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IN THE HIGH COURT OF ALLAHABAD
HON'BLE ANJANI KUMAR MISHRA, HON'BLE JAYANT BANERJI, JJ.
M/S Deep Builders And Another - Petitioner
Versus
State Of Uttar Pradesh And Others - Respondents
Writ C. No. 33710 Of 2021
Decided On : 29-05-2024
FORFEITURE - MINING LEASE - Uttar Pradesh Minor Minerals (Concession) Rules, 1963; Uttar Pradesh Minor Minerals (Concession) (Forty Third Amendment) Rules, 2017; Uttar Pradesh Minor Minerals (Concession) (Forty Fourth Amendment) Rules, 2019; Uttar Pradesh Minor Minerals (Concession) (Forty Seventh Amendment) Rules, 2019 - The court analyzed the provisions of the Uttar Pradesh Minor Minerals (Concession) Rules, particularly focusing on the lack of authority to forfeit security deposits or royalty payments upon cancellation of a Letter of Intent. The court emphasized that the relevant rules did not provide for forfeiture in the absence of a lease deed execution and that the forfeiture order was issued without legal sanction. This interpretation led to the conclusion that the forfeiture was unlawful, necessitating the refund of the amounts with interest.
Fact of the Case:
The petitioner participated in a bidding process for a mining lease for ordinary sand, which was awarded through a Letter of Intent. After depositing the required security and royalty, the Letter of Intent was cancelled without any order for refund. Subsequently, the District Magistrate forfeited the security and royalty payments, prompting the petitioner to challenge this order in court.
Finding of the Court:
The court found that the forfeiture order was issued without any legal basis as the relevant rules did not empower the authorities to forfeit the security deposit or royalty payments after the cancellation of the Letter of Intent. The court concluded that the petitioner was entitled to a refund of the amounts deposited along with interest.
Issues: Whether the District Magistrate had the authority to forfeit the security deposit and first instalment of royalty after the cancellation of the Letter of Intent, and whether the petitioner was entitled to a refund of these amounts.
Ratio Decidendi: The court held that the provisions of the Uttar Pradesh Minor Minerals (Concession) Rules did not provide for forfeiture of security deposits or royalty payments upon cancellation of a Letter of Intent, especially in the absence of an executed lease deed. The court emphasized that any forfeiture must be explicitly authorized by law, which was not the case here.
Final Decision: The court quashed the forfeiture order dated 28.08.2021 and directed the respondents to refund the security deposit and first instalment of royalty to the petitioner within three weeks, along with simple interest at the rate of 9%.
ORDER :
1. Heard Shri Syed Mohd. Fazal, learned counsel for the petitioner and learned Standing Counsel for the State-respondents.
This writ petition seeks a writ of certiorari for quashing the order dated 28.08.2021 passed by the third respondent, the District Magistrate/District Officer, Ghaziabad.
2. By this order and in purported exercise of powers conferred by Rule 34 (4) of the Uttar Pradesh Minor Minerals (Concession) (Forty Seventh Amendment) Rules, 2019 and for their non compliance, the security deposited by the petitioner as also the first instalment consequent to the issuance of Letter of Intent with regard to Plot Nos. 290M, 301M, 303M, 304M, 310M, 311M, 314M area 12.512 hectares has been forfeited in favour of the State.
3. The facts of the case briefly stated are that the petitioner participated in the bidding for grant of mining lease of ordinary sand for a period of five years over plots situated in Village Pachayra, Tehsil Loni, District Ghaziabad having a total area of 12.512 hectares. The auction was for a mining of annual quantity of 2,50,240 cubic meters of sand.
4. Since the bid of the petitioner was the highest, a Letter of Intent was issued in its favour on 31.10.2017. The petitioner thereafter deposited 25% of the bid amount as security and an equal amount as the first instalment of royalty in accordance with Rule 28(2)(i) of the Uttar Pradesh Minor Minerals (Concession) Rules, 1963.
5. The Letter of Intent was cancelled on 28.01.2019. However, no order was passed for refund of the security amount or the first instalment forcing the petitioner to approach this Court by means of Writ – C No.19354 of 2021.
6. During the pendency of the said writ petition, the order dated 28.08.2021 was passed. The petitioner thereafter withdrew his earlier Writ – C No.19354 of 2021 and the instant writ petition is being filed challenging the order of the District Magistrate dated 28.08.2021, whereby the security and first instalment towards royalty has been forfeited in favour of the State.
7. The contention of learned counsel for the petitioner primarily is that there exists no power with the respondents to forfeit the security deposit or the first instalment deposited by him, once the Letter of Intent has been cancelled. The impugned order therefore, is without any sanction of law and is liable to be quashed. The amount deposited by the petitioner is liable to be refunded along with interest, thereon.
8. Elaborating further, it has been submitted that at the time, the Letter of Intent was issued in favour of the petitioner, the Uttar Pradesh Minor Minerals (Concession) Rules, 2017 as amended by the 43rd Amendment, therein, were in force.
9. On the date, the Letter of Intent was cancelled namely 28.01.2019, it is the 44th Amendment Rules, which were operational. Neither the 43rd nor the 44th Amendment Rules contain any provision for forfeiture of the security deposit and/or the royalty paid by the petitioner on cancellation of the Letter of Intent. He has reiterated that after issuance of the Letter of Intent, a mining plan was submitted by the petitioner within the time prescribed for the same. This mining plan was also granted approval by the respondents. Thereafter, the petitioner applied for environmental clearance and before the same could be granted, the Letter of Intent has been cancelled. No order for forfeiture was passed at the time of cancellation of the Letter of Intent and this order has been passed after the petitioner had preferred a revision to the State Government, wherein the matter was remitted back to the third respondent to pass appropriate orders on the prayer of the petitioner for refund for security deposit and also the royalty deposited by him. However, no order was passed and, therefore, the petitioner approach this Court by means of Writ – C No.19354 of 2021 and during the pendency of this writ petition, the impugned order has been passed.
10. He has also submitted that the order of forfeiture
The court established that forfeiture of security deposits and royalty payments requires explicit legal authority, which was absent in the relevant rules governing mining leases in Uttar Pradesh.
The court clarified the specific penalty that could be imposed for non-compliance with the mining plan provision within one month of receiving the Letter of Intent, and emphasized the requirement for....
The authority can forfeit a mining lease security deposit for non-payment of lease installments under the terms established in the lease agreement, affirming contractual obligations.
The authority must provide adequate reasons for the complete forfeiture of a security deposit, especially when a lesser penalty has been imposed and already paid.
Forfeiture of earnest money in mining lease applications is only permissible when there is evidence of false documentation; procedural requirements lacking a penal clause are considered directory.
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