Orissa High Court
Orissa Mining Corporation Ltd. And Anr. vs Union Of India (Uoi) And Ors. on 20 November, 1991
Equivalent citations: AIR1992ORI61, AIR 1992 ORISSA 61
Author: G.B. Patnaik
Bench: G.B. Patnaik
JUDGMENT G.B. Patnaik, J.
1. These two writ applications -- one at the instance of the Orissa Mining Corporation Ltd. and the other at the instance of the State of Orissa --are directed against the one and the same order dt. 25-6-1987, annexed as Annexure 14, and both the cases were heard together and are being disposed of by this common judgment. By the impugned order of the Central Government dated 25-6-1987, the Central Government in exercise of powers conferred under Section 30 of the Mines and Minerals (Regulation & Development) Act, 1957 (hereinafter referred to as the "Act") set aside the impugned order of the State Government as well as the reservation made by the State and has directed that the area in question be granted to opposite party No. 2 under a mining lease.
2. 2,499.40 acres of land in villages of Siljora, Gurda, Balda and Kalimati in the district of Keonjhar had been given to M/s. Serajuddin & Company under a mining lease for extraction of manganese ore by order dated 1-11-1946. The lease in question was to expire on 31-10-1966. M/s. Serajuddin & Company filed an application for renewal of the mining lease and that application was rejected by the State Government by order dated 26-10-1973, annexed as Annexure 1 to O.J.C. No. 2552 of 1987. M/s. Manganese Ore (India) Ltd. (for short, MOIL) (opposite party No. 2) made an application to the State of Orissa on 8-9-1972 for the very area which was under occupation of M/s. Serajuddin & Company for grant of mining lease. M/s. Serajuddin & Company moved the Calcutta High Court in Civil Revision No. 8602(W) of 1973 and on 12-11-1973 obtained an order of injunction against the State of Orissa not to interfere with the possession of said M/s. Serajuddin & Company. As the application filed by opposite party No. 2 on 8-9-1972 was not disposed of by the State Government within the period specified, in Sub-rule (1) of Rule 24 of the Mineral Concession Rules, 1960 (hereinafter referred to as the "Rules"), it was deemed to have been refused under Sub-rule (3) of Rule 24 of the Rules and against the deemed refusal, opposite party No. 2 moved the Central Government in revision under Rule 54 of the Rules. The Central Government disposed of the said revision application by order dated 8-4-1974 calling upon the State Government to consider the application of opposite party No. 2 and pass orders within four months. The said order of the Central Government is annexed as Annexure 3. On receipt of the order of the Central Government, the State Government intimated that the application of opposite party No. 2 could not be considered in view of the injunction order issued by the Calcutta High Court. The writ petition filed by M/s. Serajuddin & Company in the Calcutta High Court was dismissed by order dated 21-4-1982 and the application to the Division Bench against the said order was also dismissed by the Division Bench on 12-5-1982. Ultimately the State Government took over possession of the mines on 5-6-1982 and then authorised the Orissa Mining Corporation Ltd., the present petitioner in O. J.C. No. 2552 of 1987, to work out the mines as the agent of the Government. The Orissa Mining Corporation is a public sector undertaking of the State of Orissa. On 18-8-1982, the present petitioner filed an application to the State Government for grant of mining lease in respect of the area in question for extraction of manganese ore. When petitioner's application filed on 18-8-1982 was not disposed of within the period provided under the statute, against the deemed rejection, the petitioner moved the Central Government and the Central Government disposed of that revision by order dated 9-12-1983 requiring the State Government to pass final order on the application within 200 days. On 8-6-1984, the State Government issued a notification reserving the area in question for exploitation in the public sector. The said notification has been annexed as Annexure 8. Opposite party No. 2 moved the Central Government against the action of the State Government permitting the petitioner to work out the mines as the agent of the Government. The said revision was disposed of by the Central Government on 18-6-1984, annexed as Annexure 9, and it was observed by the Central Government that the State Government might take further action in the matter in accordance with law in the context of reservation notification issued on 8-6-1984. On 13-7-1984, the State Government in modification of its earlier notification of reservation issued another notification, annexed as Annexure 10, and it was stated in the said notification that the area was reserved for exploitation by the Orissa Mining Corporation, a Government Company, within the meaning of Section 617 of the Companies Act, 1956. Opposite party No. 2 moved the Central Government against the reservation notification dated 8-6-1984. Subsequently, on 9-7-1985 the State Government rejected the application of opposite party No. 2 that had been filed on 8-9-1972 on the ground that the application was premature and was not entertainable under Rule 60 of the Rules. The said order of the State Government has been annexed as Annexure 11. Against the aforesaid order of rejection passed by the State Government, opposite party No. 2 also filed a revision to the Central Government on 4-10-1985. On 24-6-1986, in accordance with the reservation of the area made for Orissa Mining Corporation, the State Government moved the Central Government for permission to grant the mining lease as manganese was one of the scheduled minerals. Both the revision applications filed by opposite party No. 2 were disposed of by orders passed by the Central Government on 25-6-1987 and the Central Government has allowed the revision applications and has set aside the reservation notification dated 8-6-1984 as well as the rejection order of the State Government dated 9-7-1985 and has directed the State Government to grant the mining lease in favour of opposite party No. 2. The said order has been annexed as Annexure 14 and the said order has been assailed in both these writ applications, as stated earlier.
3. Mr. Rath appearing for petitioner in O.J.C. No. 2552 of 1987 and learned Additional Government Advocate appearing for the petitioner in O.J.C. No. 3345 of 1987 have raised the following contentions in assailing the order of the Central Government under Annexure 14:--
(i) On 8-9-1972, the date on which opposite party No. 2 filed an application for grant of mining lease, the area in question was not available for grant as admittedly the same had been held by M/s. Serajuddin & Company and conditions prescribed in Rule 58(1) of the Rules had not been complied with and, therefore, the application of opposite party No. 2 was not entertainable under Rule 60 of the Rules. Consequently, the State Government rightly rejected the application of opposite party No. 2 by order dated 9-7-1985 and the Central Government illegally interfered with the said order without noticing the statutory rules under Rules 58 and 60 of the Rules which are mandatory in nature;
(ii) The Central Government committed gross error in entertaining the application of opposite party No. 2 which was not statutorily entertainable on the ground that the said opposite party No. 2 had fought the case in the Calcutta High Court against the ex-lessee;
(iii) The conclusion of the Central Government that MOIL (opposite party No. 2) has the prior right to the mining lease is contrary to the provisions of the Act and the Rules and the said conclusion is thereby vitiated; and
(iv) The Central Government committed an error in interfering with the reservation order made in favour of a public sector undertaking without any justifiable reason and, therefore, the said order cannot be sustained.
Mr. Modak appearing for opposite party No. 2, on the other hand, contends that since the State Government had all along been giving out that the application of opposite party No. 2 had not been disposed of, it was not fair on the part of the State Government to reject the application on the ground that it was premature. The learned counsel further urges that the reservation notification issued during the pendency of the application of opposite party No. 2 must be held to be a mala fide act just to deprive opposite party No. 2 from extracting the minerals and, at any rate, since opposite party No. 2 is also a public sector undertaking, there was no justification on the part of the State Government to treat it discriminately and to make the reservation for the Orissa Mining Corporation. The rival submissions made at the Bar requires a careful examination of the different provisions of the Act and the Rules as well as certain decisions of the Supreme Court as well as of this Court.
4. The first question that arises for consideration is whether the application filed by opposite party No. 2 for grant of mining lease on 8-9-1972 was at all entertainable and what is the impact of Rules 58, 59 and 60 of the Rules on such application. Admittedly, the area in question had been held under a lease by M/ s. Serajuddin & Company and the lease had expired on 31-10-1966. The said ex-lessee had made an application for renewal of lease which stood rejected only on 26-10-1973. But notwithstanding the said order of rejection, the ex-lessee continued to be in possession of the mines pursuant to an order of injunction issued by the Calcutta High Court until 5-6-1982 on which date the State Government took over possession of the mines after dismissal of the writ application filed by Serajuddin & Company. The minerals vest in the State Government, but the Parliament has enacted the Act to regulate the development of mines and minerals. The Central Government in exercise of power conferred under the Act has made the Rules laying down the procedure for making application for grant and its disposal. Rule 22 of the Rules provides for making of an application for grant of mining lease and Rule 24 provides for its disposal. Rule 58 recognises the power of the State to reserve any area for the exploitation either by the Government or by a Corporation established by the Central or the State Government or by a Government Company within the meaning of Section 617 of the Companies Act, 1956. Rule 59 prescribes that no area which was previously held under a Prospecting Licence or a Mining Lease shall be available for grant unless an entry to the effect that the area is available for grant is made in the register referred to in Sub-rule (2) of Rule 21 or Sub-rule (2) of Rule 40 as the case may be, and the availability of the area for grant is notified in the Official Gazette specifying a date being a date not earlier than thirty days from the date of publication of such notification in the Official Gazette from which such area will be available for grant. This provision has been engrafted in the Rules to exclude the possibility of any underhand dealing by the State Government who is the owner of the minerals and to make it known to all concerned with regard to availability of an area for grant. Rule 60 makes an embargo on the power of the State Government to entertain application for grant of mining lease without compliance of Rule 59. It would be appropriate at this stage to extract Rules 59 and 60 in extenso :--
"59. Availability of area for regrant to be notified. -
(1) No area -
(a) which was previously held or which is being held under a prospecting licence or a mining lease; or
(b) in respect of which an order had been made for the grant of a prospecting licence or mining lease, but the applicant has died before the grant of the licence or the execution of the lease, as the case may be; or
(c) in respect of which the order granting a licence or lease has been revoked under Sub-rule (1) of Rule 15 or Sub-rule (1) of Rule 31; or
(d) in respect of which a notification has been issued under Sub-section (2) or subsection (4) of Section 17; or
(e) which has been reserved by the State Government under Rule 58, shall be available for grant unless -
(i) an entry to the effect that the area is available for grant is made in the register referred to in Sub-rule (2) of Rule 21 or Sub-rule (2) of Rule 40 as the case may be, in ink; and
(ii) the availability of the area for grant is notified in the Official Gazette and specifying a date (being a date not earlier than thirty days from the date of the publication of such notification in the Official Gazette) from which such area shall be available for grant:
Provided that nothing in this rule shall apply to the renewal of a lease in favour of the original lessee or his legal heirs notwithstanding the fact that the lease has already expired:
Provided further that where an area reserved under Rule 58 is proposed to be granted to a Government Company, no notification under Clause (ii) shall be required to be issued.
(2) The Central Government may, for reasons to be recorded in writing relax the provisions of Sub-rule (1) in any special case.
60. Premature applications. -
Applications for the grant of prospecting licence or mining lease in respect of area whose availability for grant is required to be notified under Rule 59 shall, if, --
(a) no notification has been issued under that rule; or
(b) where any such notification has been issued, the period specified in the notification has not expired;
shall be deemed to be premature and shall not be entertained, and the application fee thereon, if any paid, shall be refunded."
In view of the aforesaid provisions in the Rules, and on the conceded position that by the date opposite party No. 2 made the application for grant of mining lease, there had been no entry to the effect that the area was available for grant in the register referred in Sub-rule (2) of Rule 21 or Sub-rule (2) of Rule 40, nor had there been any Gazette Notification indicating the availability of the area for grant, as required under Rule 59(1) of the Rules, the application of opposite party No. 2 was not entertainable, as provided in Rule 60 and by application of rule, it must be hold to have been deemed to be premature.
5. The provisions of Rules 58, 59 and 60 came up for consideration before a Bench of this Court in the case of Ferro Alloys Corporation Ltd. v. Union of India, ILR 1975 Cuttack, 199 (Sic) Construing the rules, it was held that an area would not be available for grant of mining lease or prospecting licence and would not be open for such a grant unless the conditions of Rule 59(1) of the Rules were complied with. (In the reported decision it has been wrongly stated that unless conditions of Rule 58(1) of the Rules are complied with, but obviously that is a mistake). It has been further held that Rules 59 and 60 of the Rules being mandatory, the effect of non-compliance of Rule 59(1) is that the application must be deemed to be premature and shall not be entertained under Rule 60. In this view of the matter, on the admitted position, we have no hesitation to conclude that the application filed by opposite party No. 2 was not legally entertainable for non-compliance of Rule 59(1) of the Rules and in the eye of law, it must be deemed to be premature. The Central Government without considering the effect of the statutory rules, referred to earlier, interfered with the decision of the State Government not on interpreting any rules, but on a sympathetic consideration. We have no doubt in our mind that in the face of mandatory requirements of the rules as contained in Rules 59 and 60, the Central Government committed gross error in interfering with the order of the State Government rejecting the application of opposite party No. 2 and the said order of the Central Government cannot be sustained.
6. In course of hearing learned counsel appearing for opposite party No. 2 took great pains in trying to persuade us that since the State Government had been all along telling that the application of opposite party No. 2 was pending for consideration, notwithstanding the infirmity in the application under the Rules, the State Government could not have rejected the same in the year 1985. We are unable to accept this submission of the learned counsel in view of the peremptory language of the rules which have been held to be mandatory in nature. The State Government's communication to the Central Government that the application of opposite party No. 2 is pending and has not been disposed of does not make the application valid which, in law, is invalid. An application which could not have been entertained on account of the provisions contained in Rules 59 and 60 of the Rules, cannot be said to be a valid application for consideration merely because the State Government had indicated that the application was pending. We are, therefore, unable to persuade ourselves to agree with the submissions made by the learned counsel for opposite party No. 2 in this regard. Mr. Rath's first contention accordingly must succeed.
7. Coming to the question of reservation, the State being the owner of the mines, its paramount right over the minerals cannot be denied. The Supreme Court in the case of Amritlal Nathubhai Shah v. Union Government of India, AIR 1976 Supreme Court. 2591, has considered the question of the State's power for reservation and has observed that the authority to order reservation flows from the fact that the State is the owner, of the mines and the minerals within its territory which vest in it and Rule 59 of the Rules recognises such right of reservation with the State. The State Government having made the reservation by its notification dated 8-6-1984 for exploitation of the area in, the public sector has exercised its right as the owner of the property which is, also recongised under Rule 59 of the Rules. The only reason that has weighed with the Central Government in annulling the said reservation; notification is that the MOIL (opposite party No. 2) having fought the litigation in the Calcutta High Court should not have been denied the first right for the minging lease. This, reason on the face of it is wholly untenable, inasuch as fighting a litigation in any court does not confer any preferential right on an applicant either under the Act or under the Rules. That apart, if the application of the MOIL was not legally entertainable, the question of conferring a preferential right on it does not arise. The notification issued by the State as the owner of the property to exploit the mines through its public sector cannot but be in the public interest. The Central Government by the impugned order does not say that the reservation for exploitation in the public sector as was made by the State Government in the notification dated 8-6-1984 was not in the public interest. 'But it was of the view that there was no greater public interest if the Orissa Mining Corporation was allowed to exploit in preference to the MOIL (opposite party No. 2). The question is not of a greater public interest. The judicial decisions and the law recognise the State's right for reservation of its own mines and minerals. The only restriction is that the reservation should be in the public interest. When a reservation notification is issued for exploitation by a public sector undertaking, which is undoubtedly in the public interest, that notification cannot be annulled either on the ground of a greater public interest or on the ground of any sympathetic consideration. The Central Government not having differed with the conclusion of the State Government that the reservation for exploitation in the public sector was in the public interest had no further jurisdiction to interfere with the notification on a hypothesis that greater public interest would be served by reserving the area for exploitation by MOIL. In other words, the owner's decision of reservation for exploitation of any minerals through a public sector cannot be interfered with by the revisional authority, so long as the conclusion that it was in the public interest remains unassailable. In this view of the matter, we have no hesitation to conclude that the Central Government by the impugned order committed gross error in interfering with the reservation notification of the State Government dated 8-6-1984 on a ground which is not sustainable in law and the said conclusion, therefore, must be set aside.
8. At this stage it would be profitable to notice that in Amritlal's case AIR 1976 SC 2591, referred to supra, the Supreme Court has also considered the question of reservation vis-a-vis an application for grant of the area for mining lease. After recognising the State's power for reservation, and on consideration of the provisions contained in Rules 59 and 60, their Lordships of the Supreme Court have held that it is not permissible for any person to apply for a lease in respect of a reserved area until after it becomes available for such grant and the availability is notified by the Central Government in the Official Gazette. Relying upon Rule 60, their Lordships have further held at page SC 2594:--
"........,.. It would therefore follow that as the areas which are the subject-matter of the present appeals had been reserved by the State Government for the purpose stated in its notification, and as those lands did not become available again for the grant of a prospecting licence or a mining lease, the State Government was well within its rights in rejecting the applications of the appellants under Rule 60 as premature. ............."
The aforesaid dictum would apply with full force to the facts and circumstances of the present case since we have already held that the application of MOIL, (opposite party No.
2) was not legally entertainable by application of Rule 60 of the Rules and, therefore, at the behest of such an applicant, whose application itself was not entertainable at the threshold, it was not within the competence of the Central Government to set aside a reservation; notification after coming to a finding that the reservation for exploitation in the public sector was in the public interest.
Mr. Rath's second contention, therefore, also must succeed.
9. It would not be out of place to notice that a bare reading of the revisional order of the Central Government which is being impugned in the present two writ applications would indicate that the Central Government instead of considering the provisions of the Act and the Rules had been swayed away by the fact that opposite party No. 2 had been fighting litigations in the Calcutta High Court for getting possession of the land and, therefore, possession having been delivered to the State Government, the State should not deny opposite party No. 2 from getting the grant. We are indeed unable to appreciate this stand of the revisional authority which is contrary to the Rules as discussed earlier.
We will be failing in our duty by not pointing out the erroneous impression under which the Central Government has been labouring that MOIL has a first right for the mining lease in question. A preferential right in the matter of obtaining a mining lease has been indicated in Section 11 of the Act. Section 11(2) indicates that where two or more persons had applied for mining lease in respect of the same land, the applicant whose application was received earlier shall have a preferential right for the grant of the lease over an applicant whose application was received later. This provision undoubtedly stipulates that an application which was legally entertainable and was received at a prior point of time would have the preference. But an application which was not legally entertainable and in the eye of law which must be deemed to be premature, cannot be considered for getting a preferential right.
The Central Government has totally left the provisions of the Act and the Rules from consideration and has come to a conclusion which is erroneous on the face of it. Consequently, the said order of the Central Government under Annexure-14 cannot be sustained.
It also further transpires that the modified notification of the State Government dated 13-7-1984 reserving the area for exploitation by the Orissa Mining Corporation Ltd. a Government Company, as per Annexure 10 as not been set aside or annulled though the factum of reservation in favour of the Orissa Mining Corporation Limited has been mentioned in the revisional order itself.
10. In the premises, as aforesaid, we quash the order of the Central Government under Annexure 14 as well the order of the Central Government under Annexure 15 which is merely a communication to the State Government of the order passed under Annexure 14. A writ of certiorari be accordingly issued. Both the writ applications are allowed. There will, however, be no order as to costs.
D.M. Patnaik, J.
11. I agree.