DEBIDUTTA MOHANTY versus RANJAN KUMAR PATTNAIK & ORS.
[2023] 2 S.C.R. 72, Supreme Court of India, 2023
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
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SUPREME COURT REPORTS
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DEBIDUTTA MOHANTY
v.
RANJAN KUMAR PATTNAIK & ORS.
(Civil Appeal No. 4939 of 2022)
MARCH 03, 2023
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Orissa Minor Minerals Concession Rules, 2016 – r. 51(7) –
Auction was to be made for grant of lease as per the Orissa Minor
Minerals Concession Rules – One of the requirement of the auction
notice was that the bidder was required to submit a solvency
certificate issued by the Revenue Officer – The respondent no.1
participated in the tender process and submitted his application
along with the solvency certificate issued by the Tehsildar – The
solvency certificate was issued despite the specific order passed by
the Sub-collector stating that a solvency certificate was to be issued
in the name of the ‘Trust’ – However, Tehsildar issued the solvency
certificate in favour of the respondent no.1 individually – Collector
cancelled the lease in favour of the respondent no.1 – High Court
set aside the order passed by the Collector cancelling the lease
deed in favour of respondent no.1 – Before the Supreme Court, the
respondent no.1 contended that the solvency certificate issued in
the favour of respondent no.1 was a mistake – On appeal, held: In
the present case the Sub-Collector specifically directed not to issue
the solvency certificate in favour of respondent no.1 herein in his
individual capacity and specifically directed to issue the certificate
in the name of Trust – Under the
circumstances it cannot be said
that the solvency certificate was issued in favour of respondent
no.1 in his individual capacity by mistake – It appears that the
respondent no.1 deliberately and willfully obtained the solvency
certificate in his own name though the property belonged to the
Trust and the solvency certificate was required to be issued in the
name of the Trust – He misused/used the solvency certificate for his
own benefit illegally – Bid using solvency certificate by respondent
no.1 in his own name was non-est and void ab initio – Lease in his
favour was rightly cancelled – Impugned judgment of the High Court
set aside.
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Allowing the appeal, the Court
HELD: 1. So far as the finding recorded by the High Court
that the order passed by the Collector dated 24.03.2021 cancelling
the lease deed was without authority under the law inasmuch as
the competent authority to cancel the lease deed under Rule 51(7)
of the Rules, 2016 would be Tehsildar is concerned, it is required
to be noted that the Rule 51(7) shall be applicable in case of
breach of any condition of the lease deed. The present case is
not a case of breach of any condition of the lease deed, but a case
of producing invalid solvency certificate at the time of submission
of the bid. Therefore, Rule 51(7) shall not be applicable at all to
the facts of the case at hand. It is also required to be noted that in
fact Collector passed the order dated 24.03.2021 pursuant to the
directions issued by the High Court directing the Collector to
take an appropriate decision on the representation/(s) made by
the appellant. Under the circumstances the High Court has
materially erred in holding that the order dated 24.03.2021 passed
by the Collector cancelling the lease deed was without authority
under the law. [Para 7.1, 7.2][80-E-G]
2. In the present case the Sub-Collector, Athagarh
specifically directed not to issue the solvency certificate in favour
of respondent no.1 herein in his individual capacity and specifically
directed to issue the certificate in the name of Trust. Under the
circumstances it cannot be said that the original
solvency certificate
dated 07.12.2017 was issued in favour of respondent no.1 in his
individual capacity by mistake. It appears that the respondent
no.1 deliberately and willfully obtained the solvency certificate in
his own name though the property belonged to the Trust and the
solvency certificate was required to be issued in the name of the
Trust. He misused/used the solvency certificate dated 07.12.2017
for his own benefit illegally and submitted the same along with
his bid and on the basis of the said solvency certificate he got the
lease bid. Under the circumstances, the bid by using the solvency
certificate dated 07.12.2017 by respondent no.1 was non-est and
void ab initio and therefore, the lease in his favour on the basis of
such solvency certificate was rightly cancelled by the Collector. [
Para 8][81-D-F]
DEBIDUTTA MOHANTY v. RANJAN KUMAR PATTNAIK &
ORS.
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4939
of 2022.
From the Judgment and Order dated 28.10.2021 of the High Court
of Orissa at Cuttack in WP (C) No. 16437 of 2021.
Basant R., Sr. Adv., Arunav Patnaik, Dhananjay Ray, Ms. Bhabna
Das, Akshay Sahay, Advs. for the Appellant.
A.N.S. Nadkarni, Sr. Adv., Ashok Panigrahi, Ms. Geetanjali Das
Krishnan, Nabab Singh, Salvador Santosh Rebello, Arzu Paul, Ms. Deepti
Arya, Adiraj Bali, Ms. Varnalee Mishra, Ms. Anindita Pujari, Advs. for
the Respondents.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the High Court of Orissa at Cuttack in Writ Petition
(Civil) No.16437 of 2021 by which the High Court has allowed the said
writ petition preferred by the respondent no.1 herein and has set aside
the order passed by the Collector, Cuttack dated 24.03.2021 by which
the lease in favour of the original writ petitioner was cancelled and
consequently the lease in favour of the original writ petitioner has been
revived, the original respondent no.5 before the High Court has preferred
the present appeal.
2. The facts leading to the present appeal in nutshell are as under:
2.1 That an auction notice for grant of the lease in question was
published on 08.01.2018. Clause 5 of the auction notice stated that the
bidder should submit a solvency certificate from the Revenue Officer
which amount
should not be less than the royalty and the additional
charges fixed for the source. The bidder was also required to submit the
details of the movable properties. The auction notice referred to the
Orissa Minor Minerals Concession Rules, 2016 (hereinafter referred to
as ‘OMMC Rules, 2016’). The respondent no.1 – original writ petitioner
participated in the tender process and submitted his application along
with a Solvency Certificate dated 07.12.2017 issued by the Tehsildar,
Narasinghpur. The above solvency certificate was issued despite the
aboveorder passed by the Sub-Collector, Athagarh on 06.12.2017. At
this stage, it is required to be noted that an order was passed by the Sub-
Collector, Athagarth on 06.12.2017 specifically stating that a solvency
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certificate be issued in favour of “Gurukrupa Charitable Trust, Chairman
of Village Kendupali”. However, the Tehsildar issued the solvency
certificate in favour of the original writ petitioner individually who at the
relevant time was the Chairman of the Trust. The said solvency certificate
was enclosed with the original writ petitioner’s bid.
2.2 When the bids were opened, the highest bid was of one Sukanti
Sahoo, the original writ petitioner was the second highest bidder and the
appellant herein – original respondent no.5 - Debidutta Mohanty was
the third highest bidder. The bid of the first highest bidder Sukanti Sahoo
was cancelled as she was found to be a defaulter. Since the original writ
petitioner was the second highest bidder a letter dated 08.05.2019 was
issued to him asking him to communicate his willingness to operate the
sand sairat at Rs.142 per cubic meter which was the rate quoted by the
highest bidder. On the same date, the original writ petitioner submitted
his willingness. He was then asked to execute a lease deed. The original
writ petitioner then deposited Rs.26,28,450/- and complied with the
requirements. That Sukanti Sahoo filed the Writ Petition (C) No.9023 of
2019 before the High Court questioning the cancellation of her bid and
the selection of the original writ petitioner. Initially the High Court granted
the order of status quo which came to be vacated subsequently.
Thereafter the present original writ petitioner filed Writ
Petition (C)
No.22660 of 2019 in the High Court for a direction to the competent
authority i.e. the Tehsildar, Sadar for execution of the lease deed in his
favour. Thereafter on 01.01.2020, a lease deed came to be executed in
his favour. That thereafter a second writ petition came to be filed by
Sukanti Sahoo against the grant of lease in favour of the present original
writ petitioner being Writ Petition (C) No.951 of 2020. Initially the High
Court stayed the operation of the lease deed executed in favour of the
original writ petitioner. However, thereafter the stay came to be vacated
clarifying that the operation of the lease would be subject to the final
outcome of the pending writ petition.
2.3 That thereafter the appellant herein Debidutta Mohanty filed
the Writ Petition (C) No.3326 of 2021 in the High Court questioning the
solvency certificate issued in favour of respondent no.1 herein – original
writ petitioner. The said petition came to be disposed of by the High
Court vide order dated 04.02.2021 directing the Collector, Cuttack to
consider his representation. While the matter was pending with the
Collector, the appellant herein filed Writ Petition (C) No.14241 of 2021
DEBIDUTTA MOHANTY v. RANJAN KUMAR PATTNAIK &
ORS. [M. R. SHAH, J.]
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which came to be disposed of on 19.04.2021. In the said order, it was
noted that on 08.03.2021, the Tehsildar, Narasinghpur had cancelled the
solvency certificate produced by respondent no.1 herein with his bid and
that against the said cancellation order, an appeal had been filed before
the Collector. A direction was issued to the Collector to also dispose of
the representation of the appellant herein questioning the solvency
certificate which was issued in favour of the original writ petitioner, not
later than 12.05.2021. In the meanwhile, the respondent no.1 was
permitted to operate the sairat and then it was stopped at the instance of
the Tehsildar. On 02.03.2021 a letter was written by the Tehsildar,
Narasinghpur to the Sub-Collector, Athagarh stating that the respondent
no.1 herein – original writ petitioner was the Chairman of the
GurukrupaCharitable Trust. He had filed an application for issuance of a
solvency certificate in his own name, but since he was the Chairman of
the GurukrupaCharitable Trust, the solvency certificate that had to be
issued in the name of the Trust was issued in his name. It was stated
therein that the notice had been issued to the party and necessary steps
have been taken for correction of the said certificate.
2.4 Subsequently, another letter was sent by the Tehsildar on
08.03.2021 to the Collector, Cuttack stating that the earlier solvency
certificate issued in favour of the original
writ petitioner – Respondent
no.1 herein stood cancelled and another certificate was asked to be
issued in favour of the “Gurukrupa Charitable Trust, Chairman of Village
Kendupali”.
2.5 That meanwhile, on 29.01.2021, the original respondent no.1
herein - original writ petitioner wrote to the Tehsildar, Sadar Cuttack to
substitute/exchange the solvency certificate given with his bid with another
one in the value of Rs.4.6 crores which had been issued on 27.01.2021.
That thereafter on the representation made by the appellant herein, the
Collector cancelled the lease in favour of respondent no.1 herein -original
writ petitioner by observing and concluding that the solvency certificate
which was required to be issued in favour of the “Gurukrupa Charitable
Trust Chairman of Village Kendupali”, was issued in the name of
respondent no.1 and therefore, the solvency certificate had not been
issued following the stipulated provisions of the law and hence, the
utilization of the same by respondent no.1 herein - original writ petitioner
in auction of the sairat is illegal. The order passed by the Collector dated
24.03.2021 was the subject matter of the present writ petition before the
High Court at the instance of Respondent no.1 herein.
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2.6 Before the High Court it was the case on behalf of respondent
no.1 herein - original writ petitioner that under the provisions of the
OMMC Rules, 2016 the competent authority in regard to minor minerals
is the Tehsildar and therefore, the lease deed could not have been
cancelled by the Collector. It was also the case on behalf of the original
writ petitioner - respondent no.1 herein that he rectified the defect of not
furnishing a solvency certificate in his own name. It was submitted that
it is true that earlier the solvency certificate should have been issued in
the name of the Trust of which he was the Chairman, however, on
29.01.2021 itself he had written to the Tehsildar for substituting the
solvency certificate submitted with the bid with another issued in his
own name and, therefore, even the said defect stood cured. It was
submitted that without taking note of this, the Collector had cancelled
the lease.
2.7 The writ petition was opposed by the State as well as the
appellant herein- original respondent no.5. It was submitted on behalf of
the appellant herein that the bid submitted by respondent no.1 herein -
original writ petitioner was ab initio void and should never have been
accepted since it was not accompanied by a valid solvency certificate in
the name of the original writ petitioner. It was submitted that the document
that was enclosed as a solvency certificate was in fact not correctly
issued and was contrary to the express order of
Sub-Collector. It was
submitted that as the bid of the first highest bidder - Sukanti Sahoo was
earlier cancelled and the original writ petitioner was the second highest
bidder whose lease has been rightly cancelled by the Collector, being the
third highest bidder the lease ought to have been granted in his favour.
2.8 By the impugned judgment and order and having opined that
the initial solvency certificate was issued in favour of the original writ
petitioner which was issued in the name of the original writ petitioner,
though required to be issued in the name of the Trust, was a bona fide
error which subsequently came to be cancelled and even a fresh solvency
certificate was issued in favour of the original writ petitioner, the Collector
had erred in cancelling the lease deed in favour of the original writ
petitioner. The High Court also has observed that under the OMMC
Rules, 2016, the competent authority in terms of Schedule (IV) who can
cancel the lease deed, is the Tehsildar and therefore, the competent
authority’s power under the OMMC Rules, 2016 would not have been
straight way exercised by the Collector in the first instance. Therefore,
DEBIDUTTA MOHANTY v. RANJAN KUMAR PATTNAIK &
ORS. [M. R. SHAH, J.]
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the High Court by the impugned judgment and order has set aside the
order passed by the Collector cancelling the lease deed in favour of the
original writ petitioner.
2.9 The impugned judgment and order passed by the High Court
quashing and setting aside the order passed by the Collector, Cuttack
dated 24.03.2021 cancelling the lease in favour of the original writ
petitioner - respondent no.1 herein is the subject matter of the present
appeal at the instance of the original respondent no.5 – third highest
bidder.
4. Shri R. Basant, learned Senior Advocate has appeared on behalf
of the appellant and Shri A.N.S. Nadkarni, learned Senior Advocate has
appeared on behalf of Respondent no.1.
4.1 Shri Basant, learned Senior Advocate appearing on behalf of
the appellant has vehemently submitted that in the facts and circumstances
of the case the Division Bench of the High Court has materially erred in
quashing and setting aside the order passed by the Collector, Cuttack
dated 24.03.2021 cancelling the lease in favour of respondent no.1 herein.
4.2 Shri Basant, learned Senior Advocate has further submitted
that the High Court has materially erred in observing and holding that
the initial subject solvency certificate which as such was in the name of
Gurukrupa Charitable Trust, but was used by respondent no.1 in his
individual capacity in order to participate in the tender was a genuine
mistake and not a deliberate act and
therefore a rectifiable defect.
4.3 It is submitted that it is an admitted position that the property
belonged to the Gurukrupa Charitable Trust and was not owned by
respondent no.1. It is submitted that therefore, the subject solvency
certificate used by respondent no.1 in his individual capacity in order to
participate in the tender was an exercise in fraud which rendered his bid
non-est and void ab initio.
4.4 It is submitted that the High Court has not properly appreciated
the fact that it was the modus operandi of respondent no.1 to attempt to
pass off the property of the Trust as his own property inasmuch as the
self-same subject solvency certificate had been misused by respondent
no .1 in another tender and detecting the fraud played, the Tehsildar and
the Sub-Collector had disqualified him from the said tender.
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4.5 It is further submitted that the High Court has materially erred
in applying Rule 51(7) of the OMMC Rules, 2016. It is submitted that
the said Sub-Rule shall be applicable only in a case where there is a
breach of any condition of the lease deed, whereas in the instant case
there has been a breach of the auction/tender call notice and the Rules
governing bids.
4.6 It is further submitted that the High Court has materially erred
in holding that the competent authority under the OMMC Rules, 2016
was the Tehsildar and therefore the Collector could not have been
approached in the first instance despite being aware that there were
allegations against the Tehsildar of conspiring with respondent no.1.
4.7 Shri R. Basant, learned senior counsel appearing on behalf of
the appellant has further submitted that the High Court has materially
erred in taking into consideration the subsequent conduct on the part of
respondent no.1 in obtaining the fresh solvency certificate. It is submitted
that what was required to be considered was the solvency certificate at
the time of bid and not the subsequent solvency certificate.
5. Present appeal is vehemently opposed by Shri A.N.S. Nadkarni,
learned Senior Advocate appearing on behalf of respondent no.1. It is
submitted that as rightly observed and held by the High Court the initial
solvency certificate dated 07.12.2017 issued in favour of Respondent
no.1 was by mistake and instead of Gurukrupa Charitable Trust, the
same
was issued in favour of Respondent no.1 being the Chairman of
Trust.
5.1 It is submitted that thereafter respondent no.1 himself made
an application for substitution of the solvency certificate. That thereafter
respondent no.1 obtained the fresh solvency certificate in his favour
which came to be permitted to be substituted/filed. Therefore, it cannot
be said that the initial solvency certificate produced by respondent no.1
along with the bid was non-est and void ab initio as sought to be
contended on behalf of the appellant.
5.2 It is further submitted that even otherwise the power to cancel
the lease deed would vest with the Tehsildar who is the competent
authority under Rule 51(7) of the OMMC Rules, 2016. That in the present
case the lease deed was cancelled by the Collector and therefore, the
High Court has rightly observed and held that the order passed by the
Collector, Cuttack cancelling the lease was without authority under the
Law.
DEBIDUTTA MOHANTY v. RANJAN KUMAR PATTNAIK &
ORS. [M. R. SHAH, J.]
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5.3 It is further submitted that even during the pendency of the
present proceedings not only the lease period has expired but even
subsequently the fresh lease deed has been executed pursuant to the
impugned judgment passed by the High Court.
6. We have heard learned Senior Counsel appearing on behalf of
the respective parties at length.
7. By the impugned judgment and order the High Court has set
aside the order passed by the Collector, Cuttack dated 24.03.2021
cancelling the lease which was in favour of respondent no.1 herein inter
alia on the grounds that:
(i)
the order passed by the Collector cancelling the lease deed
was without authority under the law as under Rule 51(7) of
the Rules, 2016 the Tehsildar is the competent authority to
cancel the lease deed;
(ii)
That the original solvency certificate dated 07.12.2017
produced by respondent no.1, produced along with the bid
was issued in his favour by mistake.
7.1 Now so far as the finding recorded by the High Court that the
order passed by the Collector dated 24.03.2021 cancelling the lease deed
was without authority under the law inasmuch as the competent authority
to cancel the lease deed under Rule 51(7) of the Rules, 2016 would be
Tehsildar is concerned, it is required to be noted that the Rule 51(7) shall
be applicable in case of breach of any condition of the lease deed. The
present case is not a case of breach of any condition of the lease deed,
but a case
of producing invalid solvency certificate at the time of
submission of the bid. Therefore, Rule 51(7) shall not be applicable at all
to the facts of the case at hand.
7.2 It is also required to be noted that in fact Collector passed the
order dated 24.03.2021 pursuant to the directions issued by the High
Court directing the Collector to take an appropriate decision on the
representation/(s) made by the appellant. Under the circumstances the
High Court has materially erred in holding that the order dated 24.03.2021
passed by the Collector cancelling the lease deed was without authority
under the law.
8. Now so far as the findings recorded by the High Court that the
original Solvency Certificate dated 07.12.2017 in favour of respondent
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no.1 was a mistake and there was no other mala fide intention is
concerned, it is required to be noted that despite the fact that Gurukrupa
Charitable Trust was the owner of the property and on the said basis the
solvency certificate was claimed, the respondent no.1 made an application
for issuance of the solvency certificate in his own name - in his individual
capacity. The Sub-Collector, Athagrah vide communication dated
06.12.2017 as such had specifically directed the Tehsildar to issue the
certificate in the name of Gurukrupa Charitable Trust. However, despite
the same the Tehsildar issued the solvency certificate dated 07.12.2017
in favour of respondent no.1 in his individual capacity, which as such
cannot be said to be by mistake. If the communication by the Sub-
Collector, Athagarh dated 06.12.2017 addressed to the Tehsildar would
not have been there and the Tehsildar would have issued the solvency
certificate in favour of respondent no.1 in his individual capacity as he
was the Chairman of the Trust then one can understand such a mistake.
However, in the present case the Sub-Collector, Athagarh specifically
directed not to issue the solvency certificate in favour of respondent
no.1 herein in his individual capacity and specifically directed to issue
the certificate in the name of Trust. Under the circumstances it cannot
be said that the original solvency certificate dated 07.12.2017 was issued
in favour of respondent no.1 in his individual capacity
by mistake. It
appears that the respondent no.1 deliberately and willfully obtained the
solvency certificate in his own name though the property belonged to
the Trust and the solvency certificate was required to be issued in the
name of the Trust. He misused/used the solvency certificate dated
07.12.2017 for his own benefit illegally and submitted the same along
with his bid and on the basis of the said solvency certificate he got the
lease bid. Under the circumstances, thebid by using the solvency
certificate dated 07.12.2017 byrespondent no.1 was non-est and void
ab initio and therefore, the lease in his favour on the basis of such
solvency certificate was rightly cancelled by the Collector.
8.1 At this stage it is required to be noted that subsequently the
respondent no.1’s application on 29.01.2021 permitting him to substitute
the solvency certificate was not on the ground that the initial solvency
certificate dated 07.12.2017 which was issued in his individual name
was by mistake. The reason given was that the other partner may claim
over the earlier solvency certificate and therefore we intend to substitute/
exchange the fresh solvency certificate which was obtained against the
other properties.
DEBIDUTTA MOHANTY v. RANJAN KUMAR PATTNAIK &
ORS. [M. R. SHAH, J.]
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8.2 At this stage it is required to be noted that the respondent no.1
used the very solvency certificate in another tender and the Tehsildar
and the Sub-Collector disqualified the respondent no.1 from the said
tender.
8.3 Under the circumstances as such the respondent no.1 misused
the solvency certificate dated 07.12.2017 which as such was illegally
issued in his individual capacity/name as though the same was required
to be issued in the name of Gurukrupa Charitable Trust. At this stage it
is required to be noted that subsequently the solvency certificate dated
07.12.2017 has been cancelled by the Tehsildar vide order dated
08.03.2021 which has attained the finality.
8.4 Now so far as the submission on behalf of respondent no.1
that subsequently respondent no.1 obtained the fresh solvency certificate
which was sought to be substituted/exchanged is concerned, it is required
to be noted that what is required to be considered is the solvency
certificate produced along with the bid and not the subsequent solvency
certificate.
9. Now so far as the submission on behalf of respondent no.1 that
thereafter pursuant to the impugned judgment and order passed by the
High Court a fresh lease deed has been issued is concerned, at the
outset, it is required to be noted that in the order dated 18.05.2022 it is
observed by this Court that the fresh lease deed, pursuant to the impugned
judgment and order shall be subject to the
ultimate outcome of the present
SLP/appeal and/or further orders that can be passed by the court in the
proceedings.
10. In view of the above and for the reason stated above, we are
of the opinion that the High Court has committed a very serious error in
quashing and setting aside the order dated 24.03.2021 passed by the
Collector, Cuttack cancelling the lease deed which was in favour of
respondent no.1. Consequently, the impugned judgment and order passed
by the High Court deserves to be quashed and set aside and is accordingly
quashed and set aside. The order passed by the Collector, Cuttack dated
24.03.2021 cancelling the lease deed which was in favour of respondent
no.1 is hereby restored. On the impugned judgment and order being set
aside the fresh lease deed in favour of respondent no.1 also deserves to
be set aside and is accordingly set aside.

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Present appeal is accordingly allowed. However, in the facts and
circumstances of the case, there shall be no order as to costs.
Ankit Gyan
Appeal allowed.
(Assisted by : Abhishek Agnihotri and Mahendra Yadav, LCRAs)
DEBIDUTTA MOHANTY v. RANJAN KUMAR PATTNAIK &
ORS. [M. R. SHAH, J.]