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Synopsis

The Supreme Court has said the exploitation of natural resources must be in accordance with the law, including environmental and local ones, and the bottom line is public interest and maximum validation. The courts cannot be substitute to the discretion vested in the executive authorities in such decision, it said

"Natural resources, including mines, minerals, etc, are considered national wealth for the common good and benefit of society through a systematic, scientific and legal exploitation of the natural resources," a bench of Justices Sanjiv Khanna and S V N Bhatti said.

The court said that the grant of mining leases/permits for exploitation of natural resources is one of the sources of revenue for the State Government. 

"It has been consistently held by this Court that the exploitation of natural resources must be in accordance with the law, including environmental and local laws," the bench said. 

The court allowed an appeal filed by the Jharkhand government and the Director of Mines and Geology against the High Court's division bench order holding its decision to annul a tender and auction notice of January 28, 2020 relating to bauxite mineral mines located in Lodhapat, Jobhipat and Hethilodha blocks over an area of 75.193 hectares as vitiated.

The bench said that the economy and economic exploitation, as per the mining plan, is a guiding factor to the State in awarding contracts concerning natural resources. The bottom line is public interest and maximum validation from exploitation of minerals and natural resources.

"Therefore, the Rules prescribe the mode and manner in which the bidding process for granting mining lease is taken up, continued and concluded by the appellants. The tender document lays down the mode and manner of communication of expression of interest/bid both online and filing of physical copy of the document submitted online," it said.

The bid filing since conditioned by a definite manner and mode of communication, the mode and the manner would become an important essence, the court added.

The bench held that the appellants were right in annulling the tender process initiated on October 25, 2019 and deciding to auction the blocks in accordance with the Rules.

"The appellants are governed by the MMDR Act and M(A) Rules, for identifying, auctioning the blocks and granting mining lease rights to successful participants. The first and foremost obligation on the appellants is to act in trust and advance the public interest while granting mining leases. The Court insists upon strict adherence to statutory rules. Through our judicial view, the Court avoids exercising the very discretion vested with the jurisdictional authority under the Rules. The directions issued in the writ jurisdiction ought not to become a substitute to the executive discretion of the authorities," the bench said

In the case on hand, the bench pointed out that the effect of allowing the writ petition was that the directions of writ court compeled the government to open the price bid and evaluate the feasibility of awarding the subject Mining Lease to the respondent. 

Once the NIT (Notice Inviting Tender) dated October 27, 2019 is held as a non-responsive tender, then the Sub-Rule (12) of Rule 9 of the M(A) Rules is not attracted, and the appellants are not compelled to evaluate the sole price bid of the Respondent in terms thereof, the bench said.

"In our considered view, the Impugned Judgment did not appreciate the want of a bidder in the first round of auction in the first attempt but examined the decision-making process of the appellants in annulling the tender process and had set aside the well-considered judgment of the Single Judge; which according to us, is erroneous and unsustainable," the bench said. 

Case Title: State of Jharkhand, through its Secretary, (Mines & Geology) and Another Vs Sociedade De Fomento Industrial Pvt Ltd and Others