Direction issued to pay back around 37 Crores within 4 weeks

Chandigarh, 25 February, (Niel Bhalinder Singh): The state government which is reeling under severe financial stress was dealt  another severe blow when a division bench of the High Court directed them to refund approximately 37 crore rupees to contractors whose money was being held back for almost two years. These contractors had been declared successful bidders in the auction of minor minerals held by the state government but were not being able to start their mining operations because of the environmental clearance having been cancelled by the SEIAA.  

Today in a decision handed down by the High Court in the writ petitions filed by the contractors, a direction has been issued to State Government to refund the amount within a period of four weeks. The contractors participated in the auction process for securing mining quarries on lease.  The quarries which are 7 in number are of Jalandhar district.  The notification for the auction of said quarries was issued by the Government in the month of May 2017.  

The contractors were the highest bidders for the said quarries and they deposited around Rs. 37 crores as security deposit and the first instalment as per the conditions of the auction notification. After the bidding process, the petitioners were declared as the highest bidders and the process of allotment of quarries and necessary approvals in their favour was initiated.

Refund approximately 37 crore rupees to contractors

When the matter was submitted to the State Environment Impact Assessment Authority (SEIAA), the matter was examined and it was found that the Environmental Clearance was obtained by the Government on the basis of wrong facts as there were flood protection embankments and dams within the mining areas.  In view of the objections SEIAA denied transfer of the EC in the names of the contractors.  

After examining the matter in detail and after hearing the department, the SEIAA further revoked the EC granted in the name of the department. Against the said decision of SEIAA the Government approached the appellate authority and the same was rejected. Further the appeal filed before the National Green Tribunal by the State Government was also dismissed. Aggrieved from the action of the Government, the contractors approached the High Court through Mr Gurminder Singh Senior Advocate and RPS Bara Advocate for refund of amount lying with the department.

During the course of hearing, it was argued that the Government by misleading the SEIAA has obtained the EC which was not allowed to be transferred in the name of the contractors. Further the EC was revoked by SEIAA which made it impossible for any contract to be executed by the petitioners.  It was also argued that the EC is precondition for allotment and mining of quarries. Once the EC has been revoked, the Government has no right to withhold the amount of the contractors lying with them.

National Green Tribunal

During the course of hearing on 17.11.2018, the Principal Secretary appeared before the Court in person and the Advocate General of the State made a statement before the Court on instructions from Principal Secretary that the Government is ready to refund the amount. The direction was issued by the Court to refund the amount within a period of 8 weeks. Today during the resumed hearing, the Government changed its stand and appeared before the Court by stating the department has filed the SLP against the NGT order in which notice has been issued by the Supreme Court.  

The department further said that the amount can be refunded to the contractors only if they furnish the bank guarantee of like amount to the Government. The said argument was opposed by the counsel for the petitioners and it was argued by Mr Gurminder Singh Senior Advocate that once the EC has been revoked, the same quarries cannot be put to auction as the same are not conducive for mining and the state had since changed the policy of auction. Hence there is no question for asking the contractors to furnish the bank guarantee for their own amount.  

After hearing the counsels for the parties, the Division bench comprising of Justice Mahesh Grover and Justice Lalit Batra held that the Government once having made a statement regarding refund of amount within 8 weeks has back tracked from its commitment. The Court further held that the direction with regard to bank guarantee can only be issued if the department made a statement before the court that the same quarries are legally  permissible to be auctioned in the same state and the was no infirmity with them.

The State Geologist who was present in the Court could not make a statement before the court to this effect. The High Court further rejected the argument of the State that the issuance of notice in SLP would be reason enough to deny the payment to the petitioners. It was held that in light of the environmental clearance itself having been cancelled the auction has been rendered illusionary. The writ petitions were disposed off with direction to the department to refund the amount forthwith and preferably within a period of 4 weeks.