2017 Supreme(P&H) 1376

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH
S.J. VAZIFDAR, ANUPINDER SINGH GREWAL, JJ.
M/s Sunder Marketing Associates – Petitioners
Versus
State of Haryana and others – Respondents
Civil Writ Petition No. 20986 of 2016
Decided On : 01-06-2017

The agreement between the petitioners and the official respondents was contrary to the provisions of the terms and conditions of the notice inviting tenders, the provisions of law and the principles that govern such matters. The decision making process was flawed and did not involve the committee for appraisal of the petitioners' qualification. The agreement is also contrary to the provisions of law.

Headnote:

The petition challenges the cancellation of permission to transfer the lease and the lease agreement dated 05.08.2015 in favor of the petitioners by the official respondents. The petitioners sought a writ of certiorari to quash the show cause notice dated 09.08.2016 and an order dated 29.09.2016 by which respondent No.3 withdrew the permission granted in favor of the petitioners to transfer the share of their joint venture partner M/s Karamjeet Singh & Company Ltd. to the petitioners and declared a lease-deed executed on 05.08.2015 in favor of the petitioners by the official respondents to be void. The petitioners also sought a writ of mandamus directing respondent Nos.1 to 4 to allow them to perform their obligations in accordance with the mining lease dated 05.08.2015.

Fact of the Case:

The petitioners and M/s Karamjeet Singh & Company Ltd. had formed a Joint Venture (JV) dated 18.09.2012. The joint venture participated in the auction held on 30.12.2013. It was not issued in favor of the petitioners in their independent capacity. For reasons which we will enumerate later, the JV was given an option to rescind the contract. M/s Karamjeet Singh and Company Ltd. decided to rescind the contract and sought a refund of the amount deposited by the JV. The petitioners, however, wanted to implement the contract either by themselves or by the induction of another partner. The official respondents and the JV partners entered into correspondence and after following a considerably detailed procedure including obtaining an opinion of the Advocate General of the State of Haryana, the official respondents agreed to M/s Karamjeet Singh and Company Ltd. transferring their entire 51% shares in favor of the petitioners and a lease/agreement dated 05.08.2015 was entered into between the official respondents and the petitioners.

Finding of the Court:

The Court held that the agreement which the petitioners seek to enforce by this writ petition was contrary to the provisions of the terms and conditions of the notice inviting tenders, the provisions of law and the principles that govern such matters. The Court also held that the decision making process was flawed and did not involve the committee for appraisal of the petitioners' qualification. The Court further held that the agreement is also contrary to the provisions of law. It is contrary to Section 15 of the Act read with Rule 9 of the 2012 Rules which mandate leases of 10 years to 20 years to be granted by the Government following a competitive bid process.

Issues: 1. Whether the agreement dated 05.08.2015 between the petitioners and the official respondents was contrary to the provisions of the terms and conditions of the notice inviting tenders, the provisions of law and the principles that govern such matters? 2. Whether the decision making process was flawed and did not involve the committee for appraisal of the petitioners' qualification? 3. Whether the agreement is also contrary to the provisions of law?

Ratio Decidendi: 1. The Court held that the agreement which the petitioners seek to enforce by this writ petition was contrary to the provisions of the terms and conditions of the notice inviting tenders, the provisions of law and the principles that govern such matters. The Court also held that the decision making process was flawed and did not involve the committee for appraisal of the petitioners' qualification. The Court further held that the agreement is also contrary to the provisions of law. It is contrary to Section 15 of the Act read with Rule 9 of the 2012 Rules which mandate leases of 10 years to 20 years to be granted by the Government following a competitive bid process. 2. The Court held that the decision making process was flawed and did not involve the committee for appraisal of the petitioners' qualification. The Court also held that the agreement is also contrary to the provisions of law. It is contrary to Section 15 of the Act read with Rule 9 of the 2012 Rules which mandate leases of 10 years to 20 years to be granted by the Government following a competitive bid process. 3. The Court held that the agreement is also contrary to the provisions of law. It is contrary to Section 15 of the Act read with Rule 9 of the 2012 Rules which mandate leases of 10 years to 20 years to be granted by the Government following a competitive bid process.

Final Decision: The petition is disposed of by the following order : The reliefs as claimed in the petition are rejected. Dr. Singhvi submitted in the alternative that the indemnities and guarantees furnished by the petitioners only for the purpose of and in connection with the agreement dated 05.08.2015 should stand discharged and that the petitioner is at liberty to file appropriate proceedings for damages and compensation. All the rights and contentions of the parties including in this regard are kept open. Mr. Sinhal’s statement that after deducting the amounts the official respondents consider due to them by the petitioners, the official respondents will refund the balance amount, if any, from the amount of Rs. 28.75 crores deposited by the JV to the petitioners and not to KJSL is accepted. This it is clarified is the respondents’ statement and not a direction of the Court as KJSL is not before the Court. The fresh tender process shall be completed by 31st August, 2017 and the official respondents shall convey the decision in this regard to the petitioners within four weeks thereafter. Liberty to the parties to apply. In view of the interim order dated 06.10.2016, the equities are adjusted by directing the petitioners to pay the difference between the higher bid, if any, submitted by the party to whom the mining rights are granted and Rs.115 crores for the period 06.10.2016 till possession of the site is handed over by the petitioners together with interest thereon at the rate of 15% per annum from the date of the interim order i.e. 06.10.2016 till payment and/or realization. The rights of the official respondents to claim amounts for the earlier period are kept open. The amounts deposited by the JV may be adjusted towards the recovery of this amount. The parties are at liberty to adopt proceedings regarding the balance, if any. If the bid is lower than Rs.115 crores, the petitioner shall not be entitled to the difference between Rs.115 crores and the lower bid as the petitioners had in any event agreed to do the work at the rate of Rs.115 crores. Mr. Sinhal’s statement that the reserve bid in the fresh auction process shall not be less than Rs.115 crores is accepted. Mr. Bhardwaj’s undertaking on behalf of the private respondent i.e. respondent No.5 that respondent No.5 will place a minimum bid of Rs.150 crores, if fresh tenders are invited or a fresh auction is held, is accepted. The amount of Rs.15 crores sought to be tendered on behalf of respondent No.5 on an earlier occasion shall be deposited with the official respondents by 31.07.2017. In the event of a breach of the undertaking by respondent No.5 to bid a minimum of Rs.150 crores and to implement the contract, if any, this amount shall stand forfeited without further orders in addition to any other remedy that the official respondents may have against respondent No.5 including for contempt of Court for the breach of this undertaking. This is subject to the condition of eligibility in the fresh process not being more onerous to respondent No.5. The undertaking on behalf of respondent No.5 to take care of his ineligibility on account of any payment required by the official respondents without prejudice to his rights to ensure his participation in the fresh auction or tender is accepted. The interim order will continue upto and including 31st July, 2017 to enable the petitioners to challenge this judgment.