Orissa High Court
M/S. K.P. Granite Industries vs Harish Chandra & Ors on 4 December, 2012
Author: V. Gopala Gowda
Bench: V. Gopala Gowda
HIGH COURT OF ORISSA: CUTTACK
W.P.(C) No. 28746 of 2011
In the matter of an application under Articles 226 & 227 of the Constitution
of India.
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M/s. K.P. Granite Industries
and another ...... Petitioner
-Vrs-
State of Orissa and others .... Opp. parties
For Petitioners : M/s. P.C. Panda &
R.R. Swain.
For Opp. Parties : Mr. D. Panda,
Addl. Government Advocate
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P R E S E N T:
THE HON'BLE THE CHIEF JUSTICE V. GOPALA GOWDA
AND
THE HON'BLE MR. JUSTICE B.N. MAHAPATRA
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Date of Judgment: 04.12.2012
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B.N. MAHAPATRA, J.This writ petition has been filed with a prayer to quash the order/proceeding dated 22.09.2011 passed/drawn in the Department of Steel and Mines under Annexure-11 whereby the mining lease granted vide Proceeding No. 8418/SM, dated 22.8.2005 and mining lease executed on 14.02.2006 for decorative stone over an area of 6.972 hectares in village Andhrajholi of Gajapati district in favour of petitioner was cancelled on the ground that the said order is illegal, arbitrary, outcome of colourable exercise of power in violation of principles of natural justice and in 2 contravention of Articles 14 and 19(1)(g) of the Constitution of India and contrary to the provisions of Orissa Minor Mineral Concession Rules, 2004 (for short, 'the Rules, 2004').
2. Petitioners' case in a nutshell is that petitioner no.1-firm was mainly engaged in mining of decorative stone and related activities. Petitioner no.2 is the Managing partner of petitioner no.1-firm. On 30.4.2004, petitioner no.1-firm applied for a mining lease of decorative stone over an area of 30.865 hectares in village Andharijholi in the district of Gajapati before opposite party no.1-Commissioner-cum-Secretary, Department of Steel and Mines, Bhubaneswar under Rule 15 of the Rules, 2004. Opposite party no.2-Director of Mines, Odisha forwarded the said mining lease application of petitioner no.1-firm to the State Government on 5.7.2004 with the recommendation for grant of mining lease over an area of 26.325 hectares. On 18.10.2004, Government of Odisha-opposite party no.1 issued terms and conditions for grant of mining lease over an area of 26.325 hectares, which was accepted by the petitioner-firm on 20.10.2004. Upon acceptance of terms and conditions by the petitioner-firm, the Govt. of Orissa-opp. Party no.1 issued the order granting mining lease for decorative stone over 26.325 hectares in village Andharijholi in the District of Gajapati in favour of the petitioner-firm for a period of 10 years vide proceeding No. 11795 dated 31.12.2004. Pursuant to grant of mining lease by the State Government on 31.12.2004, opp. Party no.2 vide letter dated 19.1.2005 directed opposite party no.3 to execute the mining lease deed with 3 petitioner-firm. Upon a joint inspection, the mining lease area was demarcated by the officials of the Mining, Revenue and Forest Department on 19.4.2005. On such inspection it was found that the granted mining lease area contains cashew trees and other unclassified and bushy growth for which recommendation was made by the inspecting team for deletion of the vegetated area and to grant mining lease over an area of 6.972 hectares out of 26.325 hectares. The joint inspection report dated 19.4.2005 was forwarded by the Director of Mines-opp. Party no.2 on 2.5.2005 to the State Government with the recommendation to consider grant of mining lease over a reduced area of 6.972 hectares. Since no action was taken by the State Government to execute the lease deed with the petitioner-firm, the latter filed writ petition bearing W.P.(c) No. 4331 of 2005 before this Court, which was disposed of on 25.4.2005 with a direction to the petitioner-firm to produce the writ petition with all annexures before opp. Party no.2- Director, Mines which shall be treated as a representation and opp. Party no.2 was directed to consider the said representation for due compliance of order dated 19.1.2005 of opp. Party no.2.
3. On 22.8.2005, opp. Party no.1 in supersession of its earlier order dated 31.12.2004 has granted mining lease for decorative stone over an area of 6.972 hectares out of the earlier granted area of 26.325 hectares and directed petitioner no.1-firm to submit Mining Plan. The Mining Plan in respect of the mining lease was approved by opp. Party no.2 on 27.1.2006. The mining lease deed was executed on 13.2.2006 in Form-H as provided 4 under Rule 61(1) of the Rules, 2004, which was registered on 14.2.2006. Part-II of the mining lease deed executed on 13.2.2006 contained the conditions as provided under Rule 25 of the Rules, 2004. The petitioner-firm started mining operation of the lease hold area on 2.8.2006 and continued for six months. On 9.2.2007, the petitioner-firm deposited Rs.77,091/- with opp. Party no.3 towards surface rent, dead rent for the years 2006 and 2007 with opp. Party no.3-Mining Officer, Ganjam towards surface rent and dead rent for the year 2006 and 2007 with interest. In terms of Clause 5 of Part- II of Mining Lease deed dated 13.2.2006, the lessee-petitioner-firm intimated the competent authority under the Rules, 2004 regarding discontinuance of the mining operation over the lease-hold area as there was no market demand of decorative stone in the region from the date of execution of lease deed. It was further intimated that decorative stones are mainly exported from the State of Orissa. The said intimation was received by the competent authority on 8.11.2007. Again vide letter dated 23.2.2008, petitioner-firm intimated opp. Party no.3 regarding discontinuance of the mining operation in the lease hold area due to health problem of petitioner no.2. But no reply either rejecting and/or objecting the letter regarding discontinuance of mining operation was ever communicated to the petitioner-firm.
4. On 30.6.2008, opp. Party no.3 issued demand notice directing the petitioner-firm to deposit Rs.1,78,494.00 towards dead rent and surface rent up to 31.12.2008. Pursuant to such demand notice on 14.8.2008, the petitioner-firm deposited Rs.79,910/- with opp. Party no.3 towards surface 5 rent and dead rent up to 31.12.2007 which was duly received and acknowledged by opp. Party no.3. On 12.10.2010, opp. Party no.3 issued demand order directing the petitioner-firm to deposit Rs.4,24,483/- towards dead rent and surface rent for the period 2008-2010 and interest for the year 2007. Pursuant to such demand notice dated 31.12.2010, petitioner- firm deposited Rs.4.24,483/- with opp. Party no.3 which was duly received and acknowledged by opp. Party no.3. On 31.12.2010, the petitioner-firm submitted a representation before the competent authority through proper channel to accord permission for opening quarrying operation and lifting of decorative stone from the leasehold area and the said representation was duly forwarded by opp. party no.2 to opp. party no.3 vide its letter dated 18.1.2011. On 31.12.2010, the petitioner-firm also requested the opp. Party no.3 to issue permit to lift the existing stock of 70.073 cubic metres of decorative stone as there was market demand. While the petitioner-firm awaiting permission for opening mining operation and lifting of the materials, all of a sudden on 29.7.2011 opp. Party no.1 issued a notice to the petitioner-firm for personal hearing as to why the lease shall not be cancelled under Rule 25(5) of the Rules, 2004. In the said notice it was stated that opp. Party no.2 vide his letter dated 3.2.2011 has submitted a proposal for cancellation of the mining lease on the ground that after execution of lease deed, petitioner-firm has kept the area idle since more than two years deviating Rule 25.(5) of the Rules, 2004. Pursuant to the aforesaid notice, on 16.8.2011, petitioner no.2 appeared before the 6 Additional Secretary to Govt. Department of Steel and Mines for personal hearing and submitted a note stating its case. Petitioner-firm in the personal hearing also stated that it will start a decorative stone processing unit in the lease hold area within a period of one year from the date of issuing the order for reopening the quarry and submitted a letter to that effect. Opp. Party no.1 without considering the matter in its proper perspective, and without supplying the proposal of opp. Party no.2 dated 3.2.2011 to the petitioner-firm, in a most illegal, arbitrary and perfunctory manner vide order dated 22.9.2011 has held that there is violation of Rule 25(5) of the Rules, 2004 and therefore, the mining lease granted on 22.8.2005 and the lease deed executed on 13.2.2006 were cancelled. Hence, the present writ petition.
5. Mr. P.C. Panda, learned counsel for the petitioners submitted that the impugned order dated 22.9.2011 passed under Annexure-11 is illegal, arbitrary and out come of colourable exercise of power, in violation of principles of natural justice and contrary to the provisions of Orissa Minor Mineral Concession Rules, 2004. The initiation of proceeding by the Opp. Party for cancellation of the mining lease dated 13.2.2006 suffers from gross violation of principles of natural justice as the Opp. Party has not supplied the proposal dated 3.2.2011 of Opp. Party no.2 to the petitioner-firm which was reflected in the notice dated 29.7.2011 as well as in the impugned order dated 22.9.2011. Hence the impugned order dated 22.9.2011 was passed relying upon various documents such as show cause notice dated 7 18.12.2007 and 28.1.2009 of Opp. Party no.3 as well as the letter dated 28.10.2010 by opp. Party no.3, but the same were not supplied to the petitioner-firm. Hence, the said order suffers from gross violation of principles of natural justice.
6. Referring to Rule 68 (7) and Rule 2(e) and serial 4 of the Schedule IV of the Rules, 2004, it was submitted that the Department of Steel and Mines, Govt. of Odisha is the competent authority in respect of lease of decorative stone as provided in Clause (b) of Column No.3 of serial no.4 of the Schedule-IV of the Rules, 2004. No notice has ever been issued by the competent authority to the petitioner-firm to rectify the breach as contemplated under sub-rule (7) of Rule 68 of the Rules, 2004.Therefore, non-issuance of notice under Rule 68(7) of the Rules, 2004 by opp. Party no.1 prior to issuance of notice dated 29.7.22011 vide Annexure-8 vitiates the entire proceeding. The two show cause notices dated 18.12.2007 and 28.1.2009 as well as the letter dated 28.10.2010 of opp. Party no.3 which were referred to in the impugned order dated 29.9.2011 were not reflected in the notice dated 29.7.2011. The alleged show-cause notice dated 18.12.2007 and 28.1.2009 of opp. Party no.3 to the petitioner-firm for violation of conditions of mining lease deed are wholly without jurisdiction since the competent authority in respect of the mining lease for decorative stone is department of Steel and Mines, Govt. of Odisha as provided under the Rules. Once the mining lease deed in Form-H is executed and the conditions as enumerated in sub-rule (1) to (30) of the Rule 25 of the Rules, 8 2004 are incorporated in the mining lease deed, it is not open to the opp. Parties to invoke sub-rules (1) to (30) of the Rule 25 of the Rules, 2004 and the only procedure available with the opp. Parties is the procedure as prescribed under Rule 68(7) of the Rules, 2004. Since the action of opp. Party no.1 resulted in civil consequences, opp. Party no.1 ought to have issued notice to the petitioner-firm under Rule 68(7) of the Rules, 2004 prior to issuance of such direction.
7. Since petitioner no.1 deposited the surface rent and dead rent for the period from 13.2.2006 to 31.12.2010 with interest which was duly received and acknowledged by the appropriate authority, there is no loss to State Exchequer. For unavoidable circumstances, the petitioner-firm could not continue its mining operation after six months of the commencement of the mining operation, which fact was communicated to the competent authority. Because of discontinuance of mining operation of the lease-hold area by petitioner -firm, there is no loss to the State exchequer as royalty of decorative stones at the present time is higher than the rate of royalty prevalent during the period 2007-2010. In the meantime, the petitioner-firm has entered into sale/purchase contract with various buyers for supply of decorative stones from his lease hold area and the petitioner has employed 45 number of persons for working in the lease-hold area of the petitioner- firm and 80 number of persons are also indirectly dependants on the said mines. If the mining lease is not restored, livelihood of more than 125 persons engaged directly and indirectly for working in the mines will be put 9 to jeopardy. The petitioner-firm has set up a decorative stone processing unit which is a value addition of lease hold area of the petitioners. The petitioners have already purchased land from private person which are adjacent to lease hold area for setting up of a decorative processing unit for value addition.
8. Mr.D.Panda, learned Additional Government Advocate submitted that since the petitioner did not work upon the lease for a continuous period of two years the lease is liable to be cancelled and in the present case in view of the undisputed fact that the petitioner has not worked upon the lease for a continuous period of two years, opposite party No.1 is justified in passing the order dated 22.09.2011 under Annexure-11. It is further submitted that reasonable opportunity of hearing was afforded to the petitioner before cancelling the lease. In support of his contention, learned Additional Government Advocate relied on petitioner's own letter dated 31.12.2010. Concluding his argument, Mr.Panda, prayed for dismissal of the writ petition.
9. On the rival factual and legal contentions raised by the parties, the following questions fall for consideration by this Court:
(i) Whether any reasonable opportunity of hearing was afforded to the petitioner before passing the impugned order dated 22.09.2011 under Annexure-
11 cancelling petitioner's mining lease granted vide proceeding No.8418/SM dated 22.08.2005 and 10 cancelling the mining lease-deed executed on 14.02.2006?
(ii) Whether an opportunity should be given to the petitioner as provided in sub-rule (7) of Rule 68 by the authority before passing the Order under Annexure-
11?
(iii) Whether in view of the mandatory provision of sub-
rule(5) of Rule 25 of Rules, 2004, the order of cancellation of lease and the lease agreement is valid and the petitioner is not entitled to the relief claimed in the writ petition?
10. With a view to deal with question No.(i), we need not detain ourselves for longer period. Annexure-9 is the letter dated 29.07.2011 issued by the Under Secretary to Government of Odisha, Department of Steel and Mines to the petitioner intimating him that the Directorate of Mines vide its letter No.1270/DM, dated 03.02.2011 has submitted a proposal for cancellation of the mining lease for decorative stone held by the petitioner over 6.972 hectares in village-Andharajholi under Parlakhemundi Tahasil of Gajapati district on the ground that after execution of the lease- deed, the petitioner has kept the area idle since more than two years which deviate the rule 25(5) of OMMC Rules, 2004. It was further intimated that the Additional Secretary to Government, Department of Steel and Mines has fixed the date of personal hearing on 16.08.2011 at 1.00 PM to hear the case, as to why the aforesaid lease shall not be cancelled under rule 25(5) of 11 OMMC Rules, 2004 and accordingly petitioner was noticed to appear before the Additional Secretary for personal hearing on the scheduled date and time. On 16th August, 2011, petitioner addressed the Under Secretary intimating that he has started execution of work from 02.08.2006 and due to unavoidable circumstances he stopped the mining operation which fact thereafter has been intimated to the authority on 05.11.2007. It is further stated that thereafter though he has not operated the quarry he has paid the dead rent etc. Letter dated 31.12.2010 written to the Joint Secretary to Government, Steel & Mines, Deptt., Odisha, Bhubaneswar also reveals that the Mining Officer, Ganjam Circle, Berhampur has issued registered letter to show cause for non-working of the said M.L. area to which lessee submitted his reply stating the problems and reason thereof to the said Mining Officer. It is further stated that although it is delayed more than two years to run the quarry and it attracts provisions of Mining Act for cancelling M.L., till then the said provision may be relaxed and liberally considered to ensure providing opportunity to the petitioner to open and run the quarry. From the above two letters of the petitioner, it is amply clear that the petitioner has not worked upon the lease for a continuous period of two years and before cancellation of grant of lease agreement under Annexure-11 opportunity of hearing has been provided to the petitioner.
11. Question No.(ii) deals with giving of prior notice of 30 days to the petitioner as provided under sub-rule (7) of Rule 68 of OMMC Rules to rectify the defects within the time specified before cancelling the lease or 12 levying any particular penalty. Rule 68 provides for levy of penalty when any person is found extracting or transporting any minor mineral or on whose behalf such extraction or transportation is being made otherwise in accordance with the lease rules, shall be presumed to be a party to the illegal extraction or removal of such minor minerals and every such person shall be punishable with simple imprisonment for a term which may extend to two years or with fine which may extend to Rs.25,000/- or with both and in case of a continuing contravention, with an additional fine which may extend to rupees five hundred only for every day during which such contravention continues after conviction for the first such contravention. So the entire Rule 68 deals with levy of penalty. Rule 68 comes to operation when any person is found extracting or transporting any mineral in violation of the statutory provision. The present case is not a case of extracting or transporting any materials in contravention of the Rules for which penalty is to be imposed under Rule 68. Infraction of statutory provision is sub-rule (5) of Rule 25 of OMMC Rules, 2004 for not working upon the lease for continuous period of two years. Therefore, the provision of sub-rule (7) of Rule 68 has no application to the present case.
12. To deal with question No.(iii), it is felt necessary to know what is contemplated in sub-rule(5) of Rule 25 of the OMMC Rules, 2004 which is reproduced below.
"(5) If the leasee does not work upon the lease for a continuous period of two years, the lease shall be liable to be cancelled, unless prior permission has 13 been granted for such stoppage by the Competent Authority on reasonable grounds."
13. Admittedly, in the present case no prior permission has been granted to the petitioner for stoppage of quarry operation by the Competent Authority much less on any reasonable ground. In view of the clear statutory provision contained in sub-rule (5) of Rule 25 of OMMC Rules, we do not find that any illegality has been committed by opposite party No.1 for canceling the grant of lease and the lease-deed under Annexure-11 in view of the clear cut statutory provision contained in sub-rule (5) of Rule 25 of the OMMC Rules, 2004.
14. Law as has been laid down by the Hon'ble Supreme Court, the Court cannot issue a direction to the opposite parties contrary to law. Nor the Court can direct an authority to act in contravention of the statutory provisions [Vide State of U.P. & Ors. Vs. Harish Chandra & Ors., AIR 1996 SC 2173; Union of India & Anr. Vs. Kirloskar Pneumatic Co. Ltd., AIR 1996 SC 3285; and Vice-Chancellor, University of Allahabad & Ors. Vs. Dr.Anand Prakash Mishra & Ors. (1997) 10 SCC 264]
15. In State of Punjab & Ors. Vs. Renuka Singla & Ors. (1994) 1 SCC 175, dealing with a similar situation, the Hon'ble Supreme Court observed as under:-
"We fail to appreciate as to how the High Court or this Court can be generous or liberal in issuing such directions which in substance amount to directing the authorities concerned to violate their own statutory rules and regulations...."14
16. Similarly, in Karanataka State Road Transport Corporation Vs. Ashrafulla Khan & Ors., AIR 2002 SC 629, the Hon'ble Supreme Court has held as under:-
"The High Court under Article 226 of the Constitution is required to enforce rule of law and not pass order or direction which is contrary to what has been injuncted by law."
17. The stand of the petitioner that he was asked by the Mining Officer to make payment of the dead rent will not improve the case of the petitioner. Any direction of the Mining Officer to make payment of dead rent will not override the statutory provisions of the Rules of OMMC Rules of 2004.
18. In view of the above, we do not find any illegality or infirmity in the order passed under Annexure-11 warranting interference with the same by this Court in exercise of its power under Article 226 of the Constitution of India.
19. In the result, the writ petition is dismissed, but without costs.
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B.N. Mahapatra,J.
V. Gopala Gowda,C.J. I agree.
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V. Gopala Gowda,C.J.
Orissa High Court, Cuttack
The 4th December, 2012/ssd/ss