The State Of Bihar & Ors. vs M/s. Balaji Enterprises

An application for stay in connection with the instant appeal and application dated 02.09.2026 filed by the respondent/ writ-petitioner with a prayer to direct the appellants not to proceed with the auction and settlement of Stone Block No.27 situated at Mauza-Hazratpur Mandro Chandi, Area-5 hectares at District-Shaikhpura, mentioned at Serial No.11 in the notice inviting tender dated 13.08.2026 were fixed for hearing on 25.09.2026.

At the time of hearing of the applications above-named, we were of the view that the instant appeal can be disposed of on the basis of the submission made by the learned Counsels for the parties.

Therefore, we proposed to take up the hearing of the appeal in presence of the learned Counsel for the appellants and the respondent.

The instant appeal under Clause-10 of the Letters Patent Act is directed against the judgment dated 02.05.2026 passed by the learned Single Judge in C.W.J.C. No. 11678 of 2023.

By the impugned judgment, the writ petition was allowed. The appellants herein were directed to finalize the D.S.R. (District Survey Report) of mining lease with the respondent; extend the time of lease and issue work order followed by final settlement of contract of lease with the respondent within a period of six weeks from the date of passing of the order.

In order to ascertain the issue, the following facts are required to be recorded which are as follows:-

We have already stated in a nutshell the order passed by the writ-Court.

Mr. Samdarshi, learned Advocate for the respondent/writ petitioner submits that the writ-court in Paragraph No.30 of its judgment recorded the observation of the Hon’ble Supreme Court of India in State of Bihar and Ors. Vs. Pawan Kumar and Ors. etc. (Civil Appeal No.3661-3662 of 2020) decided on 10.11.2021. Paragraph No.11 of the said judgment records the guidelines of possible sand mining sources and preparation of D.S.R. in the following words:-

It is submitted by the learned Advocate on behalf of the respondent/writ-petitioner that on the basis of D.S.R. (District Survey Report), auction is to be made, letter of intent will be issued. The successful bidder will submit mining plan which shall be approved by the Competent Authority. Thereafter, the successful bidder is required to file application before SEIAA for environmental clearance and only then the lease deed is to be executed under Rule-28 of Bihar Minerals (Concession, Prevention of Illegal Mining, Transportation & Storage) Rules, 2019.

Mr. Samdarshi after elaborating briefly different stages till the execution of lease deed in connection with this matter draws our attention to Page No.148 of the list of letter of intent holder in the district of Shaikhpura alongwith its validity.

It is pointed out by the learned Advocate on behalf of the respondent/writ petitioner that location of the mining lease with reference to latitude and longitude was not stated in respect of the petitioner's block by the District Mining Office, Shaikhpura. Therefore, the respondent/writ-petitioner did not get environmental clearance within the stipulated period of time. The writ-petitioner was not in fault for non-execution of the deed of lease within the stipulated period of time. However, without admitting the inaction on the part of the State Authority, the Collector cancelled the letter of intent, which was approved by the Commissioner.

The learned Advocate on behalf of the respondent/writ-petitioner next draws our attention to paragraph Nos.5, 7 & 11 of the order passed in appeal by the Commissioner of Mines on 14.07.2023. The above-mentioned paragraphs are quoted below:-

Learned Advocate for the respondent/writ-petitioner next draws our attention to Rule-28 of Bihar Minerals (Concession, Prevention of Illegal Mining, Transportation & Storage) Rules, 2019, which deals with execution of lease. Rule-28 runs thus:-

Referring to the above provisions, it is contended by Mr. Samdarshi that duty of supplying D.S.R. with Geo-coordinates for issuance of environmental clearance lies upon the State-Respondents. If the D.S.R. and environment clearance were supplied by the Mining Authority and in spite of receipt of such documents, there was delay on the part of the respondent/writ-petitioner to execute the deed of lease within 180 days of the order sanctioning the list than the respondent might have been held to be responsible.

Mr. Samdarshi also refers to the second proviso of the aforesaid Rules of 2019 which gives power to the Collector to permit the execution of formal lease even after the expiry of the said period of 180 days, where the Collector is satisfied that the person to whom such lease has been granted is not responsible for delay in execution of formal lease.

The learned Advocate for the respondent/writ-petitioner refers to a very recent decision in the case of The Director of Mines and Geology Vs. M/s. BMM Ispat Ltd. & Anr., reported in 2026 INSC 627. In the aforesaid decision an order of Karnataka High Court in Writ Petition No.6979 of 2017, whereby the Court allowed the respondent's petition directed against an order passed by the appellant herein, rejecting the respondent's representation made against the charge of higher royalty than what was stipulated in the tender agreement, which in itself was a consequence of an earlier round of litigation, was challenged. The Hon'ble Supreme Court in Paragraph Nos.12 & 13 held as hereunder:-

Mr. Samdarshi also refers to a three Judges Bench decision of the Hon'ble Supreme Court in Goa State Cooperative Bank Ltd. Vs. Krishna Nath A. (Dead) through Legal Representatives & Ors., reported in (2019) 20 SCC 38.

Paragraph No.23 of the said judgment states as follows:-

The learned Advocate General, on the other hand, refers to certain dates which are relevant for the purpose of this case from the record. In respect of the mining lease in question, auction was conducted by the District Magistrate, Shaikhpura on 18.03.2017. Letter of intent was issued on 21.09.2017. On 10.08.2018, the petitioner requested the respondent, Mineral Development Officer that for environmental clearance the petitioner seeks information which were to be provided by the Circle Officer, Ariari. On 13.09.2018 Mining Plan was submitted by the appellant. Subsequently, during the year 2018 and 2019, the writ-petitioner submitted representation to the Mineral Development Officer for providing information through the Circle Officer for submitting the said before SEIAA. On 28.01.2019, the petitioner submitted pre-feasibility report and Proposed Terms of Reference before the SEIAA. Since March, 2020 to July, 2020 normal work of all Departments was suspended due to COVID Pandemic. On 07.09.2020 the SEIAA recommended to issue the terms of reference on the basis of recommendation of SEAC and SEIAA pointed out the discrepancies, such as approval of mining plan by the Department of Mines and Geology, D.S.R. lacking latitude and longitude etc. However, considering the COVID Pandemic, the SEIAA resolved to issue the term of reference subject to submission of certain documents and complying with the necessary directions dated 07.09.2020. On 29.01.2021, the petitioner deposited demand draft for conducting public hearing before the Bihar State Pollution Control Board. On 16.03.2021, the Mineral Development Officer communicated the Bihar State Pollution Control Board that on 24.04.2021 is the date fixed for public hearing. However, public hearing was conducted on 17.12.2021. On 30.06.2022, the petitioner again requested the Mineral Development Officer to provide approved D.S.R. with Geo-coordinates, without which SEIAA was not considering grant of environment clearance. Subsequently, a series of explanations was submitted before the District Magistrate and the Competent Authority in the Mining Department explaining the petitioner's stands as to why the delay in issuing the sanction order was not attributable to the petitioner. However, on 23.01.2023 the Collector, Shaikhpura cancelled the sanction letter and forfeited the security deposit.

Referring to the above list of dates, it is submitted by Mr. S.D. Sanjay, the learned Advocate General that as per Rule-28(1) of 2019 Rules, the formal lease deed shall be executed by the Collector in Form 'B' within 180 days of the order sanctioning the lease and if the person to whom such mineral concession has been granted fails to submit the required documents for execution within the aforesaid period, the order sanctioning the lease shall be deemed to have been revoked, and in that event the application fee and the security deposit shall be forfeited.

If a person in favour of whom the sanction order is issued fails to produce necessary documents within 180 days for execution of the lease deed, the lease will automatically be revoked.

In the instant case, the letter of intent was issued on 21.09.2017, from the list of dates it appears that the petitioner for the first time took step on 10.08.2018 requesting the Mineral Development Officer to produce certain information/ documents for obtaining environmental clearance. Thus, the petitioner for the first time took step to discharge his liability after the expiry of 180 days.

The learned Advocate General next draws our attention to paragraph No.33 of the impugned judgment, where the learned Single Judge observed as follows:-

A bare perusal of the above quoted observation clearly suggests that there was delay and laches on the part of the writ-petitioner. Therefore, when the learned Single Judge found that the respondent/writ-petitioner was guilty by delay and laches, it was not proper for the learned Single Judge to extend equitable relief under Article 226 of the Constitution of India.

It is submitted by the learned Advocate General on behalf of the appellants that the equity cannot override the statutory principle.

The learned Advocate General next refers to paragraph Nos.52, 53 & 54 of the impugned judgment. In paragraph No.52, the learned Single Judge directed the Competent Authority-cum-District Magistrate to finalize D.S.R. and thereafter, extend the time and issue work order followed by final settlement of contract of lease within a period of six weeks from the date of passing of this order. In paragraph No.53, the learned Single Judge observed that already more than six years have lapsed and no third party right is created, therefore, the Competent Authority-cum-District Magistrate and the Additional Chief Secretary considering that proposal has been submitted by the Proponent of Project before the SEIAA and considering the said proposal in detail as would appear from the letter dated 09.07.2020 for considering the ‘Term of Reference’ herein-above, petitioner having satisfied, the Competent Authority is required to take decision for issuing modified D.S.R. giving the Geo-coordinate expeditiously without further delay. In paragraph No.54, the SEIAA was directed not to cause any delay in taking decision to issue Environmental Clearance Certificate forthwith.

It is contended by the learned Advocate General that SEIAA was not even a party to the writ petition then how could the learned Single Judge pass a direction upon a State Authority who is not a party to the writ petition.

Under the above stated premises, it is submitted by the learned Advocate General that till date the writ-petitioner failed to produce requisite documents for execution of the lease deed.

Rule-25 of Bihar Minor Mineral Concession Rules, 1972 clearly stipulates that the mining lease shall be executed by the Collector in Form 'D' within 120 days of the order sanctioning the lease and if the person to whom such lease has been granted fails to submit the required documents for execution within the aforesaid period, the order sanctioning the lease shall be deemed to have been revoked and in that event the application fee and the security deposit shall be forfeited. Thus, revocation of the lease deed is automatic. After the expiry of 120 days from the date of sanction, no formal order is also necessary. Section 25(1) is a deeming provision.

Having heard the learned Advocate for the respondent/writ-petitioner and the learned Advocate General on behalf of the appellants, the moot question that is required to be adjudicated is the scope of judicial review of the action of the State in matters relating to contract/tender under writ-jurisdiction.

It is needless to say that tender operates in the realm of the law of contract. Floating a tender by any organization is an invitation to offer. When the offer is accepted as per the terms of tender. The offers are examined and the person or company or firm who offers the highest bid is accepted. After acceptance under various rules created under the statute like Bihar Minerals (Concession, Prevention of Illegal Mining, Transportation & Storage) Rules, 2019, Bihar Minor Mineral Concession Rules, 1972 as well as under different Rules on various matters.

The parties are directed to execute various documents and only on satisfactory execution of documents, a contract is entered into. A lease for quarrying sand or extracting stones for a particular period of time is basically a contract of lease.

The issue relating to the scope of judicial review of State action in matters relating to contract/tender under writ jurisdiction was elaborately dealt with in a three Judges Bench decision of the Hon'ble Supreme Court in Subodh Kumar Singh Rathore Vs. Chief Executive Officer & Ors., reported (2024) 15 SCC 461. The Hon'ble Supreme Court was pleased to consider its earlier view and the present changes in judicial review.

Over the years, the scope of judicial review and the extent to which a Court can interfere in disputes arising out of contracts or tenders has seen a significant development, marked by a nuanced understanding of the critical role of administrative discretion. The judicial quest in administrative matters has always been to find a right balance between: (i) allowing leeway to the States in deciding the exercise of their administrative discretion in matters pertaining to policy; and (ii) the need to ensure fairness and propriety in such administrative actions.

Earlier, the position of law was that any dispute arising out of a contract entered into with the State or its instrumentalities could not be adjudicated by the Court under its writ jurisdiction, as in all such cases, it could be said that the “real grievance” was essentially only one being that of breach of a contract for which the appropriate remedy would be an ordinary suit and not a writ petition.

Thus, for a period of time the courts recognised that there was a clear brightline distinction between when a State or its instrumentalities could be said to be acting in its executive capacity and when it could be said to be acting in its private capacity, with the existence of a “contractual relation” inter se the parties being the determinative factor. Wherever, there was a contract, the State's relations and all its actions were said to be within the field of a contract i.e. within the realm of private law, and the courts would resile from interfering with the same under their writ jurisdiction or embarking upon a judicial review of such actions.

Such reluctance on the part of the courts stemmed from its understanding that the State or any of its instrumentalities must have the flexibility or the discretion to take decisions that are in the best interest of the public and efficient governance. The Government being the decision-maker of the State is said to be the best judge of when a contract or an agreement is in its interest and by its extension in the interest of the public, and as such the courts should not interfere in the State's discretion to award or terminate contracts. Another reason why contractual disputes were precluded from being espoused under the writ jurisdiction of the courts was due to the summary nature of such proceedings, which do not allow for an exhaustive review unlike civil suits.

This simplistic approach of the courts in deeming every act and action of the State which was complained of as nothing more than a “contractual dispute” or a case of “breach of contract” often led to the State abusing its position and acting unfairly under the misconceived notion, that all its actions such as award of contracts or tenders were nothing but a “largesse” — a generosity bestowed upon its citizens, which it can at its own whims choose to deny, alter, modify, or take away without any consequences. This often led to a conflation of power with duty, and resulted in every arbitrary exercise of power by the State under the guise of a “contractual dispute” to remain unchecked and undisputable before the courts and out of the reach of judicial review, undermining the rights of the citizen to have their interests safeguarded and protected.

Over a period of time the courts recognised the crucial role of judicial oversight in preventing the abuse of power and maintaining public confidence in the administrative process. Courts developed various doctrines and principles to guide their review, such as the principles of natural justice, reasonableness and proportionality. These principles ensured that the administrative actions are not arbitrary, discriminatory or capricious. By enforcing such standards, the courts also ensured that the rule of law was maintained and the individual rights were protected.

The interplay between judicial review and administrative discretion has been a dynamic process. As new challenges and complexities kept on arising before the courts as regards the State's actions and governance, it continued to refine its approach. This ongoing dialogue between the courts and the executive branch contributed to the development of a more accountable and transparent administrative framework, paving the way for the exercise of judicial review even in the realm of contractual disputes to achieve a fine balance between efficiency and fairness in policy decisions on the one hand and the rights of individuals and overall public interest on the other.

In Mahabir Auto Stores v. Indian Oil Corpn. [Mahabir Auto Stores v. Indian Oil Corpn., reported in (1990) 3 SCC 752 : (1990) 69 Comp Cas 746], this Court expressed doubts over the correctness of the earlier position of law, that actions of the State in the private contractual field cannot be questioned in writ jurisdiction. This Court further held that even if the inter se relation of parties with the State is governed purely by a contract, the method, motive and decision of the State would be subject to judicial review on the grounds of relevance and reasonableness, fair play, natural justice, equality and non-discrimination. This view was reiterated in subsequent decisions.

The decision of the Hon'ble Supreme Court in A.B.L. International Ltd. Vs. Export Credit Guarantee Corpn. of India Ltd., reported in (2004) 3 SCC 553 is significant and was the turning point in the scope of judicial review in contractual matters. In this landmark ruling, the Court decisively laid down and approved that a relief against the State or its instrumentalities in matters related to contractual obligation can be sought under the writ jurisdiction.

It is needless to state that in matters concerning specific modalities of the such as required work, execution methods, material quality, time frame, contract the supervision standards, and other aspects impacting the tender's purpose court usually refrains from interference. State authorities, like private individuals, have a consensual element in contract formation. The stipulations or terms in the underlying contract purpose are part of the consensual aspect, which need not be entertained by the courts in writ jurisdiction and the parties may be relegated to ordinary private law remedy. Judicial review does not extend to fixing contract stipulations but ensures that the public authorities act within their authority to prevent arbitrariness.

Thus, the demarcation between a private law element and public law element in the context of contractual disputes if any, may be assessed by ascertaining whether the dispute or the controversy pertains to the consensual aspect of the contract or tender in question or not. Judicial review is permissible to prevent arbitrariness of public authorities and to ensure that they do not exceed or abuse their powers in contractual transactions and requires overseeing the administrative power of public authorities to award or cancel contracts or any of its stipulations. (emphasis supplied) (Paragraph Nos.33 to 43 are reproduced from head notes in Subodh Kumar Singh Rathore (supra)).

Factual aspects of the instant appeal are not in dispute that the letter of intent was issued on 21.09.2017. The statutory rule provides that from the date of issuance of letter of intent, the lease is required to be executed within 120 days under 2019 Rules or within 180 days under 1972 Rules, as the case may be. Admittedly the respondent/writ-petitioner took step to obtain environmental clearance on 10.08.2018, i.e. after a lapse of about 11 months. There is no explanation as to the delay committed by the writ-petitioner to obtain environmental clearance. Subsequent to 10.08.2018, the State Government also delayed supplying necessary document and according to the writ-petitioner environmental clearance was not issued by the concerned department because the respondents failed to produce geo-coordinate mentioning latitude and longitude of the stone block. In the meantime about nine years have elapsed.

Under such backdrop if we consider the factual circumstances of the case this appears to us that both the parties are responsible for contributory negligence in the matter of timely execution of the lease deed for quarrying stone from Block No.27.

We are in agreement with the learned Advocate General that due to non-execution of the deed of lease and failure on the part of the writ-petitioner from extracting stone from the stone mines, the appellant has lost revenue and financial gain.

It is, however, contended by Mr. Samdarshi that as per the terms of agreement, the writ-petitioner was obliged to pay the price of stone prevailing on the date of actual extraction of stones. Therefore, the State Government will not loose any revenue, royalty or any other financial benefit.

However, it is obvious that the rate of revenue has ofcourse been enhanced within 9-10 years. The royalty depends upon determination of revenue and charges of royalty over a particular block. Therefore, the royalty that was fixed in the year 2017 must not be the same as on this date.

The learned Single Judge failed to consider this aspect of contributory negligence and consequent loss incurred by the State Government for non-execution of lease deed.

Since the State Government failed to comply with the part of their promise by providing necessary documents for environmental clearance within the stipulated period of time, the State Government/appellants were negligent in the same manner as that of the writ-petitioner who initiated the process of having D.S.R. and environmental clearance after about one year of issuance of letter of intent. On due recognition of appellants' negligence, we set aside the portion of the order passed by the Collector and affirmed by the Appellate Tribunal of forfeiture of the initial bid amount paid by the respondent/writ-petitioner to the tune of Rs.2,90,00,000/- (Rupees Two Crore Ninety Lakhs only).

At the same time, we impose interest over the said amount at the rate of 12% per annum from the date of depositing the amount till the date of payment. Such amount shall be paid by the appellant before initiation of new tender process in respect of Block No.27. It is also made clear that the writ-petitioner shall be given an opportunity to participate in the new tender process and its past conduct cannot be considered by the State Authority to reject his claim. If the writ-petitioner becomes L-1, he will be entitled to get the order of intent.

In the instant case as well as in many other cases of similar type we have noticed that execution of lease deed is being delayed because of the failure on the part of the State Government in its various departments to produce necessary documents immediately after the letter of intent. Therefore, we propose to formulate the following guidelines so that mining lease may not be revoked for want of necessary documents like environmental clearance etc. before execution of lease deed:-

Since we have come to a decision that the deed of lease was revoked by the State Government, as a result of contributory negligence by both the parties, we have no other alternative but to set aside the order passed by the learned Single Judge.

For the reasons stated above, the instant appeal is allowed.

The District Magistrate, Shaikhpura is directed to comply with the order regarding payment of initial deposit with interest within the stipulated period of time to the writ- petitioner.

Let a copy of this order be sent to the Chief Secretary, Government of Bihar, Patna for information and issuance of appropriate direction to maintain the guidelines described herein-above, in the matter of execution of the deed of lease in connection with mines and minerals.