Debidutta Mohanty Versus Ranjan Kumar Pattnaik & Ors.

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4939 of 2022

Debidutta Mohanty .. Appellant

Versus

Ranjan Kumar Pattnaik & Ors. .. Respondents

J U D G M E N T

M. R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned

judgment and order passed by the High Court of Orissa at

Cuttack in Writ Petition (Civil) No.16437 of 2021 by which the

High Court has allowed the said writ petition preferred by the

respondent no.1 herein and has set aside the order passed by

the Collector, Cuttack dated 24.03.2021 by which the lease in

favour of the original writ petitioner was cancelled and

consequently the lease in favour of the original writ petitioner

has been revived, the original respondent no.5 before the High

Court has preferred the present appeal.

2. The facts leading to the present appeal in nutshell are as

under:

2.1 That an auction notice for grant of the lease in question

was published on 08.01.2018. Clause 5 of the auction notice

stated that the bidder should submit a solvency certificate

from the Revenue Officer which amount should not be less

than the royalty and the additional charges fixed for the

source. The bidder was also required to submit the details of

the movable properties. The auction notice referred to the

Orissa Minor Minerals Concession Rules, 2016 (hereinafter

referred to as ‘OMMC Rules, 2016’). The respondent no.1 –

original writ petitioner participated in the tender process and

submitted his application along with a Solvency Certificate

dated 07.12.2017 issued by the Tehsildar, Narasinghpur. The

above solvency certificate was issued despite the above order

passed by the SubCollector, Athagarh on 06.12.2017. At this

stage, it is required to be noted that an order was passed by

the SubCollector, Athagarth on 06.12.2017 specifically

stating that a solvency certificate be issued in favour of

“Gurukrupa Charitable Trust, Chairman of Village

Kendupali”. However, the Tehsildar issued the solvency

certificate in favour of the original writ petitioner individually

who at the relevant time was the Chairman of the Trust. The

said solvency certificate was enclosed with the original writ

petitioner’s bid.

2.2 When the bids were opened, the highest bid was of one

Sukanti Sahoo, the original writ petitioner was the second

highest bidder and the appellant herein – original respondent

no.5 Debidutta Mohanty was the third highest bidder. The

bid of the first highest bidder Sukanti Sahoo was cancelled as

she was found to be a defaulter. Since the original writ

petitioner was the second highest bidder a letter dated

08.05.2019 was issued to him asking him to communicate his

willingness to operate the sand sairat at Rs.142 per cubic

meter which was the rate quoted by the highest bidder. On

the same date, the original writ petitioner submitted his

willingness. He was then asked to execute a lease deed. The

original writ petitioner then deposited Rs.26,28,450/ and

complied with the requirements. That Sukanti Sahoo filed the

Writ Petition (C) No.9023 of 2019 before the High Court

questioning the cancellation of her bid and the selection of the

original writ petitioner. Initially the High Court granted the

order of status quo which came to be vacated subsequently.

Thereafter the present original writ petitioner filed Writ

Petition (C) No.22660 of 2019 in the High Court for a direction

to the competent authority i.e. the Tehsildar, Sadar for

execution of the lease deed in his favour. Thereafter on

01.01.2020, a lease deed came to be executed in his favour.

That thereafter a second writ petition came to be filed by

Sukanti Sahoo against the grant of lease in favour of the

present original writ petitioner being Writ Petition (C) No.951

of 2020. Initially the High Court stayed the operation of the

lease deed executed in favour of the original writ petitioner.

However, thereafter the stay came to be vacated clarifying that

the operation of the lease would be subject to the final

outcome of the pending writ petition.

2.3 That thereafter the appellant herein Debidutta Mohanty

filed the Writ Petition (C) No.3326 of 2021 in the High Court

questioning the solvency certificate issued in favour of

respondent no.1 herein – original writ petitioner. The said

petition came to be disposed of by the High Court vide order

dated 04.02.2021 directing the Collector, Cuttack to consider

his representation. While the matter was pending with the

Collector, the appellant herein filed Writ Petition (C) No.14241

of 2021 which came to be disposed of on 19.04.2021. In the

said order, it was noted that on 08.03.2021, the Tehsildar,

Narasinghpur had cancelled the solvency certificate produced

by respondent no.1 herein with his bid and that against the

said cancellation order, an appeal had been filed before the

Collector. A direction was issued to the Collector to also

dispose of the representation of the appellant herein

questioning the solvency certificate which was issued in

favour of the original writ petitioner, not later than

12.05.2021. In the meanwhile, the respondent no.1 was

permitted to operate the sairat and then it was stopped at the

instance of the Tehsildar. On 02.03.2021 a letter was written

by the Tehsildar, Narasinghpur to the SubCollector, Athagarh

stating that the respondent no.1 herein – original writ

petitioner was the Chairman of the Gurukrupa Charitable

Trust. He had filed an application for issuance of a solvency

certificate in his own name, but since he was the Chairman of

the Gurukrupa Charitable Trust, the solvency certificate that

had to be issued in the name of the Trust was issued in his

name. It was stated therein that the notice had been issued

to the party and necessary steps have been taken for

correction of the said certificate.

2.4 Subsequently, another letter was sent by the Tehsildar

on 08.03.2021 to the Collector, Cuttack stating that the

earlier solvency certificate issued in favour of the original writ

petitioner – Respondent no.1 herein stood cancelled and

another certificate was asked to be issued in favour of the

“Gurukrupa Charitable Trust, Chairman of Village

Kendupali”.

2.5 That meanwhile, on 29.01.2021, the original respondent

no.1 herein original writ petitioner wrote to the Tehsildar,

Sadar Cuttack to substitute/exchange the solvency certificate

given with his bid with another one in the value of Rs.4.6

crores which had been issued on 27.01.2021. That thereafter

on the representation made by the appellant herein, the

Collector cancelled the lease in favour of respondent no.1

herein original writ petitioner by observing and concluding

that the solvency certificate which was required to be issued

in favour of the “Gurukrupa Charitable Trust Chairman of

Village Kendupali”, was issued in the name of respondent no.1

and therefore, the solvency certificate had not been issued

following the stipulated provisions of the law and hence, the

utilization of the same by respondent no.1 herein original

writ petitioner in auction of the sairat is illegal. The order

passed by the Collector dated 24.03.2021 was the subject

matter of the present writ petition before the High Court at the

instance of Respondent no.1 herein.

2.6 Before the High Court it was the case on behalf of

respondent no.1 herein original writ petitioner that under

the provisions of the OMMC Rules, 2016 the competent

authority in regard to minor minerals is the Tehsildar and

therefore, the lease deed could not have been cancelled by the

Collector. It was also the case on behalf of the original writ

petitioner respondent no.1 herein that he rectified the defect

of not furnishing a solvency certificate in his own name. It

was submitted that it is true that earlier the solvency

certificate should have been issued in the name of the Trust of

which he was the Chairman, however, on 29.01.2021 itself he

had written to the Tehsildar for substituting the solvency

certificate submitted with the bid with another issued in his

own name and, therefore, even the said defect stood cured. It

was submitted that without taking note of this, the Collector

had cancelled the lease.

2.7 The writ petition was opposed by the State as well as the

appellant herein original respondent no.5. It was submitted

on behalf of the appellant herein that the bid submitted by

respondent no.1 herein original writ petitioner was ab initio

void and should never have been accepted since it was not

accompanied by a valid solvency certificate in the name of the

original writ petitioner. It was submitted that the document

that was enclosed as a solvency certificate was in fact not

correctly issued and was contrary to the express order of SubCollector. It was submitted that as the bid of the first highest

bidder Sukanti Sahoo was earlier cancelled and the original

writ petitioner was the second highest bidder whose lease has

been rightly cancelled by the Collector, being the third highest

bidder the lease ought to have been granted in his favour.

2.8 By the impugned judgment and order and having opined

that the initial solvency certificate was issued in favour of the

original writ petitioner which was issued in the name of the

original writ petitioner, though required to be issued in the

name of the Trust, was a bona fide error which subsequently

came to be cancelled and even a fresh solvency certificate was

issued in favour of the original writ petitioner, the Collector

had erred in cancelling the lease deed in favour of the original

writ petitioner. The High Court also has observed that under

the OMMC Rules, 2016, the competent authority in terms of

Schedule (IV) who can cancel the lease deed, is the Tehsildar

and therefore, the competent authority’s power under the

OMMC Rules, 2016 would not have been straight way

exercised by the Collector in the first instance. Therefore, the

High Court by the impugned judgment and order has set

aside the order passed by the Collector cancelling the lease

deed in favour of the original writ petitioner.

2.9 The impugned judgment and order passed by the High

Court quashing and setting aside the order passed by the

Collector, Cuttack dated 24.03.2021 cancelling the lease in

favour of the original writ petitioner respondent no.1 herein

is the subject matter of the present appeal at the instance of

the original respondent no.5 – third highest bidder.

4. Shri R. Basant, learned Senior Advocate has appeared on

behalf of the appellant and Shri A.N.S. Nadkarni, learned

Senior Advocate has appeared on behalf of Respondent no.1.

4.1 Shri Basant, learned Senior Advocate appearing on

behalf of the appellant has vehemently submitted that in the

facts and circumstances of the case the Division Bench of the

High Court has materially erred in quashing and setting aside

the order passed by the Collector, Cuttack dated 24.03.2021

cancelling the lease in favour of respondent no.1 herein.

4.2 Shri Basant, learned Senior Advocate has further

submitted that the High Court has materially erred in

observing and holding that the initial subject solvency

certificate which as such was in the name of Gurukrupa

Charitable Trust, but was used by respondent no.1 in his

individual capacity in order to participate in the tender was a

genuine mistake and not a deliberate act and therefore a

rectifiable defect.

4.3 It is submitted that it is an admitted position that the

property belonged to the Gurukrupa Charitable Trust and was

not owned by respondent no.1. It is submitted that therefore,

the subject solvency certificate used by respondent no.1 in his

individual capacity in order to participate in the tender was an

exercise in fraud which rendered his bid nonest and void ab

initio.

4.4 It is submitted that the High Court has not properly

appreciated the fact that it was the modus operandi of

respondent no.1 to attempt to pass off the property of the

Trust as his own property inasmuch as the selfsame subject

solvency certificate had been misused by respondent no .1 in

another tender and detecting the fraud played, the Tehsildar

and the SubCollector had disqualified him from the said

tender.

4.5 It is further submitted that the High Court has

materially erred in applying Rule 51(7) of the OMMC Rules,

2016. It is submitted that the said SubRule shall be

applicable only in a case where there is a breach of any

condition of the lease deed, whereas in the instant case there

has been a breach of the auction/tender call notice and the

Rules governing bids.

4.6 It is further submitted that the High Court has

materially erred in holding that the competent authority

under the OMMC Rules, 2016 was the Tehsildar and therefore

the Collector could not have been approached in the first

instance despite being aware that there were allegations

against the Tehsildar of conspiring with respondent no.1.

4.7 Shri R. Basant, learned senior counsel appearing on

behalf of the appellant has further submitted that the High

Court has materially erred in taking into consideration the

subsequent conduct on the part of respondent no.1 in

obtaining the fresh solvency certificate. It is submitted that

what was required to be considered was the solvency

certificate at the time of bid and not the subsequent solvency

certificate.

5. Present appeal is vehemently opposed by Shri A.N.S.

Nadkarni, learned Senior Advocate appearing on behalf of

respondent no.1. It is submitted that as rightly observed and

held by the High Court the initial solvency certificate dated

07.12.2017 issued in favour of Respondent no.1 was by

mistake and instead of Gurukrupa Charitable Trust, the same

was issued in favour of Respondent no.1 being the Chairman

of Trust.

5.1 It is submitted that thereafter respondent no.1 himself

made an application for substitution of the solvency

certificate. That thereafter respondent no.1 obtained the fresh

solvency certificate in his favour which came to be permitted

to be substituted/filed. Therefore, it cannot be said that the

initial solvency certificate produced by respondent no.1 along

with the bid was nonest and void ab initio as sought to be

contended on behalf of the appellant.

5.2 It is further submitted that even otherwise the power to

cancel the lease deed would vest with the Tehsildar who is the

competent authority under Rule 51(7) of the OMMC Rules,

2016. That in the present case the lease deed was cancelled

by the Collector and therefore, the High Court has rightly

observed and held that the order passed by the Collector,

Cuttack cancelling the lease was without authority under the

Law.

5.3 It is further submitted that even during the pendency of

the present proceedings not only the lease period has expired

but even subsequently the fresh lease deed has been executed

pursuant to the impugned judgment passed by the High

Court.

6. We have heard learned Senior Counsel appearing on

behalf of the respective parties at length.

7. By the impugned judgment and order the High Court

has set aside the order passed by the Collector, Cuttack dated

24.03.2021 cancelling the lease which was in favour of

respondent no.1 herein inter alia on the grounds that:

(i) the order passed by the Collector cancelling the lease deed

was without authority under the law as under Rule 51(7) of

the Rules, 2016 the Tehsildar is the competent authority to

cancel the lease deed;

(ii) That the original solvency certificate dated 07.12.2017

produced by respondent no.1, produced along with the bid

was issued in his favour by mistake.

7.1 Now so far as the finding recorded by the High Court

that the order passed by the Collector dated 24.03.2021

cancelling the lease deed was without authority under the law

inasmuch as the competent authority to cancel the lease deed

under Rule 51(7) of the Rules, 2016 would be Tehsildar is

concerned, it is required to be noted that the Rule 51(7) shall

be applicable in case of breach of any condition of the lease

deed. The present case is not a case of breach of any

condition of the lease deed, but a case of producing invalid

solvency certificate at the time of submission of the bid.

Therefore, Rule 51(7) shall not be applicable at all to the facts

of the case at hand.

7.2 It is also required to be noted that in fact Collector

passed the order dated 24.03.2021 pursuant to the directions

issued by the High Court directing the Collector to take an

appropriate decision on the representation/(s) made by the

appellant. Under the circumstances the High Court has

materially erred in holding that the order dated 24.03.2021

passed by the Collector cancelling the lease deed was without

authority under the law.

8. Now so far as the findings recorded by the High Court

that the original Solvency Certificate dated 07.12.2017 in

favour of respondent no.1 was a mistake and there was no

other mala fide intention is concerned, it is required to be

noted that despite the fact that Gurukrupa Charitable Trust

was the owner of the property and on the said basis the

solvency certificate was claimed, the respondent no.1 made an

application for issuance of the solvency certificate in his own

name in his individual capacity. The SubCollector,

Athagrah vide communication dated 06.12.2017 as such had

specifically directed the Tehsildar to issue the certificate in the

name of Gurukrupa Charitable Trust. However, despite the

same the Tehsildar issued the solvency certificate dated

07.12.2017 in favour of respondent no.1 in his individual

capacity, which as such cannot be said to be by mistake. If

the communication by the SubCollector, Athagarh dated

06.12.2017 addressed to the Tehsildar would not have been

there and the Tehsildar would have issued the solvency

certificate in favour of respondent no.1 in his individual

capacity as he was the Chairman of the Trust then one can

understand such a mistake. However, in the present case the

SubCollector, Athagarh specifically directed not to issue the

solvency certificate in favour of respondent no.1 herein in his

individual capacity and specifically directed to issue the

certificate in the name of Trust. Under the circumstances it

cannot be said that the original solvency certificate dated

07.12.2017 was issued in favour of respondent no.1 in his

individual capacity by mistake. It appears that the

respondent no.1 deliberately and willfully obtained the

solvency certificate in his own name though the property

belonged to the Trust and the solvency certificate was

required to be issued in the name of the Trust. He

misused/used the solvency certificate dated 07.12.2017 for

his own benefit illegally and submitted the same along with

his bid and on the basis of the said solvency certificate he got

the lease bid. Under the circumstances, the bid by using the

solvency certificate dated 07.12.2017 by respondent no.1 was

nonest and void ab initio and therefore, the lease in his

favour on the basis of such solvency certificate was rightly

cancelled by the Collector.

8.1 At this stage it is required to be noted that subsequently

the respondent no.1’s application on 29.01.2021 permitting

him to substitute the solvency certificate was not on the

ground that the initial solvency certificate dated 07.12.2017

which was issued in his individual name was by mistake. The

reason given was that the other partner may claim over the

earlier solvency certificate and therefore we intend to

substitute/exchange the fresh solvency certificate which was

obtained against the other properties.

8.2 At this stage it is required to be noted that the

respondent no.1 used the very solvency certificate in another

tender and the Tehsildar and the SubCollector disqualified

the respondent no.1 from the said tender.

8.3 Under the circumstances as such the respondent no.1

misused the solvency certificate dated 07.12.2017 which as

such was illegally issued in his individual capacity/name as

though the same was required to be issued in the name of

Gurukrupa Charitable Trust. At this stage it is required to be

noted that subsequently the solvency certificate dated

07.12.2017 has been cancelled by the Tehsildar vide order

dated 08.03.2021 which has attained the finality.

8.4 Now so far as the submission on behalf of respondent

no.1 that subsequently respondent no.1 obtained the fresh

solvency certificate which was sought to be

substituted/exchanged is concerned, it is required to be noted

that what is required to be considered is the solvency

certificate produced along with the bid and not the

subsequent solvency certificate.

9. Now so far as the submission on behalf of respondent

no.1 that thereafter pursuant to the impugned judgment and

order passed by the High Court a fresh lease deed has been

issued is concerned, at the outset, it is required to be noted

that in the order dated 18.05.2022 it is observed by this Court

that the fresh lease deed, pursuant to the impugned judgment

and order shall be subject to the ultimate outcome of the

present SLP/appeal and/or further orders that can be passed

by the court in the proceedings.

10. In view of the above and for the reason stated above, we

are of the opinion that the High Court has committed a very

serious error in quashing and setting aside the order dated

24.03.2021 passed by the Collector, Cuttack cancelling the

lease deed which was in favour of respondent no.1.

Consequently, the impugned judgment and order passed by

the High Court deserves to be quashed and set aside and is

accordingly quashed and set aside. The order passed by the

Collector, Cuttack dated 24.03.2021 cancelling the lease deed

which was in favour of respondent no.1 is hereby restored.

On the impugned judgment and order being set aside the

fresh lease deed in favour of respondent no.1 also deserves to

be set aside and is accordingly set aside.

Present appeal is accordingly allowed. However, in the

facts and circumstances of the case, there shall be no order as

to costs.

…………………………………J.

(M. R. SHAH)

…………………………………J.

(B.V. NAGARATHNA)

New Delhi,

March 3, 2023

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