Kandi Prabhakar Reddy and M. Buchilingam Goud and Vinayaka Enterprises V. The Government of Andhra Pradesh, rep. by Its Secretary, Department of Mines and Geology, Secretariat, Hyderabad-1 and The Assistant Director of Mines and Geology, Karimnagar

WP/26749/2010

AI Insights

The case involves three writ petitions related to the auction of sand quarrying rights in Karimnagar District, conducted by the Assistant Director of Mines & Geology. The auction was initially contested due to environmental concerns and procedural non-compliance. The government later cancelled the auction based on a legal opinion that the auction notice did not comply with mandatory procedural requirements. The petitioners, who were successful bidders, challenged the cancellation and the forfeiture of their EMD amounts. The court found that the forfeiture was unjustified due to an interim stay that prevented the payment of the required deposit, leading to the refund order for one set of petitioners, while upholding the cancellation for others.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 799696 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 27-04-2011
• Assessment Year: misc
• Other Referred Cases: Writ Petition No. 27790 of 2009, Writ Petition No. 27846 of 2009, Writ Petition No. 9753 of 2009
• Laws Referred To: A.P. Minor Mineral Concession Rules, 1966
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Keywords: Auction Notice; EMD Refund; Feasibility report; Interim Stay; Sand quarry
• Section: 9(l); 9-B(6); 9-K(1); 9-K(3)

Judgement Text

"HONOURABLE SRI JUSTICE ASHUTOSH MOHUNTA WRIT PETITION Nos. 18043, 26749 and 27485 OF 2010. DATED 27th April, 2011. WRIT PETITION No. 18043 OF 2010 BETWEEN Kandi Prabhakar Reddy and anor …Petitioners AND The Government of Andhra Pradesh, rep. by Its Secretary, Department of Mines and Geology, Secretariat, Hyderabad-1 and ors ….Respondents. WRIT PETITION No. 26749 OF 2010: BETWEEN M. Buchilingam Goud and ors ….Petitioners And The Assistant Director of Mines and Geology, Karimnagar and ors …Respondents. WRIT PETITION No. 27485 OF 2010: BETWEEN M. Buchilingam Goud and ors ….Petitioners And The Assistant Director of Mines and Geology, Karimnagar and ors …Respondents HONOURABLE SRI JUSTICE ASHUTOSH MOHUNTA WRIT PETITION Nos. 18043, 26749 and 27485 OF 2010 COMMON ORDER: These three writ petitions can be disposed of by this common order as common questions of law and fact are involved for adjudication. The facts may briefly be stated as under: The Assistant Director of Mines & Geology, Karimnagar, (hereinafter referred to as ‘the first respondent’) issued Auction Notice No. 1568/O/Sand/2010/Auc/9-10 dated 01.12.2009 inviting sealed tenders and notifying public auction of leasehold rights of sand quarry in ten reaches in Karimnagar District, after duly obtaining the fresh clearances from the Ground Water and Irrigation Departments and conducted auction on 19.12.2009 for nine reaches under the submergence of Lower Manneru Dam and Medium Manneru Dam, namely, Elgandal, Nustulapur, Vachunur, Nedunur, Kudurupaka, Vardavelly, Sankepally, Ganneruvaram and Khazipur, for a period of not more than two years, i.e. upto 31.03.2011. Pursuant thereto, the petitioners in these Writ Petitions Nos.26749 and 27485 of 2010 (petitioners in W.P.No.18043 of 2010 are petitioner Nos.4 and 5 in the above two writ petition Nos.26749 and 27485 of 2010) participated in the auction proceedings and stood as highest bidders for their respective sand reaches and were directed to pay 25% of the bid amount. The successful bidders for seven sand reaches have paid 25% of the knocked down amount for their respective reaches but petitioners in Writ Petition No.18043 of 2010 have not paid the 25% of the EMD amount within the stipulated time on account of the interim order granting stay of all further proceedings pursuant to the auction notice dated 1.12.2009 passed by a Division Bench of this Court in Writ Petition Nos. 27790 and 27846 of 2009 filed by some third parties alleging that the sand quarry will affect the water level, drinking, irrigation sources etc. in the respective areas. Further, Writ Petition Nos. 27560, 27764 and 27527 of 2009 were also filed by some other third parties seeking a direction not to proceed with the so-called auction and a learned single Judge of this Court while ordering notice before admission granted interim direction to the effect that auction may go on but the auction proceedings shall not be finalized until further orders. While things stand thus, the Director of Ground Water Department by way of letter No. 6759/HG/GP/2009 dated 8.3.2010 issued feasibility report for six reaches and recommended for cancellation of auction proceedings for three reaches, viz., Nedunur, Elegandal and Ganneruvaram as these three reaches are not feasible for quarrying sand. Based on the same, the Government by Memo Nos.17814/SPIU & SAND/2009-2 dated 7.5.2010 and 17814/SPIU & SAND/2009-3 dated 16.05.2010 decided that the EMD amounts received in respect of three sand reaches, namely, Nedunur, Elgandal and Ganneruvaram were proposed to be refunded as the said reaches had to be deleted keeping in view of the non-feasibility report issued by the Ground Water Department and that the EMD amounts received towards Nugulapur and Kudurupaka sand reaches shall be forfeited to the Government by the confirmation authority since the successful bidders have failed to pay the 25% of the knocked down amount within the stipulated time. In respect of the remaining four sand reaches, viz., Khazipur, Vachunur, Vardavelly and Sankepally, the Government had also decided not to go ahead with the further process of the auction proceedings in view of the opinion given by the learned Additional Advocate General. Thereafter, the Assistant Director of Mines and Geology by proceedings dated 21.06.2010 informed the petitioners as stated supra. Questioning the same, one Kandi Prabhakar Reddy and M/s VinayakaEnterprices, who are the successful bidders, filed Writ Petition No. 18043 of 2010 and this Court by order dated 27.7.2010 granted interim suspension of the operation of the proceedings dated 21.6.2010 of the Assistant Director of Mines and Geology observing that the said petitioners could not have deposited the balance EMD on or before 22.12.2009 in view of the interim stay granted by a Division Bench of this Court in writ Petition No.27790 of 2009 dated 21.12.2009 and the respondents could not have accepted the same even if tendered by the said petitioners on account of the said interim order. At this stage, the Government sought legal opinion from the Government Pleader, who opined that the auction notification dated 1.12.2009 had been issued without following the procedure laid down under Rule 9-B(6) of the A.P. Minor Mineral Concession Rules, 1966 (for short ‘the 1966 Rules’) and more particularly without obtaining necessary clearance/ feasibility report of the Director, Ground Water Department prior to issuance of the auction notice, which is mandatory and therefore advised that the entire notification be withdrawn and the amounts so received pursuant to the auction notification be refunded. Accordingly, the Government issued Memo No. 17814/SPIU & SAND/2009-6 dated 5.10.2010 in keeping with the legal opinion given by the learned Government Pleader and after examining the matter in detail in exercise of powers conferred under the provisions of Rule 9-K(1) &(3) of the 1966 Rules cancelled the auction notification dated 1.12.2009 and permitted to refund the amounts paid by the successful bidders pursuant to the said notification and ordered to conduct fresh auction where the Ground Water feasibility reports are received with the prior approval of the District Level Sand Committee, Karimnagar District. The said proceedings are impugned in WP.No.27485 of 2010. Subsequently, consequential proceedings are issued vide Lr. No. 1568/Q/Sand/07/Auc/2009- 10, dated 21.10.2010 informing the petitioners the aforesaid decision of the Government and the said proceedings are impugned in Writ Petition No.26749 of 2010. Counter affidavits are filed on behalf of the respondents, mainly stating that in as much as the auction notice dated 1.12.2009 had been issued without following the due procedure laid down under the provisions of Rule 9-B(6) of the 1966 Rules and more particularly without first obtaining the mandatory clearance/feasibility report of the Director, Ground Water Department, the same had been rightly cancelled following the decision of a Division Bench of this Court in Writ Appeal No. 9753 of 2009 dated 13.09.2010. It is further stated that only six successful bidders have paid 25% of the respective knocked down amounts along with payment of Income Tax within the stipulated period of two working days and that EMD amounts paid towards Nustulapur and Kudurupaka sand reaches were forfeited to the Government by the confirmation authority since the successful bidders have not paid 25% of the knocked down amount within the stipulated period of two days as was done by other successful bidders as per Rules 9-1(1) and 9 (1)(4) of the 1966 Rules. The learned Counsel for the petitioners submits that the action of the respondents in forfeiting the EMD amounts paid by the petitioners in W.P.No.18043 of 2010, who are petitioners 4 and 5 in W.P.Nos.26749 and 27485 of 2001, to the Government is arbitrary, illegal and without any justification in as much as they could not pay the 25% of the knocked down amount on account of the interim stay dated 21.12.2009 passed by a Division Bench of this Court in writ Petition No.27790 of 2009 and even if deposited the respondents could not have accepted the same on account of the said interim order. The learned counsel further submits that a prior report was in fact obtained from the Deputy Director of the Ground Water Department before issuance of auction notification and that after a challenge to the auction notification and prior to the proceedings dated 7.5.2010 the report of the Director dated 24.11.2009 was also obtained, which gave clearance to the petitioners in respect of the subject reaches and therefore cancellation of the impugned auction notice is without any justification. The learned counsel argues that pursuant to the impugned auction notice, the respondents cannot deny rights of quarrying sand to the petitioners. The learned Counsel for the petitioners contends that issuance of the proceedings dated 21.6.2010 is nothing but contrary to their initial stand. On the other hand, the learned Government Pleader appearing for the respondents during the course of his arguments reiterated the stand taken in the counter affidavits filed on behalf of the respondents. Heard the learned counsel on either side. Perused the case file and material placed on record. A Division Bench of this Court in its order dated 19.08.2009 passed in Writ Petition No.9753 of 2009, while referring to Rule 9-B(6) of the 1966 Rules, held that on a true and fair construction of the provisions of the said rule, the interpretation is compelling that a report or clearance from the Conservator of River and from the Director of Ground Water Department is a mandatory condition precedent to the exercise by the District Level Committee, commencing with identification of the reach or Mandal to be leased out for conduct of auction; the assessment of availability of sand, the power and discretion to club or subdivide the reaches where necessary and other housekeeping or corollary functions requiring decision by the District Level Committee, as specified in the rule. The Division Bench opined that the object underlying the incorporation of a requirement of prior clearance from the Conservator of the concerned River and the Director, Ground Water Department is to ensure that the ground water levels are to be monitored and conserved. In the case on hand, the respondent authorities, on coming to know from the legal opinion sought from the learned Government Pleader, who expressed his view that the auction notification issued was not in keeping with the provisions of Rule 9-(B) 6 of the 1966 Rules, took steps to cancel the auction notification dated 1.12.2009 to rectify the defect. It is to be noticed that immediately after the public auction conducted on 19.12.2009, some third parties have filed writ petitions in W.P.Nos. 27790, 27846, 27560, 27764 and 27527 of 2009 questioning the impugned auction notice alleging that total proposed sand quarrying will affect the water level table, irrigation water sources etc. In the meanwhile, the Director of Ground Water Department by his letter dated 8.3.2010 issued feasibility report for six reaches and recommended for cancellation of auction proceedings for three reaches, viz., Nedunur, Elegandal and Ganneruvaram as these three reaches are not feasible for quarrying sand. Thereupon, one of the petitioners/successful bidders namely N.Jagga Reddy for Sankepally sand reach filed representation dated 12.8.2010 pursuant to the order of this court dated 22.12.2009 passed in Writ Petition No. 27846 of 2009 filed by him, either to grant sand quarry lease hold rights or to refund the amounts paid by him. The Director of Mines and Geology sought for the opinion of the learned Government Pleader, who expressed in his view as stated supra. Therefore, the Government after coming to know the defect in the auction notification dated 01.12.2009 issued by the first respondent cancelled the same by memo dated 05.10.2010 and permitted to refund the amounts paid by the successful bidders pursuant to the impugned notification and auction held on 19.12.2009. It is settled position of law that in view of the provisions of Rule 9 (L) of the 1966 Rules, the extension of the lease period shall not be granted under any circumstances either by the State or competent authority. The prohibition of granting extension of the lease under any circumstances has a comprehensive trajectory and includes all circumstances including the fact situation where the earlier lease period was inoperative on account of grant of stay granted by the Courts of law. In that view of the matter, the petitioners are not entitled for grant of leasehold rights of sand quarry beyond the term of lease. Further, the writ petitions filed by the third parties questioning the auction notice dated 1.12.2009 were dismissed on account of the submission made by the petitioners therein that the impugned auction notification itself stood recalled. It is to be noticed from the proceedings dated 21.06.2010 issued by the first respondent that the EMD amounts paid by the petitioners in W.P.No.18043 of 2010 in respect of Nustulapur and Kudurpaka sand reaches were forfeited on the ground that they failed to pay 25% of the knocked down amount as per the Government Memo dated 07.05.2010. The respondent authorities have failed to take note of the fact that a Division Bench of this Court by order dated 21.12.2009 passed in W.P.No.27790 of 2009 granted interim stay of all further proceedings pursuant to the auction notice. By virtue of the said interim order, the petitioners in W.P.No.18043 of 2010 did not pay 25% of the knocked down amount and in fact even if the said amounts were tendered by the said petitioners, the respondent authorities could not have accepted the same in the light of the interim order passed by a Division Bench of this Court as stated supra. I am of the considered opinion that the petitioners in Writ Petition No. 18043 of 2010 are entitled to equity to restitution of injury suffered by them on account of deprivation of refund of EMD amount. For these reasons, the action of the respondent authorities in forfeiting the EMD amount paid by the petitioners in W.P.No.18043 of 2010 is arbitrary and illegal and that part of the action of the respondent authorities is accordingly set aside. Consequently, the respondent authorities are directed to refund the EMD amounts paid by the petitioners in W.P.No.18043 of 2010 as was rightly done in the case of other successful bidders while canceling the impugned auction notification dated 01.12.2009. For the foregoing reasons, W.P.No.18043 of2010 is disposed of directing the respondent authorities to refund the EMD amounts paid by them forthwith. W.P.Nos.26749 and27485 of 2010 are dismissed upholding action of the respondent authorities in cancelling the impugned auction notification dated 01.12.2009 issued by the first respondent. In the circumstances of the case, there shall be no order as to costs. -------------------------------------- JUSTICE ASHUTOSH MOHUNTA Dated 27th April, 2011. Msnro "