CW 14467/09 //1// In the High Court of Judicature for Rajasthan Jaipur Bench ** Civil Writ Petition No.14467/2009 M/s Shiva Corporation (India) Ltd. & Anr Versus State & Others. Date of Order : 15/03/10 Hon'ble Mr. Justice Ajay Rastogi Mr. Kamlakar Sharma, for petitioner Mr. RP Singh, Addl. Adv. Gen. for respondents. Instant petition has been filed seeking direction against respondents to grant extension of 90 days in the period of contract beyond 31/03/2010 as sought for by petitioners through their application/legal notice served, which was declined in exercise of powers U/r 32 of Rajasthan Minor Mineral Concession Rules, 1986 (“Rules, 1986”), after filing of instant petition vide order dt.15/02/2010 having been assailed through amended writ petition. Superintending Engineer (Mines), Bharatpur issued a notice (“NIT”) dt.06/01/09 (Ann.1) inviting tenders for grant of a contract of excess royalty collection for mineral sand-stone & masonry stone within revenue boundary of two Tehsils Bayana & Roopbas (Bharatpur) for the period from the date of execution of contract to 31/03/2010 – in pursuance whereof, petitioner NO.1 also submitted bid to the tune of Rs.2,65,61,111/-, CW 14467/09 //2// which being the highest was accepted by the Committee as is evident from letter dt. 05/02/09 (Ann.2), pursuant to which, the petitioner deposited 12.5% of the bid amount as security through FDR dt.05/02/2009 (Ann.3) issued by Bank of Baroda amounting to Rs.33,00,140/- on 06/02/2009 in the office of SE (Mines) Bharatpur. It was specifically stipulated in the NIT that period of contract will be from the date of its execution to 31/03/2010. In ordinary course, the process would have been initiated after complying with necessary formalities including execution of contract but as alleged, some mining lease holders & crusher operators filed a civil suit against State Government before Civil Judge (Sr.Dn.) Bharatpur (Brij Mohan Agarwal & Ors Vs. State), alongwith application seeking temporary injunction wherein ad interim injunction was passed on 17/02/2009 directing the parties to maintain status quo, besides directing not to take action pursuant to NIT dt.06/01/2009. Since in the suit, petitioner NO.1 was not arrayed as a defendant; as such on their behalf, application was moved U/O 1, R.10, CPC, which was allowed on 27/02/2009 impleading as a defendant. But for one reason or the other, despite best efforts made by CW 14467/09 //3// petitioner, the matter was adjourned for being heard on application for temporary injunction, which constrained him to file CWP-3417/2009; wherein the Court while issuing notices vide order dt.30/03/2009 directed the trial Court to decide temporary injunction application on merit, and accordingly was finally decided vide order dt.04/04/2009 (Ann.5) granting temporary injunction – against which the petitioner preferred appeal before the District Judge, Bharatpur and vide order dt.16/04/2009 (Ann.6) operation of temporary injunction order dt.04/04/2009 was stayed by District Judge and even thereafter, despite all hurdles being cleared, respondents took time in executing a contract for collection of excess royalty in favour of petitioner and ultimately on 12/05/2009, the Director (Mines) Udaipur passed an order (Ann.7) granting contract of excess royalty collection from the date of registration in favour of petitioner – in pursuance thereof, the Mining Engineer got the contract executed & registered on 18/05/2009 and accordingly the petitioner started the work on 19/05/209 under NIT dt.06/01/2009. However, while executing the contract, it was mentioned that contract shall remain in force from the date of its execution (18/05/2009) upto 31/03/2010, as is evident CW 14467/09 //4// from Cl.2 of Agreement (Ann.8). Since execution of contract was delayed beyond control of petitioner, and as per condition of NIT, the period available for excess royalty collection was to commence from the date of execution of the contract to 31/03/2010, and the time was curtailed because of injunction being granted by trial Judge, a legal notice was served through counsel on 09/08/2009 (Ann.9) seeking extension atleast for 90 days in the period of contract beyond 31/03/2010 provided U/r 32 of Rules, 1986 and since legal notice remained pending and fresh NIT was issued on 25/01/10, the petitioner approached this Court by way of instant petition. After notices were served, respondents rejected petitioner’s application/ notice for extension of time as prayed for vide order dt.15/02/2010, which the respondents have placed on record alongwith application U/Art.226 (3) of the Constitution seeking vacation of interim stay order passed on 09/02/2010; and accordingly, order of rejection dt.15/02/2010 has also been assailed after seeking amendment in writ petition. However, vide interim order dt. 09/02/2010 this Court stayed operation of NIT dt.25/01/10 qua petitioners – in pursuance thereof, the process could not have been initiated by respondents as regards mining CW 14467/09 //5// lease area impugned at the site. Counsel for petitioners submits that in ordinary course, the contract could have been executed within a reasonable period by the end of February, 2009 but only because of temporary injunction being granted by trial Judge, petitioners made efforts to get it vacated; yet it was finally vacated on 16/04/2009 by District Judge in an appeal preferred against temporary injunction granted by trial court on 04/04/2009; and such a delay was beyond the control of petitioners; as such they were entitled for extension of period of contract beyond its expiry on 31/03/2010; but their prayer for extension has been arbitrarily rejected by respondents vide order dt.15/02/10 which is in clear violation of Art.14 of the Constitution. Counsel further submits that maximum period of contract is of two years as provided U/r 32 of Rules, 1986 and could be further extended by competent authority for a period of 90 days with the prior approval of the Director & consent of the contractor; and at the same time, under 2nd proviso to R.32(2) of Rules, 1986, a discretion further vests with the State Government to further extend the period of contract, where it is necessary to do so; however, in the instant case, in fact the contract period having remained available CW 14467/09 //6// with the petitioner was only for a period of ten & half months; in such circumstances, prayer seeking extension of time for 90 days beyond expiry of period of contract has been rejected without due application of mind and in arbitrary manner, which certainly requires interference by this Court. In their reply, respondents have not controverted that on the highest bid of petitioners being accepted, the security was deposited by them on 06/02/09 and only after intervention by the High Court in earlier CWP- 3417/2009, the trial Judge decided temporary injunction application on 04/04/2009 and the injunction initially granted on 17/02/2009 was finally vacated on 16/04/2009 by the District Judge in appeal, that too at the behest & efforts made by petitioners; and only after having received certified copy of order dt.16/04/2009, the matter was processed and the sanction was issued on 12/05/2009, and accordingly the contract was executed & registered for the period commencing from 19/05/09 to 31/03/2010 wherein according to respondents, there was no clause for extension of time; hence petitioner is not entitled for extension in the period of contract beyond 31/03/2010. Government Counsel further submits that neither at the stage of execution of the CW 14467/09 //7// contract or even thereafter, the petitioners ever raised any grievance before respondents for extension of period of contract for 90 days beyond 31/03/2010; and that apart, there being no clause either in the NIT or in the conditions of the contract for excess royalty collection executed between the parties for its extension beyond the contract period, and proviso to sub-rule (2) to R.32 of Rules, 1986, is not applicable in case of present petitioner seeking extension as prayed for; and accordingly their prayer has rightly been rejected on 15/02/2010. Government Counsel further submits that fresh NIT was issued on 25/01/2010 only to initiate process afresh since it has been decided to execute the contract on year to year basis; and in the last NIT dt.06/01/2009, (Ann.1), the petitioner had tendered highest bid of Rs.2,65,61,111/-; while at the same time, reserve price, itself, has been notified of Rs.3.5 Crores under fresh NIT issued on 25/01/2010, which the petitioner is trying to prolong with an intent to continue with the contract even after its expiry beyond 31/03/2010 by way of seeking extension but because of interim order passed by the Court on 09/02/2010, the respondents could not be able to process further in regard to NIT dt. 25/01/2010. CW 14467/09 //8// Government Counsel further submits that the policy decision has been taken by the competent authority vide Circular dt.23/06/01 (Ann.R./1) directing Mining Engineers to issue & execute the contracts on yearly basis for grant of the contract of excess royalty collection from the date of execution of the contract to 31st March of financial year, with which the petitioner was completely aware of while executing the contract in question that the period available at their disposal for excess royalty collection will be only from 19/05/2009 to 31/03/2010; as such, what has been urged by Counsel for petitioners deserves to be rejected. This Court has considered rival contentions of Counsel for parties and with their assistance, examined material on record. Facts are not in dispute that after the petitioner’s bid was finally accepted, 12.5% of bid amount was deposited by petitioner on 06/02/209 but because of litigation being initiated at the behest of some mining lease holders and crusher operators and temporary injunction being granted by trial Court on 17/02/2009, further process including execution of the contract under NIT dt. 06/01/2009 could not have been carried out and only after intervention by this Court in CWP- 3417/2009, directing the trial Court to decide CW 14467/09 //9// application, it was decided by trial Court on 04/04/2009 - operation of which was stayed by District Judge vide order dt.16/04/2009 in the appeal preferred by petitioner – as a result whereof, sanction was accorded for grant of contract of excess royalty collection in favour of petitioner on 12/05/209 pursuant to which the contract was executed and registered on 18/05/2009 for the period from 19/05/209 upto 31/03/2010; and on 19/05/2009 the petitioner started excess royalty collection under NIT dt.06/01/2009. There is no provision having been brought to the notice of this Court which may provide for the period in which the contract is required to be executed after the highest bid being accepted but certainly it requires to be executed within a reasonable time unless there is a fault being committed by the bidder. It is not the case of respondents that there was a delay on the part of petitioners in executing the contract while contrarily it is the petitioner who was sent from pillar to post and only at his behest, the matter was initiated and injunction was finally got vacated on 16/04/2009 and the period of delay during which injunction remained operative, was beyond control of petitioner. R.32(2) being relevant reads ad infra: CW 14467/09 //10// “32. Grant of excess royalty collection contract: (1) Royalty collection contract may be granted by auction or tender only in respect of such area and such mineral as the Director may, by a general or special order, direct. (2) Royalty collection contract may be granted by the competent authority by auction or tender for a maximum period of two years; Provided that where it is necessary to do so, the period of contract may be further extended for a period of 90 days by the competent authority with the prior approval of the Director and with the consent of contractor and a rider agreement shall be executed before expiry of the original contract. Provided further that where it is necessary to do so, the period of contract may be further extended by the Government and a rider agreement shall be executed before expiry of the contract.” R.32(2) provides that the competent authority can grant the contract for maximum period of two years which can be extended provided it is necessary to do so with prior approval of the Director & with the consent of the contractor. But, under proviso to R.(2) of Rules, 1986 (supra), it is always open for the competent authority to extend the period if it is necessary to do so. There was no circumstance or exigency arose before the CW 14467/09 //11// State Government which can be taken note of being necessitated for extension of the contract; more so when it was made clear that as per conditions of NIT, the bidder will have the period of contract from its execution to 31st March of financial year and since the process is being initiated on yearly basis, certainly fresh contract has to be executed for the year commencing from 01/04/2010 in these circumstances, fresh NIT was issued on 25/01/2010. Even in the NIT issued for the year commencing from 01/04/2010, it has been mentioned that the period of contract will be from 01/04/2010 or the date of execution of the contract whichever is earlier to 31/03/2011. Thus, the respondents have taken a policy decision dt.23/06/2001 (Ann.R/1) – copy whereof has been placed on record to continue the process on year to year basis upto 31st March of financial year. Certainly there was no necessity available for respondents in terms of proviso to R.32(2) to grant extension in case of petitioner as prayed for the contract executed pursuant to NIT dt.06/01/2009. However, the petitioner being highest bidder in earlier NIT dt.06/01/2009 having offered bid of Rs.2.65 Crores while at the same time, in the present NIT dt.25/01/2010, reserve price has been CW 14467/09 //12// notified of Rs.3.5 Crores – in regard thereto, it is always open for the petitioner to submit a tender if so desired; but as there was no necessity for the State Government in the facts of instant case to invoke proviso to sub-rule (2) of R.32 of Rules, 1986 for grant of extension in favour of petitioner as prayed for 90 days beyond 31/03/2010. This Court does not find any manifest error being committed in rejecting application of petitioner seeking extension beyond 31/03/2010 under NIT dt.06/01/2009 vide order dt.15/02/2010. At the same time, there might not be any necessity for the State Government as referred to in proviso to R.32(2) to consider case for extension but in a matter like at hand, where the contract could not have been executed due to fault of the petitioner; but due to intervention being made by grant of temporary injunction, and beyond petitioners control despite having tried at best and made efforts for getting TI vacated, it could be possible on 16/04/2009 and only thereafter the process was initiated for execution of the contract, which was finally executed and registered on 18/05/2009 and the petitioner started the work on 19/05/2009 under NIT dt.06/01/2009. Indeed, the petitioner while executing the contract has not raised any grievance in CW 14467/09 //13// regard to available period of ten & half months at his disposal from 19/05/2009 to 31/03/2010 but the petitioner was not in a bargaining stage to come into litigation with the State Government since it was a part of terms & conditions of the contract and so also the conditions under NIT dt.06/01/09 pursuant to which the bid was submitted by petitioners; but still within a period of three months thereafter sent a legal notice on 09/08/09 to the respondents for consideration of case of for extension which remained pending but was ultimately rejected on 15/02/2010 only after petitioners approached this Court. Taking note of material on record, this Court certainly takes judicial notice of the fact that when the delay at no point of time was at the behest of petitioner, certainly they are entitled for pro-rata reduction of the contract value having been finally accepted by respondents atleast for the period during which injunction having remained operative i.e., from 17/02/2009 to its vacation by District Judge on 16/04/09. Consequently, writ petition is partly allowed; while upholding order of rejection dt.15/02/2010, the respondents are directed to grant rebate/reduction in the amount of bid accepted under impugned contract executed pursuant to NIT dt.06/01/09, on pro-rata basis CW 14467/09 //14// for the period during which temporary injunction remained operative from 17/02/09 to 16/04/2009. Appropriate orders may be passed by respondents within two months for compliance of directions (supra). No costs. (Ajay Rastogi), J. K.Khatri/p14/ 14467CW2009Mar15Rsrv.doc