KARACHI: While turning down pleas seeking the issuance of mining permits for sand and clay extraction across Thatta and Karachi West, the Sindh High Court ruled that single-bid open auctions conducted in the absence of a statutorily notified Mines Committee confer no vested legal rights.
A Division Bench comprising Justice Yousuf Ali Sayeed and Justice Adnan Iqbal Chaudhry dismissed two constitutional petitions (C.P. No. D-2494 of 2025 and C.P. No. D-2495 of 2025) filed by Muhammad Nazar Gondal and M/s. Habibullah Stones (Pvt.) Ltd.
Author judge of the 11-page verdict, Justice Yousuf Ali Sayeed noted the petitioners had sought court directions instructing the Mines and Mineral Development Department, Government of Sindh, to issue mining permits for sand (reti/bajri) and clay extraction in Thatta and Karachi West following an open auction conducted on June 23, 2023.
Counsel for the petitioners argued that letters issued by the Director General of Mines on August 4, 2023, declaring them successful bidders, had created enforceable vested rights after they deposited 10% of the reserved prices and required application fees.
Dismissing the arguments, the High Court held that under Section 10 read with Section 5 of the Sindh Mines and Minerals Governance Act, 2021, the Licensing Authority can only issue mineral permits on the advice of a statutorily constituted Mines Committee. Because the provincial government only officially notified the Mines Committee on November 10, 2023 – months after the auction – the entire preceding process lacked the required statutory foundation.
“The statutory apparatus through which a mining permit could lawfully be granted had not been put in place, and no permit could lawfully have been issued to the Petitioners on the strength thereof,” the Bench observed.
Addressing the legal status of auction participation, the High Court reaffirmed settled jurisprudence, referencing Supreme Court precedents including Muhammad Jawed v. First Women Bank Ltd. (2020 SCMR 2134). The Court emphasized that an auction bid is merely an offer that does not automatically yield an enforceable contract until accepted by the competent authority on the proper advice of the statutory body.
The Court also rejected the petitioners’ attempt to invoke the Sindh Public Procurement Rules, 2010. The Bench noted that the grant of a mining permit is a mineral concession where the State grants extraction rights for consideration, making it the “very antithesis of procurement” under public fund definitions.
Furthermore, highlighting public trust principles (Suo Motu Case No. 13 of 2009), the Court observed that accepting single bids at reserved prices without competition failed to safeguard public exchequer interests. Thus, the department’s decision to issue a fresh advertisement on October 17, 2023, inviting fresh competitive applications, was upheld as lawful.
While denying the writ directives and upholding the departmental re-auction, the Court ruled on principles of equity that the state cannot retain the funds deposited by the bidders under an invalid process.
The Bench issued directives to the Mines and Mineral Development Department to refund all deposited application fees and 10% reserved price amounts to both petitioners within thirty (30) days. The Court clarified that the petitioners remain fully eligible to participate in any upcoming fresh auction for the mining blocks.
