Debidutta Mohanty Versus Ranjan Kumar Pattnaik & Ors.
Debidutta Mohanty Versus Ranjan Kumar Pattnaik & Ors.
Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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.
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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
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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
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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
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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,
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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;
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(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
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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
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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
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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.
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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
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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.
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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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