Tender Terms Not Vague if Statutory Rules (RMMCR 2017) Provide Clarity; Clarification Failure Inconsequential: Rajasthan HC - 2025-05-08

Rajasthan High Court Upholds Mining E-Auction, Dismisses Plea Alleging Ambiguous Tender Terms

Jodhpur, Rajasthan - The High Court of Judicature for Rajasthan at Jodhpur, in a significant ruling on tender law and mining leases, has dismissed appeals filed by Ecosafe Infraprojects LLP, upholding the validity of e-auction notices for bajri (river sand) mining leases. The Division Bench, comprising Chief Justice Mr. Manindra Mohan Shrivastava and Mr. Justice Sunil Beniwal , found no merit in the appellant's contention that the auction terms were vague or uncertain.

The judgment, dated April 22, 2025, in D.B. Spl. Appl. Writ No. 566/2024 (and a connected matter), affirmed a Single Judge's order dated May 7, 2024, which had dismissed Ecosafe 's writ petitions challenging the e-auction process.

Background of the Dispute

Ecosafe Infraprojects LLP had participated in an e-auction process initiated by the State of Rajasthan for 14 plots of minor mineral bajri in Districts Bhilwara and Sirohi, following e-auction notices dated March 6 and March 8, 2024. The appellant sought clarifications on certain terms and conditions, alleging ambiguity. Despite remitting application fees and bid security, Ecosafe challenged the auction proceedings by filing writ petitions on April 6, 2024, after the auctions were finalized, seeking re-auction.

Appellant's Arguments: Allegations of Vagueness

Ecosafe Infraprojects LLP, represented by Senior Advocate Mr. R.K. Agarwal, primarily argued that the e-auction terms were void for uncertainty, lacking transparency and fairness, based on two main contentions:

Lease Period Ambiguity (Clause 1 of e-auction notice): The notice stated the lease period would be five years from the "date of registration." Ecosafe argued this was ambiguous because, under Rule 16(3) of the Rajasthan Minor Mineral Concession Rules, 2017 ('Rules of 2017'), mining operations can only commence after obtaining Environmental Clearance (EC), a process that can take considerable time (around two years). This, they claimed, created uncertainty as a substantial part of the lease period might expire before mining could begin. They cited Deepak Kumar vs. State of Maharashtra [2012 (4) SCC 629] on the necessity of EC before lease grant.

Sale Price and Location Ambiguity (Clause 11(2) & (5) of e-auction notice): Ecosafe found sub-clauses (2) and (5) of Clause 11 highly ambiguous regarding the determination of the "rate of sale at pit mouth." While sub-clause (5) fixed a maximum sale price at the pit mouth, sub-clause (2) required establishing stocking depots with CCTVs and registers, and sub-clause (20) mandated compliance with Supreme Court directions (based on Central Empowered Committee recommendations) which, according to the appellant, did not permit sale from the pit mouth but from a stocking center. This apparent contradiction, coupled with the costs of transportation to stocking centers, created confusion.

The appellant relied on judgments like Reliance Energy Ltd. & Anr. vs. Mahrashtra State Road Development Corporation Ltd. & Ors. [(2007) 8 SCC 1] and Dutta Associates Pvt. Ltd. vs. Indo Merchantiles Pvt. Ltd. & Ors. [(1997) 1 SCC 53] to emphasize that tender terms must be clear and transparent.

Respondents' Rebuttal: Terms Clear When Read with Rules

The State of Rajasthan, represented by Additional Advocate General Mr. Mahaveer Bishnoi, and counsel for the successful bidders, argued that the appellant was attempting to stall the mining lease process with frivolous objections. They highlighted that out of 132 bidders, only Ecosafe raised such concerns.

Their core counter-arguments were:

Holistic Interpretation: The e-auction notice terms must be read in conjunction with the statutory procedures in the Rules of 2017, which govern the bid process, grant, and period of lease.

Clarity on Lease Period: Rules 9, 13, 16, and 21 of the Rules of 2017 unequivocally define the lease period, grant process, and commencement date (from registration, post-EC and other compliances).

Clarity on Sale Price : Rule 13(6) of the Rules of 2017 allows the State to fix the maximum sale price at the pit mouth. The auction notice adhered to this for price determination, while simultaneously mandating, per Supreme Court directives (via Clause 11(20)), that actual sale and dispatch occur from a separate stocking depot.

No Ambiguity: The respondents contended there was no ambiguity or uncertainty requiring clarification, and the Single Judge had correctly dismissed the "frivolous" writ petitions.

High Court's Analysis and Reasoning

The Division Bench acknowledged the settled legal principle that tender/auction terms must possess "legal certainty" and that vagueness can vitiate the process, citing Reliance Energy Ltd. : > "When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This 'legal certainty' is an important aspect of the rule of law. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment." (Para 38, Reliance Energy Ltd.)

However, the Court found that the appellant's claims of ambiguity stemmed from not thoroughly considering the e-auction terms in conjunction with the comprehensive provisions of the Rules of 2017.

On the Lease Period (Clause 1): The Court meticulously examined Rules 9 (Period of mining lease), 16 (Grant of mining lease), and 21 (Execution of mining lease) of the Rules of 2017. * Clause 1 of the notice stated: "the period of mineral bajri mining lease would be for 5 years from the date of registration of lease." * Rule 9(1) proviso sets bajri lease period at five years. * Rule 16(3) mandates that a lease is granted "with the condition that the lessee shall commence mining operations after obtaining environment clearance." * Critically, Rule 21(6) states: "The currency of lease shall be from the date of registration of the lease deed unless otherwise stated."

The Bench concluded: > "The detailed statutory scheme as described hereinabove does not support the statement of learned senior counsel for the appellant that the terms and conditions are vague, ambiguous and uncertain... The appellant’s doubt is nothing but a figment of his imagination, which shows that the appellant did not carefully go through the provisions of the Rules. The scheme of the Rules is crystal clear that the stage of registration of lease is much after fulfillment of various compliances including environment clearance." (Para 24)

On Sale Price and Location (Clause 11): The Court analyzed Clause 11(2) (stocking places), 11(5) (max sale price at pit mouth, but no sale at pit mouth), and 11(20) (compliance with SC/CEC directives for sale from transit depots) alongside Rule 13(6) (State can specify max sale price at pit mouth).

The Court found no contradiction: > "Once the sub-clauses (2), (5) and (20) of Clause 11 of the auction notice are read with Rule 13(6) of the Rules of 2017, it becomes as clear as day light that while the sale price is mandated under the Rules to be fixed at the pit mouth of the lease in view of the Hon’ble Supreme Court directives, the sale shall actually take place from the transit depot, the place different from the pit mouth." (Para 28)

The Court observed that the appellant had "assumed his own confusion as uncertainty or ambiguity" and had not properly read the Rules. It also noted that 132 other participants did not raise similar doubts.

Regarding the failure to provide clarifications, the Court held: > "if the terms and conditions of the auction are vague, ambiguous or uncertain... failure to come out with proper clarification at an appropriate stage, may even vitiate the entire tender/auction proceedings. However, if on the facts and circumstances of the case in hand, the Court reaches to the conclusion that there is no vagueness, ambiguity or uncertainty in the terms and conditions of tender/auction, failure to respond to letters seeking clarification would not vitiate the proceedings as the same would be inconsequential." (Para 11)

Decision and Implications

The High Court concluded that the Single Judge had rightly dismissed the petitions. While declining to delve into allegations of oblique motives, the Bench described the petition as "frivolous as it could be."

The appeals were dismissed as "sans substratum."

This judgment underscores that e-auction or tender conditions must be interpreted not in isolation but in harmony with the governing statutory rules and regulations. It serves as a caution to bidders that alleged ambiguities may not stand scrutiny if the legal framework itself provides sufficient clarity. Furthermore, it clarifies that while authorities should address genuine ambiguities, a failure to respond to clarification requests on terms that are already clear under the law will not invalidate an auction process.