# M/S Pragyason Cons. Pvt. Ltd v. State of U.P. & Ors. Opp. Parties

- **Citation:** (2024) 5 ILRA 2381
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-05-29
- **Case number:** Writ-C No. 21022 of 2021
- **Bench:** Anjani Kumar Mishra, Jayant Banerji
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-pragyason-cons-pvt-ltd-v-state-of-u-p-ors-opp-parties-52081
- **Pages:** 6

## Headnote

Rules, 1963 - G.O. dated 14.08.2017 -
Clause 17 - Forfeiture of Earnest Money -
Conditions - Letter of Intent - Nonsubmission of Documents - Refund of
Earnest Money - Right to Claim Refund -
As per Clause 17 of G.O. dated 14.08.2017,
forfeiture of earnest money can only be
ordered
if,
upon
verification,
any
document or certificate submitted by the
individual is found to be false, fabricated,
or incorrect. No letter of intent shall be
issued to such a person. Further, G.O.
dated 09.10.2017, provides that no person
in the State of U.P. shall be granted more
than two mining leases aggregating an
area in excess of 50 hectares. In case
information is provided to the authority by
the applicant himself that the applicant
has been issued two letters of intent for
two or more mining leases or for areas
exceeding 50 hectares, he has the right to
choose one of the mining lease areas, and
the amount deposited for the remaining
areas
would
be
refunded
upon
verification. (Para 21)

B. U.P. Minor Minerals (Concessions)
Rules, 1963 - G.O. dated 14.08.2017 -
Condition of Submission of Documents -
Directory or Mandatory - G.O. mandates
that the relevant documents are to be
submitted by the highest bidder within
three days of acceptance of his bid.
However, the provision does not prescribe
any penalty for non-compliance. It is a
settled principle that in the absence of any
penal provision, such a requirement is
considered directory and not mandatory.
(Para 22)

C. Facts: Petitioner participated in an eauction and deposited an earnest money
of Rs. 90 lakhs - Upon the acceptance of
his bid, a letter was issued to the
petitioner to furnish relevant documents
for the issuance of a letter of intent -
Instead of submitting the documents, the
petitioner sought a refund of the earnest
money, stating that he had been granted
more than two mining leases - District
Magistrate rejected the refund application
on the ground that the petitioner's failure
to furnish documents caused a loss of
revenue to the State - Held - Forfeiture of
earnest money is not sustainable as no
2382 INDIAN LAW REPORTS ALLAHABAD SERIES
document
or
certificate
was
ever
furnished by the petitioner - Impugned
order forfeiting the petitioner's security
deposit was quashed - Respondents were
directed to refund the security deposit of
Rs. 90 lakhs. (Paras 21, 23)

Allowed. (E-5)

## Text

5 All. M/S Pragyason Cons. Pvt. Ltd. Vs. State of U.P. & Ors.
2381
Bench of Hon'ble Supreme in the case of
Karnataka State Road Transport Corporation
(Supra), this Court has no doubt in mind that the
issue qua violation of principles of natural
justice and fair play during the domestic enquiry
should be decided first as a preliminary issue.
There is no need to discuss the merits of the case
or other points inasmuch as matter referred to
the labour court is still sub judice, therefore, any
observation made by this Court would effect the
merits of the case. As such, instant writ petition
succeeds and is allowed. Order impugned dated
18.11.2023 passed by the Presiding Officer,
Labour Court is hereby quashed. Application
dated 08.08.2023 (Paper No.13-D) filed on
behalf of the petitioner is allowed and the labour
court is directed to decide the issue no.1 as a
preliminary
issue.
It
is
expected
that
unnecessary
adjournment/delay
shall
be
avoided by the parties concerned and the labour
court shall make endeavour to decide the
adjudication case, as early as possible.
----------
(2024) 5 ILRA 2381
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 29.05.2024

BEFORE

THE HON'BLE ANJANI KUMAR MISHRA, J.
THE HON'BLE JAYANT BANERJI, J.

Writ-C No. 21022 of 2021

M/S Pragyason Cons. Pvt. Ltd....Petitioner
Versus
State of U.P. & Ors. ...Opp. Parties

Counsel for the Petitioner:
Sr. Advocate, Udayan Nandan

Counsel for the Opp. Parties:
C.S.C.

A. U.P. Minor Minerals (Concessions)
Rules, 1963 - G.O. dated 14.08.2017 -
Clause 17 - Forfeiture of Earnest Money -
Conditions - Letter of Intent - Nonsubmission of Documents - Refund of
Earnest Money - Right to Claim Refund -
As per Clause 17 of G.O. dated 14.08.2017,
forfeiture of earnest money can only be
ordered
if,
upon
verification,
any
document or certificate submitted by the
individual is found to be false, fabricated,
or incorrect. No letter of intent shall be
issued to such a person. Further, G.O.
dated 09.10.2017, provides that no person
in the State of U.P. shall be granted more
than two mining leases aggregating an
area in excess of 50 hectares. In case
information is provided to the authority by
the applicant himself that the applicant
has been issued two letters of intent for
two or more mining leases or for areas
exceeding 50 hectares, he has the right to
choose one of the mining lease areas, and
the amount deposited for the remaining
areas
would
be
refunded
upon
verification. (Para 21)

B. U.P. Minor Minerals (Concessions)
Rules, 1963 - G.O. dated 14.08.2017 -
Condition of Submission of Documents -
Directory or Mandatory - G.O. mandates
that the relevant documents are to be
submitted by the highest bidder within
three days of acceptance of his bid.
However, the provision does not prescribe
any penalty for non-compliance. It is a
settled principle that in the absence of any
penal provision, such a requirement is
considered directory and not mandatory.
(Para 22)

C. Facts: Petitioner participated in an eauction and deposited an earnest money
of Rs. 90 lakhs - Upon the acceptance of
his bid, a letter was issued to the
petitioner to furnish relevant documents
for the issuance of a letter of intent -
Instead of submitting the documents, the
petitioner sought a refund of the earnest
money, stating that he had been granted
more than two mining leases - District
Magistrate rejected the refund application
on the ground that the petitioner's failure
to furnish documents caused a loss of
revenue to the State - Held - Forfeiture of
earnest money is not sustainable as no
2382 INDIAN LAW REPORTS ALLAHABAD SERIES
document
or
certificate
was
ever
furnished by the petitioner - Impugned
order forfeiting the petitioner's security
deposit was quashed - Respondents were
directed to refund the security deposit of
Rs. 90 lakhs. (Paras 21, 23)

Allowed. (E-5)

(Delivered by Hon'ble Anjani Kumar
Mishra, J. & Hon'ble Jayant Banerji, J.)

1. Heard Shri Udayan Nandan, for
the petitioner and learned Standing Counsel
for the state respondents.

2. The petitioner by means of this
writ petition seeks a writ of certiorari for
quashing the order dated 16.07.2020 passed
by the District Magistrate, respondent no. 2
(annexure 9 to the writ petition) and the
order dated 20.11.2020 (annexure 11 to the
writ petition) passed by the Secretary,
Mines and Minerals, U.P.

3. By the order dated 16.07.2020,
the
District
Magistrate
has
rejected
petitioner's application for refund of
earnest money deposited by him for
participating in an e-auction for grant of a
lease in District Hamirpur for which an
advertisement
had
been
issued
on
03.01.2020.

4. The order of the District
Magistrate has been affirmed in revision by
the first respondent, hence, this petition.

5. The facts of the case briefly
stated are that an advertisement was issued
on 03.01.2020 inviting bids for grant of
mining leases in District Hamirpur. The
petitioner submitted its bid along with
earnest money of Rs. 90 lakhs on
24.04.2020. The bid of the petitioner, being
the highest, was accepted. On 05.03.2020,
a letter was issued calling upon the
petitioner to furnish relevant documents so
that a letter of intent could be issued in his
favour.

6. In the meantime, the petitioner
on 07.03.2020 participated in the bidding
for grant of leases in District-Fatehpur
which was, however, cancelled.

7.

Since,
the
letter
dated
05.03.2020 could not be complied with,
allegedly on account of the prevailing
pandemic, yet another reminder was issued
to the petitioner on 16.05.2020 requiring
submission of the relevant documents
within three days.

8. It appears that in the meantime,
on 14.05.2020, yet another advertisement
was published, inviting tenders for grant of
mining leases in District Fatehpur. The
petitioner participated in the bidding and
was issued a letter of intent on 18.06.2020.

9. After this letter of intent was
issued, the petitioner on 19.06.2020
represented to the District Magistrate,
Hamirpur for refund of the earnest
money of 90 lakhs deposited by him for
participation
in
the
bidding
held
consequent to the advertisement dated
3.01.2020. It is this application which
has been rejected holding that the
petitioner deliberately failed to furnish
the required documents within three
days after acceptance of his bid as was
provided in the tender. This has caused
huge loss of revenue to the State.
Therefore, petitioner is not entitled to a
refund. Accordingly, the earnest money
of 90 lakhs deposited by the petitioner
was forfeited in favour of the State.
Thus order has been affirmed by the
revisional authority.
5 All. M/S Pragyason Cons. Pvt. Ltd. Vs. State of U.P. & Ors.
2383
10. The submission of learned
counsel for the the petitioner is that the
application dated 19.06.2020 seeking
refund of earnest money was in accordance
with Rule 10(3) of the U.P. Minor Minerals
(Concessions) Rules, 1963, as amended by
the 47th Amendment Rules, 19.10.2019,
which provided that no person in the State
of U.P. can be granted leases in excess of an
area of 50 hectares. The Government Order
dated 19.10.2019 provides the modalities
for refund of earnest money in cases where
more than two mining leases have been
granted in favour of one entity or the
aggregate of leases granted is in excess of
50 hectares.

11. It is additionally reiterated that
Rule 10(3) of 47th Amendment Rules limits
the maximum number of leases that can be
granted in favour of one entity to two and
the other condition is that the aggregate
area of these two leases cannot exceed 50
hectares.

12. Since, the petitioner had been
granted two leases in District-Fatehpur
consequent to the advertisement issued on
14.05.2020, the petitioner informed the
authorities opting to operate two leases
granted in Fatehpur which option was with
the petitioner.

13. This amended provision has not
been taken into consideration by the
respondent while passing the impugned
orders. The earnest money would be
forfeited, if at all, if the information of grant
of more than two leases having an aggregate
area in excess of 50 hectares had not been
communicated by the petitioner and was
discovered by the authorities on their own.
Such is not the position in the case at hand.
The petitioner intimated the respondent no.1
immediately on obtaining two leases in
District-Fatehpur and therefore, exercised his
option of not going ahead with his bid offered
for the mining lease in District-Hamirpur.

14. Learned Standing Counsel has
opposed the writ petition and has reiterated
what has been stated in the impugned order
especially that the petitioner was required to
submit documents prior to grant of letter of
intent in his favour within three days of the
acceptance of his bid. This specific condition
mentioned in the tender was not complied
with by the petitioner despite issuance of the
reminders on 05.03.2020 and 16.05.2020.
This inaction of the petitioner resulted in huge
loss to the exchequer and therefore, the
earnest money deposited by the petitioner has
been rightly forfeited as lease could not be
operated by any other person also.

15. Learned Standing Counsel has
also referred to GO No. 1875/86-2017-57
(सरर्रन्य)/2017 which is dated 14.08.2017. This
very same GO also find mention in the order
passed by the revisional authority. He has
specifically refered the Clause 17 of this
Notification which reads as follows:-

"17- ई- दनिरर्ी सर्रप्त होने के पश्चरत 03 करयम
दिवस के अन्िर सफि बोिीिरतर को अपने र्ूि अदििेख कर
सत्यरपन उस जनपि के दजिरदिकररी जहराँ क्षेत् दस्थत है, के द्वररर
अथवर दनिेशक, िूतत्व एवां खदनकर्म, दनिेशरिय के द्वररर कररनर
होगर। दनिेशक द्वररर र्ूि अदििेख की सत्यरपन की दस्थदत र्ें
अदििेख सत्यरपन की आख्यर ई-र्ेि के र्रध्यर् से सांबांदित
दजिरदिकररी को प्रेदषत की जरयेगी। अदििेख सत्यरपन के पश्चरत
ही दजिरदिकररी द्वररर िेटर आफ इन्टेंट जररी दकयर जरयेगर।
सत्यरपन र्ें यदि कोई अदििेख अथवर प्रर्रण पत् कूटरदचत,
असत्य अथवर गित परयर जरतर है तो िेटर आफ इन्टेंट जररी नही
दकयर जरयेगर तथर बयरने की िनररदश (अनेस्ट र्नी) जब्त कर
िी जरयेगी।"

16. He has also referred to Clause
19 of the tender notice dated 03.01.2020
which reads as follows:-
2384 INDIAN LAW REPORTS ALLAHABAD SERIES
"दवज्ञदप्त की शतम सांख्यर-19 र्े उल्िेख दकयर गयर है
दक- ई- नीिरर्ी सर्रप्त होने के पश्चरत 03 करयम दिवस के अन्िर
सफि बोिीिरतर को अपने र्ूि अदििेख कर सत्यरपन उस जनपि
के दजिरदिकररी, जहराँ क्षेत् दस्थत है, के द्वररर अथवर दनिेशक, िूतत्व
एवां खदनकर्म दनिेशरिय के द्वररर कररनर होगर। दनिेशक, द्वररर र्ूि
अदििेख के सत्यरपन की दस्थदत र्ें अदििेख-सत्यरपन की आख्यर
ई-र्ेि के र्रध्यर् से सम्बदन्ित दजिरदिकररी को प्रेदषत की जरयेगी।
अदििेख-सत्यरपन के पश्चरत ही दजिरदिकररी द्वररर आशय पत्
(िेटर आफ इन्टेट) जररी दकयर जरयेगर। सत्यरपन र्ें यदि कोई
अदििेख अथवर प्रर्रण पत् कूटरदचत, असत्य अथवर गित परयर
जरतर है तो िेटर आफ इन्टेंट जररी नही दकयर जरयेगर तथर बयरने की
िनररदश (अनेस्ट र्नी) जब्त कर िी जरयेगी।
आप द्वररर शरसनरिेश दिनरांक- 09.10.2019 र्ें दिये
गये दनिेशों एवां दवज्ञदप्त दिनरांक- 03.01.2020 र्ें िी गयी शतों
के अनुसरर अदििेख प्रस्तुत नही दकयर गयर है, दजस कररण आपके
प्रकरण र्ें अग्रेतर करयमवरही दकयर जरनर सम्िव नहीं है।"

17. In rejoinder, the submission of
learned counsel for the petitioner is that
Clause 17 of the GO dated 14.08.2017,
relied upon by learned Standing Counsel,
does not empower the respondents to forfeit
the earnest money deposited by the
petitioner. Forfeiture of earnest money
under the this provision is provided only in
case
the
documents
or
certificates
submitted by a person are found forged,
fabricated or false. Additionally, no letter of
intent would be issued in favour of such
person. This condition does not apply
because it is the admitted case of the
respondents
that
no
documents
or
certificates were ever furnished by the
petitioner.

18. It is next submitted that in any
case, the condition that relevant documents
are to be submitted by the person whose bid
is found highest within three days after such
acceptance does not provide any penal
clause
for
its
non-compliance.
The
provision is, therefore, merely directory
and not mandatory. In support of this
contention,
learned
counsel
for
the
petitioner has placed reliance upon the
decision of the Apex Court in State of
Bihar and others v. Bihar Rajya Bhumi
Vikas Bank Samiti, (2018) 9 SCC 472
wherein it has been held that any
requirement under a statute in the absence
of a penal clause or provision for its noncompliance, the provision is deemed to be
directory and not mandatory. Therefore,
also the earnest money deposited by the
petitioner could not be forfeited especially
in the absence of any quantification of loss
suffered by the State on account of
petitioner not having furnished relevant
documents
within
three
days
from
acceptance of this bid.

19. We have considered the
submissions made by learned counsel for
the parties. From the narration of the facts
above and submission made by learned
counsel for the parties, the point which
arises for consideration in the writ petition
is
whether
the
respondents
were
empowered to order forfeiture of the
earnest money deposited by the petitioner
in favour of the State.

20. The State has relied upon the
GO
No
GO
No.
1875/86-2017-57
(सरर्रन्य)/2017 which is dated 14.08.2017,
relevant part whereof has already been
quoted hereinabove.

21. We are in agreement with the
submission of learned counsel for the
petitioner that forfeiture of earnest money
could be ordered only when, upon the
verification, any document or certificate
filed by an individual was found false,
fabricated or incorrect.

22. There does not appear to be any
penal consequence provided for non-
5 All. M/S Pragyason Cons. Pvt. Ltd. Vs. State of U.P. & Ors.
2385
compliance of the earlier part of this
provision which requires the highest bidder
to submit relevant documents within a
period of three days from acceptance of his
bid. Therefore, in view of the judgment
relied upon by the learned counsel for the
petitioner, the provision has to be held to be
directory and not mandatory. This view is
further supported by the fact that in case
this
provision
was
mandatory,
noncompliance would have resulted in adverse
consequences having visited the petitioner
on the 4th day itself. The authorities, on the
contrary, have issued at least two reminders
to the petitioner on 05.03.2020 and
16.05.2020.

23. Under the circumstances,
reliance upon GO No. 1875/86-2017-57
(सरर्रन्य)/2017 which is dated 14.08.2017 for
forfeiture of his earnest money deposited
by the petitioner is unsustainable.

24. In the context of the arguments,
it is necessary to refer to GO No. 2168/862019-57(सरर्रन्य)/2017, dated 09.10.2017,
copy whereof has been filed as annexure 8
to this writ petition, which states that it has
been issued to amend the notification dated
14.08.2017,
No.
1875/86-201757(सरर्रन्य)/2017TC1 on account of the
amendments incorporated in the UP Minor
Minerals (Concessions) (47th Amendment)
Rules 2019. The relevant portion of this
notification for the purposes of this writ
petition
whereby
clause
13 of
the
Government Order dated 14.08.2017 was
amended, is quoted below:-

"13(9)- अदिकतर् िो खनन पट्टे यर 50 हे० से
अदिक के क्षेत् को, उ० प्र० ररज्य र्ें दकसी व्यदक्त/फर्म कम्पनी के
पक्ष र्ें स्वीकृत नही दकयर जरयेगर। यदि दकन्ही पररदस्थदतयों र्ें एक
व्यदक्त/ फर्म/ कम्पनी द्वररर अपने पक्ष र्ें िो खनन पट्टे यर 50 हे० से
अदिक के खनन पट्टे स्वीकृत करर दियर जरतर है, तो अन्त र्ें स्वीकृत
खनन पट्टे दनरस्त कर पट्टर अन्तगमत जर्र सम्पूणम िनररदश जब्त कर
िी जरयेगी तथर केवि प्रररम्ि के िो क्षेत् अथवर 50 हे० के खनन
पट्टे ही अनुर्न्य होंगे। परन्तु यदि आवेिक स्वयां अपने पक्ष र्ें िो खनन
पट्टे यर 50 हे० से अदिक के खनन पट्टे हेतु जररी िेटर ऑफ इटेन्ट
की सूचनर िेतर है, तो उक्त सीर्र के अन्तगमत कोई िी खनन पट्टर क्षेत्
के चयन कर उसे अदिकरर होगर तथर शेष क्षेत्ों की जर्र िनररदश
पुदि के उपररन्त यथरवत वरपस कर िी जरयेगी।"

25. A bare perusal of the provision
cited above reveals that it provides that a
person in the State of U.P. cannot be granted
more than two mining leases for an
aggregate area in excess of 50 hectares. It
further provides if in a case this condition
stands violated, the last lease shall stand
cancelled and the earnest money deposited
for the same will also stand forfeited and
only the first two leases which are not for
more than 50 hectares shall remain approved.
This provision is subject to proviso that if
information is provided by the applicant that
he has been issued two letters of intent for two
or more mining leases or that their areas are
in excess of 50 hectares, he will have right to
choose any of the mining lease areas and the
amount deposited for the remaining areas
would be returned after verification.

26. The contention of learned
counsel for the petitioner that the intimation
of two choices of the petitioner getting more
than two leases whose an area of aggregate
was intimated to the authorities by the
petitioner and therefore, he had, under the
relevant provision, option to retain any of the
two leased areas for which letter of intent had
been issued in his favour. Under the
circumstances, the respondents had no option
but to refund the earnest money deposited by
the petitioner, regarding the mining area in
District-Hamirpur.

27. In view of the forgoing
discussion, this Court is constrained to hold
2386 INDIAN LAW REPORTS ALLAHABAD SERIES
that the forfeiture of the petitioner's
security deposit of Rs. 90 lakhs is without
any authority of law. Accordingly, this
petition is hereby allowed and the
impugned
orders
16.07.2020
and
20.11.2020 are hereby quashed.

28. The respondents are directed to
refund the security deposit of Rs. 90 lakhs
to the petitioner expeditiously, positively
within a period of four weeks from the date
a certified copy of this order is filed before
them.
----------
(2024) 5 ILRA 2386
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 29.05.2024

BEFORE

THE HON'BLE ANJANI KUMAR MISHRA, J.
THE HON'BLE JAYANT BANERJI, J.

Writ-C No. 33710 of 2021

M/S Deep Builders & Anr. ...Petitioners
Versus
State of U.P. & Ors. ...Opp. Parties

Counsel for the Petitioners:
Ashish Malhotra, Syed Mohd. Fazal

Counsel for the Opp. Parties:
C.S.C.

Civil Law - Mining Lease - Cancellation of
Letter of Intent - Forfeiture of Security
Deposit and Royalty - U.P. Minor Minerals
(Concession) Rules, 2017 [As amended by
the 43rd Amendment] - Rule 29 - U.P.
Minor
Minerals
(Concession)
(Forty
Seventh Amendment) Rules, 2019, w.e.f.
13.08.2019 - Rule 34(4) - Petitioner
participated in the bidding for the grant of
a mining lease of ordinary sand, a Letter of
Intent was issued, and the petitioner
deposited 25% of the bid amount as
security and an equivalent amount as the
first installment of royalty. Subsequently,
the Letter of Intent was cancelled, and by
the order of the District Magistrate, the
security deposit and first instalment
towards royalty were forfeited in favor
of the State - Held - There exists no
power under the relevant rules to
forfeit the security deposit or the first
instalment once the Letter of Intent has
been cancelled - Impugned order was
without the sanction of law and hence
quashed - State was directed to refund
the security deposit and the first
instalment of royalty deposited by the
petitioner, along with simple interest at
the rate of 9% thereon (Para 21, 25,
26)

Allowed. (E-5)

(Delivered by Hon'ble Anjani Kumar
Mishra, J. & Hon'ble Jayant Banerji, J.)

1. Heard Shri Syed Mohd. Fazal,
learned counsel for the petitioner and
learned Standing Counsel for the Staterespondents.

This writ petition seeks a writ of
certiorari for quashing the order dated
28.08.2021 passed by the third respondent,
the District Magistrate/District Officer,
Ghaziabad.

2. By this order and in purported
exercise of powers conferred by Rule 34 (4)
of the U.P. Minor Minerals (Concession)
(Forty Seventh Amendment) Rules, 2019
and for their non compliance, the security
deposited by the petitioner as also the first
instalment consequent to the issuance of
Letter of Intent with regard to Plot Nos.
290M, 301M, 303M, 304M, 310M, 311M,
314M area 12.512 hectares has been
forfeited in favour of the State.

3. The facts of the case briefly
stated are that the petitioner participated in
the bidding for grant of mining lease of