No Penal Consequences for Delayed Document Submission by Highest Bidder; Rule 10(3) of the UP Minor Minerals Rules Is Directory: Allahabad HC

The Court held thus while noting that the provision prescribes no penal consequences for delayed document submission by the highest bidder.

The Court was hearing a Writ Petition seeking a Writ of Certiorari for quashing the order passed by the District Magistrate, and the order passed by the Secretary, Mines and Minerals, U.P.

The bench of Justice Anjani Kumar Mishra and Justice Jayant Banerji observed, “There does not appear to be any penal consequence provided for non- compliance of the earlier part of this provision which requires the highest bidder to submit relevant documents within a period of three days from acceptance of his bid. Therefore, in view of the judgment relied upon by the learned counsel for the petitioner, the provision has to be held to be directory and not mandatory.”

Brief Facts-

The Petitioner M/S Pragyason Constructions Private Limited seeks to quash the District Magistrate's order, which rejected his application for a refund of Rs. 90 lakhs earnest money deposited for an e-auction lease. The District Magistrate's decision, affirmed by the first respondent in revision, cites the petitioner's failure to provide the required documents within the specified time. The petitioner had submitted the highest bid and was asked to furnish documents for a letter of intent. Due to the pandemic, he failed to comply and was reminded to submit documents within three days. Meanwhile, the petitioner participated in another auction and was issued a letter of intent. Subsequently, he requested a refund of his earnest money which was denied, resulting in the forfeiture of the amount due to his non-compliance causing revenue loss to the State.

The Court noted that the forfeiture of earnest money could be ordered only when, upon the verification, any document or certificate filed by an individual was found false, fabricated or incorrect.

The Court said that in case the provision was mandatory, non-compliance would have resulted in adverse consequences having visited the petitioner on the 4th day itself. The authorities, on the contrary, have issued at least two reminders.

The Court perused Rule 10(3) U.P. Minor Minerals (Concessions) Rules, 1963, as amended by the 47th Amendment Rules, 19.10.2019, and observed, “…a person in the State of U.P. cannot be granted more than two mining leases for an aggregate area in excess of 50 hectares. It further provides if in a case this condition stands violated, the last lease shall stand cancelled and the earnest money deposited for the same will also stand forfeited and only the first two leases which are not for more than 50 hectares shall remain approved. This provision is subject to proviso that if information is provided by the applicant that he has been issued two letters of intent for two or more mining leases or that their areas are in excess of 50 hectares, he will have right to choose any of the mining lease areas and the amount deposited for the remaining areas would be returned after verification.”

The Court held that the forfeiture of the petitioner’s security deposit of Rs. 90 lakhs is without any authority of law.

Accordingly, the Court allowed the Writ Petition and quashed the impugned orders.

Cause Title: M/S Pragyason Constructions Private Limited v. State of U.P. (Neutral Citation: 2024:AHC:98024-DB)

Appearance: 

Sr. Adv. Udayan Nandan

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