M/S. JAI DURGA FINVEST PVT. LTD. versus STATE OF HARYANA AND ORS.

Citation: [2004] 1 S.C.R. 157 · Decided: 05-01-2004 · Supreme Court of India · Bench: V.N. KHARE · Disposal: Appeal(s) allowed

Judgment (excerpt)

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MIS. JAi DURGA FINVEST PVT. LTD. 
A 
v. 
STATE OF HARYANA AND ORS. 
JANUARY 5, 2004 
[V. N. KHARE, CJ, S.B. SINHA AND DR. AR. LAKSHMANAN, JJ.] 
B 
Punjab Afinor Mineral Concession Rules, 1964-Rule 33-Contractfor 
mining operation-Non-performance of contract by the contractor due to non-
compliance of statutOIJ' obligation on part of concerned authority-Demand C 
of contract amount by authority-Demand held justified by High Court-On 
appeal, held: Demand nut justified in view of non-compliance of statutory 
obligation on part of the authority-However, case remitted back to High 
Court for determination of doctrine of frustraiion. 
Respondent got a confract for mining operation for extraction of D 
mineral sand in an auction. In furtherance of acceptance of his bid he 
entered into an agreement. According to clause 9 of the agreement 
appellant approached the land owners for settlement of compensation. 
When the land owners did not permit him to operate, he requested 
respondent No.3 as per clause 27 of the agreement to get the compensation E 
determined by the District Collector, but no response thereto was made. 
As a result, performance of the contract by the appellant became 
impossible despite having paid a large amount. Appellant also did not seek 
any relief in payment of contract money on the plea of non-extraction of 
sand in view of condition No.ISA of the contract agreement. Respondent F 
No.2 terminated the contract of the appellant on 9.3.2000 for not having 
paid the contract money from Septetnber 1999 to January 2000 and his 
security amount was also forfeited. In appeal against the order terminating 
the contract, Appellate Authority directed adjustment of security amount 
against the outstanding amount of contract money and upto date interest 
thereon. Thereafter respondent No.3 demanded the alleged balance G 
amount, which was paid by appellant, but he submitted that contract 
money for the period 10.3.2000 to 7.4.2000 was wrongly raised in view of 
the fact that the contract was terminated on 9.3.2000. 
Appellant filed writ petition, which was partly allowed by High H 
Court regarding the amount for the period 10.3.2000 to 7.4.2000 and it 
157 
158 
SUPREME COURT REPORTS 
(2004) I S.C.R. 
A further held that appellant was obliged to deposit the amount in terms of 
the contract, as he had entered into the contract voluntarily without any 
coercion and undue influence. 
In appeal to this Court, appellant contended that the contract became 
B 
impossible to be performed as the compensation was not paid to the land 
owners due to non-enforceability of Clause 27 of the agreement on the 
part of respondent No.3. 
Allowing the appeal and remitting the case to the High Court, the 
Court 
c 
HELD: Grant of mining lease in favour of the appellant for the 
extraction of mineral sand by the respondents is governed by the 
provisions of Punjab Minor Mineral Concession Rules, 1964. In terms of 
Rule 33, the bidder is required to execute a deed in Form 'L'. Clause 27 
of the agreement in Form 'L' obligates the respondent to comply with the 
D request made in terms thereof. The Appellant Authority had not 
considered this aspect of the matter. High Court also did not apply its mind 
in this behalf. As the High Court has merely proceeded on the basis that 
the appellant had entered into the contract with his eyes wide open; but, 
the same would not mean that they were bound to pay the contract 
E amount, get its security amount forfeited, as also pay interest at the rate 
of 24 per cent, although it could not, by reason of acts of omission and 
commission on the part of the respondents, carry out the mining operation 
as per the terms of the agreement. Whether in such a situation the doctrine 
of frustration will be invoked or not should have been considered by the 
F 
High Court. 1162-F-H; 163-A-BI 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9267 of2003. 
From the Judgment and Order dated 7. I 0.2002 of the Punjab and 
Haryana High Court in C.W.P. No. 12114 of 2000. 
G 
Dr. Vikas Vashishth for Kuldip Singh for the Appellant. 
Aditya K. Choudhary, Sanjay Singh for Ms. Kavita Wadia for the 
Respondents. 
H 
The Judgment of the Court was delivered by 
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.IAI DURGA FINVEST PVT. LTD. v. STATE [SINHA. J.] 
159 
S.B. SINHA, J. The writ petitioner before the High Court is appellant A 
herein. 
Admitted fact of the matter is as under: 
An auction for grant of mining operation that is f

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