# NAND KISHORE SARAF v. STATE OF RAJASTHAN AND ANOTHER

- **Citation:** [1965] 3 S.C.R. 173
- **Court:** Supreme Court of India
- **Decided:** 1965-02-24
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nand-kishore-saraf-v-state-of-rajasthan-and-another-3391
- **Pages:** 4

## Headnote

A
B
c
D
E
F
G
NAND KISHORE SARAF
v.
STATE OF RAJASTHAN AND ANOTHER
February 24, 1965
(P. B. GAJENDRAGADKAR, C.J., RAGHUBAR DAYAL AND
V. RAMASWAMI, JI.)
173
Rajasthan Minor Mineral Concessio~ Rules, 1959, Rules 36(7), ~9Auction for the grant of royalty collection cantract-Whether obltaa.-
tor11 on Government to accept highest bid-Whether prefere~e ca"
be shown t.o workers' coope~ative societies against highest bidder.
The appellant offered the highest bid at the auction for the grant
of royalty collection contract on January 21, 1964. Re~pondent No. a
a cooperative society of workers was also one of the bidders. Respondent No. 2 made an application on March 5, 1964 to the Government
stating therein that the appellant had not deposited 25 per cent of
the bid amount as security within the time prescribed by Rule 36(~)
of the Rajasthan Minor Mineral Concession Rules, 1959, and that it
was prepared to toke the royalty collection contract on the highest
bid as made by appellant. On the above application the State Government made an order in favour of Respondent No. 2. The appellant
thereupon filed a writ petition. in the High Court which was dismissed. He was however granted a certificate of fitness.
In appeal it was contended that the Government had merely tB
confirm the highest bid at the auction by way of formality and was
not competent to sanction the contract in favour of someone who ilad
not offered the highest bid at the auction.
HELD : (i) The appellant had admittedly failed to deposit ~ per
cent of the bid as security in compliance with the provisions of Rule
36(7). The rules did not contemplate adjustment of security deposited
for an earlier period as the appellant claimed. He therefore lost what.-
ever claim he could have had for the final acceptance of his bid by
Government and therefore could not question the grant of the contract to any other person by th" Government. [175 B-C]
(ii) Nothing in Rule 36 requires the Government to accept
the highest bid by formally confirming it. The Government has discretion to confirm the bid or not to confirm it. Further Rule 59 provides for the relaxation of any provision of the rules in the interest
of mineral development or better working of the mines. [176 A-BJ
(iii) The view taken by the Government in preferring Respondent No. 2 to the appellant cannot be said to be arbitrary or without
any justification. The cooperative society is of the labourers who
work in the mines and the benefit of the contract would go to the
labourers. In view of the spirit underlying Rule 59, Government
could therefore relax any such rule which could in any way come
in the way or i:ts granting the contract to Respondent No. 2.
[176 D-Fl
(iv) The time for .which the contract was granted was shortly to
R
come to an end, and •t would not be desirable even if the appellant
was right to interfere with the contract. fl'76 Gl
K. N. Guruswamy v. State of Mysore, [19551 1 S.C.R. 305, relied
on.
C1VIL APPELLATE JuRISDICTJON: Civil Appeal No. 79 of 1965.
Appe~I from t!ie judgment and order dated August 5, 1964,
of the Ra1asthan High Court, Jodhpur, in D.B. Civil Writ Petition
No. 636 of 1964.
J,/B(D)BCI-13
IH
8UPREMll
COURT
MPORTI!
[1965] 3 s.o.e..
Sarjoo Prasad, /. B. Dadachanjl, 0. C. Mathur and Ravinder A
· Narain, for the appellant.
M. M. Tewari, K. K. Jain and R. N. Sachthey, for respondent
No. I.
B. B. Tawak/ey and K. P. Gupta, for respondent No. 2.

## Text

A
B
c
D
E
F
G
NAND KISHORE SARAF
v.
STATE OF RAJASTHAN AND ANOTHER
February 24, 1965
(P. B. GAJENDRAGADKAR, C.J., RAGHUBAR DAYAL AND
V. RAMASWAMI, JI.)
173
Rajasthan Minor Mineral Concessio~ Rules, 1959, Rules 36(7), ~9Auction for the grant of royalty collection cantract-Whether obltaa.-
tor11 on Government to accept highest bid-Whether prefere~e ca"
be shown t.o workers' coope~ative societies against highest bidder.
The appellant offered the highest bid at the auction for the grant
of royalty collection contract on January 21, 1964. Re~pondent No. a
a cooperative society of workers was also one of the bidders. Respondent No. 2 made an application on March 5, 1964 to the Government
stating therein that the appellant had not deposited 25 per cent of
the bid amount as security within the time prescribed by Rule 36(~)
of the Rajasthan Minor Mineral Concession Rules, 1959, and that it
was prepared to toke the royalty collection contract on the highest
bid as made by appellant. On the above application the State Government made an order in favour of Respondent No. 2. The appellant
thereupon filed a writ petition. in the High Court which was dismissed. He was however granted a certificate of fitness.
In appeal it was contended that the Government had merely tB
confirm the highest bid at the auction by way of formality and was
not competent to sanction the contract in favour of someone who ilad
not offered the highest bid at the auction.
HELD : (i) The appellant had admittedly failed to deposit ~ per
cent of the bid as security in compliance with the provisions of Rule
36(7). The rules did not contemplate adjustment of security deposited
for an earlier period as the appellant claimed. He therefore lost what.-
ever claim he could have had for the final acceptance of his bid by
Government and therefore could not question the grant of the contract to any other person by th" Government. [175 B-C]
(ii) Nothing in Rule 36 requires the Government to accept
the highest bid by formally confirming it. The Government has discretion to confirm the bid or not to confirm it. Further Rule 59 provides for the relaxation of any provision of the rules in the interest
of mineral development or better working of the mines. [176 A-BJ
(iii) The view taken by the Government in preferring Respondent No. 2 to the appellant cannot be said to be arbitrary or without
any justification. The cooperative society is of the labourers who
work in the mines and the benefit of the contract would go to the
labourers. In view of the spirit underlying Rule 59, Government
could therefore relax any such rule which could in any way come
in the way or i:ts granting the contract to Respondent No. 2.
[176 D-Fl
(iv) The time for .which the contract was granted was shortly to
R
come to an end, and •t would not be desirable even if the appellant
was right to interfere with the contract. fl'76 Gl
K. N. Guruswamy v. State of Mysore, [19551 1 S.C.R. 305, relied
on.
C1VIL APPELLATE JuRISDICTJON: Civil Appeal No. 79 of 1965.
Appe~I from t!ie judgment and order dated August 5, 1964,
of the Ra1asthan High Court, Jodhpur, in D.B. Civil Writ Petition
No. 636 of 1964.
J,/B(D)BCI-13
IH
8UPREMll
COURT
MPORTI!
[1965] 3 s.o.e..
Sarjoo Prasad, /. B. Dadachanjl, 0. C. Mathur and Ravinder A
· Narain, for the appellant.
M. M. Tewari, K. K. Jain and R. N. Sachthey, for respondent
No. I.
B. B. Tawak/ey and K. P. Gupta, for respondent No. 2.
The Judgment of the Court was delivered by
B
Raghubar Dayal, J. This appeal, on certificate granted by the
Rajasthan High Court, is against the dismissal of the appellant's
writ petition under Art. 226 of the Constitution praying for the
issue of a writ of certiorari to the State of Rajasthan, respondent
no. I, for the cancelling and setting aside of its order dated April I, c
1964 granting the contract for collecting royalty on building stones
excavated from certain area to respondent no. 2, Dharti Dan
Shramik Theka Sahkari Samiti Ltd., a cooperative society. The
appeal arises in these circumstances.
The appellant offered the highest bid at the auction for the D
grant .of royalty collection contract on January 21, 1964. Respondent no. 2 was also one of the bidders, but stopped after offering
a bid of Rs. 33,000. The final bid of the appellant was for
Rs. 42,200. The State Government made the order in favour of
respondent no. 2 on an application made by it on March 5, 1964,
stating therein that the appellant had not deposited 25 per cent of E
the bid amount as security immediately after the completion of the
auction in accordance with r. 36(7) of the Rajasthan Minor Mineral
Concession Rules, 1959, hereinafter called the rules, and as per the
terms and conditions of the Auction Notification and that it was
prepared to take the royalty collection contract on the highest bid
of Rs. 42,200. It was further stated in the application that respon- r
dent no. 2 was a cooperative society of the labourers who themselves worked on the mines of the area and therefore in view of
Government's policy it should receive preference to an individual
bidder. It was further stated that the benefit accruing out of the
contract of royalty collection would be shared by the labourers
and workers themselves which would go a long way to improve G
their socio-economic conditions and thus ultimately would ameliorate the conditions of the workers who were working hard in
quarries since long.
The contention for the appellant is that the Government had
merely to confirm the higheiit bid at the auction by way of formaR
lity and was not competent to sanction the contract in favour of
someone who had not offered the highest bid at the auction.
Rule 34 of the rules provides that royalty collection contracts
may be. granted by the Government by auction or tender for a
maximum period of two years after which no extension was to be
granted. The procedure for auction is provided by r. 36. Sub-rule
NAND KISRORE V. STATE (Dayal, J.)
175
A
(5) thereof provides that no bids shall be regarded as accepted
unless confirmed by Government or the competent authority and
sub-rule (7) provides that on completion of the auction the result
will be announced and the provisionally selected bidder shall immediately deposit 25 per cent of the amount of bid for one year
and another 25 per cent as security for due observance of the terms
B and conditions of the lease or contract. It is admitted for the appellant that on completion of the auction he did not deposit 25 per
cent of the bid as security in compliance with the provisions of
sub-r. (7). He therefore lost whatever claim he could have had for
the final acceptance of his bid by Government and therefore cannot question the grant of the contract to any other person by the
C Government.
The appellant urges that he held such royalty collection contract for the year 1963-64 and had deposited Rs. 9,250 as security
for the due performance of that contract. On February 12, 1964,
over three weeks after the auction, he submitted an application to
D the Mining Engineer, Jaipur, stating that he had been continuously
taking contract for the last three years and that he was depositing
Rs. 1,300 and that the balance of the security amount required, i.e.
Rs. 9 ,250 be ad justed against Rs. 9 ,250 with the Government in
connection with the earlier contract. This letter was not replied to.
E The request made in this letter could not possibly be accepted. The
earlier contract was to continue up to March. 31, and the security
money had to remain with the Government upto that date. It is
only after March 31, that anything could be said with some
definiteness as to how much of the security money in deposit would
be available to the contractor. Paragraph 2 of the Form of Agree-
•
ment of Collection of Royalty on Minor Minerals, prescribed
under the rules, and set out in the Schedule to the rules, states that
the agreement shall remain in force for a period commencing from
first April of a year and ending on March 31 of the next year
on which the period of the contract would expire and that the
security would be refunded on the termination of the contract.
G Para 6 of the Form provides that for the due fulfilment of the terms
and conditions of the contract the Contractor shall deposit 25 per
cent of the contract money in advance as security which will be
refunded on the termination of the contract. The appellant alleged
that there was a practice of adjusting previous security amounts
towards the security for the next contract.. The practice is denied
B
o.n behalf of respondent no. 1 and the practice against the provismns of the rules cannot be recognized as of any binding effect. It
may be mentioned here that the representation which the appellant
made to the State Government on April 6, 1964, made no reference
!O his depositing the security by depositing Rs. 1,300 and by makmg a request for the adjustment of the balance from the securitv
amount already in deposit and indicates that he too did not consider the request for adjustment of the amount acceptable.
176
SUPREME
COURT
REPORTS
[1965] 3 s.c.n.
There is nothing in r. 36 of the rules which may lead to the A
oonclusion that the Government has to accept the highest bid by
formally confirming it or that it cannot grant the contract to any
person other than one who had bid the highest. A bid is not regarded as accepted unless it is confirmed by Government. The Government has therefore discretion to confirm the bid or not to confirm
it. Further, r. 59 provides for the relaxation of any provision of B
the rules in the interest of mineral development or better working
of mines.
There is the letter dated February 14, 1962 from the Director
of Mines and Geology, to All Mining Engineers on the subject of
encouragement of cooperative mines and states that cooperative
societies ought to be encouraged for mining work also as per C
directive of the Government of India. Respondent No. 2 addr~ssed
a letter to the Director of Mines and Geology and referred to
Government policy for the encouragement of cooperative societies
in connection with royalty collection contracts. The order of Government dated April 1, 1964, after referring to the appellant's
offering the highest bid, stated that the Government was satisfied
D
that the Society, respondent No. 2. was a suitable party for the
grant of the said contract. The view takeri by the Government in·
preferring respondent No. 2 to the appellant for the grant of the
contract cannot be said to be arbitrary or without any justification.
The cooperative socie.ty is of the labourers who work in the mines
and it is obvious that any benefit arising out of the contract would E
· .. go to the labourers and thus improve their economic position. In
view of the spirit underlying r. 59, Government could therefore
relax any such rule which could in any way come in the way of its
granting the contract to respondent no. 2.
We therefore hold that the Government was competent to
ll'
give the contract to respondent no. 2 it being not bound to accept
the highest bid at the auction, though usually it accepts such bids.
Another consideration which is decisively against the appellant is that the contract for the collection of royalty for the year
1964-65 is shortly to come to an end and it would not be desirable,
even if the appellant's contentions were acceptable, to interfere with
6:
that contract.
Reference, in this connection, may be made to the decision of
this Court in K. N. Guruswamy v. State of Mysore(') where the appellant was refused a writ solely on the ground that it would have
been ineffective, the period of the impugned contract coming to an H
end after about a fortnight of the order of this Court. That was a
case where on merits the Court was of opinion that the writ should
have been issued.
We therefore dismiss the appeal and order the parties to bear
their own costs.
Appeal dismissed.
(') [1955] I.S.C.R. 305.