THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO W.P.No. 20393 OF 2011 ORDER: This writ petition has been instituted seeking a writ of Mandamus for declaring the action of the 4th respondent – The Assistant Director of Mines & Geology cum Member Convener, District Level Committee for Sand Auctions, Nandigama, Krishna District, in publishing the auction notice bearing No. 2556/Sand/2011, dated 16.7.2011 inviting sealed tenders for conducting public auction for grant of leasehold rights to quarry ordinary sand from Ghaniathkur sand reach, Kanchikecharla Mandal and Sanagapadu of Penuganchiprolu Mandal of Krishna District for a period of two years without mentioning the available quantity of sand and fixing the upset price of Rupees Two Crores and Twenty lakhs respectively which is quite disproportionate to the estimated quantity of sand available therein, as illegal and contrary to the provisions contained in the Andhra Pradesh Minor Mineral Concession Rules, 1966 (for short hereinafter referred to as `APMMC Rules, 1966’). The matter has undergone several adjournments. To test the bona fides of the petitioner, this court directed the petitioner to deposit a sum of Rs.Five Crores by way of a demand draft. Since then, the petitioner has been avoiding to do so. When the matter is called today, none appeared for the petitioner also. However, the learned Government Pleader for Mines and Geology has been instructed to bring to the notice of the court the orders passed by the State Government in Industries and Commerce Department through their Memo No. 11367, dated 5.9.2011 cancelling the auctions conducted on 5.8.2011 and 6.8.2011 in respect of the following four reaches viz., (1) Gani – Atkuru, (2) Damuluru (3) Madduru and (4) Valluripalem. In view of the cancellation of the auction notice, the cause in this writ petition does not survive any further. Before parting with this case, I must observe that, for one reason or the other, auctions for grant of leasehold rights for quarrying ordinary sand from one of the perennial sources in our State viz., Krishna and situate in Krishna District have not been allowed to fructify. When auctions are conducted, highly attractive bids running into several crores of rupees are offered. But, when such bidders were asked to pay up the balance 25% of the bid amount and seek confirmation of their bid, they are consistently backing out. In the process all that such a bidder would be losing is the EMD, which is too small or marginal a money in comparison to the offered amount or even the upset price fixed for the said purpose. That necessitates another round of auction which is bound to be a time consuming affair. Unfortunately, the APMMC Rules, 1966, did not contemplate providing an answer for this kind of concerted action brought about by the bidders. There is no rule providing for banning the defaulting bidder from participation for sand auctions at least for a minimum of three year period. There is no further action that is contemplated under the Rules such as requiring the 2nd highest bidder to confirm his bid and take the auction to its logical conclusion, if the said bid amount was anywhere above the upset price and meets the reasonable expectation of the department to fetch revenue. The Rule 9-I(4) in its present form only enables the forfeiture of the amount paid by the bidder till then. Rule 9-I(5) enables the 2nd highest tenderer/bidder to be granted the leasehold rights provided such tenderer/bidder is willing to pay the highest knocked down amount. This rule as is couched in the present language will enable the auction confirming authority to request the 2nd highest bidder or even the next highest bidder, for that matter, to match the highest knocked down amount for conferring the leasehold rights. The fallacy behind this rule can be illustrated by this following example. Assuming that a reach comprising good quantity of the mineral, sand is expected to fetch a reasonable amount of let us say Rs.5 to Rs.10 Crores and with an upset price of Rs. 2 Crores to take advantage of the existing system, not the serious kind of bidders will be offering bids for Rs.30 crores, Rs.25 crores etc., when the bids are knocked down in their favour, since they are aware that paying such an amount would be next to suicidal, they do not respond to the call and coolly prefer the meager EMD paid by them to be forfeited, instead. Hence, they back out. Upon a realistic assessment of the potential, let us assume, that the next highest bidder gives an offer for Rs.11 crores, the present rule requires him to update his bid to Rs.30 crores or Rs.25 crores, as the case may be depending upon the highest bid. No sensible person would be falling for such a temptation to jack up his bid amount to such an unrealistic extent. Consequently, by the sheer default committed by the highest bidder and the mischief indulged in by him by coming up with a fanciful bid, he is successfully stalling the auctioning/confirming authorities from granting leasehold rights in favour of a particular reach. It is not very difficult for one to understand the scheme behind such manipulative tactics. One remote reach or the other would have been allowed to be confirmed in favour of one bidder or the other for a reasonable price. If such a successful bidder can ensure that for the rest of the reaches, leasehold rights are not sanctioned, by default, he will become the only supplier for the mineral sand. So long as he can successfully prevent the auctions for other reaches, he continues to enjoy the monopoly status of an exclusive supplier. Hence, the vested interests form a clique and see to it that majority of the reaches fall into this mischief so that leasehold rights will not be granted in those reaches/areas, denying legitimate revenue to the State. It will create not only monopoly in favour of a few, but it would also create an artificial scarcity in the market so that the prices can be jacked up as and when the demand is picked up. Nextly, there is no way the government or its machinery will be able to keep round the clock vigil over illegal quarrying operations that would be undertaken clandestinely in the reaches which are not confirmed in favour of one bidder or the other. It is nearly an Herculean task to prevent these illegal quarrying operations. If one were to go by the indications of the number of trucks, tractors and trailers which are seized while transporting illegally quarried mining mineral sand, the magnitude of these illegal operations would become clear. The penalties that are imposed upon such trucks, tractors and trailers is comparatively too insignificant an amount. When caught only they would be required to pay the said amount of penalty and so long as they are not caught, they have a field day of gaining enormous amounts of money causing correspondingly a dent to the State’s revenue. One possible way to prevent and plug this menace, to my mind, is to incorporate an appropriate proviso in sub-rule (5) of Rule 9-I of APMMC Rules, 1966, by way of amendment in exercise of the power available under Section 15 of the Mines and Minerals Development and Regulation Act, vesting power in the hands of the confirming authority to accept a realistic bid from any of the bidders other than the lowest or the 2nd lowest bidder and recover the differential amount from the lowest bidder and or the next lowest bidder, whoever declines to confirm his bid amount. It is for the State to bestow its thought on these lines urgently so as to prevent these kind of manipulative tendencies gaining further currency. The orders passed by the State Government in their Memo dated 5.9.2011, a copy of which has been placed by the learned Government Pleader is taken on record. This writ petition is dismissed as the cause in it does not survive for further adjudication. No costs. --------------------------------- Nooty Ramamohana Rao, J knk 8th September 2011