/2023 INSC 0155/
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
 
CIVIL APPEAL NO. 4939 of 2022
Debidutta Mohanty           .. Appellant
    
Versus
Ranjan Kumar Pattnaik & Ors.                .. Respondents
J U D G M E N T
M. R. Shah, J.
1. Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment   and   order   passed   by   the   High   Court   of   Orissa   at
Cuttack in Writ Petition (Civil) No.16437 of 2021 by which the
High Court has allowed the said writ petition preferred by the
respondent no.1 herein and has set aside the order passed by

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the Collector, Cuttack dated 24.03.2021 by which the lease in
favour   of   the   original   writ   petitioner   was   cancelled   and
consequently the lease in favour of the original writ petitioner
has been revived, the original respondent no.5 before the High
Court has preferred the present appeal.
2. The facts leading to the present appeal in nutshell are as
under:
2.1 That an auction notice for grant of the lease in question
was published on 08.01.2018.   Clause 5 of the auction notice
stated   that   the   bidder   should   submit   a   solvency   certificate
from   the   Revenue   Officer   which   amount   should   not   be   less
than   the   royalty   and   the   additional   charges   fixed   for   the
source.   The bidder was also required to submit the details of
the   movable   properties.     The   auction   notice   referred   to   the
Orissa   Minor   Minerals   Concession   Rules,   2016   (hereinafter
referred   to   as   ‘OMMC   Rules,   2016’).     The   respondent   no.1   –
original writ petitioner  participated in the tender process and
submitted   his   application   along   with   a   Solvency   Certificate
dated 07.12.2017 issued by the Tehsildar, Narasinghpur.  The

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above   solvency   certificate   was   issued   despite  the   above   order
passed by the Sub­Collector, Athagarh on 06.12.2017.  At this
stage,  it  is  required  to  be  noted  that  an   order   was  passed  by
the   Sub­Collector,   Athagarth   on   06.12.2017   specifically
stating   that   a   solvency   certificate   be   issued   in   favour   of
“Gurukrupa   Charitable   Trust,   Chairman   of   Village
Kendupali”.     However,   the   Tehsildar   issued   the   solvency
certificate  in  favour  of  the original  writ petitioner   individually
who at the relevant time was the Chairman of the Trust.   The
said   solvency   certificate   was   enclosed   with   the   original   writ
petitioner’s bid.
2.2 When   the   bids   were   opened,   the   highest   bid   was   of   one
Sukanti   Sahoo,   the   original   writ   petitioner   was   the   second
highest bidder and the appellant herein – original respondent
no.5 ­ Debidutta  Mohanty  was  the  third highest bidder.   The
bid of the first highest bidder Sukanti Sahoo was cancelled as
she   was   found   to   be   a   defaulter.     Since   the   original   writ
petitioner   was   the   second   highest   bidder   a   letter   dated
08.05.2019 was issued to him asking him to communicate his

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willingness   to   operate   the   sand   sairat   at   Rs.142   per   cubic
meter   which   was   the   rate   quoted   by   the   highest   bidder.     On
the   same   date,   the   original   writ   petitioner   submitted   his
willingness.   He was then asked to execute a lease deed.   The
original   writ   petitioner   then   deposited   Rs.26,28,450/­   and
complied with the requirements.  That Sukanti Sahoo filed the
Writ   Petition   (C)   No.9023   of   2019   before   the   High   Court
questioning the cancellation of her bid and the selection of the
original   writ   petitioner.     Initially   the   High   Court   granted   the
order   of   status   quo   which   came   to   be   vacated   subsequently.
Thereafter   the   present   original   writ   petitioner   filed   Writ
Petition (C) No.22660 of 2019 in the High Court for a direction
to   the   competent   authority   i.e.   the   Tehsildar,   Sadar   for
execution   of   the   lease   deed   in   his   favour.     Thereafter   on
01.01.2020,   a   lease   deed   came   to   be   executed   in   his   favour.
That   thereafter   a   second   writ   petition   came   to   be   filed   by
Sukanti   Sahoo   against   the   grant   of   lease   in   favour   of   the
present   original   writ  petitioner  being   Writ   Petition   (C)   No.951
of   2020.     Initially   the   High   Court   stayed   the   operation   of   the

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lease   deed   executed   in   favour   of   the   original   writ   petitioner.
However, thereafter the stay came to be vacated clarifying that
the   operation   of   the   lease   would   be   subject   to   the   final
outcome of the pending writ petition.
2.3 That   thereafter   the   appellant   herein   Debidutta   Mohanty
filed   the   Writ   Petition   (C)   No.3326   of   2021   in   the   High   Court
questioning   the   solvency   certificate   issued   in   favour   of
respondent   no.1   herein   –   original   writ   petitioner.     The   said
petition   came   to   be   disposed  of  by   the   High   Court   vide   order
dated 04.02.2021 directing the Collector, Cuttack to consider
his   representation.     While   the   matter   was   pending   with   the
Collector, the appellant herein filed Writ Petition (C) No.14241
of 2021 which came to be disposed of on 19.04.2021.   In the
said   order,   it   was   noted   that   on   08.03.2021,   the   Tehsildar,
Narasinghpur had cancelled the solvency certificate produced
by   respondent   no.1   herein   with   his   bid   and   that   against   the
said   cancellation   order,   an   appeal   had   been   filed   before   the
Collector.     A   direction   was   issued   to   the   Collector   to   also
dispose   of   the   representation   of   the   appellant   herein

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questioning   the   solvency   certificate   which   was   issued   in
favour   of   the   original   writ   petitioner,   not   later   than
12.05.2021.     In   the   meanwhile,   the   respondent   no.1   was
permitted to operate the sairat and then it was stopped at the
instance of the Tehsildar. On 02.03.2021 a letter was written
by the Tehsildar, Narasinghpur to the Sub­Collector, Athagarh
stating   that   the   respondent   no.1   herein   –   original   writ
petitioner   was   the   Chairman   of   the   Gurukrupa   Charitable
Trust.   He had filed an application for  issuance of a solvency
certificate in his own name, but since he was the Chairman of
the   Gurukrupa  Charitable Trust,  the  solvency   certificate  that
had   to   be   issued   in   the   name   of   the   Trust   was   issued   in   his
name.     It was  stated  therein  that  the  notice  had  been  issued
to   the   party   and   necessary   steps   have   been   taken   for
correction of the said certificate.
2.4 Subsequently,   another   letter   was   sent   by   the   Tehsildar
on   08.03.2021   to   the   Collector,   Cuttack   stating   that   the
earlier solvency certificate issued in favour of the original writ
petitioner   –   Respondent   no.1   herein   stood   cancelled   and

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another   certificate   was   asked   to   be   issued   in   favour   of   the
“Gurukrupa   Charitable   Trust,   Chairman   of   Village
Kendupali”.
2.5 That meanwhile, on 29.01.2021, the original respondent
no.1   herein   ­   original   writ   petitioner   wrote   to   the   Tehsildar,
Sadar Cuttack to substitute/exchange the solvency certificate
given   with   his   bid   with   another   one   in   the   value   of   Rs.4.6
crores which had been issued on 27.01.2021.  That thereafter
on   the   representation   made   by   the   appellant   herein,   the
Collector   cancelled   the   lease   in   favour   of   respondent   no.1
herein   ­original   writ   petitioner   by   observing   and   concluding
that   the   solvency   certificate   which   was   required   to   be   issued
in   favour   of   the   “Gurukrupa   Charitable   Trust   Chairman   of
Village Kendupali”, was issued in the name of respondent no.1
and   therefore,   the   solvency   certificate   had   not   been   issued
following   the   stipulated   provisions   of   the   law   and   hence,   the
utilization   of   the   same   by   respondent   no.1   herein   ­   original
writ   petitioner   in   auction   of   the   sairat   is   illegal.     The   order
passed   by   the   Collector   dated   24.03.2021   was   the   subject

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matter of the present writ petition before the High Court at the
instance of Respondent no.1 herein.
2.6 Before   the   High   Court   it   was   the   case   on   behalf   of
respondent   no.1   herein   ­   original   writ   petitioner   that   under
the   provisions   of   the   OMMC   Rules,   2016   the   competent
authority   in   regard   to   minor   minerals   is   the   Tehsildar   and
therefore, the lease deed could not have been cancelled by the
Collector.     It   was   also   the   case   on   behalf   of   the   original   writ
petitioner ­ respondent no.1 herein that he rectified the defect
of   not   furnishing   a   solvency   certificate   in   his   own   name.     It
was   submitted   that   it   is   true   that   earlier   the   solvency
certificate should have been issued in the name of the Trust of
which he was the Chairman, however, on 29.01.2021 itself he
had   written   to   the   Tehsildar   for   substituting   the   solvency
certificate   submitted   with   the   bid   with   another   issued   in   his
own name and, therefore, even the said defect stood cured.  It
was   submitted   that   without   taking   note   of   this,   the   Collector
had cancelled the lease.

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2.7 The writ petition was opposed by the State as well as the
appellant herein ­ original respondent no.5.  It was submitted
on   behalf   of   the   appellant   herein   that   the   bid   submitted   by
respondent  no.1  herein  ­ original  writ petitioner   was   ab  initio
void   and   should   never   have   been   accepted   since   it   was   not
accompanied by a valid solvency certificate in the name of the
original   writ   petitioner.     It   was   submitted   that   the   document
that   was   enclosed   as   a   solvency   certificate   was   in   fact   not
correctly issued and was contrary to the express order of Sub­
Collector.  It was submitted that as the bid of the first highest
bidder ­ Sukanti Sahoo was earlier cancelled and the original
writ petitioner was the second highest bidder whose lease has
been rightly cancelled by the Collector, being the third highest
bidder the lease ought to have been granted in his favour.
2.8 By the impugned judgment and order and having opined
that the initial solvency certificate was issued in favour of the
original   writ   petitioner   which   was   issued   in   the   name   of   the
original   writ   petitioner,   though   required   to   be   issued   in   the
name of the Trust, was a bona fide error which subsequently

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came to be cancelled and even a fresh solvency certificate was
issued   in   favour   of   the   original   writ   petitioner,   the   Collector
had erred in cancelling the lease deed in favour of the original
writ petitioner.   The High Court also has observed that under
the   OMMC   Rules,   2016,   the   competent   authority   in   terms   of
Schedule (IV) who can cancel the lease deed, is the Tehsildar
and   therefore,   the   competent   authority’s   power   under   the
OMMC   Rules,   2016   would   not   have   been   straight   way
exercised by the Collector in the first instance.  Therefore, the
High   Court   by   the   impugned   judgment   and   order   has   set
aside   the   order   passed   by   the   Collector   cancelling   the   lease
deed in favour of the original writ petitioner.
2.9 The   impugned   judgment   and   order   passed   by   the   High
Court   quashing   and   setting   aside   the   order   passed   by   the
Collector,   Cuttack   dated   24.03.2021   cancelling   the   lease   in
favour of the original writ petitioner ­ respondent no.1 herein
is the subject matter  of the  present  appeal  at  the instance of
the original respondent no.5 – third highest bidder.

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4. Shri R. Basant, learned Senior Advocate has appeared on
behalf   of   the   appellant   and   Shri   A.N.S.   Nadkarni,   learned
Senior Advocate has appeared on behalf of Respondent no.1.
4.1 Shri   Basant,   learned   Senior   Advocate   appearing   on
behalf  of  the   appellant   has  vehemently  submitted  that  in   the
facts and circumstances of the case the Division Bench of the
High Court has materially erred in quashing and setting aside
the   order   passed   by   the   Collector,   Cuttack   dated   24.03.2021
cancelling the lease in favour of respondent no.1 herein.
4.2 Shri   Basant,   learned   Senior   Advocate   has   further
submitted   that   the   High   Court   has   materially   erred   in
observing   and   holding   that   the   initial   subject   solvency
certificate   which   as   such   was   in   the   name   of   Gurukrupa
Charitable   Trust,   but   was   used   by   respondent   no.1   in   his
individual capacity in order to participate in the tender was a
genuine   mistake   and   not   a   deliberate   act   and   therefore   a
rectifiable defect.
4.3 It   is   submitted   that   it   is   an   admitted   position   that   the
property belonged to the Gurukrupa Charitable Trust and was

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not owned by respondent no.1.  It is submitted that therefore,
the subject solvency certificate used by respondent no.1 in his
individual capacity in order to participate in the tender was an
exercise in fraud which rendered his bid non­est and void   ab
initio.
4.4 It   is   submitted   that   the   High   Court   has   not   properly
appreciated   the   fact   that   it   was   the   modus   operandi   of
respondent   no.1   to   attempt   to   pass   off   the   property   of   the
Trust as his own property inasmuch as the self­same subject
solvency certificate had been misused by respondent no .1 in
another   tender   and   detecting   the   fraud   played,   the   Tehsildar
and   the   Sub­Collector   had   disqualified   him   from   the   said
tender.
4.5 It   is   further   submitted   that   the   High   Court   has
materially   erred   in   applying   Rule   51(7)   of   the   OMMC   Rules,
2016.     It   is   submitted   that   the   said   Sub­Rule   shall   be
applicable   only   in   a   case   where   there   is   a   breach   of   any
condition of the lease deed, whereas in the instant case there

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has   been   a   breach   of   the   auction/tender   call   notice   and   the
Rules governing bids. 
4.6 It   is   further   submitted   that   the   High   Court   has
materially   erred   in   holding   that   the   competent   authority
under the OMMC Rules, 2016 was the Tehsildar and therefore
the   Collector   could   not   have   been   approached   in   the   first
instance   despite   being   aware   that   there   were   allegations
against the Tehsildar of conspiring with respondent no.1.
4.7 Shri   R.   Basant,   learned   senior   counsel   appearing   on
behalf   of   the   appellant   has   further   submitted   that   the   High
Court   has   materially   erred   in   taking   into   consideration   the
subsequent   conduct   on   the   part   of   respondent   no.1   in
obtaining   the   fresh   solvency   certificate.   It   is   submitted   that
what   was   required   to   be   considered   was   the   solvency
certificate at the time of bid and not the subsequent solvency
certificate.
5. Present   appeal   is   vehemently   opposed   by   Shri   A.N.S.
Nadkarni,   learned   Senior   Advocate   appearing   on   behalf   of
respondent no.1.  It is submitted that as rightly observed and

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held   by   the   High   Court   the   initial   solvency   certificate   dated
07.12.2017   issued   in   favour   of   Respondent   no.1   was   by
mistake and instead of Gurukrupa Charitable Trust, the same
was issued in favour of Respondent no.1 being the Chairman
of Trust.
5.1 It   is   submitted   that   thereafter   respondent   no.1   himself
made   an   application   for   substitution   of   the   solvency
certificate.  That thereafter respondent no.1 obtained the fresh
solvency   certificate   in   his   favour   which   came   to  be   permitted
to   be  substituted/filed.    Therefore,   it  cannot   be   said  that   the
initial solvency certificate produced by respondent no.1 along
with   the   bid   was   non­est   and   void   ab   initio   as   sought   to   be
contended on behalf of the appellant.
5.2 It is  further  submitted that even  otherwise the  power  to
cancel the lease deed would vest with the Tehsildar who is the
competent   authority   under   Rule   51(7)   of   the   OMMC   Rules,
2016.   That in the present case the lease deed was cancelled
by   the   Collector   and   therefore,   the   High   Court   has   rightly
observed   and   held   that   the   order   passed   by   the   Collector,

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Cuttack cancelling the lease was without authority under the
Law.
5.3 It is further submitted that even during the pendency of
the present proceedings not only the lease period has expired
but even subsequently the fresh lease deed has been executed
pursuant   to   the   impugned   judgment   passed   by   the   High
Court.
6. We   have   heard   learned   Senior   Counsel   appearing   on
behalf of the respective parties at length.
7. By   the   impugned   judgment   and   order   the   High   Court
has set aside the order passed by the Collector, Cuttack dated
24.03.2021   cancelling   the   lease   which   was   in   favour   of
respondent no.1 herein  inter alia  on the grounds that:
(i)  the order passed by the Collector cancelling the lease deed
was   without   authority   under   the   law   as   under   Rule   51(7)   of
the   Rules,   2016   the   Tehsildar   is   the   competent   authority   to
cancel the lease deed;

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(ii)     That   the   original   solvency   certificate   dated   07.12.2017
produced   by   respondent   no.1,   produced   along   with   the   bid
was issued in his favour by mistake.
7.1 Now   so   far   as   the   finding   recorded   by   the   High   Court
that   the   order   passed   by   the   Collector   dated   24.03.2021
cancelling the lease deed was without authority under the law
inasmuch as the competent authority to cancel the lease deed
under   Rule   51(7)   of   the   Rules,   2016   would   be   Tehsildar   is
concerned, it is required to be noted that the Rule 51(7) shall
be   applicable   in   case   of   breach   of   any   condition   of   the   lease
deed.     The   present   case   is   not   a   case   of   breach   of   any
condition   of   the   lease   deed,   but   a   case   of   producing   invalid
solvency   certificate   at   the   time   of   submission   of   the   bid.
Therefore, Rule 51(7) shall not be applicable at all to the facts
of the case at hand.
7.2 It   is   also   required   to   be   noted   that   in   fact   Collector
passed the order dated 24.03.2021 pursuant to the directions
issued   by   the   High   Court   directing   the   Collector   to   take   an
appropriate   decision   on   the   representation/(s)   made   by   the

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appellant.   Under   the   circumstances   the   High   Court   has
materially   erred   in   holding   that   the   order   dated   24.03.2021
passed by the Collector cancelling the lease deed was without
authority under the law. 
8. Now   so   far   as   the   findings   recorded   by   the   High   Court
that   the   original   Solvency   Certificate   dated   07.12.2017   in
favour   of   respondent   no.1   was   a   mistake   and   there   was   no
other   mala   fide   intention   is   concerned,   it   is   required   to   be
noted   that   despite   the   fact   that   Gurukrupa   Charitable   Trust
was   the   owner   of   the   property   and   on   the   said   basis   the
solvency certificate was claimed, the respondent no.1 made an
application for   issuance of  the solvency  certificate in  his own
name   ­   in   his   individual   capacity.     The   Sub­Collector,
Athagrah vide communication dated 06.12.2017 as such had
specifically directed the Tehsildar to issue the certificate in the
name   of   Gurukrupa   Charitable   Trust.   However,   despite   the
same   the   Tehsildar   issued   the   solvency   certificate   dated
07.12.2017   in   favour   of   respondent   no.1   in   his   individual
capacity,   which   as   such   cannot   be   said   to   be   by   mistake.     If

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the   communication   by   the   Sub­Collector,   Athagarh   dated
06.12.2017   addressed   to   the   Tehsildar   would   not   have   been
there   and   the   Tehsildar   would   have   issued   the   solvency
certificate   in   favour   of   respondent   no.1   in   his   individual
capacity   as   he   was   the   Chairman   of   the   Trust   then   one   can
understand such a mistake.  However, in the present case the
Sub­Collector,   Athagarh   specifically   directed   not   to   issue   the
solvency certificate in favour of respondent no.1 herein in his
individual   capacity   and   specifically   directed   to   issue   the
certificate   in   the   name   of   Trust.     Under   the   circumstances   it
cannot   be   said   that   the   original   solvency   certificate   dated
07.12.2017   was   issued   in   favour   of   respondent   no.1   in   his
individual   capacity   by   mistake.     It   appears   that   the
respondent   no.1   deliberately   and   willfully   obtained   the
solvency   certificate   in   his   own   name   though   the   property
belonged   to   the   Trust   and   the   solvency   certificate   was
required   to   be   issued   in   the   name   of   the   Trust.     He
misused/used   the   solvency   certificate   dated   07.12.2017   for
his   own   benefit   illegally   and   submitted   the   same   along   with

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his bid and on the basis of the said solvency certificate he got
the lease bid.   Under the circumstances, the bid by using the
solvency certificate dated 07.12.2017 by respondent no.1 was
non­est   and   void   ab   initio   and   therefore,   the   lease   in   his
favour   on   the   basis   of   such   solvency   certificate   was   rightly
cancelled by the Collector.
8.1 At this stage it is required to be noted that subsequently
the   respondent   no.1’s   application   on   29.01.2021   permitting
him   to   substitute   the   solvency   certificate   was   not   on   the
ground   that   the   initial   solvency   certificate   dated   07.12.2017
which was issued in his individual name was by mistake.  The
reason   given   was   that   the   other   partner   may   claim   over   the
earlier   solvency   certificate   and   therefore   we   intend   to
substitute/exchange   the   fresh   solvency   certificate   which   was
obtained against the other properties.
8.2 At   this   stage   it   is   required   to   be   noted   that   the
respondent  no.1  used  the very   solvency   certificate in  another
tender   and   the   Tehsildar   and   the   Sub­Collector   disqualified
the respondent no.1 from the said tender.  

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8.3 Under   the   circumstances   as   such   the   respondent   no.1
misused   the   solvency   certificate   dated   07.12.2017   which   as
such   was   illegally   issued   in   his   individual   capacity/name   as
though   the   same   was   required   to   be   issued   in   the   name   of
Gurukrupa Charitable Trust. At this stage it is required to be
noted   that   subsequently   the   solvency   certificate   dated
07.12.2017   has   been   cancelled   by   the   Tehsildar   vide   order
dated 08.03.2021 which has attained the finality.
8.4 Now   so   far   as   the   submission   on   behalf   of   respondent
no.1   that   subsequently   respondent   no.1   obtained   the   fresh
solvency   certificate   which   was   sought   to   be
substituted/exchanged is concerned, it is required to be noted
that   what   is   required   to   be   considered   is   the   solvency
certificate   produced   along   with   the   bid   and   not   the
subsequent solvency certificate.
9. Now   so   far   as   the   submission   on   behalf   of   respondent
no.1 that thereafter pursuant to the impugned judgment and
order   passed   by   the   High   Court   a   fresh   lease   deed   has   been
issued   is   concerned,   at   the   outset,   it   is   required   to   be   noted

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that in the order dated 18.05.2022 it is observed by this Court
that the fresh lease deed, pursuant to the impugned judgment
and   order   shall   be   subject   to   the   ultimate   outcome   of   the
present SLP/appeal and/or further orders that can be passed
by the court in the proceedings.
10. In view of the above and for the reason stated above, we
are   of   the   opinion   that   the   High   Court   has   committed   a   very
serious   error   in   quashing   and   setting   aside   the   order   dated
24.03.2021   passed   by   the   Collector,   Cuttack   cancelling   the
lease   deed   which   was   in   favour   of   respondent   no.1.
Consequently,   the   impugned   judgment   and   order   passed   by
the   High   Court   deserves   to   be   quashed   and   set   aside   and   is
accordingly   quashed   and   set   aside.   The   order   passed   by   the
Collector, Cuttack dated 24.03.2021 cancelling the lease deed
which   was   in   favour   of   respondent   no.1   is   hereby   restored.
On   the   impugned   judgment   and   order   being   set   aside   the
fresh lease deed in favour of respondent no.1 also deserves to
be set aside and is accordingly set aside.

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Present   appeal   is   accordingly   allowed.     However,   in   the
facts and circumstances of the case, there shall be no order as
to costs.
 
…………………………………J.
            (M. R. SHAH)
…………………………………J.
    (B.V. NAGARATHNA)
New Delhi, 
March 3, 2023