C.W.P. No. 14045 of 2007 1 In the High Court of Punjab and Haryana at Chandigarh C.W.P. No. 14045 of 2007 Date of decision: 28-04-2008 M/s Om Parkash and Company .....Petitioner Vs. State of Haryana and others ....Respondents .... Coram: Hon'ble Mr. Justice K.S.Garewal Hon'ble Mrs. Justice Daya Chaudhary Present: Mr. A.K.Bura, Advocate for the petitioner. Ms. Kirti Singh, AAG, Haryana for respondents No. 1 to 3 K.S.GAREWAL, J. M/s Om Parkash & Company has filed this petition seeking refund of security and first instalment, deposited on account of the mining lease given to them for mining in khasra 51 and 52 of Bhedanti, Tehsil Narnaul District Mohindergarh. The reason for asking for refund was restrictions imposed on mining. The area had fallen under the Aravali Project Plantation and the petitioners were unable to mine the area. The petitioners have pleaded that notice of auction had been issued on March 22, 2007 inviting bids for 93 minor mineral stone quarries and 58 minor mineral sand quarries in District Mohindergarh. Clause 23 of the auction notice Annexure P-1 did categorically state that no mining operation shall be allowed on land under the Aravali Plantation. However, no specific area of the Aravali Plantation was mentioned in the auction notice. The petitioner participated in the auction on April 3, 2007, for C.W.P. No. 14045 of 2007 2 sand quarries in Khasra No.51 and 52 of Bhendanti and was the highest bidder at Rs.71,00,000/- per annum. Petitioner's bid was accepted on April 11, 2007. An agreement was executed between the petitioner and the department on May 9, 2007, the petitioner also submitted a mining plan on the following day. However, when the petitioner came to know that the plots for which he had bid came under Aravali Project Plantation, he immediately applied to the Mining Officer respondent No.3 that the agreement may not be executed. In response to the petitioner's letter the Mining Officer wrote on June 20, 2007 (Annxure P-6) informing the Director of Mines that the contractor was trying to escape from contractual liability and the contract be prematurely terminated for a fresh auction to be held. A copy of the letter was sent to the petitioner. Thereafter the petitioner issued notice on July 25, 2007 demanding that amount of security and first instalment deposited by him be refunded. The respondents failed to do so, the petitioner filed this petition on September 7, 2007 seeking refund. The security amount in this case was Rs.5,91,677/- and the first instalment was Rs.17,75,000/- . Both amounts were deposited on April 3, 2007. In reply the Mining Officer has categorically stated that the petitioner was trying to create a bias against the respondents. According to the respondents stone quarries were auctioned by mentioning specific khasra number but sand quarries were auctioned on revenue estate basis. In case of sand mining, if the area of operation selected was 5 hectares or more then environmental clearance was required. If the area was less than 5 hectares then mining was to be allowed only after submission of a mining scheme. The area for excavation was to be selected by the contractor and C.W.P. No. 14045 of 2007 3 not by the Government. It was specifically stipulated in condition 23 that no mining in area under Aravali Project Plantation shall be carried out. The petitioner had bid for a sand quarry in Bhedanti on revenue estate basis and not in Khasra 51 and 52. The petitioner selected an area less than 5 hectare and submitted a mining scheme on May 9, 2007 alongwith other documents, for execution of the contract on May 10, 2007. On submission of the scheme, the Mining Officer informed the petitioner that the area selected by them in Khasra 51 and 52 was not reported under the Aravali Project Plantation as per report dated December 24, 2006. However, as per latest information supplied by the Forest Department khasra 51 and 52 had indeed been covered under the Aravali Project Plantation. Therefore, the petitioner should select some other area of the village or get the matter clarified from the Forest Department. Instead of selecting some other area, the petitioner immediately wrote to the Mining Officer on May 9, 2007 itself that the contract may not be executed. According to the respondent the petitioner was trying to wriggle out of the contractual obligation. We have gone through the documents of the case and find that the petitioners bid had been confirmed on April 11, 2007 for Rs.71,00,000/- per annum in respect of sand quarry for the period upto March 31, 2010. The petitioner was to execute a mining agreement and select an area for mining. In case the area was more than 5 hectares the petitioner was required to obtain Environmental Clearance but if it was less then mining would be allowed on submission of mining plan/scheme. The scheme was required to contain a specific Environmental Management Plan, Progressive/final Mine Closure Plan giving details of the steps to be taken C.W.P. No. 14045 of 2007 4 for reclamation of area where mining was closed during the subsistence of contract and also on expiry of contract. The petitioner executed the agreement on May 9, 2007 and deposited the security and first instalment. When he submitted his mining plan it covered Khasra 51 and 52. At this stage he realized that these khasra number were under Aravali Project Plantation. Therefore, he forthwith issued notice dated may 9, 2007 to terminate the agreement. From the reply filed by the respondents it is clear that khasra 51 and 52 were not reported under Aravali Project Plantation in report dated December 24, 2006. It was later that these khasra numbers came to be covered under the said project. Therefore, it is easy to see that the petitioner was misled by the earlier report and selected khasra 51 and 52 for sand mining. The contract did not permit change of khasra numbers after selection. When the petitioner learnt that these khasra numbers fell under the Aravali Project Plantation the petitioner immediately invoked the doctrine of frustration, without any delay. Section 56 of the Indian Contract Act provides that an agreement to do an act impossible in itself is void. It further provides that a contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. The petitioner's bid was accepted on April 11, 2007. He executed an agreement on May 9, 2007. Alongwith the agreement he filed an mining plan. On that very day he came to know that the mining was forbidden on the fields proposed by him in the plan. Therefore, the agreement was revoked on that very day. The respondents have not for a C.W.P. No. 14045 of 2007 5 moment cast any doubt on the vialability of the agreement but have simply stated that the petitioner could opt for an alternative site outside the Aravali Project Plantation. The respondents do not have a viable defence because the petitioner had bid for the sand quarry with a particular site in mind although sand quarries were not granted in accordance with khasra number but on revenue estate basis. We feel that when the petitioner came up with a mining plan containing khasra 51 and 52, which were covered under the Aravali Project Plantation, the agreement itself was rendered impossible and became void. Therefore, the petitioner is entitled to refund of the money deposited on account of security and first instalment (of Rs.5,91,667/- and Rs.17,75,000/- respectively). Petitioner shall also be paid interest at the rate of 9% per annum from the date of the deposit till the refund of the amount because the amount had been wrongly withheld. Petitioner shall be entitled to costs. Counsel's fee assessed at Rs.10,000/-. ( K.S.GAREWAL) JUDGE (DAYA CHAUDHARY) JUDGE April 28,2008 RSK