Abdul Quadir vs State of Maharashtra

P.R. Bora, J.—Heard.

RULE.

Rule made returnable forthwith. The petition is heard finally with the consent of the learned counsel for the parties.

The instant matter pertains to E -auction held on 07.12.2013 for grant of lease in respect of 73 sand ghats in Bhandara district in pursuance of the advertisement published on 23.11.2013 in daily ''Lokmat''. The present petitioners had submitted their bids and the same were accepted. The letters of acceptance were issued in their favour on 13.01.2014 and on the same day all the petitioners deposited 25% of the total bid amount pertaining to their respective sand ghats.

Vide Government Resolution dated 12.03.2013 the Maharashtra Government has declared its policy in respect of the excavation of sand. This Government Resolution runs into 33 printed pages. It provides the mode and manner of excavation of sand, survey of sand ghats, about environmental clearance, fixing of upset price, eligibility criteria for bidders, detail procedure of auction of sand ghats etc.

The aforesaid government resolution also provides that the successful bidder must deposit 25% of the bid amount on the date of receipt of the letter of acceptance and the balance 75% of the bid amount in any case within 15 days thereafter. The aforesaid government resolution empowers the government to forfeit 25% amount deposited by the successful bidder on the date of acceptance of his offer, if he fails to deposit balance 75% amount within a period of 15 days thereafter. By invoking the said clause respondent No.2 vide its order dated 23.04.2014 has forfeited 25% amount deposited by the present petitioners towards bid of their respective sand ghats. This order is challenged in the present petition.

As is revealed from the contentions raised in the petition and submissions made on behalf of the petitioners, the order of forfeiture has been challenged on the ground on unreasonableness and being inequitable. According to the petitioners, when the respondents did not discharge their obligation they have lost right to forfeit the earnest money amount. On the other hand, the entire thrust of the respondents is on the government resolution dated 12.03.2013. According to them, the action taken by the respondent No.2 and the order passed by him, impugned in the present petition, are strictly within the purview of the said government resolution. It is further argued that when in the advertisement itself it was mentioned that the tenders so invited, pursuant to E -auction, were subject to environmental clearance from the competent authority, the petitioners have no right to make grievance as regards to the time consumed in obtaining environmental clearance after having participated in the tender process.

After having gone through the contents of the government resolution dated 12.03.2013 it does not appear to us that it may be of any help to the respondents. We need not refer to the whole text of the said government resolution since two provisions in it only are sufficient to negate the arguments of the respondents. This government resolution in view of the Apex Court judgment reported at Deepak Kumar etc. Vs. State of Haryana and Others etc., mandates that without prior environmental clearance / approval no excavation of the sand will be permitted from any sand ghats. In the instant case, admittedly, the respondents were not possessing such clearance on the date of publishing the tender notice or even on the date of auction i.e. on 07.12.2013.

It was also argued that with the bonafide intention to save time the respondents commenced E -auction process by publishing an advertisement inviting bids awaiting environmental clearance. Perusal of the government resolution dated 12.03.2013, however, shows that even such auction was not permissible. The Government Resolution specifically provides that for excavation of the sand from the sand ghats having less than 5 Hectare of area, even the process of auction shall not be commenced without obtaining environmental approval from State Level Environment Assessment Committee (SEAC) and State Environment Impact Assessment Authority (SEIAA). In the present case, each of the 73 sand ghats in respect of which the E -auction notice was published is admittedly of the area below 5 hectares. It may not be disputed that the process of auction commences with publication of the notice inviting offers. Perhaps this was one of the reasons that this Court in its order dated 02.07.2014 in Writ Petition No. 6305 of 2013 has held E -auction notice published on 22.11.2013 unsustainable in law.

The aforesaid two clauses in government resolution dated 12.03.2013 make it abundantly clear that respondent No.2 could not have commenced the process of E -auction without there being environmental approval from the competent authority for carrying out the excavation of the sand from the respective sand ghats in Bhandara district. Indeed the advertisement dated 23.11.2013 could also not have been published in view of the express bar provided in the government resolution itself.

It is not in dispute that the environmental clearance was finally received on 04.04.2014 for excavation of the sand from sand ghats in Bhandara district. There is further no dispute that though the advertisement was published in respect of 73 sand ghats the environmental clearance is received in respect of only 54 sand ghats. Notice was given by respondent No.2 thereafter on 15.04.2014 calling upon the petitioners to deposit the balance 75% of the bid amount and to execute the prescribed agreement within one week from receipt of the said communication. Respondent No.2 also cautioned the petitioners that on their failure to deposit the balance 75% of the bid amount, 25% amount deposited by them will be forfeited and the petitioners would also be liable to make good the further loss.

As stated earlier, the petitioners have come out with the case that after having failed in discharging the obligation cast upon them, the respondents have lost right to penalize the petitioners by forfeiting the earnest money amount deposited by them. From the dates and events mentioned herein -above there seems no dispute about majority of the facts. The entire controversy now boils down to as to whether the petitioners should be allowed to withdraw from the tender proceedings and whether to quash and set aside the impugned communication dated 23.04.2014 issued by the respondent No.2 forfeiting 25% amount deposited by the petitioners by way of earnest money on the date of acceptance of their offers.

The contention of the petitioners that, upset price of each sand ghat is fixed considering the period of lease of one full year and quantity to be excavated is also fixed on that basis, has not been specifically disputed by the respondents. There is every reason to believe that the petitioners have submitted their offers based on the aforesaid assumption. It is true that the petitioners were aware that the award of leases in question was subject to environmental clearance. However, as has been argued on behalf of the petitioners they were legitimately expecting that by the time they comply with the other formalities the environmental clearance will be received. Not only the petitioners, the respondents were also having the same expectation. As has been submitted in the affidavit in reply on behalf of the respondent No.2, he had submitted the proposals for getting environmental clearance to Environment Department on 08.08.2013 and 01.11.2013. Thus, in anticipation that the environmental clearance will be received within a reasonable period the respondents have also proceeded with auction process. However, it is the matter of record that the environmental clearance was received in April, 2014. The period of lease was to admittedly expire on 30.09.2014. It is thus, evident that the period of only 5 to 6 months was available for carrying out the excavation of the sand from the respective sand ghats. The further contention raised by the petitioners that in the rainy season the excavation could have been difficult also cannot be lost sight of.

Considering the aforesaid facts, no -one will dispute that to proceed in execution of the tenders in question would have definitely resulted in incurring losses. That was the reason that the petitioners well in advance on 18.02.2014 had written a letter to the respondent No.2 to modify the tender conditions either by extending the period of lease or by decreasing the price of sand ghats or by any other mode which may be viable for both, the auction purchasers as well as the Government. The petitioners in the said letter had alternatively claimed refund of the earnest money amount deposited by them with the Government. On 19.03.2014 the petitioners again made the same demand with respondent No.2. The petitioners have argued that the respondent No.2 ought to have considered the request of the petitioners and should have halted the tender process or should have modified the terms of the tender so that the petitioners could execute the said tenders. Admittedly, the request so made by the petitioners was not considered and the impugned communications came to be issued which have given rise for filing the present petition.

After having considered the submissions advanced on behalf of the petitioners and the respondents, we find much substance in the contentions so raised by the petitioners. When it is the fact that upset price of each sand ghat is fixed considering the period of lease of one full year and quantity to be excavated is also fixed on that basis, the respondents were under an obligation to see that the auction purchasers get the entire said period for excavation. Even if it is accepted that the delay which has occasioned in obtaining environmental clearance was beyond the control of the respondents, the petitioners alone cannot be subjected for its disadvantages. Therefore, the petitioners were fully justified in withdrawing from the tender process.

The terms and conditions incorporated in government resolution dated 12.03.2013 cannot be interpreted and considered only to the extent and in the manner they favour the case of the respondent. The clauses in the said government resolution, on the basis of which the respondents have attempted to justify their impugned orders, cannot be isolatedly considered. As mentioned earlier, when there is a specific stipulation that even the auction process cannot be initiated in respect of the sand ghats having area less than 5 hectares without obtaining environmental clearance from State Level Environment Assessment Committee (SEAC) and State Environment Impact Assessment Authority (SEIAA), in fact, the process should not have been initiated by respondent No.2. The act of respondent No.2 was contrary to the provisions of law and the government resolution dated 12.03.2013. Violation of clause 4(D)(i)(a) of the Government Resolution dated 12.03.2013 has rendered the auction process vitiated. From the facts of the case, it is further clear that though the lease period is of one year, the bidders would be practically getting the period of only five months for carrying out excavation of sand. The contract is thus, rendered impossible of performance.

In the above circumstances, it does not appear to us that the respondents are having any right or authority to forfeit the earnest money amount deposited by the petitioners on the date of acceptance of the offers submitted by them. The order, forfeiting the earnest money deposit, passed by the respondents, could have been justified had there been any willful default on the part of the petitioners or had the petitioners refused to go ahead with the contract in normal circumstances. In the present case, as we have stated earlier totality of the circumstances need to be taken into consideration in order to reach to certain conclusion whether the petitioners were at fault so as to make the respondent entitled to forfeit the earnest money amount deposited by them. When the petitioners have been prevented from taking benefit of the acceptance of their bid for want of environmental clearance, for which no blame can be attributed on their part, they cannot be penalized by forfeiting the earnest money amount paid by them. We feel that the ''Doctrine of Equity'' will apply in such situation.

We reiterate that after having consciously considered the facts and circumstances of the case, we find that the petitioners had not purposefully or for any oblique motive rescinded from the tender proceedings or refrained from depositing the remainder 75% of the bid amount. The petitioners i.e. the auction purchasers deposited earnest money on clear understanding that the environmental clearance would be received soon. Respondents however, failed to obtain such clearance, whatsoever may be the reason. As such, the petitioners cannot be said to have failed to comply conditions of auction by not paying the balance amount. Forfeiture of earnest money by the respondents, in such circumstances, is wholly arbitrary and unfair. The respondents cannot take advantage of their own wrong. As such, the impugned orders dated 15.04.2014 and 23.04.2014 cannot be sustained. The respondents are bound to act fairly and reasonably. The Doctrine of Fairness contemplates that every action of the Government should be fair and reasonable. The said Doctrine is evolved to ensure a fair action. The impugned orders tested on the Doctrine of Fairness are liable to be quashed and set aside.

In the result, the writ petition succeeds. The communications dated 15.04.2014 and 23.04.2014 are quashed and set aside, consequently, the respondents are directed to refund the amount of earnest money deposited by each of the petitioner within one month from the date of this order.

The Rule is made absolute accordingly with no order as to costs.