Karnataka High Court
Milan Minerals Private Limited And Ors. vs Union Of India (Uoi) And Ors. on 28 February, 2002
Equivalent citations: AIR2002KANT242, 2002(5)KARLJ227
ORDER Chandrashekaraiah, J.
1. The petitioners in these writ petitions have sought for quashing of the proceedings of the State Government seeking approval of the Central Government, for grant of mining lease under Section 5(1) of the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter referred to as 'MMRD Act, 1957), on the application filed by 4th respondent pursuant to the notification bearing No. DMB/ML/DV/99-5575, dated 15-6-1999, as contrary to law and for other reliefs.
2. The facts in these cases are as follows.--An area of 2,560 acres in Hombalghatta, Gollarahalli and other villages were held under mining lease by Sri P.K. Sarangapani Mudaliar. After the expiry of the lease, the State Government issued a notification dated 15-6-1999 published in the Official Gazette for regrant under Rule 59 of the Mineral Concession Rules, 1960 (hereinafter referred to as 'the Rules'). The petitioner, 4th respondent and 27 other persons filed applications for grant of mining lease. It is submitted that the petitioners learnt from the office of respondents 2 and 3 that the State Government has sought for approval of the Central Government under Section 5 of the MMRD Act, for grant of lease in favour of 4th respondent without considering the other applications as contemplated under the Act and the Rules and have filed these writ petitions seeking for quashing of the proceedings. The petitioner (in W,P. No. 19291 of 2001) also has submitted a detailed representation to the Chief Secretary to the Government of Karnataka, requesting for suitable direction to the 2nd respondent for grant of mining lease in its favour by seeking approval from the Secretary (Mines), Central Government, under Section 5 of the Act, a copy of which is produced as An-nexure-D to the petition.
3. The grievance of the petitioners is that in spite of the said representation, the Government has not taken any action and on the other hand has taken a decision to grant mining lease in favour of the 4th respondent and has taken steps to move the Central Government, for approval as provided under Section 5 of the MMRD Act.
4. Sri D.L.N. Rao, learned Counsel for the petitioners, submits that the decision of the State Government to grant mining lease in favour of respondent 4 is in total disregard of all provisions of the Act and the Rules.
5. The State Government in its statement of objections has justified the selection of 4th respondent for grant of mining lease. Respondent 4 also in the statement of objections justified his selection by the State Government, for grant of mining lease. In addition to this the 4th respondent has raised a preliminary objection regarding maintainability of the writ petitions relying upon the decision in the case of Binani Zinc Limited and Anr. v. State of Rajasthan and Anr., . According to the learned Counsel for the respondent, grant of mining lease if any, by the State Government is only after approval by the Central Government as contemplated under Section 5 of the Act, and in the instant case since the Central Government is yet to accord its approval these petitions are premature and liable to be dismissed. Further, it is submitted that even assuming that the State Government has taken a decision to grant mining lease in favour of the 4th respondent and if the petitioners are aggrieved of the said decision, the appropriate remedy for the petitioners is to challenge the said decision by way of filing a revision petition under Rule 54 of the Rules.
6. Before considering the case on merits with reference to the relevant provisions of law referred to above, I propose to consider the point raised by Sri R.N. Narasimha Murthy, learned Senior Counsel regarding maintainability of the writ petitions.
7. Sri R.N. Narasimha Murthy, appearing for the 4th respondent in all the petitions, submits that in the absence of any approval by the Central Government as provided under Section 5 of the Act, the writ petitions are liable to be dismissed as they are premature. It is further submitted that it is not known whether the Central Government would accord sanction or not and therefore at this stage, it is not appropriate for this Court to interfere in these writ petitions under Article 226 of the Constitution of India. In support of this, he relied upon the decision in the case of M/s. Binani Zinc Limited referred to supra. In that case, the Central Government has accorded approval for mining lease in favour of respondent 4 under Section 5 of the Act. But the State Government pursuant to the said approval had not passed an order granting mining lease in favour of respondent 4. On those facts, the High Court of Rajasthan has held that the writ petition is premature. In the instant case, on the basis of the information famished by the concerned officer of the State Government the petitioners have filed these petitions challenging the very process of selection on the ground that the selection of respondent 4 is contrary to the provisions of the Act and the Rules.
8. From the records, if it is shown that the State Government has not followed the procedure prescribed for the purpose of granting mining lease, in my opinion, in order to prevent any further litigation, it would be better to set right things at the threshold itself. In the instant case, there were 29 applications for grant of mining lease. Out of the 29 applications only four applications were forwarded by short listing to the State Government in the first instance, and subsequently one more application was forwarded to the State Government. No doubt, only these five applicants are before the Government. So far as the rest of the applicants are concerned, it appears they are not even aware of what has happened to their applications. Therefore, if the Central Government were to accord approval and pursuant to the said approval if mining lease is granted in favour of the 4th respondent, then there would be revision petitions or writ petitions challenging the said decision. Therefore, in order to avoid future litigation and to set right the irregularity or illegality in the matter of selection, I feel it is appropriate at this stage to interfere with the process of selection.
9. Further, from the records made available by the learned Government Pleader, I find that the State Government has taken a decision to grant mining lease in favour of the 4th respondent rejecting the applications of the other four applicants. This decision no doubt has not been communicated to the petitioners. Normally, whenever a decision is taken adverse to the interest of other applicants, and the State Government has taken steps to ask for approval of the Central Government, the State Government should have communicated its decision to the applicants whose applications have been rejected. In the instant case, there is no such communication to the petitioners. If the decision of the State Government has been communicated to the petitioners, the petitioners should have challenged the said decision, by way of filing a revision petition before the Central Government. Under Rule 54 of the Rules and in such circumstances, the Central Government would have considered the decision of the State Government before according approval to the State Government to grant mining lease in favour of the 4th respondent. But there is no such communication and therefore in order to prevent abuse of process of law, I hold, it is just and proper for this Court to interfere with the process of selection. Hence, I hold the writ petitions filed by the petitioners in this regard are maintainable in law.
10. In order to consider the rival contentions, it is useful to refer to certain provisions of the Act and the Rules, Section 5 of the Act provides for restrictions on the grant of prospective licences or mining leases. The proviso to Sub-section (1) of Section 5 of the Act reads as follows.-
"Provided that in respect of any mineral specified in the First Schedule, no reconnaissance permit, prospecting licence or mining lease shall be granted except with the previous approval of the Central Government".
Under Section 11(1) of the Act, 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.
Under Sub-section (2) of Section 11, where the State Government has not notified in the Official Gazette the area for grant of mining lease, and when two or more persons have applied for mining lease in respect of any land in such area, the applicant whose application was received first shall have the preferential right to be considered for grant of mining lease. Under the proviso to Sub-section (2) of Section 11, where the area is not notified for grant of lease, all applications, received pursuant to such notification during the specified period, including the pending applications received prior to the notification for grant, will have to be considered as if all the applications are received on the same day. Under Sub-section (4) where the State Government notifies in the Official Gazette an area for grant of mining lease, all applications received during the period as specified in such notification, which shall not be less than 30 days, shall be considered simultaneously as if all such applications have been received on the same day.
11. Rule 26 of the Rules reads as follows.-
"Refusal of application for grant and renewal of mining lease.--(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 mining lease over the whole or part of the area applied for.
(2) An application for the grant or renewal of a mining lease made under Rule 22 or 24-A, as the case may be, shall not be refused by the State Government only on the ground that Form I or J, as the case may be, is not complete in all material particulars, or is not accompanied by the documents referred to in Sub-clauses (e), (f), (g) and (h) of Clause (i) of Sub-rule (3) of Rule 22.
(3) 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 sixty days from the date of receipt of the said notice by the applicant".
12. From a reading of the above said rule, it is clear the State Government shall afford an opportunity of hearing before refusing to grant a mining lease. Further, under the above said rule, the State Government shall not refuse the application if it is incomplete or necessary documents have not been produced without issuing a notice calling upon the applicant to supply the omission or to furnish the necessary documents without any further delay within sixty days from the date of receipt of the said notice.
13. The State Government issued a notification dated 15-6-1999, calling for applications for grant of mining lease under Rule 59 of the Rules. The petitioner and others are the applicants seeking for grant of mining lease. If the applications are filed in response to the notification of the State Government, all applications received during the period as specified in such notification, shall be considered as if the said applications have been filed on the same day under Sub-section (4) of Section 11 of the Act. In the instant case all these applications are in response to the notification issued by the State Government. Therefore, preferential right as provided under Sub-section (2) of Section 11 has no application. Sri R.N. Narasimha Murthy, learned Senior Counsel appearing for the contesting respondent submits that as on the date the notification was published, calling for applications, present Rule 11 was not in force and therefore, the unamended Section 11 is applicable. The contention of the petitioners is that even if the unamended section is applied in respect of applications filed prior to the amendment of Section 11, the State Government is required to consider all applications filed on a particular date together. In order to appreciate this contention, I looked into the records. From the records, I find, out of 29 applications many of the applicants have filed their applications for grant of mining lease on 9-8-1999 i.e., on which date the petitioners have also filed their applications. Under the scheme of the Act and the Rules, all applications filed shall be forwarded to the State Government by preparing a list on the basis of the dates on which applications were filed. In the instant case, the Department has forwarded only four applications in the first instance and one application subsequently by short listing. This in my opinion is impermissible. When once applications are filed, all applications should be forwarded provided they are in order, to the State Government. The State Government thereafter has to consider on the basis of the preferential right as per the unamended Section 11 of the Act. In the instant case such procedure has not been followed by the Department.
14. The contention of the State Government is that even though the State Government has issued notices to other applicants calling upon them to supply the omission or to furnish documents, they have not complied with the requirement as per the notice and therefore, the Department has forwarded only five applications which were in order. Under Rule 26 of the Rules, if there is any deficiency in the application, an opportunity should be given to supply the deficiency. In the absence of non-compliance of the requirement, within sixty days from the date of receipt of the notice by the applicants, an opportunity should be given to them before passing an order refusing to grant the mining lease. In the instant case, even assuming that the persons to whom the notices have been issued to comply with the requirements, no opportunity has been given to such of those applicants. The petitioners also were not provided with an opportunity of hearing before taking a decision to reject their applications for grant of mining lease. Therefore, there is non-compliance of Rule 26 of the Rules.
15. It is in the submission of the learned Counsel for the petitioners, that Section 11, as amended is applicable to the facts of this case since Section 11 of the Act has been substituted by Act 38 of 1999 and it was in force as on the date of consideration of the applications by the State Government. In support of this submission the learned Counsel for the petitioners relied upon the decision of the Supreme Court in the case of Indian. Metals and Ferro Alloys Limited v. Union of India and Ors., the Supreme Court in the above said judgment has held as follows.-
"20. Now, to turn to the contentions urged before us: Dr. Singhvi, who appeared for GRIND, vehemently contended that the rejection of the application of GRIND for a mining lease was contrary to the statutory mandate in Section 11(2); that, subject only to the provision contained in Section 11(1) which had no application here, the earliest applicant was entitled to have a preferential right for the grant of a lease; and that a consideration of the comparative merits of other applicants can arise only in a case where applications have been received on the same day. It is no doubt true that Section 11(2) of the Act, read in isolation gives such an impression which, in reality, is a misleading one. We think that the sooner such an impression is corrected by a statutory amendment the better it would be for all concerned. On a reading of Section 11 as a whole, one will realise that the provisions of Sub-section (4) completely override those of Sub-section (2). This sub-section preserves to the S.G. a right to grant a lease to an applicant out of turn subject to two conditions: (a) recording of special reasons; and (b) previous approval of the C.G. It is manifest, therefore, that the S.G. is not bound to dispose off applications only on a first come, first served" basis. It will be easily appreciated that this should indeed be so for the interests of national mineral development clearly require in the case of major minerals, that the mining lease should be given to that applicant who can exploit it most efficiently. A grant of ML, in order of time, will not achieve this result".
From the above, it is clear whether it is amended or unamended, the application should be considered on its own merits and it is not on "first come first served basis". Further, even assuming that the applications are prior to the amendment introduced to Section 11 of the Act, what is the law to be applied is the law that is in force on the date of consideration of the applications on merits. If that is so, all 29 applications, if they were in order and were not rejected after affording opportunity of hearing to applicants as provided under Rule 26 of the Rules should have been forwarded by the Department and the State Government should have considered all the said applications on their own merits as contemplated under Section 11(4) of the Act, as if the said applications were filed on the same day.
16. From the records made available by the State Government I find the Secretary to the Government, Department of Commerce and Industries, has made a note which reads as follows.-
"Under the rules in vogue, all applications for mining leases should be processed only after 30 days, and then it should be collected together irrespective of the date of application and decisions will have to be taken on merits and capacity for performance and then referred to the Government for taking appropriate action".
This aspect of the matter has not been considered by the concerned Minister while taking a decision to grant mining lease in favour of the 4th respondent. From the file, I also find that because of the call by the private secretary to the Hon'ble Minister for Mines, the file has been put up before the Hon'ble Minister for his perusal. Ultimately, the concerned Minister has taken a decision to grant mining lease in favour of the 4th respondent. This decision is in violation of all the procedures prescribed under the provisions referred to above.
17. Sri R.N. Narasimha Murthy, learned Counsel for respondent 4 submits that Section 11 of the Act, does not provide for affording an opportunity of hearing to the applicants before rejecting their applications for grant of mining lease and therefore, the petitioners are not entitled for hearing even assuming there is a decision by the State Government to reject the applications of the petitioners. From the records, it is seen the concerned Minister has taken a decision to grant mining lease in favour of the 4th respondent and at the same time rejected the applications of the petitioners. The argument of Sri R.N. Narasimha Murthy, is that Section 11 of the Act has been amended by Act 38 of 1999. As per the amended section, no opportunity is required to be given before passing an order rejecting the applications and therefore Rule 26 which was in force from the beginning has no application and consequently no opportunity of hearing need be given to the applicants before passing an order rejecting their applications. If the intention of the Government is that there is no need to afford an opportunity of hearing to the applicants before rejecting their applications for grant of mining lease, as the said applications are required to be considered on merits, the State Government would have suitably amended Rule 26 of the Rules to delete Sub-rule (1) of Rule 26 after the amendment of Section 11 of the Act. In the instant case, the very fact that Rule 26 is on the statute book, it is to be presumed that the Government, in its wisdom is of the view that an opportunity should be given to the applicant before rejecting his application, even after the amendment of Section 11 of the Act. In these cases as found from the records, no opportunity has been afforded to the petitioners before passing the order rejecting their applications and no opportunity has also been afforded to the other applicants whose applications are still lying in the Department without being forwarded to the State Government.
18. When a statute provides a thing to be done in a particular manner, it should be done only in that manner. In the instant case, no procedure prescribed under the Act and the Rules has been followed by the State Government and therefore in order to avoid the abuse of process of law, I am of the considered view that the selection if any of the 4th respondent by the State Government is to be quashed and all 29 applications filed by the applicants shall be considered in accordance with law and in the light of the observation made above. Hence, I pass the following order.-
Writ petitions are allowed.
(1) The proceedings of the State Government granting mining lease in favour of the 4th respondent are quashed;
(2) Direction is issued to the State Government to consider all applications which are pending and pass appropriate orders in the light of the observations made above.