High Court upholds e-auction of J&K minerals

Upholding the e-auction mode for auctions of minor minerals, Jammu and Kashmir High Court has ruled that e-auctions are the most transparent and it enables maximization of the public interest and national priorities.

A division bench of Chief Justice Gita Mittal and Justice Sanjy Dhar while dismissing a batch of appeals against government’s decision to switch over to e-auctioning of minor minerals said: “The decision to change the policy and to auction mineral licences by e-auction was a reasonable policy decision and the e-auctions are most transparent,” the court said.

The appellants had challenged a single judge judgment against the dismissal of 16 petitions which had challenged scraping of open auction by Department of Industries

and Commerce under the J&K Minor Minerals Concession, Storage, Transportation of Minerals and Prevention of Illegal Mining Rules 2016 and proposal of carrying out fresh auctions only through e-auction mode.

“Rule 104A which enabled mining activity to be undertaken by the highest bidders without environmental clearance was ultra vires the Mines and Minerals (Development and Regulation) Act, 1957,” the court said.

“The illegal acts of the appellants have deprived the State of valuable financial resources in terms of the balance bid amount while deriving huge commercial profits and causing environmental degradation by their indiscriminate mining operations without environmental clearances utilizing the shield of Rule 104A”.

The Court pointed out that in the present case the bids of the appellants were accepted only provisionally and they were required to obtain approval of the Mining Plan and environment clearance in accordance with Rule 26(2) of the Rules of 2016.

Besides it, the court said, the bidders were to deposit the balance bid amount within a period of six months as per Rule 55(9) which was communicated to them by the letter of intent issued as per Rule 55(9) before being considered for grant of the mining lease under Rule 52 and lastly execution of the mining lease in accordance with Rule 40.

Pointing out that only thereafter a concluded contract would have come into existence, the Court said the appellants failed to comply with the requirements of Rule 26(2) and 55(9) and for this reason no concluded contract came into existence.

“The respondents had no power or authority to waive, modify the pre-conditions for grant of a mining lease or to grant extension of the time stipulation as contained in the Rules and communicated in the letter of intent,” the court said.

The appellants, the court said, were not concerned with the compliance of any of the mandatory conditions laid down in the rules or making good the financial obligations to the respondents and failed to act with expedition and diligence.

The Court said the authorities had not held out any representation or unconditional promise to the appellants that they would be granted mining leases irrespective of whether they complied with the requirements of Rules of 2016 or not. “The doctrine of promissory estoppels is neither attracted nor has application in the present case”.

The cancellation of the entire auction of 2017 and the policy decision to allot mining leases henceforth only by e-auction, the court said, was lawful, principle based, most transparent, viable and fair mode of grant of public largess.

The Court said the action of the authorities cannot be faulted for violations of natural justice on the ground that no notice was issued before cancellation of the auction or because no reasons have been assigned in individual cases.

The Court also did away with the liberty granted by the single judge to the appellants to claim refund of their bid amount(s), if any, lying with the respondents or to sue the respondents in appropriate proceedings for any loss or damage, if any, suffered by the appellants.

Pointing out that the authorities in government cannot be held responsible for the delay in obtaining the environment clearances, the court set aside the finding of the Single Judge that the appellants were not responsible for the delay. “ The appellants do not have any right or entitlement to seek compensation and hence no remedy in common law to do so”.

Meanwhile the Court asked the Chief Secretary to take immediate steps for appointing professional and qualified persons or an agency for technically and scientifically evaluating within strict time frame fixation of the reserved prices of minerals, the terms and conditions on which auctions for grant of all mineral concessions are conducted, and recommendations of the experts so appointed be implemented in public interest in J&K.

The Court asked the CS to appoint a Committee of Experts on the lines of directions given by the Supreme Court in some cases – which the bench mentioned in its judgment- to assess the components and scales of compensation and recommend measures of reparation for acts and omissions of the appellants which have resulted in environmental degradation.

The Court also asked the CS to appoint a nodal officer or committee of officers to compute the scale of compensation as recommended by the Committee with a time bound mandate to issue notices to show cause to the appellants with regard to payment of compensation, consideration of the responses, making appropriate determination of liability and effecting recoveries thereof.