IN THE HIGH COURT OF JUDICATURE OF ANDHRAPRADESH AT HYDERABAD HONOURABLE SRI JUSTICE GODA RAGHURAM & HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU WRIT APPEAL No.359 of 2010 Date: 13.09.2010 Between: M/s.Bramarambha Wines …..Appellant And: A.Rajesh and others …..Respondents. HONOURABLE SRI JUSTICE GODA RAGHURAM & HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU WRIT APPEAL No.359 of 2010 JUDGMENT:(PER HON’BLE SRI JUSTICE GODA RAGHURAM) Heard Sri E.Manohar, learned Senior Counsel instructed by Sri K.Devender for the appellant, learned counsel for Industries and Commerce for respondents 1 to 4 and Sri D.Prakash Reddy learned senior counsel for the 6th respondent who is impleaded as such by the orders of this Court dated 10.08.2010 in W.P.M.P.No.1265 of 2010. 2. The unsuccessful writ petitioner is before this Court in appeal the order dated 20.04.2010 dismissing the writ petition and rejecting the appellants challenge to the order dated 15.04.2010 passed by the 1st respondent. 3. The relevant factual scenario in brief: The Assistant Director of Mines and Geology, Guntur on 19.09.2007 invited sealed tenders for conduct of a public auction for grant of leases for quarrying sand in several reaches including Atchampet Mandal limits, Krishna river specifying the minimum bid amount of Rs.1,30,00,000/-; the period of lease is stipulated to be initially upto 31.03.2008 with 20% enhancement of the knocked down amount for the second year, terminable on 31.03.2009. The appellant/writ petitioner and two others submitted their bids and participated in auction. The writ petitioner was highest bidder having bid for Rs.3.20 crores. As per the provisions of the Andhra Pradesh Mineral Concession Rules, 1966 (for short, ‘the rules’) the successful bid was required to be confirmed by the District Collector and the petitioners bid was confirmed on 17.10.2007. The petitioner deposited the initial amount as per the terms of the offer. Before the lease could be executed on behalf of the State by the Assistant Director concerned, the 5th respondent filed a revision before the State Government under Rule 35-A of the Rules. 4. On 23.10.2007, in purported exercise of revisional power the 1st respondent State stayed further proceedings, pursuant to the order of the confirmation passed by the District Collector, Guntur, dated 17.10.2007. No reasons are recorded for grant of the stay. 5. It is not apparent from the record that the writ petitioner took any steps thereafter to pursue with the State for expeditious disposal of the revision preferred by the 5th respondent or for vacation of the interim stay granted on 23.10.2007. Eventually, without hearing the writ petitioner, the 1st respondent by the order dated 15.04.2010 (impugned in the writ petition) vacated the earlier stay order dated 23.10.2007 on the ground that the period of the lease expired on 31.03.2009. The 1st respondent also directed that the Director, Mines and Geology is permitted to refund the amount paid by the writ petitioner as well as by the revision petitioner/5th respondent herein who was the 2nd highest bidder and that fresh auction be conducted for Reach-15A, after receiving the clearance from the Ground Water Department. 6. Aggrieved thereby the appellant/writ petitioner preferred the writ petition contending interalia that the order of the State Government impugned was passed without any further notice to the writ petitioner; the interim stay granted in favour of the 5th respondent was vacated; the revision petition dismissed; and further directing to conduct a fresh auction. The writ petitioner contended that the State Government negligently and callously entertained a revision preferred by the 5th respondent without the revision petition being properly stamped and without payment of any revision fee and granted ex-parte stay order in favour of such respondent at the behest of “political persons”; that the petitioner had deposited more than Rs.75,00,000/- which lying with the State for nearly three years and the amount was deposited out of the hard earnings of the members of the petitioner-society including loans that members obtained from private individuals and institutions at exorbitant rates of interest on a legitimate expectation that they would operate the Sand Quarry for two years and could make a living out of the avocation. The petitioner further pleaded that not were members of the petitioner society prevented from eking out their livelihood but on account of the impugned order of the State directing re-conduct of auction for the sand reach, members of the petitioner society are crippled financially. It is further pleaded and asserted at oral hearing by the learned Senior Counsel that since the right or legitimate expectation of the petitioner to obtain the lease was interdicted on account of exercise of quasi judicial power by the State under Rule-35A of the Rules, the State ought to legitimately and in equity consider grant of lease in favour of the petitioner without putting the Reach to a fresh auction as that is the only equitable method of restituting the petitioner for the injury suffered on account of the irrational revisional intervention. 7. By the order under appeal, the learned Single Judge, relying on the decision of a learned Division Bench of this Court in M.V.Siva Prasad v. Government of Andhra Pradesh[1] interpreting Rule-9-L of the Rules and in view of the undisputed factual position that the earlier period of lease expired by 31.03.2009, held that the order of the State Government dated 15.04.2010 suffered from no infirmity warranting interference and dismissed the writ petition. 8. Sri E. Manohar, the learned Senior Counsel would contend, relying upon the Judgment of a learned Single Judge of this Court in Krishna Country Canal Boat Workers and Labour Contract Cooperative Society Ltd., rep. by its President, Krishna District v. Assistant Director of Mines and Geology, Vijayawada, Krishna District[2]; and of the Supreme Court in Mohammed Gazi v. State of M.P[3] and in Beg Raj Singh v. State of UP[4] that notwithstanding the judgment of the learned Division Bench of this Court in M.V.Siva Prasad (1 supra), the State is not denuded of the power to grant extension of lease if the earlier lease period is hyphenated or interdicted wholly or partly on account of the irregular and irrational revisional exercise of power by the State Rule-35A of the Rules. This contention does not commend acceptance by this Court. 9. Rule 9(L) of the Rules reads as under: “The successful tenderer or bidder shall have no claims for any compensation due to floods or heavy rains or any other situation and extension of the lease period shall not be granted under any circumstances.” 10. I n M.V.Siva Prasad (1 supra), in an opposite though not identical factual context, it was contended by the State that Rule-9K(3) empowered the State Government to grant extension of the period of the lease. This Court interpreting Rule 9L held that the apparent power of the State under Rule 9K would not over reach the specific provisions of Rule 9L and authorise extension of the lease, beyond the term of the lease. It also requires to be noticed that Rule 9L comprises two facets. One facet of the rule disables a claim by the successful tenderer or bidder for any compensation due to floods or heavy rains. The second aspect of the rule disentitles grant of extension of the lease under any circumstances. The prohibition of granting extension of lease under any circumstances has a comprehensive trajectory and includes all circumstances including a facet situation where the earlier lease period was inoperative on account of grant of stay in a revision, under Rule 35A. The underlying philosophy of Rule 9L appears to be recognition of the dynamic and inflationary nature of lease amounts obtainable by the State for quarrying of Sand and the consequent revenue increment over the years. The clear directive of Rule 9L prohibiting the grant of extension of lease under any circumstances is a clear limitation on the power of the State or the competent authority, as the case may be. 11. I n Krishna Country Canal Boat Workers and Labour Contract Cooperative Society Ltd.,(2 supra), a learned Single Judge had observed that the provisions of Rule 9L would not be applicable to a case where quarry operations are interdicted on account of interim orders passed by this Court. With respect, we are unable to accept this interpretation of the provisions of Rule 9L of the Rules. The phraseology of Rule 9L is clear and unambiguous and provides no invitation for an exclusionary interpretation. The provision must be given its natural and grammatical meaning. There is no ambiguity in the language of Rule 9L which warrants different interpretations in different fact situations. The rule unambiguously prohibits grant of extension by the State or other competent authority, under any circumstances. 12. The decision of the Supreme Court Mohammed Gazi (3 supra) is equally of no assistance to the petitioner nor provides a guidance to the interpretation of the Rule 9L. The tender notice inviting tenders for disposal of tendu leaves was issued by the State of Madhya Pradesh in November, 1995 and 4th respondent’s offer was found the most competitive. On account of complaints by others, the 4th respondent’s offer was not accepted and the tender process was cancelled in January, 1996. Fresh tender was notified in May, 1996. The appellant before the Supreme Court was declared the highest bidder. Meanwhile, the 4th respondent approached the High Court challenging the order of cancellation of the tender in January, 1996 and retender notice issued in May, 1996. The High Court issued an interim direction in June, 1996 restraining the respondent officials from taking any steps pursuant to the fresh tender notice, proceedings to which the appellant was not impleaded. His application for intervention in the writ petition was also rejected. The appellant was called upon to execute an agreement after deposit of balance security, which he did deposit. The 4th respondent’s writ petition was disposed of by a learned Single Judge of the Madhya Pradesh High Court quashing the order dated 27.01.1996 to the extent this order directed the earnest money deposited by the 4th respondent to be forfeited and a direction was issued to refund the earnest money to the 4th respondent. Thereafter, the appellant requested the official respondents to refund his security deposit pleading that tendu leaves (for which the lease was entered into) was a perishable commodity and had already rotted and perished. Apprehending that the earnest money deposited by him would be forfeited and he would also be blacklisted, the appellant approached the High Court seeking quashing of the order dated 01.04.1997, by which he was directed to deposit the balance tendered price and was asked to execute an agreement; he also sought refund of the earnest money along with damages. Eventually, the Division Bench of High Court observed that the contract between the parties was frustrated; the respondents were not entitled to compel the appellant to purchase or lift the tendu leaves at the price quoted by him and were duty-bound to return the money received from the petitioner at the time of submission of the tender, but after deducting Rs.30,000/- from the security amount deposited by the appellant. On appeal, the Supreme Court held that the principle actus curiae neminem gravabit applies, the maxim is founded upon justice and good sense and therefore the order of the learned Single Judge which directed refund of the whole amount was restored. While this judgment does expound the equitable principle it does not in our respectful view offer guidance on the applicable principles in the context of a specific statutory provision namely Rule 9L of the Rules which prohibits grant of extension of lease. 13. Sri E. Manohar, learned Senior Counsel would also rely on the judgment in Beg Raj Singh (4 supra). In this case, the State of Uttar Pradesh enunciated a policy to grant mining lease for three to five years on first cum first served basis in respect of the river bed of Yamuna for Sand and Morram. The petitioner applied for a sand mining lease and was granted lease only for a period of one year. Before expiry of this term, he sought renewal for another two years. The Collector granted extension by an order dated 20.12.2000, on the premise that under the policy the lease should have been for three years. After the grant of extension, the Government took a policy decision to hold a fresh auction of the Sand mining lease and cancelled the renewal. The third respondent a competitor of the petitioner preferred a revision before the State Government with a delay. The State Government condoned the delay, took up the revision and set aside the order of the Collector granting extension to the petitioner on the ground that it has decided to hold fresh auction of the mining rights since Government is likely to gain higher revenue, which is in public interest. The petitioner unsuccessfully challenged the cancellation of the extension of his lease. In these factual circumstances, the Supreme Court observed that the relief ought not to be denied solely on account of time lost in prosecuting proceedings in judicial or quasi-judicial fora and for no fault of the petitioner. As the petitioner was found to be entitled to the relief, the court would as an ordinary rule try to place the successful party in the same position in which he would have been if the wrong complained against would not have been done to him. In the circumstances and on these observations, the Apex Court directed that the petitioner should be allowed the full period of three years, subject to adjustment for the period for which he had already operated the lease. The Apex Court was not dealing with a fact situation involving any statutory rule which prohibited extension of a lease under any circumstances, as in this case. This decision, therefore, does not afford guidance for an interpretation of Rule 9L of the Rules. 14. It is relevant to notice that the State Government in passing order dated 15.04.2010 (impugned in the writ petition) did not consider the consequences of the dismissal of the 5th respondent’s revision, on the writ petitioner who deposited a considerable amount pursuant to his being declared the highest bidder, pursuant to the auction notification dated 19.09.2007. It failed to consider whether the 5th respondent’s revision was properly instituted; in time; for adequate reasons; or even whether the initial interim order dated 23.10.2007 granted by it in favour of the 5th respondent and against the petitioner was on a rational exercise of discretion. The State Government did not also consider whether if the revision was warranted including the interim stay granted. The petitioner was entitled in equity to restitution for the injury suffered on account of deprivation of the benefits of the lease. The Government ought to have considered grant of a reasonable interest for the amount deposited by him, particularly in the context of the fact that no extension of time could be granted in view of Rule 9L of the Rules. Such non application of mind by the State to the relevant factors while disposing of the 5th respondent’s revision, by the impugned order dated 15.04.2010 was occassioned by the procedural flaw in failing to issue a notice to the writ petitioner who was clearly an aggrieved and necessary party to the revision. It is a matter of concern that quasi judicial powers are exercised without even a protean comprehension of the nature of the jurisdiction exercised. As a result of such negligent exercise of revisional power and the procedural infirmity vitiating the exercise, the writ petitioner has suffered. His interests could not have been disregarded without a proper consideration of his grievances, by the State. 15. In our considered view and in the peculiar facts and circumstances of the case, the State must be directed to revisit the exercise of revisional power and to consider the 5th respondent’s revision and how it should be disposed of, after hearing the revision petitioner/appellant herein. 16. By the order dated 15.04.2010 as already noticed the 1st respondent has also directed conduct of a fresh auction. The power to conduct the auction does not flow only from the exercise of revisional power under the Rule 35A of the Rules. The power to conduct an auction is derived the provisions of Rule 9B(1) of the Rules, as notified in G.O.Ms.No.84 dated 10.04.2007. The genesis of the State’s power is the statutory rule and not the quasi judicial direction. It is represented by the learned Government Pleader for the State in reiteration of the averments in the additional affidavit filed by the 4th respondent (in August, 2010) that pursuant to the auction conducted on 30.07.2010, the 6th respondent M/s.Atchampet Mandal all Castes Sand and boat Workers L.C. Cooperative Society Limited, Kastala emerged as the highest bidder for the Reach for the highest bid amount of Rs.20,03,45,679/- and that the said respondent/highest bidder had deposited an amount of Rs.5,12,70,000/- constituting 25% of the bid amount along with the applicable income tax. But, no confirmation of the lease in favour of the 6th respondent was issued in view of the interim order of this Court dated 13.07.2010, whereby the respondents were directed not to finalise the auction. Since the power to conduct the auction flows from the statutory grant qua Rule 9B(1) of the Rules and is independent of the direction of the 1st respondent in the order impugned dated 15.04.2010, we find no reason to interfere with the process of tender including the auction at which the 6th respondent has apparently become the highest bidder. The official respondents are a liberty to process and proceed further in the matter of executing a lease, in accordance with law. 17. On the aforesaid analyses, we consider it to appropriate to quash the order of the 1st respondent dated 15.04.2010 and direct the 1st respondent to hear the affected parties including the writ petitioner before passing a fresh final order on the 5th respondent revision, pursuant to which the 1st respondent has passed the defective order dated 15.04.2010. The 1st respondent shall record clear reasons as to whether the petitioner suffered any injury on account of any defective exercise of revisional power by the State and if so in what matter the writ petitioner/appellant could be compensated including by payment of interest or otherwise. The writ appeal is disposed of with the above observations. The interim order dated 13.07.2010 stands dissolved. There shall however, be no order as to costs. ______________________ GODA RAGHURAM, J ___________________________________ SAMUDRALA GOVINDARAJULU, J September 13, 2010 KSH/GK HONOURABLE SRI JUSTICE GODA RAGHURAM & HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU WRIT APPEAL No.359 of 2010 September 13, 2010 KSH/GK [1] 2010 (2) ALD 288(DB) [2] 2010(3) ALT 100 [3] (2000)4 Supreme Court Cases 342 [4] AIR 2003 Supreme Court 833