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PETITIONER: NAND KISHORE SARAF

       Vs.

RESPONDENT: STATE OF RAJASTHAN AND ANOTHER

DATE OF JUDGMENT: 24/02/1965

BENCH: DAYAL, RAGHUBAR BENCH: DAYAL, RAGHUBAR GAJENDRAGADKAR, P.B. (CJ) RAMASWAMI, V.

CITATION:  1965 AIR 1992            1965 SCR  (3) 173  CITATOR INFO :  E          1985 SC1147  (15)

ACT:     Rajasthan  Minor Mineral Concession Rules,  1959,  Rules 36(7),  59--Auction  for  the grant  of  royalty  collection contract--Whether obligatory on Government to accept highest bid--Whether preference can be shown to workers’ cooperative societies against highest bidder.

HEADNOTE:    The appellant offered the highest bid at the auction  for the  grant  of royalty collection contract  on  January  21, 1964.  Respondent No.2 a cooperative society of workers  was also  one  of  the  bidders.  Resportdent  No.  2  made   an application  on  March  5, 1964 to  the  Government  stating therein that the appellant had not deposited 25 Dee cent  of the  bid  amount as security within the time  prescribed  by Rule 36(7) of the Rajasthan Minor Mineral Concession  Rules, 1959,  and  that  it  was  prepared  to  take  the   royalty collection contract on the highest bid as made by appellant. On the above application the State Government made an  order in favour of Respondent No. 2. The appellant thereupon filed a  writ petition in the High Court which was  dismissed.  He was however granted a certificate of fitness.    In appeal it was contended that the Government had merely to  confirm  the  highest  bid at  the  auction  by  way  of formality and was not competent to sanction the contract  in favour of someone who had not offered the highest bid at the auction.     HELD: (i) The appellant had admittedly failed to deposit 25  per cent of the bid as security in compliance  with  the provisions  of  Rule 36(7). The rules  did  not  contemplate adjustment  of security deposited for an earlier  period  as the  appellant claimed. He therefore lost whatever claim  he could  have  had  for the final acceptance  of  his  bid  by Government and therefore could not question the grant of the contract to any other person by the. Government. [175 B-C]     (ii)  Nothing  in Rule  36 requires  the  Government  to accept  the  highest  bid by  formally  confirming  it.  The Government  has  discretion  to confirm the bid  or  not  to confirm  it. Further Rule 59 provides for the relaxation  of

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any  provision  of  the rules in  the  interest  of  mineral development or better working of the mines. [176 A-B]     (iii)  The  view taken by the Government  in  preferring Respondent  No.  2  to the appellant cannot be  said  to  be arbitrary  or  without any  justification.  The  cooperative society  is  of the laborers who work in the mines  and  the benefit  of the contract would go to the labourers. In  view of the spirit underlying Rule 59, Government could therefore relax any such rule which could in any  way come in the  way of" its granting the contract to Respondent No. 2. [176 D-F]     (iv)  The  time for which the contract was  granted  was shortly  to  come to an end, and it would not  be  desirable even  if  the  appellant was right  to  interfere  with  the contract. [176 G]     K.N. Guruswamy v. State of Mysore, [1955] 1 S.C.R.  305, relied on.

JUDGMENT:  CIVIL APPELLATE JURISDICTION: Civil Appeal No. 79 of 1965.     Appeal from the judgment and order dated August 5, 1964. of  the  Rajasthan High Court, Jodhpur, in D.B.  Civil  Writ Petition No. 536 of 1964. L,/B(D)SCI-13 174     Sarjoo Prasad, J.B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant.     M.M. Tewari, K.K. Jain and R.N. Sachthey, for respondent No. 1. B.B.  Tawakley  and K.P. Gupta, for respondent  No.  2.  The Judgment of the Court was delivered by     Raghubar  Dayal, J. This appeal, on certificate  granted by the Rajasthan High Court, is against the dismissal of the appellant’s writ petition under Art. 226 of the Constitution praying  for the issue of a writ of certiorari to the  State of  Rajasthan,  respondent  no. 1.  for  the  canceling  and setting aside of its order dated April 1, 1964 granting  the contract for collecting royalty on building stones excavated from  certain area to respondent no. 2, Dharti  Dan  Shramik Theka Sahkari Samiti Ltd., a cooperative society. The appeal arises in these circumstances.     The appellant offered the highest bid at the auction for the  grant  of royalty collection contract  on  January  21, 1964.  Respondent  no. 2 was also one of  the  bidders,  but stopped after offering a bid of Rs. 33,000. The final bid of the appellant was for Rs. 42,200. The State Government  made the  order in favour of respondent no. 2 on  an  application made  by  it  on March 5. 1964.  stating  therein  that  the appellant had not deposited 25 per cent of the bid amount as security immediately after the completion of the auction  in accordance  with  r. 36(7) of the  Rajasthan  Minor  Mineral Concession Rules, 1959, hereinafter called the rules, and as per the terms and conditions of the Auction Notification and that it was prepared to take the royalty collection contract on  the highest bid of Rs. 42,200. It was further stated  in the  application  that respondent no. 2  was  a  cooperative society  of the laborers who themselves worked on the  mines of the area and therefore in view of Government’s policy  it should  receive preference to an individual bidder.  It  was further stated that the benefit accruing out of the contract of  royalty collection would be shared by the labourers  and workers  themselves  which would go a long  way  to  improve their  socioeconomic  conditions and thus  ultimately  would ameliorate  the conditions of the workers who  were  working

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hard in quarries since long.     The contention for the appellant is that the  Government had merely to confirm the highest bid at the auction by  way of formality and was not competent to sanction the  contract in favour of someone who had not offered the highest bid  at the auction.     Rule  34 of the rules provides that  royalty  collection contracts  may  be granted by the Government by  auction  or tender  for  a maximum period of two years  after  which  no extension  was to be granted. The procedure for  auction  is provided by r. 36. Sub-rule 175 (5)  thereof  provides  that no bids shall  be  regarded  as accepted  unless  confirmed by Government or  the  competent authority  and sub-rule (7) provides that on  completion  of the   auction   the  result  will  be  announced   and   the provisionally  selected bidder shall immediately deposit  25 per  cent of the amount of bid for one year and  another  25 per  cent  as security for due observance of the  terms  and conditions of the lease or contract. It is admitted for  the appellant  that  on  completion of the auction  he  did  not deposit  25  per cent of the bid as security  in  compliance with  the  provisions  of  sub-r.  (7).  He  therefore  lost whatever claim he could have had for the final acceptance of his  bid  by Government and therefore  cannot  question  the grant of the contract to any other person by the Government.     The appellant urges that he held such royalty collection contract for the year 1963-64 and had deposited Rs. 9,250 as security  for  the  due performance  of  that  contract.  On February  12, 1964, over three weeks after the  auction,  he submitted  an  application to the Mining  Engineer,  Jaipur, stating  that he had been continuously taking  contract  for the  last three years and that he was depositing  Rs.  1,300 and  that the balance of the security amount required,  i.e. Rs. 9,250 be adjusted against Rs. 9,250 with the  Government in connection with the earlier contract. This letter was not replied  to.  The  request made in  this  letter  could  not possibly  be accepted. The earlier contract was to  continue up  to March 31, and the security money had to  remain  with the  Government upto that date. It is only after  March  31, that anything could be said with some definiteness as to how much of the security money in deposit would be available  to the  contractor.  Paragraph 2 of the Form  of  Agreement  of Collection  of Royalty on Minor Minerals,  prescribed  under the rules, and set out in the Schedule to the rules,  states that  the  agreement  shall remain in  force  for  a  period commencing from first April of a year and ending on March 31 of  the next year on which the period of the contract  would expire  and  that  the security would  be  refunded  on  the termination  of  the contract. Para 6 of the  Form  provides that for the due fulfillment of the terms and conditions  of the contract the Contractor shall deposit 25 per cent of the contract money in advance as security which will be refunded on  the termination of the contract. The  appellant  alleged that  there  was a practice of adjusting  previous  security amounts  towards  the security for the  next  contract.  The practice  is  denied on behalf of respondent no. 1  and  the practice  against  the  provisions of the  rules  cannot  be recognized  as  of any binding effect. It may  be  mentioned here that the representation which the appellant made to the State Government on April 6, 1964, made no reference to  his depositing  the  security  by depositing Rs.  1,300  and  by making a request for the adjustment of the balance from  the security amount already in deposit and indicates that he too did  not consider the request for adjustment of  the  amount

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acceptable. 176     There is nothing in r. 36 of the rules which may lead to the conclusion that the Government has to accept the highest bid  by formally confirming it or that it cannot  grant  the contract  to  any  person other than one  who  had  bid  the highest.  A  bid is not regarded as accepted  unless  it  is confirmed  by  Government.  The  Government  has   therefore discretion to confirm the bid or not to confirm it. Further, r.  59 provides for the relaxation of any provision  of  the rules  in  the  interest of mineral  development  or  better working of mines.     There  is  the letter dated February 14, 1962  from  the Director  of Mines and Geology, to All Mining  Engineers  on the subject of encouragement of cooperative mines and states that cooperative societies ought to be encouraged for mining work  also  as  per directive of the  Government  of  India. Respondent No. 2 addressed a letter to the Director of Mines and  Geology  and  referred to  Government  policy  for  the encouragement  of cooperative societies in  connection  with royalty collection contracts. The order of Government  dated April  1, 1964, after referring to the appellant’s  offering the  highest bid, stated that the Government  was  satisfied that the Society, respondent No. 2, was a suitable party for the  grant  of  the said contract. The  view  taken  by  the Government  in preferring respondent No. 2 to the  appellant for the grant of the contract cannot be said to be arbitrary or without any justification. The cooperative society is  of the  labourers who work in the mines and it is obvious  that any  benefit  arising out of the contract would  go  to  the labourers and thus improve their economic position. In  view of  the spirit underlying r. 59, Government could  therefore relax  any such rule which could in any way come in the  way of its granting the contract to respondent no. 2.     We  therefore hold that the Government was competent  to give the contract to respondent no. 2 it being not bound  to accept  the  highest bid at the auction, though  usually  it accepts such bids.     Another  consideration which is decisively  against  the appellant is that the contract for the collection of royalty for  the  year 1964-65 is shortly to come to an end  and  it would not be desirable, even if the appellant’s  contentions were acceptable, to interfere with that contract.     Reference,  in  this  connection. may  be  made  to  the decision  of  this  Court  in K.N.  Guruswamy  v.  State  of Mysore(1)  where the appellant was refused a writ solely  on the  ground that it would have been ineffective, the  period of  the  impugned contract coming to an end  after  about  a fortnight of the order of this Court. That was a case  where on merits the Court was of opinion that the writ should have been issued.     We therefore dismiss the appeal and order the parties to bear their own costs. Appeal dismissed. (1) [1955] I.S.C.R. 305, 177