Patna High Court
S. Lal & Co. Pvt. Ltd. vs The Union Of India (Uoi) And Ors. on 4 April, 1972
Equivalent citations: AIR1972PAT460, AIR 1972 PATNA 460, ILR (1973) 52 PAT 64 1972 BLJR 930, 1972 BLJR 930
JUDGMENT Akbar Hussain, J.
1. This is an application at the instance of M/s. S. Lal and Company Private Limited having its registered office at No. 15, Chittaranjan Avenue, Calcutta-13, in which the petitioner-company has challenged the validity of an order passed by the Union of India, respondent No. 1, under their letter No. 5 (4)/68-MII dated 28th July, 1968, as indicated in paragraph 44 of the petition and the grant of lease in favour of respondent No. 3 by respondent No. 2 in pursuance thereof. It appears that on 30-9-1969 under the direction from the government of India (respondent No. 1), respondent No. 2 has granted a lease in respect of an area of 12 square miles being a part of the area referred to in Annexure 1 to this petition which is a notification in respect of 280.62 acres in Mouza Balki and Surngi and in the Forest Block within Thana No. 481 in the district of Singhbhum falling within the aforesaid notification, for the purpose of working apatite which is a matter specified in the first schedule as mineral, being item No. 1. Mr. B. C. Ghose, learned counsel appearing for the petitioner has attacked the validity of this lease on various grounds which I propose to deal with later. In order to appreciate and examine the correctness of the contentions and the points raised, it is necessary to state, in brief, the facts leading to this impugned lease and to this application in this Court.
2. It is stated that sometime in 1965, the petitioner learnt of a Notification issued by the District Mining Officer, Singhbhum inviting applications for lease from persons holding certificate of approval for mining lease in respect of certain area included in the Notification. Annexure 1. This Notification was purported to have been issued under Rule 58 of the Mineral Concession Rules, 1960 (hereinafter referred to as 'the Rules'). In pursuance of this Notification the petitioner filed an application dated 22-3-1965 (Anncxure 1/A) for the grant of a mining lease over the area of 280.62 acres in the villages named above. The application, it appears, was not disposed of within the period prescribed under Rule 24 of the aforesaid Rules and, therefore, it was deemed to have been rejected. The petitioner consequently filed an application in revision (Annexure 2) under Rule 54 of the Rules to the Central Government on 14-1-1966. Thereafter, respondent No. 1 appears to have called for comments from respondent No. 2 as contemplated by Rule 55 of the rules. It is said that on 17th March, 1966, respondent No. 2 sent their comments to respondent No. 1 (Annexure 3) a copy of which was forwarded by respondent No. 1 on 26th May, 1966 and received by the petitioner on 28th May, 1966 for further comments, if any -- vide Annexure 3/A. The State Government appears to have taken a decision to work the phosphetic area departmentally and, therefore, they seem to have recommended the rejection of the petitioner's application to respondent No. 1 on this ground. On 23rd June, 1966, the petitioner also sent their comments to respondent No, 1 which is Annexure 4 to this application. The Government of India by their letter dated 7th August, 1966, rejected the petitioner's application on the following grounds:--
"The Central Government have come to the conclusion that there is no valid ground for interfering with the derision of the Government of Bihar to reject your application for grant of mining lease for appetite over 280.62 acres in village Balki etc., district Singhbhum."
The aforesaid order is made Annexure 5 to this application.
3. Now, I propose to deal with the material part of the petition which is devoted to the manner and the circumstances in which respondent No. 2 at the instance of respondent No. 1 has granted the impugned lease to respondent No. 3. It appears that after the passing of the order contained in Annexure 5, respondent No. 3 took interest in the lease in question and first of all tried to obtain a certificate of approval necessary for obtaining a mining lease, It is said that respondent No. 3, being an influential member of the Parliament, had very important contacts with the Government of India and applied for certificate of approval on 3rd May, 1968 to the Government of Bihar. It is alleged in paragraph 20 of this application that on that very day, this application for certificate of approval was granted by the Government of Bihar to respondent No. 3 in violation of the normal procedure of obtaining the approval of the Central Government prior to the granting of the certificate. This was, however, done by respondent No. 2. On the same day, namely, on 3rd May, 1968, respondent No. 3 armed with the certificate of approval granted to him, applied for the lease over an area of 12 square miles to the Deputy Commissioner of Singhbhum. It is alleged that no Notification had been issued by the Government of Bihar making any other area available for the grant of mining lease under Rule 58 of the Rules nor was there any Notification relating the area previously notified under Annexure 1 in 1965. In spite of these difficulties in the way of respondent No. 3 for getting his application recommended to respondent No. 1 for approval, respondent No. 2, recommended the application of respondent No. 3 for grant of the mining lease for the entire area applied for. This was also done on 3rd May, 1968.
4. On the application of respondent No. 3, thus recommended by respondent No. 2, it appears that respondent No. 1 directed the grant of the lease to respondent No. 3 in the following terms:--
'"The Central Government in the interest of mineral development in exercise of the powers conferred by Sub-rule (2) of Rule 58 of the Mineral Concession Rules, 1960, hereby authorise the State Government to grant mining lease for appetite over the area to Dr. Satya Narain Sinha without following the procedure laid down in Sub-rule (1) of the said Rule 58 of the M. C. Rules, 1960.
Further, in exercise of the powers conferred by Section 31 of the M. M. R. D. Act, 1957, the Central Government hereby authorise the State Government to grant mining lease to Dr. Sinha over the area in question which does not form a compact block.
The Central Government also, in exercise of the powers conferred by proviso to Section 6 (1) of the Mines and Minerals (Regulation and Development) Act, 1957, authorise the State Government to grant mining lease for appetite over the areas to Dr. Sinha in excess of the limit of 10 square miles prescribed in Section 6 (1) and (b) of the said Act."
5. On 14-1-969, when the petitioner learnt about the aforesaid actions of respondent No. 2, they approached the Government of Bihar for an appropriate action asking for staying the grant of the lease in favour of respondent No. 3. This application is Annexure 8 to this petition to which prayer of the petitioner, the Government did not agree. The petitioner thereafter on 29-6-1969 filed an application (Annexure 8/A) before respondent No. 2 against their decision mentioned above. On 9-7-1969 the petitioner appears to have made another application (Annexure 9) for an interim order restraining respondent No. 2 from granting the lease in respect of the aforesaid area of 280.62 acres (earlier refused on the ground of being worked by the Government of Bihar themselves). On 15th July, 1969, the petitioner again made an application to respondent No. 2 against the proposal for grant of lease in favour of respondent No. 3 and praying for grant in their own favour which is Annexure 10 to this application. This application was rejected as communicated by the letter of respondent No. 2 dated 6th August, 1969 (Annexure 11). At this stage, it may be mentioned that by Annexure 13 the prayer made in Annexure 9 was rejected by respondent No. 1.
6. On 23rd August, 1969, it appears that a third attempt was made by the petitioner to obtain the lease from respondent No. 2 for which purpose another application was filed with respect to the three villages as was made in the first application. On 21st February, 1970, the Deputy Commissioner pointed out that the grant of lease in favour of the petitioner was not possible in view of the fact that the same had been granted to respondent No. 3. On 10-10-1970, respondent No. 2, however, formally rejected in express terms the application of the petitioner by means of letter No. 1013/70-743. On 17-11-1970, the petitioner filed an application in revision under Rule 54 of the Rules before respondent No. 1 which seems to have resulted in an order contained in Annexure 14 dated 23rd November, 1971.
7. Annexure 14 is a part of the second supplementary affidavit filed on behalf of the petitioner in this case. In this order, the operative portion is as follows:--
"On a perusal of the original grounds of rejection as well as of those stated in the counter comments, it is not possible to get convinced that the State Government followed the correct procedure in dealing with the application. In the circumstances the Central Government in exercise of their revisional powers under Rule 55 of M. C. R. 1960 and all other powers enabling in this behalf hereby set aside the orders of the State Government contained in their letter No. 1013/70-7434-M dated 10-10-70 and further direct that the State Government shall give further consideration to the application and pass appropriate orders within a period of four months.
The State Government is being informed." This completes the course of events subsequent to the Notification on Annexure 1 in 1965.
8. There are, however, other series of events which took place as a result of another notification under Rules 58 and 59 of the Rules in January, 1968 (Annexure 6). These notifications relate to the villages Byangbil and Kanyaluka within the district of Singhbhum where also similar areas were made available for grant of working phosphate. On a perusal of the said notification, the petitioner company applied for the grant of mining lease over the said villages on 15th February, 1968, by two applications contained in Annexures 7 and 7/A. As the aforesaid applications were not disposed of within the prescribed period under Rule 24 of the rules, the petitioner filed two applications in revision under Rule 54 before respondent No. 1. These petitions are Annexures 7/B and 7/G dated 21-3-1969. As stated in paragraphs 16 and 17 of the petition, it appears that no final order has Been passed or received by the petitioner up till now. It is not categorically stated on behalf of respondent No. 1 or respondent No. 2 as to whether the applications contained in Annexures 7/B and 7/C have been finally disposed of by respondent No. 1 and it so with what result. So far as the area forming the subject-matter of grant in favour of respondent No. 3 is concerned, it appears that the entire area for which the petitioner filed applications seems to contain the grant in favour of respondent No. 3.
9. Mr. R. C. Ghose, learned counsel for the petitioner has attacked the lease in favour of respondent No. 3 on the following grounds, (i) Under Rule 59 of the Mineral Concession Rules, the State Government cannot grant a mining lease in respect of an area which was reserved by the State Government for some purpose unless an entry is made in the register of prospecting licences and mining leases to the effect that the said area has been thrown open for grant and a notification is issued in the Official Gazette stating the date from which the area shall be available for grant in terms of Rule 58,
(ii) No such advertisement has been issued and as such, no mining lease can be granted in favour of any person unless such an entry is made and notification is issued.
(iii) The respondents have acted in violation of the provisions of Rules 58 and 59 of the Mineral Concession Rules, 1960, which they are not permitted to do;
(iv) Having rejected the petitioner's application for a mining lease over a portion of the area in respect of which the present grant to Dr. Satyanarain Sinha has been made on the ground that the State Government had reserved the area for being worked in the Public Sector, it is obligatory on the State Government to make an entry in the register of prospecting licences and mining leases to the effect that the area has been thrown open for grant in the private sector and notify by advertisement the date from which the said area is available for grant in terms of Rules 58 and 59 of the Mineral Concession Rules, 1960.
(v) In any event the grant of lease in favour of respondent No. 3 is mala fide and colourable exercise of the powers conferred under Section 6 of the Act and Rule 58 of the Rules.
10. In my opinion, the application can be effectively disposed of on a proper examination of the implications of Section 5 (2), Section 6 (1) and Section 31 of the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter called 'the Act') and the provisions of Sub-rule (2) of Rule 58 of the Rules. It is evident that the grant in favour of respondent No. 3 has been made in pursuance of the directions of the Central Government giving its approval under Section 5 (2) of the Act and in exercise of the powers conferred by Sub-rule (2) of Rule 58 of the Rules. The aforesaid provisions are in the following terms:--
Section 5 (2): "Except with the previous approval of the Central Government, no prospecting licence or mining lease shall be granted--
(a) as respects any mineral specified in the First Schedule, or
(b) to any person who is pot an Indian National."
Section 8 (1); "No person shall acquire in any one State in respect of any mineral or prescribed group of associated minerals--
(a) one or more prospecting licences covering a total area of more than fifty sequare miles; or
(b) one or more mining leases covering a total area of more than ten square miles;
Provided that if the Central Government is of opinion that in the interests of mineral development it is necessary so to do, it may, for reasons to be recorded, permit any person to acquire one or more prospecting licences or mining leases covering an area in excess of the aforesaid maximum."
Section 31: "Relaxation of rules in special cases: The Central Government may, if it is of opinion that in the interests of mineral development it is necessary so to do, by order in writing and for reasons to be recorded, authorise in any case the grant, renewal or transfer of any prospecting licence or mining lease, or the working or any mine for the purpose of searching for or winning any mineral, on terms and conditions different from those laid down in the rules made under Section 13."
Rule 58 (2): "The Central Government may, for reasons to be recorded in Writing, relax the provision of Sub-rule (1) in any special case."
The direction in the instant case is given apparently in exercise of the powers contained under Sub-rule (2) of Rule 58 by which the Central Government may, for reasons to be recorded in writing, relax the provisions of Sub-rule (1) in any special case. According to Mr. Ghosh, the grant has been made under Rule 59 in which there is no provision for making any relaxation of the kind which has been done in the instant case and that being so the whole grant suffers from this serious and fatal infirmity. I do not think, I can persuade myself to accept this contention in view of the specific reference to Rule 58 in Rule 59 and referentially Sub-rule (2) of Rule 58 must be looked into and invoked for the purpose of giving a grant under Rule 59 also. Therefore, the Central Government did certainly have the right exercisable under Sub-rule (2) of Rule 58 of the Rules for making the relaxation in the provisions of Sub-rule (1) of Rule 58 in special case. But the most important expression contained in Sub-rule (2) of Rule 58 is "for reasons to be recorded in writing." In the instant case, although, it is said that the power conferred by Sub-rule (2) of Rule 58 of the Rules has been exercised by the Central Government in the interest of mineral development, no reasons for the exercise of that special power have been expressly indicated and given and that being so it is not possible to hold that the grant of the lease in favour of respondent No. 3 is with legal authority.
11. Likewise the Central Government has chosen to exercise the powers contained in Section 31 of the Act which has already been quoted above. Here also, the Central Government can only exercise these very extraordinary powers in appropriate cases but the statute makes it obligatory that the reasons for such exercise of powers must be recorded and then only the granting authority can be protected in giving a grant of lease, renewal or transfer of any prospective licence or mining lease etc. on terms and conditions different from those contained in Sec. 13, In the instant case although this power seems to have been exercised by the Central Government to authorise the granting authority, namely, respondent No. 2, to give something in excess in spite of the limitation imposed under Section 13, it suffers from the same infirmity as has been indicated in connection with the exercise of powers under Rule 58, Sub-rule (2). The result is that this exercise of power under Section 31 of the Act also, in my opinion, suffers from a fatal infirmity and the grant derived from this authority emanating from respondent No. 1 is bad and cannot be sustained.
12. Similar is the position in regard to the power exercised by the Central Government under the proviso to Section 6 (1) of the Act. From Section 6 (1) of the Act, which has already been quoted above, it is evident that the section begins with prohibitive expressions and there is a command that no person shall acquire in any one State in respect of any mineral or prescribed group of associated minerals, in a manner different from what are contained in Sub-clauses (a) and (b) of Clause (1). This limitation, however, is overridden by a proviso in express terms. By means of this proviso, the Central Government have been given the power to permit any person to acquire one or more prospecting licences or mining leases covering an area in excess of the prescribed maximum. But this again has to be 'for the reasons to be recorded' and not merely a bald exercise of powers. In the instant case, there is no material to show that any reason has at any stage, been recorded in any form by respondent No. 1 to justify the grant within the ambit of these provisions rendering it valid exercise of powers contained thereunder. In this view of the matter and having regard to all the facts and circumstances of the case, in my opinion, the submissions made by learned counsel for the petitioner and the grounds of attack on the grant by respondent No. 2 in favour of respondent No. 3 must be accepted.
13. For the reasons stated above, in my opinion, the application must succeed and the grant of lease in favour of respondent No. 3 on 30-8-1969 must be called up and quashed. Before I part with this case, I must refer to Annexure 14 of the Supplementary affidavit by the petitioner to which I have already referred above. By this order, respondent No. 1, while dealing with the revision application of the petitioner under Rule 54 of the Rules have directed the State Government to give further consideration to the application of the petitioner within the period of four months. This period appears to have already expired and I will only observe that respondent No. 2 having regard to the spirit of the order will dispose of the application in accordance with law and expeditiously.
14. So far as the revision applications, Annexures 7/B and 7/C arising out of the original applications contained in Annexures 7 and 7/A are concerned, it must be observed and directed that respondent No. 1 should dispose of the applications Annexures 7/B and 7/C, if not already disposed of as expeditiously as possible. In case respondent No. 1 has already disposed of the revision applications in Annexures 7/B and 7/C in view of the fact that the petitioner to this day have no knowledge of the result of those applications, it would be fair and proper that respondent No. 1 should communicate the decision on those revision applications to the petitioner expeditiously. Subject to these observations and directions, the application succeeds and must be allowed; but in the circumstances of the case, there was be no order as to costs.
Untwalia, J.
15. I agree, I would, however, like to add a few words.
16. The lease granted to respondent No. 3 is invalid, if I may say so with respect as rightly held by my learned Brother. Under Section 5 (2) of the Mines and Minerals (Regulation and Development) Act, 1957, (Central Act 67 of 1957) (hereinafter referred to as 'the Act'), in respect of any mineral specified in the first schedule appended to the Act, no prospecting licence or mining lease can be granted, except with the previous approval of the Central Government. Appetite and phosphoric ore are one of the minerals mentioned in the first Schedule (Item No. 1). Therefore without the previous approval of the Central Government, the State Government had no power to grant the mining lease to respondent No. 3. The approval of the Central Government in this case is by their order dated 20th July, 1968, the relevant portion of which is quoted in paragraph 6 of the petition. While giving this approval, three relaxations have been made by the Central Government one under Rule 58 (2) of the Mineral Concession Rules, 1960 (hereinafter referred to as 'the Rules') and the other two under Sections 31 and 6 (1) of the Act. The first relaxation is attacked by Mr. Ghose on two grounds (i) that this being not a case of Rule 58, but a case of Rule 59 of the Rules, the Central Government had no power of relaxation, (ii) even if the power was there, the requirements of the rule were not complied with in the order. I do not accept the first submission as correct. Undoubtedly, this is a case covered by Rule 59 of the Rules which requires that the State Government shall grant the lease after following the procedure laid down in Rule 58 of the Rules. The procedure laid down in Clauses (a) and (b) of Sub-rule (1) of Rule 58 of the Rules, therefore, apply to a case of Rule 59 of the Rules also. It will be unreasonable to hold that even though the said procedure applies, there is no power in the Central Government to relax the procedure prescribed in Sub-rule (1) in exercise of their power under Sub-rule (2) of Rule 58 of the Rules. I am of the opinion that as a matter of interpretation the power has to be conferred in the Central Government to relax the requirement of Sub-rule (2) of Rule 58 of the Rules even in case which is covered by Rule 59 of the Rules.
17. The second ground of attack is on the ground that the reasons have not been recorded in writing to relax the provisions of Sub-rule (1) of Rule 58 of the Rules. There are no reasons given in the relaxation order made in that regard. The rule requires the giving of reasons. The reasons so required to be given may be justiciable; hut that apart, where no reasons are given at all, it is no compliance with the requirements of the rule and hence the exercise of the power is illegal and invalid.
18. The second relaxation with reference to Section 31 of the Act is a relaxation of the rule framed under Section 13 which requires that the demised area must form one compact block. This requirement was also relaxed but with two infirmities, viz., (i) in the order it is not stated that the Central Government is of the opinion that in the interest of mineral development it is necessary to relax the requirement nor, is any reason recorded in the order. The identical two defects are to be found in the third relaxation under Section 6 (1) of the Act. The demised area could not be in excess of 10 square miles unless it was validly relaxed by the Central Government. It is not stated in the order that the Central Government is of the opinion that in the interest of mineral development, it is necessary to relax the requirement nor any reasons have been given for doing so. It may, however, be mentioned that in the beginning of the order it is mentioned that the Central Government in the interest of the mineral development is doing something, but that is with reference to the exercise of their power under Rule 58 (2) only and not with reference to the provisions of Sections 31 and 6 (1) of the Act. Therefore, all the relaxations made are infirm, illegal and invalid. That being so, it has got to be held in this case that the lease granted to respondent No. 3 on the basis of the infirm, illegal and invalid approval accorded by the Central Government is invalid and void and must be quashed.