M/s Balaji Constructions &others vs State of Uttarakhand & others

SUDHANSHU DHULIA, J. (ORAL)

All the petitioners before this Court participated for allotment of mining lots for river bed material pertaining to different plots and different river

beds in the State of Uttarakhand for a period of five years. We are presently concerned with the mining lots being given in District Udham Singh

Nagar.

Some of the petitioners were mere participants in the auction bid which was done by way of e-auction process. This process i.e. e-auction process

was adopted for the first time in cases of mining, in the State of Uttarakhand. Many of the petitioners, made the highest bid and hence call themselves

as H-1 bidders and consequently were liable to be allotted the lease, but to the contrary, the State Government has cancelled the entire process. This

action has been taken by the State Government on the basis of an alleged complaint, on which a preliminary enquiry was done by the Deputy Director

of Mining, State of Uttarakhand, who gave a preliminary finding that the petitioners who had participated for the bid had formed a kind of “cartelâ€

with a common purpose of keeping the final bid amount to as low as possible, which would result in a heavy loss to the State Exchequer, apart from

the act being a criminal conspiracy and fraud on the State. The basis on which the preliminary finding was given by the Inquiry Office was that the

I.P. address given by each of the petitioners did not tally with the I.P. address which was supplied by the National Informatics Centre to the inquiry

officer, thus creating a suspicion that the petitioners have indulged in some kind of surreptitious activity, which may be in nature of a cyber crime as

well, as it was with a motive to keep the prices down. Consequent to this preliminary inquiry, an order was passed by which not only the entire

process was canceled, but the earnest money deposited by each of the participants has also been withheld till a final decision is taken in the matter and

the petitioners have been temporary barred for participating in any tender process relating to mining, in the State of Uttarakhand.

Pursuant to the preliminary enquiry, the Director, Mining passed orders on 2.3.2018 and 3.5.2018, by which he has sent the investigation to the

Cyber Crime Cell, Dehradun to verify whether the actual crime as alleged in the preliminary enquiry has been committed or not and till then agreeing

with the recommendation of the inquiry officer, the earnest money shall remain withheld and the petitioners shall not be allowed to participate in any

mining process in Uttarakhand. In any case, the auction has been cancelled.

As far as the cancellation of the auction is concerned, that is well within the powers of the State Government and by mere cancellation of the

auction no prejudice can be caused to the petitioners as the rates quoted by them even in the cases, where it was highest, it remains only in the nature

of an “offer†and it has not been accepted as yet by the State Government and, therefore, there is no contract. What has to be seen is remaining

action on the part of the State Authorities, whereby they have withheld the earnest money and temporarily barred the petitioners from participating in

further tender process.

The counter affidavit and the rejoinder affidavit have been filed in most of the cases and detail arguments were submitted by the learned counsels

for the petitioners, as well as by the learned State Counsels, Sri Pankaj Purohit and Sri Yogesh Pandey.

After hearing learned counsels of the parties, this Court has come to the conclusion that as of now there is not a conclusive evidence with the State

Government to establish that the petitioners have willingly and deliberately, with an intention and purpose by forming a cartel, kept the auction price

low. This assumption on the part of the Government is based on the following:

(A) The I.P. address provided by the petitioners does not tally with the I.P. address provided to the Inquiry Officer and the State Government by the

National Informatics Centre.

(B) Whereas in other places where action was done, such as, Haridwar and other places, the price was much higher sometimes upto 4 to 9 times of

the base price, whereas in the case at hand it is only 1.1 to 1.4 times.

(C) Whereas in other places, each of the bidders had made multiple bids repeatedly participating in the bidding process, thus showing an active and

independent participation, whereas in the present case, the bid was much less pointing towards a conspiracy.

The petitioners, on the other hand, have rebutted these arguments saying that parallels cannot be drawn with Haridwar inasmuch as in Haridwar

due to restrictions imposed by the National Green Tribunal and other restrictions the supply of river bed material has been limited and therefore usual

principle of economics would apply, where the prices have shot up because of the shrinking supply itself. This is not the case in District Udham Singh

Nagar, they would argue. Moreover, the petitioners have also given the figures before this Court of the same auction being done for different river

beds and in some cases of the same river beds in the same district price has been settled for an amount which was 1.5 to 2.2 times of the base price.

Therefore, it is not a case where the bidding was exorbitantly low. Moreover, the petitioners would argue that they cannot be penalized on the basis of

mere conjectures and surmises, which is what the respondents before them.

After hearing the learned counsels for the parties, this Court is of the view that admittedly the e-auction process has been adopted in order to check

the formation of cartel, to control formation of monopolies and in order to have a fair and transparent procedure. On the other hand, if there are still

unscrupulous elements in the State, who are bent upon defeating this process, as it is presently alleged, then it becomes an extremely serious matter. It

is also an admitted fact that e-auction process has been adopted in the State of Uttarakhand for the first time and therefore the State may have

teething problems, as it is dealing with this procedure for the first time, as this Court has been informed.

On the other hand, it is also true, and which is evident from the impugned orders, itself that as of now there is no conclusive evidence with the State

Government to establish that the petitioners have actually formed a cartel. Considering that in the impugned order it has been categorically stated that

the final decision will be taken on the completion of inquiry by the cyber crime cell, this Court orders as following.

Inquiry to the cyber crime cell was referred to in May, 2018 and it is now more than three months and the cyber crime cell is still seized with the

matter. By this time inquiry could have been completed. The petitioners allege that they have been doubly punished as of now. Firstly, they cannot

participate in any further bidding process and secondly, the earnest money which each of the petitioners have deposited has already been withheld. It

is, therefore, directed that the Cyber Crime Cell must complete its enquiry within one month i.e. on or before 06.09.2018, and thereafter further

decision be taken by the State Government, after giving proper notice to the petitioners within two weeks thereafter i.e. on or before 21.09.2018. Till

such a decision is taken, the restrictions imposed by the State Government shall remain, however, it is made clear that in case the State Government

does not complete its inquiry on or before 06.09.2018, the petitioners would be at liberty to seek refund of the amount deposited by them as the earnest

money, which shall then be refunded. By order of this Court dated 20.07.2018 the earnest money deposited by the petitioners have already been kept

in a fixed deposit so that it may earn interest.

With the observations as above, all the writ petitions stand disposed.

Interim orders passed by this Court stand vacated.

Let a certified copy of this order be issued within twenty-four hours on payment of usual charges.