Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(SC) 190

SUPREME COURT OF INDIA
M.R. SHAH, B.V. NAGARATHNA, JJ.
Debidutta Mohanty - Appellant
Versus
Ranjan Kumar Pattnaik & Ors. - Respondents
Civil Appeal No. 4939 of 2022
Decided On : 03-03-2023

Advocates appeared:
For the Appellant(s) : Mr. Basant R., Sr. Adv. Mr. Arunav Patnaik, Adv. Mr. Dhananjay Ray, Adv. Ms. Bhabna Das, AOR Mr. Akshay Sahay, Adv.
For the Respondent(s): Mr. Ashok Panigrahi, AOR Ms. Geetanjali Das Krishnan, Adv. Ms. Nikita Jaydevan, Adv. Mr. Nabab Singh, Adv. Ms. Anindita Pujari, AOR

Misuse of an invalid solvency certificate renders a bid void ab initio, justifying cancellation of a lease.

Headnote:OMMC Rules, 2016 - The judgment discusses the Orissa Minor Minerals Concession Rules, 2016 and specifically refers to Rule 51(7) which outlines the competent authority for canceling a lease deed.
Fact of the Case:
The case involves the cancellation of a lease in favor of the original writ petitioner due to issues with the solvency certificate submitted during the tender process.
Finding of the Court:
The High Court set aside the order canceling the lease, citing that the Collector did not have authority under Rule 51(7) to cancel the lease deed. It also found that the initial solvency certificate issued in favor of the petitioner was a mistake and subsequently rectified.
Issues:
The main issue revolved around the validity of the solvency certificate and whether its misuse rendered the bid void ab initio.
Ratio Decidendi:
The court held that using an invalid solvency certificate rendered the bid non-est and void ab initio, justifying the cancellation of the lease.
Final Decision:
The appeal was allowed, quashing and setting aside the High Court's judgment and restoring the order canceling the lease in favor of respondent no.1. The fresh lease deed was also set aside.

JUDGMENT :

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 Sub-Collector, Athagarh on 06.12.2017. At this stage, it is required to be noted that an order was passed by the Sub-Collector, 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 issue