Andhra HC (Pre-Telangana)
Government Of Andhra Pradesh And ... vs Y.S. Vivekananda Reddy And Others on 2 September, 1994
Equivalent citations: AIR1995AP1, 1994(3)ALT179, AIR 1995 ANDHRA PRADESH 1, (1994) 2 APLJ 241, (1994) 3 ANDH LT 179, (1994) 2 ANDHWR 300
Bench: Syed Shah Mohammed Quadri, B.S. Raikote
ORDER Syed Shah Mohammed Quadri, J.
1. These ten writ appeals arise out of the common judgment dated February 1, 1994 of a learned single Judge allowing five writ petitions filed by sub-lessees of Barytes Ore granted by Ahdhra Pradesh Mineral Development Corporation Limited tin their favour, Five Writ Appeals are filed by the Government of Andhra Pradesh and five Writ Appeals are filed by the Andhra Pradesh Mineral Development Corporation Limited. The Division Bench which dealt with these appeals, having referred to the aspects debated before it, came to the conclusion that the question of justiciability of rights and pri-vileges claimed by the parties and the obligations and the duties cast upon the authorities in such contingencies and many other questions which may relevantly arise for consideration by the Court are of considerable significance to the public at large and they require adjudication and resolution by a larger Bench. Accordingly these appeals are posted before us.
2. To appreciate the contentions raised before us, which we shall refer to presently, it would be necessary to notice the factual background which gave rise to these appeals. There are large extents of lands bearing gray varieties of barytes in Anantarajupet village and Mangampet village-erstwhile Inam village of Cuddapah District. The Government of Andhra Pradesh issued orders in' G.O.Ms. No. 27, Industries and Commerce (Mines. III) Department dated January 7, 1974 declaring that the Barytes Ore bearing areas in the villages of Mangampet and Anantarajupet of Cuddapah District except those already leased out were reserved with immediate effect for exploitation in the public sector. In pursuance of the said orders, the Government of Andhra Pradesh (hereinafter referred to as the 'lessor-State') sanctioned the mining lease of Barytes over an extent of 22.799 hectares (on various Survey Nos., specified in G.O., mentioned hereunder) for a period of 20 years in favour of M/s. The Andhra Pradesh Mining Corporation Limited, Hyderabad which subsequently came to be known as the Andhra Pradesh Mineral Development Corporation (hereinafter, referred to as the 'Lessee-Corporation') in G.O.Ms.No. 151, Industries & Commerce (Mines. III) Department dated February 10, 1975, subject to the provisions of Mines and Minerals (Regulation & Development) Act, 1957 (for short the Act) and the rules made thereunder and also subject to the condition in Form 'K' prescribed under the Mineral Concession Rules, 1960 (for short the rules).
3. It appears that the surface rights in the said lands vested in the pattedars. They filed Revision Petitions before the Central Government challenging the validity of the order granting the lease in favour of the lessee-Corporation and also obtained stay of the operation of the lease granted in favour of the lessee-Corporation in G. O.Ms.No. 151. Thus, the Lessee-Corporation was disabled from undertaking the mining operation. This impasse was resolved by a tripatite agreement entered into among the lessor-State, lessee-Corporation and the pattedars. By virtue of that agreement, as modified subsequently, the pattedars were obliged to withdraw the revision petitions and request the Central Government for dismissal of the revision petitions and the stay petitions; the lessor-State undertook to give consent for granting of sub-leases under the Rules in respect of the defined extents in favour of the pattedars and the lessee-Corporation had agreed to grant sub-leases of the said defined extents of the land in favour of the pattedars. Accordingly, the revision petitions were withdrawn, consent under R. 37 for grant of sub-leases was given and the sub-lease deeds were executed between the lessee-Corporation and the pattedars-sub-lessees. While so, the Andhra Pradesh Legislative Assembly appointed a House-Committee to go into the complaints of illegal mining operations of Barytes. The House-Committee submitted its report on May 24, 1993. Accepting the recommendation of the House Committee, the Government of Andhra Pradesh have taken a policy decision reserving the entire Barytes deposits in Mangampet and Anantarajupet of Cuddapah district for exclusive exploitation by the lessee-Corporation and ordered cancellation of the sub-leases granted by the lessee-Corporation in favour of the pattedars-sub-lessees for mining operations of Barytes which is reflected in G.O.Ms.No. 402, Industries & Com-merce (Mines I) Department dated December 1, 1993. Further to the orders issued in the said G.O.Ms.No. 402, the Government of Andhra Pradesh withdrew, with immediate effect, the consent granted to the lessee-Corporation to enter into sub-leases of lands bearing Barytes Ore in Anantarajupet and Mangampet of Cuddapah District with the pattedars sub-lessees in G. O.Ms.No. 4^7, Industries and Commerce (Mines. I) Department dated December 7, 1993. In compliance with the said orders, the lessee-Corporation cancelled the sub-leases. The legality of the said G.O.Ms.Nos. 402 and 417 and the consequent cancellation of the sub-leases were assailed by the pattedars-sub-lessees in the above said writ petitions.
4. The learned single Judge who dealt with these writ petitions came to the conclusion that before passing the impugned orders directing cancellation of the sub-leases and withdrawal of the consent, the Government have not given an opportunity of being heard to the sub-lessees which is violative of the principles of natural justice and also of S. 4 A of the Act quashed the impugned G.Os., and the orders passed by the lessee-Corporation cancelling the sub-leases and thus allowed the writ petitions.
5. The learned Advocate General appearing for the 'lessor-State' as well as the 'lessee-Corporation', has contended that the subleases are not statutory, but are ordinary contracts without any statutory flavour, so the termination of the sub-leases cannot be questioned in the writ petitions; as the impugned G.Os., and the other proceedings are neither statutory orders nor executive orders but they are made in exercise of the rights conferred under the terms of the contract, the remedy, if any, for the pattedars-sub-lessees lies under the ordinary civil law, but not under Art. 226 of the Constitution of India. R. 37 of the Rules has no application for withdrawal of the consent; even if the withdrawal is treated as action under R. 37, no notice need be given as the provisions of the Act and the Rules constitute a complete code and exclude by necessary implication the necessity of issuance of notice to the sublessees before withdrawing consent; it is pointed out that the c6nsent given by the Government of Andhra Pradesh in favour of the petitioners in W.P. No. 18499 of 1993 and 18537 of 1993 are void by virtue of S. 19 of the Act as prior approval of the Central Government was not obtained as contemplated by the amended R. 37. With regard to W.P. No. 19953 of 1993, it is urged that the lease was granted in violation of the proceedings of the Government of India dated September 4, 1990 and also in violation of S. 5(1) of the Act and Rr. 59 and 60 of the Rules framed thereunder; even the consent given to the pattedars who filed W.P. No. 18538 of 1993 and 19122 of 1993 for sub-lease of the land, was without de-reserving the area, as such the consent given in all cases is illegal; -the pattedars get no right under'a void contract of sub-leases in view of S. 19 of the Act. The transactions between the Corporation-lessee and the pattedars are "transfers in any other manner" and not "sub-leases" or in the alternative the sub-leases in question are not in Form 'C', so they do not fall within the meaning of the 'lease' and therefore, S. 4A of the Act has no application. In any event, submits the learned Advocate General, assuming the Court has rightly come to the conclusion that the impugned orders are bad for want of notice or for non-compliance of S. 4 A of the Act, the writ petitions ought not to have been allowed as it resulted in reviving void orders and perpetuating the illegality.
6. The learned Additional Solicitor General appearing for the Union of India and the 2nd respondent in these appeals, brought to our notice the contents of para 3 of the counter-affidavit to the effect that the matter relating to sub-leases does not fall within the purview of the Central Government, but is within the purview of the State Government. However, he submits that the State Government was not competent to grant consent under R. 37 of the rules, which is not attracted where the area has been reserved for exploitation by a Public sector undertaking. He elaborated his submission with reference to R. 59 which provides, inter alia, that an area which has been reserved for exploitation by a public sector undertaking is not available for grant of leases; if a sub-lease is granted in respect of such area by the lessee-Corporation, it would be contrary to the orders of reservation from which the lessee derives sustenance. His contention is that when a notification under R. 58 is in force, R.37 cannot be invoked. Though the learned counsel conceded that S.4A of the Act applies to sub-leases, yet he contended that as the arrangement to grant sub-leases pursuant to the tripartite agreement is itself void, S. 4A of the Act will not be attracted for such illegal sub-leases. According to the learned counsel, no notice need be given to the sub-lessees before withdrawal of the consent as the rights claimed by them whether treated as arising under the contract of sub-lease or under statutory order under R. 37 of the rules or executive action of tripartite arrangement, really emanate from a void order of consent being in violation of declaration of reservation.
7. Shri Kapil Sibal, learned Senior Counsel appearing for the respondents-writ petitioners in W.A. Nos. 131, 134, 170 and 175 of 1994, brought to our notice S. 2 of the Act and has contended that in view of the concept of occupied field', all matters relating to regulation of mines and development of minerals have been brought under the control of the Union Government and that the State Government has no residuary power in those matters. His contention is, application of R. 37 to the leases granted to public sector undertakings in respect of the reserved areas cannot be excluded; once the consent contemplated under R.37 was given and it resulted in execution of the sub-leases, the question of withdrawal of the consent does not arise as the order granting consent has worked out itself and there remain nothing to be withdrawn; the sub-leases having been granted with the consent of the State Government, rights have accrued to the sublessees and so, the consent cannot be withdrawn without giving notice to the affected parties. He also argued that as lease includes sub-lease, S. 4A of the Act is applicable 19 sub-leases as such premature determination of the sub-leases has to be strictly in accordance with the terms of the said section which enjoins notice to the affected party. As admittedly no notice was given either before ordering the termination of the leases or withdrawing the consent, the impugned Government orders were rightly quashed by the learned single Judge. On the question of granting consent illegally and the leases themselves being void on the ground of violative of the provisions of the Act and the Rules, the learned Senior Counsel submits that the impugned orders themselves are not based on those grounds and that the impugned orders cannot now be improved or supported on grounds othe^ than those mentioned in the orders. Referring to the clauses in the sub-lease deeds where under the sub-lessees have agreed not to claim any damages in the event of termination of subleases due to withdrawal of consent or taking of policy decision to determine sub-leases, the learned counsel argued that the clauses themselves being void cannot be given effect to and that having regard to the cases put forth by the parties before the learned single Judge no new plea can be allowed to be raised at the stage of appeal. On the question of the absence of prior consent of the Central Government in W.P.Nos. 18499 and 19537 of 1993, the learned counsel puts his case on two grounds viz., that it was not the case of the lessor-State in the impugned order and there was no plea that for want of the consent of the Central Government, the sub-leases would be void.
8. Shri J. V. Suryanarayaria Rao the learned counsel appearing for the respondents in W.A Nos. 132 and 133 of 1993, adopted the arguments of Shri Kapil Sibal. He however added that it was the duty of the State Government to obtain the approval of the Central Government and that the State Government cannot take advantage of its own wrong, yiz., not obtaining the approval of the- Central Government before granting sub-leases and in any event, there has been implied approval of the Central Government in view of the letter dated September 4, 1990 and that had notice been given before passing the impugned order, the sub-lessees would have satisfied of the existence of implied consent. As the sub-leases have been cancelled en bloc which is a clear indication of the non-application of mind, therefore, for that reason also the cancellation of leases is illegal and has been rightly held to be so by the learned single Judge.
9. Shri Jagadish, the learned counsel appearing for the respondents-pattedars in Writ Appeals Nos. 169, 171, 172 and 173 of 1994, adopted the arguments of Shri Kapil Sibal and prayed that the appeals be dismissed.
10. The learned single Judge quashed the impugned orders on the ground of non-compliance of the principles of natural justice and of the requirements of sub-sec. (3) of S. 4A of the Act. The substance of the arguments of the learned Advocate General is that the impugned order directing termination of sub-leases is not in exercise of power under S. 4A of the Act but under power reserved by terms of sub-lease deed. We shall read with the impugned order, viz., G.O.Ms. No. 402, Industries and Commerce (Mines I) Department dated December 1, 1993 which runs thus:--
"GOVT. OF ANDHRA PRADESH ABSTRACT Report of the House Committee on illegal mining at Mangampet, Cuddapah District --Acceptance of the recommendations --Orders -- Issued.
ORDER :
1. The Committee of the Legislative Assembly which went into the question of illegal mining of barytes at Mangampet in Cuddapah District submitted its report on 24-5-1993.
2. Considering that the Government has taken a policy decision to reserve the entire barytes deposits in Mangampet and Ananta-rajupeta villages in Cuddapah District for exclusive exploitation by the Andhra Pradesh Mineral Development Corporation Limited, recommended that expeditious steps to be taken to complete the acquisition of all mineral bearing lands in Mangampet and neighbouring villages while taking simultaneous steps to dispose of litigation pending in the courts. The lands thus acquired may be handed over to the Andhra Pradesh Mineral Development Corporation Limited, a Public sector undertaking, to exploit the mines fully. The committee has further recommended that in view of the acquisition of the entire mineral bearing areas and entrusting them to the Corporation with powers to exploit the minerals fully, the need for tripartite agreement disappears and, therefore, the tripartite agreement which become a source of many irregularities may be cancelled immediately and that all mineral lands be entrusted to the Corporation for its exclusive exploitation.
3. Government have decided to accept the recommendations made by the House Committee and accordingly order cancellation of all existing subleases to mine barytes entered into between the Andhra Pradesh Mineral Development Corporation Limited and the sub-lessees. A.P. Mineral Development Corporation Limited is directed to take action accordingly in accordance with law and report compliance to Government.
4. All such mineral lands shall stand reverted to or shall be acquired by A.P. 'Mineral Development Corporation Limited for its exclusive exploitation. A.P. Mineral Development Corporation Limited alone should mine the barytes in keeping with the policy of the Government of India.
(By Order and in the Name of the Governor of Andhra Pradesh) M. V. Natarajan, Principal Secretary to Government."
The impugned order itself does not refer to any clause in the sub-lease deed pursuant to which the termination of sub-lease has been effected. In the counter-affidavit of respondents 1 and 2, para 7 deals with this aspect. We shall extract it here for proper appreciation.
"7. I submit that by an (order) under G.O.Ms.No. 402, dated 1-12-1993, the Government have taken a policy decision to put an end to all the existing sub-leases in order to enable the Corporation to carry on mining operations. It may be stated herein that the Government earlier issued G.O.Ms.No. 27, dated 7-1-1974 with the concurrence of Government of India reserving the entire area for the purpose of Public Sector undertaking i.e. the Corporation. After a thorough study of the report of the House Committee of the Legislature and the existing facts and circumstances, the Government took the present policy decision in public interest and for public good. After an objective assessment it was decided by the Government that the only proper way to exploit the deposit must be by a single agency i.e., through the Corporation, so that it can do away with illicit quarrying at various places and by different persons. Decision of the Government was to enforce accountability on a single agency and to see that the unique deposit of barytes would be quarried in a more scientific and systematic manner rather than allowing it to be quarried in fragmented small areas. The conservation of the material and proper development of the land through scientific mining was given utmost importance. The Government also kept in view the internal requirement of agencies like O.N.G.C. and Oil India. It had to see that there is no indiscriminate export resulting in shortage of the mineral at a later point of time. The Government also felt that the tripartite agreement has outlived its purpose. The deposit was being exploited indiscriminatelv. I submit that the decision of the Government was totally justified and is well within its competence. The main objective was to maximise the production in a scientific way and to go for systematic mining. Issuance of any notice in this regard-would defeat, the very purpose, assuming without admitting that the situation demands issue of notice! It may be reiterated that the sub-leases are purely contractual, without any statutory flavour and giving of notice is not only not contemplated but is also not at all necessary."
It is seen that even the counter-affidavit does not refer to any specific power in the contract of sub-lease. However, the learned Advocate General has invited our attention to CIs. 15 and 16 of the deed of sub-lease executed by the'lessee-Corporation'in favour of Mr. Y.S. Raja Reddy, the petitioner in W.P. No. 18538 of 1993. It may be appropriate to read the said clauses here:
"15. The lessee reserves the right to terminate this sub-lease in the event of any violation of the terms and conditions/ default/breach of contract and the sub-lessee shall be responsible for all damages that accrue.
16. The sub-lessee shall not claim any damage from the lessee in the event of the State Government withdrawing the permission under R. 37(i) to sub-lease during the tenure of this lease or on account of any other Governmental action having a direct bearing on this contract."
12. A perusal of the said clauses makes it evidence that clause 15 reserves the right of the lessee-Corporation to terminate the sublease but it prescribes the event on the happening of which this power can be exercised and it is any violation of the terms and conditions/default/breach of contract. In the instant case, it is nobody's case that the lessee-Corporal ion has ordered premature termination of the sub-leases for any violation of the terms and conditions/ default or breach of contract. Therefore, the impugned order cannot be said to be under clause 15 of the sub lease deed.
13. Clause 16 does not deal with the question of the termination of lease. It deals with the consequences of termination of the sub-lease, for it provides that the sub-lessee shall not claim any damage from the lessee-Corporation in the event of the State G,ov-ernment withdrawing permission under R. 37(1) of the Rules to sub-leases during the tenure of the lease or on account of any other governmental action having direct bearing on the contract. On happening of any of the events mentioned in clause 16, the sub-lessee is precluded from claiming damages from the lessee-Corporation and, in our view, this also does not support the claim that the termination of the sub-leases was in exercise of the powers conferred under the terms of the contract of sub-lease.
14. We have already pointed out above that no 4 power is reserved for the "State Government to terminate the sub-lease under the deed of sub-leases either as lessor or in its capacity as State. In view of this finding, we cannot give effect to the contention of the learned Advocate General that the impugned order directing termination of the sub-leases is by virtue of and in exercise of the authority conferred on the lessor-State by the terms of the sub-lease deed. The orders of termination of sub-leases passed by the Corporation-lessee are only consequential orders passed consequent upon the impugned G.Q.Ms., and we make it clear that we have not pronounced upon the power of the Corporation to terminate the sub-leases by invoking power under the deed of sub-leases.
15. Now we consider it appropriate to decide the question whether on the facts and in the circumstances of the case, the judgment under appeal can be sustained, because if it can be upheld, then it would be unnecessary to go into the other aspects relating to the merits of the case. Therefore, we shall consider whether the impugned order directing premature determination of the sub-leases without complying with sub-sec. (3) of S. 4A of the Act and the order withdrawing the consent without issuing notice to the pattedars-respondents are valid in law.
16. At the outset, we would point out that the impugned order directing termination of sub-leases does not purport to be issued under Section 4A of the Act. But the fact is not determinative of source of power if such an order can be passed under that section in law. As the learned single Judge has tested the validity of the impugned order on the touchstone of S. 4A of the Act and that finding is assailed before us, we shall examine this aspect in the first instance. It will be useful to refer to S. 4A of the Act in so far as it is relevant for our purposes:--
"4A. Termination of prospecting licences or mining leases :--
(1) Where the Central Government, after consultation with the State Government, is of opinion that it is expedient in the interest of regulation of mines and mineral development, preservation of natural environment, control of floods, prevention of pollution, or to avoid danger to public health or communications or to ensure safety of buildings, monuments or other structures or for conservation of mineral resources or for maintaining safety in the mines or for such other purposes, as the Central Government may deem fit, it may request the State Government to make a premature termination of a prospecting licence or mining lease in respect of any mineral other than a minor mineral in any area or part thereof, and, on receipt of such request, the State Government shall make an order making a premature termination of such prospecting licence or mining lease with respect to the area or any part thereof.
(2) Where the State Government, after consultation with the Central Government, is of opinion that it is expedient in the interest of regulation of mines and mineral development, preservation of natural environment, control of floods, prevention of pollution or to avoid danger to public health or other structures or for such other purposes, as the State Government may deem fit, it may, by an orde_r, in respect of any minor mineral make premature termination of a prospecting licence or mining lease with respect to the area or any part thereof covered by such licence or lease:
Provided that the State Government may, after, the premature termination of a prospecting licence or mining lease under sub-
sec. (1) or sub-sec. (2), as the case may be, grant a prospecting licence or mining lease in favour of such Government Company or Corporation owned or controlled by Gov ernment as it may think fit.
(3) No order making a premature termination of a prospecting licence or mining lease shall be made except after giving the holder of the licence or lease a reasonable opportunity of being heard.
(4) xx xx xx"
17. A plain reading of the provisions extracted above makes it clear that: subsection (1) deals with the premature termination of a prospecting licence and mining lease in respect of any mineral other than a minor mineral; (2) it is the Central Government which has to form an opinion, after consultation with the State Government, as to whether it is expedient to direct premature termination of lease; (3) the ground for such an action are:
(a) in the interest of regulation of mines and mineral development;
(b) preservation of natural environment;
(c) control of floods;
(d) prevention of pollution; or
(e) to avoid danger to public health; or
(f) communications, or
(g) to ensure safety of buildings, monuments or other structures, or
(h) for conservation of mineral resources, or
(i) for maintaining safety in the mines, or
(j) for such other purposes as the Central Government may deem fit;
(4) On formation of such an opinion, the Central Government has to request the State Government to make a premature determination; (5) It is only then the State Government has to pass an order making premature termination of such prospecting licence or mining lease with respect to any area, pursuant to such a request, under sub-sec. (2) of Section 4-A of the Act which deals with premature determination of prospecting licence or mining lease in respect of any minor mineral, it is for the State Government to form an opinion on the basis of the criteria mentioned therein, after consultation with the Central Government, and make an order of premature determination of the lease of any minor mineral. After such determination, the State Government has power to grant prospecting licence or mining lease in favour of a Government Company or Corporation as it may deem fit. Sub-section (3) of the said section, enjoins that no order making premature determination of the prospecting licence or mining lease shall be made except after giving the holder of the licence or lease a reasonable opportunity of being heard. For the purposes of the controversy before us, it is not necessary to deal with sub-section (4) of Section 4A of the Act which prescribes when a mining lease will lapse and matters related thereto.
18. The expression 'mining lease' is defined in Clause (c) of Section 3 of the Act in the following terms :-
" "mining lease" means a lease granted for the purpose of undertaking mining operations, and includes a sub-lease granted for such purpose."
Section 3 which deals with definitions of the expressions used in the Act, provides that the expressions defined therein would have the meaning assigned to them unless the context otherwise requires. Thus, unless the context othewise requires, a 'sub-lease'granted for the purpose of mining operations would fall within the meaning of the expression 'mining lease'. During the course of the 'debate, we found consensus among the learned counsel for the parties that for the purposes of Section 4A of the Act, 'sub-lease' falls within the meaning of the expression 'lease* but they raised competing contentions on the question as to whether the requirements of Section 4A of the Act should be complied with for premature termination of sub-leases in question. The learned Additional Solicitor General and the learned Advocate General argued that as the sub-leases were illegal and void, there was no obligation on the State Government to comply with the requirements of Section 4 A of the Act for premature termination of the sub-leases granted in favour of the pattedars, whereas Sri Kapil Sibal contended that the sub-leases were entered into in pursuance of the tripartite agreement under which the pattedars gave their consent for mining operations by the Corporation-Lessee on their patta lands and as a consideration thereof, the 'Lessor-State and the 'Lessee-Corporation agreed to grant sub-leases of parcels of land and accordingly sub-leases were duly granted with the consent of the State Government, therefore, the sub-leases are valid and the premature termination of the sub-leases without complying with thtre-quirements of Section 4A of the Act is wholly illegal.
19. These contentions lead us to the inquiry into the question -- Was the grant of sub-leases valid in law ?
20. Here it will be useful to refer to paragraph 3 of the impugned order of the Government dated 1-12-1993, extracted above, which shows that the Government (Lessor State) has taken a policy decision to accept the recommendations of the House-Committee and ordered cancellation of all existing sub-leases entered into by the Lessee-Corporation and the sub-lessees, but not for the reasons that the sub-leases were invalid or illegal.
21. It has already been noticed that the power under Section 4A of the Act regarding premature termination of leases is available to the Central Government in case of any, mineral other than minor mineral and in the event of the Central Government forming the opinion that it.is expedient in the interest of the regulation of mines and mineral development, among other reasons specified therein, so to do, it can request the State Government to make premature determination of the leases. This power is available to the State Government only in respect of minor mineral. Barytes is admittedly a major mineral. Therefore, the Government (Lessor-State) cannot exercise the power under Section 4A and request the Lessee-Corporation to terminate the sub-leases in question prematurely as Barytes is included in the first schedule and ceased to be a minor mineral from 1986. It is perhaps for this reasons, no.plea is taken by respondents 1 and 2 (the Lessor-State and the Lessee--Corporation) in their counter affidavit tracing source of power for premature termination of rhe sub-leases of Barytes to Section 4A of the Act nor was the impugned order sought to be supported before us under that provision. In view of this fact and in the view we have taken we shall revert to the said question presently.
22. We may note here that the only other provision in the Rules which authorises termination of a mining lease is sub-rule (3) of Rule 37 of the Rules. The said sub-rule is in the following terms:--
"37. Transfer of lease :--
(1) xxx xxx xxx xxx (1A) to (2) xxx xxx xxx xxx
(3) The State Government may by order in writing determine any lease at any time if the lessee has, in the opinion of the State Government committed a breach of the provision of sub-rule (1) or has transferred any lease or any right, title or interest therein otherwise than in accordance with sub-rule (2):
Provided that no such order shall be made without giving the lessee a reasonable opportunity of stating his case."
23. Thus sub-rule (3) empowers the State Government to determine any lease in writing at any time if in its opinion the lessee has committed: (i) a breach of sub-rule (1), or sub-rule (1A), or sub-rule (IB); or (ii) has transferred any lease or any right, title or interest therein otherwise than in accordance with sub-rule (2). The proviso appended to this sub-rule enjoins that the lessee shall be given a reasonable opportunity of stating his case before determining the lease. The learned Advocate General has contended that context of Rule 37 otherwise requires so in the rule, sub-lease cannot be included within the meaning of the mining lease. Reading the rule, as a whole, we find considerable force in the submission of the learned Advocate General and we do accede to it.
24. The power under sub-rule (3) of Rule 37, in our view is available to determine only a mining lease for it is meant to be exercised when there is breach of sub-rules (1), (la) or (1B) or violation of sub-rules (2) of Rule 37 and in the instant case, the source of power to issue the impugned G. O. Ms. No. 402 is not, and in our view, rightly sought to be derived from this sub-rule obviously because the proviso to sub-rule (3) enjoins that no order of termination of lease shall be made without giving the lessee a reasonable opportunity of stating his case and admittedly no notice was given to the sub-lessees.
25. We shall now proceed to consider whether the impugned order could have been validly passed by the State in exercise of its Executive power.
26. Shri Kapil Sibal contends that in view of the declaration in Section 2 of the Act, the regulation of mines and development of the minerals has come under the control of the Union and the State has no residuary power to deal with this in view of the well-recognised concept of 'occupied field' except to the extent the power is reserved to the State Government under the Act or the Rules.
27. The extent of the Executive Power of the State under Article 162 of the Constitution extends to the matters with respect to which the Legislature of the State has power to make laws. This power is subject to the provisions of the Constitution and in any matter in the List III (concurrent list), the executive power of the State is subject to and limited by the executive power expressly conferred by the Constitution or by any law made by the Parliament upon the Union or authorities thereof. In other words, in regard to the matters in the concurrent list, the executive power of the State cannot over-ride the executive power conferred upon the Union or the authorities thereof which has been expressly conferred either by the Constitution or by any Act of the Parliament upon them.
28. Entry 54 is List-I (Union List) of VII Schedule reads as follows :--
"54. Regulation of mines and mineral, development to the extent to which such regulation and development under the control of Union is declared by Parliament by law to be expedient in the public interest."
The effect of this entry is that Parliament can make law providing regulation of mines and mineral development and to the extent to which such regulation and development is declared by Parliament by law to be expedient in public interest, it will be under the exclusive control of the Union. Insofar as List II (State List) is concerned the relevant entry i.e., Entry 23 therein, makes it clear that the legislative power of the State in relation to regulation of mines and mineral development is subject to the provisions of List I with respect to the regulation and development under the control of the Union.
29. From the above discussion it follows that in view of declaration under Section 2 of the Act, the State is denuded of legislative powers to enact any law in respect of regulation of mines and mineral development, hence the State can claim to executive power touching any aspect of regulation of mines and mineral development.
30. It will be useful to refer to the judgment of the Supreme Court in State of Orissa v. M. A. Tulloch & Company, on this aspect. In the said case, the scope of provisions of the Act vis-a-vis the provisions of the Orissa Mining Areas Development Fund Act (Act 27 of 1952) came up for consideration of the Supreme Court. By the impugned Orissa Act, the State Government was empowered to levy fees on a percentage of value of mined ore for the development of mining areas. The competence of the State Legislature to pass the Orissa Act, was questioned on the ground that the Central Act covered the entire field of mineral development and that being the 'extent' to which Parliament had declared by law that it was expedient that the Union should assume control the field of mineral development was taken over, that would include the provision of amenities to workmen employed in the mines which was necessary in order to stimulate or maintain the working of mines, as such the Orissa Act was repugnant and no fee could be levied by the State Legislature. Upholding that contention the Supreme Court observed that the Act covered the entire field of mineral development and that being the 'extent' to which the Parliament had declared by law that it was expedient that the Union should assume control and that the terms of Section 18(1) of that Act laid a duty upon the Central Government to take all steps as might be necessary for the conservation and development of minerals in India and that purpose the Central Government has, by notification, to make such rules as it deemed fit so that it would include the provision of amenities to workmen employed in the mines, the Orissa Act levying fees was beyond the legislative competence of the State. It was held as follows at Page 1291 :--
"Repugnancy arises when two enactments both within the competence of the two Legislatures collide and when the Constitution expressly or by necessary implication provides that the enactment of one Legislature has superiority over the other then to the extent of the repugnancy the one supersedes the other. But two enactments may be repugnant to each other even though obedience to each of them is possible without. disobeying the other. The test of two legislations containing contradictory provisions is not, however, the only criterion of repugnancy, for if a competent legislature with a superior efficacy expressly or impliedly evinces by its legislation an intention to cover the whole field, the enactments of the other legislature whether passed before or after would be overborne on the ground of repugnance. Where such is the position, the inconsistency is demonstrated not by a detailed comparison of provisions of the two statutes but by the mere existence of the two pieces of legislation. Having regard to the terms of S. 18(1) of the Central Act 67 of 1957 it appears clear that the intention of Parliament was to cover the entire field and thus to leave no scope for the argument that until rules were framed, that was no inconsistency and no supersession of the Stale Act 27 of 1952. --"
31. In Baijnath v. State of Bihar, , Bihar State Legislature amended the Bihar Land Reforms Act, under Entry 23 of List II of the Schedule VII of the Constitution. By virtue of the amendment, the ex-landlords ceased to have any interest and the State of Bihar became the Lessor under the State Act. The State demanded rent and royalty from the Lessees who got the land under the leases prior to coming into force of the Act. The amendment was challenged as unconstitutional. Following the judgment in State of Orissa v. M. A. Tulloch & Company (1st supra), the Supreme Court held that the Union had taken all the powers to itself and authorised the State Government to make rules for the regulation of leases and that by the declaration and the entrustment of Section 14, the whole of the field relating to the minor minerals came within the jurisdiction of Parliament and no scope was left for the enactment of the second proviso to Section 10(2) in the Bihar Land Reforms Act and therefore the said enactment was without jurisdiction.
32. We may also note here the well settled principle that under Article 162, the executive power is co-extensive with the power of the legislature to legislate and that executive power cannot be exercised in derogation of the law made by the competent legislature. It was so held in Chitralekha v. State of Mysore, . We have already held that the State legislature is denuded of the legislative power on the topic of regulation of mines and mineral development. In view of this, the irresistiable conclusion is that premature termination of the sub-leases by the State Government by the impugned G. O. Ms. No. 402 cannot be upheld even under the executive power of the State Government ynder Article 162 of the Constitution.
33. Next the validity of the other impugned order issued by the Government in G.O.Ms. No. 417, Industries & Commerce (Mines-I) Department, dated December 7, 1993 remains to be considered. After referring to the policy decision and the orders issued in G.O.Ms. No. 402 dated December 1, 1993 to cancel all the sub-leases entered into between the Lessee-Corporation and the sub-lessees, and to entrust the area to the Lessee-Cor-. poration for its exclusive exploitation, the Government by orders issued in G.O.Ms. No. 417 purported to withdraw, with immediate effect, the consent given to the Corporation to enter into sub-leases of the land bearing Barytes mines in Mangampet and Anantarajupet villages of Cuddapah District.
34. Rule 37 enjoins that the transfer of a mining lease in any form specified therein shall be with the previous consent in writing of the State Government. Rule 37(1) insofar as it is relevant for the point in issue, as i* stood at the relevant time, read thus:--
"37. Transfer of lease: (I) The lessee shall not, without the previous consent in writing of the State Government;
(a) xxx xxx xxx xxx (b) xxx xxx xxx xxx (1-A) xxx xxx xxx xxx (2) xxx xxx xxx xxx (3) xxx xxx xxx xxx
From a perusal of the above extracted provision it is evident that it does not impojse absolute prohibition on the lessee to transfer the lease but it imposes an obligation on the lessee to obtain previous consent in writing of the State Government if it intends to assign, sub-let, mortgage or transfer in any other manner, mining lease or any right, title or interest therein or if he intends to enter into pr make any arrangement contract or understanding whereby he will or may be directly or indirectly financed to a substantial extent by, or under which his operations or undertakings will or may be substantially controlled by any person or body of persons other than the lessee. We do not consider it necessary to refer to the other requirements of the rule having regard to the nature of the controversy before us. Incidentally, it may be pointed out that Rule 37A of the Rules provides that after grant of the consent by the State Government, a transfer lease deed in Form 'O' or a form as near thereto as possible, shall be executed within three months of the date of the consent unless the period is extended by the State Government and that in the instant cases, the sub-leases are not in Form 'O'.
35. Mr. Sibal argues that the very purpose of granting consent is to enable the Lessee to sub-lease the mining lease or any right, title or interest therein and after the lessee transferring the mining lease by way of sub-lease, the consent given by the State Government will work out itself and nothing will survive for being withdrawn by the State Government. He relied on a judgment of this Court in C.M. Ramanath Reddy v. State of Andhra Pradesh, 1991 (11) ALT 32 which was decided by one of us (Syed Shah Mohammed Quadri, J.)
36. In that case, the consent given by the State Government to the Andhra Pradesh Mineral Development Corporation Limited to grant sub-leases in favour of the Writ Petitioner therein was ordered to be kept in abeyance after the execution of the lease deed and after he has started mining operations pursuant to the sub-leases granted in his favour. On behalf of the Government it was urged that the rights of the petitioners, if any, which were alleged to be interfered with, were contractual rights and therefore, Article 226 of the Constitution was not available and that the authority which gave its consent had power to suspend the order granting the consent. Insofar as the first contention is concerned, it was pointed out that the State Government was not a party to the sub-lease and there was no privity of contract between the State and the sub-lessee and that Rule 37 does not create any statutory relationship of lessor and the lessee between the State and the sub-lessee, therefore, the impugned action of the State could not be said to be one of the rights and obligations arising out of or under a contract; it was laid down therein that where the State acted under a contractual right or power or committed breach of a contractual obligation which gave rise to a cause to a citizen to enforce a commercial contractual right against another person or the State, generally, the High Court would not adjudicate such causes exercising its jurisdiction under Article 226 of the Constitution and would leave the parties to work out their rights in a competent Civil Court. This is not an absolute rule of law creating bar on the exercise of jurisdiction of the High Court under Article 226 of the Constitution but a factor which the High Court takes into consideration in the exercise of its extraordinary and discretionary writ jurisdiction. On the facts ef that case, it, was held that no right or obligation of the Writ Petitioner arising out of the contract of sub-leases was sought to be enforced against the State and that what was questioned therein was the executive action of the State which interfered with the rights of the petitioner. It was also laid down therein that having regard to the facts and circumstances of that case the power of the State Government to terminate the lease under sub-rule (3) of rule 37, did not embrace the power to suspend the consent granted to the lessee to enter into sub-lease with a pattedar.
37. It is now contended by the learned Advocate-General that Section 21 of the General Clauses Act confers power on the State Government to withdraw the consent already granted. Section 21 reads as follows :--
"21. Power to issue, to include power to add to, amend, vary or rescind, notifications, orders, rules or bye-laws:--
Where, by any Central Act or Regulation, a power to issue notifications, orders, rules or bye-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any) to add to, amend, vary or rescind any notifications, orders, rules or bye-laws so issued."
It may be noticed that Section 21 of the General Clauses Act prescribes a rule of construction. It says that a power to issue notifications, orders, rules or bye-laws conferred by any Central Act or Regulation includes a power to add to, amend, vary or rescind any notifications, orders, rules or bye-laws so issued and this power is to be exercised in the like manner and subject to the like sanction and conditions, if any.
38. In our view the power to withdraw the consent earlier given by the State Government under Rule 37 of the Rules to the lessee to enter into, sub-teases, can be exercised so long as it is capable of being rescinded or withdrawn as this exercise should be subject to the like conditions. When on the strength of the consent to enter into sub-leases for mining, the lessee has executed sub-lease deed and thus the consent culminated into contract and the sub-lessee has already comnlenced the mining operations, the consent has worked out itself and cannot be withdrawn at that stage as the conditions existing at the time of giving consent have changed. A close reading of the Rule 37 of the Rules, shows that having regard to the scheme of the Rule, the concept of withdrawal of the consent given to the Lessee for entering into sub-leases is inconsistent with the power conferred thereunder so by invoking Section 21 of the General Clauses Act, the State Government cannot purport to withdraw the consent.
39. In State of Bihar v. D. N. Ganguly, the question before the Apex Court was whether a reference made under Section 10 (1) of the Industrial Disputes Act can be cancelled or superseded pending adjudication proceedings pursuant to the order of reference. The Supreme Court observed that the rule of construction embodied in Section 21 of the General Clauses Act can apply to the provisions of a Statute only where the subject-matter, context and effect of such provisions are in no way inconsistent with such application and it was held that the said section did not apply to Section 10(1) cif the Industrial Disputes Act to enable the Government to cancel or supersede the order of reference.
40. The recent judgment of the Supreme Court in State of Madhya Pradesh v. \jay Singh, relied upon by the learned Advocate General is of no assistance to the appellants. There, the question was whether, in exercise of the powers under S. 21 of the General Clauses Act, the government can reconstitute the Commission of Inquiry appointed under the Commissions of'lnquiry Act, 1952. It was held that the power to rescind any notification, conferred under Section 21 of the General Clauses Act was inapplicable in the scheme of the Commissions of Inquiry Act and: that it could not be invftked to enlarge the Government's power to reconstitute the Commission constituted under Section 3 of the. Act in a manner other than that expressly provided in that Act itself and that as there was no express Power given by that Act to the appropriate Government to reconstitute the Commission of Inquiry by replacing or substituting its sole member, no such power could be exercised by the appropriate Government.
41. Following the ratio of the judgment in State of Madhya Pradesh v. Ajay Singh (6th supra), we hold that the State cannot invoke the power under Section 21 of the General Clauses Act to withdraw the consent validly given by it to the Lessee-Corporation to enter into sub-leases with the pattedars after the sub-lease deeds have been executed and the mining operations are already commenced.
42. There is one important distinguishing feature which comes in the way of applying the ratio in Ramanath Reddy's case (4th supra) to the facts of this case and that is here the grant of consent is said to be illegal and there was no such plea in that case. The contention of the appellants is that a mining area which has been reserved under Rule 58 for exploitation by a public sector undertaking is not available even for grant of a sub-lease of such an area in view of provisions of Rule 59 as such no valid consent could have been given under Rule 37. As the impugned order of the Government in G.O.Ms. 41,7 is not passed on the ground that the consent granted by it was invalid in law, we do not wish to express any opinion on this aspect. We shall deal with this further when we deal with contentions based on Rules 58 and 59 of the Rules.
43. Even assuming that the State Government is competent to order premature termination of lease as well as withdraw the consent given under Rule 37 of the Rules, the impugned orders cannot be sustained as they were passed without giving an opportunity of being heard to the affected parties and in violation of the principles of natural justice as admittedly the sub-lessees h.ave been carrying on the mining operations after they entered into sub-leases which were pursuant to consent, granted under Rule 37 of the Rules.
44. For all the above reasons, the order of the learned single Judge holding that G.O.Ms. No. 402 and G.O.Ms. No. 417 dated 1-12-1993 and 7-12-1993 respectively and consequential termination of sub-leases by the Lessee-Corporation, as illegal and void, has to be upheld.
45. Now that remains to be considered is what relief can be granted to the appellants in these cases.
46. The contention of the learned Advocate General is that as the sub-leases are void ab initio and of no effect, the petitioners should not, be granted any relief in the writ petitions as it would amount to perpetuating illegality. We have already referred to Mr. Kapil Sibal's contention on this aspect and that is, the plea that the sub-leases are void was neither the case ot the appellants in the impugned orders nor before the learned single Judge, so they cannot defend or support the orders on the grounds other than those mentioned in the orders itself as it would amount to improving the impugned orders which is impermissible. The principle that the impugned order cannot be supported on grounds other than those mentioned in the impugned order is too well settledto admit ofany debate on it. The Constitution Bench of the Supreme Court in Mohinder Singh v. Chief Election Commissioner, , laid down that when a statutory functionary made an order based on certain grounds, its validity must be judged by the reasons so mentioned and could not be supplemented by fresh reasons in the shape of affidavit or otherwise and that otherwise, an order made in the beginning might, by the time, it came to the Court on account of a challenge, get validated by additional grounds later brought out; it was pointed out, "orders are not like old wine becoming better as they grow older".
47. The illegalities with which the sub leases are said to be suffering from and which would be perpetuated are: (1) the lands which are the subject-matter of the sub-leases form part of the lands reserved for exclusive exploitation by public sector undertakings, so sub-letting of those lands or any extent out of them would be in violation of Rule 59(1) of the Rules; (2) the approval of the Central Government as contemplated under the amended Rule 37 has not been obtained by the State Government before giving its consent to the Lessee-Corporation to enter into sub-leases with the pattedars; and (3) the orders granting consent to enter into sub lease of such lands are illegal and this illegality will be perpetuated unless consents are withdrawn.
48. By Central Act No. 37 of 1986, S. 5 of the Act was amended and the amended provision disabled the State Government from granting prospecting licence or mining lease in respect of any mineral specified in First Schedule except with the previous approval of the Central Government. After amendment S. 5 reads thus:--
"5. Restrictions on the grant of prospecting or mining leases:-- (1) No prospecting licence or mining lease shall be granted by a State Government to any person unless he -
(a) is an Indian National; and
(b) satisfies such conditions as may be prescribed;
Provided that in respect of any mineral specified in the First Schedule, no prospecting licence or mining lease shall be granted except with the previous approval of the Central Government.
Explanation;-- xx xx xx (2) xx xx xx xx "
By the same amended Central Act, the First Schedule was substituted including 'Barytes' at Sl. No. 3 in the list of specified minerals. However, after about five years, on February 20, 1991, Rule 37 was amended in G.S.R. No. 129(E), to bring it in line with amended S.5 of the Act. Sub-rule(l) of Rule37 after amendment in so far as it is relevant for our purposes reads thus:
"37. Transfer of lease: (1) The lessee shall not, without the previous consent in writing of the State Government and in the case of mining lease in respect of any mineral specified in the First Schedule to the Act, without the previous approval of the Central Government,--
(a) and (b) xx xx xx "
The result of the above amendments is that in respect of Barytes bearing area, no-Iease can be granted by the State Government to any person except with the previous approval of the Central Government and no transfer of a mining lease of Barytes can be consented to by the State Government without the previous approval of the Central Government.
49. The challenge by the appellants on the validity of the sub-leases is that the area out of which the sub-leases were granted, was reserved by ihe State Government for exploitation by public sector undertakings under Rule 58 of the Rules in January, 1974. So, it ceased to be available for grant of leases and also'sub-leases under Rule 59, as such the consent given under Rule 37 being violative of Rules 58 and 59, is rendered void and of no effect by S. 19 of the Act. This contention is met by the sub-lessees urging that reservation of an area under Rule 58 does not render grant of a lease of a portion of, the reserved area in favour of a person other than public sector undertakings, illegal and void. So neither giving of consent under Rule 37 by the State Government nor sub-leasing of the area by the Lessee-Corporation will be illegal or void and in support thereof reliance is placed upon a decision of the Supreme Court in Indian Metal & Ferro Alloys Ltd. v. Union of India, .
50. In Indian Metal & Ferro Alloys Ltd. v. Union of India (8th supra), the area in question was reserved for exploitation by the public sector undertaking by the State of Orissa. The mineral involved was chrome ore which is one of the minerals included in the First Schedule. Many applications were filed for mining rights. Some of them were prjvate companies and some were public sector corporations. It appears that during the pendency of the writ petition pursuant to the orders of the Court, private parties were' granted mining lease in respect of part of the reserved area. The validity of that grant came under attack. The Supreme Court observed that the fact that the area in question was duly reserved for exploitation by public sector undertaking, did not mean that the private parties could not be granted any lease at all in respect of those areas because it was open to the Central Government to relax the reservation for recorded reasons and also because the State Government can always denotify the reservation and make the area available for grant to the private parties. The Supreme Court held that it was not open to the public sector corporations to object to the grant to any private parties on the ground that the reservation has been notified in favour of the public sector undertaking and that it was open to the State Government to grant lease to the private parties even in respect of the areas covered by the notification of the State Government and that cannot be challenged by any public sector undertaking. It may be pointed out that in the instant case, there has been neither any relaxation by the Central Government nor was any notification issued dereserving the area in question.
51. Be that as it may, the contentions now urged to sustain the impugned orders of cancellation of the sub-leases and withdrawal of the consents given by the State-Lessor for entering into sub-leases, are : firstly, the ground that no consent under Rule 37 could have been granted by the State Government and no sub-lease could have been entered into between the Lessee-Corporation and the pattedars in respect of any part of the area reserved under R. 58 having regard to the provisions of Rule 59(1) of the Rules; the second infirmity pointed out in the grant of the sub-leases- is that the approval of the Central Government as contemplated under Rule 37 of the Rules has not been obtained; and the third aspect is that the infirmities or irregularities will be perpetuated unless the leases are cancelled and the consents are withdrawn.
52. We do not wish to express any opinion on any of the infirmities or illegalities indicated above. The fact remains that the impugned orders of cancellation of the subleases or withdrawal of the consent are not based on any of the said grounds. Therefore, we are not inclined to go into the question whether the consents given by the State-lessor under Rule 37 of the Rules to the lessee-Corporation to enter into sub-leases with the pattedars and subsequent sub-leases entered into between the lessee-Corporation and the pattedars, are vitiated for any of the above infirmities or illegalities. However, we leave it open to the appellants if they propose to terminate the sub-leases or withdraw the consent, to issue notices to the sub-lessees to show cause as to why such an action should not be taken, grant them reasonable time for submitting their explanation, consider the same and pass appropriate orders in accordance with law. For this purpose, we consider it just to direct the parties to maintain status quo obtaining as on this day for a period of three months from today. If no fresh orders are passed within the said period of three months pursuant to the show cause notice, it would be open to the sub-lessees to proceed with the mining operations in accordance with the sub-leases granted to them. The orders under appeals are accordingly modified and subject to the above modification and observations, the appeals are dismissed, but in the circumstances of the case, we direct the parties to bear their own costs.
53. Order accordingly.