DEBIDUTTA MOHANTY versus RANJAN KUMAR PATTNAIK & ORS. on 3 March 2023

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court of Orissa at Cuttack in Writ PetitionD(Civil) No.16437 of 2021 by which the High Court has allowed the saidwrit petition preferred by the respondent no.1 herein and has set asidethe order passed by the Collector, Cuttack dated 24.03.2021 by whichthe lease in favour of the original writ petitioner was cancelled andconsequently the lease in favour of the original writ petitioner has beenrevived, the original respondent no.5 before the High Court has preferredEthe 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 waspublished on 08.01.2018. Clause 5 of the auction notice stated that theFbidder should submit a solvency certificate from the Revenue Officerwhich amount should not be less than the royalty and the additionalcharges fixed for the source. The bidder was also required to submit thedetails of the movable properties. The auction notice referred to theOrissa Minor Minerals Concession Rules, 2016 (hereinafter referred toas ‘OMMC Rules, 2016’). The respondent no.1 – original writ petitionerGparticipated in the tender process and submitted his application alongwith a Solvency Certificate dated 07.12.2017 issued by the Tehsildar,Narasinghpur. The above solvency certificate was issued despite theaboveorder passed by the Sub-Collector, Athagarh on 06.12.2017. Atthis stage, it is required to be noted that an order was passed by the Sub-HCollector, Athagarth on 06.12.2017 specifically stating that a solvency certificate be issued in favour of “Gurukrupa Charitable Trust, Chairmanof Village Kendupali”. However, the Tehsildar issued the solvencycertificate in favour of the original writ petitioner individually who at therelevant time was the Chairman of the Trust. The said solvency certificatewas enclosed with the original writ petitioner’s bid.

2.2 When the bids were opened, the highest bid was of one SukantiSahoo, the original writ petitioner was the second highest bidder and theappellant herein – original respondent no.5 - Debidutta Mohanty wasthe third highest bidder. The bid of the first highest bidder Sukanti Sahoowas cancelled as she was found to be a defaulter. Since the original writpetitioner was the second highest bidder a letter dated 08.05.2019 wasissued to him asking him to communicate his willingness to operate thesand sairat at Rs.142 per cubic meter which was the rate quoted by thehighest bidder. On the same date, the original writ petitioner submittedhis willingness. He was then asked to execute a lease deed. The originalwrit petitioner then deposited Rs.26,28,450/- and complied with therequirements. That Sukanti Sahoo filed the Writ Petition (C) No.9023 of2019 before the High Court questioning the cancellation of her bid andthe selection of the original writ petitioner. Initially the High Court grantedthe 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 competentauthority i.e. the Tehsildar, Sadar for execution of the lease deed in hisfavour. Thereafter on 01.01.2020, a lease deed came to be executed inhis favour. That thereafter a second writ petition came to be filed bySukanti Sahoo against the grant of lease in favour of the present originalwrit petitioner being Writ Petition (C) No.951 of 2020. Initially the HighCourt stayed the operation of the lease deed executed in favour of theoriginal writ petitioner. However, thereafter the stay came to be vacatedclarifying that the operation of the lease would be subject to the finaloutcome of the pending writ petition.

2.3 That thereafter the appellant herein Debidutta Mohanty filedthe Writ Petition (C) No.3326 of 2021 in the High Court questioning thesolvency certificate issued in favour of respondent no.1 herein – originalwrit petitioner. The said petition came to be disposed of by the HighCourt vide order dated 04.02.2021 directing the Collector, Cuttack toconsider his representation. While the matter was pending with theCollector, the appellant herein filed Writ Petition (C) No.14241 of 2021

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Awhich came to be disposed of on 19.04.2021. In the said order, it wasnoted that on 08.03.2021, the Tehsildar, Narasinghpur had cancelled thesolvency certificate produced by respondent no.1 herein with his bid andthat against the said cancellation order, an appeal had been filed beforethe Collector. A direction was issued to the Collector to also dispose ofthe representation of the appellant herein questioning the solvencyBcertificate which was issued in favour of the original writ petitioner, notlater than 12.05.2021. In the meanwhile, the respondent no.1 waspermitted to operate the sairat and then it was stopped at the instance ofthe Tehsildar. On 02.03.2021 a letter was written by the Tehsildar,Narasinghpur to the Sub-Collector, Athagarh stating that the respondentCno.1 herein – original writ petitioner was the Chairman of theGurukrupaCharitable Trust. He had filed an application for issuance of asolvency certificate in his own name, but since he was the Chairman ofthe GurukrupaCharitable Trust, the solvency certificate that had to beissued in the name of the Trust was issued in his name. It was statedtherein that the notice had been issued to the party and necessary stepsDhave been taken for correction of the said certificate.

2.4 Subsequently, another letter was sent by the Tehsildar on08.03.2021 to the Collector, Cuttack stating that the earlier solvencycertificate issued in favour of the original writ petitioner – Respondentno.1 herein stood cancelled and another certificate was asked to beEissued in favour of the “Gurukrupa Charitable Trust, Chairman of VillageKendupali”.

2.5 That meanwhile, on 29.01.2021, the original respondent no.1herein - original writ petitioner wrote to the Tehsildar, Sadar Cuttack tosubstitute/exchange the solvency certificate given with his bid with anotherFone in the value of Rs.4.6 crores which had been issued on 27.01.2021.That thereafter on the representation made by the appellant herein, theCollector cancelled the lease in favour of respondent no.1 herein -originalwrit petitioner by observing and concluding that the solvency certificatewhich was required to be issued in favour of the “Gurukrupa CharitableGTrust Chairman of Village Kendupali”, was issued in the name ofrespondent no.1 and therefore, the solvency certificate had not beenissued following the stipulated provisions of the law and hence, theutilization of the same by respondent no.1 herein - original writ petitionerin auction of the sairat is illegal. The order passed by the Collector dated24.03.2021 was the subject matter of the present writ petition before theHHigh Court at the instance of Respondent no.1 herein.

2.6 Before the High Court it was the case on behalf of respondentno.1 herein - original writ petitioner that under the provisions of theOMMC Rules, 2016 the competent authority in regard to minor mineralsis the Tehsildar and therefore, the lease deed could not have beencancelled by the Collector. It was also the case on behalf of the originalwrit petitioner - respondent no.1 herein that he rectified the defect of notfurnishing a solvency certificate in his own name. It was submitted thatit is true that earlier the solvency certificate should have been issued inthe name of the Trust of which he was the Chairman, however, on29.01.2021 itself he had written to the Tehsildar for substituting thesolvency certificate submitted with the bid with another issued in hisown name and, therefore, even the said defect stood cured. It wassubmitted that without taking note of this, the Collector had cancelledthe lease.

2.7 The writ petition was opposed by the State as well as theappellant herein- original respondent no.5. It was submitted on behalf ofthe appellant herein that the bid submitted by respondent no.1 herein -original writ petitioner was ab initio void and should never have beenaccepted since it was not accompanied by a valid solvency certificate inthe name of the original writ petitioner. It was submitted that the documentthat was enclosed as a solvency certificate was in fact not correctlyissued and was contrary to the express order of Sub-Collector. It wassubmitted that as the bid of the first highest bidder - Sukanti Sahoo wasearlier cancelled and the original writ petitioner was the second highestbidder whose lease has been rightly cancelled by the Collector, being thethird highest bidder the lease ought to have been granted in his favour.

2.8 By the impugned judgment and order and having opined thatthe initial solvency certificate was issued in favour of the original writpetitioner which was issued in the name of the original writ petitioner,though required to be issued in the name of the Trust, was a bona fideerror which subsequently came to be cancelled and even a fresh solvencycertificate was issued in favour of the original writ petitioner, the Collectorhad erred in cancelling the lease deed in favour of the original writpetitioner. The High Court also has observed that under the OMMCRules, 2016, the competent authority in terms of Schedule (IV) who cancancel the lease deed, is the Tehsildar and therefore, the competentauthority’s power under the OMMC Rules, 2016 would not have beenstraight way exercised by the Collector in the first instance. Therefore, AB

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Athe High Court by the impugned judgment and order has set aside theorder passed by the Collector cancelling the lease deed in favour of theoriginal writ petitioner.

2.9 The impugned judgment and order passed by the High Courtquashing and setting aside the order passed by the Collector, CuttackBdated 24.03.2021 cancelling the lease in favour of the original writpetitioner - respondent no.1 herein is the subject matter of the presentappeal at the instance of the original respondent no.5 – third highestbidder.

4. Shri R. Basant, learned Senior Advocate has appeared on behalfCof the appellant and Shri A.N.S. Nadkarni, learned Senior Advocate hasappeared on behalf of Respondent no.1.

4.1 Shri Basant, learned Senior Advocate appearing on behalf ofthe appellant has vehemently submitted that in the facts and circumstancesof the case the Division Bench of the High Court has materially erred inDquashing and setting aside the order passed by the Collector, Cuttackdated 24.03.2021 cancelling the lease in favour of respondent no.1 herein.

4.2 Shri Basant, learned Senior Advocate has further submittedthat the High Court has materially erred in observing and holding thatthe initial subject solvency certificate which as such was in the name ofEGurukrupa Charitable Trust, but was used by respondent no.1 in hisindividual capacity in order to participate in the tender was a genuinemistake and not a deliberate act and therefore a rectifiable defect.

4.3 It is submitted that it is an admitted position that the propertybelonged to the Gurukrupa Charitable Trust and was not owned byFrespondent no.1. It is submitted that therefore, the subject solvencycertificate used by respondent no.1 in his individual capacity in order toparticipate in the tender was an exercise in fraud which rendered his bidnon-est and void ab initio.

4.4 It is submitted that the High Court has not properly appreciatedthe fact that it was the modus operandi of respondent no.1 to attempt toGpass off the property of the Trust as his own property inasmuch as theself-same subject solvency certificate had been misused by respondentno .1 in another tender and detecting the fraud played, the Tehsildar andthe Sub-Collector had disqualified him from the said tender.

4.5 It is further submitted that the High Court has materially erredin applying Rule 51(7) of the OMMC Rules, 2016. It is submitted thatthe said Sub-Rule shall be applicable only in a case where there is abreach of any condition of the lease deed, whereas in the instant casethere has been a breach of the auction/tender call notice and the Rulesgoverning bids.

4.6 It is further submitted that the High Court has materially erredin holding that the competent authority under the OMMC Rules, 2016was the Tehsildar and therefore the Collector could not have beenapproached in the first instance despite being aware that there wereallegations against the Tehsildar of conspiring with respondent no.1.

4.7 Shri R. Basant, learned senior counsel appearing on behalf ofthe appellant has further submitted that the High Court has materiallyerred in taking into consideration the subsequent conduct on the part ofrespondent no.1 in obtaining the fresh solvency certificate. It is submittedthat what was required to be considered was the solvency certificate atthe time of bid and not the subsequent solvency certificate.

5. Present appeal is vehemently opposed by Shri A.N.S. Nadkarni,learned Senior Advocate appearing on behalf of respondent no.1. It issubmitted that as rightly observed and held by the High Court the initialsolvency certificate dated 07.12.2017 issued in favour of Respondentno.1 was by mistake and instead of Gurukrupa Charitable Trust, thesame was issued in favour of Respondent no.1 being the Chairman ofTrust.

5.1 It is submitted that thereafter respondent no.1 himself madean application for substitution of the solvency certificate. That thereafterrespondent no.1 obtained the fresh solvency certificate in his favourwhich came to be permitted to be substituted/filed. Therefore, it cannotbe said that the initial solvency certificate produced by respondent no.1along with the bid was non-est and void ab initio as sought to becontended on behalf of the appellant.

5.2 It is further submitted that even otherwise the power to cancelthe lease deed would vest with the Tehsildar who is the competentauthority under Rule 51(7) of the OMMC Rules, 2016. That in the presentcase the lease deed was cancelled by the Collector and therefore, theHigh Court has rightly observed and held that the order passed by theCollector, Cuttack cancelling the lease was without authority under theLaw.

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5.3 It is further submitted that even during the pendency of thepresent proceedings not only the lease period has expired but evensubsequently the fresh lease deed has been executed pursuant to theimpugned judgment passed by the High Court.

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6. We have heard learned Senior Counsel appearing on behalf ofBthe respective parties at length.

7. By the impugned judgment and order the High Court has setaside the order passed by the Collector, Cuttack dated 24.03.2021cancelling the lease which was in favour of respondent no.1 herein interalia on the grounds that:

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(i) the order passed by the Collector cancelling the lease deedwas without authority under the law as under Rule 51(7) ofthe Rules, 2016 the Tehsildar is the competent authority tocancel the lease deed;

(ii) That the original solvency certificate dated 07.12.2017Dproduced by respondent no.1, produced along with the bidwas issued in his favour by mistake.

7.1 Now so far as the finding recorded by the High Court that theorder passed by the Collector dated 24.03.2021 cancelling the lease deedwas without authority under the law inasmuch as the competent authorityEto cancel the lease deed under Rule 51(7) of the Rules, 2016 would beTehsildar is concerned, it is required to be noted that the Rule 51(7) shallbe applicable in case of breach of any condition of the lease deed. Thepresent case is not a case of breach of any condition of the lease deed,but a case of producing invalid solvency certificate at the time ofFsubmission of the bid. Therefore, Rule 51(7) shall not be applicable at allto the facts of the case at hand.

7.2 It is also required to be noted that in fact Collector passed theorder dated 24.03.2021 pursuant to the directions issued by the HighCourt directing the Collector to take an appropriate decision on therepresentation/(s) made by the appellant. Under the circumstances theGHigh Court has materially erred in holding that the order dated 24.03.2021passed by the Collector cancelling the lease deed was without authorityunder the law.

8. Now so far as the findings recorded by the High Court that theoriginal Solvency Certificate dated 07.12.2017 in favour of respondentH

no.1 was a mistake and there was no other mala fide intention isconcerned, it is required to be noted that despite the fact that GurukrupaCharitable Trust was the owner of the property and on the said basis thesolvency certificate was claimed, the respondent no.1 made an applicationfor issuance of the solvency certificate in his own name - in his individualcapacity. The Sub-Collector, Athagrah vide communication dated06.12.2017 as such had specifically directed the Tehsildar to issue thecertificate in the name of Gurukrupa Charitable Trust. However, despitethe same the Tehsildar issued the solvency certificate dated 07.12.2017in favour of respondent no.1 in his individual capacity, which as suchcannot be said to be by mistake. If the communication by the Sub-Collector, Athagarh dated 06.12.2017 addressed to the Tehsildar wouldnot have been there and the Tehsildar would have issued the solvencycertificate in favour of respondent no.1 in his individual capacity as hewas the Chairman of the Trust then one can understand such a mistake.However, in the present case the Sub-Collector, Athagarh specificallydirected not to issue the solvency certificate in favour of respondentno.1 herein in his individual capacity and specifically directed to issuethe certificate in the name of Trust. Under the circumstances it cannotbe said that the original solvency certificate dated 07.12.2017 was issuedin favour of respondent no.1 in his individual capacity by mistake. Itappears that the respondent no.1 deliberately and willfully obtained thesolvency certificate in his own name though the property belonged tothe Trust and the solvency certificate was required to be issued in thename of the Trust. He misused/used the solvency certificate dated07.12.2017 for his own benefit illegally and submitted the same alongwith his bid and on the basis of the said solvency certificate he got thelease bid. Under the circumstances, thebid by using the solvencycertificate dated 07.12.2017 byrespondent no.1 was non-est and voidab initio and therefore, the lease in his favour on the basis of suchsolvency certificate was rightly cancelled by the Collector.

8.1 At this stage it is required to be noted that subsequently therespondent no.1’s application on 29.01.2021 permitting him to substitutethe solvency certificate was not on the ground that the initial solvencycertificate dated 07.12.2017 which was issued in his individual namewas by mistake. The reason given was that the other partner may claimover the earlier solvency certificate and therefore we intend to substitute/exchange the fresh solvency certificate which was obtained against theother properties.

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A8.2 At this stage it is required to be noted that the respondent no.1used the very solvency certificate in another tender and the Tehsildarand the Sub-Collector disqualified the respondent no.1 from the saidtender.

8.3 Under the circumstances as such the respondent no.1 misusedBthe solvency certificate dated 07.12.2017 which as such was illegallyissued in his individual capacity/name as though the same was requiredto be issued in the name of Gurukrupa Charitable Trust. At this stage itis required to be noted that subsequently the solvency certificate dated07.12.2017 has been cancelled by the Tehsildar vide order dated08.03.2021 which has attained the finality.C

8.4 Now so far as the submission on behalf of respondent no.1that subsequently respondent no.1 obtained the fresh solvency certificatewhich was sought to be substituted/exchanged is concerned, it is requiredto be noted that what is required to be considered is the solvencycertificate produced along with the bid and not the subsequent solvencyDcertificate.

9. Now so far as the submission on behalf of respondent no.1 thatthereafter pursuant to the impugned judgment and order passed by theHigh Court a fresh lease deed has been issued is concerned, at theoutset, it is required to be noted that in the order dated 18.05.2022 it isEobserved by this Court that the fresh lease deed, pursuant to the impugnedjudgment and order shall be subject to the ultimate outcome of the presentSLP/appeal and/or further orders that can be passed by the court in theproceedings.

10. In view of the above and for the reason stated above, we areFof the opinion that the High Court has committed a very serious error inquashing and setting aside the order dated 24.03.2021 passed by theCollector, Cuttack cancelling the lease deed which was in favour ofrespondent no.1. Consequently, the impugned judgment and order passedby the High Court deserves to be quashed and set aside and is accordinglyGquashed and set aside. The order passed by the Collector, Cuttack dated24.03.2021 cancelling the lease deed which was in favour of respondentno.1 is hereby restored. On the impugned judgment and order being setaside the fresh lease deed in favour of respondent no.1 also deserves tobe set aside and is accordingly set aside.

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Present appeal is accordingly allowed. However, in the facts andcircumstances of the case, there shall be no order as to costs.

Ankit Gyan

Appeal allowed.

(Assisted by : Abhishek Agnihotri and Mahendra Yadav, LCRAs)

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