Allowed

Narayan Chandra Udgata v. State of Odisha

Orissa HC6 Oct 2020WP(C)/17069/2020

Case brief

AI extract

What is this about?

The High Court of Odisha held that a government executive order cannot supersede statutory rules requiring a Solvency Certificate for quarry leases. Quashing the government order and the Tahasildar's decision to disqualify the highest bidder, the Court remitted the matter for a fresh decision in accordance with the OMMC Rules.

What did the court decide?

Annexure-1 order dated 02.01.2020 and Annexure-2 order dated 04.07.2020 quashed and set aside; matter remitted to Tahasildar for fresh decision considering all bidders.

Narayan Chandra Udgata Vs State of Odisha — Public Procurement and Tenders | Orissa HC (2020)

¶1

IN THE HIGH COURT OF JUDICATURE FOR ORISSA AT CUTTACK

¶2

W.P.(C) No. 17069 of 2020

¶3

Narayan Chandra Udgata … Petitioner -VersusState of Orissa & Others …. Opp. Parties.

¶4

Advocates appeared in this case through Video Conferencing Mode.

¶5

Mr. Prashanta Kumar Nayak : for petitioner. Mr. M.S. Sahoo, Addl. Govt. Advocate : for Opp. Parties 1 to 4.

¶6

------------------------------------------------------------------------------------------------ HONOURABLE THE CHIEF JUSTICE MR. MOHAMMAD RAFIQ A N D HONOURABLE DR. JUSTICE B.R. SARANGI

¶7

J U D G M E N T

¶8

06.10.2020

¶9

Per: Mohammad Rafiq, CJ.

¶10

This writ petition filed by the petitioner Narayan Chandra Udgata seeks to challenge the validity of Clause-6 of the order dated 02.01.2020 under Annexure-1, issued by the Government of Odisha in the Revenue & Disaster Management (R&DM) Department, Bhubaneswar, whereunder the Government has decided to phase out the issuance of Solvency Certificate and has directed that no Department shall ask for Solvency Certificate for grant of licence or

¶11

lease and instead, they will ask for IT returns, Bank Guarantee etc. for issuing

¶12

-2-

¶13

such licence or lease etc. The petitioner has also challenged the order dated 04.07.2020 issued by the Tahasildar, Bonth, selecting opposite party No.5 as the successful bidder for Sahupada sand Sairat Source.

¶14

2. According to the case set up by the petitioner in the writ petition, the Tahasildar, Bonth-O.P. No.4 on 04.06.2020 issued a tender call notice inviting bids from the interested parties for auction of the sairat sources including Sahupada Sand Sairat source for a period of five years (2020-21 to 2024-25). In paragraph 4 of the said Auction Notice (DTCN), it was mentioned that the applicants are required to submit the Solvency Certificate or Bank Guarantee equivalent to the amount mentioned in the application form as additional charge/royalty. The last date of submission of the bid was 30.06.2020 and the date of opening the bid was on 01.07.2020. It was also stipulated in the DTCN that the bid shall be finalized in presence of the parties and incomplete application shall be rejected. Pursuant to the said tender call notice, the petitioner submitted his bid for Sahupada lease Sairat Source enclosing therewith the Solvency Certificate duly attested by the Sub-Collector, Bhadrak, IT returns and all other required documents as per the DTCN as well as Orissa Minor Mineral Concessions (OMMC) Rules, 2016. On opening of the bid on 1.7.2020, the petitioner was found to be the highest bidder as his offer was Rs.250/- per Cum for Sahupada Sand Sairat. However, the Tahasildar, Bonth issued sent a letter dated 1.7.2020 (Annexure-5) to the Sub-Collector, Bhadrak seeking clarification with regard to issue of Solvency Certificate stating therein that as per Clause-6 of the order dated 02.01.2020 issued by the

¶15

-3-

¶16

Government of Odisha, R&DM Department, Solvency Certificate has been decided to be phased out for grant of licence in quarry lease and the tenderers are required to submit IT returns along with Bank Guarantee for the said purpose. However, Shri Narayan Chandra Udgata (petitioner herein), who was found to be the highest bidder quoting Rs.250/- per Cum for Sahupada Sand Quarry, submitted Solvency Certificate issued by the Addl. Tahasildar, Bonth after being duly approved by the Sub-Collector, Bhadrak, whereas Shri Amrit Sundar Nayak (O.P. No.5 herein) was found to be the 2^nd highest bidder having quoted Rs.224.5/- per Cum, but he has submitted Bank Guarantee. Therefore, the Tahasildar, Bonth requested the Sub-Collector, Bhadrak to clarify whether Sri Narayan Chandra Udgata is eligible to get the quarry or not. While giving the clarification to the said query vide letter dated 02.07.2020 (Annexure-6), the Sub-Collector, Bhadrak, on the one hand, expressed concern as to how the Tahasildar, Bonth issued the said DTCN mentioning to submit Solvency Certificate in Clause-4 thereof for long term lease in respect of minor minerals, violating Government orders/instructions, but on the other hand, he stated that when the bidder fulfills all terms and conditions of the DTCN issued by the Tahasildar, there should not be any doubt regarding eligibility of bidders. Accordingly, the Sub-Collector requested the Tahasildar, Bonth to take appropriate steps for long term lease in respect of minor minerals sairat source of Sahupada sand quarry as per the procedure laid down under OMMC Rules, 2016. In spite of this, the Tahasildar, Bonth on 04.07.2020 declared the opposite party No.5, who was the second highest bidder, as the successful bidder in respect of Sahupada Sand Quarry, without giving any opportunity of

¶17

-4-

¶18

hearing to the petitioner though he was the highest bidder and was fulfilling all the terms and conditions of the DTCN. On 09.07.2020, the petitioner submitted representations before the Collector, Bhadrak as well as Sub-Collector, Bhadrak ventilating his grievance regarding gross irregularities in the selection of the successful bidder in respect of the said sand quarry, but no action has been taken thereon till date. Hence this writ petition.

¶19

3. Mr. P.K. Nayak, learned counsel for the petitioner submitted that the submission of Solvency Certificate was in conformity with the provisions of Rule 27(4)(iv) of the OMMC Rules and Rules 3 and 4 of the Orissa Miscellaneous Certificate Rules, 2017. These Rules have not been amended by the State Government so far. Therefore, the Executive Order issued under Annexure-1 dated 02.01.2020 cannot have the overriding effect over the statutory Rules in force. Learned counsel submitted that this issue has already been set at rest by a recent decision of this Court in the batch of cases in Gopinath Sahu & Others etc. Vs. State of Odisha & Others (W.P.(C) No. 12518 of 2020 & 161 connected writ petitions decided on 03.08.2020), reported in 2020(II) OLR 559. Relying on the judgment of the Supreme Court in Union of India Vs. Sri Somasundaram Vishwanath , AIR 1988 SC 2255, it is submitted that the Supreme Court in the said judgement has observed that if there is a conflict between the executive instruction and the Rules framed under the proviso to Article 309 of the Constitution, the Rules will prevail over the executive instructions. Similarly placing reliance on the judgments of the Supreme Court in Union of India Vs. Rakesh Kumar, AIR 2001 SC 1877, Swapan Kumar

¶20

-5-

¶21

Pal & Ors. Vs. Samitabhar Chakraborty & Ors. , AIR 2001 SC 2353; Khet Singh Vs. Union of India, (202) 4 SCC 380; Laxminarayan R. Bhattad & Ors. Vs. State of Maharashtra & Anr., (2003) 5 SCC 413; and Delhi Development Authority Vs. Joginder S. Monga , (2004) 2 SCC 297, learned counsel for the petitioner argued that statutory rules create an enforceable rights which cannot be taken away by issuing executive instructions. It is further submitted that an administrative instruction cannot compete with a statutory rule and if there is contrary provisions in the Rule, the administrative instructions must give way and the rule shall prevail, as held by the Supreme Court in C.L. Verma Vs. State of M.P. & Anr., AIR 1990 SC 463.

¶22

Learned counsel for the petitioner also submitted that as held by the Supreme Court in Punit Rai Vs. Dinesh Chaudhaty , (2003) 8 SCC 204; Union of India Vs. Naveen Jindal , (2004) 2 SCC 510; and State of Kerala Vs. Chandra Mohan , (2004) 3 SCC 429, the executive instructions cannot be termed as law within the meaning of Article 13(3)(a) of the Constitution of India. In M/s. Bishamer Dayal Chandra Mohan Vs. State of U.P. and Ors., AIR 1982 SC 33, the Supreme Court explained the difference in a statutory order and an executive order observing that executive instruction issued under Article 162 of the Constitution does not amount to law.

¶23

4. Mr. M.S. Sahoo, learned Addl. Government Advocate appearing for the State opposed the writ petition and submitted that the Government has taken an uniform decision in respect of all the departments and has issued the impugned order by way of a policy decision to phase out the practice of issuing

¶24

-6-

¶25

the Solvency Certificates as it consumes a significant amount of time of both of the Citizens and the Revenue Officers. It is clearly mentioned in the said order that no department shall ask for solvency certificate for grant of licence for issuing licences to storage agents, grant or renewal of excise licence, quarry lease etc. Instead, they will ask for IT returns, Bank Guarantee, etc. for issuing such licences or lease etc. It is also submitted by the learned AGA that the government is now in the process of incorporating the appropriate amendments in the OMMC Rules to provide Bank Guarantee in place of Solvency Certificate. It is further submitted that in the meantime the sairat in question has already been settled, therefore, this Court may not interfere at this stage.

¶26

5 . We have given our thoughtful consideration to the rival submissions and examined the material on record.

¶27

6. In order to appreciate the issue involved, we deem it appropriate to first go through the relevant Rules i.e. Rule 27(4) of the OMMC Rules, 2016 for the purpose of deciding the present writ petition, which reads as under:

¶28

“27. Grant of Quarry Lease : ………

¶29

xxx xxx xxx

¶30

(4) Subject to other provisions of these rules for settlement of quarry lease, the intending applicant may apply to the Competent Authority in a sealed cover for grant of quarry lease for such area or areas in Form-M in triplicate accompanied by the following documents and particulars, namely:—

¶31

(i) Treasury challan showing deposit of one thousand rupees (non-refundable) towards the application fee;

¶32

(ii) An affidavit stating that no mining due payable under the Act and the rules made thereunder, is outstanding against the applicant;

¶33

-7-

¶34

(iii) Proof of payment of earnest money equivalent to five percentum of the minimum amount of additional charges specified in the notice and the amount of royalty, both calculated on the basis of minimum guaranteed quantity for one whole year for the minimum guaranteed quantity of minor mineral to be extracted in one full year; and

¶35

(iv) a solvency Certificate or Bank guarantee valid for a period of eighteen months for an amount not less than the amount of additional charge offered and the royalty payable for the minimum guaranteed quantity for one whole year and a list of immovable properties from the Revenue Authority.”

¶36

7. It is an undisputed fact that the aforesaid Rule, inter alia, subject to other provisions of the Rules, provides that the intending applicant may apply to the Competent Authority in a sealed cover for grant of quarry lease for such area or areas in Form-M in triplicate accompanied by the following documents and particulars, which includes either a Solvency Certificate or Bank Guarantee valid for a period of eighteen months for an amount not less than the amount of additional charge offered and the royalty payable for the minimum guaranteed quantity for one whole year. As per the above Rule 27(4)(iv), an intending applicant has to submit application as per FORM-M, appended to the OMMC Rules, which is the form of application for grant of quarry lease and required to be filled up and submitted by the bidders in triplicate. Clause 3 of the Form-M provides for required particulars to be given, which is reproduced hereunder:

¶37

“3. The required particulars are given below:

¶38

i) An affidavit stating that no mining due payable under the Act and Rules made there under is outstanding against the applicant.

¶39

ii) Where land belongs to private persons, consent of all such persons for grant of quarry lease.

¶40

-8-

¶41

iii) Solvency certificate and list of immovable property from the Revenue Authority.”

¶42

From the above clause it is also clear that FORM-M, which is the application format appended to the OMMC Rules, corresponding to Rule 27(4) (iv) of the OMMC Rules, also stipulates submission of Solvency Certificate issued by the Revenue Authority and is one of the requirement for the purpose of submission of application.

¶43

8. Perusal of Rule 27(4) (iv) makes it clear that an option has been given to the intending applicants to either submit solvency certificate or bank guarantee. Therefore, if he submits solvency certificate, the competent authority cannot decline to accept the same for entertaining his application. This was even clarified in these terms by Government of Odisha in its Department of Revenue and Disaster Management vide letter dated 30.07.2020 referring to order of this court dated 19.03.2020 passed in W.P.(C) No. 9726 of 2020 (Sarat Pradhan vs. State of Odisha) in the terms that the bid of the highest bidder supported by solvency certificate cannot be invalidated merely on the ground of non-submission of bank guarantee since OMMC Rules, 2016 provides for either solvency certificate or bank guarantee. The said clarification letter dated 30.07.2020 of the R&DM Department is reproduced hereunder:

¶44

“GOVERNMENT OF ODISHA

¶45

REVENUE AND DISASTER MANAGEMENT DEPARTMENT

¶46

RDM-MMS-CLRFIC-006-2020-23726 /R&DM Dated 30 JULY 2020

¶47

From:

¶48

Sri Bhaktiprasad Mohanty, Deputy Secretary to Government.

-9-

Collector, Khordha.

Sub: Clarification on acceptance of Solvency Certificate for finalization of bidder in respect of Kalayanpur-A Sand Sairat Source of Bhubaneswar Tahasil.

¶53

Ref: Your letter No. 7236 dt. 30.04.2020.

¶54

Sir,

¶55

In inviting a reference to your letter on the subject noted above I am directed to say that keeping in view the order of the Hon’ble High Court in similar case i.e. W.P.(C) No. 9726 of 2020 filed by Sarat Pradhan Vs. State & Others and after obtaining the view of the Law Department in the matter, it is clarified that the bid of the highest bidder supported by Solvency Certificate cannot be invalidated merely on the ground of non-submission of Bank guarantee since OMMC Rules 2016 provides for submission of Solvency Certificate or Bank Guarantee. Solvency Certificate may be accepted as alternative to Bank Guarantee in finalization of bids for lease of minor mineral sources till OMMC Rules, 2016 is amended.

¶56

Appropriate action may be taken in the matter accordingly.

¶57

Yours faithfully,

¶58

Deputy Secretary to Government.”

¶59

It was therefore enjoined upon all concerned to accept

¶60

solvency certificate as an alternative to bank guarantee, in finalization of bids for lease for minor mineral sources till OMMC Rules, 2016 is amended. In view of the above, action of the opposite parties in insisting upon production of bank guarantee cannot be justified.

¶61

9. Since Rule 3(1)(iv), 3(3), 4(1)(iv) and 4(3) of the Miscellaneous Certificates Rules 2017, would also be relevant for the purpose of deciding the present writ petition, they are reproduced hereunder:-

¶62

“ 3. Categories of miscellaneous certificates:- (1) Subject to the provisions hereinafter contained, a Revenue

¶63

-10-

¶64

Officer shall be competent to grant following categories of miscellaneous certificates, namely:-

¶65

(i) xxx (ii) xxx (iii) xxx (iv) Solvency certificate (Form No.IV) (v) xxx (v-1) xxx (vi) xxx (2) xxx

¶66

(3) The solvency certificate for an amount exceeding five lakh rupees shall be granted by the Tahasildar and Additional Tahasildar subject to the approval of Sub-Collector.

¶67

4.(1) Application for miscellaneous certificates:- A person desirous of obtaining a certificate shall file before a Revenue Officer an application,-

¶68

(i) xxx (ii) xxx (iii) xxx (iv) for issuance of Solvency certificate, in Form No.4; (v) xxx (vi) xxx (2) xxx (3) An application for solvency certificate shall be accompanied by the list of immovable properties along with the encumbrance certificate.”

¶69

-11-

¶70

10. Even when the matter is examined from the perspective of the Certificate Rules, Rule-3(iv) and Rule 3(3) thereof provide for issuance of Solvency certificate. Rule-4(1)(iv) of the Certificate Rules provides that a person desirous of obtaining a Solvency certificate would apply to the Revenue Officer concerned on application in Form No.IV. Rule 4(3) of these Rules provides that application should be accompanied by an affidavit sworn in before a Magistrate, incorporating the details of immovable properties, the income and source thereof. On receipt of such application, the Revenue Officer shall cause an enquiry and scrutinize the documents furnished by the applicant. After the process of verification is complete, the Revenue Officer concerned by invoking power under Rule-3 (iv) of the Certificate Rules shall issue solvency certificate on Form No.IV.

¶71

11. In view of the afore discussed position of law, it must be held that the statutory prescription enumerated in the statutory Rules namely; Rule 27(4) of the OMMC Rules, 2016 read with Clause-3 of FORM-M and Rule 3 and Rule 4 of the Miscellaneous Certificate Rules, 2017 cannot be overridden by mere executive order issued by the Revenue & Disaster Management Department dated 02.01.2020 under Annexure-1. As a logical corollary thereto, the impugned order under Annexure-2 dated 04.07.2020, issued by the Tahasildar, Bonth, being ultra vires of the Rules aforementioned, is wholly incompetent. If the Government were to suitably amend the Rules now, in so far as the present writ petition is concerned, such amendment cannot completely omit the provision of producing the

¶72

-12-

¶73

Solvency certificate and require the production of the Bank Guarantee. Even if such provision is brought in the Rules by way of amendment, it shall obviously be applicable only prospectively and not retrospectively.

¶74

12. It is the settled proposition of law that executive instructions cannot have the effect of either amending or superseding the statutory rules or adding something thereto. Such orders cannot be issued in contravention of the statutory rules for the reason that an administrative instruction is not a statutory rule nor does it have any force of law; while statutory Rules have full force of law.

¶75

We may in this connection usefully refer to certain judgments of the Supreme Court. In State of Orissa & ors. Vs. Prasana Kumar Sahoo , reported in (2007) 15 SCC 129. Their Lordships of the Supreme Court, while dealing with a similar situation of conflict between executive instructions and statutory rules, in para-12 of the report, held as under:-

¶76

“12. Even a policy decision taken by the State in exercise of its jurisdiction under Article 162 of the Constitution of India would be subservient to the recruitment rules framed by the State either in terms of a legislative act or the proviso appended to Article 309 of the Constitution of India. A purported policy decision issued by way of an executive instruction cannot override the statute or statutory rules far less the constitutional provisions.”

¶77

In Delhi Development Authority Vs. Joginder Singh

¶78

Monga , (2004) 2 SCC 297, it is categorically held by the Supreme Court that in a case where a conflict arises between a statute and an executive

¶79

-13-

¶80

instruction, indisputable, the statute will prevail over the executive instruction.

¶81

13. It may be pertinent to mention here that in the present case, the DTCN issued by the Tahasildar, Bonth prescribed submission of Solvency Certificate/Bank Guarantee and by abiding such terms and conditions of the DTCN, the petitioner submitted the Solvency Certificate along with the Application Form and other required documents. But when he was found to be the highest bidder in respect of the sand quarry in question, the Tahasildar, Bonth sought clarification from the Sub-Collector, Bhadrak. The Sub-Collector clarified that when the bidder fulfills all terms and conditions of the DTCN issued by the Tahasildar, there should not be any doubt regarding eligibility of bidders. Accordingly, the Sub-Collector required the Tahasildar, Bonth to take appropriate steps for long term lease in respect of minor minerals sairat source of Sahupada sand quarry as per the procedure laid down under OMMC Rules, 2016. However, the Tahasildar, Bonth on 04.07.2020 declared the opposite party No.5, who was the second highest bidder, as the successful bidder in respect of Sahupada Sand Quarry, even though the petitioner was the highest bidder and was fulfilling all the terms and conditions of the DTCN, which is in our view is unjust, unreasonable and not in accordance with law.

¶82

14. In view of the foregoing discussion, we hereby allow the writ petition. Accordingly clause-6 of the impugned order dated 02.01.2020 under Annexure-1, issued by the Government of Odisha in the Revenue & Disaster Management (R&DM) Department, Bhubaneswar, and the order dated

¶83

-14-

¶84

04.07.2020 under Annexure-2 issued by the Tahasildar, Bonth, are quashed and set aside. Matter is remitted to the opposite party No.4-Tahasildar, Bonth to take fresh decision taking into consideration bid of the petitioner vis-à-vis opposite party no.5 along with all other bids.

¶85

Compliance of the judgment shall be made within one month from the date of production of a copy of this order before the opposite party

¶86

No.4.

¶87

There shall be no order as to costs.

¶88

(Dr. B.R. SARANGI) (MOHAMMAD RAFIQ) JUDGE CHIEF JUSTICE

¶89

A.Dash/Secretary.

Narayan Chandra Udgata v. State of Odisha

Case brief

What is this about?

What did the court decide?

Narayan Chandra Udgata v. State of Odisha

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Ghanashyam Panda Vs Chief Secretary and Chief Development Commissioner

Himansu Sekhar Mohanty Vs State of Odisha

Shivashakti Pujak Samaj Vs Administration Dept.

Asish Kumar Hial Vs Dist. and Session Judge, Nabarangpur

Janakalyana Parisada Vs State of Odisha

Debendra Mallik Vs the Collector, Kendrapara