Appeal No 79 of 1965
Appeal from the judgment and order dated August 5 1964
of the Rajasthan High Court Jodhpur in DB Civil Writ Petition No 536 of 1964
LBDSCI 13 174 Sarjoo Prasad JB Dadachanji OC Mathur and Ravinder Narain for the appellant
MM Tewari KK Jain and RN Sachthey for respondent No 1
BB Tawakley and KP Gupta for respondent No 2
The Judgment of the Court was delivered by Raghubar Dayal J
This appeal on certificate granted by the Rajasthan High Court is against the dismissal of the appellant s writ petition under article 226 of the Constitution praying for the issue of a writ of certiorari to the State of Rajasthan respondent No 1
for the canceling and setting aside of its order dated April 1 1964 granting the contract for collecting royalty on building stones excavated from certain area to respondent No 2 Dharti Dan Shramik Theka Sahkari Samiti Ltd a cooperative society
The appeal arises in these circumstances
The appellant offered the highest bid at the auction for the grant of royalty collection contract on January 21 1964
Respondent No 2 was also one of the bidders but stopped after offering a bid of Rs 33000
The final bid of the appellant was for Rs 42200
The State Government made the order in favour of respondent No 2 on an application made by it on March 5
stating therein that the appellant had not deposited 25 per cent of the bid amount as security immediately after the completion of the auction in accordance with r 367 of the Rajasthan Minor Mineral Concession Rules 1959 hereinafter called the rules and as per the terms and conditions of the Auction Notification and that it was prepared to take the royalty collection contract on the highest bid of Rs 42200
It was further stated in the application that respondent No 2 was a cooperative society of the laborers who themselves worked on the mines of the area and therefore in view of Government s policy it should receive preference to an individual bidder
It was further stated that the benefit accruing out of the contract of royalty collection would be shared by the labourers and workers themselves which would go a long way to improve their socioeconomic conditions and thus ultimately would ameliorate the conditions of the workers who were working hard in quarries since long
The contention for the appellant is that the Government had merely to confirm the highest bid at the auction by way of formality and was not competent to sanction the contract in favour of someone who had not offered the highest bid at the auction
Rule 34 of the rules provides that royalty collection contracts may be granted by the Government by auction or tender for a maximum period of two years after which no extension was to be granted
The procedure for auction is provided by r 36
Sub rule 175 5 thereof provides that no bids shall be regarded as accepted unless confirmed by Government or the competent authority and sub rule 7 provides that on completion of the auction the result will be announced and the provisionally selected bidder shall immediately deposit 25 per cent of the amount of bid for one year and another 25 per cent as security for due observance of the terms and conditions of the lease or contract
It is admitted for the appellant that on completion of the auction he did not deposit 25 per cent of the bid as security in compliance with the provisions of sub r
He therefore lost whatever claim he could have had for the final acceptance of his bid by Government and therefore cannot question the grant of the contract to any other person by the Government
The appellant urges that he held such royalty collection contract for the year 1963 64 and had deposited Rs 9250 as security for the due performance of that contract
On February 12 1964 over three weeks after the auction he submitted an application to the Mining Engineer Jaipur stating that he had been continuously taking contract for the last three years and that he was depositing Rs 1300 and that the balance of the security amount required ie Rs 9250 be adjusted against Rs 9250 with the Government in connection with the earlier contract
This letter was not replied to
The request made in this letter could not possibly be accepted
The earlier contract was to continue up to March 31 and the security money had to remain with the Government upto that date
It is only after March 31 that anything could be said with some definiteness as to how much of the security money in deposit would be available to the contractor
Paragraph 2 of the Form of Agreement of Collection of Royalty on Minor Minerals prescribed under the rules and set out in the Schedule to the rules states that the agreement shall remain in force for a period commencing from first April of a year and ending on March 31 of the next year on which the period of the contract would expire and that the security would be refunded on the termination of the contract
Para 6 of the Form provides that for the due fulfillment of the terms and conditions of the contract the Contractor shall deposit 25 per cent of the contract money in advance as security which will be refunded on the termination of the contract
The appellant alleged that there was a practice of adjusting previous security amounts towards the security for the next contract
The practice is denied on behalf of respondent No 1 and the practice against the provisions of the rules cannot be recognized as of any binding effect
It may be mentioned here that the representation which the appellant made to the State Government on April 6 1964 made no reference to his depositing the security by depositing Rs 1300 and by making a request for the adjustment of the balance from the security amount already in deposit and indicates that he too did not consider the request for adjustment of the amount acceptable
176 There is nothing in r 36 of the rules which may lead to the conclusion that the Government has to accept the highest bid by formally confirming it or that it cannot grant the contract to any person other than one who had bid the highest
A bid is not regarded as accepted unless it is confirmed by Government
The Government has therefore discretion to confirm the bid or not to confirm it
Further r 59 provides for the relaxation of any provision of the rules in the interest of mineral development or better working of mines
There is the letter dated February 14 1962 from the Director of Mines and Geology to All Mining Engineers on the subject of encouragement of cooperative mines and states that cooperative societies ought to be encouraged for mining work also as per directive of the Government of India
Respondent No 2 addressed a letter to the Director of Mines and Geology and referred to Government policy for the encouragement of cooperative societies in connection with royalty collection contracts
The order of Government dated April 1 1964 after referring to the appellant s offering the highest bid stated that the Government was satisfied that the Society respondent No 2 was a suitable party for the grant of the said contract
The view taken by the Government in preferring respondent No 2 to the appellant for the grant of the contract cannot be said to be arbitrary or without any justification
The cooperative society is of the labourers who work in the mines and it is obvious that any benefit arising out of the contract would go to the labourers and thus improve their economic position
In view of the spirit underlying r 59 Government could therefore relax any such rule which could in any way come in the way of its granting the contract to respondent No 2
We therefore hold that the Government was competent to give the contract to respondent No 2 it being not bound to accept the highest bid at the auction though usually it accepts such bids
Another consideration which is decisively against the appellant is that the contract for the collection of royalty for the year 1964 65 is shortly to come to an end and it would not be desirable even if the appellant s contentions were acceptable to interfere with that contract
Reference in this connection
may be made to the decision of this Court in KN Guruswamy vs State of Mysore1 where the appellant was refused a writ solely on the ground that it would have been ineffective the period of the impugned contract coming to an end after about a fortnight of the order of this Court
That was a case where on merits the Court was of opinion that the writ should have been issued
We therefore dismiss the appeal and order the parties to bear their own costs
Appeal dismissed


Summary:
The appellant offered the highest bid at the auction for the grant of royalty collection contract on January 21 1964
Respondent No2 a cooperative society of workers was also one of the bidders
Resportdent No 2 made an application on March 5 1964 to the Government stating therein that the appellant had not deposited 25 Dee cent of the bid amount as security within the time prescribed by Rule 367 of the Rajasthan Minor Mineral Concession Rules 1959 and that it was prepared to take the royalty collection contract on the highest bid as made by appellant
On the above application the State Government made an order in favour of Respondent No 2
The appellant thereupon filed a writ petition in the High Court which was dismissed
He was however granted a certificate of fitness
In appeal it was contended that the Government had merely to confirm the highest bid at the auction by way of formality and was not competent to sanction the contract in favour of someone who had not offered the highest bid at the auction
HELD i The appellant had admittedly failed to deposit 25 per cent of the bid as security in compliance with the provisions of Rule 367
The rules did not contemplate adjustment of security deposited for an earlier period as the appellant claimed
He therefore lost whatever claim he could have had for the final acceptance of his bid by Government and therefore could not question the grant of the contract to any other person by the
Government
175 B C ii Nothing in Rule 36 requires the Government to accept the highest bid by formally confirming it
The Government has discretion to confirm the bid or not to confirm it
Further Rule 59 provides for the relaxation of any provision of the rules in the interest of mineral development or better working of the mines
176 A B iii The view taken by the Government in preferring Respondent No 2 to the appellant cannot be said to be arbitrary or without any justification
The cooperative society is of the laborers who work in the mines and the benefit of the contract would go to the labourers
In view of the spirit underlying Rule 59 Government could therefore relax any such rule which could in any way come in the way of its granting the contract to Respondent No 2
176 D F iv The time for which the contract was granted was shortly to come to an end and it would not be desirable even if the appellant was right to interfere with the contract
176 G KN Guruswamy vs State of Mysore   relied on