THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE RAMESH RANGANATHAN W.P. Nos.13618 & 14787 of 2009 21-08-2009 BETWEEN; W.P.No.13618 of 2009 Ch.Sankaraiah son of Narayana ...Petitioner vs. The State of Andhra Pradesh, rep. By Secretary, Industries and Commerce Department and four others. …Respondents W.P.No.14787 of 2009 Challa Mallaiah son of Rajaiah ..Petitioner Vs. The State of Andhra Pradesh, rep. By Secretary, Industries and Commerce Department and four others. …Respondents THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE RAMESH RANGANATHAN W.P. Nos.13618 & 14787 of 2009 ORAL COMMON ORDER (Per GR,J) Heard the learned counsel for the respective petitioners, the learned Government Pleader for Industries and Commerce and the learned Standing Counsel for M/s.A.P.Mineral Development Corporation for the respondents. The grievance in both the writ petitions is substantially similar, i.e., that the respondents are not conducting public auction for grant of lease for quarrying sand, in terms of Rule 9-B of the A.P. Minor Mineral Concession Rules, 1966 (for short “the 1966 Rules”) but are granting successive temporary permits in favour of the 4th respondent- M/s.A.P. Mineral Development Corporation (APMDC), for the several reaches, in violation of the provisions of the Mines & Minerals (Development & Regulation) Act,1957 (for short “the Act”) and the 1966 Rules. In W.P.No.13618 of 2009, the 5th respondent has filed a counter- affidavit on behalf of the 1st and 3rd respondents as well. The justification is that Rule 9-M of the 1966 Rules enables grant of a temporary permit to the APMDC with the prior approval of the State Government for a period of sixty (60) days. It is further asserted that the last time an auction was conducted in Adilabad district was during 2005-06 for the seven (7) reaches specified in para 3, of which only five(5) reaches were renewed during 2007-08 which also expired by 31-03-2008. Thereafter no temporary permission was granted except in respect of the reach in Chennur village. It is pleaded in para 4 that 52 sand reaches are identified in various locations in Adilabad district, and the Deputy Director, Ground Water Department, Nirmal had recommended only five reaches for conducting auctions. However, the District Level Sand Committee was of the view that three of the five reaches recommended for conduct of auctions should not be taken up until a fresh inspection and report is received. The counter further asserts that a large extent of 216.00 Hectares in several survey numbers of Chenur Village and Mandal was granted towards mining lease for enabling stowing of sand, in favour of M/s Singareni Collieries Company Limited, a Government enterprise. The lease in favour of M/s Singareni Collieries Company Limited is for a period of 30 years commencing from 12-03-2008. To safeguard the interests of the lease granted to M/s Singareni Collieries Company Limited, the gap areas in the areas leased to M/s Singareni Collieries Company Limited are identified and granted to APMDC by way of temporary permits, to forestall illegal quarrying of sand in the gap areas. Para 9 of the 5th respondent’s counter pleads that in Paspula village reach in Adilabad District, temporary permit was granted to APMDC to facilitate the supply of sand to Contractors engaged for construction of the four lane National Highway, that this is not a commercial grant of lease. Insofar as Chennur Mandal is concerned, one temporary permit is admitted to have been cancelled for the reason that a poclain was used, contrary to the terms of the lease and Rs.20,52,000/- was collected towards seigniorage fee and thus there is no loss of revenue. It is further pleaded that all temporary permits issued in favour of the APMDC are only for a period of 60 days. In an oral argument, the learned Government Pleader for Industries and Commerce would construe Rule 9-M of the 1966 Rules as enabling the grant of successive temporary permits, so however that the term of each grant does not exceed a period of 60 days. Rule 9-B(1) of the 1966 Rules ( to the extent relevant and material) reads:- “All the sand bearing areas in the State shall be leased out by Sealed Tender cum Public Auction Reach or Mandal wise wherever applicable by the Auctioning Authority as specified under rule 9-H(1) financial year wise in any case not more than 2 years with an yearly enhancement of 20% of the knocked down amount and subject to the conditions prescribed in the notice of Sealed Tender cum Public Auction as prescribed in Rule 9-D and subject to approval of the District Level Committee as specified under sub-rule(5).” Sub-rule(4) of the Rule 9-B of the 1966 Rules explicates the philosophy underlying the adoption of the auction process. It enjoins that the sale of sand shall be on the basis of auction cum tender system, which denotes that offers of tenders shall be accepted while simultaneously holding auction with a view to maximizing revenues. (emphasis) As is apparent from Rule 9-B, the lease is to be financial year wise and therefore a lease period would end with the financial year i.e., the 31st March of the year in question. Rule 9-B as it currently stands is the product of the Government’s order in G.O.MS.No.84, Industries & Commerce (M1) Department, dated 10-04-2007. Prior to the 1966 Rules as amended in G.O.Ms.No.84, leases were granted annually but not necessarily until the end of the financial year. There is thus a potential hiatus or gap between the end of one lease period and the commencement of another lease period. To cater to this exigency it would appear, Rule 9-M is formulated. Rule 9-M(1) enables the grant of lease for a part of an year but up to the end of March of that year, either on the basis of an auction or by way of alternative arrangement by issue of temporary permits following the procedures in sub-rule (2). Sub-rule(2) of Rule 9-M of the 1966 Rules enjoins that on account of any exigency but with the approval of the Government, the Director of Mines & Geology may order issue of temporary permits pending finalisation of auctions on nomination basis to the APMDC which is required to pay seigniorage fee at the prescribed rate and is also required to maintain round the clock check point on the reaches granted to it by way of temporary permits. Sub- rule(2) of Rule 9-M specifically enjoins that temporary permits to be issued by the APMDC shall not be a period exceeding sixty(60) days. Since Rule 9-B(4) sets out the philosophy underlying the generic procedure mandated for grant of leases namely, tender-cum-public auction process (for ensuring maximisation of revenues to the State), the ambiguous phraseology of Rule 9-M(2) cannot be stretched to enable a process that would subvert the essential purposes for which the tender-cum-auction process is postulated and enjoined as the fundamental State policy. Rule 9-B of the 1966 Rules should be read in the context of its contouring conditions. Rule 9-M(1) so read would mean that instead of conducting an auction for the balance period (up to the end of March of a particular year) a temporary permit could be granted and that too for a period not exceeding 60 days. In any event, successive grants of temporary permits for 60 days each, is not envisaged by Rule 9-M, having regard to the contouring conditions in Rule 9-M(1) read with the substantive mandate i.e., adopting the tender-cum-auction process spelt out in Rule 9-B(1) read with 9-B(4). For the aforesaid reasons, these writ petitions are disposed directing the respondents, in particular the State and the Director of Mines and Geology not to issue temporary permits to the APMDC for a period in excess of 60 days in between grant of leases by tender-cum- auction process as stipulated in Rule 9-B. In W.P No.13618 of 2009 there is a asserted a grievance that the respondents are not notifying any of the sand bearing areas of river Godavari in Adilabad district. Insofar as this grievance is concerned, this court does not propose to issue any directions to the respondents since the policy of permitting quarrying of sand is dependent upon ecological concerns, of availability of ground water, obtaining of prior permission from the River Conservator and the Director of Ground Water Department. If the State for rational reasons concludes that no quarrying of sand should be permitted, that is a policy choice which if rational is not subject to judicial review. If quarrying of sand is pursued it shall however be in terms of Rules 9-B and M of the 1966 Rules as interpreted in this judgment. In the circumstances there shall be no order as to costs. ______________ GODA RAGHURAM,J __________________ RAMESH RANGANATHAN,J 21st AUGUST, 2009. TSNR