2022 PLP 550 (CLC)

MUHAMMAD EIAZ SWATI, J.

The ease of the petitioner is that pursuant to power conferred under Rule 104-A of Balochistan Mineral Rules, 2002 (hereinafter the "BM Rules, 2002"), the respondent No.2 invited tender notice dated 29th January, 2014 published in newspaper daily Jang, Quetta for the purpose of granting access Royalty Collection Contract on Major Mineral for covering Mining Field areas of District, Lasbella, Khuzdar, Kalat and Mastung for a period of one year An open auction dated 13th February 2014, highest bid offered by Al-Sohaib Enterprises (Ist bidder) of amounting to Rs.152,600,000/- (Fifteen Crore Twenty Six Lac only) was accepted with approval of the competent authority i.e. Secretary Mines and Minerals Department Government of Balochistan, offer letter regarding award of contract for Collection of Royalty on Major Mineral was issued to the 1st bidder on 17th March, 2014. The 1st bidder could not comply with the terms and conditions of the offer award contract, therefore, his security/call deposit amounting to Rs.300,000/- (Rupees Thirty lac) was forfeited in favour of the Government as provided under clause (6) the procedure made under Rule 104-A of the BM Rules, 2002 (the procedure) on 16th April 2014.

2. The respondent No.2 vide offer letter dated 16th April 2014 issued an offer regarding award of impugned contract to the second highest bidder i.e. the petitioner to execute agreement within 10 days of date of issuance of offer letter. On the failure of the petitioner, (second bidder), the Security/call deposit amount to Rs.500,000/- Rupees Fifty Lac Only) was forfeited in favour of the Government on 13th May 2014 (hereinafter the "impugned order") by the respondent No.2. On appeal filed by the petitioner, the Secretary (Appellate Authority) Mines and Minerals Development Department, Government of Balochistan vide order dated 22nd April 2016 (hereinafter the "impugned order") dismissed the appeal.

3. Learned counsel for the petitioner contented that neither any offer letter was received by the petitioner nor any opportunity was awarded to him before forfeiture of his surety; that the respondent No.2 had got no authority to forfeit the call deposit; that the orders of the competent authority and appellate authority are contrary to the relevant provisions of the BM Rules, 2002. Learned Additional Advocate General contended that despite receiving offer letter of the impugned contract, he had failed to execute the same with ten days of issuance of letter; that the impugned orders had been passed in view or Rule 104-A Clause (6) of the BM Rules, 2002, and thus the respondent acted in accordance with law.

4. We have heard the learned counsel for the parties and perused the record and law dealing the subject matter of the issue. Rule 104-A of BM Rules, 2002 deals with collection of Royalty on daily basis on all or any major minerals for a specific period through contractor by an open auction, which reads as under: "104-A. Payment of Royalty on Daily Basis.

The Government may also collect royalty on daily basis on all or any major minerals for a specific period through contractors by an open auction, in various Districts of the province: Provided that the open auction for collection of royalty on daily basis, shall be through the respective Auction committees under the prescribed procedure as may be notified by the Government in the official Gazette: Provided further that for any incidental intervening period that occurs between any two auctions, the Government may collect the royalty on daily basis, departmentally."

5. In exercise of powers under Rule 104-A of the BM Rules, 2002, the respondent vide notification dated 22nd March 2010 prescribed the procedure for open auction to collect royalty on daily basis (the Procedure). The relevant clauses 1, 2, 5, 6 and 16 of the referred notification are reproduced herein below: Clause

1. The Director General Mines and Minerals / Licensing Authority shall prepare field wise record of production of minerals and the amount of collection of the royalty during the preceding year, in order to assess the excepted amount of bid for auction in the coming year. Clause

2. The open auction for collection of the royalty (hereinafter called the auction) shall be for a specific period not exceeding one year, by the respective Auction Committees constituted from time to time with approval of the Government and notified in the official Gazette. Clause

5. The respective Auction Committee shall have the power to accept, negotiate for improvement of bid with the first or second highest bidder in case it is not adequate or reject the highest or any other bid received in an auction without assigning any reason. Provided that the acceptance of any bid at an auction considered by the Auction Committee shall be subject to confirmation by the Government: Provided further that upon confirmation by the Government, the acceptance of bid shall further be subject to forfeiture of call-deposit in case of; (i) failure to fulfill contractual obligations as agreed with the first or second highest bidder; or (ii) to resume rights for collection of royalty. Clause

6. It shall also imply that in case of acceptance of bid if the highest bidder fails to fulfill the terms and conditions of the offer letter within a period of ten days from the date of its receipt, his call deposit shall be forfeited. Subsequent to which opportunity shall be afforded to the second highest bidder and in the event of failure on his part too, while forfeiting his call deposit the right for collection shall be re-auctioned Clauses

16. The contract period shall commence from the date of issue of allotment letter / work order. (i) In case a contractor fails to assume possession of the area or to the work therein due to circumstances beyond his control and can prove it to the satisfaction of Licensing Authority, it may either extend the contract for a period not exceeding six months by the licensing authority and one year by the Government or refund proportionate bid money in thereof (ii) In case of any extension in the contract, Government shall have the right to claim half of the actual bid amount in case of extension by six months and full bid amount in case of extension for one year in addition to 10% escalation charges in both cases as per mode of payment prescribed at Paras 11 and 12 above."

6. In the instant case, the highest bidder was Al-Shoaib Enterprises, whose bid was accepted by the competent authority i.e. Secretary Mines and Minerals, Government of Balochistan vide letter dated 10th March, 2014 and pursuant to that an offer letter dated 171h March, 2014 was issued to him to execute an agreement within 10 days of the date of issuance of the above letter. On his failure, his call deposit was forfeited by the respondent No.2 vide order dated 16th April 2014. The respondent No.2, in view of sub-clause (6) of Rule 104-A of the BR Rules, 2002 issued offer letter dated 16th April, 2014 to the petitioner regarding award of contract for collection of Royalty in question. It is the mandate of sub-clause (5) of the Procedure of the BM Rules, 2002, that open auction shall be through the respondent (auction committee) subject to confirmation by the Government. In the offer letter dated 16th April 2014 issued by the respondent No.2 to the petitioner regarding award of the impugned contract, the column of the approval of the Government is blank and it appears that the above offer letter had been issued by the respondent No.4 without mentioning the reference of approval of the impugned contract by the respondent No.

1. Beside, no document had been filed by the respondent as to whether prior to passing of the impugned order of forfeiture of call-deposit, opportunity was provided to the petitioner or otherwise.

7. The appellate authority has failed to consider the above aspect of the matter, therefore, to ascertain about the approval of the Government with regard to approval of the bid of second bidder i.e. the petitioner by the Government and providing an opportunity to the petitioner, the matter requires to be remanded to the appellate authority. In view of the above, Constitutional Petition No. 529 of 2016 is partly allowed, the impugned order dated 22nd April 2016 passed by the Secretary (Appellate Authority) Mines and Minerals Development Department, Government of Balochistan is set aside and the appeal filed by the petition is deemed to be pending by the appellate authority, who shall decide the same by considering above aspect of the matter in accordance with law.

8. Before parting with judgment, we would like to observe that second proviso of Rule 104-A of the BM Rules, 2002 provides that for "any incidental intervening period that occurs between any two auctions, the Government may collect royalty on daily basis departmentally."

9. Clause 16 of the Procedure deals extension of the contract by the authority concerned subject to claim of half or full bid amount as the case may be. In addition to 10% escalation charges from the contractor, Clause 16 is to be invoked in case the contractor fails to assume possession of the area or to the work therein due to circumstances beyond his control. The Clause 16 of the Procedure applies where the contractor has failed to assume the possession of the area from the inception subject of proving the circumstances, it will not attract after completion of the contract period or any incidental intervening period that occurred between the two auctions.

10. In the instant case, the call deposit of the petitioner was forfeited on 13th May 2014, publication for inviting fresh bid was published in daily Mashriq dated 16th May 2014 and in view of above publication after acceptance of bid amounting to Rs.7,800,0000/- (Seven Crore Eighty lac) of Naveed and Company, through award letter dated 5th September 2014, contract of collection royalty was awarded to Naveed and Company for one year from 21st October 2014 to 20th October 2015. The Licensing authority vide letter dated 20th October 2015, 26th November 2015, 21st December 2015, 25th January 2016 and 19th February 2016 while invoking clause 16 of the procedure without mentioning required reasons or claiming 10% escalation charges extended the contract from 21st November 2015 to 26th March 2016 and vide letter dated 18th March 2016 extended the contract from 21st March 2016 for indefinite period, thereafter again contract was awarded to Naveed and Company vide award letter dated 23rd June 2016 for a period of one year commencing from 21st June 2016 to 20th June 2017, but on completion of above period, the respondent No.2 vide letter dated 20th June 2017 while exercising power under Clause 16 of the Procedure extended the contract from 21st June 2017 to 20th December, 2017 for 6 months. It appears that between the above two auctions the respondent No.2 accumulatively granted extension for the period of one year. Thus exercised the authority not vested to him. It appears that in such colourful exercise of power, the mandatory clauses 1 to 6 of the procedure for open auction remained redundant for one year. The second proviso of Rule 104-A of the BM Rules, 2002 only empowers the Government to collect the royalty on daily basis departmentally for any incidental intervening period that occurred between the two auctions, but in the instant case such power had been exercised by the respondent No.2 without adhering to the relevant provision of the law. The provisions of BM Rules, 2002 were brought on the Statute for the augmentation of the Government revenue. This is a check provided by the legislature because Government revenue would not be made to suffer on account of same unguided discretion, such course cannot be in the interest of the public, thus, the action of the responsible officer in granting extension after completion of the contract period without adhering to the above provision of law, Rules would amount to bypass the transparent provision relating to public auction through advertisement, but such arbitrary extension suffers from vice of being unreasonable, unfair and against the public interest. The Government is guardian of the public finance it is required to guard the same in accordance with law. Copy of this judgment be sent to the respondents Nos.1 and

2. ZH/110/Bal. Order accordingly.