Case Note & Summary
The petitioners, M/s. S.R. Shipping Co., a proprietary concern, filed a writ petition under Article 226 of the Constitution of India challenging the decision of Respondent No.1 (State of Maharashtra) dated 5th March 2010 and the consequential order of Respondent No.2 (District Collector, Ratnagiri) dated 9th March 2010 granting permits for excavation of sand in favour of Respondent No.3 (Chiplun Dredgers Associates) from four blocks in Dabhol Creek/Vashishtha River, namely Block Nos. B4, B5, F1 and F2. The petitioners had participated in the tender process for other blocks and were successful bidders, but the four blocks in question were granted to Respondent No.3 on permit basis at a price far below the upset price. The petitioners contended that under Rule 39A of the Bombay Minor Mineral Extraction Rules, 1955, extraction of sand must be granted only through public auction to the highest bidder, and the tenderer must also obtain prior permissions for pollution control and environmental clearance. They argued that the decision to award permits instead of following public auction caused severe loss to the public exchequer, as evidenced by a report of Mr. J.P. Dange, then Additional Chief Secretary (Revenue), dated 16th May 2009, which noted that in Raigad and Ratnagiri districts for the year 2008-2009, due to delay in conducting public auction, permits were issued resulting in royalty of only Rs.3.65 crores instead of the potential Rs.33.19 crores from public auction. The court examined the provisions of Rule 39A and found that the grant of permits without public auction was illegal and contrary to the rules. The court held that the permits granted to Respondent No.3 were liable to be set aside, and directed the authorities to conduct public auction for the said blocks in accordance with law. The judgment emphasized the mandatory nature of public auction to ensure transparency and maximize revenue for the state.
Headnote
A) Minor Minerals - Sand Extraction - Public Auction - Rule 39A Bombay Minor Mineral Extraction Rules, 1955 - The court considered whether permits for sand extraction could be granted without public auction. The petitioners challenged the decision of Respondent No.1 dated 05.03.2010 and consequential order of Respondent No.2 dated 09.03.2010 granting permits to Respondent No.3 for four blocks at a price below upset price. Held that Rule 39A mandates public auction for grant of sand extraction licences and permits granted without auction are illegal and cause loss to public exchequer (Paras 1-3).
Issue of Consideration
Whether the grant of permits for sand extraction without following the public auction process under Rule 39A of the Bombay Minor Mineral Extraction Rules, 1955 is valid and whether such grant causes loss to the public exchequer.
Final Decision
The court allowed the writ petition, quashed the decision dated 05.03.2010 and consequential order dated 09.03.2010 granting permits to Respondent No.3, and directed the authorities to conduct public auction for the four blocks in accordance with law.
Law Points
- Public auction mandatory for sand extraction permits
- Rule 39A Bombay Minor Mineral Extraction Rules 1955
- Loss to public exchequer
- Environmental clearance prerequisite
- Tender process must be followed
