judgement:
Civil Appeal No. 648 of 1972.
From the Judgment and order dated 30.12.1963 of the Punjab Circuit Bench at New Delhi in Letter Patent Appeal No. 32 D of 1985.
S.C Malik, S.P. Mahajan and Harbans Singh for the Appellants.
Miss Halida Khatun and R.N. Poddar for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
Sardar Mela Singh and Sardar Hari Singh were brothers They jointly owned an Ice Factory at Rawalpindi which was known as 'Sat Kartar Ice Factory '.
They entered into an agreement on August 6, 1947 with one Saghir Ahmed, who was a resident of Delhi, to sell in his favour one half of their interest in the said Ice Factory for a sum of Rs. 90,000 and received Rs. 5,000 by way of advance.
Saghir Ahmed agreed to pay the balance of Rs. 85,000 and to complete the sale transaction within a month but he failed to do so.
Saghir Ahmed having left India became an evacuee.
Sardar Mela Singh and Sardar Hari Singh anticipating that Saghir Ahmed was likely to get possession of the Factory on the basis ' of the agreement to sell executed in his favour instituted a suit in forma pauperis on October 1, 1947 in Suit No. 3 of 1947 on the file of the Senior Sub Judge at Delhi for specific performance of the agreement to sell and inter alia prayed for a decree for a sum of Rs 85,000 which was the balance of the consideration payable under the agreement to sell referred to above and for Rs. 5,000 as compensation for the loss caused by Saghir Ahmed in not completing the transaction of sale in time.
They stated that on his paying the balance of consideration, a sale deed may be obtained from them by Saghir Ahmed.
Saghir Ahmed remained ex parte and the suit was heard in his absence.
On November 20, 1947 a decree was passed in the suit by the Sub Judge, Ist 335 Class, Delhi against Saghir Ahmed, directing him to pay to Sardar Mela Singh and Sardar Hari Singh, the plaintiffs in the suit, a sum of Rs. 86,000 along with costs of Rs. 2967/8/. Saghir Ahmed was given liberty to apply to the court to get a regular sale deed executed by the plaintiffs.
It may be stated here that during the pendency of the suit the interest of Sardar Mela Singh under the agreement had been assigned in favour of one Jaswant Singh, who was impleaded as plaintiff No. 3 in the suit.
Thus Jaswant Singh became a decree holder under the decree passed, as stated above.
That on October 3,1947 on an application made by the plaintiffs a Receiver was appointed by the court to take possession of some of the properties of Saghir Ahmed.
That on October 9, 1947 on an application made by the plaintiffs certain immovable properties belonging to Saghir Ahmed, namely residential flats Nos.
S and 7 together with some shops which were situated in Panchkuian Road, New Delhi and another immovable property situated in Ghee Mandi, Pahar Ganj, Delhi were attached before judgment.
After the decree was passed by the court, the attached properties were put to sale in execution, but at the instance of the auction purchaser, who apparently had become apprehensive on account of the status of Saghir Ahmed, who had become an evacuee, the sale was set aside on July 10, 1948.
The Custodian of Evacuee Property, Delhi filed an application before the executing court on July 17, 1948 claiming that the attached properties were evacuee properties under the East Punjab Evacuees ' (Administration of Property) Act, 1947 (East Punjab Act No. XIV of 1947) (hereinafter referred to as 'the East Punjab Act '), which was extended to Delhi also and that under section 8 of that Act all properties of which the Custodian had taken possession under section 6 thereof were exempt from attachment.
That application was dismissed on July 19, 1948 on the ground that the Receiver appointed by the court was in possession of the properties and no steps had been taken by the Custodian under section 6 of that Act.
The attached properties were again brought to sale and on this occasion the properties were purchased by Jaswant Singh, one of the decree holders.
The sale was confirmed on October 16, 1948.
The East Punjab Act was amended in 1948.
After such amendment sub section (2) of section 8 of that Act, as extended to Delhi, read as follows: "8 (2) All subsisting attachments of evacuees ' property effected after 31st December, 1947 under orders of a Civil or Revenue Court or Officer or other authority shall cease to have any effect, and all sales, leases or other 336 forms of alienation by any Court, Officer or authority of A such property effected after the above mentioned date shall be liable to be set aside at the instance of the Custodian on an application filed before the Court, officer or authority which ordered the sale, lease or alienation, as the case may be, within three months of the coming into force of East Punjab Evacuees ' (Administration of Property) (Second Amendment) Ordinance, 1948, or the date of the sale, lease or alienation whichever is later.
" After the said amendment, the Custodian of the evacuee Property made another application on December 11, 1948 before the learned Sub Judge claiming that the sale of the properties by the court was ineffective since the sale had taken place after December 31, 1947.
That application was rejected by the learned Sub Judge holding that the said provision did not affect the court sales of properties which had been attached prior to December 31, 1947 and that in the instant case the properties that had been sold had been attached on October 9, l 947.
The said order of the learned Sub Judge was passed on March 28, 1949 and it became final.
Thereafter on June 13, 1949 the Governor General of India passed an ordinance called the Administration of Evacuee Property (Chief Commissioners, Provinces) Ordinance, 1949 (Ordinance No. XII of 1949).
Section 15 of that Ordinance provided "15.
Exemption from attachment, sale etc. (1) Save as otherwise expressly provided in this Ordinance, no property which has vested in the Custodian shall be liable to attachment, distress or sale in execution of a decree or order of a Court or any other authority, and no injunction in respect of any such property shall be granted by any Court or other authority.
(2) Any attachment or injunction subsisting on the commencement of this Ordinance in respect of any evacuee property which has vested in the Custodian shall cease to have effect on such commencement, and any transfer on such property under the orders of a Court or any other authority made after such date as may be specified in this behalf with reference to any Province by the 337 Central Government by notification in the Official Gazette, shall be set aside if an application is made to such Court A or authority by or at the instance of the Custodian within three months from the commencement of this Ordinance.
" On the basis of the above provision, the Custodian made an application before the Sub Judge, Ist Class, Delhi on August 24, 1949 for setting aside the sale.
That application was dismissed for default on December 10, 1949.
But during the pendency of the said application the Governor General had promulgated another ordinance called The Administration of Evacuee Property Ordinance, 1949 (Ordinance No. XXVII of 1949) hereinafter referred to as 'Ordinance No. XXVII of 1949 ') which came into force with effect from October 18, 1949.
Ordinance No. XXVII of 1949 provided for the administration of evacuee property and for certain other matters connected there with.
Under clause (i) of section 2 (d) of Ordinance No. XXVII of 1949 a person, who on account of the setting up of the Dominions of India and Pakistan or on account of civil disturbances or the fear of such disturbances had left any place in any part of India for any place outside India, was treated as an evacuee.
Saghir Ahmed, it is not disputed, was an evacuee falling within the said definition.
Section 2 (f) of Ordinance No. XXVII of 1949 defined the expression 'evacuee property ' thus: "2.
(f) "evacuee property" means any property in which an evacuee has any right or interest (whether personally or as a trustee or as a beneficiary or in any other capacity), and includes any property (1) which has been obtained by any person from an evacuee after the 14th day of August, 1947, by any mode of transfer, unless such transfer has been confirmed by Custodian, or (2) belonging to any person who, after the commencement of this Ordinance, does any of the acts specified in clause (e) of section 2, or in which any such person has any right or interest, to the extent of such right or interest, but does not include 338 (i) any ornament and any wearing apparel, cooking A vessels or other household effects in the immediate possession of an evacuee; (ii) any property belonging to a joint stock company the registered office of which was situated before the 15th day of August, 1947, in any place no forming part of Pakistan and continues to be 80 situated after the said date," Section 7 of Ordinance No. XXVII of 1949 empowered the Custodian appointed thereunder to pass an order declaring any property, which satisfied the definition in section 2 (f) thereof as 'evacuee property ' and on such declaration being made such property vested in the Custodian by virtue of sub section (2) of section 8 thereof.
It provided that where immediately before the commencement of Ordinance No. XXVII of 1949 any evacuee property had vested in any person exercising the powers of a Custodian under any law repealed by Ordinance No. XXVlI of 1949, such evacuee property would on the commencement of Ordinance No. XXVII of 1949 be deemed to have vested in the Custodian appointed or deemed to have been appointed for the area under Ordinance No. XXVII of 1949 and would continue to so vest.
It is again not disputed that the properties of Saghir Ahmed which had been attached in the suit and which had been sold through court had also vested in the Custodian under Ordinance No XXVII of 1949 by virtue of section 8(2) thereof.
It is now necessary to refer to the crucial provision in Ordinance No. XXVI of 1949 insofar as this appeal is concerned.
Section 17 of Ordinance No. XXVII of 1949 read as follows: "17.
(1) Save as otherwise expressly provided in this Ordinance, no property which has vested in the Custodian shall be liable to attachment, distress or sale in execution of an order of a Court or of any other authority, and no injunction in respect of any such property shall be granted by any Court or other authority.
(2) Save as otherwise expressly provided in this Ordinance, any attachment or injunction subsisting on the commencement of this Ordinance in respect of any evacuee property which has vested in the Custodian shall cease to have effect on such commencement, and any 339 transfer of evacuee property under orders of a Court or any other authority made after the 14th day of August, A 1947, shall be set aside, if an application is made to such Court or authority by or at the instance of the Custodian within three months from the commencement of this Ordinance R It may be noted that under sub section (2) of section 17 of Ordinance No. XXVII of 1949 any transfer of evacuee property under orders of a court or any other authority made after August 14, 1947 was liable to be set aside if an application was made to such court or authority by or at the instance of the Custodian within three months from the commencement of Ordinance No. XXVII of 1949.
Now reverting to the narration of events, on December 15, 1949 the Custodian made an application dated December 12, 1949 both under Order 9, rule 9 of Code of Civil Procedure, 1908 and under section 17(2) of Ordinance No. XXVII of 1949 praying for restoration of the application which had been dismissed for default on December 10, 1949 and for setting aside the sale as provided by section 17(2) of Ordinance No. XXVlI of 1949.
The application dated August 24, 1949 was restored on February 11, 1950 and that application was heard on February 28, 1950.
The application was dismissed on March 24, 1950.
Against the order of the Sub Judge, Ist Class, Delhi dated March 24, 1950 the Custodian filed and appeal No. 97 of before the High Court of Punjab and one of the grounds urged in the course of that appeal was that the learned Sub Judge had erred in not considering the effect of section 17 of Ordinance No. XXVII of 1949 on the case.
That appeal was dismissed by a Single Judge of the High Court of Punjab at Chandigarh on August 26, 1958.
The learned Single Judge dismissed that appeal on August 26, 1958 on the ground that as the earlier order dated March 28, 1949 passed by the Sub Judge, Ist Class, Delhi on the basis of the East Punjab Act had become final, it was not open to the Custodian to reagitate the matter again after the promulgation of Ordinance No. XII of 1949 by the Governor General Surprisingly, the learned Single Judge did not also refer to Ordinance No. XXVII of 1949 and the (Act XXXI of 340 1950) (hereinafter referred to as the 'Central Act ') which had replaced the said ordinance.
Against the judgment of the learned Single Judge, the Custodian filed an appeal in Letters Patent Appeal No. 32 D of 1958 before the High Court of Punjab.
That appeal was heard by a Division Bench and it came to be allowed on December 30, 1963.
The Division Bench held that by virtue of section 17 of Ordinance No. XXVII of 1949 the sale in favour of the decree holder/auction purchaser was liable to be set aside on the application made by the Custodian and the application made by the Custodian was not barred by the rule of res judicata.
The Division Bench accordingly set aside the court sale, under which one of the decree holders had purchased the properties.
This appeal by certificate is filed against the said decision of the Division Bench.
Before dealing with the merits of the case, it is necessary to state that Ordinance No. XXVII of 1949 was replaced by the Central Act i.e. with effect from April 17, 1950.
Section 17 of the Central Act was substituted with retrospective effect by the Administration of Evacuee Property (Amendment) Act, 1951 (Act XXII of 1951).
Section 17(2) of the Central Act read as follows: "17.
(2) Where, after the 1st day of March, 1947, any evacuee property which has vested in the Custodian or is deemed to have vested in the Custodian under the provisions of this Act has been sold in execution of any decree or order of any Court or other authority, the sale shall be set aside if an application in that behalf has been made by the Custodian to such Court or authority on or before the 17th day of October, 1950," The only noticeable difference between section 17 of Ordinance No. XXVII of 1949 and section 17 of the Central Act is that the date 'August 14, 1947 ' in section 17(2) of Ordinance No. XXVII of 1949 is substituted by 'March 1, 1947 '.
In other respects, there is no material difference between the provisions of Ordinance No. XXVII of 1949 and the Central Act insofar as the question which arises for consideration in this appeal is concerned.
The main ground urged in support of the above appeal by the appellants of whom.
appellant No. 1, Jaswant Singh is the auction 341 purchaser, is that the order dated March 28, 1949 passed by the Sub Judge, Ist Class, Delhi having become final, it would operate as A a bar to any enquiry into the application which had been made by the Custodian after the promulgation of Ordinance No. XII of 1949 and Ordinance No. XXVII of 1949.
This ground is based on the principles underlying section 11 of the Code of Civil Procedure, 1908.
That section provides that no court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court.
Explanation IV to that section provides that any matter which might or ought to have been made a ground of defence or attack in such former suit shall be deemed to have been directly and substantially in issue in such suit.
It is well settled that in order to decide the question whether a subsequent proceeding is barred by res judicata it is necessary to examine the question with reference to the (i) forum or the competence of the Court, (ii) parties and their representatives, (iii) matters in issue, (iv) matters which ought to have been made ground for defence or attack in the former suit and (v) the final decision.
In the instant case there is no dispute that the parties and the properties involved in the proceedings in which the order dated March 28, 1949 was passed and in the proceedings commenced by the application which has given rise to this appeal are the same.
The only point of difference between them however is that whereas in the former proceedings, the Custodian had relied upon the provisions of section 8 of the East Punjab Act, in the present proceedings reliance is placed by him on the provisions of section 17(2) of Ordinance No. XXVII of 1949 and section 17(2) of the Central Act.
Section 8 of the East Punjab Act which was relied on by the Custodian in the earlier proceedings stated that all subsisting attachments of evacuee property effected after December 31, 1947 under orders of a Civil or Revenue court or an officer or other authority would cease to have any effect, and all sales, leases or other forms of alienation by any court, officer or authority of such property effected after the above mentioned date were liable to be set aside at the instance of the Custodian on an application filed before the court, officer or authority concerned.
The application made by the Custodian under that provision was dismissed by the Sub Judge, Ist Class, Delhi as already mentioned on the 342 ground that the attachment of the properties involved in the case had A been effected prior to December 31, 1947 and, therefore, the sale of those properties was not assailable under section 8 of the East Punjab Act.
The next application with which we are concerned in this appeal was filed by the Custodian on August 24, 1949 before the court.
By then Ordinance No. XII of 1949 had been promulgated.
Ordinance No XXVII of 1949 which came into force on October 18, 1949 during the pendency of that application had repealed and replaced Ordinance No. XII of 1949, and therefore the Sub Judge, Ist Class, Delhi should have taken into consideration the provisions of Ordinance No. XXVII of 1949 on March 24, 1950 when he disposed of the said application.
As mentioned earlier, the learned Sub Judge had not referred to Ordinance No. XXVII of 1949 at all in the course of his order.
Sub section (2) of section 17 of Ordinance No. XXVII of 1949 was wider in its scope and content than section 8 of the East Punjab Act which arose for consideration at the time when the order dated March 28, 19l9 was passed by the court.
Section 17(2) of Ordinance No. XXVII of 1949 which conferred a new right on the Custodian provided that any transfer of evacuee property under orders of a court or any other authority made after the 14th day of August, 1947 was liable to be set aside if an application was made to such court or authority by or at the instance of the Custodian within three months from the commencement of the Ordinance.
A comparison of section 8(2) of the East Punjab Act with section 17(2) of Ordinance No. XXVII of 1919 would show that whereas section 8(2) of the East Punjab Act affected sales of properties by court which had been attached after December 31, 1947, section 17(2) of Ordinance No. XXVII of 1949 affected any transfer of evacuee property under orders of a court or any other authority made after the 14th day of August, 1947.
In the present case the properties in question had been attached by the court on October 9, 1947 which was a date anterior to December 31, 1947 which was the crucial date for purposes of section 8(2) of the East Punjab Act but subsequent to August 14, 1947 which was the crucial date for purposes of section 17(2) of Ordinance No. XXVII of 1949.
It was not, there fore, open to the Custodian to contend in his application which was disposed of by the order dated March 28, 1949 that the court sale was liable to be set aside The cause of action for making that claim arose only after Ordinance No. XXVII of 1949 was passed.
A cause of action for a proceeding has no relation whatever to the defence which may be set up, nor does it depend upon the character of the 343 relief prayed for by the plaintiff or the applicant.
It refers entirely to the grounds set forth in the plaint or the application as the case may be as the cause of action or in the other words to the media upon which the plaintiff or the applicant asks the court to arrive at a conclusion in his favour.
In order that a defence of res judicata may succeed it is necessary to show that not only the cause of action was the same but also that the plaintiff had an opportunity of getting the relief which he is now seeking in the former proceedings.
The test is whether the claim in the subsequent suit or proceedings is in fact founded upon the same cause of action which was the foundation of the former suit or proceedings.
In the instant case but for the new law contained in section 17(2) of Ordinance XXVII of 1949 the Custodian would not have been able to question the court sale in question.
Since the Custodian could not, therefore, have asked for the relief which he claimed in the application which has given rise to this appeal before March 28, 1949 it cannot be said that the present proceedings are barred by the rule of res judicata, even though in both the proceedings the prayer made by the Custodian was that the sale of the properties in question should be set aside.
We are, therefore, of the view that the Division Bench was right in holding that the present proceedings were not barred by the rule of res judicata.
One other submission made on behalf of the appellants in this case is that no application had been made by the Custodian relying expressly upon section 17(2) of Ordinance No. XXVII of 1949.
There is no substance in this submission because we find that there is a specific reference to the said provision in the application dated December 12, 1949, filed before the court of the Sub Judge, Ist Class, F Delhi on December 15, 1949.
This application is referred to by the Sub Judge at the commencement of this order dated March 24, 1950 while the application dated August 24, 1949 is referred to in the third paragraph of that order.
It appears from that order that the Sub Judge had consolidated both the applications and disposed them of together by the same order though he failed to apply the provisions of section 17(2) of Ordinance No. XXVII of 1949.
Hence it cannot be accepted that no fresh application had been made after Ordinance No. XXVII of 1949 had come into force.
In the result, we affirm the decision of the Division Bench of the High Court of Punjab and dismiss the appeal.
344 We, however, make it clear that the setting aside of the court sale does not come in the way of any other remedy open to the decree holders in the instant case to recover the amount which may be due to them under the decree from the judgment debtor or the Custodian or any other authority.
Any proceedings that may be initiated by the decree holders for realising the amount due to them, shall be disposed of by the concerned authority in accordance with law.
There will be no order as to costs.
N.V.K. Appeal dismissed.

summary/full:
Two brothers entered into an agreement to sell their interest in an Ice Factory situated at Rawalpindi and received the advance money.
As the vendee failed to complete the transaction, a suit was filed by the brothers for specific performance of the agreement and for recovery of the balance consideration.
The vendee remained exparate.
A decree was passed by the Sub Judge for the balance of the consideration money and the vendee was given liberty to apply to the court to get a regular sale deed.
During the pendency Or this suit the interest of one of the brothers was assigned in favour of the appellant who was impleaded in the suit.
The vendee left India and was declared an evacuee.
A Receiver was appointed for the properties of the vendee some of which were attached on October 9, 1947 and put to sale in execution, but at the instance of the auction purchaser who became apprehensive on account of the judgment debtor being an evacuee, the sale was got set aside on July 10 1948.
On July 17,1944 an application was filed by the Custodian of Evacuee Property under the Fast Punjab Evacuees ' (Administration of Property) Act 1947 claiming that the attached properties were evacuee properties and under section 8 were exempt from attachment.
This application was dismissed on July 19, 1948 on the ground that a Receiver was appointed by the court who was in possession of the properties, and no step was taken by the Custodian under s.6.
332 The attached properties were again brought to sale and on this occasion the appellant purchased the properties and the sale was confirmed on October 16, 1948.
The East Punjab Act having been amended in 1948, another application was made by the Custodian under the amended section 8(2) of the Act on December 11, 1948.
This application was rejected on the ground that the said provision was not applicable to court sales of property attached prior to December 31, 1947.
The Administration of Evacuee Property (Chief Commissioners Provinces) Ordinance, 1949 was promulgated on July 10, 1949.
The Custodian made an application under section 15, on August 24, 194 for setting aside the sale but this was dismissed for default on December 10, 1949.
However, during the pendency of this application another Ordinance the Administration of Evacuee Property Ordinance 1949 (Ordinance No. XXVII of 1949) was promulgated with effect from October 18, 1949.
The Custodian made an application on December 12, 1949 both under order 9, rule 9 of the Code of Civil Procedure 1908 and under s.17(2) of Ordinance No, XXVII Or 1949 for restoration of the application dismissed for default on December 10, 1949, and for setting aside the sale.
The sub court restored the application on February 11, 1950 but after hearing the application on February 28, 1950 dismissed the same on March 24, 1950.
The Custodian filed an appeal before the High Court against the order of the Sub Judge, dated March 24, 1950.
contending that the Sub Judge had erred in not considering the effect of section 17 of Ordinance XXVII of 1949, but the appeal was dismissed, on the ground that as the earlier order dated March 28, 1949 passed by the Sub Judge on the basis of the East Punjab Act had IB became final, it was not open to the Custodian to reagitate the matter again after the promulgation of Ordinance No. XXVII of 1949, The Custodian filed a Letters Patent Appeal which was allowed by a Division Bench on December 30, 1963, on the ground that by virtue of section 17 of Ordinance No. XXVII of 1949 the sale in favour of the decree holder/auction purchaser was liable to be set aside on the application made by the Custodian and the application made by the Custodian was not barred by the rule of res judicata.
The court sale, under which one of the decree holders had purchased the properties, was accordingly set aside.
Dismissing the appeal of the auction purchaser.
^ HELD: 1.
Ordinance No. XXVII of 1949 was replaced by the Central Act i.e. with effect from April 17, 1950.
Section 17 of the Central Act was substituted with retrospective effect by Administration of evacuee Property (Amendment) Act, 1951.
The only noticeable difference between section 17 of the Central Act is that the date August 14, 1947 ' in section 17(2) of Ordinance No. XXVII of 1949 is substituted by 'March 1, 1947 '.
In other respects, there is no material difference between the provision.
In order to decide the question whether a subsequent proceeding is barred by res judicate it is necessary to examine the question with reference to the (i) forum or the competence of the Court, (ii) parties and their representatives, (iii) matters in issue, (iv) matters which ought to have been made ground for defence or attack in the former suit and (v) the final decision.
[341 D] In the instant case, there is no dispute that the parties and the properties involved in the proceedings in which the order dated March 28, 1949 was passed and in the proceedings commenced by the application which has given rise to this appeal are the same.
The only point of difference; is that whereas in the former proceedings, the Custodian had relied upon the provisions of section 8 of the least Punjab Act, in the present proceedings, reliance is placed on the provisions of section 17(2) of (Ordinance No. XXVII of 1949 and section 17(2) of the Central Act .
[341 E F] 3.
(i) The Sub Judge had not referred to Ordinance No. XXVII of 1949 at all in his order.
Sub section (2) of Section 17 of Ordinance No. XXVII of 1949 was wider in scope and content than section 8 East Punjab Act.
A comparison of the two would show that whereas s 8(2) of the East Punjab Act affected sales of the properties by court which had been attached after December 31, 1947 section 17(2) of Ordinance No. XXV11 of ]949 affected any transfer of evacuee property under orders of a court or any other authority made after the 14th day of August 1947.
[342 C; D F] 3.
(ii) In the present case the properties in question had been attached by the court on October 9, 1947 which was a date anterior to December 31, 1S47 which was the crucial date for purposes of section 8(2) of the least Punjab Act but subsequent to August 14, 1947 which was the crucial date for purposes of section 17(2) of Ordinance No. XXVII of 1949.
It was not, therefore, open to the Custodian to contend in his application which was disposed of by the Order dated March 28, 1949 that the court sale was liable to be set aside.
The cause of action for making that claim arose only after Ordinance No. XXVII of 1945 was passed.
[342G H] 4.
A cause of action for a proceeding has no relation whatever to the defence which may be set up, nor does it depend upon the character of the relief prayed for the plaintiff or the applicant.
It refers entirely to the grounds set forth in the plaint or the application as the case may be as the cause of action or in other words to the media upon which the plaintiff or the applicant asks the court to arrive at a conclusion in his favour.
[343 A B] 5.
In order that a defence of res judicata may succeed it is necessary to show that not only the cause of action was the same but also that the plaintiff had an opportunity of getting the relief which he is now seeking in the former proceedings.
The test is whether the claim in the subsequent suit Or proceedings is in fact founded upon the same cause of action which was the foundation of the former suit or proceedings.
In the instant case, but for the new law contained in section 17(2) of A ordinance No. XXVlI of 1949 the Custodian would not have been able to question the court sale.
It therefore cannot be said that the present proceedings are barred by the rule of res judicata, even though in both the proceedings the prayer made by the Custodian was that the sale of the properties in question should be set aside.
I343 C D]


judgement:
Civil Appeal No. 2439 of 1984.
From the Judgment and Order dated 18.11.1983 of the Patna High Court in W.P. No. 1014 of 1983.
Jaya Narayan and Pramod Swarup for the Appellant.
Gaur G. Ray, A.K Nag, Mrs. N. Bakshi, Anil Dev Singh, P.P. Gupta and R.N. Poddar, for the Respondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
Respondent No. 1 Banshi Ram Modi was granted a mining lease by the State of Bihar for mining and winning mica in respect of an area of eighty acres of land in the 347 villages of Meghatri and Bishuntikar in the district Hazaribagh, which formed part of reserved forest area in the year 1966.
A mining A lease deed was executed in that connection by the lessee and the State Government on April 25, 1966 in accordance with the Mineral Concession Rules, 1960.
The lease deed was registered on May 30, 1966.
The period of lease was fixed at 20 years.
The said lease will expire on April 24, 1986 unless it is renewed in accordance with law.
During his mining operations which are admittedly now being carried on in about five acres only Respondent No. 1 came across two other minerals namely felspar and quartz which are commonly known to be associated minerals of mica.
Under the conditions of the lease the lessee had to report to the State Government the discovery in the leased area of any mineral not specified in the lease within sixty days of such discovery and if any mineral not specified in the lease was so discovered in the leased area he could not win and dispose of such mineral unless such mineral was included in the lease or a separate lease was obtained therefor.
Accordingly, on discovery of felspar and quartz in the area where the mining operations were being carried on for mica, Respondent No. I applied to the State Government to include the said minerals also in the lease executed on April 25, 1966, so that he could win and dispose of these minerals also.
On the State Government agreeing to do so, a Dead of Incorporation dated April 6, 1983 was duly executed by the parties to the original lease.
By the said Deed, felspar and quartz were included in the original lease as minerals which the lessee could win and carry away after paying the required royalty from the area over which he had been granted lease for mining mica.
All other conditions of the lease including the period of lease remained the same.
In fact it was not a new mining lease for a fresh period.
The lease is to exp re on April 24, 1986 as originally stipulated.
It may be mentioned here that the State Government did not obtain the previous approval of the Central Government for the inclusion of the two new minerals in the original lease under clause (ii) of section 2 of the (Act 69 of 1980) (hereinafter referred to as 'the Act ') which was deemed to have come into force on October 25, 1980.
The relevant part of section 2 of the Act reads thus: "2.
Restriction on the dereservation of forests or use of forest land for non forest purpose Notwithstanding 348 anything contained in any other law for the time being in A force in a State, no State Government or other authority shall make, except with the prior approval of the Central Government, any order directing, . . . (ii) that any forest land or any portion thereof may be used for any non forest purpose.
Explanation For the purpose of this section 'non forest purpose ' means breaking up or clearing of any forest land or portion thereof for any purpose other than reafforestation.
" It would appear that after the coming into force of the Act the Government of India (Ministry of Agriculture) wrote to the Chief Secretary to the Government of Bihar drawing his attention to the provisions of the Act, and the prohibitions contained therein.
Perhaps, as a result of the said letter the Divisional Forest Officer, Kodarma Forest Division, Kodarma, within whose jurisdiction the mining area of Respondent No. 1 was situated, wrote to Respondent No. I on August 8, 1983 stating that the mining area was situated within the reserved forest area and that since previous approval of the Central Government had not been obtained for inclusion of felspar and quartz in the mining lease as required by the Act, Respondent No. 1 could not be permitted to win felspar and quartz, even though the Deed of Incorporation had been executed.
Aggrieved by the said letter of the Divisional Forest Officer, Respondent No. I filed a writ petition on the file of the High Court of Patna (Ranchi Bench) contending that the provisions of the Act were not applicable to a case where the lease had been entered into prior to the coming into force of the Act and that there was no need to break up or clear any forest land other than the area where mining operations were being carried on.
The High Court after hearing the parties allowed the writ petition holding that the Act had no application to the instant case and he could win and take away felspar and quartz from the mining area.
But it however made clear that if for winning felspar and quartz the lessee was required to break up or clear any forest land other than the area required for mining to win mica, he could not do so without obtaining the previous approval of the Central Government under the Act.
349 Aggrieved by the judgment of the High Court, the State of Bihar has filed this appeal by special leave.
In this case it has to be mentioned that the learned counsel for Respondent No. 1 has stated that Respondent No. 1 would not in any event carry on any mining operations on any area other than the five acres of land which had already been utilised for non forest purpose even before the Act came into force by breaking up the land, for the purpose of winning felspar or quartz.
It has also to be mentioned here that before the High Court, the learned Standing Counsel for the Central Government had stated that the Act had no application to leases granted prior to the coming into force of the Act and that there is no repudiation of that stand before us by the Central Government.
In view of the above statements the only question which remains to be considered in this appeal is whether the mining operations which are being carried on in the five acres of land for the purpose of winning felspar and quartz, are illegal by reason of the absence of the previous approval of the Central Government granted under the Act.
In order to appreciate the contentions of the parties on the limited question before us, it is necessary to ascertain the object of the Act.
As its Statement of Objects and Reasons indicates, the Act was passed with a view to checking deforestation which had been taking place in the country on a large scale and which had caused ecological imbalance and thus led to environmental deterioration.
It is well known that breaking up of the soil or the clearing of the forest land affects seriously reafforestation or regeneration of forests and therefore such breaking up of the soil can only be permitted after taking into consideration all aspects of the question such as the overall advantages and disadvantages to the economy of the country, environmental conditions, ecological imbalance that is likely to occur, its effects on the flora and the fauna in the area etc.
The Act having stated in section 2 thereof that no dereservation of forests or use of forest land for non forest purposes can be permitted without the previous approval of the Central Government has further provided for the constitution of an Advisory Committee to advise the Central Government on all cases in which the question of granting permission required by section 2 of the Act arises.
The Act is intended to serve a laudable purpose and it has got to be enforced strictly for the benefit of the general public.
The Act applies not merely to cases of mining lease granted in respect of areas within the reserved forests 350 but to all cases where forest land is sought to be used for non forest A purposes.
The question before us is a narrow one and that is whether in the case of a mining lease which has been granted for winning a certain mineral prior to the coming into force of the Act, if the lessee applies to the State Government after the coming into force of the Act for permission to win and carry any new mineral from any part of a forest area which is already utilised for non forest purposes by carrying out mining operations before the coming into force of the Act, the prior approval of the Central Government has to be obtained under section 2 of the Act for the purpose of granting such permission.
The relevant parts of section 2 of the Act which have to be construed for purposes of this case are clause (ii) of and the Explanation to that section.
Clause (ii) of section 2 of the Act provides that notwithstanding anything contained in any other law for the time being in force in a State, no State Government or other authority shall make, except with the prior approval of the Central Government, any order directing that any forest land or any portion thereof may be used for any non forest purpose.
Explanation to section 2 of the Act defines "non forest purpose" as breaking up or clearing of any forest land or portion thereof for any purpose other than reafforestation.
Reading them together, these two parts of the section mean that after the commencement of the Act no fresh breaking up of the forest land or no fresh clearing of the forest on any such land can be permitted by any State Government or any authority without the prior approval of the Central Government.
But if such permission has been accorded before the coming into force of the Act and the forest land is broken up or cleared then obviously the section cannot apply.
In the instant case it is not disputed that in an area of five acres out of eighty acres covered by the mining lease the forest land had been dug up and mining operations were being carried on even prior to the coming into force of the Act.
If the State Government permits the lessee by the amendment of the lease deed to win and remove felspar and quartz also in addition to mica it cannot be said that the State Government has violated section 2 of the Act because thereby no permission for fresh breaking up of forest land is being given.
The result of taking the contrary view will be that while the digging for purposes of winning mica can go on, the lessee would be deprived of collecting felspar or quartz which he may come across 351 while he is carrying on mining operations for winning mica.
That would lead to an unreasonable result which would not in anyway A subserve the object of the Act.
We are, therefore, of the view that while before granting permission to start mining operations on a virgin area section 2 of the Act has to be complied with it is not necessary to seek the prior approval of the Central Government for purposes of carrying out mining operations in a forest area which is broken up or cleared before the commencement of the Act.
The learned counsel for Respondent No. 1 has also given an undertaking the Respondent No. 1 would confine his mining operations only to the extent of five acres of land on which mining operations have already been carried out and will not fell or remove any standing trees thereon without the prior permission in writing from the Central Government.
Taking into consideration all the relevant matters, we are of the view that Respondent No. I is entitled to carry on mining operations in the said five acres of land for purposes of removing felspar and quartz subject to the above conditions.
With the above modification, the judgment of the High Court is affirmed.
The appeal is accordingly disposed of but with no order as to costs.
M.L.A Appeal disposed.

dataset_name: IN-Abs

summary/full:
Clause (ii) of Section 2 of (for short, the Act) which came into force on October 25, 1980, provides that notwithstanding anything contained in any other law for the time being in force in a State, no State Government or other authority shall make, except with the prior approval of the Central Government, any order directing that any forest land or any portion thereof may be used for any non forest purpose.
Explanation to section 2 of the Act defines "non forest purpose" as breaking up or clearing of any forest land or portion thereof for any purpose other than reafforestation.
Respondent No. 1, who had been granted a mining lease in the year 1966 for a period of 20 years for mining and winning mica in respect of 80 acres of land in accordance with Mining Concession Rules, 1960 came across two other minerals, namely, felspar and quartz during the course of mining operations.
Under the conditions of the lease, Respondent No. I applied to the State Government to include the said minerals also in the earlier lease deed so that he could win and dispose of these minerals also.
Thereupon, the State Government and the lessee executed a Deed of Incorporation on April 6, 1983 allowing the lessee to win and carry away felspar and Quartz after paying the required royalty from the area over which he had been granted lease for mining mica.
On August 8, 1983 the Divisional Forest Officer wrote a letter to the lessee stating that the impugned mining area was situated within the reserved forest area and that, since previous approval of the Central Government had not been obtained for inclusion of felspar and quartz in the mining lease as required by the Act.
Respondent No. I could not be permitted to win felspar and quartz even through the Deed of Incorporation had been executed.
Aggrieved by the said letter, Respondent No. I filed a writ petition in the High Court contending that the provisions of the Act were not applicable to a case where the lease had been entered into prior to the coming into force of the Act and that there was no need to break up or clear any forest land other than the area of only 5 acres of land where mining operations were being carried on.
The High Court allowed the writ petition.
Hence this appeal by the State.
346 Disposing of the appeal, ^ HELD: (1) It is clear from a reading of clause (ii) of section 2 of the Act and the Explanation to that section that these two parts Or the section mean that after the commencement of the Act I o fresh breaking up of the forest land or no fresh clearing of the forest on any such land can be permitted by any State Government or any authority without the prior approval of the Central Government.
But if such permission has been accorded before the coming into force of the Act and the forest land is broken up or cleared then obviously the section cannot apply.
[350 D F] (2) In the instant case, it is not disputed that in an area of five acres out of eighty acres covered by the mining lease the forest land had been dug up and mining operations were being carried on even prior to the coming into force of the Act.
If the State Government permits the lessee by the amendment of the lease deed to win and remove felspar and quartz also in addition to mica it cannot be said that the State Government has violated section 2 of the Act because thereby no permission for fresh breaking up of forest land is being given.
The result of taking the contrary view will be that while the digging for purposes of winning mica can go on, the lessee would be deprived of collecting felspar or quartz which he may come across while he is carrying on mining operations for winning mica.
That would lead to an unreasonable result which would not in any way subserve the object of the Act.
[350 G H; 351 A] (3) While before granting permission to start mining operations on a vergin area section 2 of the Act has to be complied with, it is not necessary to seek the prior approval of the Central Government for purposes of carrying out mining operations in a forest area which is broken up or cleared before the commencement of the Act.
[351 B]


judgement:
Civil Appeal No. 3751 of 1982.
From the Judgment and Order dated 15.9.1982 of the Punjab and Haryana High Court in L.P. A. No. 1232 of 1982.
Soli J. Sorabjee Ram K.B. Rohtagi and H.N. Salve, for the Appellant.
P.P. Rao, Arun Madon, R. Venkataramani and A Marriarputtam for the Respondent No. 4.
L.N. Sinha, Attorney General and R.N. Poddar for the Respondents.
The Judgment of the Court was delivered by 545 DESAI, J.
As the matter brooked no delay, when the arguments were concluded, the Court pronounced the order which reads as under "The appeal is allowed and the decision of the High Court of Punjab and Haryana at Chandigarh in L.P.A. No. 1232 of 1982 dated September 15, 1982 as well as the decision of the learned Single Judge in Civil Writ Petition No. 2321 of 1981 dated August 30, 1982.
The writ petition filed by the present appellant succeeds.
The order of the Director of Industries dated May 25, 1981 granting a quarry lease to M/s Pioneer Crushing Co. (respondent No. 4) in respect of Serai Khawaja Plot No. II Quarry (except the area of Green Field colonies) for the period ending with 31st March, 1984 is quashed and set aside.
The first respondent the State of Haryana and the second respondent the Director of Industries are directed under and subject to the relevant provisions of the Haryana Minor Minerals (Vesting of Rights) Act, 1973 read with Punjab Minor and Mineral Concession Rules, 1964 as applicable to the State of Haryana to grant a right to the appellant in the form of contract usually entered into in similar cases to extract stones from Serai Khawaja Plot No. II on compensation howsoever described at the rate of Rs. 25 lacs per, year for a period of five years commencing from January I, 1983 and upto and inclusive and ending with December 31, 1987.
The appellant herein is directed to appear before the second respondent within a weak from today to execute the contract and/or necessary documents, instruments and to carry out all formalities including the making of deposits and/or payments, if any, required to be made under the relevant provisions of the Act and Rules.
The fourth respondent is given time upto December 31, 1982 to clear out from the area and this time is given to him as and by way of locus penitentae to wind up his affairs as far as the quarry involved in this appeal.
546 In the circumstances of the case, there will be no order as to costs.
Reasons will follow.
" Here are the reasons.
It must be confessed that reasons in support of the decision are delayed but without offering an alibi for the tardiness, one aspect which inhibited giving of the reasons may be mentioned.
My learned colleague suddenly left the Court and the doubt nagged me for some time whether one Judge alone can give the reasons.
It was an agreed order.
Before pronouncing the order broad discussion took place which showed identity of views on all points involved in the matter.
In this background to give reasons which appealed to us though drawn up by one of us would any day provide a better choice than not to give reasons because it would always annoy and distress the party who lost the legal battle whether there are legal or logical reasons in support of the order or it is merely an arbitrary exercise of power.
However, what happened in the Court in the presence of all parties and the learned counsel is res ipsa loquiter.
What started before the Court as a minor whisper, hardly audible, ended with the experience in a whispering gallery where the whisper multiplied at the other end of the gallery in volleying thunders.
There would have been no qualms of conscience if the matter was disposed of sub silentio as to reasons because of the outcome of the Court 's exercise of jurisdiction under article 136.
The reasons which dictated the choice and indicated the path did stand in need of justification because the end product justified interference.
The very outcome would provide the raison d 'etre for the exercise of power.
Yet to bow to the tradition to convince the protagenis of reasoned orders, these are the reasons.
Factually matrix first.
The State of Haryana in exercise of the power conferred upon it by Haryana Mioner Minerals (Vesting of Rights) Act, 1973 ( '1973 Act ' for short) grants lease for winning minor mineral vestige in it.
The grant of the lease is regulated by Punjab Minor Mineral Concession Rules, 1964 ( 'Rules ' for short) in their application to the State of Haryana.
A notification was issued on December 26, 1980 specifying that minor mineral quarries at various places in Faridabad District would be auctioned on February 20, 1981.
At the auction held on that day, appellant Ram & Shyam Company 547 gave the highest bid for Sarai Khawaja Plot No. II in the amount of Rs 1,52,000 p.a.
The presiding Officer conducting the auction accepted the bid but the State Government did not confirm the same.
A fresh auction was notified to be held on May 4, 1981.
The appellant participated and gave the bid for the same plot, his highest bid rising to Rs 3,87,000 for a period of three years.
The same routine followed.
The Presiding Officer accepted the bid and the State Government declined to confirm the same.
Then there happened something which cannot have any parallel or precedent in a constitutional democracy like ours but one could have profitably drawn parallel from the administration of old princely States.
Respondent No. 4 wrote a letter dated May 9, 1981 (Anx.
R 1 in the High Court) addressed to the Chief Minister, Haryana State setting out therein the history of various auctions, and casting serious aspersions on those who participated in the auction inter alia saying that the bidders at the auctions have formed a syndicate and want to monopolise the business by not outbidding each other so that the State gets uneconomical rent/royalty.
It was further alleged that 'the goondas and anti social elements are assisting those monopolists/bidders and successfully pushed out a party like respondent No. 4.
The letter further proceeds to make an offer/that if the contract for a period of five years is given to respondent No. 4 in respect of Sarai Khawaja Plot No. 2, it is willing to pay Rs 4,50,000 per year.
There is also an offer for Sarai Khawaja Plot No. 1 with which we are not concerned.
Promptly this offer was accepted by the Chief Minister.
The appellant challenged the action of the Chief Minister in Writ Petition No. 2321/81 in the Punjab and Haryana High Court inter alia contending that those who formed the firm styled as M/s Pioneer Crushing Co. respondent No. 4, had participated in the auction and Then made false allegations against the appellant whose bid was the highest and without giving him any opportunity, the offer of respondent No. 4 was accepted which has denied equality of opportunity to the appellant in the matter of distribution of State largesse.
A learned Single Judge issued a notice to the respondents calling upon them to show cause why rule nisi may not be issued.
In response to the notice, respondent No. 4 appeared and contended that the petitioner had an alternative remedy and on this short ground, the learned Single Judge rejected the writ petition.
A Division Bench of the High Court in the Letters Patent Appeal filed by the appellant 548 concurred with the learned Single Judge and dismissed the appeal.
Hence this appeal by special leave.
At this stage it would be advantageous to refer in some details what transpired at the hearing of this appeal in this Court.
Let us at once recapitulate what happened in the court because that by itself provides a tell tale piece of evidence compelling the court to interfere and set aside the impugned order.
Mr. L.N Sinha, learned Attorney General raised a sort of a preliminary objection that this Court should not assist the syndicalists to join hands to deprive the State of its legitimate revenue.
Then he made a pertinent observation a interposing an objection when Mr. Sorabjee, learned counsel for the petitioner was making his submissions.
The question posed was: if the Court interferes and quashes the grant in favour of the fourth respondent, the only option open to the court would be to direct a fresh auction.
He posed the further question that if at the time of re auction, the highest bid does not reach upto Rs 4,50,000 p.a. for which the lease is granted to the fourth respondent, would the Court make good the loss ? Apart from the rhetoric of the question, the issue raised was of primary importance.
We, therefore, asked Mr. Sorabjee whether his client is willing to make an affidavit incorporating therein that if the highest bid at a reauction, if the court so directs, falls short of Rs 4,50,000 the appellant would agree and undertake to accept the contract at the value of Rs 5,50,000 p.a.
Such an affidavit was immediately filed.
In order to give the fourth respondent to whom contract under the impugned order was given, an opportunity whether he would like to raise his offer.
Mr. P.P. Rao voiced his apprehension about his contentions.
We assured him that without prejudice to his contentions, it would be open to his client to raise his offer.
What transpired may be tabulated in a chart: Appellant 's offer Respondent 's offer 1.
5.50 lacs 2. 6 lacs 3. 6.50 lacs 4. 7 lacs 5.
7.53 lacs 6. 8 lacs 7.
8.50 lacs 8. 9 lacs 9. 10 lacs 10.
10.50 lacs 549 Court intervened at this stage and said that the raise must be minimum at the rate of Rs 1 lac.
12 lacs 12.
14 lacs 13.
15 lacs 14.
16 lacs 15.
17 lacs 16.
18 lacs 17.
19 lacs 18.
20 lacs 19.
21 lacs 20.
22 lacs 21.
25 lacs.
Shock and surprise was visible on the face of each one in the court.
Shock was induced by the fact that public property was squandered away for a song by persons in power who holds the position of trust.
Surprise was how judicial intervention can serve larger public interest.
One would require multi layered blind fold to reject the appeal of the appellant or any tenuous ground so that the respondent may enjoy and aggrandize his unjust enrichment.
On this point we say no more.
Before we deal with the contentions, let us have a look at the relevant provisions of the Act and the Rules.
Rule 28(1) of the Rules provides that contracts for extraction of minor mineral may be granted by the Government by auctioning or tendering for a maximum period of five years after which no extension shall be granted ' Sub rule (2) provides that 'the amount to be paid annually by the contractor to the Government shall be determined in auction or by tender to be submitted for acceptance, by the authority competent to grant the contract. ' Rule 29 confers power on the Presiding Officer to reject or accept any bid or tender without assigning any reason to the bidders or tenderers.
However, where the highest bid or tender is rejected, the reason shall however, be reported to the Government.
Rule 30 provides for notifying of the proposed auction on the notice board of the Director, Mining Officers and at least in one newspaper having wide circulation in the locality nearest to the area in question in the regional language as also in the Government Gazette.
Sub cl.
(4) of sub r.
(2) of Rule 30 provided that 'no bid shall be regarded as accepted unless confirmed by Government. ' Rule 58 confers 550 power on the Government to relax any of the provisions of the Rules in the interest of mineral development or better working of the mine.
Before we deal with the larger issue, let me put out of the way the contention that found favour with the High Court in rejecting the writ petition.
The learned Single Judge as well as the Division Bench recalling the observations of this Court in Assistant Collector of Central Excise vs Jainson Hosiery Industries rejected the writ petition observing that 'the petitioner who invokes the extraordinary jurisdiction of the court under article 226 of the Constitution must have exhausted the normal statutory remedies available to him '.
We remain unimpressed.
Ordinarily it is true that the court has imposed a restraint in its own wisdom on its exercise of jurisdiction under article 226 where the party invoking the jurisdiction has an effective, adequate alternative remedy.
More often, it has been expressly stated that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than rule of law.
At any rate it does not oust the jurisdiction of the Court.
In fact in the very decision relied upon by the High Court in The State of Uttar Pradesh vs Mohammad Nooh it is observed that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy.
It should be made specifically clear that where the order complained against is alleged to be illegal or invalid as being contrary to law, a petition at the in stance of person adversely affected by it, would lie to the High Court under article 226 and such a petition cannot be rejected on the ground that an appeal lies to the higher officer or the State Government.
An appeal in all cases cannot be said to provide in all situations an alternative effective remedy keeping aside the nice distinction between jurisdiction and merits.
Look at the fact situation in this case.
Power was exercised formally by the authority set up under the Rules to grant contract but effectively and for all practical purposes by the Chief Minister of the State.
To whom do you appeal in a State administration against the decision of the Chief Minister ? The clutch of appeal from Ceasar to Ceasar wife can only be bettered by appeal from one 's own order to oneself.
Therefore this is a case in which the High Court was not at all justified in throwing out the petition on the untenable ground 551 that the appellant had an effective alternative remedy.
The High Court did not pose to itself the question, who would grant relief when the impugned order is passed at the instance of the Chief Minister of the State.
To whom did the High Court want the appeal to be filed over the decision of the Chief Minister.
There was no answer aud that by itself without anything more would be sufficient to set aside the judgment of the High Court.
Turning to the merits of the case, the arguments covered a much larger canvass than was anticipated when the hearing opened.
It was submitted that India being a Sovereign Socialist Secular Democratic Republic, the property of the Union or of the Slate is socialist property which would imply that it is community property and every citizen of this country has vital interest in its effective use and legitimate disposal.
It was never disputed nor could it have been disputed that minerals vest in the state.
The minor minerals vast in the State where the land from which they are to be extracted is situated and minerals other than minor minerals vast in the Union. 'Minor minerals ' have been defined in The Mines and Minerals (Regulation and Development).
Act, 1957 to mean, 'building stores, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral. ' Minor minerals vest in the state in which the land is situated.
The first respondent State of Haryana notified that an auction would be held for mineral quarries of Faridabad District.
The appellant gave his bid at the auction so notified.
It is an admitted position that his was the highest bid.
Anyone conversant with auction would not be naive enough to believe that one can go on raising his own bid.
His was the highest bid in the amount of Rs. 3,87,000 p.a.
Though the Presiding Officer accepted the bid of the appellant, being the highest bid at the auction, yet the State Government in the exercise of the power conferred by cl.
(4) of sub r.
(2) of Rule 30 declined to confirm the same presumably under the belief that the highest bid did not represent the adequate lease rent which the State Government was entitled to get.
The right of the State Government not to confirm the bid as also its action of not confirming the highest bid of the appellant is not questioned.
Therefore, various decisions laying down that the Government is not bound to accept the highest bid to which our attention was drawn 552 by Mr. P.P. Rao, learned counsel for the fourth respondent are of no relevance in this case.
This Court in Trilochan Mishra etc.
vs State of Orissa & Ors.
State of Uttar Pradesh & Ors.
vs Vijay Bahadur Singh & Ors.
and State of Orissa & Ors.
vs Harinarayan Jaiswal & Ors.
held that the Government is under no obligation to accept the highest bid and that no rights accrue to the bidder merely because his bid happened to be the highest.
The Court also observed that the Government had the right, for good and sufficient reason, not to accept the highest bid but even to prefer a tenderer other than the highest bidder.
In Vijay Bahadur Singh 's case the Court further observed that the power conferred on the Government by the act to refuse to accept the higher bid, cannot be confined to inadequacy of bid only.
There may be variety of other good and sufficient reasons to reject the same.
The appellant has no grievance that even though his was the highest bid, the same was not accepted nor Mr. Sorabjee on his behalf contends that the highest bid of the appellant was rejected on grounds which are either irrelevant or extraneous.
This aspect therefore need not detain us any more.
Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist property.
Owner of private property may deal with it in any manner he likes without causing injury to any one else.
But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest.
The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song.
On the other hand, disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare State may be able to expand its beneficient activities by the availability of larger funds.
This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose, one such being to achieve 553 the goals set out in Part IV of the Constitution.
But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy An owner of private property need not auction it nor is he bound to dispose it of at a current market price.
Factors such as personal attachment, or affinity kinship, empathy, religious sentiment or limiting the choice to whom he may be willing to sell, may permit him to sell the property at a song and without demur.
A welfare State as the owner of the public property has no such freedom while disposing of the public property.
A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of poverty.
All its attempt must be to obtain the best available price while disposing of its property because the greater the revenue, the welfare activities will get a fillip and shot in the arm.
Financial constraint may weaken the tempo of activities.
Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages The setting up of a welfare State.
In this connection we may profitably refer to Ramana Dayaram Shetty vs The International Airport Authority of India and Ors in which Bhagwati, J. speaking for the Court observed: "It must, therefore.
be taken to be the law that where the Government is dealing with the public, whether by E way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant.
The power or discretion of the Government in the matter of grant of largesse including award to jobs, contracts, quotas, licences etc., must be confined and structured by rational, relevant and non discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.
554 At another place it was observed that the Government must act in public interest, it cannot act arbitrarily or without reason and if it does so, its action would be liable to be invalidated.
It was further observed that the object of holding the auction is generally to raise the highest revenue.
The Government is entitled to reject the highest bid if it thought that the price offered was inadequate.
But after rejecting the offer, it is obligatory upon the Government to act fairly and at any rate it cannot act arbitrarily.
Following this line of thought, in Kasturi Lal Lakshmi Reddy vs State of Jammu & Kashmir and Anr.
while upholding the order of the Government of Jammu & Kashmir dated April 27, 1979 allotting to the second respondent 10 to 12 lacs blazes annually for extraction of resin from the inaccessible chir forests in Poonch, Reasi and Ramban Divisions of the State for a period of 10 years on the terms and conditions set out in the order, observed as under: "Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid.
It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest.
The Government, therefore, cannot for example give a contract or sell or lease out its property For a consideration less than The highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. " (emphasis supplied) At one stage, it was observed that the Government is not free like an ordinary individual, in selecting recipient for its largesse and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion.
The law is now well settled that the Government need not/deal with anyone, but if it does so, it must do so fairly and without discretion and without unfair procedure.
Let it be made distinctly clear that respondent No. 4 was not selected for any special purpose or to satisfy ally Directive Principles of State Policy.
He 555 surreptitiously ingratiated himself by a back door entry giving a minor raise in the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the court.
Only a blind can refuse to perceive it.
Approaching the matter from this angle, can there be any doubt that the appellant whose highest bid was rejected by the Government should have no opportunity to improve upon his bid more so when his bid was rejected on the ground that it did not represent adequate market consideration for the concession to extract minor mineral.
A unilateral offer, secretly made, not correlated to any reserved price made by the fourth respondent after making false statement in the letter was accepted Without giving any opportunity to the appellant either to raise the bid or to point out the falsity of the allegations made by the fourth respondent in the letter as also the inadequacy of his bid.
The appellant suffered an unfair treatment by the State in discharging its administrative functions thereby violating the fundamental principle of fair play in action.
When he gave the highest bid, he could not have been expected to raise his own bid in the absence of a competitor.
Any expectation to the contrary betrays a woeful lack of knowledge of auction process.
And then some one surreptitiously by a secret offer scored a march over him.
No opportunity was given to him either to raise the bid or to controvert and correct the erroneous statement.
What happened in this case must open the eyes both of the Government as well as the people at large.
How an uncontrolled exercise of executive power to deal with socialist property in which entire community 's interest was sacrificed so as to cause huge loss to the public exchequer would have gone unnoticed but for the vigilance of the appellant who no doubt is not altruistic in its approach but its business interests goaded it to expose the unsavoury deal.
Conceding that on weighty and valid considerations, the highest bid can to rejected by the State one such which can be foreseen is that the highest bid does not represent the adequate market price of the concession, yet before giving up the auction process and accepting a private bid secretly offered, the authority must be satisfied that such an offer if given in open would not be outmatched by the highest bidder.
In the absence of such satisfaction, acceptance of an offer secretly made and sought to be substantiated on the allegations without the verification of their the truth, which was not undertaken, would certainly amount to arbitrary action in the matter of distribution of State largesse which by the decisions of this Court is 556 impermissible.
Even though repeatedly, this Court has said that the State is not bound to accept the highest bid, this proposition of law has to be read subject to the observation that it can be rejected on relevant and valid considerations, one such being that the concession is to be given to a weaker section of the society who could not outbid the highest bidder.
In the absence of it, the approach must be as clearly laid down by the Constitution Bench of this Court in K.N. Guruswamy vs The State of Mysore & Ors.
In that case, the appellant and the fourth respondent were rival liquor contractors for the sale of the liquor contract for the year 1953 54 in the State of Mysore.
The contract was auctioned by the Deputy Commissioner under the authority conferred upon him by the Mysore Excise Act, 1901.
The appellant 's bid was the highest and the contract was knocked down in his favour subject to formal confirmation by the Deputy Commissioner.
The fourth respondent was present at the auction but did not bid.
Instead of that he went direct to the Excise Commissioner and made a higher offer.
The Excise Commissioner cancelled the sale of favour of the appellant and directed the Deputy Commissioner to take action under the relevant rule.
The latter accepted the tender of the respondent.
The appellant moved the High Court for a writ of mandamus which was dismissed.
In appeal by the certificate, it was urged on behalf of the State that the Deputy Commissioner acted within the ambit of his powers under the relevant rule which gave him an absolute discretion either to re auction or to act otherwise and no fetters are placed upon the 'otherwise ' method.
The court negatived this contention observing that arbitrary improvisation of an ad hoc procedure to meet the exigencies of a particular case is ruled out.
Therefore, the grant of the contract to the fourth respondent was wrong.
Repelling the contention that a writ petition at the instance of the appellant would not be maintainable, the Constitution Bench observed as under: "The next question is whether the appellant can complain of this by way of a writ.
In our opinion, he could have done so in an ordinary case.
The appellant is interested in these contracts and has a right under the laws of the State to receive the same treatment and be given the same chance as anybody else.
Here we have Thimmappa who was present at the auction and who did not bid not that it would make any difference if he had, 557 for the fact remains that he made no attempt to outbid the appellant.
If he had done so it is evident that the appellant would have raised his own bid.
The procedure of tender was not open here because there was no notification and the furtive method adopted of setting a matter of this moment behind the backs of those interested and anxious to compete is unjustified.
Apart from all else, that in itself would in this case have resulted in a loss to the State because, as we have said, the mere fact that the appellant has pursued this with such vigour shows that he would have bid higher.
But deeper considerations are also at stake, namely, the elimination of favouritism and nepotism and corruption: not that we suggest that occurred here, but to permit what has occurred in this case would leave the door wide open to the very evils which the Legislature in its wisdom has endeavored to avoid.
All that is part and parcel of the policy of the Legislature.
None of it can be ignored.
We would there fore in the ordinary course have given the appellant the writ he seeks.
But, owing to the time which this matter has taken to reach us (a consequence for which the appellant is in no way to blame, for he has done all he could to have an early hearing), there is barely a fort night of the contract left to go.
We were told that the excise year for this contract (1953 54) expires early in June.
A writ would therefore be ineffective and as it is not our practice to issue meaningless writs we must dismiss this appeal and leave the appellant content with an enunciation of the law." Fact of no two cases are alike, but if one attempts to compare the situation, the conclusion is inescapable.
Appellant 's bid was the highest bid.
It was in the amount of Rs. 3,87,000 p.a. Respondent No. 4 approached the Chief Minister with a slightly higher bid of Rs. 4,50,000 per year.
This was granted without any reference to the appellant to raise his bid.
Such a thing, if allowed to pass once is bound to be repeated because this method is open to the abuse of favouritism and nepotism and the loss of revenue in this case to the State is enormous.
What happened in tho court staggered everyone.
Learned Attorney General Shri L.N. Sinha, who questioned the competence of the court to deal with the matter when he witnessed the rising crescendo of the auction in the 558 court and the bid reached Rs. 12 lacs per year, he quietly left the court frankly stating that he does not wish any contention to be raised on behalf of the State of Haryana.
Apprehension voiced by the Constitution Bench has literally come true in this case.
This view of the Constitution Bench was reaffirmed in Nand Kishore Saraf vs State of Rajasthan & Anr., the only distinguishing feature of the case being that the highest bid of the appellant was rejected and the contract was given to Dharti Dan Shramik Theka Sahkari Samiti Ltd., a cooperative Society of the workmen.
Though the court did not so specifically state, it upheld the rejection of the highest bid of the appellant on the ground that the benefit of the concession was given to a cooperative society formed by the weaker section of the society and thereby it serves the public purpose as set out in article 41 of the Directive Principles of the State Policy.
In Fertilizer Corporation Kamgar Union (Regd), Sindri and Ors.
vs Union of India & Ors., Krishna Iyer, J. speaking for himself and Bhagwati, J. Observe as under: "A pragmatic approach to social justice compel us to interpret constitutional provisions, including those like Articles 32 and 226, with a view to see that effective policing of the corridors of power is carried out by the court until other ombudsman arrangements a problem with which Parliament has been wrestling for too long emerges.
I have dwelt at a little length on this policy aspect and the court process because the learned Attorney General challenged the petitioner 's locus standi either qua worker or qua citizen to question in court the wrong doings of the public sector although he maintained that what had been done by the Corporation was both bona fide and correct.
We certainly agree that judicial interference with the administration cannot be meticulous in our Montesquien System of separation of powers.
The court cannot usurp or abdicate, and the parameters of judicial review must be clearly defined and never exceeded.
If the Directorate of a Government company has acted fairly, even if it has faltered in its wisdom, the court cannot, as a super auditor, take the Board of Directors to I l task.
The function is limited to testing whether the 559 administrative action has been fair and free from the taint of unreasonableness and has substantially complied with the norms of procedure set for it by rules of public administration.
" In a concurring opinion, Chandrachud, CJ.
Observed that sales of public property, when the intention is to get the best price, ought to take place publicly.
In State of Uttar Pradesh vs Shiv Charan Sharma & Ors.
, this court observed that public auction with open participation and a reserved price guarantees public interest being fully subserved.
Even though later on, learned Attorney General did not invite us to examine any specific contention on behalf of the State of Harayana, it may in passing be stated that with regard to transactions with the State, the principle enunciated in Sec.
55(5) (a) of the Transfer of Property Act would apply with greater vigour.
Proceeding along it was submitted that if that is accepted and if it appears to the court that the State of Haryana did not appear to have full appreciation of the value of the property and the other party i.e. respondent No. 4 by reason of its profession was aware of the same and the resulting transaction is materially unfair, then such a case falls outside the principle enunciated by the decision of this court, on which reliance was placed on behalf of the respondent No. 4.
We consider it unnecessary in the facts of this case to examine this aspect.
The position that emerge is this.
Undoubtedly rule 28 permits contracts for winning mineral to be granted by the Government by auction or tender.
It is true that auction was held.
It is equally true that according to the State Government, the highest bid did not represent the market price of the concession.
It is open to the State to dispose of the contract by tender.
Even here the expression 'tender ' does not mean private secret deal between the Chief Minister and the offerer.
Tender in the context in which the expression is used in rule 28, meant tenders to be invited from intending contractors. ' If it was intended by the use of the expression 'tender ' in rule 28 that contract can be disposed of by private negotiations with select individual, its validity will be open to serious question.
The 560 languages ordinarily used in such rules is by public auction or private negotiations.
The meaning of the expression 'private negotiations ' must take its colour and prescribe its content by the words which precede them.
And at any rate disposal of the state property in public interest must be by such method as would grant an opportunity to the public at large to participate in it, the State reserving to itself the right to dispose it of as best subserve the public weal.
Viewed from this angle, the disposal of the contract pursuant to the letter by the fourth respondent to the Chief Minister is objectionable for more than one reason.
The writer has indulged into allegations, the truth of which was not verified or asserted.
The highest bidder whose bid was rejected on the ground that the bid did not represent the market price, was not given an opportunity to raise his own bid when privately a higher offer was received.
If the allegations made in the letter influenced the decision of the Chief Minister, fair plan in action demands that the appellant should have been given an opportunity to counter and correct the same.
Application of the minimum principles of natural justice in such a situation must be reading the statute and held to be obligatory.
When it is said that even in administrative action, the authority must act fairly, it ordinarily means in accordance with the principles of natural justice variously described as fair play in action That having not been done, the grant in favour of the fourth respondent must be quashed.
Apart from various considerations herein examiner, if any other view is taken in the facts and circumstances of this case, it may provide a classic example of ostrich burying its face in sand and declining to see the reality.

summary/full:
The State Government respondent No. 1 issued a notification for auctioning a minor mineral quarry situated in the State.
The appellant offered the highest bid in the amount of Rs. 3.87 lakhs per annum as rent/royalty.
The Presiding Officer accepted the bid of the appellant.
The State Government however under the belief that the highest bid did not represent the adequate lease rent, exercised powers under clause (4) of sub rule 2 of Rule 130 or the Punjab Minor Mineral Concession Rules 1964 and declined to confirm the same.
Respondent No. 4 wrote a letter to the Chief Minister casting serious aspersions on those who participated in the auction, and made an offer that if the contract for a period of 5 years is given he was willing to pay Rs. 4.5 lakhs per year.
The Chief Minister accepted this offer.
Being aggrieved, the appellant challenged the order of the Chief Minister, in a writ petition before the High Court, contending that respondent No. 4 had participated in the auction and made false allegations against the appellant, and without giving him any opportunity, the offer of respondent No. 4 was accepted which has denied equality of opportunity to the appellant in the matter of distribution of the State largesse.
The High Court following the decision of this Court in Assistant Collector of Central Excise vs Jainson Hosiery Industries, ; , dismissed the writ petition on the ground that the appellant had an alternative remedy and that he must have exhausted the normal statutory remedies before invoking the extraordinary jurisdiction under Article 226.
542 Being aggrieved, the appellant filed an appeal to this Court and during is hearing filed an affidavit, that if the Court orders re auction, and if the highest bid falls short of Rs. 4.5 lakhs then he would undertake to accept the contract at the value of Rs. 5.5 lakhs per annum.
The Court held are auction and both the appellant and respondent No. 4 participated there in and the appellant offered the highest bid at the value of Rs. 25 lakhs.
Allowing the Appeal, ^ HELD: 1.
(i) The Court has imposed a restraint in its own wisdom on its exercise of jurisdiction under Article 226 where the party invoking the jurisdiction has an effective adequate alternative remedy.
It has been expressly stated that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than a rule of law.
It does not oust the jurisdiction of the Court It is made specifically clear where the order complained against is alleged to be illegal or invalid as being contrary to law, a petition at the instance of a person adversely affected would lie to the High Court under Article 226 and such a petition cannot be rejected on the ground that an appeal lies to the higher officer or the State Government.
An appeal in all cases cannot be said to provide in all situations an alternative effective remedy.
[550 C F] In the instant case, power was exercised by the authority set up under the rules to grant contract.
The High Court did not pose to itself the question who would grant the relief when the impugned order is passed at the instance of a Chief Minister of the State.
This is therefore a case in which the High Court was justified in throwing out the petition on the untenable ground that the appellant had an effective alternative remedy.
[550 G H] Assistant Collector of Central Excise v Jainson Hosiery Industries, ; and The State of Uttar Pradesh v Mohammad Nooh, ; , referred to.
(2) (i) There is a clear distinction between the use and disposal of private property and socialist property.
Owner of private property may deal with it in any manner he likes without causing injury to any one else.
But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest.
Tho marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song.
On the other hand, dispose at of public property partakes the character of a trust in that in its disposal their should be nothing hanky panky and that it must be done at the best price so that large revenue coming into the offers of the State administration would serve public purpose viz. the welfare state may be able to expand its beneficient activities by the availability of larger funds.
This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or oven for a token price to achieve some defined constitutionally recognised Public purpose, one such being to achieve the goals set out in Part IV of the 543 Constitution.
But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy.
[552 G H; 553 A] (ii) The Government is not free like an ordinary individual, in selecting recipient for its largesse and it cannot chose to deal with any person it please a in its absolute and unfettered discretion.
The law is now well settled that the Government need not deal with anyone, but if it does so, it must do so fairly and without discretion and without unfair procedure.
Even though the State is not bound to accept the highest bid, this proposition of law has to be read subject to the observation that it can be rejected on relevant and valid considerations, one such being that the concession is to be given to a weaker section of the society who could not outbid the highest bidder.
In the absence of it, the approach must be as clearly laid down by the Constitution Bench of this Court in K. N. Guruswamy vs The State of Mysore and Ors.
[19551 SCR 305.
Before giving up the auction process and accepting a private bid secretly offered, the authority must be satisfied that such an offer if given in open would not be outmatched by the highest bidder.
In the absence of such satisfaction, acceptance of an offer secretly made and sought to be substantiated on the allegations without the verification of their truth, which was not undertaken would certainly amount to arbitrary action in the matter of distribution of State largesse which by the decisions of this Court is impermissible.
1554 G H; 556 A B; 555 G H] Trilochan Mishra etc vs State of Orissa and Ors.
, State of Uttar Pradesh and Ors vs Vijay Bahadur Singh and Ors.
and State of Orissa and Ors.
vs Harinarayan Jaiswal and Ors.
; held inapplicable.
Raman Dayaram Shetty v The International Airport Authority of India and Ors. ; and Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir and Anr. ; relied upon.
Rule 28 of Punjab Minor and Mineral Concession Rules, 1964 permits contract for winning mineral to be granted by the Government by auction or tender.
It is open to the State to dispose of the contract by tender.
Even here the expression 'tender ' does not mean a private secret deal between the Chief Minister and the offerer.
Tender in the context in which the expression is used in rule 28, means 'tenders to be invited from intending contractors. ' If it was intended by the use of the expression 'tender ' in Rule 28 that contract can be disposed of by private negotiations with select individual, its validity will be open to serious question.
The language ordinarily used in such rules is by public auction or private negotiations.
The meaning of the expression 'private negotiations ' must take its colour and prescribe its content by the words which precede them.
And at any rate disposal of the State property in public interest must be by such method as would grant an opportunity to the public at large to participate in it, the State reserving to itself the right to dispose it of as best subserve the public weal.
[559 F H; 560 A B 544 Nand Kishore Saraf vs State of Rajasthan and Anr. ; and Fertilizer Corporation Kamgar Union (Regd).
Sindri and Ors.
vs Union of India and Ors.
; relied upon.
State of Uttar Pradesh vs Shiv Charan Sharma and Ors. etc.
[1981] Supp.
SCC 85 referred to.
In the instant case, it is clear that respondent No. 4 was not selected for any special purpose or to satisfy any Directive Principles of State Policy.
He surreptitiously ingratiated himself by a back door entry giving a minor raise in the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the court.
A unilateral offer, secretly made, not correlated to any reserved price made by the fourth respondent after making false statement in the letter was accepted without giving any opportunity to the appellant either to raise the bid or to point out the falsity of the allegations made by the fourth respondent in the letter as also the inadequacy of his bid.
The appellant suffered an unfair treatment by the State in discharging its administrative functions thereby violating the fundamental principle of fair play in action.
When he gave the highest bid, he could not have been expected to raise his own bid in the absence of a competitor.
Any expectation to the contrary betrays a woeful lack of knowledge of auction process.
And then some one surreptitiously by a secret offer scored a march over him.
No opportunity was given to him either to raise the bid.
Application of the minimum principles of natural justice in such a situation must be read in the Statute and held to be obligatory.
When it is said that even in administrative action, the authority must act fairly, it ordinarily means in accordance with the principles of natural justice variously described as fair play in action.
That having not been done, the grant in favour of the fourth respondent must be quashed.
[554 H; 555 A E; 560 D E]