Collector Is Competent Authority To Cancel Lease Deed Under Rule 51(7) OMMC Rules: Supreme Court

A Bench comprising Justice MR Shah and Justice BV Nagarathna upheld the order of the Collector cancelling a lease deed for a sand sairat for non production of valid solvency certificate along with the bid, which was one of the conditions stipulated in the auction notice. It observed that the present is a case of non production of valid solvency certificate and not one of breach of any conditions of the lease deed so as to attract the provision of Rule 15(7). It noted that under Rule 51(7) Tehsildar is the competent authority to cancel lease deeds in case of breach of conditions of the lease deed.

Factual Background

On 08.01.2018, the auction notice for grant of the lease of a sand sairat was published. As per Clause 5 of the auction notice the bidder was to submit a solvency certificate from the Revenue Officer, the amount not being less than the royalty and the additional charges fixed for the source. Ranjan Kumar Pattanaik (respondent no. 1) participated in the auction process and submitted the solvency certificate on 07.12.2017 issued by the Tehsildar, Narasinghpur. In transgression of the order of the Sub-Collector Athagarh, the solvency certificate was issued in favour of Pattanaik (Chairman of Trust)in his individual capacity instead of ‘Gurukrupa Charitable Trust, Chairman of Village Kendupali’. Pattanaik was the second highest bidder, but since the highest bidder was found to be defaulter, a letter was sent to him pertaining his willingness to operate at Rs. 142 per cubic metre which was the rate quoted by the highest bidder. Pattanaik agreed; made the deposit and complied with the other requirements. The highest bidder approached the Orissa High Court challenging the cancellation of her bid and selection of Pattanaik. Eventually when the lease deed was executed in favour of Pattanaik, the highest bidder filed a second writ petition against the grant of lease. Subsequently, another writ petition was filed by Debidutta Mohanty (appellant) assailing the validity of the solvency certificate submitted by Pattanaik. The High Court directed the Collector, Cuttack to consider the representation made by Mohanty. While the matter was pending with the Collector, Mohanty filed a second writ petition. The High Court noted that on 08.03.2021, the Tehsildar had canceled the solvency certificate and an appeal was filed challenging the same. Therefore, it directed the Collector to also dispose of the representation made by Mohanty with respect to the solvency certificate issued not later than 12.05.2021. However, in the interim Pattanaik was allowed to operate the sand sairat.

At the representation made by Mohanty, the Collector cancelled the lease deed executed in favour of Pattanaik. While doing so it noted that the solvency certificate was to be issued in the name of the Trust and not Pattanaik and therefore the utilisation of the certificate which was issued in the name of Pattanaik in the auction was illegal. The cancellation was challenged by Pattanaik before the High Court. He, primarily, questioned the jurisdiction of the Collector to cancel the lease deed. It was argued under Orissa Minor Mineral Concession Rules, 2016 (OMMC Rules, 2016) the competent authority is the Tehsildar and not the Collector. Moreover, he averred that he had himself taken initiative to substitute the solvency certificate issued in his own name, initially submitted by him. The High Court noted that the error in issuing the certificate in Pattanaik’s name instead of that of the Trust was a bona fide error which was subsequently cancelled and a fresh certificate was issued. It observed that under the Rule 51(7) of the OMMC Rules, 2016 the competent authority to cancel a lease deed is the Tehsildar and set aside the order passed by the Collector cancelling the lease deed in favour of Pattanaik.

Analysis by the Supreme Court

The Supreme Court noted that under Rule 51(7) Tehsildar is the competent authority to cancel lease deeds only when it is a case of breach of any conditions of the lease deed. In the present case it was not a breach of condition of the deed, but production of invalid solvency certificate at the time of submission of the bid. It opined that Rule 51(7) would not be applicable in the facts and circumstances of the present case. Moreover, it observed that the decision of the Collector to cancel the deed was pursuant to an order by the High Court directing it to take decision on the representation of Mohanty. The Apex Court further noted that when the Tehsildar had issued the certificate in Pattanaik’s name even though there was a specific communication from Sub-Collector that the certificate be issued in the name of the Trust, it cannot be said to be a mistake on the part of the Tehsildar. It was of the opinion that Pattnaik had willfully and deliberately obtained the certificate in his own name and misused it for his benefit illegally. Therefore, it held that the bid was non-est and void ab initio. The Court noted that Pattanaik had used the same solvency certificate in another tender wherein he has been disqualified.

Case details:

Debidutta Mohanty v. Ranjan Kumar Pattanaik And Ors.| 2023 LiveLaw (SC) |Civil Appeal No. 4939 of 2022| 3rd March, 2023| Justice MR Shah and Justice BV Nagarathna

Citation : 2023 LiveLaw (SC) 174

Orissa Minor Mineral Concession Rules, 2016 - Rule 51(7) - Collector is the competent authority to cancel a lease deed for non production of solvency certificate.