61:
"The function of the court is to see that lawful authority is not

abused by unfair treatment and not to attempt itself the task
entrusted to that authority by the law .......... The purpose of judicial
review is to ensure that the individual receives fair treatment, and
not to ensure that the authority, after according fair treatment,
reaches on a matter which it is authorised by law to decide for itself a
conclusion which is correct in the eyes of the court".
In the same case Lord Brightman says:
"Judicial review, as the words imply, is not an appeal from a

decision, but a review of the manner in which the decision was
made".
51.A repository of power acts ultra vires either when he acts in excess
of his power in the narrow sense or when he abuses his power by
acting in bad faith or for an inadmissi- ble purpose or on irrelevant
grounds or without regard to relevant considerations or with gross
unreasonableness. See Associated Provincial Picture Houses Ltd. v.
Wednesbury Corporation, [1948] 1 K.B. 223. In the words of Lord
Macnaghten in Westminster Corporation v. London and North
Western ' Railway, [1905] AC 426, 430: 93 LT 143]
" ..... It is well settled that a public body invested with statutory powers
such as those conferred upon the Corporation must take care not to
exceed or abuse its powers. It must keep within the limits of the
authority committed to it. It must act in good faith. And it must act
reasonably. The last proposition is involved in the second, if not in the
first.....".
In The Barium Chemicals Ltd. & Anr. v. The Company Law Board &
Ors., [1966] Supp. SCR 311, this Court states:

126
" ..... Even if (the statutory order) is passed in good faith and with the
best of intention to further the purpose of the legislation which confers
the powers, since the Authority has to act in accordance with and
within the limits of that legislation, its order can also be challenged if
it is beyond those limits or is passed on grounds extraneous to the
legislation or if there are no grounds at all for passing it or if the
grounds are such that no one can reasonably arrive at the opinion or
satisfaction requisite under the legislation. In any one of these
situations it can well be said that the authority did not honestly form
its opinion or that in forming it, it did not apply its mind to the relevant
facts".
(Emphasis supplied)
314. In Sri Sita Ram Sugar Co. Ltd , the Supreme Court has finally concluded as
follows:
“52.The true position, therefore, is that any act of the

repository of power, whether legislative or administrative or quasi-
judicial, is open to challenge if it is in conflict with the Constitution
or the governing Act or the general principles of the law of the land
or it is so arbitrary or unreasonable that no fair minded authority
could ever have made it [See the observation of Lord Russel in Kruse
v. Johnson, [1898] 2 Q.B. 91 and that of Lord Greene, M.R. in
Associated Provincial Picture Houses Ltd. v. Wednesbury
Corporation, [1948] 1 K.B. 223; See also Mixnam Properties Ltd. v.
Chertsey U.D.C., [1965] AC 735; Commissioners of Customs and
Excise v. Cure and DeeIcy Ltd. [1962] 1 Q.B. 340; McEldowney v.
Forde, [1971] AC 632 (H.L.); Carltona Ltd. v. Commissioners of
Works, [1943] 2 All ER 560, 564; Point of Ayr. Collieries Ltd. v. Lloyd
George, [1943] 2 All ER 546; Scott v. Glasgow Corporation, [1899]
AC 470, 492; Robert Baird L.D.v. City of Glasgow, [1936] AC 32, 42;
Manhattan General Equipment Co. v. Commissioner, [1935] 297 US
129, 134; Yates (Arthur) & Co. Pty. Ltd. v. Vegetable Seeds

127
Committee, [1945-46] 72 CLR 37; Bailey v. Conole, [1931] 34 WALR

18; Boyd Builders Ltd. v. City of Ottawa, [1964] 45 DLR (2d) 211; Re
Burns and Township of Haldimand, [1966] 52 DLR (2d) 10 14 and
Lynch v. Tilden Produce Co. 265 US 3 15,320-322].”
(Emphasis by us)
315. The parameters of a court’s power of judicial review of administrative or
executive action or decision also stand considered by the Supreme Court of India
in its judgment reported at (1988) 4 SCC 59, State of U.P. v. Renusagar Power
Co. The Supreme Court referred to the authoritative text on administrative law in
Wade on Administrative Law, 5th Edition, pages 506/507 and Bennion on
Statutory Interpretation, 1984 Edition, pages 140-141 and Principles of Australian
Administrative Law, 6th Edition;, pp. 210-212 and observed as follows:
“…….The exercise of power whether legislative or administrative

will be set aside if there is manifest error in the exercise of such
power or the exercise of the power is manifestly arbitrary. Similarly,
if the power has been exercised on a non- consideration or non-
application of mind to relevant factors the exercise of power will be
regarded as manifestly erroneous. If a power (whether legislative or
administrative) is exercised on the basis of facts which do not exist and
which are patently erroneous, such exercise of power will stand
vitiated. See Commissioner of Income Tax v. Mahindra & Mahindra
Ltd. Ors., [1983] 3 S.C.R. 773 at 786- 787: AIR 1984 SC 1182: (1983)
54 Com Cas 6511......”
(Emphasis by us)
316. Much light is shed on the examination which the court would undertake on
the exercise of power by public authorities in the judgment of the Supreme
reported at (1974) 2 SCC 687 (at page 690), M. A. Rashid v. State of Kerala,
wherein it is held as under:

128
“7. There is no principle or authority in support of the view that

whenever a public authority is invested with power to make an order
which prejudicially affects the rights of an individual whatever may
be the nature of the power exercised, whatever may be the procedure
prescribed and whatever may be the nature of the authority
conferred, the proceedings of the public authority must be regulated
by the analogy of rules governing judicial determination of disputed
questions (see Sadhu Singh v. Delhi Administration. AIR 1966 SC 91).
8. Where powers are conferred on public authorities to exercise the
same when “they are satisfied” or when “it appears to them”, or when
“in their opinion” a certain state of affairs exists; or when powers
enable public authorities to take “such action as they think fit” in
relation to a subject matter, the courts will not readily defer to the
conclusiveness of an executive authority's opinion as to the existence
of a matter of law or fact upon which the validity of the exercise of the
power is predicated.
9. Where reasonable conduct is expected the criterion of
reasonableness is not subjective, but objective. Lord Atkin
in Liversidge v. Anderson 1942 AC 206, 228-229 said:
“If there are reasonable grounds, the Judge has no further duty of
deciding whether he would have formed the same belief any more
than, if there is reasonable evidence to go to a jury, the Judge is
concerned with whether he would have come to the same verdict.”
The onus of establishing unreasonableness, however, rests upon the

person challenging the validity of the acts.
10. Administrative decisions in exercise of powers even if conferred
in subjective terms are to be made in good faith on relevant
consideration. The courts inquire whether a reasonable man could
have come to the decision in question without misdirecting himself
on the law or the facts in a material respect. The standard of
reasonableness to which the administrative body is required to
conform may range from the courts' own opinion of what is
reasonable to the criterion of what a reasonable body might have
decided. The courts will find out whether conditions precedent to the
formation of the opinion have a factual basis.

129
11. In Rohtas Industries Ltd. v. S.D Agarwala 1969 1 SCC 325 an

order under Section 237 (b) (i) and (ii) of the Companies Act for
investigation of the affairs of the company was challenged on the
ground that though the opinion of the Government is subjective, the
existence of the circumstances is a condition precedent to the
formation of the opinion. It was contended that the Court was not
precluded from going behind the recitals of the existence of such
circumstances in the order, but could determine whether the
circumstances did in fact exist. This Court said that if the opinion of
an administrative agency is the condition precedent to the exercise of
the power, the relevant matter is the opinion of the agency and not the
grounds on which the opinion is founded. If it is established that there
were no materials at all upon which the authority could form the
requisite opinion, the Court may infer that the authority passed the
order without applying its mind. The opinion is displaced as a relevant
opinion if it could not be formed by any sensible person on the
material before him.”
(Emphasis by us)
317. So far as change of policy in exercise of executive power (also in issue
before us) and a challenge thereto is concerned, again the power of judicial review
is restricted. Valuable light is thrown on the exercise of its discretion in the
judgment of the Supreme Court reported at (2003) 5 SCC 437 (at pages-445 &
447), Union of India v. International Trading Co. in the following terms:
“15. While the discretion to change the policy in exercise of the

executive power, when not trammelled by any statute or rule is wide
enough, what is imperative and implicit in terms of Article 14 is that a
change in policy must be made fairly and should not give impression
that it was so done arbitrarily or by any ulterior criteria. The wide
sweep of Article 14 and the requirement of every State action
qualifying for its validity on this touchstone irrespective of the field of
activity of the State is an accepted tenet. The basic requirement of
Article 14 is fairness in action by the State, and non-arbitrariness in

130
essence and substance is the heartbeat of fair play. Actions are

amenable, in the panorama of judicial review only to the extent that
the State must act validly for a discernible reason, not whimsically
for any ulterior purpose. The meaning and true import and concept of
arbitrariness is more easily visualized than precisely defined. A
question whether the impugned action is arbitrary or not is to be
ultimately answered on the facts and circumstances of a given case. A
basic and obvious test to apply in such cases is to see whether there is
any discernible principle emerging from the impugned action and if
so, does it really satisfy the test of reasonableness.
16. Where a particular mode is prescribed for doing an act and
there is no impediment in adopting the procedure, the deviation to act
in different manner which does not disclose any discernible principle
which is reasonable itself shall be labelled as arbitrary. Every State
action must be informed by reason and it follows that an act
uninformed by reason is per se arbitrary.
Xxxx
22. If the State acts within the bounds of reasonableness, it would

be legitimate to take into consideration the national priorities and
adopt trade policies. As noted above, the ultimate test is whether on
the touchstone of reasonableness the policy decision comes out
unscathed.”
(Emphasis by us)
318. We may usefully extract the binding principles on the scope of judicial
review in matters of award of Govt. contracts as have been laid down in the
celebrated judgment of the Supreme Court reported at (1994) 6 SCC 651, Tata
Cellular v. Union of India, in which it has been held as under:
“94. The principles deducible from the above are: (1) The
modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews
the manner in which the decision was made.

131
(3) The court does not have the expertise to correct the
administrative decision. If a review of the administrative decision is
permitted it will be substituting its own decision, without the necessary
expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial
scrutiny because the invitation to tender is in the realm of contract.
Normally speaking, the decision to accept the tender or award the
contract is reached by process of negotiations through several tiers.
More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other
words, a fair play in the joints is a necessary concomitant for an
administrative body functioning in an administrative sphere or quasi-
administrative sphere. However, the decision must not only be tested
by the application of Wednesbury principle of reasonableness
(including its other facts pointed out above) but must be free from
arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden
on the administration and lead to increased and unbudgeted
expenditure.
Based on these principles we will examine the facts of this case since
they commend to us as the correct principles.”
(Emphasis supplied)
The above authoritative principles have guided adjudication in challenges to
administrative action.
319. We may usefully advert to the illuminating consideration, on the exercise of
power of judicial review in commercial matters including tenders and award of
contracts, by the Supreme Court in the judgment reported at (2007) 14 SCC 517,
Jagdish Mandal v. State of Orissa. In Para 22, it was held as under:
“22. Judicial review of administrative action is intended to prevent

arbitrariness, irrationality, unreasonableness, bias and mala fides. Its
purpose is to check whether choice or decision is made “lawfully”

132
and not to check whether choice or decision is “sound”. When the

power of judicial review is invoked in matters relating to tenders or
award of contracts, certain special features should be borne in mind.
A contract is a commercial transaction. Evaluating tenders and
awarding contracts are essentially commercial functions. Principles
of equity and natural justice stay at a distance. If the decision
relating to award of contract is bona fide and is in public interest,
courts will not, in exercise of power of judicial review, interfere even
if a procedural aberration or error in assessment or prejudice to a
tenderer, is made out. The power of judicial review will not be
permitted to be invoked to protect private interest at the cost of public
interest, or to decide contractual disputes. The tenderer or contractor
with a grievance can always seek damages in a civil court. Attempts
by unsuccessful tenderers with imaginary grievances, wounded pride
and business rivalry, to make mountains out of molehills of some
technical/procedural violation or some prejudice to self, and
persuade courts to interfere by exercising power of judicial review,
should be resisted. Such interferences, either interim or final, may
hold up public works for years, or delay relief and succour to
thousands and millions and may increase the project cost manifold.
Therefore, a court before interfering in tender or contractual matters
in exercise of power of judicial review, should pose to itself the
following questions:
(i) Whether the process adopted or decision made by the authority is
mala fide or intended to favour someone;
OR
Whether the process adopted or decision made is so arbitrary and

irrational that the court can say: “the decision is such that no
responsible authority acting reasonably and in accordance with
relevant law could have reached”;
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference
under Article 226. Cases involving blacklisting or imposition of penal

133
consequences on a tenderer/contractor or distribution of State

largesse (allotment of sites/shops, grant of licences, dealerships and
franchises) stand on a different footing as they may require a higher
degree of fairness in action.”
(Emphasis by us)
320. On the aspect of challenge to and scope of judicial review (as at present) of
decisions relating to laying down of conditions of award of tenders, valuable
guidance is provided by the authoritative pronouncement of the Supreme Court in
the judgment reported at (2012) 8 SCC 216, Michigan Rubber (India) Ltd. V.
State of Karnataka, the Supreme Court has observed as follows:
“23. From the above decisions, the following principles emerge:

(a) the basic requirement of Article 14 is fairness in action by the
State, and non-arbitrariness in essence and substance is the
heartbeat of fair play. These actions are amenable to the judicial
review only to the extent that the State must act validly for a
discernible reason and not whimsically for any ulterior purpose. If
the State acts within the bounds of reasonableness, it would be
legitimate to take into consideration the national priorities;
(b) fixation of a value of the tender is entirely within the purview
of the executive and courts hardly have any role to play in this
process except for striking down such action of the executive as is
proved to be arbitrary or unreasonable. If the Government acts in
conformity with certain healthy standards and norms such as
awarding of contracts by inviting tenders, in those circumstances, the
interference by Courts is very limited;
(c) In the matter of formulating conditions of a tender document
and awarding a contract, greater latitude is required to be conceded
to the State authorities unless the action of tendering authority is
found to be malicious and a misuse of its statutory powers,
interference by Courts is not warranted;

134
(d) Certain preconditions or qualifications for tenders have to be

laid down to ensure that the contractor has the capacity and the
resources to successfully execute the work; and
(e) If the State or its instrumentalities act reasonably, fairly and in
public interest in awarding contract, here again, interference by
Court is very restrictive since no person can claim fundamental right
to carry on business with the Government.
24. Therefore, a Court before interfering in tender or contractual
matters, in exercise of power of judicial review, should pose to itself
the following questions:
(i) Whether the process adopted or decision made by the authority
is mala fide or intended to favour someone; or whether the process
adopted or decision made is so arbitrary and irrational that the court
can say: the decision is such that no responsible authority acting
reasonably and in accordance with relevant law could have reached;
and
(ii) Whether the public interest is affected. If the answers to the
above questions are in negative, then there should be no interference
under Article 226.”
(Emphasis by us)
321. These are the considerations which would weigh with us while undertaking
an examination of the grounds pressed before us.
322. The Supreme Court had noted the scope of judicial review in the matter
relating to award of contract in the judgment reported at AIR 2009 SCW 470,
Seimens Public Communication Networks (P) Limited v. Union of India,
wherein it has been held that in such a case, certain special features have to be
considered. A contract is a commercial transaction and evaluating tenders and
awarding contracts are essential commercial functions. In such cases, principles of
equity and natural justice stay at a distance. If the decision relating to award of

135
contracts is bonafide and is in public interest, Courts will not exercise the power of
judicial review and interfere even if it is accepted for the sake of argument that
there is procedural lacuna.
323. In the pronouncement of the Supreme Court in (2015) 13 SCC 233, Rishi
Kiran Logistics Pvt. Ltd v. Board of Trustees of Kandla Port Trust and ors., also
the Supreme Court considered the validity of enbloc cancellation of the entire
tenders.
324. In para-20 of the judgment, the Supreme Court observed that ‘it was obvious
that larger public interest demand a fresh tender process in order to receive
maximum amount as the premium of Rs.612/sq.meter originally fixed and even
the quotation of the appellant which had been found to be highest was far below
the market rate in 2010”. The Supreme Court also noted that even when the total
premium amount to be paid by the appellant was to the tune of several crores for
these plots at which the LoI was issued in the year 2006, the appellant had paid
only Rs. 3 lakhs by way of earnest money deposited in each case. No further
amount was paid for want of the allotment letter.
325. In para 21, the Supreme Court held that in the above facts, there was
“hardly any scope for argument that the decision of the Port Trust is arbitrary. It
is based on valid considerations.”
326. The court considered precedents and held as follows (in Rishi Kiran
Logistics):
“26. In Tejas Constructions and Infrastructure (P) Ltd. v.

Municipal Council, Sendhwa & Anr.; 2012 (6) SCC 464, the Court
was dealing with the case of challenge to the awarding of contract to
the 2nd respondent in the writ petition on the ground that he had not

136
complied with eligibility requirements in NIT. Paragraph 17 of that

case reads as follows:
“17. In Raunaq International Ltd. v. IV.R. Construction Ltd. (1999)

1 SCC 492, this Court reiterated the principle governing the process
of judicial review and held that the writ court would not be justified
in interfering with commercial transaction in which the State is one
of the parties to the same except where there is substantial public
interest involved and in cases where the transaction is mala fide.”
27. In so far as argument of malafides is concerned, apart from

bald averment, there are no pleadings and there is not even a
suggestion as to how the aforesaid decision was actuated with
malafides and on whose part. Even at the time of arguments Mr. Vikas
Singh did not even advert to this aspect. In fact, the entire emphasis of
Mr. Vikas Singh was that since there was a concluded contract
between the parties, cancellation of such a contract amounted to
arbitrariness. As already pointed out above that can hardly be a
ground to test the validity of a decision in administrative law. For the
sake of argument, even if you presume that there a concluded
contract, mere termination thereof cannot be dubbed as arbitrary. A
concluded contract if terminated in a bonafide manner, that may
amount to breach of contract and certain consequences may follow
thereupon under the law of contract. However, on the touch stone of
parameters laid down in the administrative law to adjudge a decision
as are arbitrary or not, when such a decision is found to be bonafide
and not actuated with arbitrariness, such a contention in
administrative law is not admissible namely how and why a
concluded contract is terminated.
28. We, therefore, reject this contention of the appellant.”

(emphasis supplied)

137
327. Before us, the appellants do not even remotely suggest any malafide in the
action and decision making by the respondents. Other than the submission that the
enbloc cancellation of the auctions in their entirety being perse arbitrary and hence
not legally sustainable, no other substantive ground of challenge has been urged. It
is, therefore, well settled that the State must act validly for a discernible reason not
whimsically for any ulterior purpose. Such action then satisfies the test of
reasonableness. It is legitimate to take into consideration public interest and
national priorities. We are required to test the plea on the above well settled
parameters.
X Can the Issue as to whether there is a concluded contract be decided

in writ proceedings?
328. In all these appeals, it is urged that this court must hold that a concluded
contract has come into existence and this court must protect binding rights of the
appellants thereunder.
The respondents staunchly repudiate that there is any contract, let alone any
enforceable rights of these appellants.
329. Before examining this plea pressed on behalf of the appellants, we need to
consider as to whether such plea can be gone into in extraordinary writ jurisdiction.
330. The Supreme Court of India has repeatedly cautioned that the issue
regarding the existence of a concluded contract between parties falls squarely in
the realm of contract law without any hue or shade of any public law. If it is urged
by one side that there is a concluded contract, a position which is disputed by the
other side, it is not open to the Court to exercise extra-ordinary jurisdiction under

138
Article 226 of the Constitution of India to go into this question. (Ref: (1996) 10
SCC 405, Rajasthan Coop. Dairy Federation Ltd. v. Maha Laxmi Mingrate
Marketing Service Pvt. Ltd, Pr. 40).
331. Mr Vikram Sharma, learned counsel for the appellant in (LPA No.53/2020
Rakesh Kumar Chowdhary v. Union Territory of Jammu & Kashmir) has staunchly
submitted that a binding contract came into existence after the respondents had
approved the mining plan and accepted royalty from the appellant under Rule 104-
A of the Rules of 2016. In support of his submission that the writ petition would be
maintainable, Mr Vikram Sharma has relied on the pronouncements of the
Supreme Court reported at 2006 (10) SCC 236 Noble Resources Limited v. State
of Orissa & Anr and 2004 (3) SCC 533 ABL International Ltd. & anr vs. Export
Credit Guarantee.
332. In Noble Resources Limited, the core question which was argued before the
Supreme Court was as to whether a writ petition was maintainable in contractual
matters. In this case, the respondent no.2 was held to be a State within the meaning
of Article 12 of the Constitution of India. The Supreme Court observed that “its
conduct in all fields including a contract is expected to be fair and reasonable. It
was not supposed to act arbitrarily, capriciously or whimsically.”
So far as the question under consideration is concerned, the Supreme Court
held as follows:
“15. It is trite that if an action on the part of the State is violative the
equality clause contained in Article 14 of the Constitution of India, a
writ petition would be maintainable even in the contractual field. A
distinction indisputably must be made between a matter which is at the
threshold of a contract and a breach of contract; whereas in the
former the court's scrutiny would be more intrusive, in the latter the
court may not ordinarily exercise its discretionary jurisdiction of

139
judicial review, unless it is found to be violative of Article 14 of the

Constitution. While exercising contractual powers also, the
government bodies may be subjected to judicial review in order to
prevent arbitrariness or favouritism on its part. Indisputably,
inherent limitations exist, but it would not be correct to opine that
under no circumstances a writ will lie only because it involves a
contractual matter.
16. This dicta of law was laid down by this Court as far back in1977,
wherein this Court in Radhakrishna Agarwal and Others vs. State of
Bihar and Others [(1977) 3 SCC 457] accepted the division of types of
cases made by the Patna High Court in which breaches of alleged
obligation by the State or its agents could be set up. It read as under :
"(i) Where a petitioner makes a grievance of breach of promise on the
part of the State in cases where on assurance or promise made by the
State he has acted to his prejudice and predicament, but the agreement
is short of a contract within the meaning of Article 299 of the
Constitution;
(ii) Where the contract entered into between the person aggrieved and
the State is in exercise of a statutory power under certain Act or Rules
framed thereunder and the petitioner alleges a breach on the part of
the State; and
(iii) Where the contract entered into between the State and the person
aggrieved is non-statutory and purely contractual and the rights and
liabilities of the parties are governed by the terms of the contract, and
the petitioner complains about breach of such contract by the State."
17. It was further observed :
"In the cases before us, allegations on which a violation of Article 14
could be based are neither properly made nor established. Before any
adjudication on the question whether Article 14 of the Constitution
could possibly be said to have been violated, as between persons
governed by similar contracts, they must be properly put in issue and
established. Even if the appellants could be said to have raised any
aspect of Article 14 of the Constitution and this Article could at all be

140
held to operate within the contractual field whenever the State enters
into such contracts, which we gravely doubt, such questions of fact do
not appear to have been argued before the High Court. And, in any
event, they are of such a nature that they cannot be satisfactorily
decided without a detailed adduction of evidence, which is only
possible in ordinary civil suits, to establish that the State, acting in its
executive capacity through its officers, has discriminated between
parties identically situated. On the allegations and affidavit evidence
before us we cannot reach such a conclusion. Moreover, as we have
already indicated earlier, the correct view is that it is the contract and
not the executive power, regulated by the Constitution, which governs
the relations of the parties on facts apparent in the cases before us."
18. It may, however, be true that where serious disputed questions of
fact are raised requiring appreciation of evidence, and, thus, for
determination thereof, examination of witnesses would be necessary; it
may not be convenient to decide the dispute in a proceeding under
Article 226 of the Constitution of India.”
(Emphasis by us)
333. It has thus been held that only if the limited area of dispute can be resolved
by examination of the terms of the contracts without consideration of any other
oral or documentary evidence, that is, to say, if the claim does not require any
external aid, the dispute may be settled by the writ court.
334. This was further expounded upon by the Supreme Court in the
pronouncement reported at 2004 (3) SCC 533 ABL International Ltd. & anr vs.
Export Credit Guarantee, wherein it was held that such a writ petition would be
maintainable even if it involved some disputed questions of fact and that there was
no decision laying down an absolute rule that in all cases including those involving
disputed questions of fact, the parties should be relegated to the civil court. In this
pronouncement, the Supreme Court considered several judicial pronouncements

141
including the judgments reported at 1955(1) SCR 305 : K. N. Guruswamy vs. The
State of Mysore and others; 1971 (3) SCC 864 : The D.F.O, South Kheri & Ors.
V. Ram Sanehi Singh; 1986 (1) SCC 264 : Life Insurance Corporatiion of India
Vs. Escorts Ltd. & Ors; 2002 (1) SCC 216 : State of Bihar & Ors. Vs. Jain
Plastics and Chemicals Ltd.; 1969 (3) SCC 769 : Smt. Gunwant Kaur & Ors. Vs.
Municipal Committee, Bhatinda and others; 1970 (1) SCC 582 : Century
Spinning and Manufacturing Company Ltd. & anr. vs. The Ulhasnagar
Municipal Council & anr; and 2001 (1) SCC 298 : VST Industries Ltd. vs. VST
Industries Workers’ Union & Anr. We find that on consideration of the
aforementioned precedents, if the question which the court has to pose when an
authority has to perform a public function or a public duty is, has it failed to do so?
If it has, a writ petition under Article 226 of the Constitution would be
maintainable.
335. In 1991 (1) SCC 212 : Kumari Shri Lekha Vidyarthi & Ors. V. State of
U.P. & Ors., the Supreme Court held as follows:
"The impact of every State action is also on public interest. It is really

the nature of its personality as State which is significant and must
characterize all its actions, in whatever field, and not the nature of
function, contractual or otherwise which is decisive of the nature of
scrutiny permitted for examining the validity of its act. The
requirement of Article 14 being the duty to act fairly, justly and
reasonably, there is nothing which militates against the concept of
requiring the State always to so act, even in contractual matters."
xxxx
“Even assuming that it is necessary to import the concept of presence

of some public element in a State action to attract Article 14 and
permit judicial review, we have no hesitation in saying that the
ultimate impact of all actions of the State or a public body being

142
undoubtedly on public interest, the requisite public element for this

purpose is present also in contractual matters. We, therefore, find it
difficult and unrealistic to exclude the State actions in contractual
matters, after the contract has been made, from the purview of judicial
review to test its validity on the anvil of Article 14.”
(Emphasis by us)
336. In (2008) 12 SCC 500, Kisan Sahkari Chini Mills Ltd. Vardan Linkers, the
question that arose for consideration in the writ was whether the cancellation order
dated 24.4.2004 passed by the Secretary (Sugar), of the allotment letter dated
26.3.2004, was arbitrary and irrational or whether it violated any administrative
law principles. The Court observed that the question whether there was a
concluded contract or not, was only incidental to the question as to whether
cancellation order dated 24.4.2004 by the Secretary (Sugar), was justified. The
Supreme Court considered the matter and finally in para 24 held that the case
involved several disputed questions in regard to the existence of the contract itself,
and that the High Court ought to have referred the first respondent to a civil court.
It was opined that “the High Court in exercise of its writ jurisdiction, proceeded as
if it was dealing with a pure and simple civil suit relating to breach of contract.”
The Supreme Court has held as follows:
“23. If the dispute was considered as purely one relating to existence

of an agreement, that is whether there was a concluded contract and
whether the cancellation and consequential non- supply amounted to
breach of such contract, the first respondent ought to have
approached the civil court for damages. On the other hand, when a
writ petition was filed in regard to the said contractual dispute, the
issue was whether the Secretary (Sugar), had acted arbitrarily or
unreasonably in staying the operation of the allotment letter dated
26.3.2004 or subsequently cancelling the allotment letter. In a civil

143
suit, the emphasis is on the contractual right. In a writ petition, the

focus shifts to the exercise of power by the authority, that is, whether
the order of cancellation dated 24.4.2004 passed by the Secretary
(Sugar), was arbitrary or unreasonable. The issue whether there was a
concluded contract and breach thereof becomes secondary. In
exercising writ jurisdiction, if the High Court found that the exercise
of power in passing an order of cancellation was not arbitrary and
unreasonable, it should normally desist from giving any finding on
disputed or complicated questions of fact as to whether there was a
contract, and relegate the petitioner to the remedy of a civil suit.”
(Emphasis by us)
337. In Kisan Sahkari Chini Mills case, the Supreme Court laid down the
manner in which the High Court should proceed in writ proceedings even if it
found that the cancellation was of a valid contract, observing as follows:
“23.………Even in cases where the High Court finds that there is a

valid contract, if the impugned administrative action by which the
contract is cancelled, is not unreasonable or arbitrary, it should still
refuse to interfere with the same, leaving the aggrieved party to work
out his remedies in a civil court. In other words, when there is a
contractual dispute with a public law element, and a party chooses
the public law remedy by way of a writ petition instead of a private
law remedy of a suit, he will not get a full fledged adjudication of his
contractual rights, but only a judicial review of the administrative
action. The requisition whether there was a contract and whether
there was a breach may, however, be examined incidentally while
considering the reasonableness of the administrative action. But where
the question whether there was a contract, is seriously disputed, the
High Court cannot assume that there was a valid contract and on that
basis, examine the validity of the administrative action.”
(Emphasis supplied)

144
338. It is therefore clear that even if we agree with the appellants that there were
concluded contracts in favour of the appellants which were cancelled by the
respondents, only a very limited judicial review of the action of the respondents is
available to us. Given the conclusions reached by us hereafter, it would be
unnecessary to even undertake this exercise.
339. So far as issues with regard to contracts involving the State, its agencies or
public authorities, the jurisdiction of the High Court in exercise of powers under
Article 226 of the Constitution of India is very limited. Light is shed on the
contours of the jurisdiction of this court in Rishi Kiran Logistics Private Limited,
wherein while considering a plea of promissory estoppel based on the LoI, the
Supreme Court considered authoritiative precedents observing on the limitations of
exercise of writ jurisidcition as follows:
“29. Again, we clarify at the outset that even the principle of

PROMISSORY estoppel is in the field of administrative law and
while entertaining the arguments and discussion on this issue, the
question as to whether there was a concluded contract or not has to
be kept aside. Precisely this was done in Kisan Sehkari Chini Mills
Case (Supra).
xxxxxxx
33. We have already indicated above that the of the doctrine of
fairness as well as promissory estoppel are in the realm of
administrative law, whereas the issue as to whether a concluded
contract was entered into between the parties and if so, the question
of enforcement of such a contract would be in the field of law of
contract. Bearing in mind this distinction becomes more important as
the High Court was dealing with the petition filed by the appellant
under Article 226 of the Constitution.
34. Before proceeding further in the matter we would again like to
discuss the judgment of this court in Kisan Sahkari Chini Mills Ltd. &

145
Ors. (Supra) which has been earlier referred to. This case
unambiguously explains the approach which the High Court will
have in such a petition filed under Article 226 of the Constitution,
dealing with the arguments predicated on contractual aspects.”
(Emphasis supplied)
340. Referring to the prior judgment in Kisan Sahkari Chini Mills Ltd. & Ors.,
in Rishi Kiran Logistics Ltd., the Supreme Court observed as follows:
“37. The question before the Supreme Court were: (I) Whether the
High Court was right in concluding/ assuming that there was a valid
contract? And (ii) Whether the High Court was justified in quashing
the order of the Secretary (Sugar)? This court answered the aforesaid
questions in the negative and set aside the judgment of the High Court
holding that:
“Ordinarily, the remedy available for a party complaining of breach
of contract lies for seeking damages. He would be entitled to the relief
of specific performance, if the contract was capable of being
specifically enforced in law. The remedies for a breach of contract
being purely in the realm of contract are dealt with by civil courts.
The public law remedy, by way of a writ petition under Article 226 of
the Constitution, is not available to seek damages for breach of
contract or specific performance of contract. However, where the
contractual dispute has a public law element, the power of judicial
review under Article 226 may be invoked.
It is clear that the aforesaid case is closest to the facts of the present
case.”
(Emphasis supplied)
341. In Rishi Kiran Logistics, the Supreme Court summed up the applicable
principle thus:
“38. It thus stands crystalised that by way of writ petition under

Article 226 of the Constitution, only public law remedy can be

146
invoked. As far as contractual dispute is concerned that is outside the

power of judicial review under Article 226 with the sole exception in
those cases where such a contractual dispute has a public law
element.”
39. We have already held that the impugned decision of the Port
Trust was not arbitrary, unreasonable or malafide and further that
the doctrine of promissory estoppel has no application in the present
fact situation.xxxxx”
(Emphasis supplied)
342. So far as application of the above principles to the situation was concerned,
in Rishi Kiran Logistics, the Supreme Court held as follows:
“40. In so far as the issue regarding concluded contract in the

present case is concerned, this falls squarely in the realm of the
contract law, without any hue or shade of any public law. In fact, that
is not even pleaded or argued. At the same time, whether there was a
concluded contract or not is seriously disputed by the respondents and,
therefore, in the first instance it was not even necessary for the High
Court to go into this issue and could have relegated the appellant to
ordinary civil remedy. We are conscious of the position that merely
because one of the authorities raises a dispute in regard to the facts,
it may not be always necessary to relegate the parties to a suit. This
was so stated in ABL International Ltd. & Anr. v. Export Credit
Guarantee Corporation of India Ltd. & Ors.; JT 2013 (10) SC 300 in
the following manner:
“37. In our opinion, this limited areas of dispute can be settled by
looking into the terms of the contract of insurance as well as the
export contract, and the same does not require consideration of any
oral evidence or any other documentary evidence other than what is
already on record. The claim of the contesting parties will stand or fall
on the terms of the contracts, interpretation of which, as stated above,
does not require any external aid.”

147
41. At the same time, as already noted in Kisan Sahkari

(Supra) this court had taken a view that where the question whether
there was a contract or not is seriously disputed, the court is not to
assume that there was a valid contract and on that basis examine the
validity of the administrative action. Therefore, keeping in view the
aforesaid understanding of the law, a very limited inquiry on this
aspect is permissible.”
(Emphasis supplied)
343. So far as the decision of the Kandla Port Trust in Rishi Kiran Logistics, to
cancel the entire bidding is concerned, the Supreme Court rejected the challenge
holding as follows:
“xxxxxxx
45. We again emphasise that the issue of the argument of there
being a concluded contract is raised in a petition filed under Article
226 of the Constitution and not by way of suit. The issue whether
there was a concluded contract and breach thereof become
secondary and is examined by us with that limited scope in mind. In
such proceedings main aspect which has to be is as to whether
impugned decision of the Port Trust was arbitrary or unreasonable. It
is also important to remark that in a given case even if it is held that
there was a concluded contract, whether specific performance can be
ordered or not would be a moot question in writ proceedings. The
appellant took the calculated risk in not going to the civil court and
choosing to invoke extraordinary jurisdiction of the High Court, which
is also discretionary in nature.”
(Emphasis by us)
The jurisdiction of the court in a writ raising issues arising out of a contract
is thus limited to consideration of the public element only.
344. The above principles laid down by the Supreme Court in Rishi Kiran
Logistics squarely apply to our consideration in these appeals. In the case in hand

148
as well, the writ court, therefore, did not have the jurisdiction to go into the factual
dispute over whether, in the facts of the case, there was a concluded contract or
not.
XI Whether in these cases there was a concluded contract of the

respondents with appellants and whether time was of essence
of the contract?
345. We have discussed above the limitations of the power of the writ court to
examine this submission. Our consideration of this issue has to rest on admitted
facts.
346. Without exception, in the present cases, all appellants rely on the only one
communication addressed to them by the respondents. This communication
captioned as a ‘Letter of Intent’ (‘LoI’) stands addressed to all the respondents in
identical terms. Inasmuch as the appellants are sourcing their rights to this letter, it
is necessary to consider the same in detail.
347. The LoI is not unique or peculiar to the transactions under consideration but
is a document of widespread use in commercial transactions. In some commercial
transactions, a ‘letter of support’ or ‘letter of comfort’ is also found to be in
existence.
348. In the literal sense, the Black's Law Dictionary defines a 'letter of intent' as
a letter customarily implied to reduce to writing 'a preliminary understanding of
parties who intend to enter into a contract, or to intend to take some other
action.'
349. The expression 'letter of intent' is defined by Chitty on Contract in its 26th
Edition (para 116 on page 114) thus:

149
"LETTER of intent: There is as yet no clear authority on the legal

effect of the practice whereby the parties to a transaction exchange
"letters of intent" on which they act pending the preparation of
formal contracts. The terms of such letters may, of course, negative
contractual intention. But where this is not the case, it would be open
to the courts to hold the parties bound by the terms of such letters,
especially if the parties had acted on those terms for a long period of
time or if they had expended considerable sums of money in reliance
on them......"
(Emphasis by us)
350. It is emphasized by the learned author that there is no clear authority on the
legal effect of the practice whereby the parties to a transaction exchanged a ‘letter
of intent’ on which they act, pending the preparation of formal contracts. At page
181, it is stated that "where the language of such a document does not negative
contractual intention, it is open to the courts to hold the parties bound by the
document; and they will, in particular, be inclined to do so where the parties
have acted on the document for a long period of time or have expended
considerable sums of money in reliance on it. The fact that the parties envisage
that the letter is to be superseded by a later, more formal, contractual document
does not, of itself prevent it from taking effect as a contract".
351. In a judgment reported at (1971) 222 E.G. 169 Turriff Construction Ltd. vs.
Regalia Knitting Mills, the letter of intent was held to be a collateral contract to
pay for the preliminary work.
352. In yet another pronouncement reported at 1986 (1) Lloyd's Rep. 378 Wilson
Smithett & Co. (Sugar Co.) v. Bangladesh Sugar Industries Limited, the court
held that the LoI had contractual significance.

150
353. In the "Law of Contract", Butterworths Common Law Series, at page 327
of the text, it is mentioned that:
"A letter of intent may expressly state that it is not to have
contractual effect. In Drake and Scull Engineering Limited Vs. Higgs
and Hill Northern Limited, another building contract case, the parties
had reached agreement on all terms apart from day rates when a letter
of intent was issued. However, the letter expressly stated that there
should be no binding contract between the parties until contracts
were formalised. The court held that in accordance with its terms the
letter was therefore not contractual, with the result that on the facts
the employer was not entitled to deduct liquidated damages which
would have been payable under agreed contract terms. However, it is
submitted that it will take clear words to prevent a letter of intent
being regarded as an offer or acceptance of a contract if all
important terms have been agreed and one party commences
performance in reliance on the letter."
(Emphasis supplied)
354. The principles in English law so far as a LoI are concerned were
authoritatively summarised in the pronouncement reported in 33 PC 29 Hatzfeld
Wildenburg v. Alexander thus:
"It appears to be well settled by the authorities that if the

documents or letters relied on as constituting a contract contemplate
the execution of a further contract between the parties, it is a
question of construction whether the execution of the further
contract is a condition of term of the bargain or whether it is a mere
expression of the desire of the parties as to the manner in which the
transaction already agreed to will in fact go through. In the former
case there is no enforceable contract either because the condition is
unfulfilled or because the law does not recognize a contract to enter
into a contract. In the latter case there is a binding contract and the
reference to the more formal document may be ignored."
(Emphasis supplied)

151
355. It is trite that it is the express intent of the parties which controls the rule of
contract formation, rather than mere form.
356. In the judgment reported at 147 F Supp. 193, 204 (S.D.N.Y. 1956) Banking
& Trading Corporation Vs. Reconstruction Finance Corporation, affirmed in
257 F. 2d 765 (2nd Cir. 1958), the court had stated that "if the agreement is
expressly subject to the execution of a formal contract, this intent must be
respected and no contract found until then".
357. In Texas Inc Vs. Pennzoil Co. 729 SW 2d 768, the court placed reliance on
a pronouncement reported at 301 N.Y. 110, 92, N.E. 2D 914 (1950) F.W. Berk &
Co. Vs. Derecktor. In this matter, the very acceptance of the plaintiff's order by
the defendants was made subject to the occurrence of certain events. The court
defined the phrase "subject to" as being the equivalent to "conditional upon or
depending on" and held that making the acceptance of an offer subject to a
condition was not the kind of assent required to make it a binding promise.
However, making the acceptance of an offer conditional or expressly making an
agreement itself conditional is a much clearer expression of an intent not to be
bound than the use of the more ambiguous word "transaction".
358. Our attention stands drawn to the pronouncement of the Supreme Court
reported at (2006) 1 SCC 751 Dresser Rand S.A. Vs. Bindal Agro Chem Limited
wherein the court was of the view that the letter of intent made it clear that if the
projects order was not placed and a letter of credit was not issued by a particular
date, the other party was at liberty to alter the price and the delivery schedule. The
court therefore held that it may not be possible to treat the LoI as the projects
order. It was further held thus:
"Agreeing upon the terms subject to which offer is to be made and
accepted, is itself a complicated and time-consuming process. But,

152
reaching an agreement as to the terms subject to which a purchase

will be made, is not entering into an agreement to purchase."
32. Parties agreeing upon the terms subject to which a contract
will be governed, when made, is not the same as entering into the
contract itself. Similarly, agreeing upon the terms which will govern
a purchase when a purchase order is placed, is not the same as
placing a purchase order. A prelude to a contract should not be
confused with the contract itself. xxxx.
39. …a letter of intent merely indicates a party’s intention 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. …
40. It is no doubt true that a letter of intent may be constructed as a
letter of acceptance if such intention is evident from its terms. It is
not uncommon in contracts involving detailed procedure, in order to
save time, to issue a letter of intent communicating the acceptance of
the offer and asking the contractor to start the work with a stipulation
that the detailed contract would be drawn up later. If such a letter is
issued to the contractor, though it may be termed as a letter of intent,
it may amount to acceptance of the offer resulting in a concluded
contract between the parties. But the question whether it is a final
acceptance of the offer thereby leading to a contract, is a matter that
has to be decided with reference to the terms of the letter.
When the LoI is itself hedged with the condition that the
final allotment would be made later after obtaining CRZ and other
clearances, it may depict an intention to enter into contract at a later
stage. Thus, we find that on the facts of this case it appears that a
letter of intention to enter into a contract which could take place after
all other formalities are completed. However, when the completion of
these formalities had taken undue long time and the price of land, in
the interregnum, shot up sharply, the respondent had a right to
cancel the process which had not resulted in a concluded contract. "
(Emphasis supplied)

153
359. The above view has been relied upon by the Supreme Court in its decision
report at (2015) 13 SCC 233 : Rishi Kiran Logistics Pvt. Ltd. v. Kandla Port
Trust and others.
360. Mr. P. N. Raina, ld Senior Counsel has placed the judgment reported at
(2017) 2 SCC 125 (Para 24), Bhushan Power and Steel Limited v. S. L. Seal,
Additional Secretary, Steel and Mines and others, before us. In this case, the
application of the petitioner for grant of mining lease was rejected on account of a
statutory amendment. The application was made prior to the statutory amendment.
The petitioner had challenged the rejection inter alia on the ground that ‘since the
letter of intent stood issued by the State Govt. for grant of mining lease, the
petitioner’s application stood protected’. The Supreme Court had considered the
effects of the issuance of the LoI in para 24 of the judgment observing as follows:
“24. No doubt, having regard to the words “by whatever name

called”, the expression “letter of intent” is to be given wider
connotation. It means that nomenclature of the letter would not be the
determinative factor. It is the substantive nature of the letter in
question that would determine as to whether it can be treated as the
letter of intent. For this purpose, it is first necessary to find the
meaning that has to be attributed to the term “letter of intent”. As per
the legal dictionary, “letter of intent” is a document that described the
preliminary understanding between the parties who intend to make a
contract or join together in another action. This term has come up for
interpretation on few occasions before this Court.”
(Emphasis by us)
361. Mr F. A. Natnoo, has submitted that the appellants are mis-reading the
judicial pronouncement when they have no application in the present case. Mr
Natoo, submits that the manner in which a judicial precedent has to be read and
applied has been laid down by the Supreme Court in the judgment reported at 2004

154
(8) SCC 579 : Bharat Petroleum Corporation Limited & Anr., v. N. R.
Vairamani & Anr., as follows:
“9. Courts should not place reliance on decisions without discussing

as to how the factual situation fits in with the fact situation of the
decision on which reliance is placed. Observations of Courts are
neither to be read as Euclid's theorems nor as provisions of the statute
and that too taken out of their context. These observations must be
read in the context in which they appear to have been stated.
Judgments of Courts are not to be construed as statutes. To interpret
words, phrases and provisions of a statute, it may become necessary
for judges to embark into lengthy discussions but the discussion is
meant to explain and not to define. Judges interpret statutes, they do
not interpret judgments. They interpret words of statutes; their words
are not to be interpreted as statutes. In London Graving Dock Co. Ltd.
V. Horton (AC at p.761), Lord Mac Dermot observed: (All ER p.14C-
D)
"The matter cannot, of course, be settled merely by treating the

ipsissima vertra of Willes, J., as though they were part of an Act of
Parliament and applying the rules of interpretation appropriate
thereto. This is not to detract from the great weight to be given to the
language actually used by that most distinguished judge......"
10. In Home Office v. Dorset Yacht Co. (All ER p.297g-h) Lord Reid
said, "Lord Atkin's speech.....is not to be treated as if it was a statute
definition it will require qualification in new circumstances." Megarry,
J in (1971) 1 WLR 1062 observed: "One must not, of course, construe
even a reserved judgment of Russell L.J. as if it were an Act of
Parliament." And, in Herrington v. British Railways Board (1972 (2)
WLR 537) Lord Morris said: (All ER p.761c)
"There is always peril in treating the words of a speech or judgment as

though they are words in a legislative enactment, and it is to be

155
remembered that judicial utterances made in the setting of the facts of

a particular case."
11. Circumstantial flexibility, one additional or different fact may

make a world of difference between conclusions in two cases. Disposal
of cases by blindly placing reliance on a decision is not proper.
12. The following words of Lord Denning in the matter of applying

precedents have become locus classicus:
"Each case depends on its own facts and a close similarity between
one case and another is not enough because even a single significant
detail may alter the entire aspect, in deciding such cases, one should
avoid the temptation to decide cases (as said by Cordozo) by matching
the colour of one case against the colour of another. To decide
therefore, on which side of the line a case falls, the broad resemblance
to another case is not at all decisive.
* * *
Precedent should be followed only so far as it marks the path of

justice, but you must cut the dead wood and trim off the side branches
else you will find yourself lost in thickets and branches. My plea is to
keep the path to justice clear of obstructions which could impede it."”
362. We have extracted the LoI issued by the respondents to the appellants in the
cases in hand heretofore. This LoI clearly informed the appellant that their bids
had been “provisionally” accepted. It reminded the bidders of the mandate of Rule
26 of the Rules of 2016. This LoI directed the appellants to submit the approved
Mining Plan and EC (as required under Rule 26(2)) as also to deposit the
remaining 50% of the bid amount within the period of six months (as stipulated in
Rule 55(9)). The LoI clearly informed that these compliances were necessary to

156
enable the respondents to “grant mining lease” to the bidder for extraction of the
minor minerals.
363. An examination of Rule 40 shows that after the completion of the above
formalities, a formal order of “grant” of the lease has to be issued. Once this is
ordered, the bidder is required under Rule 40(1) to pay demarcation fee, deposit
the security along with one quarterly installment of the annual deed rent and
submit requisite stamps for execution of formal lease deed within 30 days from the
date of issue of the grant. Rule 40(2) mandates that the lease deed “shall” be
executed within three months from the date of issue of the grant. “Such lease deed
is required to be got registered by lessee within a period of one month from the
date of execution of the lease deed.”
364. Under Rule 40(1), the lease is a formal document executed in the formal
prescribed in Form ML 10. It enables the lessee to extract minor minerals from a
specified area of land.
365. In this background, the issuance of the LoI [under Rule 26(2)] is merely
notification to the bidder that his bid was the highest and stands provisionally
accepted. The LoI in absolutely clear terms thus reminds the bidder of the
formalities that he is required under the statutory rules [Rule 26(2), 55(9)] to
complete as well as the time frame within which they must be completed to enable
the authorities to grant the mining lease. The Rules clearly postulate that after
compliance by the bidder, a formal order of grant of the lease [Rule 40(1)] has to
be issued; completion of the prescribed formalities [Rule 40(1)], execution of the
mininig lease [Rule 40(2)] in the prescribed format Form ML10 by the Director
and thereafter its registration as per the notified schedule.

157
It needs no elaboration that it is this registered document which is the
contract between the parties. A highest bidder is only thereafter statutorily
permitted (Section 4 of the Act) to undertake mining activity.
366. In the judgment reported at (2009) 1 SCC 475, Speech & Software
Technologies (India) (P) Ltd. V. Neos International Ltd. it has been held that it is
a well settled legal position that the agreement to enter into contract is not
enforceable nor does it confer any rights on the parties.
367. By the issuance of the LoI the respondents have thus neither conveyed final
acceptance of the bid nor the terms on which a mining lease would be granted to
the bidder.
368. We may consider individual arguments addressed before us. Mr Vikram
Sharma in LPA No. 53/2020 has vehemently advanced the submission that once a
LoI stood issued to the appellant, the mining plans submitted by the appellant
approved, the right of grant of lease immediately accrued under Rule 6 to the
appellant. It is contended that on working of Rule 104-A and the appellants
extracting minor minerals against payment of royalty (as defined under Section 9
of the Minor Mineral Development Act) the appellants had moved ahead from the
stage of issuance of LoI. Mr Sharma would content that upon receipt of the
royalty, a binding contract had come into existence.
369. The Rules of 2016 are in the public domain. The public notice of the
auctions, conducted thereunder (extracted by us) unequivocally notified the
participants of the terms and conditions on which the auction would be conducted.
The rules are also clearly referred to in the LoI issued to each of the appellants as
well. That final acceptance of the bids had to be considered only after completion
of the three prerequisites, stood in clear terms informed to the appellants.

158
370. It is an admitted position that none of the appellants fulfilled these
conditions in the present cases. In this background, is it possible to hold, as
contended by Mr Vikram Sharma that there was a concluded contract in favour of
the appellants and that the bidder had any vested interest in getting the mining
lease?
371. In (1972) 2 SCC 36 State of Orissa v. Harinaryan Jaiswal, the Supreme
Court has ruled on the question as to whether the bidder acquires any vested right
merely by giving bids. In this regard in Para 13, it was further stated thus:
“13………By merely giving bids, the bidders had not acquired any
vested rights. The fact that the Government was the seller does not
change legal position once its exclusive right to deal with those
privileges is conceded. If the Government is the exclusive owner of
those privileges, reliance on Art. 19(1)(g) or Art. 14 becomes
irrelevant. Citizens cannot have any fundamental right to trade or
carry on business in the properties or rights belonging to the
Government, nor can there be any infringement of Art. 14, if the
Government tries to get the best available price for its valuable
rights. The High Court was wholly wrong in thinking that purpose of
ss. 22 and 29 of the Act was not to raise revenue. Raising revenue as
held by this Court in Cooverjee Bharucha's case (supra) was one of
the important purposes of such provisions. The fact that the price
fetched by the sale of country liquor is an excise revenue does not
change the nature of the right. The sale in question is but a mode of
raising revenue. Assuming that the question of arbitrary or unguided
power can arise in a case of this nature, it should not be forgotten
that the power to accept or reject the highest bid is given to the
highest authority in the State i.e. the Government which is expected
to safeguard the finances of the State. Such a power cannot be
considered as an arbitrary power. If that power is exercised for any
collateral purposes, the exercise of the power will be struck down. It

159
may also be remembered that herein we are not dealing with a

delegated power but with a power conferred by the legislature…..”
(Emphasis supplied)
372. With regard to the impact of the submission of a bid, we may advert to the
findings of the Supreme Court in the case reported at (1975) 1 SCC 737, Har
Shankar v. Dy. Excise & Taxation Commissioner, wherein it is held under:
“16. Those interested in running the country liquor vends offered

their bids voluntarily in the auctions held for granting licences for the
sale of country liquor. The terms and conditions of the auctions were
announced before the auctions were held and the bidders
participated in the auctions without a demur and with full knowledge
of the commitments which the bids involved. The announcement of
conditions governing the auction were in the nature of an invitation
to an offer to those who were interested in the sale of country liquor.
The bids given in the auctions were offers made by prospective
vendors to the Government.
............Those who contract with open eyes must accept the burdens
of the contract along with its benefits. Xxxxxxxxxx”
(Emphasis by us)
373. A challenge to a cancellation of the entire tender, similar to the decision
under challenge before us, was before the Supreme Court in the judgment reported
at (2015) 13 SCC 233, Rishi Kiran Logistics Private Limited v. Board of Trustees
of Kandla Port Trust and others. The respondent No.1 had invited tenders on
12.03.2005 for allotment of plots on leasehold basis on a basic premium of Rs.612
per square meter for construction of liquid storage tanks. Bids were to be
accompanied by earnest money of Rs. 3 lakhs. Price bids were opened on
30.08.2005 which were scrutinized by the tender committee. The appellant was
found technically qualified. Recommendations were placed before the Board of

160
Trustees in the meeting held on 08.12.2005. After completion of procedural
aspects, a LoI dated 07.01.2006 was communicated to the appellant wherein it was
clearly mentioned that the ‘formal letter of allotment would be issued after getting
CRZ clearance’. The appellant had bid for three plots at premiums of Rs.3200,
3150 and 3120 respectively. This CRZ clearance was received after a long gap of
five years on 16th August 2010. This prolonged time lag resulted in the Board of
Trustees taking the decision by way of resolution no.108 on 09.12.2010 deciding
to cancel the entire tender process which had commenced in the year 2005. The
decision of the Board of Trustees was conveyed to the appellant as well as to other
tenderers. The cancellation of bids was challenged by way of writ petition being
SCA No.1877/2011.
374. Nikhil Adhesives Limited, had filed a writ petition being SCA No.286/2011
in the Gujarat High Court which was dismissed by a reasoned judgment dated 4th
February, 2011 [2011 SCC online Gujarat 897 : (2011) 2 GLH 283]. Another
SCA No.1328/2011 filed by IMC Limited was dismissed by the Gujarat High
Court by another reasoned order on 7th February, 2011.
375. In Nikhil Adhesives Limited,tThe Gujarat High Court was of the view that
the petitioner could not succeed merely on the basis of the LoI dated 12 th January
2006 which had been issued by the Kandla Port Trust. It was also observed that no
effective steps had been taken by the petitioner even to facilitate obtaining the
CRZ clearance despite several communications from the respondents. The court
held that it could not be held that there was any concluded contract between the
petitioner and the respondent-Port Trust. The LoI was merely an expression of
intention issued by the respondent which imparted information to the petitioner
that it stood as the highest bidder and on receipt of the CRZ clearance, a formal

161
LoI would be issued. Even before such an event could occur, the earlier tender
process stood cancelled. It was specifically held that while cancelling the earlier
tender process, the Kandla Trust Port neither acted arbitrarily nor its action would
amount to any malafide exercise of discretionary powers. The decision had been
taken to fetch a realistic market price in accordance with the present market value
of land.
376. Another fact which had weighed in favour of the respondents was the fact
that, other than making payment of Rs.3 lakhs by way of earnest money, the
bidders had not incurred any other expenditure or suffered any liability to
implement the project of construction and maintenance of the tanks; that even if
the LoI could be considered as tantamounting to a promise given by the Port Trust,
the petitioner had not altered its position to such an extent which could lead the
court to take a decision that holding the promissor to its representation was
necessary to do justice between the parties. Thus equity demanded that the Port
Trust was allowed to rescind, looking to the facts and circumstances of the case.
377. The writ petition filed by the Rishi Kiran Logistics Pvt. Ltd. (SCA
1877/2011) was also dismissed for the reasons detailed in the above judgment
dated 4th February, 2011.
378. The main ground of challenge to the cancellation before the Gujarat High
Court in Nikhil Adhesives Limited (and the other matters including Rishi Kiran
Logistics) was that the respondents were instrumentalities of the State and being
‘other authority’ under Article 12 of the Constitution, just as in the present case, it
was urged that they were bound to act fairly, and that, their action was not based
on any rationale or relevant principle.

162
379. The entire thrust of the submission of all the writ petitioners was that there
was a concluded contract between the parties and that cancellation of such contract
perse amounted to arbitrariness in action. The cancellation was challenged also on
grounds of promissory estoppel.
380. The Gujarat High Court negated all the aforesaid propositions. Answering
the first argument that there was a concluded contract between the parties, the
High Court held that the LoI issued by the Port Trust was just information that the
addressee (the petitioner therein) had been declared highest bidder for the plot for
which it had submitted its tender. This letter further informed that the formal
allotment letter shall be issued after the receipt of CRZ clearance in general by the
Port Trust for tank forms and also informed that additional CRZ clearance if
required for installation, safety, pollution control etc, had to be obtained by the
said petitioner, from time to time at its cost. This letter also mentioned that the
payment would be made by the said petitioner after obtaining the CRZ clearance
for the individual premises allotted to it or within 3 months of issuance of
allotment letter, whichever was earlier. In the opinion of the High Court the LoI
did not result in any concluded contract.
381. Rishi Kiran Logistics Pvt. Ltd., challenged the decision of the Gujarat High
Court before the Supreme Court of India, which was rejected by the judgment
dated 21st April, 2014.
382. The Supreme Court had noted that though in the NIT dated 12th March,2005,
the premium was fixed at Rs.612/ sq.meter, prices of property in the five years
taken to obtain the CRZ clearance had taken a quantum jump. In 2010, when the
clearance was obtained, it was more than Rs. 8000/ sq. meter.

163
383. The Supreme Court also considered and rejected the plea of estoppel in
Rishi Kiran Logistics Pvt. Ltd. In para 30, the Supreme Court noted that in this
case, the total premium amount in respect of the three plots (which ran into several
crores of rupees in each case) was not to be paid on issuance of the LoI. This was
for the reason that the formal LoI or lease documents were to be executed only
after the CRZ clearance. For this reason, the appellant was required to pay the
premium amount only after receipt of the CRZ clearance in general and after
issuance of allotment letter as well as individual CRZ clearance and on execution
of these documents. Before any of these events could happen, the Port Trust
decided to cancel the entire process. It was held that except making payment of
Rs.3 lakhs by way of earnest money, the appellant did not incur any other expenses
and had also not suffered any liability or taken any steps. It was held by the High
Court that even if it could be assumed that the issuance of LOI tantamounted to a
promise given by the Port Trust, the appellants did not alter their position to their
prejudice pursuant thereto to such an extent that it could inspire the court to take
the decision that holding the promissor to its representation is necessary to do
justice between the parties. This view of the High Court was upheld by the
Supreme Court.
384. We find from the factual narration above that, as in the present case, in Rishi
Kiran Logistics Pvt. Ltd, there was an admitted position that, a LoI stood issued in
favour of the bidders which clearly informed the bidder that the formal allotment
shall be issued after the receipt of the CRZ clearance in general. The Supreme
Court sustained the finding of the High Court that the LoI did not amount to a
promise but was only in the nature of information that the addressee had been
declared the highest bidder for the plot for which it had submitted its tenders.

164
385. In (2015) 13 SCC 233 Rishi, Kiran Logistics Private Limited v. Board of
Trustees of Kandla Port Trust and others, it was held as follows:
“42. Having considered the matter from this limited angle in exercise
of powers of judicial review, we are of the view that on the facts of this
case, no interference is required. The case of the appellant is that
with the issuance of LoI a concluded contract was entered into. He
had submitted that only CRZ clearance was required and even if LoI,
which amounted to acceptance of the offer given by the appellant in
his bid was contingent based on CRZ clearance, even that clearance
was granted by the competent authority ultimately. However, what is
lost sight of, in the entire process is that the said clearance was
delayed by a period of 5 years. Because of that neither any final LoI
could be issued, nor possession of the plots given of the payments
received. It is also to be borne in mind that apart from general CRZ
clearance, specific clearance on individual basis in this behalf were
also to be obtained.”
(Emphasis by us)
386. The fact situation in Rishi Kiran Logistics Private Ltd. is on all fours with
the cases in hand. In the present cases, the appellants were unable to secure ECs
within the stipulated time. Their bids had also been only provisionally accepted.
This was clearly stated in the LoI. Final acceptance had not yet been accorded. The
submission of the appellants that on issuance of the LoI, a concluded contract
came into existence is completely misconceived and has to be rejected.
387. The judgments relied upon by the appellants are distinguishable and do not
lay down any absolute proposition of law. In (1984) 3 SCC 634 (Paras 10 & 11),
State of Haryana v. Lal Chand, the court was considering an absolute acceptance
of a bid. The case relates to auction sale of liquor vends.

165
388. Lal Chand was concerned with an auction for grant of licences for sale of
liquor in the State of Haryana. So far as these auctions are concerned, on
acceptance of the bid, as per the rules and notified conditions, a binding contract
came into existence and the bidders became entitled to the licences. These rules do
not postulate provisional acceptance. The rules in Haryana do not prescribe any
pre-conditions to be complied with. Lal Chand is inapplicable to the cases in hand.
389. So far as the judgment reported at (2011) 12 SCC 18, Saradamani
Kandappan v. S. Rajalakshmi and others is concerned, it relates to sales of
immovable property. This judgment has no relevance at all to the present case. The
court has drawn a distinction between a contract executed in exercise of executive
power and contracts which are statutory in nature.
390. As pointed out above, in the present case, the applicable rules postulate only
provisional acceptance and issuance of LoI setting out the conditions laid down
under the rules which have to be complied with. It is only thereafter that the
validity of the bid has to be considered and may give rise to a final acceptance
which culminates in execution of a formal mining lease. It cannot be said in the
instant case, on fall of the hammer or issuance of the LoI, a binding contract
between the parties had come into existence.
391. In our view, the reliance on Section 9 of the Act of 1957 is also completely
misconceived. On examination of the scheme of the Statute, we find that Section 9
explicitly states that royalty is payable only by the holder of a mining lease.
Persons who had merely participated in the auction and were yet to comply with
the requirements of Rule 26(9) and Rule 55(9), had not become entitled to mining
leases. As such, they could not have been permitted to extract the minerals or pay
royalty.

166
392. We have no manner of doubt that in the present case, there was no
concluded binding contract in favour of any of the appellants.
393. In these circumatances, the reliance placed by Mr Vikram Sharma on the
pronouncement in AIR 1991 SC 537 : Kumari Shri Lekha Vidyarthi & Ors. V.
State of U.P. & Ors, is misconceived. In this case, by a general order, issued by
the Government of State of Uttar Pradesh, the appointments of all the Government
counsels (civil, criminal, revenue) in all districts of State of UP were terminated
and preparation of fresh panels to make appointments in place of the existing
incumbents was directed.
394. Mr F. A. Natnoo, ld. AAG, has pointed out that the facts in question which
were before the Court in Kumari Shri Lekha Vidyarthi are different from the
present consideration. In the instant case, there is no contract between the parties.
For the same reason the reliance placed by Mr Vikram Sharma, on AIR 1971 SC
1021: Century Spinning & Manufacturing Company Ltd., & anr. v. The
Ulhasnagar Municipal Council and anr, is misplaced as, in the present case,
there is no concluded contract between the parties.
395. We find that Rule 104-A is a “transitory measure” and applicability thereof
so far as the appellants, who were bidders in auctions, could hold only “for
completion of auction process, preparation of mining plan and obtaining
environmental clearance from the competent authority by the successful bidder.”
396. The claims of the appellants of vested rights having accrued in their favour
on account of extraction and payment of royalty under Rule 104-A are therefore
completely misplaced and hereby rejected.
397. So far as the submissions premised on time being not of essence of the
contract are concerned, it is well settled that it is not open to a court in exercise of

167
extra-ordinary powers under Article 226 of the Constitution of India to go into
pure and undiluted questions of civil liability under a contract unless any objection
based on binding principles of administrative law and public interest arises for
consideration.
398. In any event, the time for compliance of the conditions was appointed under
the statutory Rules. There is no question of any change in this requirement. The
principle of time not being of essence is neither attracted nor applicable to the
present cases.
399. The learned Single Judge has considered as issue no.i the question as to
whether on issuance of LoI and acceptance of the 50% of the bid amount and
approval of the mining plans, a right has been created in favour of the petitioners
to claim grant of mining leases. In view of the above factual narration, the learned
Single Judge has, therefore, rightly held that the right to claim grant of lease and
execution of formal leases would accrue to the petitioners only if the aforesaid
requisite formalities were completed within the statutory prescribed period in
accordance with Section 4 of the Act of 1957 read with Rule 26(2) of the Rules of
2016. We uphold the conclusion of the learned Single Judge that no right
whatsoever had accrued to the appellant at any point of time to grant of mining
leases.
XII Whether the respondents had the power to waive or to extend time
for compliance with the conditions prescribed in the Rules as
notified in the LoI.
400. Varying, in fact contradictory, submissions have been made by the learned
Senior Counsels and Counsels in these appeals. Mr. P. N. Raina, Senior Counsel
has urged that though there was a concluded contract, however, time was not of

168
essence of the contract and that, in any case time for compliance stood extended by
the respondents themselves.
401. On the other hand, it has been urged by Mr. Z. A. Shah, learned Senior
Counsel that the stipulation of complying with the notified conditions within six
months from the date of LoI was not an essential or a mandatory condition for
grant of the mining lease.
402. The submission of Mr. Vikram Sharma, ld. Counsel is that, in the given
facts and circumstances, the appellants were entitled to extension of time which
could have been granted under Rule 40 of the Rules of 2016.
403. The question which therefore arises for consideration is as to whether the
stipulations made in the Rules and by the authorities in the notice inviting tenders
or the LoIs issued on a provisional acceptance of a bid, especially the time
stipulation within which the prerequisites have to be fulfilled, are not a binding
requirement. If this is answered in the negative, the question which has to be
answered is as to whether the respondents had any jurisdiction or power to extend
the period of six months which was stipulated as a precondition.
404. As a corollary, the further question which has to be answered is as to what is
the impact of the failure of the appellants to comply with the said requirements?
405. Lastly, we have to consider what is the impact of Rule 40 on these cases.
406. These issues are not res integra, have arisen before the Supreme Court
repeatedly and stand conclusively answered.
407. We may first and foremost refer to the pronouncement of the Supreme Court
reported at (2000) 5 SCC 287, Monarch Infrastructure Private Limited v.
Commissioner, Ulhasnagar Municipal Corporation and others which sheds
valuable light on the matter. In this case, one of the conditions of eligibility in the

169
notice inviting tenders was deleted after the expiry of the time limit for submission
of tenders but before opening thereof. The contract was awarded to a tenderer who,
at the time of submission of the tenders, did not meet the condition which was
amended. The award of this contract was set aside by the High Court holding that
on account of the restricted application of the modified tender conditions to only
the existing bidders, the Municipal Corporation stands deprived of the opportunity
which it could have had of obtaining higher and better bids from those who did not
participate earlier. The court had reiterated the well settled principles of the scope
of judicial review in award of contracts. In para 10 of the judgment, it was held
that ‘ultimately what prevails with the courts in these matters is that while public
interest is paramount there should be no arbitrariness in the matter of award of
contract and all participants in the tender process should be treated alike’. In para
11 of the judgment, it was further stated that ‘ the courts would not interfere with
the matter of administrative action or changes made therein, unless the
Government’s action is arbitrary or discriminatory or the policy adopted has no
nexus with the object which it seeks to achieve or is malafide’.
408. So far as our consideration is concerned, the fact situation brought out in
para 13 of this judgment is material. One of the conditions in the ‘notice inviting
tenders’ in Monarch Infrastructure was that the tender should be accompanied by
demand draft/pay order or cash and in no other form. One Ramchand Mahadeo
Rao had also submitted his bid which was rejected. Mr. Rao claimed that he had
got prepared a cheque for Rs. 1.70 crores which he misplaced and he was under
wrong impression that a photocopy of the draft duly notarized would be sufficient
and therefore he had submitted a photocopy of the demand draft along with
relevant documents.

170
409. The Supreme Court held that it would be naive to accept such a mere
statement that the demand draft for the sum of Rs.1.70 crores obtained for the
purpose of submission alongwith the tender document could be misplaced in the
manner suggested in the application. It was also held that the Municipal
Corporation was justified in rejecting such tender offer as not fulfilling the
conditions of the tender notice.
410. Where would then be an occasion in the present cases, for the respondents to
condone failure by the bidders/ appellants to comply with the conditions as the
requirements for ECs and deposit of the balance bid amount as stand mandated by
statutory rules, informed in the auction notices and also individually notified in the
LoIs admittedly received by each of them?
411. We may examine this issue from another perspective. Even if it could be
accepted that there were concluded contracts in favour of these appellants, would
the appellants be permitted to contend that the three conditions notified in the LoI
were not binding? The answer is to be found in a subsequent pronouncement of the
Supreme Court reported at (2007) 10 SCC 33, Puravankara Projects Ltd. V. Hotel
Venus International and others. Herein allotment of certain plots had been made
by public auction in Kerala with the understanding that the land ceiling exemption
would be obtained in due course by the Development Authority without it having
been made a condition precedent. Clause 10 of the tender terms and conditions
required submission of a bank guarantee. The respondent-Venus was the
successful bidder in respect of some of the auctioned plots including Plot Nos. D-
3, D-4 and D-5. The appellant was the second highest bidder in respect of the Plot
Nos. D-3, D-4 and D-5.

171
412. Venus-the respondent did not furnish the bank guarantee. The appellant
knowing that Venus had not furnished the bank guarantee, matched his highest
offer with regard to the plots concerned and agreed to pay the entire amount in
lump sum. As the authorities did not respond to the offer, the appellant moved to
High Court of Kerala with a writ petition praying that the tender of Venus in
relation to the said plots be treated as cancelled as the bank guarantee was not
furnished.
413. The Development Authority also issued a letter of confirmation dated 21st
May 2005. This was challenged by a writ petition filed by Venus.
414. In the meantime, the notification of exemption on the land under Section
81(3)(b) of the Kerala Land Reforms Act, 1963 was issued by the authorities. Both
the Single Judge and the Division Bench in appeal held that exemption of the land
under Section 81(3)(b) of the Kerala Land Reforms Act, 1963 was a condition
precedent to issuance of the tender and as such accepted Venus’ contention that it
could be called upon to submit the bank guarantee only after the exemption was
granted by the Government.
The Supreme Court accepted the challenge by the appellants to these
judgments of the Kerala High Court.
415. On the issue of parties being bound by terms of the offer, the Supreme Court
in Puravankara Projects’ had held thus:
“30. By observing that there was implied term which is not there in
the tender, and postponing the time by which the bank guarantee has
to be furnished, in essence the High Court directed modification of a
vital term of the contract.
31. In New Bihar Biri Leave Co. V. State of Bihar, (1981) 1
SCC 537, it was observed at para 48 as follows: (SCC p. 558)

172
“48. It is fundamental principle of general application that if

a person of his own accord, accepts a contract on certain terms and
works out the contract, he cannot be allowed to adhere to and abide
by some of the terms of the contract which proved advantageous to
him and repudiate the other terms of the same contract which might
be disadvantageous to him. The maxim of qui approbat non reprobate
(one who approbates cannot reprobate). This principle, though
originally borrowed from Scots law, is now firmly embodied in English
common law. According to it, a party to an instrument or transaction
cannot take advantage of one part of a document or transaction and
reject the rest. That is to say, no party can accept and reject the same
instrument or transaction (per Scrutton, L.J., Verschures Creameries
Ltd. V. Hull & Netherlands Steamship Co., (1921) 2 KB 608 (CA); see
Douglas Menzies v. Umphelby, 1908 AC 224; see also Stroud’s
Judicial Dictionary, Vol. I, P.169, 3rd (Edn.).”
32. In Assistant Excise Commissioner v. Isaac Peter, (1994) 4 SCC
104, this Court highlighted that the concept of administrative law and
fairness should not be mixed up with fair or unfair terms of the
contract. It was stated in no uncertain terms that duty to act fairly
which is sought to be imported into a contract to modify and/or alter
its terms and/or to create an obligation upon the State Government
which is not there in the contract is not covered by any doctrine of
fairness or reasonableness. The duty to act fairly and reasonably is a
doctrine developed in administrative law field to ensure the rule of law
and to prevent failure of justice when the action is administrative in
nature.”
(Emphasis supplied)
416. Indubitably the appellants before us cannot be heard to say that upon
issuance of the LoI, they became entitled to mine for minor minerals without
obtaining the ECs or depositing fifty percent of the bid amount.

173
417. In their submissions, both Mr. Z. A. Shah and Mr. P. N. Raina, ld Senior
Counsels submit that it is necessary to draw a distinction with regard to the nature
of the order and the power which was exercised. Distinction has been drawn
between exercise of administrative or quasi judicial power.
418. Given the non-compliances of the mandatory prescriptions by the appellants,
it is completely unnecessary for this court to undertake the exercise on this issue
which would be only an academic exercise in the factual situation which obtains.
As discussed above, the appellants in LPA 56/2020 respresented by Mr P.N.Raina,
Sr. Counsel, did not care to comply with any of the conditions while the appellants
in LPA No.64/2020 on whose behalf Mr Shah has made submissions, were
grossly belated in completing the requirements.
419. Before us, these appellants were informed of both the formalities and the
time limit of six months for completion thereof for entitlement of grant of mining
leases. The appellants contend that these were not sacrosanct or binding
requirements. The question which therefore arises for consideration is whether the
said conditions or the time limit could be deviated from?
420. A fact situation similar to the present case was before the Supreme Court in
the case reported at (1996) 10 SCC 405, Rajasthan Co-operative Dairy
Federation Ltd. v. Shri Maha Laxmi Mingrate Marketing Service Pvt. Ltd. and
others. In this case, the appellant had invited applications on or about 19th
November 1988 for appointment of selling agents for its products in different
areas. On 1st June 1990, a LoI was issued by the appellant in favour of the
respondent No. 1 for its appointment as a selling agent. This LoI required the
respondent to sign an agreement on 12th June 1990 on a non-judicial stamp paper
and the arrangement was to be enforceable from the date when a legally executed

174
contract came into being. Additionally, the respondent was required to submit an
irrevocable bank guarantee for a sum of Rs.15 lakhs in favour of the appellant;
submit profit and loss account and balance sheet for the past years before the
execution of the agreement and a letter duly signed by the respondents was
required to reach the appellant by 5th June 1990.
421. The respondent No.1 in the above case acknowledged receipt of the LoI.
However, it failed to fulfill its obligation to furnish the bank guarantee or execute
the contract within the stipulated period. It also failed to submit the documents in
the nature of profit and loss account to the appellant. Consequently, as the
respondent No. 1 failed to fulfill its obligations within the stipulated period, the
LoI was revoked by the appellant. This revocation was challenged before the High
Court of Rajasthan by way of writ petition inter alia on the ground that the
cancellation was arbitrary as well as malafide and that the appellant had
violated the principles of audi alteram partem.
422. This submission was accepted by the learned Single Judge holding that the
appeal against the Single Bench decision before the Division Bench also failed.
The challenge to these two judgments by the appellant was accepted by the
Supreme Court holding that the cancellation could not have been effected without
compliance of principles of natural justice. It was held that the LoI merely
expressed an intention to enter into a contract. The Supreme Court further held as
follows:
“5. In its letter of 16th of July, 1990 cancelling the Letter of Intent
issued in favour of respondent No.1, the appellant had given several
reasons for cancelling the Letter of Intent. Respondent No.1 had not
submitted to the appellant its profit and loss account and balance-
sheet for the previous year as requested by the appellant. Respondent

175
No.1 had wrongly held itself out as the sole selling agent of the
appellant. These are clearly circumstances which are relevant to the
cancellation of the Letter of Intent. Also the Letter of Intent clearly
set out the conditions which respondent No.1 had to fulfil. One such
condition was submitting an irrevocable bank guarantee for Rs. 15
lacs. This was also not done. Respondent No.1 contends that it had
informed the appellant that it would submit the bank guarantee within
three days of the signing of the contract. The appellant, however, is
within its rights in insisting that the bank guarantee should be
submitted before the contract is signed. The appellant, as a prudent
businessman is entitled to satisfy itself about the financial position of
the party whom the appellant is appointing as its selling agent. If
respondent No.1 has not submitted the requisite documents in this
connection and has held itself out as the sole selling agent when to its
knowledge, there was no intention of appointing respondent no.1 as
the sole selling agent, these are valid circumstances which the
appellant can take into account in deciding whether to enter into a
contract and bind itself legally with respondent No.1 or not. In these
circumstances, if the contract has been cancelled it cannot be
considered as arbitrary action on the part of the appellant violative of
any Fundamental Rights of respondent No.1.”
(Emphasis by us)
423. In the present case as well, it is an admitted position that none of the
appellants were able to fulfill the preconditions notified to them under the LoI
within the period of six months as was stipulated. None of the appellants have
addressed a single representation to the respondent to the effect that they have
fulfilled their obligations as required under the LoI or that the matter should
proceed to consideration and grant of mining lease in their favour.
424. On the contrary, before us, (just as in Shri Maha Laxmi Mingrate Marketing
Services Pvt. Ltd.), it is submitted by Mr. Vikram Sharma that the obligation to pay

176
the balance 50% of the bid amount arose only after the grant of EC by the
authorities.
425. Mr. P. N. Raina, Sr. Advocate has urged that on issuance of LoI, a binding
and concluded contract had come into existence between the parties. Therefore,
non-payment of the balance bid amount was inconsequential.
426. The positions taken by the appellants are completely contrary to the
requirements stipulated under the applicable Rules.
427. Drawing our attention to Rule 40, Mr. Vikram Sharma ld counsel had
submitted that the right to ‘grant’ and ‘execution’ of lease are two entirely
different matters. Mr. Vikram Sharma would rely on Rule 40 to submit that in the
background, the appellant was entitled to extension of time for execution of the
lease in accordance with Rule 40(4) of the Rules of 2016.
428. No other plea in support of entitlement of the appellants to extension of time
for complying with the terms of the LoI was made before us.
429. Before us, it is an admitted position that the auction of the mineral blocks
was conducted pursuant to and in terms of the Rules of 2016. Rule 6 mandates the
requirement of the approved mining plan and Rule 13 imposes the need for EC for
the mineral blocks. By virtue of Rule 26(2) these have been stipulated as pre-
conditions for grant of mining leases. Towards provisional acceptance of the bid,
the authorities would issue a LoI to the bidder calling upon it to complete the
formalities “within a period of six months including deposition of the remaining
bid amount.”
430. So far as the stipulation in the LoI is concerned, Rule 55(9) of the Rules thus
makes a mandatory direction to issue a LoI to the bidder to complete the
formalities as required within the stipulated period. This sub rule also contains a

177
prohibition that the concerned bidder ‘shall not extract or allow any extraction till
such mining lease’ is granted.
431. The submission premised on Rule 40(4) has to be noted only for the sake of
rejection. Rule 40 opens with the expression ‘Execution of Lease’. Sub rule (1)
opens with the words ‘where the lease has been granted or renewed under these
rules’. In the cases in hand, other than the LoI whereby the bids of the appellants
had only been ‘provisionally’ accepted, there is not a single communication
informing the appellants that the authorities had agreed to grant mining leases to
them. Clearly, the stage of execution of lease was nowhere near in sight.
432. The only sub rule referring to extension of time is sub rule (4) of Rule 40.
This rule applies only to a grantee. The appellants were not ‘grantees’ as their bids
had not been finally accepted and mining leases had not been granted to them. The
further reference in the Rule is to ‘extension of time’ for completing the formalities
as mentioned in sub rule (1). Thus the extension of time referred to in Rule 4 is
only with regard to the contingencies mentioned in Rule 40(1) (2) & (3) of the
Rules of 2016. This provision does not relate to extension of time for complying
with the terms and conditions of the LoI.
433. Mr F. A. Natnoo, ld. AAG, has also drawn our attention to the terms and
conditions of the auction. The terms of the auction as set down in part-E
specifically stipulated the period of six months.
It needs no elaboration that the terms on which the auction was conducted or
bids invited are held to be in the realm of invitation to make offers to contract as
per rules.

178
434. We may usefully advert to the pronouncement of the Supreme Court
reported at (2001) 2 SCC 451, W.B. SEB v. Patel Engineering Co. Limited
wherein it was held as under:
“24. The controversy in this case has arisen at the threshold. It

cannot be disputed that this is an international competitive bidding
which postulates keen competition and high efficiency. The bidders
have or should have assistance of technical experts. The degree of
care required in such a bidding is greater than in ordinary local bids
for small works. It is essential to maintain the sanctity and integrity of
process of tender/bid and also award of a contract. The appellant,
Respondents 1 to 4 and Respondents 10 and 11 are all bound by the
ITB which should be complied with scrupulously. In a work of this
nature and magnitude where bidders who fulfil prequalification
alone are invited to bid, adherence to the instructions cannot be
given a go-by by branding it as a pedantic approach, otherwise it will
encourage and provide scope for discrimination, arbitrariness and
favourtism which are totally opposed to the rule of law and our
constitutional values. The very purpose of issuing rules/instructions
is to ensure their enforcement lest the rule of law should be a
casualty. Relaxation or waiver of a rule or condition, unless so
provided under the ITB, by the State or its agencies (the appellant) in
favour of one bidder would create justifiable doubts in the minds of
other bidders, would impair the rule of transparency and fairness
and provide room for manipulation to suit the whims of the State
agencies in picking and choosing a bidder for awarding contracts as
in the case of distributing bounty or charity. In our view such
approach should always be avoided. Where power to relax or waive a
rule or a condition exists under the rules, it has to be done strictly in
compliance with the rules. We have therefore, no hesitation in
concluding that adherence to the ITB or rules is the best principle to
be followed, which is also in the best public interest. Xxxx

179
30. Though Clause 29 in this case appears to be similarly

worded as in the bid document in Spina Case a close reading of these
clauses shows that no power of waiver is reserved in the case on
hand. Xxx”
(Emphasis supplied)
435. The stipulations made in the Rules as notified to the appellants in the LoI
were unexceptionally binding on all bidders.
436. The appellants are unable to point out any statutory provision or rule or
regulation or a term in the auction notice or the LoI enabling the respondents either
to waive or to extend the time of six months for compliance of the conditions.
Clearly, the respondents or their agents, have no power or authority at all to
modify the preconditions in any manner or grant extension of the time stipulation
laid down in the Rules.
437. The contention of the appellants that their obligation to deposit the balance
50% bid amount only after grant of EC has been rightly rejected by the Ld. Single
Judge (Para 63 of the impugned judgment)
438. Therefore, it has to be held that the respondents have no power either to
waive or modify the preconditions detailed in the LoI or to extend the time to
comply with the same.
XIII Whether processing of Environmental Clearances was delayed by

the respondents and impact thereof
439. So far as the EC is concerned, Mr. Naik, ld. Senior Counsel (in LPA
61/2020) has contended that all steps thereof stood taken and the required amount
stood deposited with the authorities by the appellants. Mr. Naik submits that no

180
fault can be attributed to the appellants for delay in grant of the EC and that it was
the respondents who were responsible for the delay.
440. Mr. Z. A. Shah, ld Senior Counsel has submitted before us, that the
appellants in LPA No. 64/2020 (Vikar Ahmad Dar v. UT of Jammu and Kashmir)
had complied with all the conditions required by the Rules and the stipulations in
the LoI. We find, however, that other than the submission of the mining plan, the
other two compliances were admittedly beyond the stipulated period.
441. It is noteworthy that the letter dated 23rd December 2019 also extracted from
the LoI that it had notified the appellants to submit an approved mining plan and
EC besides deposit of remaining 50% of the amount within a period of six months.
442. Mr Shah, has urged that the District level environmental impact committees
were provided by the Government of India in its notification dated 15th January
2016 which also prescribes the procedure which was to be followed. It is submitted
that a case came to be filed in 2016 before the NGT which had pronounced the
judgment on September 2018, wherein in para 22, the Tribunal had held that the
procedure must be laid down in terms of the judgment of the Supreme Court in
Deepak Kumar.
443. Mr Shah, has further submitted that it was based on this judgment that the
government of India has issued a notification in 2019 which had to be complied
with by the appellants. It is the submission of Mr Shah that in this background, the
appellant cannot be faulted for the five days delay in getting EC.
444. Defending the appellants who do not have the required clearances, our
attention stands drawn by Mr Naik to letter dated 18th April 2018 from the
MOEF&CC to five bidders (namely Balbir Singh who is appellant No.6 in LPA
No.61/2020 and Rakesh Kumar Choudhary, Nagar Singh, Chaman Lal and

181
Jorawar Singh-who are not appellants in LPA No.61/2020) reminding them of an
earlier letter dated 26th March 2018, advising the addressees to await the
formalization of the DSR by the concerned agency.
445. In support of his submissions, Mr. Altaf Naik, ld. Senior Counsel has also
drawn our attention to the letter dated 14th March 2018 addressed by the SEIAA to
three persons i.e. Rakesh Kumar Choudhary, Balbir Singh and Nagar Singh
(appellant in LPA No.53/2020) who had applied for grant of EC for the river bed
mining projects. The authority had notified these persons that since the DSR was
awaited, it would not be possible to process the case in its absence thereof. Mr.
Naik would contend that in this background, no fault can be attributed to the
appellants.
446. Mr. Naik has further submitted that the appellants had completed all
formalities including the requirements imposed under orders of the NGT of even
obtaining clearance from the J&K Pollution Control Board. In this regard, a letter
dated 6th January 2020 has been brought to our notice. This is a letter addressed by
the J&K Pollution Control Board to Shri Balbir Singh and Shri Nagar Singh
Choudhary requiring a deposit of Rs.3.50 lakhs for processing of a public hearing
for two blocks. It is Mr. Altaf Naik’s submission that this amount was also
deposited.
447. Mr. Vikram Shama, Advocate and Mr. Abhinav Sharma, Advocate have
also drawn our attention to the communications dated 14th March 2018 and 18th
April 2018 by the SEIAA, Government of India to some of the appellants
submitting that the addressees had sought the EC.
448. It has been contended by Mr. Vikram Sharma, Advocate that the delay in
consideration of the applications for EC was attributable to the State Government

182
whose officers delayed the issuance of the DSR. Some delay is also attributed to
the amendment of rules at the level of the MOEF&CC requiring changes in
compliances by the applicants.
449. It is noteworthy that the letter dated 18th April 2018 was addressed to five
persons (Rakesh Kumar Choudhary, Balbir Singh, Nagar Singh, Chaman Lal and
Zorowar Singh) and the letter dated 23rd December 2019 was addressed only to
two persons (Balbir Singh and Nagar Singh Choudhary). Only Balbir Singh
(addressee in both the letters), is an appellant in LPA No.61/2020. Clearly in LPA
No.61/2020, the other two appellants, namely, Sajad Ahmad Shah & Sabir Ahmad
Sheikh had not even applied for the EC.
450. We find that the letter dated 18th April 2018 also informed the addressees
about a gateway available to the addressees in case they were not willing to await
the DSR. The Member Secretary of the SEIAA had informed the addressees
therein that in case they were not willing to await the DSR, they were free to join
hands with other projects proponents desirous of mining activities in the same
areas/stream and to submit EIA and EMP for the entire stream.
451. These authorities had informed the addressees that their cases for EC could
not be considered in the absence of either the DSR or, in the alternative, of the EIA
and EMP.
452. Before us, none of the appellants have contended that the alternative
suggested was not viable or possible. The appellants were thus not only aware of
the fact that they were required to complete the formalities within six months but
also they had available a gateway and alternative to the requirement of DSR. It was
thus not necessary for the appellants to wait for the DSR and they had an option
available to them.

183
453. In the present case, the LoIs were clear. The three conditions were clearly
declared as required to be complied with by every applicant within a time limit. It
is an admitted position that not one of the appellants has complied with the three
conditions within time stipulated.
454. We have found that the earliest LoI to any of the appellants before us was
issued on 12th September 2017, while the last LoI was issued on 11th June 2018.
The other LoIs were issued in between. The period of six months for the first letter
of intent ended on 11th March 2018, and period for the last letter of intent ended on
10th December 2018. While for the others, the periods ended in between. After the
10th December 2018, (i.e. last expiry of the six months), all bidders had lost the
right to consideration of their application.
455. The appellant in LPA No.53/2020 Rakesh Kumar Choudhary v. State of
J&K and others, obtained approval of the mining plan, claims to have made
applications for EC to the SEIAA but did not receive the clearance and this
appellant has failed to deposit remaining 50% of the bid amount within the
stipulated time.
456. We also find that from the dates which have been mentioned it appears that
Rakesh Kumar Choudhary applied for EC within two months of the receipt of the
issuance of LoI for some blocks. However, with regard to the applications for
District Rajouri, while the LoI was issued on 5th October 2017, the EC was applied
after expiry of six months on 14th April 2018 for some blocks and thereafter for
others.
457. Mr F. A. Natnoo, learned AAG, has pointed out that with respect to the LoI
issued on 5th October, 2017, Rakesh Kumar Chaudhary, waited five months before
submitting his mining plan on 27th February, 2018. Mr. Natnoo points out that just

184
like in all other cases, the respondent did not delay the approval of the mining plan
which was given on 4th March, 2018 i.e., within three days of submission of the
mining plan. The period of six months from the date of issuance of the LoI was
expiring on 4th April, 2018. Rakesh Kumar Chowdhary applied for the EC only on
27th September, 2019 i.e., almost one year and seven months after approval of the
mining plan.
458. On the same aspect, a letter dated 10th August 2018 from the Principal
Secretary of Government, Department of Industries and Commerce addressed to
Shri Ramesh Kumar, Deputy Commissioner, Jammu has been placed by the
appellants before us wherein it is stated that hard and soft copies of the DSR/data
prepared by the Geology and Mining Department for posting on the Districts
website stood sent to his office on the 2nd July 2018 and immediate action as
necessary was directed.
459. It has additionally been submitted by Mr. Vikram Sharma, Advocate that so
far as the EC is concerned, no fault for the delay in processing could be attributed
to the appellants. It is submitted that even the ld Single Judge has noted the fact
that the Govt. of India had appointed the SEIAA for a period of three years and
that between the periods 28th January 2019 to 4th July 2019 there was no SEIAA
which could have issued the EC.
460. The EC had to be given by the Committee constituted by the Central
Government. None of the appellants have made any grievance or sought directions
from any court for constitution of the SEIAA when it was not in existence.
Therefore, the delay in grant of EC cannot be foisted upon the authorities of the
erstwhile State who stand impleaded as respondents before us.

185
461. A letter dated 23rd December 2019 addressed by the J&K Environment
Impact Assessment Authority has noted that the LoIs stood issued to these
appellants on various dates in 2017 and 2018. It was clearly observed in this letter
that the period of six months had lapsed in all the eight cases in which these two
appellants in LPA No. 61/2020 (Balbir Singh and Nagar Singh) had applied for EC
and advised them to submit a revalidated LoI from the agency concerned before
grant of the EC.
462. Let us consider the facts regarding the only appellant who was able to get
the mining plan processed, EC and made the deposit of 50%, Vikar Ahmad Dar
(LPA No. 64/2020 filed in the Srinagar Wing) who also admits that he has failed to
do so within the period required under the LoI.
463. We are informed that this appellant (Vikar Ahmad Dar) submitted the
mining plan on 13th November 2017 (more than a month after issuance of the LoI)
which was promptly approved by the competent authority on 15th November 2017
within two days of submission. The period of six months for compliance by Vikar
Ahmed Dar, of the three conditions in the LoI expired on 5th April 2018.
464. According to Mr F. A. Natnoo, ld. AAG, as per the web portal of the
DEIAA, Vikar Ahmad Dar has submitted his application for EC, only on the 11th
April 2018 almost five months after approval of the mining plan. The mandatory
period of six months from issuance of the LoI had also expired by this date.
465. It is urged by Mr. Z. A. Shah, Senior Advocate that the appellant was
granted EC on the 11th April 2018, which does not appear to be correct. No
material in support is forth coming on record.

186
466. So far as the deposit of the balance 50% of the bid amount the appellant
Vikar Ahmad Dar is concerned, it is again orally submitted that he deposited the
same on 29th July 2018 (almost ten months after issuance of the LoI).
467. On the other hand, the respondents have submitted that the balance 50% of
his bid amount was received by the DMO and forwarded to the Joint Director,
Kashmir only on the 29th June 2018 which was forwarded to the Director on 3rd
July 2018. Even this was beyond the six month period under the LoI.
468. The clearance from the Pollution Control Board was obtained on 27th
December, 2019. It is noteworthy that this was more than two years and four
months after issuance of the LoI on 5th October 2017.
469. The above narration of facts in LPA 56/2020 Chaman Lal v. State manifests
that behind all these vehement legal submissions, is the hard reality that the
appellants in this appeal have not cared to fulfill any of the conditions prescribed
under the Rules or as stipulated in the LoI.
470. We have also noted above that none of the appellants in LPA 62/2020
(Mohd. Ashore Mir & Ors. V. Union Territory) have deposited the balance bid
amount. They have also not applied for EC. Mohd. Shaban Bhat-appellant No.3
did not even submit a mining plan.
The position qua the other appellants is not much different.
471. Mr Natnoo has drawn our attention to the communication dated 4th January,
2019, informing Rakesh Kumar Chaudhary that he had failed to comply with the
rules and called upon him to deposit the balance 50% bid amount and obtain EC
within one month failing which appropriate action would be taken in the matter.
472. This communication dated 4th January, 2019 was assailed by Rakesh Kumar
Chaudhary by way of a second writ petition being OWP no.50/2019. Directions

187
were inter alia sought for and execution of mining leases in favour of the writ
petitioner and quashing of the communication dated 4th January, 2019; approval of
the DSR; issuance of the EC. The appellant also objected to the requirement for
public consultation required by the JK State Pollution Control Board.
473. OWP 50/2019 was listed before the Ld. Single Judge on 15th January, 2019,
when while ordering notice, the respondents were directed to finalize the case of
the EC of the petitioner Rakesh Kumar Chaudhary by the next date. A further
order was passed on 1st February, 2019 directing that the writ petition be listed
with OWP No.2648/2018 and that the respondent No.2 shall not act upon the
impugned notice dated 4th January, 2019. This writ petition is still pending.
474. OWP No.50/2019 was filed on 10th January, 2019 again long after expiry of
the period of six months after the issuance of the LoI on 5th Ocotber, 2017.
475. We find that in their absolute arrogance, the appellants who did not deposit
the balance fifty percent of the bid amount, do not give a whit of an explanation or
excuse for the same.
476. In this background, these appellants cannot be heard to say that the
appellants have conducted themselves with diligence and expedition, and, that the
respondents are responsible for the delay in the matter.
477. We find that the issue of delay being attributed to the State Government in
the processing of applications for grant of EC and consequentially the applicants
being entitled to consideration of their applications for renewal of concessions
dehors this requirement under the applicable rules was pressed before the Supreme
Court in the judgment reported at (1981) 2 SCC 205 (Para 13), State of Tamil
Nadu v. Hind Stone and Others. The Supreme Court rejected the submissions
with the following observations:

188
“13. Another submission of the learned counsel in connection with the

consideration of applications for renewal was that applications made
sixty days or more before the date of G.O.Ms. No. 1312 (2-12-1977)
should be dealt with as if Rule 8C had not come into force. It was also
contended that even applications for grant of leases made long before
the date of G.O.Ms. No. 1312 should be dealt with as if Rule 8C had
not come into force. The submission was that it was not open to the
Government to keep applications for the grant of leases and
applications for renewal pending for a long time and then to reject
them on the basis of Rule 8C notwithstanding the fact that the
applications had been made long prior to the date on which Rule 8C
came into force. While it is true that such applications should be
dealt with within a reasonable time, it cannot on that account be said
that the right to have an application disposed of in a reasonable tune
clothes an applicant for a lease with a right to have the application
disposed of on the basis of the rules in force at the time of the
making of the application. None has a vested right to the grant or
renewal of a lease and none can claim a vested right to have an
application for the grant or renewal of a lease dealt with in a
particular way, by applying particular provisions. In the absence of
any vested rights in anyone, an application for a lease has
necessarily to be dealt with according to the rules in force on the date
of the disposal of the application despite the fact that there is a long
delay since the making of the application. We are, therefore, unable
to accept the submission of the learned counsel that applications for
the grant of renewal of leases made long prior to the date of G.O.Ms.
No. 1312 should be dealt with as if Rule 8-C did not exist.”
(Emphasis by us)
478. We have elaborately considered the issue as to whether the respondents had
the power to either grant exemption from compliance with the conditions laid
down in the LoIs or to extend the period for compliance thereof, and have held that
no such power lay with the respondents to do so. Therefore, even if fault for the

189
delay in finalizing of the DSR and consequential inability in processing of the
application for EC could be laid at the door of the respondents, so far as the
appellants are concerned, nothing turns in their favour as a result.
479. In this background, any change effected to procedural requirements on
account of a judgment of the NGT also does not assist any of the bidders (the
appellants before us). Even otherwise, the appellant has not cared to approach the
court within six months period prescribed by in the rules and by the LoI.
480. Most appellants applied for ECs almost at the verge of expiry of the six
months period and delay for the same cannot be attributed to the respondents.
Delays on part of the Govt. officers, if any, in the instant case are inconsequential.
481. Significantly no reminder was sent for issuance of the DSR for which there
was an alternative as per the letters dated 14th March & 18th April, 2018 as above
by any of the appellants. Not a single highest bidder filed a petition within a period
of six months seeking any direction from this court to the respondents to ensure
that DSR was expedited and the EC granted within the period required by the rules
482. Clearly having commenced mining using the shield of Rule 104-A, the
appellants were not bothered about compliances with any of the mandatory
conditions laid down in the Rules, as notified in the auction notice and the LoIs.
We have no manner of doubt that these appellants were least interested in making
good their financial obligations of the huge amount owed by them as 50% of the
balance bid amount.
483. We completely agree with the observation of the learned Single Judge in
para-63 of the impugned judgment that the writ petitioners had an absolute and
legal obligation to deposit the remaining 50% of the bid amount irrespective as to
whether they have been granted EC or not by the SEIAA.

190
484. All those persons who have failed to deposit the 50% balance amount of the
bid amount and/ or obtain the clearances within the period of six months from the
date of LoI lost even the right of consideration for their applications and have to be
non-suited.
485. There is no cavil in saying that the compliance was delayed by a mere day,
or a month or few months. Delay is delay, irrespective of its extent and
consequences thereof know no exception or exemption.
486. For the foregoing reasons, we are unable to agree with the conclusion of the
learned Single Judge in para-46 of the judgment while dealing with issue No.(ii)
that the writ petitioners had a remedy in common law to seek compensation or
with the finding on issue No. iv that the appellants were not responsible for the
delay. For the reason that no contract had come into existence, the doctrine of
frustration was neither attracted nor applicable.
These conclusions are, therefore, set aside.
XIV Whether the respondents had made a representation and

promise to the appellants and would stand estopped from
withdrawing from it?
487. It has been contended before us by the appellants that the respondents had
held out the promise of grant of mining lease in the auction notice, that the
appellants were declared highest bidders in the auction and that they had deposited
amounts pursuant thereto. The appellants have vehemently contended that the
respondents are bound by their representations and promise to these bidders and
estopped from back tracking therefrom.
488. Mr Vikram Sharma, learned counsel for the appellant in LPA 53/2020, has
submitted that in the instant case, premised on the representation of the
respondents, that the appellant was entitled to a mining lease, he has materially

191
altered his position. It is submitted that there was an obligation on the respondents
to ensure that they facilitated fulfillment of the preconditions within the six months
period and granted mining lease to the appellant. In support of his submission, Mr.
Vikram Sharma placed reliance on the pronouncement of the Supreme Court
reported at AIR 1971 SC 1021 : Century Spinning & Manufacturing Company
Ltd., & anr. v. The Ulhasnagar Municipal Council and anr.
489. The question which arises is as to whether the respondents had at all made a
representation or held out a promise to grant mining leases to the appellants? And
further, even if it could be held that there was a promise or representation made by
the authorities to the appellants, does it give rise to any basis for holding the
government bound by the same? Even if made, what are the circumstances in
which the government can withdraw from its representation/ promise or change its
policy? The answer to all these questions is well settled.
490. In the cases in hand, we do not find a single submission in the writ petitions
setting out any representation or un-conditional promise on the part of the
respondents that the highest bidders would be granted mining leases irrespective of
whether they comported to the requirements of the Rules of 2016 or not. The very
Rules relied upon by the appellants prescribe the manner in which the lease has to
be granted and executed. This has not been done. On the contrary, the appellants
have admittedly failed to comply with the requirements under the rules.
491. Importantly there is also no averment at all as to how and where the
appellants have altered their position. Even on application of the principles in
Century Spinning Mills, there is thus no promise binding the respondents to grant
mining leases to the appellants.

192
492. The answer to this question is to be found in the pronouncement of the
Supreme Court in Century Spinning & Manufacturing Company Ltd., & anr. v.
The Ulhasnagar Municipal Council and anr, wherein the court held as follows:
“Public bodies are as much bound as private individuals to carry out

representations of facts and promises made by them, relying on
which other persons have -altered their position to their prejudice.
The obligation arising against an individual out of his representation
amounting to a promise may be enforced ex contractu by a person who
acts upon the promise : when the law requires that a contract
enforceable at law against a public body shall be in certain form or
be executed in the manner prescribed by statute, the obligation may
be if the contract be not in that form be enforced against it in
appropriate cases in equity. 'In Union of India & Ors. v. Mls.
IndoAfghan Agencies Ltd.(1) this Court held that the Government is
not exempt from the equity arising out of the acts done by citizens to
their prejudice, relying upon the representations as to its future
conduct made by the Government. This Court held that the following
observations made by Denning, J., in Robertson v. Minister of
Pensions(1) applied in India "The Crown cannot escape by saying that
estoppels do not bind the Crown for that doctrine has long been
exploded.
Xxxx xxxxx xxxx
If our nascent democracy is to thrive different standards of conduct

for the people and the public bodies cannot ordinarily be permitted.
A public body is, in our judgment, not exempt from liability to carry
out its obligation arising out of representations made by it relying
upon which a citizen has altered his position to his prejudice. xxx
xxx”
(Emphasis by us)

193
493. On this aspect, we may usefully also advert to the judgment of the Supreme
Court reported at (1997) 3 SCC 398, Shrijee Sales Corporation and Anr. V.
Union of India, wherein the Supreme Court observed that once public interest is
accepted as the superior equity which can override individual equity the principle
would be applicable 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 it has the power to withdraw from a 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.
494. In the judgment of the Supreme Court reported at (2006) 13 SCC 708, M. P.
Mathur v. D.T.C, the Supreme Court has held that promissory estoppel is based on
equity or obligations and is not a vested right. The Court has to strike a balance in
equity between individual rights on the one hand and the larger public interest on
the other. It has been held that if “there is a supervening public equity, the
Government would be allowed to change its stand and it has the power to
withdraw from a 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.” It was held that 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
doctrine acted on the basis of a notification, it should have known that such

194
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.
495. Let us examine the other part of the government decision. The respondents
have also taken the decision to henceforth grant mining licences only by e-auction.
So far as this change of policy is concerned, it would impact grant of mining leases
which fall in the realm of contractual matters.
496. The principles which apply to State functioning in matters of policy in

contractual matters have been considered in the pronouncement of the Supreme
Court reported at AIR 1991 SC 537: Kumari Shri Lekha Vidyarthi & Ors. V.
State of U.P. & Ors. It was observed as follows:
“It can no longer be doubted at this point of time that Article 14 of the
Constitution of India applies also to matters of governmental policy
and if the policy or any action of the Government, even
in contractual matters, fails to satisfy the test of reasonableness, it
would be unconstitutional. See Ramana Dayaram Shetty v. The
International Airport Authority of India and Ors., [1979] 3 SCR
1014 and Kasturi Lal Lakshmi Reddy v. State of Jammu and
Kashmir & Anr., [1980] 3 SCR 1338. In Col. A.S. Sangwan v. Union
of India and Ors., [1980] Supp. SCC 559, while the discretion to
change the policy in exercise of the executive power, when not
trammelled by the statute or rule, was held to be wide, it was
emphasised as imperative and implicit in Article 14 of the
Constitution that a change in policy must be made fairly and should
not give the impression that it was so done arbitrarily or by any
ulterior criteria. The wide sweep of Article 14 and the requirement of
every State action qualifying for its validity on this touch-stone,
irrespective of the field of activity of the State, has long been settled.
Later decisions of this Court have reinforced the foundation of this
tenet and it would be sufficient to refer only to two recent decisions of
this Court for this purpose.”
(Emphasis supplied)
497. The learned Single Judge has placed reliance on the following observations
of the Supreme Court in the judgment reported at AIR 1997 SC 2233: Premium
Granites vs. State of Tamil Nadu in support of the decision of the respondents,
wherein it was held as under:

195
“It is not the domain of the court to embark upon unchartered ocean
of public policy in an exercise to consider as to whether a particular
public policy is wise or a better public policy can be evolved. Such
exercise must be left to the discretion of the executive and legislative
authorities as the case may be. The court is called upon to consider
the validity of a public policy only when a challenge is made that such
policy decision infringes fundamental rights guaranteed by the
Constitution of India or any other statutory right.
xxxxx”
In the case in hand, the appellants are unable to make out violation of any
right by the decision of the respondents.
498. Mr F. A. Natnoo, ld. AAG, has placed reliance on the pronouncement of the
Gujarat High Court reported at 2014 (3) GLH 425 (paras 6.6, 10.10 and 10.12)
Patel Vishnubhai Maganbhai v. State of Gujarat. In this case the Government
changed the mode of disposal of minor minerals on the policy of first come first
served contained in Rule 8 of the Rules of 2010 to a public auction by issuance of
directions which was upheld. The observations recorded by the High Court read
thus:
“6.6 It is further submitted that though Chapter VIII under the heading
‘Miscellaneous’ contains Rules 69 and 70 provide for ‘disposal of
minor minerals by public auction in certain cases’ and ‘power of
government to give direction’, however, will not defeat right accrued
to the applicants under Rule 8 of the Rules, 2010. As per law, rules
prevalent at the time of receiving applications will apply, and any
inconsistency contained in the guidelines/directions issued by the
authorities of Department of Industry and Mines of State of Gujarat
with that of Act, 1957 and/or Rules, 2010 is to be ignored, and will
have no applicability whatsoever to the pending applications on
31.03.2010. Even Rule 69 does not empower any such authority to

196
issue direction or guidelines or to take any administrative action

contrary to Rule 8 of the Rules, 2010. There is no rationale behind
doing away with policy of first come first serve defeating the legitimate
expectation of petitioners for grant of mining lease in accordance with
Rules, 2010 and prevalent policy in larger public interest.
xxxxx
10.10 That affidavit filed by the respondent authority clearly revealed

that before issuance of instructions/guidelines/ directions, the matter
was placed for due deliberation including approval and sanction of
the higher authority of the Department and it was considered by task
force and Coordination cum Empowered Committee held under the
Chairmanship of the Chief Secretary on 09.09.2010 and thereafter it
was decided that all mineral bearing areas be put up in public
domain and procedure to be followed, and accordingly the
Commissionerate of Geology and Mining issued guidelines on
06.04.2011 qua disposal of applications received after 31.03.2010 for
major/minor mineral concession through blocks/auction and a
clarificatory instructions/ communication dated 01.10.2011 cannot be
said to be in any manner contrary to law. The said guidelines dated
06.04.2011 received approval of highest authority of the Department
of Mines and Industry as per note dated 01.04.2011 and the
contention raised by learned advocates for the petitioners that the
Collector is the only competent authority to issue
instructions/guidelines in the case of minor mineral is misconceived
and decision taken by highest authority cannot be faulted on such
contention. Therefore, it cannot be said that even any flaw is noticed
in decision making process.
10.12 The decisions viz. Central For Public Interest
Litigation [supra] and [ii] Natural resources Allocation [supra] for
which law laid down by Their Lordships of Apex Court in view of what
is interpreted and held in the foregoing paragraphs of of this judgment
on the context of Rules 8(4), 69 & 70 of the Rules, and particularly

197
when the State Government authorities have decided to put minor

minerals in public domain in a fair and transparent manner, it
cannot be said that law laid down by the Apex Court in the above two
decisions have any bearing on the facts of these cases.”
(Emphasis by us)
499. Coming to the issue of permissibility of change of policy, we note that the
legal position is that the Government stands permitted to change even industrial
policy if the situation so warrants. Such decisions changing policy had come up for
consideration in the judgments reported at AIR 1997 SC 3910 Pawan Alloys and
Casting Pvt. Ltd. V. U. P. State Electricity Board and others and (1990) 1 SCC
572, Sales Tax Officer and another v. Shree Durga Oils Mills and another.
500. In Pawan Alloys and Casting Pvt. Ltd., it has been observed by the
Supreme Court that merely because a resolution stood announced for a particular
period, it did not mean that the government could not amend and change the policy
under any circumstances. The notification can be amended or rescinded at any
point of time if the government felt that it was necessary to do so in public interest.
501. In Shri Durga Oil Mills and another, it was held that even an industrial
policy resolution can be changed if there is overriding public interest involved. In
this case, the State had contended that various notifications granting sales tax
exemptions to the dealers resulted in severe resource crunch. On a reconsideration
of the financial position, it was decided to limit the scope of the exemption
notifications issued under Section 6 of the Orissa Sales Tax Act. The Supreme
Court upheld the withdrawal of notification holding that it was done in public
interest and that the Court would not interfere in any action taken by the
Government in public interest. It was further observed that public interest must

198
override any consideration of private loss or gain and, therefore, the plea of change
of policy on the basis of resource crunch was sufficient for dismissing the case of
the assessee which was based on the doctrine of promissory estoppel.
502. The questions raised before this court find a complete answer in the words
of Supreme Court in the judgment reported at (2002) 2 SCC 188, Sharma
Transport v. Government of A.P and others, even in a case where a promise or
representation stood made. The Supreme Court has laid down the disclosure which
the government would be required to make before the court to enable it to take the
decision on the inequity which would result if the government was held to its
representation. It was held as follows:
"If it can be shown by the Government that having regard to

the facts as they have transpired, it would be inequitable to hold the
Government or public authority to the promise or representation
made by it, the court would not raise an equity in favour of the
promise and enforce the promise against the Government. The
doctrine of promissory estoppel would be displaced in such a case,
because on the facts, equity would not require that the Government
should be held bound by the promise made by it. But the Government
must be able to show that in view of the fact as has been transpired,
public interest would not be prejudiced. Where the Government is
required to carry out the promise the Court would have to balance the
public interest in the Governments carrying out the promise made to
the citizens, which helps citizens to act upon and alter their position
and the public interest likely to suffer if the promises were required
to be carried out by the Government and determine which way the
equity lies. It would not be enough just to say that the public interest
requires that the Government would not be compelled to carry out the
promise or that the public interest would suffer if the Government were
required to honour it. In order to resist its liability the Government
would disclose to the court the various events insisting its claim to be

199
exempt from liability and it would be for the court to decide whether
those events are such as to render it inequitable to enforce the
liability against the Government."
(Emphasis by us)
503. In this regard Mr F. A. Natnoo, ld. AAG, has placed reliance on
pronouncement of the Supreme Court reported at (1996) 5 SCC 268 : PTR
Exports (Madras) Pvt. Ltd. & Ors. v. Union of India & Ors. In this case the
petitioner was challenging a change in Government policy with regard to grant of
export licence contending that it had a legitimate expectation to consideration and
grant of his application in terms of the Government policy prevailing at the time
the application was made. The court rejected the contention of the petitioner and
held that the court would not bind the Government to its previous policy by
invoking the doctrine of legitimate expectation of the applicant for the licence
unless the change in policy is vitiated by malafide or abuse of power which the
applicant must plead and prove to the satisfaction of the court. The court also held
that doctrine of promissory estoppel is equally inapplicable to the facts and
circumstances of the case. We usefully extract the observations of the court as
follows:
“2.Shri Vaidyanathan, learned counsel, contended that the

Government had promised to grant MEE and NQE quotas for those
who upto date their quality of products by purchasing new machines
after expiry of 5 years life span or given promise that all those who
performed their applications MEE were entitled to NQE quota and
that, therefore, the respondents are estopped to recile from the
promise made to them. They cannot act in a way detrimental to their
legitimate expectations. We find no force in the contention. It is seen
that the change in the policy is as a result of GATT agreement with all
contracting countries. The quota system was available to export

200
garments and clothing to European countries, viz., U.S.A, Canada,

Norway etc. The Government took the policy that with a view to meet
more competitive quality in the foreign markets introduced FCFS
system giving 20% of the export. PPE was provided with 80% of the
export. The new dynamism in the policy would make the trade more
competitive and it will be in the best interest of the country and to
boost in export potentiality and foreign exchange, on account thereof
MEE and NQE quotas were eliminated and large allocation was
issued to PPE system and rest of 20% was marked for FCFS system. It
was also pointed that the Government encountered that MEE system
was beset with floods of false declarations of the productive capacity
by unscrupulous traders masquerading as exporters. Though action
was being taken against persons who committed fraud but it became
difficult to stop misutilisation of the scheme completely.
Consequently, MEE system was eliminated. The Government,
therefore, took policy to abolish NQE system so that the genuine
quota exporters could do business so as to stop the malady and to
preserve PPE and FCFS system.
3. In the light of the above policy question emerges whether the

Government is bound by the previous policy or whether it can revise
its policy in view of the changed potential foreign markets and the
need for earning foreign exchange? It is true that in a given, set of
facts, the Government may in the appropriate case be bound by the
doctrine of promissory estoppel evolved in Union of India Vs. Indo-
Afghan Agencies [(1968) 2 SCR 366]. But the question revolves upon
the validity of the withdrawal of the previous policy and introduction
of the new policy. The doctrine of legitimate expectations again
requires to be angulated thus: whether it was revised by a policy in
the public interest or the decision is based upon any abuse of the
power? The power to lay policy by executive decision or by
legislation includes power to withdraw the same unless in the former
case, it is by malafide exercise of power or the decision or action
taken is in abuse of power. The doctrine of legitimate expectation

201
plays no role when the appropriate authority is empowered to take a

decision by an executive policy or under law.xxxxxx It is therefore, by
exercise of the power given to the executive or as the case may be,
the legislature is at liberty to evolve such policies.
4. An applicant has no vested right to have export or import licences

in terms of the policies in force at the date of his making application.
For obvious reasons, granting of licences depends upon the policy
prevailing on the date of the grant of the licence or permit. The
authority concerned may be in a better position to have the overall
picture of diverse factors to grant permit or refuse to grant permission
to import or export goods. The decision, therefore, would be taken
from diverse economic perspectives which the executive is in a better
informed position unless, as we have stated earlier, the refusal is
mala fide or is an abuse of the power in which event it is for the
applicant to plead and prove to the satisfaction of the Court that the
refusal was vitiated by the above factors.
5. It would, therefore, be clear that grant of licence depends upon the

policy prevailing as on the date of the grant of the licence. The Court,
therefore would not bind the Government with a policy which was
existing on the date of application as per previous policy. A prior
decision would not bind the Government for all times to come. When
the Government are satisfied that change in the policy as necessary
in the public interest, it would be entitled to revise the policy and lay
down new policy. The Court therefore would prefer to allow free play
to the Government to evolve fiscal policy in the public interest and to
act upon the same. Equally, the Government is left free to determine
priorities in the matters of allocations or allotments or utilisation of
its finances in the public interest. It is equally entitled, therefore,. to
issue or withdraw or modify the export or import policy in
accordance with the scheme evolved. We, therefore, hold that the
petitioners have no vested or accrued right for the issuance of permits
on the MEE or NQE, nor the Government is bound by its previous

202
policy. It would be open to the Government to evolve the new schemes

and the petitioners would get their legitimate expectations
accomplished in accordance with either of the two schemes subject to
their satisfying the conditions required in the scheme. The High Court
therefore; was right in its conclusion that the Government are not
barred by the promises or legitimate expectations from evolving new
policy in the impugned notification.”
(Emphasis by us)
504. In this case the submission by the petitioner was interestingly premised on
pointing out the distinction between an agreement to lease and agreement of lease
and rested on the precedent of the Supreme Court reported at (1994) 2 SCC 497,
State of Maharashtra v. Atur India Private Limited. It was held herein that a
contract for a lease would be merely an agreement that such a conveyance shall be
entered into at a future date. The petitioner had pointed out that in case of a lease,
there must be a demise.
505. The respondents have amended the rules restricting auctions to e-mode only.
No challenge has been laid thereto.
506. The change of policy was thus not only bonafide but completely in public
interest and absolutely necessary.
507. Furthermore, none of the present appellants have argued that they were put
to any losses or adverse situation, let alone a position which cannot be rectified. As
noted, the appellants do not allege malafide against the respondents. Before us, the
appellants have utilized the shield of Rule 104-A of the Rules of 2016. Even
though the respondents have not granted any permission thereunder.
508. The appellants have illegally extracted and commercially exploited minerals
from the sites for which they had bid. The appeallants have thereby derived huge

203
commercial profits while appropriating the national resource to their individual
interest. Certainly, there is no alteration of position to their prejudice by the
appellants which could justify this court taking the decision that the respondents
must be held to their “representation”, if any, in the LoI to do justice between the
parties. The principles laid down in Rishi Kiran Logistics Pvt Ltd squarely apply
to the present cases.
509. We agree with the finding of the learned Single Judge on issue No. (iii) in
para (i) at page 36 of the impugned judgment and hold that the doctrine of
promissory estoppel is neither attracted nor has any application to the present
cases.
XV Cancellation of the entire auction process- permissibility &

validity
510. We now turn to an examination of the issue of the cancellation of the entire
bidding process by the respondents. We find that the instant appeals are not the
first cases where entire auctions stand cancelled. Prior hitherto auctions also have
been cancelled and the highest (or the lowest, as the case may be) bidders took the
cancellations to court. Authoritative pronouncements laying down both the
permissibilities and the boundaries of both the grounds of challenge and the
consideration by the court have been examined by us. We discuss hereafter the
principles laid down by the Supreme Court of India in these precedents.
511. In the judgment of the Supreme Court reported at (2016) 4 SCC 716, State
of Uttar Pradesh and another v. Al Faheem Meetex (P) Ltd, while considering
the validity of the cancellation of the entire tender process at the instance of the
bidders who had participated in the tender process for construction of a modern

204
slaughter house the Supreme Court also set down the legal principles of
permissibility of judicial interference in such matters.
512. A few necessary facts first. By a notice dated 26th May 2010, the Nagar
Nigam, Meerut invited tenders for Request for Qualification (RFQ) for
establishment of a new modern slaughterhouse at Village Ghosipur, Meerut on
Build-Operate and Transfer (BOT) basis. Three firms had submitted financial and
technical bids and the consultant had found all the three bids to be deficient. Bids
were invited afresh by a notice dated 29th June 2010. Five bids were received out
of which four companies were permitted to participate in the RFQ stage. The
Nagar Nigam issued the RFP on 29th September 2010 pursuant whereto tenders
were submitted by three firms. In its meeting dated 8th September 2010, the Bid
Evaluation Committee (BEC) had selected Al Faheem Meetex (P) Ltd.- respondent
No.1 as a developer out of the only two firms whose bids were found eligible for
consideration. Before the recommendations of the BEC could be placed before the
Cabinet of Ministers (the competent authority), the Finance Department pointed
out certain procedural irregularities. In this background, the BEC had taken a
decision on 22nd November 2010 cancelling its earlier decision dated 8th September
2010.
513. The Supreme Court held that the BEC (which had selected the respondent
No.1) was only a recommendatory body and that the matter had not reached the
competent authority for final decision. The action of the BEC in cancelling the
selection was sustained also for the reason that there were insufficient bidders and
it was necessary that the bidding process became more competitive. For this
reason, the Supreme Court decided that the decision could not be held to be unfair,
malafide or based on irrelevant considerations and held that the High Court had

205
gone wrong in finding fault with the decision of the BEC that it could not have
taken a decision without notice to the BEC.
514. A factor which had weighed with the Supreme Court was that it was almost
six years when the notice inviting tenders was published and that fresh tendering
was essential to ensure establishment of a modern slaughterhouse. In these appeals
as well the auctioning commenced in 2017, almost three years before the
cancellation of the auction.
515. A situation of cancellation of bidding and change of policy regarding
disposal of properties arose before the Supreme Court in the judgment reported at
(2007) 2 SCC 588, Ramchandra Murarilal Bhattad v. State of Maharashtra. In
this case, the decision was taken to reject all bids received regarding a public
project after the petitioner had satisfied their minimum eligibility criteria, the
technical and financial bids stood opened and the appellants had been found to be
the highest bidder. Thereafter, all tenders were cancelled which was challenged in
court. The Supreme Court had noted the issue arising for consideration (which was
similar to the issue raised in the present case) in the following terms:
“53. In this case, highest offer has not been rejected. A new policy
decision has been taken. Question as noticed herein is not as to
whether the offer of the Appellants should have been rejected but is
as to whether the Authority in law could have altered its policy in
regard to disposal of its properties. 'Public Trust Doctrine' was also
sought to be invoked by Mr. Nariman against the Authority and in this
behalf reliance has been placed on Bangalore Medical Trust Vs. B.S.
Muddappa & Ors. [(1991) 4 SCC 54]. This Court therein was dealing
with a master plan in the light of justifiability of exercise of
discretionary jurisdiction under the Town Planning Act. Having
regard to the provisions contained in Sub-Section (4) of Section 19 of
the Bangalore Development Authority Act, 1976 as also the fact that

206
the discretionary jurisdiction had been arbitrarily exercised, this

Court invoked the 'public trust doctrine' saying that although the State
is required to keep a vigil on the local body, but, thereby the power
thereunder cannot be stretched so as to entitle the Government to alter
any scheme and convert any site or power specifically reserved in the
statute in the Authority”.
(Emphasis by us)
516. In (2010) 6 SCC 303, Shimnit Utsch India Pvt. Ltd. And anr v. West
Bengal Infrastructure Development Corporation Ltd and ors, the first NIT was
issued in July 2003 by the States of West Bengal and Orissa for manufacture and
supply of HSRP fixing 06-08-2003 as the last date for submission of tender papers.
Four bidders participated, however, the finalization of the tender process could not
take place because of the interim order passed by the Supreme Court. The cases
could be decided by the Supreme Court finally only on 30 th November 2004. Of
the four bidders who had initially participated in the tender process, one withdrew.
As regards another (Promuk), Shimnit objected to their eligibility and approached
the Calcutta High Court obtaining an interim order from a Single Judge that the
tender process be not finalized.
517. As a result of the litigation, no substantial progress took place for two years
in finalization of process for which NIT was issued in July 2003 and practically
only two bidders in the entire tender process remained in fray.
518. During this period, a considerable number of indigenous manufacturers
obtained the requisite TAC from the approved institutions as per the statutory
requirements and thereby acquired the capacity and ability to manufacture the
product. In this background, the State Government formed an opinion that by
increasing competition, greater public interest could be achieved and accordingly
decided to cancel the first NIT and proceed afresh, doing away with conditions like

207
experience in foreign countries and prescribed minimum turnover from their
business.
519. This decision of the State Government was challenged before the Calcutta
High Court which observed that there was no challenge to the changed policy on
any of grounds of Wednesbury reasonableness or principle of legitimate
expectation or arbitrariness or irrationality. On the issue of sufficiency of
circumstances justifying departure from the previous stand, in Shimmit Utsch Ltd,
the Calcutta High Court recorded a finding that the reasons stated by the State
Government for departure from the condition of the first NIT did exist and
accepted the Government’s contentions that by increasing the area of competition,
greater public interest would be sub-served because of financial implications.
520. The Supreme Court repelled the challenge by Shimmit Utsch Ltd, to the
decision of the Calcutta High Court including on the ground of malafide, holding
as follows:
“52. We have no justifiable reason to take a view different from the

High Court insofar as correctness of these reasons is concerned. The
courts have repeatedly held that government policy can be changed
with changing circumstances and only on the ground of change,
such policy will not be vitiated. The government has a discretion to
adopt a different policy or alter or change its policy calculated to
serve public interest and make it more effective. Choice in the
balancing of the pros and cons relevant to the change in policy lies
with the authority. But like any discretion exercisable by the
government or public authority, change in policy must be in
conformity with Wednesbury reasonableness and free from
arbitrariness, irrationality, bias and malice.”
(Emphasis supplied)

208
521. The Supreme Court also laid down binding principles in Shimmit Utsch Ltd
on the manner in which authorities should proceed in the following manner:
“64. It is true that the State or its tendering authority is bound to

give effect to essential conditions of eligibility stated in a tender
document and is not entitled to waive such conditions but that does not
take away its administrative discretion to cancel the entire tender
process in public interest provided such action is not actuated with
ulterior motive or is otherwise not vitiated by any vice of
arbitrariness or irrationality or in violation of some statutory
provisions. It is always open to the State to give effect to new policy
which it wished to pursue keeping in view `overriding public interest’
and subject to principles of Wednesbury reasonableness.”
(Emphasis by us)
522. The Supreme Court has also had occasion to rule on the scope of judicial
review into the cancellation/discharge of a tender process after submission of
bids/tenders in the judgment reported at (2014) 3 SCC 760, Maa Binda Express
Carrier and another v. North East Frontier Railway and another. So far as the
right of participants in the bid is concerned, in para 8 of the judgment, the Supreme
Court has ruled as follows:
“8. The scope of judicial review in matters relating to award of

contract by the State and its instrumentalities is settled by a long line
of decisions of this Court. While these decisions clearly recognize that
power exercised by the Government and its instrumentalities in
regard to allotment of contract is subject to judicial review at the
instance of an aggrieved party, submission of a tender in response to
a notice inviting such tenders is no more than making an offer which
the State or its agencies are under no obligation to accept. The
bidders participating in the tender process cannot, therefore, insist
that their tenders should be accepted simply because a given tender is
the highest or lowest depending upon whether the contract is for sale

209
of public property or for execution of works on behalf of the

Government. All that participating bidders are entitled to is a fair,
equal and non-discriminatory treatment in the matter of evaluation
of their tenders. It is also fairly well-settled that award of a contract is
essentially a commercial transaction which must be determined on
the basis of consideration that are relevant to such commercial
decision. This implies that terms subject to which tenders are invited
are not open to the judicial scrutiny unless it is found that the same
have been tailor made to benefit any particular tenderer or class of
tenderers. So also the authority inviting tenders can enter into
negotiations or grant relaxation for bona fide and cogent reasons
provided such relaxation is permissible under the terms governing
the tender process.”
(Emphasis supplied)
523. We have already noticed above that cancellation of the entire bidding on
account of public interest in obtaining the best “realistic market price” stands
sustained by the Supreme Court in para 20 of the pronouncement in (2015) 13
SCC 233 : Rishi Kiran Logistics Pvt. Ltd v. Board of Trustees of Kandla Port
Trust & Ors. In para 21 it was ruled that the decision of the Port Trust therefore
was not arbitrary.
524. The applicable principle on which such cancellation must be tested is stated
in para 22 of Rishi Kiran Logistics thus:
“22. When competing claims are private interest v. public interest,

then in the case of disposal of public property the question would
be whether the right of the person, who has earned the right to the
public property in a public auction, is to be preferred over the right
of the public in ensuring that valuable public assets were not
disposed of except for a fair price and in a fair and transparent
manner. Whether this court should, in judicial review, sit in

210
judgment over the decision of a public body which is of the view

that it need not go further ahead with the tender process. It is true
if such a decision is taken without any reasons to support it, or
mere ipsi dixit, it would be arbitrary. In this case there are reasons.
The High Court analysed the reasons and has taken the view that
those reasons are valid. In our view in matters, particularly to the
disposal of valuable assets by the State when the State seeks to
explore the possibility of getting higher price.”
(Emphasis by us)
The Supreme Court has thus held that the action of the Port Authority was
not arbitrary or unreasonable being in over riding public interest. Clearly, it is open
to an authority to cancel an entire process of bidding or tendering for good reason,
public interest in obtaining optimal rates providing just cause for doing so.
525. Several judicial authorities are also available wherein the Supreme Court has
upheld decisions of authorities to reject a lowest bid or refuse to accept the highest
bid. The reasons and circumstances in which this was sustained shed valuable light
on the matters in hand. We consider some of such precedents hereafter.
526. In (2001) 1 SCC 451, W.B. SEB v. Patel Engineering Co. Limited, the
Corporation had chosen to reject the lowest tender. This decision was upheld by
the Supreme Court emphasizing the public interest in adherence to the rules and
conditions on which bids are invited, observing as follows:
“31. The submission that remains to be considered is that as the price

bid of Respondents 1 to 4 is lesser by 40 crores and 80 crores than that
of Respondents 11 and 10 respectively, public interest demands that the
bid of Respondents 1 to 4 should be considered. The Project
undertaken by the appellant is undoubtedly for the benefit of the public.
The mode of execution of the work of the Project should also ensure
that the public interest is best served. Tenders are invited on the basis

211
of competitive bidding for execution of the work of the Project as it

serves dual purposes. On the one hand it offers a fair opportunity to
all those who are interested in competing for the contract to execution
of the work and , on the other hand it affords the appellant a choice to
select the best of the competitors on a competitive price without
prejudice to the quality of the work. Above all, it eliminates
favourtism and discrimination in awarding public works to
contractors. The contract is, therefore, awarded normally to the lowest
tenderer which is in public interest. The principle of awarding contract
to the lowest tenderer applies when all things are equal. It is equally in
public interest as to adhere to the rules and conditions subject to
which bids are invited. Merely because a bid is the lowest the
requirement of compliance with the rules and conditions cannot be
ignored. It is obvious that the bid of Respondents 1 to 4 is the lowest of
bids offered. As the bid documents of Respondents 1 to 4 stand without
correction there will be inherent inconsistency between the particulars
given in the annexure and the total bid amount, it (sic they) cannot be
directed to be considered along with the other bids on the sole ground
of being the lowest.”
(Emphasis supplied)
527. A challenge to the cancellation of an entire tender came up for consideration
before the Supreme Court in the judgment reported at (2007) 2 SCC 588,
Ramchandra Murarilal Bhattad v. State of Maharashtra, wherein the court had
laid down the following parameters.
“49............ While exercising its jurisdiction of judicial review, the

Court is required to decide the cases before it, keeping the well
known principles therefor in mind and having regard to the fact
situation obtaining therein. No hard and fast rule can be laid down
therefor. Recently, in Noble Resources Ltd. Vs. State of Orissa and

212
Anr. [2006 (9) SCALE 181] this Court has noticed the power of
judicial review vis-a-vis contractual disputes, opining :
“28. Although terms of the invitation to tender may not be

open to judicial scrutiny, but the courts can scrutinize the
award of contract by the Government or its agencies in
exercise of their power of judicial review to prevent
arbitrariness or favouritism. [See Directorate of Education
and Ors. V. Educomp Datamatics Ltd. And Ors. 2004 (4) SCC
19]. However, the court may refuse to exercise its
jurisdiction, if it does not involve any public interest.
29. Although the scope of judicial review or the development

of law in this field has been noticed hereinbefore particularly
in the light of the decision of this Court in ABL International
Ltd. (supra), each case, however, must be decided on its own
facts. Public interest as noticed hereinbefore, may be one of
the factors to exercise power of judicial review. In a case
where a public law element is involved, judicial review may
be permissible.” xxxxx
51. The expansive role of Courts in exercising its power of judicial

review is not in dispute. But as indicated hereinbefore, each case
must be decided on its own facts.
xxxxx”
“10. In recent times, judicial review of administrative action

has become expansive and is becoming wider day by day. The
traditional limitations have been vanishing and the sphere of
judicial scrutiny is being expanded. State activity too is
becoming fast pervasive. As the State has descended into the
commercial field and giant public sector undertakings have
grown up, the stake of the public exchequer is also large
justifying larger social audit, judicial control and review by

213
opening of the public gaze; these necessitate recording of

reasons for executive actions including cases of rejection of
highest offers. That very often involves large stakes and
availability of reasons for action on the record assures
credibility to the action; disciplines public conduct and
improves the culture of accountability. Looking for reasons in
support of such action provides an opportunity for an
objective review in appropriate cases both by the
administrative superior and by the judicial process. The
submission of Mr. Dwivedi, therefore, commends itself to our
acceptance, namely, that when highest offers of the type in
question are rejected reasons sufficient to indicate the stand
of the appropriate authority should be made available and
ordinarily the same should be communicated to the
concerned parties unless there be any specific justification
not to do so.”
(Emphasis by us)
528. In Meerut Development Authority v. Assn. of Management Studies; (2009)
6 SCC 171, the decision related to disposal of public property by an
instrumentality of the State and the rights of a person submitting a tender. In this
context, the Court reiterated the essentiality of fairness and transparency in the
process inter alia holding as follows:
“26. A tender is an offer. It is something which invites and is

communicated to notify acceptance. Broadly stated it must be
unconditional; must be in the proper form, the person by whom tender
is made must be able to and willing to perform his obligations. The
terms of the invitation to tender cannot be open to judicial scrutiny
because the invitation to tender is in the realm of contract. However, a
limited judicial review may be available in cases where it is
established that the terms of the invitation to tender were so tailor

214
made to suit the convenience of any particular person with a view to

eliminate all others from participating in the biding process.
27. The bidders participating in the tender process have no other
right except the right to equality and fair treatment in the matter of
evaluation of competitive bids offered by interested persons in
response to notice inviting tenders in a transparent manner and free
from hidden agenda. xxxxx
28. It is so well settled in law and needs no restatement at our
hands that disposal of the public property by the State or its
instrumentalities partake the character of a trust. The methods to
be adopted for disposal of public property must be fair and
transparent providing an opportunity to all the interested persons
to participate in the process.
29. The authority has the right not to accept the highest bid and
even to prefer a tender other than the highest bidder, if there exist
good and sufficient reason, such as, the highest bid not
representing the market price but there cannot be any doubt that
the Authority's action in accepting or refusing the bid must be free
from arbitrarinesses or favouritism.”
(Emphasis supplied)
529. On the issue of fairness in procedure to maximize public interest, we may
also usefully refer to the pronouncement of the Supreme Court reported at (1993) 1
SCC 71, Food Corporation of India v. M/s Kamdhenu Cattle Feed Industries in
which it was held that even the highest bid can be ignored. In this case, Food
Corporation of India (FCI) and instrumentalities of the State invited tenders for
stock of damaged food grains in accordance with the terms and conditions
contained in the tender notice. The respondents’ bid was highest. But the appellant
being not satisfied about the adequacy of the amount offered in the highest tender,
instead of accepting any of tenders received by it, invited all the tenderers to

215
participate in negotiations. The respondent refused to revise the rate offered in its
tender. In the negotiations, FCI was offered an excess amount of Rs.20 lakhs. The
respondents filed a writ petition challenging FCI’s refusal to accept the tender
submitted by it contending that FCI having chosen to invite tenders, it could not
dispose of the stocks of damaged food grains by subsequent negotiations rejecting
the highest tender on the ground that the action was arbitrary and violative of
Article 14. The High Court had accepted the challenge.
530. The Supreme Court overturned the High Court decision and held that the
State and all its instrumentalities have to conform to Article 14 and that there is no
unfettered discretion in public law. It was held that the public authority possessed
powers only to be used for public good which imposed the duty to act fairly and to
adopt a procedure which is fair play in action. To satisfy the requirement of non
arbitrariness in State action, it is necessary to consider and give due weight to the
reasonable or legitimate expectations of the persons likely to be affected by the
decision or else that unfairness in the exercise of the power may amount to an
abuse or excess of power apart from affecting the bona fides of the decision in a
case where such decision could be exposed to challenge on the ground of
arbitrariness. The requirement of due consideration of legitimate expectation also
forms part of the principle of non-arbitrariness, a necessary concomitant of the rule
of law.
531. So far as the view of the authorities regarding adequacy of the price offered
by a tenderer, the claim of the highest tenderer and the challenge to the
negotiations with the other tenderers is concerned, in para 10 of the judgment, the
Supreme Court upheld the action of the procedure adopted by FCI observing as
follows:

216
“10. From the above, it is clear that even though the highest
tenderer can claim no right to have his tender accepted, there being
a power while inviting tenders to reject all the tenders, yet the power
to reject all the tenders cannot be exercised arbitrarily and must
depend for its validity on the existence of cogent reasons for such
action. The object of inviting tenders for disposal of a commodity is
to procure the highest price while giving equal opportunity to all
the intending bidders to compete. Procuring the highest price for
the commodity is undoubtedly in public interest since the amount
so collected goes to the public fund. Accordingly, inadequacy of the
price offered in the highest tender would be a cogent ground for
negotiating with the tenderers giving them equal opportunity to
revise their bids with a view to obtain the highest available price.
The inadequacy may be for several reasons known in the
commercial field. Inadequacy of the price quoted in the highest
tender would be a question of fact in each case. Retaining the
option to accept the highest tender, in case the negotiations do not
yield a significantly higher offer would be fair to the tenderers
besides protecting the public interest. A procedure wherein resort is
had to negotiations with the tenderers for obtaining a significantly
higher bid during the period when the offers in the tenders remain
open for acceptance and rejection of the tenders only in the event of
a significant higher bid being obtained during negotiations would
ordinarily satisfy this requirement. This procedure involves giving
due weight to the legitimate expectation of the highest bidder to have
his tender accepted unless outbid by a higher offer, in which case
acceptance of the highest offer within the time the offers remain open
would be a reasonable exercise power for public good.”
(Emphasis supplied)
532. The Supreme Court has also had occasion to examine a challenge to the
relaxation of the eligibility criteria in the case reported at (1999) 1 SCC 492,
Raunaq International Ltd. V. I.V.R. Construction Ltd. And others. The Court

217
noted that the challenger I.V.R. Construction Ltd also did not fulfill the qualifying
criteria. So far as award of contract by both private and public bodies are
concerned, the Supreme Court had considered the paramount considerations in
Para 9 in the following terms.
“9. The award of a contract, whether it is 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. These 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;
(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.
Even when the State or a public body enters into a commercial
transaction, considerations which would prevail in its decision to
award the contract to a given party would be the same. However,
because the State or a public body or an agency of the State enters
into such a contract, there could be, in a given case, an element of
public law or public interest involved even in such a commercial
transaction.”

218
(Emphasis supplied)
533. In para 10, given the nature of the work involved in the case, the court
expounded on what would constitute element of public interest observing as
follows:
“10. What are these elements of public interest? (1) Public money
would be expended for the purposes of the contract; (2) The goods or
services which are being commissioned could be for a public
purpose, such as, construction of roads, public buildings, power
plants or other public utilities. (3) The public would be directly
interested in the timely fulfillment of the contract so that the services
become available to the public expeditiously. (4) The public would
also be interested in the quality of the work undertaken or goods
supplied by the tenderer. Poor quality of work or 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 or public
money and delaying the availability of services, facilities or goods.
e.g. A delay in commissioning a power project, as in the present
case, could lead to power shortages, retardation of industrial
development, hardship to the general public and substantial cost
escalation.”
534. On the issue as to whether the price offered should be the sole criteria for
awarding a contract, in Raunaq International, the Supreme Court has made an
important declaration of the binding principles when it stated as follows:
“16. It is also necessary to remember that price may not always be

the sole criterion for awarding a contract. Often when an evaluation
committee of experts is appointed to evaluate offers, the expert
committee’s special knowledge plays a decisive role in deciding
which is the best offer. Price offered is only one of the criteria. The

219
past record of the tenderers, the quality of the goods or services

which are offered, assessing such quality on the basis of the past
performance of the tenderer, its market reputation and so on, all play
an important role in deciding to whom the contract should be
awarded. At times, a higher price for a much better quality of work,
can be legitimately paid in order to secure proper performance of
the contract and good quality of work-which is as much in public
interest as a low price. The court should not substitute its own
decision for the decision of an expert evaluation committee.”
(Emphasis supplied)
535. It is therefore well settled that public property has to be disposed of by a
process that is open and transparent. The participants in the auction or tender
process are entitled only to fair, equal and non-discriminatory treatment in
evaluation of their offer. The award of the contract has to be tested on commercial
considerations. Even the highest bidder/lowest tenderer cannot claim an absolute
or exclusive right to award of the contract. The authority calling for bids/tenders
is bound by the terms thereof. However, it has the discretion to cancel the process
subject to its action not being motivated by malafide or ulterior motive. Its action
should not be arbitrary or irrational or subject to Wednesbury unreasonableness.
The cancellation of process should also be free from favouritism. The cancellation
of the process could be the result of a change of policy and rejection of a bid or
tender could be guided by larger concerns of public interest.
536. In the present case, we are concerned with distribution of a valuable natural
resource and regulation of rights to exploit the same for commercial purposes.
Undeniably the interests of the public at large, preservation of the resources and
protection of the environment must override all individual interests emanating
from a individual commercial profit motives.

220
537. The above facts establish that Auctions by the e-mode are the most efficient,
efficacious and transparent mode of award of contracts. An e-auction enables wide
geographic participation by the most talented and experienced bidders, maximizes
competition and ensures fetching of best rates enhancing public interest, and
increasing revenues. Not a word has been addressed before us by the appellants
assailing this decision of the respondents. The e-auction ensures widest possible
circulation of the auction notice. The process is much faster than the physical
auction. The platform of e-auction ensures lawful playing field to all the
participants subjectivity in the evaluation of the bids is completely eliminated and
selection of the best bidder is by objective process. The minimization of human
interaction and interface eliminates subjective association. There can be no manner
of doubt that the e-mode of conducting an auction is completely principle based,
efficacious and most accessible inasmuch as participants do not have to physically
travel to the place of auction and face no barriers.
538. The learned Single Judge has found that the respondents have held
threadbare discussions and obtained reports from all relevant quarters; kept the
pending litigation and interim directions issued in the case of Radha Krishan in
their consideration and thereafter taken the informed decision to the effect that the
provision in the Rules permitting grant of mining leases by open auction was
required to be amended and competitive bidding should be invited by seeking e-
auction only. The learned Single Judge has also considered the material before the
authorities regarding possibility of cartelization and intimidation having laid down
in the process of open auction and also the default by the bidders who had
participated in the auctions and had failed to complete the formalities despite
repeated opportunities.

221
539. In this background, the learned Single Judge in para 68 of the impugned
judgment has concluded that the decision to scrap the earlier auction of 2016/2017
and the policy decision to allot mining leases only by e-auction was the most
potent, fair, transparent and viable mode of grant of public largess.
Nothing has been pointed out to us which could enable this Court to take a
contrary view.
XVI Failure to issue notice to show cause-whether violation of

principles of natural justice-impact on impugned decision.
540. All the appellants in the instant cases have assailed the action of the
respondents for failing to abide by principles of natural justice on two pronged
objections. We examine the first objection on behalf of the appellants that they
were not put to notice regarding the action of the cancellation of the bids. In
support of this submission, reliance is placed on the pronouncement of the
Supreme Court reported at (2007) 2 SCC 181 (para 29), Rajesh Kumar and others
v. Dy. CIT and others.
541. Let us first and foremost remind ourselves of the procedure which was
required to be followed by the respondents. This procedure is laid down in the
Jammu and Kashmir Minor Mineral Rules 1962 framed under legislative
mandate. The terms and conditions for grant of mineral concession through auction
are stipulated in Rule 55. Sub rule (7) of Rule 55 clearly mandates that on
completion of the bid process i.e. fall of the hammer, the Chairman may
‘provisionally’ accept the highest bid offered and send his recommendations to the
Director. As per sub rule (9) of Rule 55, once a bid is ‘provisionally’ accepted, the
Director shall issue LoI to the bidder to complete the formalities as are required for
grant of minor minerals under Rules within a period of six months.

222
542. It is only after the formalities laid under Rule 26(9) and 55, have been
completed in terms of Rule 55(9) that the bid would be finally accepted and the
occasion for consideration of the application for grant of mining lease be arise.
543. So far as the disposal of the application for grant of mining lease is
concerned, Rule 30 prescribes that the same shall be within twelve months from
the date of its receipt.
544. It is Rule 31 which prescribes that the competent authority may refuse to
grant any mining lease “subject to reasons to be recorded and communicated to
the applicant in writing”’. Thus, the rules specifically prescribe both the stage at
which and extent of compliance with the principles of natural justice. Under the
Rules, it is only after the bidder has completed the formalities and pre-conditions,
the bid has been finally accepted and consideration is being accorded for grant of
mining lease, that reasons have to be recorded and communicated to the applicant
in writing.
545. Significantly, and it is admitted before us that, the appellants failed to
comply with the requirements of the LoI within the mandatory period of six
months.
546. We have found that no authority had the power of extending the time for
compliance of these conditions. Clearly, the stage of issuance of the notice to show
cause and an opportunity to do so would have arisen only if the bidders had
complied with the mandatory conditions under the LoI.
547. Is there substance, therefore, in the absolute proposition urged by the
appellants that the respondents under all circumstances have to comply with the
principles of natural justice?

223
548. The principles on which these contentions must be examined are best stated
in the words of Justice V. R. Krisha Iyer in the judgment reported at (1977) 2 SCC
256, The Chairman, Board of Mining Examination and Chief Inspector of
Mines and another v. Ramjee when it was held as follows:
“13. …….. Natural justice is no unruly horse, no lurking landmine,

nor a judicial cure-all. If fairness is shown by the decision-maker to
the man proceeded against, the form, features and the fundamentals of
such essential processual propriety being conditioned by the facts and
circumstances of each situation, no breach of natural justice can be
complained of. Unnatural expansion of natural justice, without
reference to the administrative realities and other factors of a given
case, can be exasperating. We can neither be finical nor fanatical
but should be flexible yet firm in this jurisdiction. No man shall be
hit below the belt — that is the conscience of the matter.
14. ……... But then we cannot look at law in the abstract or natural
justice as a mere artifact. Nor can we fit into a rigid mould the
concept of reasonable opportunity………..
15. These general observations must be tested on the concrete facts of
each case and every minuscule violation does not spell illegality. If
the totality of circumstances satisfies the Court that the party visited
with adverse order has not suffered from denial of reasonable
opportunity the Court will decline to be punctilious or fanatical as if
the rules of natural justice were sacred scriptures.”
(Emphasis by us)
549. We find that it is well settled that principles of natural justice do not
mandatorily have to apply to every decision taken by the authorities. In the
judgment of the Division Bench of High Court of Andhra Pradesh reported at AIR
1981 AP 165, Sri Rama Engineering Contractors v. Construction Engineer,
Civil Engineering, Department of Space, Govt. of India, Sriharikota, Nellore
and another, the tender submitted by the petitioner had been found to be lowest,

224
yet the contract was awarded to the respondent No. 2 whose tender was above that
of the petitioners. The court was called upon to consider the validity of the
acceptance of a tender of the second respondent for construction of a group of
houses for housing the employees of the space project and issuance of directions to
the respondents to accept the petitioners tender. The petitioner had challenged this
decision of the construction engineer inter alia on grounds of violation of
principles of natural justice. The court observed as follows:
“16. …..There is a practical reason also why rules of natural justice

should not apply to the facts of this case. The petitioner was only one
among several tenderers. His tender was rejected on the basis of his
relative unsuitability. If principles of natural justice should apply to
this case, notices should go to all the competing tenderers inviting
their claims and objections. Their replies must be collected, collated
and considered. Relative assessment of tenderers should be made. All
that certainly means postponement of the decision by a few months to
award the contract to build houses. This is a wholly unreasonable way
of going about building houses and certainly not at all the way to build
bridges. Natural justice applied to such situations would" turn into a
stumbling-block for the efficient and effective exercise of State
power. Natural justice must be envisaged by the Courts as a canal
through which State power may freely flow releasing its energy for
the benefit of the citizens and not as a dam to hold it back. This time-
consuming and self-defeating process would clearly rule out the
applicability of principles of natural justice to the facts of this case.
De Smith did say, "clearly not every decision affecting individual
interests has to be preceded by a priori notice and an opportunity to
be heard." (see De Smith's Constitutional Law and Administrative
Law, III Edition, page 566.)”
(Emphasis by us)

225
550. In (2007) 2 SCC 181 : Rajesh Kumar and others v. Dy. CIT and others, the
Supreme Court has observed that exceptions to these rules are required to be
provided for either expressly or by necessary implication. The Supreme Court has
specifically observed that ‘while complying the principles of natural justice, the
Court must bear in mind the theory of useless formality and the prejudice
doctrine.’
551. It is trite that principles of natural justice cannot be mechanically applied. In
the judgment reported at AIR 1968 SC 851, Union of India and others v. P. K.
Rao and others, the Supreme Court had ruled that “the extent of an application of
the doctrine of natural justice cannot be imprisoned within the straitjacket of a
rigid formality. The application of the doctrine depends on the nature of the
jurisdiction conferred on the administrative authority, upon the character of the
rights of the persons effected, the scheme and policy of the statute and other
relevant circumstances disclosed in the particular case.”
552. In this regard, we may also usefully advert to the pronouncement of the
Supreme Court reported at (2006) 8 SCC 647, Punjab National Bank and others
v. Manjeet Singh and anr. The case arose in a proceeding in which trade unions
had participated. The decision ultimately reached by the Industrial Tribunal was
assailed by individual workmen contending that they had not been made party to
the reference and submitted that there was violation of principles of natural justice.
This plea was rejected by the Supreme Court holding that:
“17. In an industrial dispute referred by the Central Government

which has an all-India implication, individual workmen cannot be
made party to a reference. All of them are not expected to be heard.
The unions representing them were impleaded as parties. They were
heard. Not only were the said unions heard before the High Court, as

226
noticed hereinbefore from a part of the judgment of the High Court,

they had preferred appeals before this Court. Their contentions had
been noticed by this Court. As the award was made in the presence of
the unions, in our opinion, the contention of the respondents that the
award was not binding on them cannot be accepted. The principles of
natural justice were also not required to be complied with as the
same would have been an empty formality. The court will not insist on
compliance with the principles of natural justice in view of the binding
nature of the award. Their application would be limited to a situation
where the factual position or legal implication arising thereunder is
disputed and not where it is not in dispute or cannot be disputed. If
only one conclusion is possible, a writ would not issue only because
there was a violation of the principles of natural justice.”
(Emphasis by us)
553. It is well settled that a judicial precedent has to be examined and applied in
the context of the fact situation which was raised therein. Mr. F. A. Natnoo, ld.
AAG, has relied on the pronouncement of the Supreme Court in (2004) 8 SCC 579
Petroleum Corporation Ltd. Vs. N. R. Vairamani & Others (para 9) and (2003)
11 SCC 584 Ashwar Kumar Singh Vs. UPSC (Para 10) in support of this
submission.
554. One very important factor in the present case is that there is no dispute to
any of the material facts. While the writ petitioners/appellants made no disclosure
of facts in their writ petitions, they do not dispute the factual narration laid down
by the respondents regarding their failure to complete the formalities as required
under Rule 26(2) and Rule 55(9).
555. An exception to the requirement of compliance with the principles of natural
justice stands drawn also where the facts (as in the present cases) are undisputed.

227
556. We extract hereunder the binding principles of the law laid down by the
Supreme Court reported at (1999) 6 SCC 237, M. C. Mehta v. Union of India
hereafter. It was held in para 22 (Pages 246, 247) as follows:
“More recently Lord Bingham has deprecated the ‘useless formality’

theory in R. v. Chief Constable of the Thames Valley Police Forces, ex
p Cotton [1990 IRLR 344] by giving six reasons. (See also his article
‘Should Public Law Remedies be Discretionary?’, 1991 PL, p. 64.) A
detailed and emphatic criticism of the ‘useless formality theory’ has
been made much earlier in ‘Natural Justice, Substance or Shadow’ by
Prof. D.H. Clark of Canada (see 1975 PL, pp. 27-63) contending
that Malloch [Malloch v. Aberdeen Corpn., (1971) 1 WLR 1578 :
(1971) 2 All ER 1278 (HL)] and Glynn [Glynn v. Keele University,
(1971) 1 WLR 487 : (1971) 2 All ER 89 (Ch D)] were wrongly
decided. Foulkes (Administrative Law, 8th Edn., 1996, p. 323), Craig
(Administrative Law, 3rd Edn., p. 596) and others say that the court
cannot prejudge what is to be decided by the decision-making
authority. De Smith (5th Edn., 1994, paras 10.031 to 10.036) says
courts have not yet committed themselves to any one view though
discretion is always with the court. Wade (Administrative Law, 5th
Edn., 1994, pp. 526-30) says that while futile writs may not be issued,
a distinction has to be made according to the nature of the decision.
Thus, in relation to cases other than those relating to admitted or
indisputable facts, there is a considerable divergence of opinion
whether the applicant can be compelled to prove that the outcome will
be in his favour or he has to prove a case of substance or if he can
prove a ‘real likelihood’ of success or if he is entitled to relief even if
there is some remote chance of success. We may, however, point out
that even in cases where the facts are not all admitted or beyond
dispute, there is a considerable unanimity that the courts can, in
exercise of their ‘discretion’, refuse certiorari, prohibition,
mandamus or injunction even though natural justice is not followed.
We may also state that there is yet another line of cases as in State

228
Bank of Patiala v. S.K. Sharma [(1996) 3 SCC 364 : 1996 SCC (L&S)
717] , Rajendra Singh v. State of M.P. [(1996) 5 SCC 460] that even
in relation to statutory provisions requiring notice, a distinction is to
be made between cases where the provision is intended for individual
benefit and where a provision is intended to protect public interest. In
the former case, it can be waived while in the case of the latter, it
cannot be waived.”
(Emphasis by us)
557. Again in (2005) 5 SCC 337, Viveka Nand Sethi v. Chairman, J&K Bank
Ltd, it was held that when facts are admitted, an enquiry would be an empty
formality. The principles of natural justice are thus required to be complied with
in a case having regard to the fact situation obtaining therein. It cannot be applied
in a vacuum without reference to the relevant fact and circumstances.
558. In the pronouncement of the Supreme Court reported at (2005) 3 SCC 409,
Karnataka State Road Transport Corporation and another v. S. G. Kotturappa
and another, also, it was held that the principle of natural justice are not required
to be complied with if it will lead to compliance with an empty formality.
559. We note that apart from vehement submissions that there was no compliance
with the principles of natural justice, the appellants before us have not been able to
point out as to how the action or decision of the respondents could have been
different if they had been granted a hearing.
560. For the reasons that the appellants had failed to comply with prescription of
Rule 26(2) and Rule 55(9) and the LoI, the stage for consideration and acceptance
of the bid had not even arisen. The appellants have not asserted any loss or
prejudice on account of any act or omission on the part of the respondents. There is
not the remotest suggestion that the process adopted or the decision taken is either

229
malafide or that it is intended to favour someone. It is not appellants’ case that it is
based irrelevant consideration or is contrary to any statutory provion. Given the
material considered by the respondents, it cannot be said that the decision taken
was arbitrary or irrational. On the contrary, the decision taken is in public interest.
In taking the decision, the authorities have acted both reasonably and responsibly
in the matter.
561. In similar facts as at present, in its judgment reported at (1996) 10 SCC 405,
Rajasthan Cooperative Diary Federation Ltd v. Shri Maha Laxmi Mingrate
Marketing Service Pt. Ltd and others, the Supreme Court also rejected the
objection of the respondent regarding violation of principles of natural justice for
the reason that no prefixation hearing was given. In this regard, in para 7, the
Supreme Court held as follows:
“7. The High Court was also not right in importing the doctrine of
audi alteram partem in these circumstances. If the conduct of
respondent No.1 was such that it did not inspire any confidence in
the appellant, the appellant was entitled to decline entering into any
legal relationship with respondent No.1 as its selling agent. The
Letter of Intent merely expressed an intention to enter into a
contract. If the conditions stipulated in the Letter of Intent were not
fulfilled by respondent No. 1 and if the conduct of respondent No.1
was otherwise not such as would generate confidence, the appellant
was entitled to withdraw the Letter of Intent. There was no binding
legal relationship between the appellant and respondent No. 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 No 1 or not.”
(Emphasis supplied)

230
562. We may usefully advert to the judgment of the Supreme Court reported at
(2016) 6 SCC 408 : Centre for Public Interest Litigation v. Union of India (para
21) which has been placed before us by Mr F. A. Natnoo, learned AAG. In para 21
of this judgment, the Supreme Court held thus:
“41. The power of judicial review of the executive and legislative

action must be kept within the bounds of constitutional scheme so that
there may not be any occasion to entertain misgivings about the role of
judiciary in outstepping its limit by unwarranted judicial activism
being very often talked of in these days. The democratic set-up to
which the polity is so deeply committed cannot function properly
unless each of the three organs appreciate the need for mutual respect
and supremacy in their respective fields.’
xxxxxxxx
138. However, we hasten to add and do not wish to be

misunderstood so as to infer that howsoever gross or abusive may
be an administrative action or a decision which is writ large on a
particular activity at the instance of the State or any other authority
connected with it, the Court should remain a passive, inactive and a
silent spectator. What is sought to be emphasised is that there has
to be a boundary line or the proverbial “laxman rekha” while
examining the correctness of an administrative decision taken by
the State or a central authority after due deliberation and
diligence which do not reflect arbitrariness or illegality in its
decision and execution. If such equilibrium in the matter of
governance gets disturbed, development is bound to be slowed
down and disturbed specially in an age of economic liberalisation
wherein global players are also involved as per policy decision.”
(Emphasis by us)
563. The situation before us is akin to consideration of tenders for construction
contracts wherein preconditions for eligibility are laid down and technical and
financial bids are invited. It is only if a tenderer satisfies the eligibility conditions,
his technical bid is evaluated and, if found feasible, that the authority inviting
tenders proceeds to examine the tenderers’ financial bids. If a person fails at either
of the previous stages, there would be no question of considering his financial bids.

231
564. Similarly in the present case, upon failing to comply with the essential
conditions laid down in the Rules, notified in the notices of auction and reiterated
in the LoI, would the bidder be entitled to consideration of his offer? Having failed
to comply with the preconditions, the issues and stage for consideration of the
applications of the appellants did not arise. There was, therefore, also no need to
follow the procedure prescribed under the Rule 31.
565. Furthermore, as no bid had been finally accepted, there was no occasion for
cancellation thereof. The violations also being admitted, there was no requirement
to issue notice to show cause or grant hearing to the appellants. In this background,
to insist upon compliance of principles of natural justice despite the admitted
breach by the appellants, would really be in the nature of requiring compliance of a
useless and empty formality.
566. In this regard, we may note the view taken by the Supreme Court in (2016) 4
SCC 716 : State of Uttar Pradesh v. AL Faheem Meetex P Ltd, wherein the court
was examining a challenge to a similar cancellation of the bidding process before
award of the contract. The Supreme Court held that inasmuch as there was no
acceptance of bid of the appellant by the competent authority, the decision
making process had not reached finality. Therefore, there was no requirement of
issuing notice to the appellant. It is the same position in the case in hand.
567. In the facts of the present cases, we are, therefore, unable to hold that the
action of the respondents was bad for the reason that there was violation of
principles of natural justice as the requirement of issuance of notice was not
complied with by the respondents inviting interference by us.

232
XVII Failure to give reasons-non compliance with principles of natural

justice- whether impacts present cases
568. The second objection of violation of principles of natural justice is premised
on the requirement of giving reasons for the impugned order. The submission is
that respondents have violated this requirement.
569. Elaborate arguments have been made by Mr. Z. A. Shah, Mr. Altaf Naik,
Mr. P. N. Raina, ld. Senior Counsels, as well as Mr. Abhinav Sharma, Mr. Vikram
Sharma and Mr. Hakim Suhail Ishtiyaq, Advocates that the respondents were
required to record reasons and communicate them to the bidders in writing under
Rule 31 before rejecting the highest bids.
570. Mr Z.A. Shah, learned senior counsel has placed reliance on the
pronouncement of the Supreme Court in AIR 1952 SC 16 Commissioner of Police
vs. Gordhan Dass Bhanji to contend that the orders scrapping of auction was not
passed by the competent authority.
571. It has further been submitted by Mr Z. A. Shah, learned Senior Counsel that
upon scrapping of the auction by the order dated 26th February 2019, a
consequential order under Rule 31 refusing the mining lease to the bidders by the
Competent Authority i.e., Director was mandatorily required.
572. In this regard, Mr. Z. A. Shah, Senior Advocate has placed reliance on the
pronouncement of the Supreme court reported at (1990) 3 SCC 280 (paras 9 & 10),
Star Enterprises v. City and Industrial Development Corporation of
Maharashtra Ltd.
573. Mr Abhinav Sharma ld. Counsel has placed reliance on the judgment of the
Supreme Court reported at AIR 1976 SC 789 (para 18) Hukum Chand Shyam Lal
vs. Union of India & Ors. in support of his submission that once a statute requires
something to be done in a particular manner or mode, it has to be done in that mode

233
or not at all. The submission is that in the instant case, under Rule 42, only the
Director, Geology was the competent authority to pass the orders in the present
case.
574. There can be no dispute at all with the well settled principle that once a
statute requires a thing to be done in a particular manner, it has to be done in that
manner or not at all. However, in the instant case, the stage for consideration of the
applications under Section 31 did not reach as the appellants and bidders failed to
comply with the requirements of the Rules and as communicated in the LoI’s
issued to them.
575. It has been additionally urged by Mr Vikram Sharma that in the present
case, the order dated 26th February, 2019 only says that the auction was “scrapped”
and that this was impermissible. In support of his submission, Mr Sharma has
placed reliance on the pronouncement of the Supreme Court reported at AIR 1991
SC 537 : Kumari Shri Lekha Vidyarthi & Ors. V. State of U.P. & Ors.
576. Mr Vikram Sharma, ld. counsel, has contended that under Rule 42, the
authority to grant mining lease for areas upto 10 hectares has been designated as
the Director. It is urged that, in the instant cases, only the director as the competent
authority could have refused to grant the mining lease that too, strictly in
accordance with Rule 31. It is pointed out that the letter dated 7th February, 2019
which was issued by the Director. Mr. Sharma, contends that the letter dated 26th
February, 2019 has been issued by an officer of the designation of Under Secretary
and not the Director.
A similar objection (as in the present case) was taken in (2007) 2 SCC 588
Ramchandra Murarilal Bhattad v. State of Maharashtra, that the cancellation of
tenders was effected by the Govt. whereas the Commissioner was the competent

234
authority. We extract hereunder the illuminating factual observations in this case
which read thus:
“55. Lastly, it was urged that the petition is incompetent because the
provisions of section 46 of the Specific Relief Act have not been
complied with, namely, the petitioner has not shown that he made a
demand for justice and that it was denied.
56. The demand and denial which section 46 requires are matters
of substance and not of form. In our opinion, there was a substantial
demand here and it is clear that there was a denial. Soon after the
order of cancellation was intimated to the petitioner he instructed his
solicitors to write to the Commissioner and enquire why the
permission granted had been so arbitrarily cancelled. This was on the
18th November, 1947. The reply dated 3/4th December, 1947, was that
the cancellation was under the orders of Government and that they
should be approached in the matter. Government was approached. The
petitioner's solicitors wrote to the Home Minister on the 9th
December, 1947, and said :-
"Our client has not been informed of any reasons which had moved the
Government to direct the cancellation of the permission. Our client
was really entitled to be heard in the matter...Our client desires to
present his case before you and he shall feel obliged if you give him an
interview..."
57. The Secretary to the Home Department replied on the 12th of

January, 1948, that the Commissioner was directed to cancel the
permission in view of numerous protests which Government received.
This was replied to on the 16th of February, 1948, and the petitioner's
solicitors said :-
"Our client feels that he has not been treated fairly and that justice has
been denied to him."
58. The only reply to this was :-

235
"I am directed to inform you that Government does not wish to add
anything to the reply already given to you."
59. The correspondence read as a whole contains a clear demand
for justice and a denial. It is true the actual demand was not made to
the Commissioner nor was the denial by him but he clearly washed
his hands of the matter by his letter of the 3rd/4th December, 1947,
and referred the petitioner to Government under whose orders he
said he was acting. The demand made to Government and the denial
by them were therefore in substance a demand made to the
Commissioner and a denial by him.”
(Emphasis by us)
577. We have held in the present case above that the stage for cancellation of the
bids of the appellants did not reach, and hence no decision was required even if it
was so, the decision was by an authority higher than the director, only
communicated by a subordinate and cannot be invalidity on the ground of
competency.
578. Mr Vikram Sharma has further contended that upon royalty being charged
from the appellant, the LoI had taken the character of lease and that its termination
could only be on satisfaction of stipulations contained in sub-rule 15, 16, 17 and 19
of Rule 38.
579. Mr F. A. Natnoo, learned AAG, has submitted that the reliance placed by
Mr P. N. Raina, ld. senior counsel, on Rules 6, 13 and 38 is completely
misconceived. Mr Raina has relied on Rule 38(XVI) which refers to “breach on
the part of the lessee”. Mr Natnoo has emphasized the fact that appellants are not
lessees before this Court and, therefore, the Rule has no application.
580. Rule 38 stipulates the “Conditions of the Lease” and is placed in Chapter IV
captioned “Grant of Mining Lease” and contains Rules 26 to 42-a. We have noted

236
that the appellants have failed to comply with rule 26. Thereafter the appellants
had to complete requirements under Rule 27 (procedure for grant of mining lease
which includes a deposit of Rs.50,000/-) and Rule 36 (which requires deposit of
the security deposit). Execution of the lease requires compliance with Rule 40.
Admittedly, the stage for these did not arrive as the appellants failed to complete
the pre-conditions under Rules’ 26 and 55. In the instant case, the appellants
therefore could not be considered for grant of lease and no leases have been
executed in their favour. As such, Rule 38 has no application at all.
581. Let us examine the principles laid down by the Supreme Court in judicial
precedents on the essentiality of recording reasons for administrative and executive
orders and actions as well as the contours of such requirement. In the judgment
reported at (1990) 3 SCC 280, Star Enterprises & Ors. vs. City and Industrial
Development Corporation of Maharashtra & Ors, relied upon by Mr. Shah, ld.
Senior Counsel, the court was called upon to examine the correctness of the action
of the respondents in rejecting the highest offer received in response to an
invitation to bid by a public authority. We find from a reading of para 5.8 of this
pronouncement that in this case, the highest bid received had been rejected by the
respondents. It was in this background that the Supreme Court had observed as
follows:
“5. It is not disputed that the scheme which is operating provides that
"respondent No. 1 reserves the right to amend, revoke or modify the
scheme at its discretion as well as to reject any or all offers for
allotment without assigning any reason." Obviously, it is in exercise of
this power that the highest tenders have not been accepted.
8. The State is certainly entitled to look for the best deal in regard to its
properties. This has been accepted by several decisions of this Court

237
with reference to State action under the Excise Laws. There is no

allegation of mala fides in the conduct of respondent no. 1 in refusing
to accept the highest offer. We must, therefore, proceed on the footing
that respondent no. 1 acted bona fide and in refusing to accept the
highest offers of the appellants in regard to specific plots has been
actuated by the consideration of looking for better offers for the specific
plot in the economic interests of respondent no. 1.
xxx
10. In recent times, judicial review of administrative action has
become expansive and is becoming wider day by day. The traditional
limitations have been vanishing and the sphere of judicial scrutiny is
being expanded. State activity too is becoming fast pervasive. As the
State has descended into the commercial field and giant public sector
undertakings have grown up, the stake of the public exchequer is also
large justifying larger social audit, judicial control and review by
opening of the public gaze; these necessitate recording of reasons for
executive actions including cases of rejection of highest offers. That
very often involves large stakes and availability of reasons for actions
on the record assures credibility to the action; disciplines public
conduct and improves the culture of accountability. Looking for
reasons in support of such action provides an opportunity for an
objective review in appropriate cases both by the administrative
superior and by the judicial process. The submission of Mr Dwivedi,
therefore, commends itself to our acceptance, namely, that when
highest offers of the type in question are rejected reasons sufficient
to indicate the stand of the appropriate authority should be made
available and ordinarily the same should be communicated to the
concerned parties unless there be any specific justification not to do
so.”
(Emphasis by us)
In the instant case, the Rules do not prescribe any procedure for a decision
for cancellation of an entire auction. Given the breaches of the Rules, we have held

238
Government did not have to record a specific order in this regard. The judgment in
Commissioner of Police v. Gordhan Dass Ghaaji has therefore no application in
the present case.
582. In Ramchandra Murarilal Bhattad also, the Supreme Court had observed
that the individual tender of the appellant had not been rejected but all tenders had
been cancelled and that, for the reason that there was change in policy, no reason
for the cancellation was required to be given.
583. So far as the decision of the respondents to amend the Rules and to
incorporate the requirement of conducting auctions of mining leases by e- mode is
concerned, the same was in the nature of a policy decision and stands taken by the
competent authorities. The appellants do not challenge the authority of the
respondents to amend the rules or the competency of the authority to take the
decision to do so. This objection is therefore untenable and of no consequences.
584. There can be no dispute at all with the well settled proposition that when the
authority, administrative or quasi judicial adjudicates on a dispute and if its order
is appealable or subject to judicial review, it would be necessary to spell out the
reasons thereof. Furthermore, if as a result of action on the part of the statutory
authority, civil or evil consequences ensue, principles of natural justice are
required to be followed.
Such occasion has not risen in the present cases.
585. In the present cases, after failure of the bidders to comply with the terms of
the LoI and the requirement of the rules, the bids of 2016 and 2017 were non- est
and of no consequence and effect. The bidders had no surviving right whatsoever
pursuant to the provisional acceptance of the bids. The occasion for consideration
of the bids of the appellants for final acceptance and for grant of mining lease by

239
the Director (the authority designated under Rule 42 to grant the mining lease) or
passing of order therefore under Rule 31 never arose. As such, the appellants have
not been deprived of any right under Rule 85 or the statutory remedy of appeal
prescribed thereunder. Since the bids had not received final acceptance, no separate
orders for cancellation of the individuals bids were necessary.
586. This fact, coupled with the respondent’s estimation that the reserve price
was not optimum and finding suggestion of cartelization in the auctions, the
authorities scrapped the auctions in their entirety. It is noteworthy that this was
communicated by the letter dated 26th February, 2020. A policy decision was taken
to maximize public interest by holding e-auctions only in the future. There is no
case where the highest offer stands overlooked or rejected or there is refusal to
accept a lower bid. In this background the requirement of recording reasons for
rejecting the highest bids did not arise.
587. For these very reasons, the reliance placed on the pronouncement reported at
(2007) 2 SCC 181, Rajesh Kumar and others v. Dy. CIT and others in support of
the contention that the basic principle of natural justice being the recognition of a
duty to assign reasons, having been violated in the present case, is misconceived.
588. Inasmuch as the auction as a whole was being scrapped and a new policy
being put in place, no reason individually was required to be assigned.
589. The plea that the action of respondents is liable to be quashed for the reason
that no reasons were given for rejection of the bids and the principles of natural
justice therefore violated, is misconceived and hereby rejected.

240
XVIII Whether any Remedial steps with regard to the illegal mining-
cost of reparation and compensation- quantification and
apportionment of liability?
590. The instant case reveals glaring illegalities, non compliance with judgments
of the Supreme Court, directions of the NGT and violations of the law committed
with absolute impunity. The matter could have ended with dismissal of the
appeals. However, what is not condonable is the fact that public and national minor
mineral resources stand ruthlessly exploited for commercial profits by a group of
bidders without any compunction. Can we overlook such illegalities?
591. The present appeals arise out of the refusal to exercise extraordinary writ
jurisdiction under Article 226 of the Constitution of India read with Section 103 of
The Jammu & Kashmir Constitution, by the learned Single Judge in favour of the
appellants.
592. The Supreme Court of India had occasion to rule on the the power of the
High Courts in exercise of extra ordinary writ jurisdiction under Article 226 of the
Constitution of India in the judgment reported at AIR 1966 SC 81 Dwarka Nath
Vs. Inicome Tax Officer, Sspecial Circle in the following terms:
“4………This article is couched in comprehensive phraseology and it ex

facie confers a wide power on the high court to reach injustice wherever it
is found. The constitution designedly used a wide language in describing the
nature of the power, the purposes for which and the person or authority
against whom it can be exercised. It can issue writs in the nature of
prerogative writs as understood in England; but the scope of those writs also
is widened by the use of the expression "nature", for the said expression does
not equate the writs that can be issued in India with the those in England, but
only draws in analogy from them. That apart, High Courts can also issue
directions, orders or writs other than the prerogative writs. It enables the
High Courts to mould the reliefs to meet the peculiar and complicated
requirements of this country. xxxxxxxxx"
(Emphasis supplied)

241
593. While considering the permissibility of a writ court examining
proportionality/ penalty imposed on a person in disciplinary proceedings, in the
judgment reported at (1995) 6 SCC 749 B. C. Chaturvedi v. Union of India and
others, we find an illuminating illucidation of the power of the High Court to do
complete justice in the concurring judgment of Hansaria, J, who had observed as
follows:
“21. I am in respepctful agreement with all the conclusions reached by

learned brother Ramaswamy, J. This concurring note is to express my
view on two facets the case. The first of these relates to the power of the
High Court to do "complete justice", which power has been invoked in
some cases by this Court to alter the punishment/penalty where the one
awarded has been regarded as dispropotionate, but denied to the High
Courts. No doubt, Article 142 of the Constitution has specifically
conferred the power of doing complete justice on this Court, to achieve
which result it may pass such decree or order as deemed necessary; it
would be wrong to think that other courts are not to do complete
justice between the parties.
xxxxxxxxx
23. It deserves to be pointed out that the mere fact that there is no
provision parallel to Article 142 relating to the High Courts, can be no
ground to think that they have not to do complete justice between the
parties, the same cannot be ordered. Absence of provision like Article
142 is not material, according to me. This may be illustrated by
pointing out that despite there being no provision in the Constitution
parallel to Article 137 conferring power of review on the High Court,
this Court held as early as 1961 in Shivdeo Singh's case, AIR 1963 SC
1909, that the High Courts too can exercise power of review, which
inheres in every court of plenary jurisdiction. I would say that power to
do complete justice also inheres in every court, not to speak of a court
of plenary jurisdiction like a High Court. of course, this power is not

242
as wide which this Court has under Article 142. That, however, is a
different matter.
xxxxx
26. I had expressed my unhappiness qua the first facet of the case, as
Chief Justice of the Orissa High Court in paras 20 and 21 of Krishna
Chandra v. Union of India, AIR 1992 Orissa 261 (FB), by asking why
the power of doing complete justice has been denied to the High Courts
? I feel happy that I have been able to state, as a Judge of the Apex
Court, that the High Courts too are to do complete justice. This is also
the result of what has been held in the leading judgment.”
(Emphasis supplied)
594. The principles laid down in the Dwarka Nath were reiterated in the
judgment reported at (1989) 2 SCC 691 Andi Mukta Sadguru Shree Muktajee
Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust and Ors., Vs. V.R.
Rudani and others.
595. It is, therefore, well settled that this court hearing appeals in its writ
jurisdiction is adequately empowered to mould reliefs to do complete justice. In
fact, we are duty bound to ensure that law is complied with. We have noted above,
the law laid down by the NGT and its directions which are binding on all persons.
596. Jammu & Kashmir has seen some of the worst natural disasters in the recent
times. While the earthquake in Uri in 2005 would be a natural disaster, the drastic
consequences of the flooding of 2014 in Kashmir and of River Tavi in Jammu as
well as its causes are still alive in the minds of the people. Despite the deep
concerns with regard to the impact and consequences of unregulated extraction of
minor minerals along rivers are engaging the attention of the Supreme Court of
India and are under the continuous monitoring by the NGT, illegal mining of

243
minor minerals and sand quarrying activities are rampant and continuing with
impunity in Jammu and Kashmir. The irreversible damage and impact on the
environment as well as the implications thereof to society at large clearly visisble
and are in public domain.
597. The NGT is closely monitoring the action taken by the various States and
Union Territories, with regard to the illegal sand, mining from the river beds,the
lead case being OA No. 360/2015, National Green Tribunal Bar Association v.
Virendra Singh (State of Gujarat) and the connected petitions.
598. The drastic impact of unregulated river bed mining in West Bengal noted by
the NGT in its order dated 15th April, 2019 in OA 360/2015 NGT Bar Association
v. Virendra Singh is extracted below:
11. When the State holds a resource that is freely available for the
use of public, it provides for a high degree of judicial scrutiny on
any action of the State in dealing with the subject in a prudent
manner. It is the duty of the State to provide complete protection to
the natural resources as a trustee of the public at large. Moreover,
a policy to give free sand must be justified as a welfare measure
but even this consideration cannot justify unregulated and
unscientific mining unmindful of impact on environment. If in the
course of mining, damage is caused, cost of the same must be
recovered from such violators. In any case, the authorities cannot
avoid their duty under the environmental law to prevent and
restore the damage which is an inalienable duty of the State.
Sudarsan Das v. State of West Bengal
Vide order dated 04.09.2018 in O.A No. 173/2018, Sudarsan Das v.
State of West Bengal & Ors, the Tribunal considered the issue of
unchecked mechanised sand mining on the banks of river
Subarnarekha by use of suction pumps, earth movers and netting in
an area falling under Jaleshwar Tehsil, Balasore District, Odisha
on the Odisha – West Bengal Boarder area and neighbouring

244
district of West Medinapur in the State of West Bengal. The mining

was being done by a method whereby ground water is allowed to
seep into excavation of 40 to 50 feet beneath the river and collected
in sumps and pumped away for disposal. No environmental
clearance had been taken nor consent taken from the Pollution
Control Board. This was impacting the ecology of the river
including its channel geometry, bed elevation, substratum
composition and stability, instream roughness of the bed, flow
velocity, discharge capacity, sediment transpiration capacity,
turbidity, temperature, etc. Such indiscriminate mining was the
cause of the river Subarnarekha changing its course every year
and made susceptible to flooding during every monsoon,
threatening the safety of the villages situated along the river bank
due to the banks being severely eroded in villages Rajnagar,
Mankia, Kanrpur, Totapada, Beherasahi and Praharajpur. The
authorities confirmed that illegal mining was taking place at large
scale without any Environmental Clearance under the Environment
(Protection) Act, 1986 or Consent under the Water (Prevention and
Control of Pollution) Act, 1974 or the Air (Prevention and Control
of Pollution) Act, 1981. Sustainable Sand Mining and Management
Guidelines, 2016 were also not being followed. There was adverse
impact on the ecology. No Management Plan was prepared for
replenishment of preventive steps. Safeguards suggested in the
report of High-powered Committee in September, 201612 were also
not been adopted.”
(Emphasis supplied)
599. Can these illegal activities be permitted to continue without consequence of
reparation and compensation for the illegal mining? The observations made by the
Tribunal in its order dated 5th April, 2019 in O.A. No.360/2015 National Green
Tribunal Bar Association v. Virender Singh (State of Gujarat) in this regard
deserve to be considered in extenso and read thus:

245
“6. The grievance before the Tribunal is that the river bed mining was
taking place at several locations in violation of judgment of the
Hon’ble Supreme Court either without any valid lease or under
leases given without following the strict regulatory regime in terms
of judgment of the Hon’ble Supreme Court or in violation of lease
conditions.
Proceedings before NGT
7. This Tribunal passed several orders in the present matter since
05.08.2013 to check illegal sand mining from the riverbeds without
environmental clearance or in violation of terms of environmental
clearance. The State of Uttar Pradesh was directed to frame a policy
to check illegal sand mining. MoEF&CC was also directed to
prepare comprehensive guideline on the subject. The Tribunal
considered regulatory regime applicable in some of the States in the
light of the judgment of the Hon’ble Supreme Court in Deepak Kumar
(supra), including in the States of Uttar Pradesh, Haryana, Madhya
Pradesh, Maharashtra, Karnataka, Gujarat, West Bengal and Odisha.
The MoEF&CC issued Sustainable Sand Mining Guidelines 2016,
vide notification dated 15.01.2016. Thereafter, further directions were
issued by the Tribunal in the light of the report of the High-powered
Committee.
8. Despite this the menace of illegal sand mining in India continues
unabated. As per reports the sand business in India employs over 35
million people and is valued at well over $126 billion per annum. In
the year 2015-2016, there were over 19,000 cases of illegal minor
minerals including sand in the country. In Uttarakhand, a 115 years
old bridge collapsed due to overloaded sand trucks. In Maharashtra,
26,628 cases of illegal sand mining were recorded in the year 2017.
The State of Maharashtra has the highest number of cases of non-
compliance of Sustainable Sand Mining Management Guidelines,
2016. The State of Kerala suffered hugely in 2004 Tsunami and 2018
floods which several report explain were aggravated by illegal sand
extraction. The issue of illegal sand mining is also rampant in the

246
states of Goa, Bihar, Tamil Nadu, Uttarakhand, Telangana, Jammu

and Kashmir amidst others.”
(Emphasis by us)
In the light of the above facts, the NGT noted the duty of the State in
protecting natural resources and recovery of damage from the violators in the
following terms:
10. Public Trust Doctrine primarily rests on the principle that certain
resources like air, sea, water and forest have great importance to
public as a whole and it is wholly unjustified to make them a subject
of private ownership. The public trust doctrine enjoins upon the
Governments to protect the resources for enjoyment of general
public rather than to permit the use for private ownership of
commercial purposes.”
(Emphasis by us)
600. In Para 45 of the order dated 05th April 2019 in O. A. No. 360/2015 titled
National Green Tribunal Bar Association v. Virender Singh (State of Gujarat)
the NGT noted that the illegal sand mining in violation of the Sustainable Sand
Mining Guidelines 2016 has been widely reported in several states including
Jammu and Kashmir amongst others and that general directions may be necessary
which would apply to other states facing the same issue. It also referred to an
article published in ‘Daily Greater Kashmir’ which is available at
https://greaterkashmir.com/article/news.aspx?storyid=309365&catid=2&mid
=53&AspxAutoDetectCookiesSupport.
601. The NGT then considered measures which could be effective for preventing
the illegal mining and quarrying among other remedial measures including

247
recovery of compensation. In this regard in paras 51 and 52 (of the order dated 5th
April, 2019), it was observed as follows:
“51. We have found in the discussion above, particularly in paras 8 to

11, 20, 21, 23, 29, 32, 33, 36, 39, 41 and 43 with regard to factual
position in various States that monitoring mechanism preventive and
remedial measures is not effective and illegal sand mining is
continuing. The same needs to be reviewed in the light of above
discussion. The States may review monitoring mechanism in terms of
several directions of the Tribunal and guidelines of MoEF&CC. As
regards monetory compensation, the same has to be not only equal to
cost of mined material and penalty to evade royalty but also to meet
cost of restoration and NPV of eco services fore gone forever.
Seizure of vehicles or other equipment may be dealt with as per rules
and directions in Threat to life arising out of Coal Mining in South
Garo Hills District (supra).
Re (iv): Directions in Individual Cases Listed Today. For the
discussion and observation hereinabove, case is made out for issuing
directions following discussion on the subject.
52. In Sudarsan Das (supra) one of the directions was that the Chief
Secretaries of West Bengal and Odisha will prepare a restoration plan
in consultation with the Central Pollution Control Board (CPCB),
Indian School of Mines, Dhanbad and the Respective State Pollution
Control Boards (SPCBs). We are informed that Indian School of
Mines, Dhanbad declined to comply with the 35 order. This may call
for remedial action against defiance by the said institution. Order of
this Tribunal is a decree of the Court and can be executed in the
manner provided under Section 51 CPC by ordering civil
imprisonment or adopting other norms. Violation of order of this
Tribunal is also a criminal offence punishable by imprisonment and
fine. The Head of the Department concerned is liable to be
proceeded against. Thus, the Director Indian School of Mines,
Dhanbad will have to be required to appear in person to explain why
action be not taken for violation of order of this Tribunal. The State of

248
West Bengal, Orissa, Punjab and Gujarat need to send further action
taken reports by 30.06.2019.”
(Emphasis by us)
602. The NGT had further considered optimum scale of compensation in paras
55 to 57 of the order dated 5th April, 2019 in O. A. No. 360/2015 titled National
Green Tribunal Bar Association v. Virender Singh (State of Gujarat) which
reads as follows:
“55. We have held that the scale of compensation proposed by the

State of Gujarat does not fully comply with the ‘Polluter Pays’
principle which envisages that polluter is required to pay for
complete restoration of the environment. This principle has been
articulated further by the Hon’ble Supreme Court of India in T.N.
Godavarma Thirumulpad vs Union of India & Ors, (2006) 1 SCC 1
in the context of forests. In this matter, the Hon’ble Supreme Court
appointed a committee of experts and following directions were given:
(i) To identify and define parameters (scientific, biometric
and social) n the basis of which each of the categories of
values of forest land should be estimated.
(ii) To formulate a practical methodology applicable to
different biogeographical zones of India for estimation of
the values in monetary terms in respect of each of the
above categories of forest values.
(iii) To illustratively apply this methodology to obtain actual
numerical values for different forest types for each
biogeographical zone in the country.
(iv) To determine on the basis of established principles of
public finance who should pay the costs of restoration
and/or compensation with respect to each category of
values or forests.
(v) Which projects deserve to be exempted from payment of
NPV.”

249
56. Similar criteria may have to be taken into account for arriving
at an appropriate scale of compensation. The compensation is to
include not only the full value of the illegally mined material but also
cost of restoration of environment as well as cost of ecological
services foregone forever. It should be deterrent so as not to render
such illegal activity profitable. In Sudarsan Das Vs. State of West
Bengal & Ors. (supra), it was held that full value of the material, the
cost of restoration and the NPV should form part of the
compensation to be recovered. There has also to be action against the
polluters and the erring officers. The vehicles or any other
equipment used for illegal mining are required to be confiscated and
to be released only on payment of atleast 50% of the showroom value
as laid down in Original Application No.220(THC)/2012, Threat to
life arising out of coal mining in South Garo Hills District v. State of
Meghalaya & Ors. This scale can then apply for all States, as far as
possible.
57. We consider it necessary to constitute a Committee comprising
representatives of the MoEFF&CC, Central Pollution Board
(CPCB), Indian Institute of Forest Management, Bhopal, Institute of
Economic Growth Delhi and Madras School of Economics to prepare
a scale of compensation, after including the above components which
can then be adopted in whole of the country. The report may be
furnished within three months to the Tribunal by email at
[email protected]. The nodal agency for compliance and
coordination will be CPCB. The Committee may also take professional
service of an expert/institution in the matter if it so desires.”
(Emphasis by us)
603. On 5th April, 2019, the NGT thereafter summed up its time bound directions
to the States including the erstwhile State of Jammu and Kashmir as follows:
“58. We sum up our directions as follows:

250
a) MoEF&CC may now take necessary steps in the matter in terms of

order dated 04.09.2018 in Sudersan Das (supra) latest by June 30,
2019 and file compliance report by 15.07.2019, as already directed.
b) The States of West Bengal, Gujarat, Karnataka, Maharashtra,
Punjab, Uttar Pradesh, Haryana, Madhya Pradesh, Andhra Pradesh,
Bihar, Uttarakhand, Jammu and Kashmir, Goa, Kerala, Telangana
and Tamil Nadu and Himachal Pradesh may take steps in terms of
orders dated 04.09.2018 in Sudarsan Das v. State of West Bengal &
ors, 05.09.2018 in, 13.9.2018 in Mushtakeem v. MoEF&CC & Ors.
and 16.01.2019 in Compliance of Municipal Solid Waste Management
Rules, 2016. The Chief Secretaries may monitor and furnish reports
as earlier directed.
(c) The States of West Bengal, Gujarat, Karnataka, Maharashtra,
Bihar, Uttarakhand, Jammu and Kashmir, Goa, Kerala, Telangana
and Tamil Nadu and Himachal Pradesh may review monitoring
mechanism in terms of directions of the Tribunal and guidelines of
MoEF&CC.
(d) The Director Indian School of Mines, Dhanbad may appear in
person on 26.07.2019 to explain why action be not taken for violation
of order of this Tribunal.
(e) The State of West Bengal, Gujarat, Karnataka, Maharashtra,
Bihar, Uttarakhand, Jammu and Kashmir, Goa, 39 Kerala,
Telangana and Tamil Nadu and Himachal Pradesh may send further
action taken reports by 30.06.2019.
(f) The Committee in terms of para 59 above may furnish its report
within three months to the Tribunal by email at
[email protected].”
(Emphasis by us)
604. In the above order, the NGT noted the amendment notification dated 15th
January 2016 to the Environment Impact Assessment Notification, 2006.We find

251
that, amongst others, the then State of J&K was directed to take steps in terms of
the order dated 4th September 2018 in OA No. 173/2018 in Sudershan Das v.
State of West Bengal and others; orders dated 5th September 2018 and 13th
September 2018 in Mushtakeem v. MoEF&CC and Ors. in OA No. 44/2016 and
the Chief Secretaries to monitor and furnish reports as earlier directed. The State
of Jammu and Kashmir was directed to review its monitoring mechanism as well.
605. Our attention has been drawn to a further order dated 26th July 2019 passed
in OA No.360/2015 National Green Tribunal Bar Association vs. Virendra Singh
(State of Gujarat) & connected petitions (including those filed by Dr. Sarrabhaun,
Bagali, Mushtakeen & Others).
606. It appears that no compliance report was filed by the State of Jammu and
Kashmir as noted in the order dated 26th July 2019 and last opportunity was given
by the NGT to file appropriate response.
We have not been informed as what has happened to this matter thereafter.
607. The principles of law which are to guide measures for reparation;
quantification of compensation and action for violations and illegal mining are
absolutely unambiguous. They have been laid down in binding judicial precedents
and the respondents have no choice in the matter of compliance with them. Despite
this position, it is quite evident that nothing appears to have been done by the
respondents in this regard.
608. Is there any statutory provision relating to compensation for environmental
degradation? The legislature has empowered the NGT to order relief,
compensation and restitution for environmental damages and pollution for victims
in Sections 15 and 20 of the National Green Tribunal Act, 2010. Some guidance
on the components of compensation and measures for restitution may be derived

252
from the wisdom of the legislature. We, therefore, extract these provisions which
read as follows:
“15. Relief, compensation and restitution.—(1) The Tribunal may, by

an order, provide,—
(a) relief and compensation to the victims of pollution and other
environmental damage arising under the enactments specified in the
Schedule I (including accident occurring while handling any
hazardous substance);
(b) for restitution of property damaged;
(c) for restitution of the environment for such area or areas, as the
Tribunal may think fit.
(2) The relief and compensation and restitution of property and
environment referred to in clauses (a), (b) and (c) of sub-section (1)
shall be in addition to the relief paid or payable under the Public
Liability Insurance Act, 1991 (6 of 1991).
(3) No application for grant of any compensation or relief or
restitution of property or environment under this section shall be
entertained by the Tribunal unless it is made within a period of five
years from the date on which the cause for such compensation or relief
first arose: Provided that the Tribunal may, if it is satisfied that the
applicant was prevented by sufficient cause from filing the application
within the said period, allow it to be filed within a further period not
exceeding sixty days.
(4) The Tribunal may, having regard to the damage to public health,
property and environment, divide the compensation or relief payable
under separate heads specified in Schedule II so as to provide
compensation or relief to the claimants and for restitution of the
damaged property or environment, as it may think fit.
(5) Every claimant of the compensation or relief under this Act shall
intimate to the Tribunal about the application filed to, or, as the case
may be, compensation or relief received from, any other court or
authority.

253
20. Tribunal to apply certain principles.—The Tribunal shall, while

passing any order or decision or award, apply the principles of
sustainable development, the precautionary principle and the
polluter pays principle.”
(Emphasis by us)
609. Thus, the legislative guidance by way of Section 20 is extremely broad and
the NGT is required to apply the principle of sustainable development, polluter
pays principle and the precautionary principle while passing an award or order in
favour of an applicant. The Tribunal is required to assess the environmental
damage as well in a case while coping with the scientific uncertainty which is
involved in this assessment.
610. Some guidance in the approach which is to be followed can be found in the
judgment of the Supreme Court in Writ Petition (Civil) No.435/2012 : Goa
Foundation v. Union of India. In this case, the court was considering an issue of
determination of environmental damage caused on account of illegal mining
activity in Goa. The Court was guided by the consideration of the issue that the
mining could not be completely stopped due to its contribution towards
employment and revenue generation for the State. The Supreme Court thus was
concerned with an activity which was making a major contribution to the State’s
revenue. It was, therefore, held that if mining had to continue, determining
compensation on the basis of sale proceeds would be apt as it would directly affect
the profitability of the project. In this case, the Supreme Court created a special
purpose vehicle- “Goan Iron Ore Permanent Fund” for depositing the
compensation. However, this cannot be an absolute principle in assessment of
adequate compensation for the detriment and damage to the ecology and
environment.

254
611. As noted by the Supreme Court in Deepak Kumar, illegal mining has the
effect of causing irreparable damage to the ecology. We also have instances of the
NGT assessing “environmental penalty” equivalent to the percentage of 5% of the
project cost.
612. While the contribution of the revenue towards the State has weighed with
the Supreme Court while according consideration in Goa Foundaion case,
however, in the case in hand, the damage is irreparable and also irreversible and
extremely serious. An instance of similar damage was noted by the Supreme Court
in the judgment reported at (2019) 8 SCC 177 : State of Meghalaya v. All Dimasa
Students Union, Dima-Hasao District Committee. In this case illegal mining
operations in the Jaintia Hills in the State of Meghalays had not only caused
serious and irreparable damage to the ecology, water bodies including underwater
plants and socio economic conditions of the concerned areas including of Dimal
Hasao district of Assam but had also resulted in serious erosion/ corrosion of the
machineries and equipment of the Kopili Hydro Power Project of the North
Eastern Electric Power Corporation of India. The court, noticing that there was
huge environmental degradation and pollution of the water in the State of
Meghalaya, observed that serious steps were required to be taken for cleaning
polluted water bodies. With these objectives, the court authorized the State
Government to collect 10% of the market value of the coal in addition to the
royalty payable to it.
613. The judgments of the Supreme Court and the orders of the NGT have also
considered proportion of sale proceeds or the project cost as a measure of quantum
of compensation and provide guidance on the parameters on which compensation
in such cases could be evaluated.

255
614. We find that even the legislature was sensitive to requirement of restoration
and rehabilitation measures for the benefit of the community in and around the
areas where mining activities are undertaken. Section 15A of the Act of 1957 was
incorporated by amendment with effect from 12.01.2015 which empower the State
Government to collect funds for District Mineral Foundation in case of minor
minerals of the District in which mining operations are carried on.
615. We find that even the Government of Jammu & Kashmir was not ignorant
about the possible need for such measures. The Rules of 2016 include Chapter X
captioned ‘Mines and Minerals Development Restoration and Rehabiliation
Fund.’ This postulates creation of a fund known as the Mines and Minerals
Development, Restoration and Rehabilitation Fund (MMDRRF) under the
administrative control of the Department to which rehabilitation charges payable
under Section 15A of the Act shall be credited. Rule 73(i) incorporates the
objective of funding of the restoration or rehabilitation works in the sites affected
by mining operations. Under Rule 74, 10% of the royalty paid to the State shall be
charged from the mineral concession holder in the nature of other charges for
restoration and rehabilitation works and credited to the account payable to the
Government. This amount under Rule 74(2) has to be remitted by the mineral
concession holder along with royalty. We have no information before us as to
whether payments were effected by the appellants or the other bidders who
extracted the minerals as above.
616. An analysis of the judgments and orders on the subject shows that it is
essential to determine compensation on a case by case basis so as to not only dis-
incentivise the violator but enable protection of the environment and also its

256
restoration wherever there has been significant illegal activity. We find that
evaluation of the fair and necessary balance between the default and consequential
liability of the defaulter in instances of environmental degradation is not an easy
task. It depends on several indeterminate factors and imponderables. It is,
therefore, necessary to undertake a scientific determination of the environmental
damage before quantifying a fair compensation.
617. We have no manner of doubt that this Court lacks the expertise to quantify
the environmental damage.
618. We also find that respondents have exhibited complete lack of will to abide
by the judgment of the Supreme Court and the orders passed by the NGT or to
enforce binding statutory provisions.
619. In the present case, the appellants not only used the shield of Rule 104A
over the years, failed to follow the mandate of this rule and carried on with illegal
mining activities. Even the limited information and record available before us,
clearly speaks volumes about the commercial profits which have been derived by
the appellants from the illegal activity.
620. The Ld. Single Judge has in para 74 of the impugned judgment noted the
lack of material regarding the resultant environmental degradation on account of
the illegal activities of the writ petitioners.
621. In view of the facts brought on record, it is essential for the respondents to
effectively evaluate the cost of the illegal mining undertaken by the appellants
after provisional acceptance of their bids pursuant to the auctions of 2016.
Effective, imperative and scientific measures need to be scientifically taken by the
respondents to determine damage, assess value, apportion liability and effect

257
recovery thereof which act as a deterrant, discourage and bring illegal mining to a
halt in the Union Territory of Jammu & Kashmir.
XIX Writ petitions liable to be dismissed for suppressio veri
622. It is an elementary principle of law that every writ petitioner must make a
complete and fair disclosure of all relevant facts. Failure to do so would
tantamount to concealment of material facts.
623. Misjoinder of parties and non-joinder of necessary parties are also
established procedural requirements. Every petition must ensure compliance with
the above.
624. In the instant matters, wherein the appellants are aggrieved by the action of
the respondents in cancelling an entire auction process, the factual details relating
to the auction notice; terms and conditions of the auction; the details of the
conditions stipulated in the LoI; the dates on which the writ petitioners took steps
for compliance of the requirements and when the requirements were completed are
material and essential facts necessary for complete and effective adjudication.
Not a single writ petitioner has given these basic facts in totality.
625. We have had to undertake a close scrutiny of the counter affidavit of the
respondents as well the official records to ascertain these essential facts. We have
no doubt that the whole effort was to conceal material facts which went to the root
of the matter and clearly disentitled the writ petitioners to grant of any relief. These
writ petitioners deserved to be non-suited at the very threshold for concealment of
necessary and material facts.
626. Mr F. A. Natnoo, ld. AAG, has placed the judicial precedent reported at
(2012) 6 SCC 430 A Shanmugan Vs. Ariya Kshatriya Rajakula Vamsathu

258
Madalaya Nandhavana Paripalanai, relying on the following observations of the
court:
“43.4. Once the court discovers falsehood, concealment, distortion,

obstruction or confusion in pleadings and documents, the court should
in addition to full restitution impose appropriate costs. The court must
ensure that there is no incentive for wrong doer in the temple of justice.
Truth is the foundation of justice and it has to be the common
endeavour of all to uphold the truth and no one should be permitted to
pollute the stream of justice.”
627. Yet another circumstance which in our view is completely dishonest is the
manner in which the writ petitions having multiple petitioners, each with separate
facts, were joined as co-petitioners in single writ petitions. While one out of the
many co-petitioners may have completed some of the requirements of the LoI,
bidders who have not completed any of the requirements with utter impunity have
been joined as co-petitioners. This is a deliberate and dishonest attempt to mislead
the court into overlooking the defaults.
628. This is yet another circumstance which merited the writ petitioners to
summary dismissals of the writ petitions.
XX Whether the issuance of the Letter of Intent (LoI) resulted in

grant of ‘quarrying licence’ or a ‘prospecting licence’
629. As noted above, it has been vehemently contended by Mr Abhinav Sharma ,
ld. counsel in LPA No. 7/2020 that by the issuance of the LoI a ‘quarrying licence’
stood granted to the petitioners. Mr Abhinav Sharma has relied on the definitions
contained in Section 3, (a), (c), (f), (g), and (ga) of the Mines and Minerals
(Development & Regulation) Act, 1957.

259
630. Ld. counsel submits that there is a distinction between a mining lease and a
quarrying/prospecting licence as is evidenced from Rule 26. Before this court, it is
contended by Mr. Abhinav Sharma that by issuance of the LoI, the appellant had
been granted quarry licence in accordance with Rule 55(Lx).
631. On behalf of the appellant, it was also orally urged that with the issuance of
the LoI, a ‘prospecting licence [under section 3(g)] stood granted to them.
632. Mr. Abhinav Sharma has adverted to Section 3(g)(a) of the Act which
defines ‘prospecting licence cum mining lease’ to point out the difference between
a prospecting licences and a mining lease which prescribes two stages, the first
stage requiring undertaking prospecting operations which are followed by mining
operations. Mr. Sharma, has also drawn our attention to the definition of
prospecting operations in Section 3(h) of the Act. It is pointed out that under
Section 7 of the Act, a ‘prospecting licence’ is granted for not more than three
years.
633. Mr Altaf Naik, ld Senior Counsel appearing in LPA No. 61/2020 placed
reliance on Sections 3, (g), (h) and section 7 of the Act and has contended that
upon issuance of the LoI, a ‘prospecting licence’ stood granted to the appellants
which licence, according to ld. Senior Counsel, could be terminated only in
accordance with Section 4-A of the said Act. It is argued that there is no order of
termination of the prospecting licence.
634. Mr F. A. Natnoo, ld. AAG, has emphasized that in SRO 105, there is
nothing in the nature of a “prospecting licence”.
635. In order to deal with these submissions, it is essential to understand the
difference between ‘prospecting’, ‘quarrying’ and ‘mining’. The second basic issue

260
which has to be understood is the distinction between a ‘licence’ and a formal
mining ‘lease’.
636. Mr Sunil Sethi, ld Senior Counsel who appears for the intervenors in these
matters has drawn our attention to an important fact that there is no reference to
‘quarrying licence’ in the Act of 1957. A quarrying licence is for the first time
mentioned in Rule 2 (LV) of SRO 105 of 2016 framed by the Government of
Jammu and Kashmir which has been extracted above. Another important fact is
that these rules do not refer to a ‘prospecting licence’.
637. The manner in which an application for a ‘quarrying licence’ has to be
made, is provided under Rule 46. It is noteworthy that Rule 46 (4) requires that an
application for grant of a quarrying licence must be accompanied by “the consent
of owner or occupier of the applied area.”
We therefore find substance in the submission of Mr Sethi that a quarrying
licence envisages excavation of mining minerals in private lands.
638. On the other hand, ‘mining operations’ are defined in section 3(d) of the Act
and mean any operations undertaken for the purposes of mining any material. A
‘mining lease’ is defined under Section 3 (c) and means a lease granted for the
purposes of undertaking mining operation.
639. Mr Sethi has pointed out yet another distinction between grant of a ‘licence’
and a ‘lease’. It is pointed out that a ‘licence’ is granted only for the purposes of
prospecting operations undertaken to identify and ascertain existence of minerals
on a piece of land whereas a ‘lease’ confers specific rights for undertaking mining
in identified areas.
640. This is supported by the provisions incorporated as Section 3 (g-a) of the

261
Act which postulates a ‘prospecting licence cum mining lease’. This is defined as a
two stage concession granted for the purpose of undertaking prospecting
operations followed by mining operations.
641. It is important to note that again SRO 105 i.e., the Rules of 2016 do not make
any reference to a ‘prospecting licence’. The explanation for this, as advanced
before us, is that in the erstwhile Stae (now Union Terriory) of Jammu and
Kashmir, prospecting is undertaken by the State only. There appears strength in
this submission as well.
642. We also find differences in the manner in which a ‘quarrying licence’ is
applied for and the manner in which a ‘mining lease’ are applied for. An
application for a ‘mining lease’ in terms of Rule 28 has to be made in the model
format prescribed as Form ML1. The acknowledgement for this application is in
the format prescribed as form ML3. On the other hand, an application for grant
/renewal of a quarrying licence under Rule 46 has to be made in the format
prescribed as Form QL1. A mining lease deed is issued in Model Format
prescribed in Form ML-10 under Rule 40(1). The proforma of the Quarrying
Licence under Rule 48(ii) is in the format prescribed as Form QL2.
643. There are material differences in the essential requirements for the two as
well. The legislature has put in stringent requirements in the nature of duly
approved mining plan and EC under Rule 26 for grant of mining lease. As against
this, for grant of a quarrying licence, under the proviso to Rule 43 in Chapter V,
only an environmental management plan is needed.
644. It is undisputed that quarrying licences and mining leases fall under distinct
categories of concessions under the Rules. Mr F. A. Natnoo, ld. AAG, has drawn
our attention to Rule 45 which prescribes the period and area of a quarrying

262
licence. Rule 45(2) prohibits grant of a quarrying licence to an area exceeding 05
hectares.
645. Let us now examine the argument of Mr Altaf Naik that on issuance of the
LoI, a prospecting licence under Section 3(g) stood granted to the bidders
including the appellant for the periods prescribed under Section 4 and 7.
646. In the submissions made in rejoinder to the arguments of Mr. F. A. Natnoo,
learned AAG, yet another claim was projected. Placing reliance on Section 3(g)
and 3(h) of Mines and Mineral Development Act, and Rule 6, it was contended by
Mr. Naik that, till the lease was granted, the appellants were prospecting licencees.
The submission was that if such licence has to be terminated, it has to be
terminated in accordance with Section 4. Mr. Naik had also referred to the
definition of prospecting licence as laid down in Section 4(a) and Section 7 of the
Act.
647. This submission makes it necessary to understand as to what is entailed in
“prospecting operations.” This is statutorily recognized under Section 3 (h) which
provides that prospecting operations means “any operations undertaken for the
purposes of exploring, locating, approving mineral deposits. Clearly, prospecting
operations do not envisage mining activity. A prospecting operation is clearly a
stage which is prior to undertaking mining operations as defined in Section 3 (d).
648. The appellants having applied for a mining lease cannot be heard to say that a
prospecting licence under section 3 (g) for a period of three years (as per Section
7) stood issued which could be terminated.
649. We have extracted above, as a sample, one of the public notices issued by
the respondents notifying the public of the scheduling of the public auctions for
grant of mining leases. The appellants had participated in auctions for grant of

263
mining leases in specified blocks.
650. The LoIs also clearly refer to the mandatory requirements under Rule 26(2)
for grant of mining lease. The LoI notifies the appellant that it was issued under
Rule 55(9), pertaining to mining leases, with the direction to submit approved
mining plan, EC and deposit the balance 50% of the bid amount to enable grant of
a mining lease.
651. The pleas pressed by Mr Altaf Naik, ld. Senior Counsel, Mr Abhinav
Sharma, Advocate, are thus totally contrary to what was urged by the appellants
before the Writ Court. In the writ petition filed by the appellants, wherefrom the
instant appeal arises, the writ petitioners had clearly asserted that they had
participated in auctions for grant of mining leases. The prayer clause relates to
grant of mining lease. The appellants cannot be permitted to set up contrary pleas
in appeal.
652. For the respondents, Mr. F. A. Natnoo, ld. AAG, has placed reliance on
2000(2) SCC 734: Modern Insulators Ltd. v. Oriental Insurance Co. Ltd. (para
10) ; (2006) 6 SCC 467 : Sanjay Kumar and others v. Narinder Verma and
others (para 13); and (2010) 4 SCC 518 : State of Maharashtra v. Hindustan
Construction Company Limited (Paras 36 and 37). It stands reiterated in these
judgments that in an appeal, a party cannot bring new facts before the court. The
appeal would be a continuation of the original proceeding. New grounds
containing new facts cannot be introduced for the first time in an appeal. In view
of the same, in the present case, no new facts are permitted to be placed.
653. It is important to note that a ‘quarrying licence’ is not synonymous with a
‘mining lease.’ Grant of a quarrying licence is also not an intermediate stage of
consideration for grant and execution of a mining lease.

264
654. A ‘prospecting licence’ also cannot be equated to a mining lease, for which
the appellants had applied.
655. In this background, the oral submissions propounded on behalf of appellants
in LPA No. 61/2020, that on issuance of LoI, the appellant stood granted a
‘prospecting licence’ and the submissions in LPA No. 7/2020 that the appellant
stood granted ‘quarrying licence’ are completely misconceived, untenable and is
rejected.
XXI Whether any mining lease at all stands granted?
656. The respondents have informed that only three mining leases for minor
minerals relating to District Kathua were granted under SRO 105.
657. We are informed that a mining lease was granted to one Sh. Mohan Paul
Singh of Chandigarh, regarding the extraction of minor minerals in village
Kediyan Gadiyal, District Kathua, vide an order bearing No. 2-DGM of 2016 dated
12th May, 2016. However, by an order dated 24th June, 2016, this lease was
cancelled. It is reported that upon challenge of the cancellations by the grantee an
interim order was issued by this Court (Jammu Wing) directing that the order dated
24th June, 2016 shall not be acted upon.
658. A second mining lease granted to Sh. Mohan Paul Singh by an order bearing
No.01-DGM of 2016 dated 12th May, 2016 was also cancelled, operation whereof
also stands stayed by this Court.
659. Unfortunately, we are neither given the details of the cases in which the
interim order was passed; the status of the interim order or the main proceedings in
which the order was passed.

265
660. The third mining lease was granted to one Sh. Diyan Singh of Jammu for
extraction of minor minerals in Mahi Chak (Ujh river) vide order No. 257-IND of
2017 dated 17th November, 2017, for a period of five years. This lease is stated to
be operational.
661. It would thus appear that, over all these years, the process for grant of
mining leases has been completed only in respect of one person. It is significant,
however, that mining leases stands granted, establishes that it was not impossible
for bidders to complete the process envisaged by the Rules and to obtain a mining
lease.
XXII Whether the Learned Single Judge has failed to consider the
Rule 55 (10) of SRO 105? If so, effect thereof.
662. It has been contended by Mr Altaf Naik, ld Senior Counsel, that the
consideration by the Ld. Single Judge stopped at consideration such of sub-rule 9 of
Rule 55 of SRO 105and has erred in overlooking the sub-rule 10 thereof. This
submission is to be also noted for the sake of rejection only.
663. Sub-Rule 10 of Rule 55 only states that the bid amount offered by the
successful bidder shall be considered as “guarantee amount for grant of such
mineral concession.” This provision would take effect only after compliance of
Rule 55 (9) which reiterates the requirements on the bidder to complete the
formalities including deposition of the remaining fifty percent of the bid amount
required under rules within a period of six months from the issuance of the LoI.
664. That has not happened in these appeals, and it was completely unnecessary
for the ld. Single Judge to consider Rule 55 (10). Sub-rule 10 of Rule 55 has no
bearing or relevance so far as the prior stages of grant or execution of the mining
lease is concerned.

266
XXIII Refund of the bid amount-enitlement to in the facts of case
665. We find that in the Government files, reference is made to refund of the bid
amount to the bidders. In para-76 of the impugned judgment dated 1st May, 2020,
the ld. Single Judge has clarified that the judgment shall not come in the way of the
petitioners or any person to claim refund of the bid amount or to sue the
respondents in any appropriate proceedings for any loss or damage, if any suffered
by the appellants, as may be permissible in law.
666. The appellants claim to have undertaken mining utilizing the shield of Rule
104A. The appellants have paid royalty at paltry rates to the respondents. Even if
Rule 104A had to be worked, the appellants needed permission under Rule 104A
from the respondents to do so. We have noted above the volume of the illegal
extraction effected by these appellants and the quantum of commercial profits
derived. Both the bidders nor the respondents have thus bothered to discharge their
responsibility under law to the ecology. In the light of the clear directions in afore
noted orders dated 5th April, 2019 and 26th July, 2019 passed by the NGT, the
environmental degradation which has been caused by the appellants and the extent
of commercial profits which the appellants have derived from the illegal mining
activity, the appellants who are bound to compensate the State and ensure
restoration of the environment to the condition it was before they undertook the
illegal extraction of public resources without ECs and specific orders from the
respondents. We are of the firm view that the payment by the bidders of the paltry
amounts of royalty or its recipt by the respondents does not diminish the appellants
liability to compensate and effect reparation for the illegal mining or detract from
the illegality on the part of the respondents in extending the unfortunate Rule
104A.

267
667. In para 55 of the order dated 5th April, 2019 (O.A. 360/2015) National
Green Tribunal Bar Association v. Virendra Singh (State of Gujarat), extracted
above, the NGT has observed that the scale of compensation for illegal mining is
payable on the “Polluter Pays” principle and must be such as would enable
“complete restoration of the environment.” The scale at which such monetary
compensation would be payable in para 52 and 56 has been declared as including
“not only the full value of the illegally mined material but also cost of restoration
of environment as well as cost of ecological services foregone forever.” The NGT
has observed that MPV should additionally form part of the compensation to be
recovered.
668. The NGT has in para 56 of the above order dated 5th April, 2019 directed
action against the polluters and the erring officers.
669. Significantly, in the same order, the NGT has reiterated the direction that
vehicles or any other equipment used for illegal mining are required to be
confiscated and to be released only on payment of atleast 50% of the showroom
value as were laid down in OA No.220(THC)/2012.
670. In para 52 of its order dated 5th April, 2019, the NGT has stated that
violation of its orders is a criminal offence punishable by imprisonment and fine. It
is also observed that its orders can be executed by ordering civil imprisonment or
adopting other norms.
671. In the present cases, the appellants as well as the respondents were aware of
the illegalities noted by us hereinabove and the judgments of the Supreme Court.
The Union Territory of Jammu & Kashmir (earlier State) was all along party in the
proceedings before the NGT and aware of its directions.

268
672. In para 57 of the order dated 5th April, 2019, the NGT has appointed a
Committee for evaluating compensation. We have not been informed as to whether
any recommendation has been placed by this Committee before the NGT or any
orders passed on it.
673. There also appears to have been no compliance of the directions dated 13th
September, 2018 of the NGT in Mushtakeen v. MOEFF & CC mandating
evaluation of the NPV and compounding charges.
674. The royalty payments manifest the huge commercial profits which must
have been derived by the appellants. For this reason we hold that appellants have
no right to sue the respondents in any proceeding for loss or damage as none has
enured to them. We, therefore, are unable to agree with the liberty granted by the
learned Single Judge in para 76 of the impugned judgment dated 1st May, 2020,
which are hereby set aside and quashed. We hold that appellants have no right at
all to sue the respondents for any reason.
675. Given the directions we are passing hereafter, the respondents shall not
refund any amounts to the appellants till such time appropriate assessment with
regard to the remedial measures and compensation which the appellants may,
respectively, be found liable for payment in terms of the directions we propose to
pass.
XXIV Submission that the amendment to the Rules was prospective

and the pending applications of the appellants had to be
considered in accordance with the unamended provisions
676. The appellants have contended before us that their applications having been
made prior to the amendment of the rules, have to be favourably considered.
677. The impact of an amendment to a rule on pending applications fell for
consideration before the Supreme Court in the judgment reported at (1981) 2 SCC

269
205, State of Tamil Nadu vs. Hind Stone and Ors. which was placed by Mr. Z.A.
Shah, Senior Counsel before us. In this case, on the 2nd December 1977, Rule 8-C
was introduced into the Tamil Nadu Minor Mineral Concession Rules, 1959. By
this Rule, it was directed that w.e.f. 7th December 1977 ‘no relief for quarrying
black granite shall be granted to private persons’. The validity of the Rule was
assailed in writ petitions before the Madras High Court which challenge was
accepted. Allowing the appeals, the Supreme Court upheld the competency of the
State Government to make the rules.
678. One of the grounds for challenge by the writ petitioners in Hind Stone was
that the writ petitioners are persons who are holding leases for quarrying black
granite which were about to expire and had applied for renewal of leases. Just as
the appellants before us, they had also complained that their applications for
renewal had been made prior to the coming into force of the prohibition in Rule 8-
C and these applications should have been dealt with without reference to the
same. It was further complained that these applications were kept pending for a
long time. The Supreme Court held that an application for renewal is in essence an
application for grant of lease for a fresh period; that the renewal is not to be
granted automatically, for the mere asking.
679. So far as the consideration of the application dehors the amendment and
incorporation of Rule 8-C is concerned, we may usefully extract the observations
of the Supreme Court which also shed valuable light on the submissions made
before us which reads as follosws:
“12. The next question for consideration is whether Rule 8-C is

attracted when applications for renewal of leases are dealt with. The
argument was that Rule 9 itself laid down the criteria for grant of
renewal of leases and therefore Rule 8-C should be confined, in its

270
application, to grant of leases in the first instance. We are unable to

see the force of the submission. Rule 9 makes it clear that a renewal is
not to be obtained automatically, for the mere asking. The applicant
for the renewal has, particularly, to satisfy the Government that the
renewal is in the interests of mineral development and that the lease
amount is reasonable in the circumstances of the case. These
conditions have to be fulfilled in addition to whatever criteria is
applicable at the time of the grant of lease in the first instance,
suitably adapted, of course, to grant of renewal. Not to apply the
criteria applicable in the first instance may lead to absurd results. If as
a result of experience gained after watching the performance of
private entrepreneurs in the mining of minor minerals it is decided to
stop grant of leases in the private sector in the interest of conservation
of the particular mineral resource, attainment of the object sought will
be frustrated if renewal is to be granted to private entrepreneurs
without regard to the changed outlook. In fact, some of the applicants
for renewal of leases may themselves be the persons who are
responsible for the changed outlook. To renew leases in favour of such
persons would make the making of Rule 8C a mere exercise in futility.
It must be remembered that an application for the renewal of a lease
is, in essence an application for the grant of a lease for a fresh
period. We are, therefore, of the view that Rule 8C is attracted in
considering applications for renewal of leases also.”
(Emphasis by us)
680. Before us, so far as the bids of the appellants are concerned, the respondents
have not applied the new amended provisions. Objections premised on this
submission are therefore completely misplaced.
XXV Conclusions
681. In the aforesaid background, we conclude as under:
I. The learned Single Judge was bound to consider the statutory provisions
and the rules in their entirety and has rightly concluded that Rule 104A

271
was affront to the Environment Protection Act. Rule 104A which enabled
mining activity to be undertaken by the highest bidders without
environmental clearance was ultra vieres the Mines and Minerals
(Development and Regulation) Act, 1957. It was in the teeth of the
judgment of the Supreme Court reported at (2012) 4 SCC 629 Deepak
Kumar and Anr. V. State of Haryana and Anr., and the series of
directions including the directions dated 5th September, 2019 and 13th
September, 2018 made by the National Green Tribunal in the case OA
No. 360/2015, National Green Tribunal Bar Association v. Virendra
Singh (State of Gujarat) and OA No.186/2016 Satindra Pandey v.
MOEF & CC, respectively. Rule 104A was in contradiction with Rules
26 (2) and 55(9) of the J&K Minor Minerals Concession, Storage,
Transportation of Minerals and Prevention of Illegal Mining Rules,
2016.
II. The illegal acts of the appellants have deprived the State of valuable
financial resources in terms of the balance bid amount while deriving
huge commercial profits and causing environmental degradation by their
indiscriminate mining operations without environmental clearances
utilizing the shield of Rule 104A.
III. The suspicion of the respondents that in the auctions of 2017, the reserve
price fixed was low and there was cartelization was with basis.
IV. The decision of the respondents to cancel the auction of 2017 was
bonafidely based on material on record and arrived at after application of
mind and full consideration of the relevant material purely in public
interest.

272
V. The decision to change the policy and to auction mineral licences by e-
auction was a reasonable policy decision fairly made without any ulterior
purpose for the discernible reasons that e-auctions are the most
transparent, maximize competition, geographically inclusive, effective,
efficient method of conducting a public auction which enables
maximization of the public interest and national priorities.
VI. The writ court has limited powers of judicial review into administrative
action and matters of contract. It does not have the jurisdiction to go into
a factual dispute of whether in the facts of the case there was a concluded
contract or not.
VII. In the present cases, the bids of the appellants were only provisionally
accepted; they were required to obtain approval of the Mining Plan and
environment clearance in accordance with Rule 26(2) of the Rules of
2016 as well as deposit the balance bid amount within a period of six
months as per Rule 55(9) which was communicated to the bidders by the
letter of intent issued as per Rule 55(9); before being considered for grant
of the mining lease under Rule 52 and lastly execution of the mining
lease in accordance with Rule 40. Only thereafter, a concluded contract
would have come into existence.
For the reason that appellants failed to comply with the
requirements of Rule 26(2) and 55(9), no concluded contract came into
existence.
VIII. The respondents had no power or authority to waive, modify the pre-
conditions for grant of a mining lease or to grant extension of the time

273
stipulation as contained in the Rules and communicated in the letter of
intent.
IX. The appellants were not concerned with the compliance of any of the
mandatory conditions laid down in the rules or making good the financial
obligations to the respondents and failed to act with expedition and
diligence. The respondents cannot be held responsible for the delay in
obtaining the environment clearances. As such, the finding of the learned
Single Judge on issue no. iv that the appellants were not responsible for
the delay is set aside and quashed.
X. The appellants do not have any right or entitlement to seek compensation
and hence no remedy in common law to do so.
XI. The respondents had not held out any representation or unconditional
promise to the appellants that they would be granted mining leases
irrespective of whether they complied with the requirements of Rules of
2016 or not. The doctrine of promissory estoppels is neither attracted nor
has application in the present case.
XII. The cancellation of the entire auction of 2017 and the policy decision to
allot mining leases henceforth only by e-auction was lawful, principle
based, most transparent, viable and fair mode of grant of public largess.
XIII. The action of the respondents cannot be faulted for violations of natural
justice on the ground that no notice was issued before cancellation of the
auction or because no reasons have been assigned in individual cases.
XIV. The appellants are guilty of suppressio veri and disentitled to any relief.
XV. The appellants are liable to effect reparation and compensation for the
environmental degradation from their illegal mining.

274
XVI. Rule 55(10) of the Rules of 2016 has no bearing or relevance in the
present case.
XVII. The submissioins that the appellant stood granted a ‘prospecting licence’
(LPA 61/2020) or a ‘quarrying licence’ (LPA 7/2020) are legally
untenable and rejected.
XVIII. The respondents are required to comply with the judgments and
directions of the Supreme Court of India and the National Green Tribunal
on the issues relating to reparation and compensation for environmental
degradation and damage and to undertake a scientific examination of the
impact on the environment of the acts of omissions of the appellants.
XIX. In view of the admitted violation of the Rules and the requirements of
LoI by the bidders, any action, communication or order of the authorities
subsequent to 26th February, 2019, which could be considered as
processing of the matter, is illegal and of no consequence and effect.
XXVI Result
682. In view of the above, it is directed as follows:
I. The instant appeals are found to be without any merit and are hereby
dismissed.
II. The conclusion of the learned Single Judge in para 46 of the judgment
that the appellants had a remedy in common law to seek compensation is
set aside and quashed.
III. The liberty granted by the learned Single Judge in para 76 of the
impugned judgment dated 1st May, 2020, to the appellants to claim
refund of their bid amount(s), if any, lying with the respondents or to sue

275
the respondents in appropriate proceedings for any loss or damage, if
any, suffered by the appellants, is hereby set aside.
IV. In view of the discussion in paras 296 to 311, hereinabove, the Chief
Secretary of the Union Territory of Jammu & Kashmir shall take
immediate steps for appointing professional and qualified person(s)/
agency(ies) for technically and scientifically evaluating, in strict time
frames, the issues of:
(a) fixation of the reserved prices of minerals in the UT of Jammu
& Kashmir.
(b) the terms and conditions on which auctions/tenders for grant of
all mineral concessions are conducted.
(c) recommendations of the experts so appointed be implemented
in public interest.
V. In view of the discussion in paras 273 to 295, hereinabove, the Chief
Secretary of the Union Territory shall, if not already done, appoint a
Committee of Experts on the lines of directions given by the Supreme
Court of NGT in para 55 of the order dated 5th April, 2019 in OA No.
360/2015, National Green Tribunal Bar Association v. Virendra Singh
(State of Gujarat), as well as order dated 13th September, 2018 in
Mushtakeen v. MOEFF & CC, to assess the components and scales of
compensation and recommend measures of reparation for acts and
omissions of the appellants which have resulted in environmental
degradation.
VI. The Chief Secretary of the Union Territory shall appoint a nodal officer/
committee of officers to compute the scale of compensation as

276
recommended by the Committee as above with a time bound mandate to
issue notices to show cause to the appellants with regard to payment of
compensation, if any, consideration of the responses, making appropriate
determination of liability and effecting recoveries thereof.
(SANJAY DHAR) (GITA MITTAL)

JUDGE CHIEF JUSTICE
Jammu
30.09.2020

Display PDF.php 5 1 (2)

Uploaded by

Copyright:

Available Formats

Display PDF.php 5 1 (2)

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Display PDF.php 5 1 (2)

Uploaded by

Copyright:

Available Formats

HIGH COURT OF JAMMU AND KASHMIR

Pronounced on: 30.09.2020

LPA No. 53/2020(Jammu)

Rakesh Kumar Choudhary .....Appellant

Mr. Sunil Sethi, Sr. Advocate

Through :- Mr. F. A. Natnoo, AAG

LPA No. 56/2020 (Jammu)

Through :- Mr. P. N. Raina, Sr. Advocate with

State of J&K (Now Union Territory of

Through :- Mr. F. A. Natnoo, AAG

LPA No.61/2020 (Srinagar)

M/s Usman Construction and others .....Appellant

Through :- Mr. F. A. Natnoo, AAG

LPA No.62/2020 (Srinagar)

M/s Mohammad Ashore and others .....Appellant

Through :- Mr. F. A. Natnoo, AAG

Mohammad Farooq Lone & Others .....Appellants

Through :- Mr. Hakim Suhail Ishtiaq,

LPA No.53/2020 & connected appeals Page 2

LPA No.64/2020 (Srinagar)

Vikar Ahmad Dar …...Appellants

Through:- Mr. Z. A. Shah, Sr. Advocate

State of J&K and others …..Respondent(s)

Through:- Mr. F. A. Natnoo, AAG

LPA No. 58/2020 (Jammu)

Nagar Singh …...Appellants

LPA No. 77/2020 (Srinagar)

Shahnawaz Ahmad Bhat & anr. …...Appellants

LPA No.53/2020 & connected appeals Page 3

HON’BLE THE CHIEF JUSTICE

Per Gita Mittal, CJ.

“6. Rivers, Forests, Minerals and such other resources

(Ref: (1981) 2 SCC 205, State of Tamil Nadu vs. Hind

“9. Natural resources are ‘public goods’ and the

LPA No.53/2020 & connected appeals Page 4

[Ref: Original Application No.360/2015,

1. By way of the instant appeal, a challenge is laid to the common judgment

communication of the Department of Industries and Commerce of the Government

bearing No.Ind/legal-239/2018 dated 26.02.2019 conveying the approval of the

Minor Minerals Concession, Storage, Transportation of Minerals and Prevention

carried out only through e-auction mode.

2. To avoid conflict of adjudication, a direction was made for clubbing of the

Court, which were directed to be consolidated for hearing and adjudication.

Jammu on video conferencing.

LPA No.53/2020 & connected appeals Page 5

account of connectivity issues. The matter was accordingly listed on 26 th August,

5. We propose to consider the several propositions placed by the parties in

Sr. No. Headings Paragraph

LPA No.53/2020 & connected appeals Page 6

XIII. Whether processing of Environmental Clearances 439-486

I. Judicial consideration of issues concerning mining of minor

6. Mining Activity, undertaken primarily for commercial reasons, has a far

Government may, by notification in official gazette declare to be a minor mineral.

LPA No.53/2020 & connected appeals Page 7

These minor minerals are extracted in large quantities with devastating

consequences and has been the subject matter of authoritative judicial

pronouncements by the Supreme Court of India as well as the National Green

7. So as to put the matter in perspective, and to understand the context, it is

legislations and Government notifications on matters relating to mining of

minerals with which this case is concerned.