Uttarakhand High Court
Ultra Tech Cement Limited. vs State Of Uttarakhand And Others. on 18 May, 2017
Equivalent citations: AIR 2017 (NOC) 1096 (UTR.)
Author: Alok Singh
Bench: K.M. Joseph, Alok Singh
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Special Appeal No. 101 of 2017
Ultra Tech Cement Limited. ............ Appellant
Versus
State of Uttarakhand & others. .............. Respondents
with
Special Appeal No. 102 of 2017
Ultra Tech Cement Limited. ............ Appellant
Versus
State of Uttarakhand & others. .............. Respondents
Mr. Jaideep Gupta, Senior Advocate, assisted by Mr. Aditya Kumar Chaudhary and
Mr. Prateek Tripathi, Advocates for the appellant.
Mr. H.M. Bhatia, Brief Holder for the State of Uttarakhand / respondent Nos. 1 & 2.
Mr. Rakesh Thapliyal, Assistant Solicitor General, with Mr. V.K. Kaparwan,
Advocate for respondent No. 3.
JUDGMENT
Coram: Hon'ble K.M. Joseph, C.J.
Hon'ble Alok Singh, J.
Dated: 18th May, 2017 K.M. JOSEPH, C.J. (Oral) These two appeals being connected, we are disposing of the same by this common judgment.
2. Special Appeal No. 101 of 2017 arises from Writ Petition (M/S) No. 1124 of 2015 and Special Appeal No. 102 of 2017 arises from Writ Petition (M/S) No. 1105 of 2015. Appellant in these two appeals is one and the same. The writ petitions were filed seeking the following reliefs (as per WPMS No. 1124 of 2015):
2"a) issue a writ, order or direction in the nature of mandamus directing the respondents to issue formal orders granting Prospecting License to the Petitioner in respect of Land measuring 495.544 ha situated in Tehsil Someshwar, District Almora;
b) Issue a writ of mandamus or any other appropriate writ, order or direction to declare the provisions of Section 10A of the MMDR Amendment Act, 2015 as being unreasonable, arbitrary and whimsical and therefore violative of Articles 14 and 19(g) of the Constitution and as such liable to be struck down being unconstitutional; and
c) Further issue a writ of Certiorari thereby quashing the Section 10A of the MMDR Amendment Act, 2015."
3. Appellant is a Public Limited Company engaged, according to it, in the manufacture and sale of cement. It made an application for a prospecting licence for limestone and shale minerals on 20.06.2012 under Rule 9 of the Mineral Concession Rules, 1960 (hereinafter referred to as the "Rules"). It is the case of the appellant that the first respondent State considered the application and passed an order for issuance of a Letter of Intent (LOI) for a prospecting licence. It is done on 09.12.2013. By the said Letter of Intent, seven conditions were stipulated. On 08.01.2014, Writ Petition (PIL) No. 10 of 2014 was filed before this Court challenging the grant of Letter of Intent and this Court issued notice to the appellant apart from the State. It is, further, stated that there is an amended Letter of Intent issued on 24.01.2014. On 24.04.2014, a joint demarcation was carried out, which was endorsed by the Government officials in the Departments of Revenue, Forest and Mining and also the representative of the appellant. On 31.05.2014, appellant requested for extension by three months from 9th June, 2014 for complying with the conditions. It is the appellant's case that, on 06.08.2014, appellant intimated compliance with conditions of the Letter of Intent. On 11.08.2014, respondent No. 1 granted extension of three months from 9th June, 2014 to 8th September, 2014 purporting to act under Rule 15 of the Rules. Appellant sent letter dated 27.08.2014 to expedite the grant of prospecting licence. It is the further case of the appellant that the Director, Geology and Mining Department, recommended issuance of prospecting licence. On 12.01.2015, the Mines and Minerals (Development and Regulation) 3 Amendment Ordinance came to be promulgated. Still later, on 26.03.2015, the Mines and Minerals (Development and Regulation) Amendment Act, 2015 (hereinafter referred to as the "Amendment Act") came to be enacted. It is, thereafter, on 18.05.2015, that the appellant filed the two writ petitions. The learned Single Judge has dismissed the writ petitions.
4. Three contentions appear to have been canvassed by the appellant before the learned Single Judge. Referring to sub-section (1) of Section 10A of the Amendment Act, it was the case of the appellant that it occasioned a breach under Article 14 of the Constitution, insofar as it provided that all applications, which are received prior to the date of commencement of the Amendment Act, were declared ineligible. Treating all applications equally was alleged to occasion transgression of Article 14, as it amounted to treating applications, which would be of different hues, equally, inasmuch as, in some cases, nothing much would have been done on the applications; whereas, in other cases, the applications may have been processed. In the instant cases, the application has progressed to an advance stage, so much so that a Letter of Intent has been issued purportedly under Rule 15 of the Rules.
5. Secondly, it was contended that, under sub-section (2)(c) of Section 10A of the Amendment Act, a person, who has obtained a Letter of Intent for the grant of mining lease, is treated differently and favourably; whereas, the appellant, which has also obtained a Letter of Intent, no doubt, for the issuance of a prospecting licence, is discriminated against.
6. Lastly, it was contended that the Court should read into the requirement of natural justice, namely, right to be heard. Reliance was placed in this regard on a judgment of the Apex Court in C.B. Gautam vs. Union of India & others, reported in (1993) 1 SCC 78.
7. These contentions did not find favour with the learned Single Judge. The learned Single Judge took the view that a legislation could be 4 challenged only on two grounds, namely, violation of fundamental rights and absence of legislative power. It is noted that there is no case of absence of legislative power. As far as the case of violation of fundamental rights, namely, Article 14 is concerned, the learned Single Judge, on a conspectus of the provisions contained in Section 10A, found that sub-section (2)(a) of Section 10A deals with an application under Section 11A (the said provision deals with mining operations by public sector units) and sub-section (2)(b) of Section 10A deals with cases where a person had obtained reconnaissance permit or prospecting licence; the appellant had neither. It dealt with a situation, where certain rights in the form of reconnaissance permit or prospecting licence had been issued and it was not found to support the case of the appellant. Coming to sub- section (2)(c) of Section 10A also, the learned Single Judge took the view that the appellant could not find support from the said provision, as it dealt with a case, where there is a Letter of Intent for grant of a mining lease.
8. It is feeling aggrieved by the said judgment that the appellant is before us.
9. We have heard Mr. Jaideep Gupta, learned Senior Advocate, assisted by Mr. Aditya Kumar Chaudhary, Advocate on behalf of the appellant; Mr. Rakesh Thapliyal, learned Assistant Solicitor General, assisted by Mr. V.K. Kaparwan, learned counsel for the Union of India; and Mr. H.M. Bhatia, learned Brief Holder for the State.
10. Mr. Jaideep Gupta, learned Senior Counsel appearing on behalf of the appellant would submit that it is true that the Apex Court had occasion to consider the question as to whether it will be unfair to distribute largesse in the form of mineral rights. In Centre for Public Interest Litigation & others vs. Union of India & others, reported in (2012) 3 SCC 1, the Apex Court took the view that natural resources belong to the people; but the State legally owns them on behalf of its people and, from that point of view, natural resources are considered as national assets. It 5 was further held that the State is bound to act in consonance with the principles of equality and public trust. State is the legal owner of the natural resources as the trustee of the people. The process of distribution must be guided by constitutional principles, including the doctrine of equality and larger public good. It is further held that there is a fundamental flaw in the first-come-first-served policy, inasmuch as, it involves an element of pure chance or accident. Invocation of first-come- first-served policy has inherently dangerous implications. State must adopt a rational method for disposal of public property. It was further held that duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first-come-first-served, when used for alienation of natural resources / public property, are likely to be misused by unscrupulous people, who are only interested in garnering maximum financial benefit and have no respect for constitutional ethos and values. It is further held that, while transferring or alienating the natural resources, the State is duty-bound to adopt method of auction by giving wide publicity so that all eligible persons can participate in the process.
11. Learned Senior Counsel for the appellant would submit that, still later, on a reference made under Article 143(1) of the Constitution, a Constitution Bench had considered the question again in the decision in Natural Resources Allocation, In Re, Special Reference No. 1 of 2012, reported in (2012) 10 SCC 1. Therein, the court proceeded to take the view that auction may be the best way to maximise the revenue; but revenue maximisation may not always be the best way to subserve public good. There is no constitutional imperative in the matter of economic policies. Article 14 does not predefine any economic policy as a constitutional mandate. In short, the court took the view that there is no constitutional mandate in favour of auction under Article 14.
12. Learned Senior Counsel for the appellant would complain that, apparently, in the background of this constitutional law developments, the ordinance was promulgated for amending the Act. The ordinance 6 came into force on 12.01.2015 and, as already noted, later the Amendment Act was enacted in March, 2015, but it came into force with effect from the date of the ordinance, namely, 12.01.2015. Since everything turns on the terms of Section 10A, which was inserted by the amendment, we may refer to it. It reads as follows:
"10A. Rights of existing concession-holders and applicants.- (1) All applications received prior to the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, shall become ineligible.
(2) Without prejudice to sub-section (1), the following shall remain eligible on and from the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015-
(a) applications received under section 11A of this Act;
(b) where before the commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 a reconnaissance permit or prospecting licence has been granted in respect of any land for any mineral, the permit holder or the licencee shall have a right for obtaining a prospecting licence followed by a mining lease, or a mining lease, as the case may be, in respect of that mineral in that land, if the State Government is satisfied that the permit holder or the licencee, as the case may be,-
(i) has undertaken reconnaissance operations or prospecting operations, as the case may be, to establish the existence of mineral contents in such land in accordance with such parameters as may be prescribed by the Central Government;
(ii) has not committed any breach of the terms and conditions of the reconnaissance permit or the prospecting licence;
(iii) has not become ineligible under the provisions of this Act; and
(iv) has not failed to apply for grant of prospecting licence or mining lease, as the case may be, within a period of three months after the expiry of reconnaissance permit or prospecting licence, as the case may be, or within such further period not exceeding six months as may be extended by the State Government;
(c) where the Central Government has communicated previous approval as required under sub-section (1) of section 5 for grant of a 7 mining lease, or if a letter of intent (by whatever name called) has been issued by the State Government to grant a mining lease, before the commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, the mining lease shall be granted subject to fulfillment of the conditions of the previous approval or of the letter of intent within a period of two years from the date of commencement of the said Act:
Provided that in respect of any mineral specified in the First Schedule, no prospecting licence or mining lease shall be granted under clause (b) of this sub-section except with the previous approval of the Central Government."
12. Learned Senior Counsel for the appellant would essentially address three submissions before us. Firstly, he would submit that a perusal of sub-section (1) of Section 10A would show that it falls foul of the constitutional guarantee of equality enshrined in Article 14 insofar as it purports to treat all applications as ineligible. It is his case that it suffers from the vice of discrimination, as no attempt has been made to distinguish between applications on the basis of what is transpired consequent upon the applications being made. In other words, it is his case that there may be applications, which are made and no action as such has been taken pursuant thereto; there may be situations, however, where action has been taken on the applications as has happened in the facts of these cases. He would point out that, acting on the applications made by the appellant, various steps have been taken, which have culminated in the grant of Letter of Intent in favour of the appellant. The conditions, which are stipulated, stood complied with. He would, therefore, submit, to club together all applications irrespective of differences emanating from the action taken thereon, would incur wrath of Article 14 and the learned Single Judge has not appreciated the true scope of Article 14 with reference to the challenge to the provision in question. He drew our attention in this regard to the judgment of the Apex Court in Kunnathat Thatehunni Moopil Nair vs. State of Kerala & another, reported in AIR 1961 SC 552. Learned Senior Counsel for the appellant also sought to draw support from the decision of the Apex Court in Kumari 8 Shrilekha Vidyarthi & others vs. State of U.P. & others, reported in (1991) 1 SCC 212. We will deal with the said judgments a little later.
13. The next submission of the learned Senior Counsel for the appellant is as follows:
Parliament has declared in sub-section (2)(c) of Section 10A that, when a Letter of Intent is issued for the purpose of grant of mining lease, then the applicant would be entitled to a mining lease. He poses a question, if that be so, how the appellant could be discriminated against when the appellant, admittedly, has been favoured with a Letter of Intent, no doubt, in the context of its application for a prospecting licence. It is his submission that both in respect of an application for a prospecting licence and an application for a mining lease, when similar stages are reached, namely, a Letter of Intent is issued, the action would be afflicted with the vice of discrimination, if only in the case of an application for prospecting licence, where a Letter of Intent is issued, the matter is not allowed to progress further under the new regime and no rights are created in favour of the person in whose favour Letter of Intent is issued. There is no basis for discriminating between the two, runs the argument.
14. Lastly, learned Senior Counsel for the appellant would submit that the finding of the learned Single Judge regarding non-availability of the principles of natural justice vitiating the statute and, therefore, the need to read into the same has not been dealt with correctly by the learned Single Judge.
15. Per contra, Mr. Rakesh Thapliyal, learned Assistant Solicitor General would support the judgment. He would submit that, in the counter affidavit of the Union of India, as regards sub-section (2)(c) of Section 10A, the following stand is taken:
"17. That sub-section (2) (c) of section 10A makes an exception for the cases of applications received for grant of mining leases. Where the Central Government has communicated previous 9 approval as required under sub-section (1) of section 5 for grant of a mining lease, or if a letter of intent (by whatever name called) has been issued by the State Government to grant a mining lease, before the commencement of the MMDR Amendment Act, the mining lease shall be granted subject to fulfillment of the conditions of the previous approval or of the letter of intent within a period of two years from the date of commencement of the said Act. Before the commencement of the MMDR Amendment Act, the process of approvals in the case of mining leases became complete either with the communication of the previous approval as required under sub-section (1) of section 5 for grant of a mining lease (for minerals specified in part C of the First Schedule to the MMDR Act, 1957) or with the issue of a letter of intent (by whatever name called) by the State Government to grant a mining lease (for minerals not specified in part C of the First Schedule to the MMDR Act, 1957). After the stage of granting approvals is completed, the mining operations cannot be started immediately as the lessees have to fulfill statutory requirements of obtaining Environment Clearance, Forest Clearance, Consent to Operate etc. There is thus a delay in commencing the mining operations after the stage of approvals due to the time taken in obtaining these clearances. Clause (c) of sub-section (2) has been designed to provide a reasonable time period of two years to commence mining operations after completing all the required formalities. The validity of any such prior approval under section 5(1), or of a letter of intent is only for a period of two years from the date of commencement of the MDMR Amendment Act, 2015 i.e. two years from 12.01.2015. This is to ensure that any such applicants do not take undue advantage of such a provision. The basic objective of government is to expedite mining activities in the country and, in case any applicant is unable to complete all the required formalities within a reasonable time, the government should be free to allocate the area to any other suitable person through the route of auction process."
16. He would submit that a perusal of the same would show that the conditions, which are attached to Letter of Intent for the mining lease, are inherently different from conditions in respect of a Letter of Intent for the purpose of prospecting licence. He would rely on the judgment of the Madhya Pradesh High Court in the case of Savita Rawat vs. State of M.P. & others passed in Writ Petition No. 4278 of 2001 & connected matters (which is also relied on by the learned Single Judge). Learned Assistant Solicitor General would submit that amendments were necessitated in the wake of the decisions of the Apex Court, which we have adverted to. He would also reiterate that there is no challenge to the 10 system of distribution of largesse by way of auction and all that is challenged is Section 10A alone.
17. Since what is essentially involved in these cases is a challenge to the constitutionality of a statute based on Article 14 of the Constitution, we would do well to refer to certain principles, which are beyond the region of dispute. We may advert in this regard to the decision of the Constitution Bench in Ram Krishna Dalmia & others vs. Justice S.R. Tendolkar & others, reported in AIR 1958 SC 538. Therein, the Apex Court has laid down the following principles, which should be present in the mind of the court dealing with a challenge to a statute based on breach of Article 14:
"11. The principal ground urged in support of the contention as to the invalidity of the Act and/or the notification is founded on Art. 14 of the Constitution. In Budhan Choudhry v. The State of Bihar a Constitution Bench of seven Judges of this Court at pages 1048-49 explained the true meaning and scope of Art. 14 as follows:
"The provisions of Article 14 of the Constitution have come up for discussion before this court in a number of cases, namely, Chiranjit Lal Choudhuri v. The Union of India, The State, of Bombay v. F. N.Balsara,The state of west Bengal v. Anwar Ali Sarkar, Kathi Baning Rawat v. The State of Saurashtra Lachmandas Kewalram Ahuja v. The State Of Bombay, Qasim Razvi v. The State of Hyderabad and Habeeb Mohamad v. The State of Hyderabad. It is, therefore, not necessary to enter upon any lengthy discussion as to the meaning, scope and effect of the article in question. It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, filled namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and, (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well established by the decisions of this Court that article 14 condemns discrimination not only by a substantive law but also by a law of procedure."11
The principle enunciated above has been consistently adopted and applied in subsequent cases. The decisions of this Court further establish-
(a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself;
(b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles;
(c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds;
(d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest;
(e) that in order to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and
(f) that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation.
The above principles will have to be constantly borne in mind by the court when it is called upon to adjudge the constitutionality of any particular law attacked as discriminatory and -violative of the equal protection of the laws.
12. A close perusal of the decisions of this Court in which the above principles have been enunciated and applied by this Court will also show that a statute which may come up for consideration on a question of its validity under Art. 14 of the Constitution, may be placed in one or other of the following five classes:-
(i) A statute may itself indicate the persons or things to whom its provisions are intended to apply and the basis of the classification of such persons or things may appear on the face of the statute or may be gathered from the surrounding circumstances known to or brought to the notice of the court. In determining the validity or otherwise of such a statute the court has to examine whether such classification is or can be reasonably regarded as 12 based upon some differentia which distinguishes such persons or things grouped together from those left out of the group and whether such differentia has a reasonable relation to the object sought to be achieved by the statute, no matter whether the provisions of the statute are intended to apply only to a particular person or thing or only to a certain class of persons or things.
Where the court finds that the classification satisfies the tests, the court will uphold the validity of the law, as it did in Chiranjitlal Chowdhri v. The Union of India, The State of Bombay v. F. N. Balsara, Kedar Nath Bajoria v. The State of West Bengal, V. M. Syed Mohammad & Company v. The State of Andhra and Budhan Choudhry v. The State of Bihar.
(ii) A statute may direct its provisions against one individual person or thing or to several individual persons or things but, no reasonable basis of classification may appear on the face of it or be deducible from the surrounding circumstances, or matters of common knowledge. In such a case the court will strike down the law as an instance of naked discrimination, as it did in Ameerunnissa Begum v. Mahboob Begum and Ramprasad Narain Sahi v. The State of Bihar.
(iii) A statute may not make any classification of the persons or things for the purpose of applying its provisions but may
-leave it to the discretion of the Government to select and classify persons or things to whom its provisions are to apply. In determining the question of the validity or otherwise of such a statute the court will not strike down the law out of hand only because no Classification appears on its face or because a discretion is given to the Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion by the Government in the matter of the selection or classification. After such scrutiny the court will strike down the statute if it does not lay down any principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification, on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discriminate between persons or things similarly situate and that, therefore, the discrimination is inherent in the statute itself. In such a case the court will strike down both the law as well as the executive action taken under such law, as it did in State of West Bengal v. Anwar, Ali Sarkar, Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh and Dhirendra Krishna Mandal v. The Superintendent and Remembrancer of Legal Affairs.
(iv) A statute may not make a classification of the persons or things for the purpose of applying its provisions and may leave it to the discretion of the Government to select and classify the persons or things to whom its provisions are to apply but may at the same time lay down a policy or principle for the guidance of the exercise of discretion by the Government in the matter of such selection or classification, the court will uphold the law as 13 constitutional, as it did in Kathi Raning Rawat v. The State of Saurashtra.
(v) A statute may not make a classification of the persons or things to whom their provisions are intended to apply and leave it to the discretion of the Government to select or classify the persons or things for applying those provisions according to the policy or the principle laid down by the statute itself for guidance of the exercise of discretion by the Government in the matter of such selection or classification. If the Government in making the selection or classification does not proceed on or follow such policy or principle, it has been held by this Court, e. g., in Kathi Raning Rawat v. The State of Saurashtra that in such a case the executive action but not the statute should be condemned as unconstitutional.
In the light of the foregoing discussions the question at once arises:
In what category does the Act or the notification impugned in these appeals fall?"
18. The stage is apposite for us to now advert to the decision of the Apex Court in Kunnathat Thatehunni Moopil Nair vs. State of Kerala & another, reported in AIR 1961 SC 552. Therein, the petitioners challenged the constitutionality of the Travancore Cochin Land Tax Act, 15 of 1955 after the amendment in 1957. The petitioners were owners of forest areas in certain parts of the State of Madras before the reorganisation of the State and which, later, came within the limits of State of Kerala. They were sought to be visited with levy of a land tax. It was contended that the provisions of the Act were clearly discriminatory and, therefore, infringed Article 14. This is inasmuch as the Act did not have regard to the quality of the land or its productive capacity. Tax was sought to be imposed on flat rate of ` 2 per acre. No doubt, Article 19(1)(f) of the Constitution (which stands deleted by the 44th Amendment) was also invoked successfully. But we are concerned in these cases with the impact of Article 14 and the principles laid down therein. The Apex Court in para 8 of the judgment held as follows:
"8. It is common ground that the tax, assuming that the Act is really a taxing statute and not a confiscatory measure, as contended on behalf of the petitioners, has no reference to income, either actual or potential, from the property sought to be taxed. Hence, it may be rightly remarked that the Act obliges every person who holds land to pay the tax at the flat rate prescribed, whether or not he makes any income out of the property, or whether or not the 14 property is capable of yielding any income. The Act, in terms, claims to be "a general revenue settlement of the State" (s. 3). Ordinarily, a tax on land or land revenue is assessed on the actual or the potential productivity of the land sought to be taxed. In other words, the tax has reference to the income actually made, or which could have been made, with due diligence, and, therefore, is levied with due regard to the incidence of the taxation. Under the Act in question we shall take a hypothetical case of a number of persons owning and possessing the same area of land. One makes nothing out of the land, because it is arid desert. The second one does not make any income, but could raise some crop after a disproportionately large investment of labour and capital. A third one, in due course of husbandry, is making the land yield just enough to pay for the incidental expenses and labour charges besides land tax or revenue. The fourth is making large profits, because the land is very fertile and capable of yielding good crops. Under the Act, it is manifest that the fourth category, in our illustration, would easily be able to bear the burden of the tax. The third one may be able to bear the tax. The first and the second one will have to pay from their own pockets, if they could afford the tax. If they cannot afford the tax, the property is liable to be sold, in due process of law, for realisation of the public demand. It is clear, therefore, that inequality is writ large on the Act and is inherent in the very provisions of the taxing section. It is also clear that there is no attempt at classification in the provisions of the Act. Hence, no more need be said as to what could have been the basis for a valid classification. It is one of those cases where the lack of classification creates inequality. It is,, therefore, clearly hit by the prohibition to deny equality before the law contained in Art. 14 of the Constitution. Furthermore, sec. 7 of the Act, quoted above, particularly the latter part, which vests the Government with the power wholly or partially to exempt any land from the provisions of the Act, is clearly discriminatory in its effect and, therefore, infringes Art. 14 of the Constitution. The Act does not lay down any principle or policy for the guidance of the exercise of discretion by the Government in respect of the selection contemplated by a. 7. This Court has examined the cases decided by it with reference to the provisions of Art. 14 of the Constitution, in the case of Shri Ram Krishna Dalmia v. Shri Justice S. B. Tendolkar and others. S. R. Das, C. J., speaking for the Court has deduced a number of propositions from those decisions. The present case is within the mischief of the third proposition laid down at pages 299 and 300 of the Report, the relevant portion of which is in these terms:-
"A statute may not make any classification of the persons or things for the purpose of applying its provisions but may leave it to the discretion of the Government to select and classify persons or things to whom its provisions are to apply. In determining the question of the validity or otherwise of such a statute the Court will not strike down the law out of hand only because no classification appears on its face or because a discretion is given to the 15 Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion by the Government in the matter of the selection or classification. After such scrutiny the Court will strike down the statute if it does not lay down any principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification, on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discriminate between persons or things similarly situate and that, therefore, the discrimination is inherent in the statute itself". (p. 299 of the Report).
The observations quoted above from the unanimous judgment of this Court apply with full force to the provisions of the Act. It has, therefore, to be struck down as unconstitutional. There is no question of severability arising in this case, because both the charging sections, s. 4 and s. 7, authorising the Government to grant exemptions from the provisions of the Act, are the main provisions of the Statute, which has to be declared unconstitutional."
With the aid of this opinion of the Apex Court, learned Senior Counsel for the appellant would submit that it is squarely applicable in the facts at hand. He would expatiate and submit that, just as in the said case where all lands irrespective of their productive capacity were treated alike and tax was sought to be imposed on lands across the board irrespective of the capacity of the land owner to bear the tax, discrimination is writ large in sub-section (1) of Section 10A, which is impugned before us, for the reasons which he has already canvassed and which we have referred to.
19. The next decision, which we should advert to, is Kumari Shrilekha Vidyarthi & others vs. State of U.P. & others, reported in (1991) 1 SCC 212. In the said case, the issue, which arose, was the validity of the State action. Government of Uttar Pradesh terminated, by a general order, appointment of all Government counsel. Learned Senior Counsel for the appellant would rely on the following paragraph:
"39. No doubt, it is for the person alleging arbitrariness who has to prove it. This can be done by showing in the first instance that the impugned State action is uninformed by reason inasmuch as there is no discernible principle on which it is based or 16 it is Contrary to the prescribed mode of exercise of the power or is unreasonable. If this is shown, then the burden is shifted to the State to repel the attack by disclosing the material and reasons which led to the action being taken in order to show that it was an informed decision which was reasonable. If after a prima facie case of arbitrariness is made out, the State is unable to show that the decision is an informed action which is reasonable, the State action must perish as arbitrary."
Learned Senior Counsel for the appellant would submit that the appellant having established a prima facie case of discrimination in these cases, it is the bounden duty of the State to discharge its burden by contending and substantiating that there is no discrimination, but the burden has not been discharged by the respondents.
20. In order to better appreciate the contentions of the parties, it is necessary to advert to the state of law in regard to the subject in question prior to the amendment. The Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as the "Act") was enacted, apparently, on the strength of the power under Entry 54 of List I to the Seventh Schedule of the Constitution. Entry 54 reads as follows:
"54. Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest."
21. Apparently, Parliament considered it necessary to regulate the mining activities and it was, accordingly, that, in the year 1957, the Act came to be promulgated. The Act defines "reconnaissance operations"
under Section 3(ha) as follows:
"(ha) "reconnaissance operations" means any operations undertaken for preliminary prospecting of a mineral through regional, aerial, geophysical or geochemical surveys and geological mapping, but does not include pitting, trenching, drilling (except drilling of boreholes on a grid specified from time to time by the Central Government) or sub-surface excavation."17
22. Section 3(hb) provides for the definition of "reconnaissance permit" as a permit granted for undertaking reconnaissance operations. The Act also defines "prospecting operations" in Section 3(h) as follows:
"(h) "prospecting operations" means any operations undertaken for the purpose of exploring, locating or proving mineral deposits."
23. Section 3(g) defines "prospecting licence" as the licence granted for the purpose of undertaking prospecting operations. Still further, "mining operations" has been defined in Section 3(d) as meaning any operation undertaken for the purpose of winning any material. Section 3(c) defines "mining lease" as a lease granted for the purpose of undertaking mining operations and it includes sub-lease granted for this purpose. Section 4 of the Act provides as follows:
"4. Prospecting or mining operations to be under licence or lease. - (1) No person shall undertake any reconnaissance, prospecting or mining operations in any area, except under and in accordance with the terms and conditions of a reconnaissance permit or of a prospecting licence or, as the case may be, of a mining lease granted under this Act and the rules made thereunder:
Provided that nothing in this sub-section shall affect any prospecting or mining operations undertaken in any area in accordance with the terms and conditions of a prospecting licence or mining lease granted before the commencement of this Act which is in force at such commencement:
Provided further that nothing in this sub-section shall apply to any prospecting operations undertaken by the Geological Survey of India, the Indian Bureau of Mines, the Atomic Minerals Directorate for Exploration and Research of the Department of Atomic Energy of the Central Government, the Directorates of Mining and Geology of any State Government (by whatever name called), and the Mineral Exploration Corporation Limited, a Government Company within the meaning of Section 617 of the Companies Act, 1956:
Provided also that nothing in this sub-section shall apply to any mining lease (whether called mining lease, mining concession or by any other name) in force immediately before the commencement of this Act in the Union territory of Goa, Daman and Diu.18
(1A) No person shall transport or store or cause to be transported or stored any mineral otherwise than in accordance with the provisions of this Act and the rules made thereunder.
(2) No reconnaissance permit, prospecting licence or mining lease shall be granted otherwise than in accordance with the provisions of this Act and the rules made thereunder.
(3) Any State Government may, after prior consultation with the Central Government and in accordance with the rules made under Section 18, undertake reconnaissance, prospecting or mining operations with respect to any mineral specified in the First Schedule in any area within that State which is not already held under any reconnaissance permit, prospecting licence or mining lease."
24. Sub-section (2) of Section 4, which we have extracted above, was substituted w.e.f. 18.12.1999. Section 5 provides for restrictions in the matter of grant of a reconnaissance permit, prospecting licence or mining lease. Section 7 declares that the period for which a reconnaissance permit or a prospecting licence may be granted shall not exceed three years. Similarly, the periods for which mining leases could be granted or renewed is provided in Section 8. Section 10 comes under the heading "procedure for obtaining prospecting licences or mining leases in respect of land in which the minerals vest in the Government". It reads as follows:
"10. Application for prospecting licences or mining leases. - (1) An application for a reconnaissance permit, prospecting licence or mining lease in respect of any land in which the minerals vest in the Government shall be made to the State Government concerned in the prescribed form and shall be accompanied by the prescribed fee.
(2) Where an application is received under sub-section (1), there shall be sent to the applicant an acknowledgement of its receipt within the prescribed time and in the prescribed form.
(3) On receipt of an application under this section, the State Government may, having regard to the provisions of this Act and any rules made thereunder, grant or refuse to grant the permit, licence or lease."
25. Section 11 comes under the heading "preferential right of certain persons". Sub-section (1) of Section 11 reads as follows:
19"11. Preferential right of certain persons. - (1) Where a reconnaissance permit or prospecting licence has been granted in respect of any land, the permit holder or the licensee shall have a preferential right for obtaining a prospecting licence or mining lease, as the case may be, in respect of that land over any other person:
Provided that the State Government is satisfied that the permit holder or the licensee, as the case may be, -
(a) has undertaken reconnaissance operations or prospecting operations, as the case may be, to establish mineral resources in such land;
(b) has not committed any breach of the terms and conditions of the reconnaissance permit or the prospecting licence;
(c) has not become ineligible under the provision of this Act; and
(d) has not failed to apply for grant of prospecting licence or mining lease, as the case may be, within three months after the expiry of reconnaissance permit or prospecting licence, as the case may be, or within such further period as may be extended by the said Government."
26. Sub-section (2) of Section 11, without the provisos, reads as follows:
"(2) Subject to the provisions of sub-section (1), where the State Government has not notified in the Official Gazette the area for grant of reconnaissance permit or prospecting licence or mining lease, as the case may be, and two or more persons have applied for a reconnaissance permit, prospecting licence or a mining lease in respect of any land in such area, the applicant whose application was received earlier, shall have a preferential right to be considered for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, over the applicant whose application was received later."
27. Section 13 provides for power to the Central Government to make rules. Section 14, in fact, contemplates that the provisions of Sections 5 to 13 (inclusive) shall not apply to quarry leases, mining leases or other mineral concessions in respect of minor minerals. Section 15 provides for rule making power with the State Governments.
28. It is, accordingly, that both the Centre and the State has made Rules. The Mineral Concession Rules were made in the year 1960 by the 20 Central Government; whereas, various States have made Mineral Concession Rules in respect of minor minerals. Rule 4 of the Rules provides for an application for reconnaissance permit to be made to the State Government. The application is processed at various stages. We may only refer to Rule 7C, which reads as follows:
"7C. Prospecting Licences and Mining Leases of other minerals. - The applications received for grant of prospecting licences or mining leases within the area granted under reconnaissance permit for minerals other than those for which the permit has been granted, shall not be refused on the grounds that the area is not available for grant. The State Government shall dispose of such applications as per provisions of these rules:
Provided that if a prospecting licence or a mining lease for other mineral has been granted to some other applicant within the area granted for a reconnaissance permit and where the reconnaissance permit holder discovers availability of minerals covered under his permit within the area so granted subsequently for prospecting or mining of minerals other than those covered under the reconnaissance permit, he shall have the right to get such areas vacated from the licensee or the lessee, as the case may be, and such licensee or lessee shall not hinder the reconnaissance operations being undertaken by the reconnaissance permit holder."
29. Chapter III of the Rules deals with grant of prospecting licences in respect of land in which the minerals vest in the Government. Rule 8 makes the provisions of Chapter II, Chapter III and Chapter IV applicable to the grant of reconnaissance permits as well as grant or renewal of prospecting licences and mining leases only in respect of the land in which the minerals vest in the Government of a State. Rule 9 provides for application for a prospecting licence. Rule 10 contemplates acknowledgement of the applications and Rule 11 contemplates the procedure for disposal of the applications. Rule 12 deals with refusal of application for a prospecting licence. It reads as follows:
"12. Refusal of application for a prospecting licence:- (1) The State Government may, after giving an opportunity of being heard and for reasons to be recorded in writing and communicated to the applicant, refuse to grant or renew a prospecting licence over the whole or part of the area applied for.
(1A) An application for the grant or renewal of a prospecting licence made under rule 9 shall not be refused by the State 21 Government only on the ground that Form B or Form E, as the case may be, is not complete in all material particulars, or is not accompanied by the documents referred to in clauses (d), (e), (f) and (g) of sub-rule (2) of the said rule.
(1B) Where it appears that the application is not complete in all material particulars or is not accompanied by the required documents, the State Government shall, by notice, require the applicant to supply the omission or, as the case may be, furnish the documents without delay and in any case not later than thirty days from the date of receipt of the said notice by the applicant.
(2) An application for the grant of a prospecting licence shall not be refused on the ground only that, in the opinion of the State Government, a mining lease should be granted for the area for which the application for a prospecting licence has been made:
Provided that where applications for the grant of prospecting licence and applications for the grant of mining lease in respect of the same area are received on the same date or on different dates within a period of thirty days, the applications for the grant of mining lease shall, if the area was previously held and worked under a mining lease, be disposed of before the applications for the grant of prospecting licence are considered:
Provided further that the applications received for grant of prospecting licence shall be liable to be considered only if they have not been already disposed of."
30. Rule 14 deals with the conditions of a prospecting licence. In sub- rule (2) of Rule 14, it is provided that a prospecting licence may contain further conditions that the State Government may think fit, which are separately enumerated. Sub-rule (3) of Rule 14 enables the State Government to impose even further conditions either with the approval of the Central Government or at the instance of the Central Government. Chapter IV deals with grant of mining leases in respect of land in which the minerals vest in the Government. Rule 22 contemplates applications for grant of mining leases. We may advert to sub-rule (4) of Rule 22, which reads as follows:
"4. On receipt of the application for the grant of a mining lease the State Government shall take decision to grant precise area for the said purpose and communicate such decision to the applicant. On receipt of communication from the State Government of the precise areas to be granted, the applicant shall submit a mining plan within a period of six months or such other period as may be allowed by the State Government, to the Central Government for its approval. The applicant shall submit the mining plan, duly approved by the Central Government or by an officer 22 duly authorised by the Central Government, to the State Government to grant mining lease over that area."
31. Rule 22A provides that mining operations shall be undertaken in accordance with the duly approved mining plan. Rule 22B contemplates mining plan to be prepared only by recognised persons. Rule 24 deals with disposal of an application for mining lease. Rule 27 declares the conditions, which are applicable to all mining leases.
32. After the amendment made by the Ordinance initially and, later on, by the Amendment Act, as already noticed, the Act has undergone substantial changes. Section 3(ga) defines "prospecting licence-cum- mining lease" as follows:
"(ga) "prospecting licence-cum-mining lease" means a two-
stage concession granted for the purpose of undertaking prospecting operations followed by mining operations."
33. Apart from Section 10A, Section 10B has been incorporated. It is important that we refer to Section 10B, which reads as follows:
"10B. Grant of mining lease in respect of notified minerals through auction. - (1) The provisions of this section shall not be applicable to cases covered by section 10A or section 17A or to minerals specified in Part A or Part B of the First Schedule or to land in respect of which the minerals do not vest in the Government.
(2) Where there is inadequate evidence to show the existence of mineral contents of any notified mineral in respect of any area, a State Government may, after obtaining the previous approval of the Central Government, grant a prospecting licence-
cum-mining lease for the said notified mineral in such area in accordance with the procedure laid down in section 11.
(3) In areas where the existence of mineral contents of any notified mineral is established in the manner prescribed by the Central Government, the State Government shall notify such areas for grant of mining leases for such notified mineral, the terms and conditions subject to which such mining leases shall be granted, and any other relevant conditions, in such manner as may be prescribed by the Central Government.
(4) For the purpose of granting a mining lease in respect of any notified mineral in such notified area, the State Government shall select, through auction by a method of competitive bidding, 23 including e-auction, an applicant who fulfils the eligibility conditions as specified in this Act.
(5) The Central Government shall prescribe the terms and conditions, and procedure, subject to which the auction shall be conducted, including the bidding parameters for the selection, which may include a share in the production of the mineral, or any payment linked to the royalty payable, or any other relevant parameter, or any combination or modification of them.
(6) Without prejudice to the generality of sub-section (5), the Central Government shall, if it is of the opinion that it is necessary and expedient to do so, prescribe terms and conditions, procedure and bidding parameters in respect of categories of minerals, size and area of mineral deposits and a State or States, subject to which the auction shall be conducted:
Provided that the terms and conditions may include the reservation of any particular mine or mines for a particular end-use and subject to such condition which allow only such eligible end users to participate in the auction.
(7) The State Government shall grant a mining lease to an applicant selected in accordance with the procedure laid down in this section in respect of such notified mineral in any notified area."
34. Section 11 has undergone a complete transformation and it reads as follows:
"11. Grant of prospecting licence-cum-mining lease through auction in respect of minerals other than notified minerals. - (1) The provisions of this section shall not be applicable to cases covered by section 10A or section 17A or to minerals specified in Part A or Part B of the First Schedule or to land in respect of which minerals do not vest in the Government.
(2) In areas where there is evidence to show the existence of mineral contents as required by clause (a) of sub-section (2) of section 5, the State Government shall grant a mining lease for minerals other than notified minerals following the procedure laid down in section 10B.
(3) In areas where there is inadequate evidence to show the existence of mineral contents as required under clause (a) of sub-section (2) of section 5, the State Government shall grant a prospecting licence-cum-mining lease for minerals other than notified minerals in accordance with the procedure laid down in this section.
(4) The State Government shall notify the areas in which prospecting licence-cum-mining leases shall be granted for any minerals other than notified minerals, the terms and conditions subject to which such prospecting licence-cum-mining leases shall be granted, and any other relevant conditions, in such manner as may be prescribed by the Central Government.24
(5) For the purpose of granting prospecting licence-cum-
mining leases, the State Government shall select, through auction by method of competitive bidding, including e-auction, an applicant who fulfils the eligibility conditions as specified in this Act.
(6) The Central Government shall prescribe the terms and conditions, and procedure, subject to which the auction shall be conducted, including the bidding parameters for the selection, which may include a share in the production of the mineral, or any payment linked to the royalty payable, or any other relevant parameter, or any combination or modification of them.
(7) Without prejudice to the generality of sub-section (6), the Central Government shall, if it is of the opinion that it is necessary and expedient to do so, prescribe terms and conditions, procedure and bidding parameters in respect of categories of minerals, size and area of mineral deposits and a State or States, subject to which the auction shall be conducted.
(8) The State Government shall grant a prospecting licence-cum-mining lease to an applicant selected in accordance with the procedure laid down in this section.
(9) The holder of a prospecting licence-cum-mining lease shall be required to complete, within the period laid down in section 7, the prospecting operations satisfactorily as specified in the notice inviting applications.
(10) A holder of a prospecting licence-cum-mining lease, who completes the prospecting operation as laid down in sub- section (9) and establishes the existence of mineral contents in the area in conformity with such parameters as may be prescribed for this purpose by the Central Government, shall be required to apply for a mining lease for such area and shall have the right to get the mining lease and thereafter undertake mining operations in accordance with the provisions of this Act."
35. Section 11A has been incorporated and it contemplates that the Central Government may, for the purpose of granting reconnaissance permit, prospecting licence or mining lease in respect of any area containing coal or lignite, select any of the following companies through auction by competitive bidding, on such terms and conditions as may be prescribed. The companies are provided in clauses (a) & (b) as follows:
"(a) a Government company or corporation or a joint venture company formed by such company or corporation or between the Central Government or the State Government, as the case may be, or any other company incorporated in India; or
(b) a company or a joint venture company formed by two or more companies, that carry on coal mining operations in India, in any form either for own consumption, sale or for any other purpose in accordance with 25 the permit, prospecting licence or mining lease, as the case may be."
36. Sub-section (2) of Section 11A contemplates powers of the Central Government to rationalise coal and lignite mines. Sub-section (3) of Section 11A provides as follows:
"(3) The State Government shall grant such reconnaissance permit, prospecting licence or mining lease in respect of any area containing coal or lignite to such company as selected through auction by competitive bidding or otherwise under this section:
Provided that the auction by competitive bidding under this section shall not be applicable to an area containing coal or lignite--
(a) where such area is considered for allocation to a Government company or corporation or a joint venture company formed by such company or corporation or between the Central Government or the State Government, as the case may be;
(b) where such area is considered for allocation to a company or corporation or that has been awarded a power project on the basis of competitive bids for tariff (including Ultra Mega Power Projects)."
37. It is in the context of the existing law and the amendments, which have been made, we may proceed to appreciate the contentions of the parties.
38. As noticed, in Ram Krishna Dalmia & others vs. Justice S.R. Tendolkar & others (supra), there is a presumption of constitutionality attached to every statute. The court must presume that Parliament is aware of felt necessities of time, the court must indeed assume every fact in order that constitutionality of a statute is sustained when it is impugned. It is open to the court to take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of the legislation. The burden is on the writ petitioner, who challenges a statute, to show that there is a clear violation of constitutional principles. The court must also assume that the laws are directed to problems made manifest by experience and that its discriminations are based on adequate 26 grounds. It is true that, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation (see Ram Krishan Dalmia's case).
39. Here, we may first appreciate what exactly the legislature has intended by introducing Section 10A, which, even according to the learned counsel for the appellant, is a transitory provision intended to deal with applications, which were pending as on the commencement of the Amendment Act. As we have already noticed, under Section 10 of the Act, for the purpose of undertaking reconnaissance, prospecting and mining, an application was an indispensible requirement. Therefore, when Parliament in Section 10A(1) declared that all applications received prior to the date of the commencement of the Amendment Act (which date is 12.01.2015) shall become ineligible, it is clear as day light that what was intended is all applications, be they applications for reconnaissance permit, prospecting licence or mining lease. The embargo is in regard to the applications, which were received, meaning thereby applications which were filed and received by the competent authority. It is, thereafter, that in sub-section (2), the Parliament has provided that, without prejudice to sub-section (1), what is provided in sub-section (2) would remain eligible on and from the date of commencement of the Amendment Act. Clause (a) of sub-section (2) deals with applications under Section 11A of the Act. The legislative intent is clear, namely, that it deals with a method, which it found to be compatible with the doctrine of fairness and transparency, which was declared by the Apex Court in the decision in Centre for Public Interest Litigation & others vs. Union of India & others, reported in (2012) 3 SCC 1. About the constitutionality of this Section, in fact, no argument was addressed before us. Passing over to clause (b) of sub-section (2), it provides for a situation, where, before the Amendment Act commenced, i.e. before 12.01.2015, a 27 reconnaissance permit or prospecting licence has been granted in respect of any land for any mineral, Parliament contemplated that the permit holder would be entitled to obtain a prospecting licence followed by a mining lease and the prospecting licensee would be entitled to a mining lease in respect of the lands subject to the State Government being satisfied that various elements are present, which are indicated in sub- clauses (i) to (iv). It is, in fact, necessary to remind ourselves that the conditions, which have been stipulated, are similar to the conditions to be found in Section 11 of the Act, as it stood prior to the amendment. This provision was intended clearly to take care of a situation, where rights had, therefore, accrued in favour of an applicant for a reconnaissance permit in the form of issuance of a reconnaissance permit or an applicant for a prospecting licence in the form of a prospecting licence. Therefore, sub-section (2)(b) of Section 10A, read with Section 11 of the Act as it stood prior to the amendment, would evince the legislative intention to safeguard and preserve those rights, which had crystallized under the earlier law. In fact, we need not be detained by the sub-section any further, as the learned Senior Counsel for the appellant also would submit that he has no quarrel with the said provision. Coming to clause (c) of sub-section (2), what is contemplated is that where the Central Government has communicated previous approval under sub-section (1) of Section 5 for grant of a lease, the person concerned would be entitled to the grant of a mining lease. Equally, a person, who has been favoured with a letter of intent, by whatever name called, by the State Government to grant a mining lease before the commencement of the Act, then such person would also be entitled to a mining lease. A letter of intent in favour of an applicant for a prospecting licence is conspicuous by its absence in clause (c) of sub-section (2). We may notice that the appellant had unsuccessfully urged the principles of under-inclusive classification before the learned Single Judge. In fact, learned Senior Counsel for the appellant would submit before us that the argument of discrimination under Article 14 was not actually a contention based on under-inclusive classification.
2840. Having culled-out what exactly the provision commands, we may proceed to appreciate the contentions of the appellant.
41. We would think that the challenge to the vires of Section 10A(1) and Section 10A(2)(c) may not be justified. As we have already noticed, running as a golden thread through the constitution is the command of equity and also the doctrine of fairness (as discovered in the judgment of the Supreme Court in Menaka Gandhi vs. Union of India, reported in (1978) 1 SCC 248). At this juncture, we may point out that the learned Single Judge has repelled the contention of the appellant that the provisions are arbitrary and, therefore, they are to be declared invalid. This conclusion is arrived at on the basis of the judgment of the Apex Court in Rajbala and others vs. State of Haryana & others, reported in (2016) 2 SCC 445. No argument is raised before us to disabuse us of the view, which we would also take in agreement with the learned Single Judge that a constitutional challenge cannot be successfully mounted against a statute on the ground that the same is arbitrary.
42. While it is true that Article 14, which has in fact been held to possess in itself the attribute of basic structure by the Nine-Judge Bench decision in I.R. Coelho vs. State of Tamil Nadu, reported in AIR 2007 SC 861, the question is as regards its applicability in the facts of this case. Article 14 forbids unequal treatment of equals, as much as it prohibits equal treatment of unequals. Article 14 does not prevent classification, which is reasonable. Classification means treatment of persons or things differently on the basis of their belonging to different classes. What is forbidden is hostile discrimination. Hostile discrimination would arise when, without there being reasonable classification, persons, who are similarly situated, are treated unequally or unequally circumstanced persons are treated equally. The doctrine of reasonable classification is based on the presence of two elements. Firstly, if there is intelligible basis which distinguishes the two classes; secondly, there must be a rational relation between the intelligible differentia and the purpose of the enactment. An intelligible differentia cannot be the purpose.
2943. We may, at this juncture, notice a judgment of the Apex Court in the case of Mohammad Shujat Ali & others vs. Union of India & others, reported in (1975) 3 SCC 76. No doubt, therein the court was dealing with the question relating to the validity of rules relating to appointment in the State of Hyderabad in the Engineering Service. The Apex court dealt with challenge on the basis of violation of Articles 14 &
16. The court held as follows:
"24. We thus arrive at the point at which the demand for equality confronts the right to classify. For it is the classification 'which determines the range of persons affected by the special burden or benefit of a law which does not apply to all persons. This brings out a paradox. The equal protection of the laws is a "pledge of the protection of equal laws." But laws may classify. And, as pointed out by Justice Brewer, "the very idea of classification is that of inequality". The court has tackled this paradox over the years and in doing so, it has neither abandoned the demand for equality nor denied the legislative right to classify. It has adopted a middle course of realistic reconciliation. It has resolved the contradictory demands of legislative specialization and constitutional generality by a doctrine of reasonable classification. This doctrine recognizes that the legislature may classify, for the purpose of legislation but requires that the classification must be reasonable. It should ensure that persons or things similarly situated are all similarly treated. The measure of reasonableness of a classification is the degree of its success in treating similarly those similarly situated.
25. But the question is : what does this ambiguous and crucial phrase "similarly situated" mean? Where are we to look for the test of similarity of situation which determines the reasonableness of a classification? The inescapable answer is that we must look beyond the classification to the purpose of the law. A reasonable classification is one which includes all persons or things similarly situated with respect to the purpose of the law. There should be no discrimination between one person or thing and another, if as regards the subject-matter of the legislation their position is substantially the same. This is sometimes epigrammatically described by saying that what the constitutional code of equality and equal opportunity requires is that among equals, the law should be equal and that like should be treated alike. But the basic principle underlying the doctrine is that the legislature should have the right to classify and impose special burdens upon or grant special benefits to persons or things grouped together under the classification, so long as the classification is of persons or 30 things similarly situated with respect to the purpose of the legislation, so that all persons or things similarly situated are treated alike by law. The test which has been evolved for this purpose is- and this test has been consistently applied by this Court in all decided cases since the commencement of the Constitution-that the classification must be founded on an intelligible differentia which distinguishes certain persons or things that are grouped together from others and that differentia must have a rational relation to the object sought to be achieved by the legislation.
26. But we have to be constantly on our guard to see that this test which has been evolved as a matter of practical necessity with a view to reconciling the demand for equality with the need for special legislation directed towards specific ends necessitated by the complex and varied problems which require solution at the hands of the legislature, does not degenerate into rigid formula to be blindly and mechanically applied whenever the validity of any legislation is called in question. The fundamental guarantee is of equal protection of the laws and the doctrine of classification is only a subsidiary rule evolved by courts to give a practical content to that guarantee by accommodating it with the practical needs of the society and it should not be allowed to submerge and drown the precious guarantee of equality'. The doctrine of classification should not be carried to a point where instead of being a useful servant, it becomes a dangerous master, for otherwise, as pointed out by Chandrachud, J., in State of Jammu & Kashmir v. Triloki Nath Khosa, "the guarantee of equality will be submerged in class legislation masquerading as laws meant to govern well-marked classes characterised by different and distinct attainments".
Overemphasis on the doctrine of classification or an anxious and sustained attempt to discover some basis for classification may gradually and imperceptibly deprive, the guarantee of equality of its spacious content. That process would inevitably end in substituting the doctrine of classification for the doctrine of equality : the fundamental right to equality before the law and equal protection of the laws may be replaced by the overworked methodology of classification. Our approach to the equal protection clause must, therefore, be guided by the words of caution uttered by Krishna Iyer, J., in State of Jammu & Kashmir v. Triloki Nath Khosa: (at SCC p. 42) Mini-classifications based on micro-distinctions are false to our egalitarian faith and only substantial and straightforward classifications plainly promoting relevant goals can have constitutional validity. To overdo classification is to undo equality."
44. In fact, as already noticed, we need not pursue the aspect relating to under-classification having regard to the stand taken by the learned Senior Counsel for the appellant. As far as challenge to sub-section (1) of Section 10A is concerned, we are of the view that the appellant has not 31 made out a case for striking down Section 10A(1) on the basis of Article
14. While it is true that Article 14 forbids discrimination in the form of treating unequals equally, we would think that the premise on the basis of which the argument is built-up cannot be sustained. We are of the view that Section 10A must be read as a whole. Reading as a whole, we have already unraveled the legislative intention to be that, except for the contingencies which are contemplated in sub-section (2), all applications, be they for permit, licence or lease, under the earlier law would become ineligible. As already noticed by the learned Single Judge also, there is no case of absence of legislative power. Therefore, we need not be detained by that aspect, the only argument being that all applications are treated equally and, therefore, it amounts to unequals being treated equally with reference to the difference in the applications on the basis of the things, which have happened after the applications have been filed.
45. In this case, it is true that not only did the appellant made the application for a prospecting licence, the application was apparently acknowledged under the Rules. It reaches the point, where a letter of intent is issued. It is to be noticed at this stage that letter of intent is a concept, which is not found in the provisions of either the Act or the Rules; but it is a common case that issuance of a letter of intent has grown up as a matter of practice over the years. The same is clear from a reference to letter of intent in sub-section (2)(c) of Section 10A. In fact, therein it is referred to as a letter of intent or by whatever name it is called. Therefore, we may take it that there was a practice by which letter of intent is issued. It is, apparently, a stage prior to the actual grant of a prospecting licence or lease, as the case may be. We also proceed on the basis that the appellant was given extension of time for the fulfillment of conditions and that conditions were complied with. As we have noticed, in fact, appellant would rely on the fact that the communication had expressly referred to Rule 15 of the Rules when the appellant was granted time as is contemplated in the said provision. Having said so, we must remind ourselves that it is not in dispute that the matter did not progress thereafter. It may be true that the application was kept pending for some 32 time. Mere delay would not clothe the appellant with a legal right. Under the earlier law, undoubtedly, when a person obtained a reconnaissance permit or a prospecting licence, certain rights were contemplated. By the Amendment Act, these rights have been honoured, as is evident from Section 10A(2)(b). Appellant has not obtained a prospecting licence. Intention of Parliament appears to be to switch over to a new system of distribution of State largesse in the form of rights in valuable natural resources. Apparently, the State was disturbed over delay in the matter of settlement of rights for exploitation of minerals. It is to be remembered that a fair, transparent and equitable dispersal of mineral rights is certain to fetch the Government revenue, which is the most scarce resource for the Government to carry out its multifarious activities as a welfare State. An equitable and fair distribution of largesse is also important for the upkeep of the rule of law and to prevent monopolization, as also unethical, illegal and wrong practices in the garnering of rights over such important natural resources. All these aspects have been considered by the Constitution Bench in Natural Resources Allocation, In Re, Special Reference No. 1 of 2012, reported in (2012) 10 SCC 1 and also in Centre for Public Interest Litigation & others vs. Union of India & others, reported in (2012) 3 SCC 1. While it may be true that auction has not been elevated to a constitutional norm in view of the judgment in the Reference Case, when the purpose is commercial, auction continues to be recognised as the recognised norm. It is this, which has been reflected in the Amendment Act. Apparently, the Government intended to make a regime change and to distribute largesse, as was contemplated by the Apex Court. At the same time, it intended to preserve certain rights. The rights, which were sought to be preserved in respect of applications which were pending, have been exhaustively dealt with in sub-section (2) of Section 10A. This is the reason why we have earlier stated that Section 10A must be read as a whole. It is a sound principle of interpretation to not read a provision in isolation; but to look at it as a composite whole.
46. Learned Senior Counsel for the appellant would point out that it may not be correct to characterize situations in Section 10A(2)(b) as a 33 case, where Parliament was dealing with any pending application. It is to be noticed that Section 10A(2)(b) does not advert to any application. We have already understood its scope in the context of Section 11 of the Act as it stood prior to the amendment. Section 10A(2)(a) deals with an application of the kind to which no exception is taken and can be taken. Thus, Section 10A(2)(a) deals with a case, where the very nature of the application would protect it from constitutional invalidity. Section10A(2)(b) deals with a situation, where rights as recognised even under the earlier system had accrued and Section 2A(2(c) deals with a situation, where there is approval under Section 5(1) or where a letter of intent is given in connection with mining lease.
47. In this connection, we must remember that, in a challenge to the constitutional validity, court will not sit in judgment over the wisdom of Parliament. It may be true, as contended by the learned Senior Counsel for the appellant, that even a policy can be challenged on the ground that it is arbitrary, capricious and violative of fundamental rights. But, when the essential argument appears to be based on differences in the action taken on the applications and when the Amendment Act came into force, we would think that it would be carrying things too far, when the appellant has also not raised contention based on under-classification, to explore this further. The value judgment of the Legislature cannot be open to judicial review, no doubt, unless it comes into direct collision with the fundamental rights or is otherwise constitutionally flawed.
48. At this juncture, we may also notice that the learned Single Judge has proceeded on the basis that challenge to a statute can be made only on two grounds; firstly, if there is a violation of fundamental rights or if there is lack of legislative power. We would think that there is a third ground available, as has been noticed in the judgment of the Madhya Pradesh High Court in the case of Savita Rawat vs. State of M.P. & others passed in Writ Petition No. 4278 of 2001 & connected matters, namely when a statute is not in conformity with any other constitutional provision.
3449. As far as the argument based on Kunnathat Thatehunni Moopil Nair's case (supra) is concerned, as noticed by the learned Single Judge, it was a case where all kinds of lands, irrespective of their productive capacity, were sought to be visited with identical tax. The rate of tax was ` 2 per acre. The Legislature did not consider classifying the lands based on their productive capacity. Barren lands were treated on par, for instance, with lands which were yielding income. It was a case of complete lack of classification. The court found that inequality was writ large in the Act and is inherent in the very provisions, as was noticed in paragraph 8, which we have already extracted above. There was no attempt at classification of the provisions. It was a clear case where discrimination was palpable.
50. The Parliament has clearly provided for contingencies in which alone the applications, referred to in sub-section (1) of Section 10A, would be eligible. This is part of the wisdom of Parliament and falls within the province of policy of the law made by Parliament. As to what are to be excepted from ineligible applications has been, apparently, considered by Parliament and it has been expressly and clearly provided in sub-section (2) of Section 10A. All other applications are clearly to be treated as ineligible. To attempt to make a differentiation on the basis of action taken or the time or money spent by the applicant on the application and to brush it with the paint of hostile discrimination would, in our view, be impermissible in the context of the law. Uppermost in the mind of Parliament, it would appear to be, was the intention to switch over to a new system of distribution of largesse.
51. Mr. Jaideep Gupta, learned Senior Counsel, in fact, point out that no attempt has been made by the respondents to justify it in this manner and the burden of proof has not been discharged. In this connection, we may advert to the pleadings of the parties. Para 8(xiv) of Writ Petition (M/S) No. 1124 of 2015 reads as follows:
35"xiv. That Section 10A of the amendment Act, arbitrarily and whimsically, declared all applications received prior to the date of commencement of the amendment Act ineligible. The amendment is not applicable to the Petitioner's case as the same does not provide for or consider cases of grant of Letter Of Intent by the State Government for issuance of Prospecting License. Since the amendment is silent on this aspect and the newly added Section 10A does not cover cases of Letter Of Intent for Prospecting License, the amendment cannot be applied to the case of Petitioner. The said amendment is unreasonable and irrational in as much as it does not consider cases where lots of activities have been undertaken in pursuance of the grant of Letter Of Intent for Prospecting License. There is no reasonable basis and rational behind enacting such an arbitrary provision. Without prejudice to the above submission, it is stated that though Government has used the word Letter Of Intent in its letter of dated 9th December, 2013 and 11th August, 2014, but in the eye of law the aforesaid letter are grant order as the same are issued under Rule 15 of Mineral Concession Rules, 1960. It is further stated that there is no provision for grant of Letter Of Intent for Prospecting License under Mineral Concession Rules, 1960 but State Government usually follows this procedure as a safety measure to assess the capability of a Licensee."
52. Mr. Rakesh Thapliyal would press paragraphs 18 & 23 of the counter affidavit filed by the Union of India, which read as follows:
"18. That the provisions of saving clauses (b) and (c) of sub-section (2) of section 10A have been formulated with application of mind keeping in view the overarching objectives of the Amendment Act, 2015, which is to give an impetus to mineral exploration, development of mines and the production of minerals, while at the same time achieving the highest standards of transparency. Therefore the saving clauses (b) an (c) of sub-section (2) of section 10A pass the test of reasonability of article 14.
23. That an application for grant of a mining lease has to be dealt in accordance with the rules in force on the date of disposal of the application, has been upheld by the Hon'ble Supreme Court in its judgment dated 05.02.1981 in the matter of State of Tamil Nadu Vs. Hind Stone Etc. [1981 AIR 711, 1981 SCR (2) 742]. Extract of the order dated 05.02.1981 relevant in the context is set out hereunder for immediate reference:
36"9. While the applications should be dealt with within a reasonable time, it cannot on that account be said that the right to have an application disposed of in a reasonable time clothes an applicant for a lease with a right to have the application disposed of on the basis of the rules in force at the time of the making of the application. No one has a vested right to the grant or renewal of a lease and none can claim a vested right to have an application for the grant or renewal of a lease dealt with in a particular way, by applying particular provisions. In the absence of any vested rights in any one, an application for a lease has necessarily to be dealt with according to the rules in force on the date of the disposal of the application despite the fact that there is a long delay since the making of the application."
(emphasis supplied)"
53. While it is true that discrimination cannot be sustained on the basis of insubstantial causes, we would think that, in the context of the statute, appellant cannot succeed on the basis that much water has flown under the bridge after the application is made in the form of conditions being stipulated, a letter of intent being issued for the purpose of prospecting licence and the matter had reached the stage of Rule 15 of the Rules. It is to be noticed that even if it had reached the stage of letter of intent under the law as it existed, the same by itself did not confer any legal right to get a prospecting licence. To make a classification on the basis of action taken by the authorities or by the applicant, which falls short of the issuance of even a prospecting licence, cannot be the basis for a challenge to enactment on the ground of discrimination and we repel the same.
54. Coming to the argument based on Section 10A(2)(c), the argument appears to be that, when the application for the prospecting licence had reached the stage, where letter of intent is issued, it is discrimination which is frowned upon by Article 14 to deny the appellant the prospecting licence and to carry the matter further. A person, who has applied for a mining lease and who has obtained a letter of intent, is to be favoured with mining lease, as provided therein. We have already noticed the statements in paragraph 17 of the counter affidavit. Learned Senior Counsel for the appellant would, in fact, point out that paragraph 17 only sets out the steps to be taken after the issuance of letter of intent in the 37 case of an application for a mining lease. Paragraph 17 does not set out that the conditions stipulated for a letter of intent in regard to a prospecting licence are different from what is set out as conditions in respect of a letter of intent for a mining lease. The argument is, apparently, that Section 2A(2)(c) is violative of Article 14 as equals are treated unequally.
55. Here again, we must be reminded of well-settled principles in regard to challenge to the law based on Article 14. We must proceed on the basis of the presumption that the law is valid. All the presumptions, which have been laid down in Ram Krishna Dalmia's case (supra), would apply. No doubt, learned Senior Counsel for the appellant would point out that this is not the stand of the State that the Parliament intended to switch over to a new change and they intended only to provide for these contingencies. But, as a constitutional court, whose duty is to, if possible, uphold the law by employing presumptions which have been laid down, we would think that a perusal of the existing law and the circumstances would come to the aid of the respondents in the matter of upholding the law.
56. Coming to Section 10A(2)(c), we would think that it is only equals, who can demand similar treatment. A perusal of the Rules would reveal, in particular, that, at the stage of a mining lease, there must be a mining plan. Mining operations can be carried out only on the basis of a mining plan. It is to be prepared by recognised persons. There are differences between prospecting licence and mining lease, which are inherent. We have already noticed the definitions of "prospecting licence" and "mining lease". Prospecting is ordinarily done prior to undertaking of mining operations. Mining, by the very definition, is the act of winning minerals in any manner known to law. The scheme of the Act would appear to be that, ordinarily, a party would attempt to find out whether mineral is located at a particular site. The first stage would ordinarily be where reconnaissance operations are made. But it is true that reconnaissance operations need not be done as such or, rather, carrying out of a 38 reconnaissance operation, which can be done only on the basis of a permit, may not be a sine qua non or an indispensable requirement to carry out mining operations. As we have stated, ordinarily, prospecting is done for the purpose of ascertaining whether mining can be carried out profitably. When application for prospecting is carried to its logical and legal culmination and in favour of the applicant and a prospecting licence is issued, prospecting is carried out pursuant to the same and the applicant moves for a mining lease. Then the applicant would be at the beginning of the process of an application for a mining lease. He has to go through the stage of processing of the mining lease application and, perhaps, the penultimate stage is the issuance of a letter of intent for the purpose of a mining lease. Therefore, it may not be open to the appellant to compare a situation, where, on an application for a prospecting licence, a letter of intent is granted and a situation, where, in the case of an application for a mining lease, a letter of intent is granted. Qualitatively, they are two different situations. If they are essentially and substantially different situations and if the legislative body thought it fit to apply the balm of giving a right only to an applicant for a mining lease, which has attained a stage of maturity in the form of issuance of a letter of intent, we cannot fault the law or strike it down on the basis of violation of Article 14. The difference between a prospecting licence and a mining lease is evident from a perusal of the Act and the Rules and it is not open to a court, examining a challenge to constitutional validity, to proceed only on the basis of absence of pleadings or scanty pleadings on the side of the State. Proceeding on the basis that there are no sufficient pleadings as such by the respondents justifying the provisions, we would think that the structure of the Act and the Rules makes it self-evident that there is a clear cut distinction between a situation, where, in an application for a prospecting licence, a letter of intent is issued and a situation, where, in an application for a mining lease, a letter of intent is issued. We would think that they are substantially different and may not require the same treatment gauging it on the basis of anvil of Article 14.39
57. As far as the argument of the learned Senior Counsel for the appellant based on C.B. Gautam's case (supra) is concerned, we are in agreement with the view taken by the learned Single Judge that the said decision may not be applicable to the fact situation and also in the statutory context. That was a case, where, as noted by the learned Single Judge, a challenge was laid to Section 269UC of the Income Tax Act, which provides for compulsory acquisition of property when there is under valuation. As noticed by the learned Single Judge, that is a clear case, where it involved the compulsory acquisition of valuable property and it is in the said context that the court took the view that right of hearing must be afforded when there was a challenge to the said provision. We may reiterate that, by merely making an application or the application having progressed to the stage where it did in these cases, appellant did not get a right as such so much so that we should treat the case of the appellant at par with C.B. Gautam's case.
58. Learned Senior Counsel for the appellant would submit that the learned Single Judge has erred, as, in these cases, the learned Single Judge should have examined the vires of the Act and it is only if a position is reached where vires becomes suspect that an attempt should be made to read it down. We are of the clear view that the appellant has not established that the Act is vulnerable to attack on the ground of Article 14 and, therefore, the question of reading it down could not arise.
59. Learned Senior Counsel for the appellant also pointed out that, as a matter of fact, a person, who has applied for a prospecting licence, has applied for a valuable right and, even under the new system, what is now contemplated is prospecting-cum-mining lease. He would, therefore, submit that due importance may be given to prospecting operations and persons, who have applied for prospecting licence, should also be protected. We have already noticed that, in the view of Parliament, if it felt that a letter of intent given to an applicant for prospecting licence is not recognised, we would think that it can only be attributed to legislative 40 policy and value judgment of the Legislature. It cannot be found a ground for the appellant to question the validity of the Act.
60. In such circumstances, the upshot of the above discussion is that we are inclined to uphold the judgment passed by the learned Single Judge. Accordingly, the appeals fail and they are dismissed. No order as to costs.
(Alok Singh, J.) (K.M. Joseph, C. J.)
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