Liberty to Seek Refund of Earnest Money in Sand Ghat Concessions Due to State Delay in Environmental Clearances

Introduction

In the batch of petitions decided on January 31, 2025, the Jharkhand High Court addressed a common grievance: various private parties had successfully bid for “Sand Ghat” (minor‐mineral extraction sites) in Palamau and Pakur districts, deposited earnest money and security amounts, but the State authorities cancelled their settlements. The petitioners—primarily The Mills Store Company (Bombay) Pvt. Ltd. and others—contended that the cancellations resulted from inordinate delay in obtaining environmental clearances from the State Level Environment Impact Assessment Authority (SEIAA), for which they bore no blame. They sought quashing of the cancellation orders, directions to grant clearances, and refund of deposits under Articles 14 and 19(1)(g) of the Constitution, the Mines and Minerals (Development & Regulation) Act, 1957, and the Jharkhand Minor Mineral Concession Rules, 2007.

Summary of the Judgment

The Court heard all writ petitions together, acknowledged that the petitioners were not responsible for the SEIAA’s delay, and observed that no prejudice could be attributed to the bidders. While the petitioners relinquished the challenge to the cancellation of their concessions, they sought refund of their deposited earnest money and security without further delay. The State counsel expressed willingness to entertain such claims. The Court therefore disposed of all petitions by granting each petitioner liberty to submit an individual representation to the Secretary, Department of Mines & Geology, Jharkhand. The Secretary was directed to decide these refund applications on merits and in accordance with law, within a reasonable timeframe.

Analysis

Precedents Cited

The Court’s order does not rely on any specific appellate or Supreme Court precedents. Rather, it follows established writ jurisprudence that distinguishes between a concessionaire’s lapse and administrative delay by the State in regulatory clearances. The principle that petitioners cannot be penalized for inaction of another statutory authority underlies the Court’s approach.

Legal Reasoning

1. Distinction of Blame: The Court observed that the auction cancellation stemmed from non‐issuance of environmental clearance by SEIAA, an event for which the petitioners were not responsible.
2. Constitutional Fairness: Under Articles 14 (equality before law) and 19(1)(g) (right to practice and carry on business), the petitioners were entitled to fair treatment in the concession process. A delay by the State undermined these guarantees.
3. Regulatory Framework: The Court noted the deposit of earnest money and security was a condition precedent under Rule 12 of the Jharkhand Minor Mineral Concession Rules, 2007 (as amended). Equity required refund when the concession could not be implemented through no fault of the bidder.
4. Judicial Restraint: Rather than directly ordering refunds, the Court granted a procedural remedy—liberty to file representations—allowing the executive branch to adjudicate in the first instance. This strikes a balance between judicial intervention and administrative discretion.

Impact on Future Cases

• Administrations will be cautious to process environmental clearances within prescribed timelines to avoid forfeiture claims.
• Bidders in minor‐mineral auctions now have a clear judicial endorsement that deposits will be refundable if State delay frustrates the concession.
• The judgment reinforces the broader principle that an applicant’s performance cannot be penalized due to administrative inaction by another statutory body.

Complex Concepts Simplified

• Writ in the nature of Certiorari: A judicial order quashing an administrative decision for legal infirmities.
• Writ in the nature of Mandamus: A court directive compelling a public authority to perform a legal duty.
• Earnest Money & Security Deposit: Up‐front monies bidders must lodge to qualify in the auction; normally forfeited if they withdraw or default.
• SEIAA: State Level Environment Impact Assessment Authority, which grants environmental approvals for certain projects.
• Articles 14 & 19(1)(g): Constitutional rights ensuring equal treatment and freedom to carry on business.

Conclusion

The Jharkhand High Court’s decision establishes a practical remedy for auction bidders caught in administrative delays beyond their control. By conferring liberty to seek refunds from the Department of Mines & Geology, the Court underscores that equitable considerations must govern enforcement of statutory bidding conditions. This measured approach preserves administrative autonomy while safeguarding commercial fairness, setting a significant precedent for mineral concession jurisprudence in India.