CAUSE TITLE:
Debidutta Mohanty v Ranjan Kumar Pattnaik & Ors.
DATE OF ORDER:
March 3, 2023
JUDGE(S):
HONOURABLE MR. JUSTICE M. R. Shah
PARTIES:
Appellant: Debidutta Mohanty
Respondent: Ranjan Kumar Pattnaik & Ors.
SUBJECT:
The Hon’ble Supreme Court (hereinafter referred to as ‘Supreme Court’ or ‘the Court’), held that according to a ruling, the Collector has the power to revoke a license document for failure to produce a viability certificate under Rule 51(7) of the Orissa Minor Mineral Concession Rules, 2016.
IMPORTANT PROVISIONS:
Orissa Minor Mineral Concession Rules, 2016
- Rule 51(7) – states that the Collector has the power to revoke a contract document for failure to produce a solvency certificate.
BRIEF FACTS:
- The auction notification for the rental agreement of a sand sairat was released on January 8, 2018.
- The buyer was required to provide a solvency document to the Revenue Officer in accordance with Clause 5 of the auction notification, with an offered sum that could be equal to the royalty and extra fees set for the source. Ranjan Kumar Pattanaik, the first defendant, took part in the auction procedure and turned in the Tehsildar of Narasinghpur's solvency document on December 7, 2017.
- The solvency certificate was given in favor of Pattanaik (Chairman of Trust) in his private role rather than "Gurukrupa Charitable Trust, Chairman of Village Kendupali," which was against the Sub-Collector Athagarh's directive.
- Pattanaik had been the second bidder, however, as the bidder with the highest price was discovered to be in default, a note regarding his readiness to begin operations at the highest bidder's rate of Rs. 142 per cubic meter was delivered to him. Pattanaik agreed with, paid the required security, and met all other criteria.
- The highest bidder filed a lawsuit with the Orissa High Court protesting the rejection of her offer and Pattanaik's hiring. The higest bidder ultimately submitted a second writ case contesting the lease grant after the lease agreement was eventually performed in favour of Pattanaik. Debidutta Mohanty (the appellant) then launched a amother writ case challenging the legitimacy of Pattanaik's solvency certificate.
- The High Court ordered the Cuttack Collector to take Mohanty's argument into consideration. Mohanty submitted a second writ appeal while the Collector was still considering the case. The Tehsildar had revoked the solvency certificate on March 8, 2021, and an appeal was submitted contesting that action, the High Court observed.
- Therefore, it instructed the Collector to take steps to get rid of Mohanty's argument regarding the solvency certificate that was given date no later than 12.05.2021. However, Pattanaik was given permission to run the sand sairat in the interval.
- The Collector revoked the lease document that had been completed in favor of Pattanaik in response to Mohanty's complaint. While doing so, it made a notation that the solvency document should be given in the favour of the Trust rather than Pattanaik and that it was consequently unlawful to use the certificate that had been issued in Pattanaik's name in the course of the auction.
- Pattanaik appealed the annulment to the High Court. He mainly questioned the Collector's authority to revoke the tenancy document. According to the Orissa Minor Mineral Concession Rules, 2016, the Tehsildar, not the Collector, is the responsible authority.
- Furthermore, he claimed that he had taken the initiative to replace the solvency certificate that had been originally submitted by him and had been given in his own name.
- The High Court stated that the mistake of giving the certificate in Pattanaik's name rather than the Trust's name was a genuine error that was corrected by the issuance of a new certificate. It made the observation that, in accordance with Rule 51(7) of the OMMC Rules, 2016, the Tehsildar is the authorized authority to cancel a lease deed and set aside the Collector's order canceling the lease deed in Pattanaik's favor.
- High Court set aside the order of collector and the lease was cancelled in the favour of original writ petitioner therefore the present appeal has been filed before the supreme court
QUESTIONS RAISED:
- Who is the competent authority to issue the order of cancellation of the solvency certificate?
- Whether the solvency certificate needed to be issued in favour of the trust or the chairmen of the trust?
ARGUMENTS ADVANCED BY THE APPELLANT
- It has been argued that given the relevant facts and circumstances, the Division Bench of the High Court erred significantly in quashing and setting aside the Collector's order by cancelling the contract in defendant No. 1's favour.
- The observations made by the high court were of material blunder regarding the initial subject matter of solvency certificate. This certificate was in the ownership of charitable trust however that was in use by the respondent’s individual capacity for obtaining the tender offer. Such act needed to be considered as the deliberate act and not any genuine mistake.
- As the property mentioned was not in the possession of the respondent, therefore the solvency certificate use would be amounting to fraud resulting his bid as non-est and void ab initio.
- The council argued that the court ignored that the case was modus operandi with the attempt to transfer the property to the trust. Also, the respondent was disqualified by the Tehsildar and the SubCollector after the fraud was detected.
- It is to be noted that Rule 51(7) of OMMC Rules 2016 should be applicable when there is any breach of condition of lease deed, however here there is breach of tender notice, auction and the rules for bidding. Also the competent authority was Tehsildar according the Rules where accordingly collector cannot be approached.
ARGUMENTS ADVANCED BY THE RESPONDENT
- It is submitted by the council that the High Court has not committed a blunder in analysing that the solvency certificate in the name of the chairman of the trust instead of the trust was a mere mistake
- Here the council only made the application for the correction of the certificate, where the fresh certificate was in the favour of respondent. Therefore appellant cannot state the bid as void ab initio as the certificate was initiate by the appellant himself.
- It is to be noted that Tehsildar is the competent authority for issuing the cancellation certificate is required under Rule 51(7) of OMMC Rules 2016. However here the cancelation order was given by the collector which was rejected by the High Court as an incompetent authority.
- In addition to the lease term expiring during the pendency of the current processes, a new lease deed was also performed later in accordance with the impugned ruling rendered by the High Court.
ANALYSIS BY THE COURT:
- The Supreme Court observed that according to Rule 51(7), the Tehsildar is only authorized to revoke tenancy agreements when those agreements' terms have been broken.
- The issuance of an unlawful solvency certificate at the point when the offer was submitted in the current instance constituted the violation of the deed's condition instead. It believed that Rule 51(7) would not apply in this particular situation.
- Additionally, it pointed out that the Collector's decision to revoke the deed was made in accordance with a High Court ruling instructing it to make a decision regarding Mohanty's representative.
- The Apex Court added that it could not be said that the Tehsildar made an error when he granted the certificate in Pattanaik's name despite receiving clear directions from the Sub-Collector that it should be generated in the name of the Trust.
- It was considered that Pattnaik had knowingly and intentionally acquired the license in his own identity and unlawfully used it for his own gain. As a result, it was decided that the offer was invalid from the start and non-est.
- The Court pointed out that Pattanaik had previously been excluded from one contract but utilized the exact same solvency document in that other one.
- Now the order passed by the collector has been restored and High Court’s order has been set aside.
CONCLUSION
In the above case it was pointed out by the council of the party that solvency document that was present at the time of the offer, not a later one, was what had to be taken into account. Upon this argument the High Court made few observations stating that according to Rule 51(7) of the Rules, 2016, the Tehsildar is the authorized authority to revoke the tenancy deed, so the Collector's order to that effect was illegal. Also, that respondent no. 1's initial solvency certificate, dated 07.12.2017, which was submitted with the offer, was accidentally granted in his favour.
The Orissa High Court's ruling that the Tahsildar is the appropriate party to revoke a contract document in accordance with Rule 51(7) was overturned by the Supreme Court. It was noted by the court that High court was at default in passing the judgment.
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