Delhi High Court
Dr. B.L. Wadehra vs Union Of India (Uoi) And Ors. on 20 August, 1998
Equivalent citations: ILR1998DELHI651, AIR 1998 DELHI 436, (1999) 1 COMLJ 44
Author: Y.K. Sabharwal
Bench: Y.K. Sabharwal, A.K. Srivastava
JUDGMENT Y.K. Sabharwal, J.
1. The petitioner, an Advocate, has filed this petition in public interest questioning, the transfer of mining lease of Deposit No. 11-B, Iron-Ore Mine by the National Mineral Development Corporation (for short 'NMDC') in favour of private sector. The NMDC a wholly owned Government of India undertaking has agreed to transfer lease of mine in question to a joint sector company, namely, Bailadila Mineral Development Company Ltd. (Respondent No. 7). An industrial House by the name of 'Mittals' has 89% shareholding in the said joint venture company ('JVC' for short).
Brief Facts:
2. The lease of 1809 hectares of land in Baledilia Reserve Forest Area, Bastar District, Madhya Pradesh, was granted in favour of NMDC for a period of 30 years with effect from 12th June, 1967 by the State of Madhya Pradesh. Deposit 11-B is part of this land lies in the middle of the area leased out to NMDC. It has would's best quality iron-ore with ferrous content of above 65% which is particularly suited for gas based sponge iron plants. A Japanese delegation visited this iron-ore deposit in May 1991 and because of its superior quality ore showed interest in taking over this Deposit only and not iron-ore mother Deposits. They were, however, not willing to pay remunerative price. Considering the nonavailability of budgetary support from Government and lack of its internal resources the NMDC in August/Sept. 1991 submitted a proposal to the Government for setting up a JVC to develop this particular deposit. The NMDC Board in its meeting held on 15th Nov. 1991 in terms of Item No. 274/2 decided that the project be opened up as a joint venture with not more than two private promoters apart from NMDC. The said two promoters were M/s. Essar Gujrat Ltd and M/s. Nippon Denro Ispat Ltd. who were to use the ore for their plants and not sell it. The Board also decided that the equity participation shall be static throughout the life of JVC. A sub committee of the Board of NMDC held discussions with these two companies and also with M/s. Mukan Ltd. whose name was suggested by the Government. These companies did not agree to the arrangement proposed by NMDC because each company wanted to be the sole promoter with NMDC and wanted the management control to rest with it. These conditions were not acceptable to NMDC. In this view, the NMDC in terms of its letter dated 20th April 1992, decided/ recommended as follows :--
(i) 11-B be developed as NMDC project by NMDC:
(ii) The Project will take approximately four years for commissioning after all clearances are given by Government. In view of importance of the Project for National Economy in general and Steel industry in particular Government be approached for providing special fast track clearances including environment clearance ;
(iii) Money be raised by (a) Advances from actual consumers and (b) Loan/Equity from Financials, Institution and Public. The exact modalities of raising funds to be worked out by NMDC.
(iv) Possibilities of sponsoring a new company where NMDC will have 40-49% share and rest with Public/Financial institutions be considered.
3. The Ministry of Steel in terms of its letter dated 25th May, 1992 conveyed to NMDC 'in principle' approval of the above recommendations and sought a detailed proposal for development of this deposit in the manner proposed by the subcommittee. Further, the Ministry of Steel in terms of its letter dated 22nd Sept. 1992 sent to NMDC, conveyed the approval of the Government for incurring expenditure of Rs. 2 crores' for the preparation of detailed Project Report and to undertake the preliminary and enabling works* of development of this particular deposit. Thus, the Government also granted stage one clearance. A detailed project report was prepared by NMDC. The Board of NMDC on 27th March, 1993 approved DPR and investment of Rs. 515 crores. The development of the project was to take approximately 4 years for commissioning after all the clearances had been obtained from the Government. The NMDC requested the Government for providing special fast track clearances.
4. It is not in dispute that the iron-ore contained in 11-B had been found to be the richest. As per NMDC, considerable development work had been done in Deposit 11-B. The layout for the Semi-mechanized mining i.e. development of benches inter-se connecting roads from Baledilia deposit 11-B to 11-C and approach road to the deposit had been done. The necessary railway siding was also provided by NMDC. The approach road connecting all the benches and further the approach road to waste dumps, workshop etc, were also laid. According to NMDC, the expenditure incurred for 11-B deposit was about 5.85 crores towards exploration of the deposit and preparation of DPR. This amount did not include the expenditure on mine development including expenditure on development of approach roads, bench access roads and development of benches.
5. While the exercise for developing 11-B deposit as NMDC project with the approval of the Government was going on the Government of India received a letter dated 12th August, 1993 from Chairman of 'Mittals' group of Companies proposing that the lease of 1 1 -B be transferred by NMDC to JVC with NMDC keeping only 11% equity shares in it and, the entire management control shall be with Mittal group. The petitioner claims that in a naked sell out of this profit making national industrial property, the Government started taking steps to transfer this ore mine in favour of 'Mittals' on the terms proposed by the Chairman of the said group. Petitioner alleges that this move was with a view to enrich Mittal group and cause corresponding loss to National exchequer.
6. The proposal as contained in aforesaid letter dated 12th August, 1993 was forwarded by the Ministry to NMDC for its comments. A committee comprising of officers from Technical Directorate (Planning and Engineering) Production Directorate, Finance, Commercial Wing, Corporate Planning & Management Services & Legal Department of NMDC examined the matter and submitted a comprehensive note and conclusions as follows :--
(1) Since NMDC is having a composite mining lease for the Deposit 11 A, 11B and 11C together, the transfer of Deposit 11B alone to the joint venture company is not practicable. If however, Government decides that the 11B mine is to be given to joint venture company for mining purposes on consideration, as per Mineral Concession Rules 1960, this also will take the minimum required time as this requires the approval of State Government, (2) NMDC has concluded Agreements to meet the major portion of current and future requirements of Visakhapatnam Steel Plant, M/s. Essar, other Sponge/Pig Iron and Steel manufacturers, the pellet plant of M/s. Essar Investments (coming up at Vizag), many of which are currently operating and some coming up in future, for supply of the iron ore in the form of calibrated lump ore, lumpore, and fine ore. Many of the customers have already started operations of their plants.
(3) In planning the supply programmes from Bailadila Sector, the availability of all categories of ore produced from existing mines and the new mines -- Bailadila 11B and Bailadila 10/11A have been taken into account. If for any reason, by going into a joint venture (with NMDC as a minor partner) and thereby not having 11B ore, NMDC will not be able to adhere to the terms of agreement with reference to quantity and quality blending of ore from Bailadila sector and the supplies to VSP, other Sponge/Pig Iron and to the export market (as certain minimum quantity of export of blast furnace grade ore is desirable to be maintained) will get adversely affected and both NMDC and the customers will be sufferers.
(4) The recent comprehensive note on iron ore availability sent to Ministry vide the letter of CMD/SETT/93 dated 24-8-1993 was based on the future availability of the entire production from the Deposit 11B and Deposit 10/11A totally to NMDC for distribution to the various customers. Any change in this situation will adversely affect the availability and distribution envisaged in the above note.
(5) With a party other than NMDC as a major partner the joint venture sector company ;will' amount to total privatization. In Bailadila sector where NMDC has got major operations, there are different labour unions affiliated to different political parties. As such it is only desirable in the event of entering into joint venture that NMDC should operate as major partner in order to maintain smooth industrial relations in the area.
(6) There does not appear to be need, or justification for NMDC to agree to the proposal of having a minority share of 11 % equity leaving the balance 89% for M/s. Ispat Group and Public. In case if a decision is taken for joint venture the Committee has examined three alternatives at page 5. As given at alternative III minimum 26% equity participation by NMDC, a maximum of 25% by one or two joint venture partners and balance equity shares to the public/financial institutions with a specified mutually agreed quantity as a buy back quantity of CLO/Lump to the joint venture partner(s) if it is also a consumer and the balance available lump ore, CLO and. entire fine ore shall be under the control of NMDC for sole distribution by NMDC.
(7) Since Board of NMDC earlier considered the proposal of joint venture of 11B project and expressed its observations it may be appropriate to put up the present proposal to Board for their guidance and directives.
7. The above were approved by NMDC Board on 7th Sept. 1993.
8. However, the Government of India on 24th May 1994 wrote to NMDC stating that "Government have decided that the development of Deposit 11B may be taken up as a joint venture with the participation of one of the private sector companies operating or setting up a gas based sponge iron plant and which already have an assurance from NMDC to meet a substantial part of their iron-ore requirements. Investment of NMDC in the project should be kept at the minimum (11% in equity) .............."
9. According to the petitioner the Government in the aforesaid letter suggested specific criteria for selection of joint venture partner but the criteria was deliberately so made as would only facilitate the ultimate selection of 'Mittals' as a joint venture partner.
10. The decision of the Government of India contained in the letter dated 24th May 1994 and ultimate decision to grant lease of iron-ore Deposit 11-B to Respondent No. 7 is claimed by the petitioner to be without jurisdiction, illegal, mala fide and misuse of the powers of Government of India. Petitioner says that these decisions thus deserve to be struck down.
11. The Government of India has opposed the writ petition. It has been, inter alia, contended by Dr. Singhvi, learned Additional Solicitor General appearing for Government of India that the consideration to lease out deposit 11B to private sector was spread over a period of 5 years during which period the matter was thoroughly considered by Ministry of Steel and NMDC and this by itself negates the plea of mala fide and arbitrariness. Learned counsel submitted that the petitioner has build up the challenge not on the final decision taken by the Government but on intermediately decisions and consideration by NMDC and Ministry, which is not permissible, as at intermediately stage, various view-points for and against the proposal are put up and views expressed but what is relevant is the final decision. It was contended that there was no procedural or other infirmity in the decision sought to be challenged by the petitioner and that it has to be borne in mind that right from the year 1991 there was a proposal to transfer 11-B to a JVC and all through it was contemplated that NMDC will have a minority shareholding in JVC. It was never stipulated or proposed at any stage that NMDC will have 51 % shareholding in JVC. One of the reasons to privatize this iron-ore deposit was to reduce burden on NMDC. It was further submitted that the Government did not and could not have kept in view only commercial considerations in the matter of this nature, It was explained that the Government had to also bear in mind the interest of the industry and had to provide for captive consumption of iron-ore by involving private parties,
12. Mr. V.R. Reddy, learned Additional Solicitor General representing NMDC also submitted that the revenue generation was not the only consideration and in fact it was notrelevant. According to learned counsel the relevant consideration was the captive consumption of the iron-ore. Dealing with the plea urged by the petitioner, that NMDC was not in favour of transfer of this iron-ore deposit to a JVC with management control of such a JVC, and also that NMDC was in a position to generate its own resources and arrange requisite large sums required for the development of deposit MB and was against transfer of management control to a private party, it was submitted by learned Additional Solicitor General that whatever may . be the perception or view-point of NMDC, the final authority to decide was Government of India. Mr. Reddy further submitted that NMDC in fact imp leaded the decision of the Government of India as contained in its letter dated 24th May, 1994.
13. Mr. Arun Jaitley, learned counsel appearing for Respondent No. 7, supporting the decision to transfer the lease of deposit 1 IB in favour of his client, inter alia, submitted that may be NMDC wanted the project to be funded by private sector, and management control to be retained by public sector (NMDC) but Government of India, taking into consideration various relevant factors such as finances, position of industry, development of backward area, foreign exchange resources etc. took a policy decision to transfer the lease of Deposit MB to private sector with 11% shareholding of NMDC and that such a policy decision was beyond power of judicial review of this Court. It was further submitted that the impugned decision, on the facts and circumstances of the case, cannot be held to be mala fide. It was also submitted that even if two views on merit;; may be possible, then too the Court would not substitute its views for that of the Government.
14. There can be no dispute about the submission of Mr. Wadhera that the public sector undertakings like NMDC are autonomous bodies and in the Board of Directors the representatives of the Government are also members and such Boards of Directors have the authority to take decisions. It is further correct that Memorandum and the Articles of Association of NMDC also vest special powers with the President of India who is the owner of public sector undertakings including NMDC. One of the contentions urged by Mr. Wadhera is that except the President of India no one has any power or jurisdiction to issue directive to NMDC to transfer its property to a third party and that even the President has to issue a formal written directive in exercise of powers vested in him in the Company's Memorandum and Article of Association and that only such directives has the force of law. The submission was that in absence of Presidential directive, the decision contained in the letter of Government of India dated 24th May, 1994 would be without jurisdiction.
15. Reference was made by the parties to the Mineral Policy (National Mineral Policy 1993). In March, 1993 the Government announced a new National Mineral Policy opening up the Mineral sector for exploitation by the private sector. The Industrial Policy Resolution of July, 1991 whereby certain minerals including iron-ore appearing in the list of industries exclusively reserved for public sector were deleted. The new policy, inter alia provides that one of the basic objectives is to develop mineral resources taking into account the national and, strategic considerations and to ensure their adequate supply and best use keeping in view the present needs and future requirements. It also provides as an objective to promote necessary linkage for smooth and uninterrupted development of the mineral industry to meet the needs of the country. The mineral policy also provides that the guiding principle in the strategy or development of any mineral or mineral deposit at any location shall ordinarily be the economic cost. The strategy of mineral development further provides that, the State may however, undertake the development of any mineral or mineral deposit in public interest to ensure unhindered availability of mineral raw material for the realisation of national goals. The said policy dealing with the financial support for mining, inter alia, provides that the induction of foreign technology and foreign participation in the exploration and mining for high value and scarce minerals shall be pursued. Foreign equity investment in joint venture in mining promoted by Indian companies would be encouraged while foreign investment in equity would normally be limited to 50%, this limitation would not apply to captive mines of any mineral processing industry. Enhanced equity holding can also be considered on cost to cost basis. In respect of joint venture mining projects of mineral and metals in which the country is deficient rodeos not have exportable surplus, a stipulated share of production would have to be made available to meet the needs of the "domestic market before exports for such projects are allowed. Regarding the ores whose known reserves are not abundant, the policy stipulates that preference will be given to those whose purpose is to take up their mining for captive use. Dealing with the foreign trade 'the Mineral policy states that the imports of mineral based material shall be coordinated as far as possible with the indigenous development of mineral based industries and the areas of co-operation with countries with complementary resource base shall be developed for mutual advantage. The policy provides that the basic approach shall be to make available to the mineral based materials to the domestic users at reasonable prices. The Ministry of Coal have issued guidelines for allocation of blocks to the private sector for coal mining for power generation. The said guidelines, inter alia, stipulate that preferably blocks in green field areas where basic infrastructure like road, rail links etc. is yet to be developed should be given to the private sector. The areas where CIL has already invested in creating such infrastructure for opening new mines should not be handed over to the private sector except on reimbursement of cost. The blocks offered to private sector should be at reasonable distance from existing mines and projects of CIL in order to avoid operational problems.
16. The petitioner's contention was that the aforesaid guidelines would and should be squarely kept in view while transfer of iron-ore mines. The contention was that the objective of blocks being offered to private sector being at at reasonable distance from existing mines and projects is to avoid pilferage problem and illegal mining by the private sector. It was contended mat if the deposit transferred to private sector is not at a reasonable distance it may almost be impossible to check pilferage and illegal mining by the private sector from the areas/deposit not even transferred to the private sector. Our attention was drawn by the petitioner to the plan to show that the location of Deposit 11 B. On the basis of location it was contended that Deposit 1 IB was just in the middle of Deposit 11A and 11C and the location suggests high degree of possibility of illegal mining by private sector. The contention was that it was not a case of transfer of green fields but was a case of transfer of the area in respect whereof the basic infrastructure like road, rail links etc. had already been developed.
17. In the background of affronted facts we will now examine the submissions put forth by learned counsel for the parties.
18. Dealing with the submission of Mr. Wadhera that under the Memorandum and Articles of Association of the Company, particularly, Clauses 86 and 119 thereof the direction to transfer the property of the company could only be issued by the President of India in writing and such a directive was required to be placed before the Parliament, the object being achieving transparency in the matter so as to safeguard the public interest in the Public Sector undertakings, we may first notice relevant case law on the subject.
19. In the .case of G.D. Zalani v. Union of India, , the Supreme Court while considering a similar provision in the Article of Association in respect of a Government company and dealing with the contention that the power to give directive is vested is the President alone and that no such directive can be issued by the Government of India, held thar it would be reasonable to understand the expression 'President' in Article of Association as referring to the Government of India, and it is difficult to say that this power should be exercised by the President himself as that is neither practical nor consistent with the dignity of the President. It was further held that the directive, however, was to be expressed in the name of the President but that is ultimately the matter of form and form cannot be held to be mandatory. In the said case the directive had been issued by the Government of India and the letter stated that it was being issued with the approval of the Minister for Chemicals & Fertilisers and there was no reference to the President at ail and that is how the question had arisen whether President in Article 117 of the Articles of Association of HAL means and refers only to President of India and whether the power is to be exercised by the President personally, as was contended by the petitioner before the Supreme Court. The contention was, however, repelled.
20. In Samsher Singh v. State of Punjab, . While considering the scope and interpretation of Articles 77 and 166(3) of the Constitution of India and Transaction of Business Rules it was held by the Supreme Court that the decision of any Minister or Officer under Rules of Business made under any of the two Articles 77(3) and 166(3) is the decision of the President or the Governor respectively. The Court held that in the Cabinet system of Government wherever the Constitution requires the satisfaction of the President or the Governor, for the exercise by the President or the Governor of any power or function, the satisfaction required by the Constitution is not the personal satisfaction of the President or the Governor but the satisfaction of the President or the Governor in the! constitutional sense in the Cabinet system of Government, i.e. satisfaction of his council of ministers on whose aid and advise the President or the Governor generally exercises all his powers and functions.
21. Apart from above, we are even otherwise unable to accept the submission that in view of Articles 86 and 119 of Memorandum & Articles of Association, it was mandatory on the part of NMDC to reserve the matter for the decision of the President of India or that the Minister for Steel had to seek Cabinet approval before issue of letter dated 24th May, 1994. The Cabinet approval was taken before transfer of lease-to Joint Venture Company. Having perused the Transaction of Business Rules, we are unable to accept the contention of the petitioner that the decision of the government as contained in the letter dated 24t May 1994 required the approval of the Cabinet and in absence thereof the decision was without jurisdiction and null and void.
22. We may now notice the legal position on the requirement of floating tenders, the extent of judicial review permissible in the matters of floating of tenders etc. and in economic policy matters.
23. It is well settled that for transfer of government property or grant of lease of government property, tender or public auction is not the only method though the normal method is auction or calling for tenders so that all intending purchasers/lessees should have an equal opportunity of submitting their bids/tenders but -then there may be exceptional situations where adopting such a course may not be insisted upon (Zalani's case ) (supra) Briefly, facts of Zalani's case are that HAL for manufacture of antibiotic drug entered into joint venture contract with a multi-national corporation and leased its plant to that Corporation at Rs. 17 crores per annum when others were willing to pay more. The allegations of mala fides had also been made against the Managing Director of HAL and one of the contention urged further was that tender had not been called. The plea of mala fides was rejected and considering the facts and circumstances of the case it was held that floating of tender may not have been the proper method. It was also held that in such cases, all that need to be ensured in that the Government or the authority, as the case may be, has acted fairly and has arrived at the best available arrangement in the circumstances.
24. There is no doubt that the contractual power of the Government is subject to judicial review so as to prevent arbitrariness or favouritism though there are inherent limitations in exercises of that power of judicial review as noticed by the Supreme Court in the case of Tata Cellular v. Union of India, . The Supreme Court said (at p. 25 of AIR) :--
"It cannot be denied that the principles of judicial review would apply to the exercise of contractual; powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation, The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down."
25. The Supreme Court has also cautioned the fall out of uncontrolled exercise of power of judicial review and highlighted the advantage of exercising judicial restraint while dealing with such matters. The two advantages of judicial restraint noticed are the ambit of judicial intervention and the scope of Court's ability to quash an administrative decision on its merits. It is also opined that the judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made but the decision making process itself. The principles laid down are these :--
(1) The modern trend points to judicial restraint in administrative action.
(2) The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made.
(3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias of actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
26. In Sachidanand Pandey v. State of West Bengal, the Supreme Court while holding that the invitation to tender was not the only method to transfer the land belonging to the Government, held that the State owned or public owned property is not to be dealt with at the absolute discretion of the Executive. In such matters the public interest is the paramount consideration. The invitation of tender may be the ordinary rule but it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but the reasons for departure must be rational and should not be suggestive for discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an appearance of bias, jobbery or nepotism.
27. In M. P. Oil Extraction v. State of Madhya Pradesh, (1997) 4 Scale 515 : (AIR 1998 SC 145), the Supreme Court again reiterated that tender/auction, is not the only or sole method of distribution of State largesse and even in absence thereof State largesse may be dealt with by negotiation and hot through tender or auction. The ultimate question to be examined in these matters is whether there has been compromise with public interest or not. Whether there has been violation of Article 14 or not ? The tender or no tender if the State largesse is distributed not in public interest but for some oblique motive such an action though arising out of a contract is required to be quashed by the Courts in exercise of power of judicial review. At the same time, however, it has to be borne in mind that the State is allowed greater latitude in the matters of economic policy. It is not for the Courts even if the two views may be possible and the Court may lean in favour of the view opposite to that of the Government, to thrust its view point on the government. In R.K. Malhotra v. Union of India, a Division Bench of this Court held that the Industrial Policy framed by the Central Government is a step towards open economy for India to become a major player in the global economy and it is a policy with which the Court would not interfere. In substance the Court held to go private or remain public is a matter of economic policy not open to judicial review.
28. In Delhi Science Forum v. Union of India, the new Telecom policy came up for consideration. It was held that privatisation is a fundamental concept underlying the question about the power to make economic decisions. What should be the role of the State in the economic development of Nation ? How the resources of the country shall be used? How the goals fixed shall be attained? What arc to be the safeguards to prevent the abuse of the economic power? What is the mechanism of accountability to ensure that the decision regarding privatisation is in public interest? All these questions have to be answered by a vigilant Parliament. It was held that the Courts have their limitations because these issues arise with the policy makers for the opinion and no direction can be given or is expected from the Courts unless while implementing such policies, there is violation or infringement of any of the constitutional or statutory provision. It was also held that when such matters are questioned the onus to demonstrate that decision has been vitiated because of adopting a procedure not sanctioned by law or because of bad faith or taking into consideration factors which are not relevant is on the person who questions the validity thereof and the onus is not discharged by raising a doubt in the mind of the Court but by satisfying the Court that the authority or the body which had been vested with the power to take decision has adopted a procedure which does not satisfy the test of Article 14 or has acted with oblique motive or has failed to examine each claim on its own merits on relevant considerations. The desirability to exercise judicial self restraint has been again reiterated in this decision.
29. In Bearer Bond's case, R. K. Garg v. Union of India, while dealing with the economic policies the Supreme Court had opined by reference to the observations of Holmes J. that the Legislature should be allowed spume play in the joints because it has to deal with the complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particularly true in case of legislation dealing with economic matters where, having regard to the nature of the problems required to be dealt with Greater play in the joints has to be allowed to the Legislature. Such matters were based on experimentation or trial and error method and, therefore, cannot provide for all possible situation or anticipate all possible abuses.
30. In G.B. Mahajan v. Jalgaon Municipal Council, , it was held that a project otherwise legal does not become any less permissible by reason alone that the legal authority instead of executing the project itself had entered into an agreement with a Developer for its financing and execution. In that case the Supreme Court was concerned with the real estate development. It was reiterated that the trial and error method was permissible so long as it was bona fide and within the limits of authority. It was also noticed that there was a scope for reasonable belief to, hold different opinions both being bona fide. While dealing with the trial and error method it was said that this again is a judicial recognition of Administrator's right to trial and error, as long as both trial and error are bona fide and within the limits of authority. The dissenting opinion of Justice Brandeis as expressed in New State Ice Company v. Ernest A. Liebmann, 285 US 262, 310-11, as noticed in this decision may be usefully reproduced as under:--"The discoveries in physical science, the triumphs in invention, attest the value of the process of trial and error. In large measure, these advances have been due to experimentation............."
".................There must be power in the States and the Nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs.............."
"To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation. It is, one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country. This Court has the power to prevent an experiment...............Biit in the exercise of this high power, we must be ever on our guard, least we erect our prejudices into legal principles.'.'
31. Bearing in mind the aforesaid principles this Court has to examine whether the transfer of lease of Deposit ! 1 -B in favour of Respondent No. 7 is legal or not.
32. The main contention pressed by Mr. Wadhera is that the transfer of such a valuable deposit in the manner demonstrated in this petition is contrary to the interests and view-point of NMDC and it is utterly mala fide and amounts to complete sell out by Government of India by distributing the State largess in favour of 'Mittals'. It has been pointed out that the transfer of this deposit in open market would have resulted in the Government/NMDC receiving many more Crores of Rupees and, therefore, the transfer at throw away value in favour of Mittals by itself shows the extraneous considerations which have played a vital role in the entire deal resulting in compromise with public interest and preference for private interest. On the facts and circumstances of the case, we are unable to accept this main contention.
33. It has to be borne in mind that the decision to transfer this particular deposit for exploitation to private sector was in fact taken in the year 1991 though it is a different matter that all through till transfer in favour of Mittal group it was envisaged mat the management control would remain with NMDC. It has also to be borne in mind that in the recent past the Indian economy has been opening up and in various fields privatisation has taken place. We have already noticed the factum of amendment of Industrial Policy Resolution of July 1991 and formation of new National Mineral Policy in 1993. Jn such policy matters the interference by Courts has to be minimal and that is only when there may be a clear case of arbitrariness and mala fides and the decision is demonstrably contrary to public interest. It has also to be borne in mind that in the matters of policy, particularly, dealing with economic matters, the Government is well within its rights to try various experiments so long as such experiments are not arbitrary and mala fide.
34. Regarding the plea that if the deposit was to be transferred to private sector the global tender would have brought many international operators thus bringing to Indian Government much large amounts than compared to what has been given by Mittal group, again it has to be kept in view that for transfer of such rights the tender system is not the only system though usually it may be so advisable. It is, however, not an inflexible rule.
35. Further, the stand of the government has also to be borne in mind that in such matters the economic consideration is secondary and the basic factor which had to be kept in view was the interest of the Indian industry and taking available to it for its captive consumption the iron-ore drawn from this deposit. It is not seriously disputed that the global tender could have brought in larger amounts but the contention urged on behalf of the government is. that tender system was not adhered to in view of the peculiar circumstances keeping in view the national interests which are paramount and have to prevail over the economic part of the deal.
36. From the record, it appears that the offers land view-points of major Indian operators had been taken into consideration by the government before taking a decision to transfer this deposit to respondent No. 7. Unfortunately, none of the private Indian operators were interested in joining with the other Indian operators. Further, private operators were also interested in the management control. The government initially decided not to accept the view-point of Indian operators and granted in principle approval for development of this deposit as NMDC's own project. Later, however, on reconsideration of the matter and also because of 1993 Policy the government decided to accept the view-point of private sector and took decision to vest management control with private operator. We also have to keep in mind that other private operators have not challenged the decision of the government though that by itself is not conclusive.
37. It is no doubt true that right from the inception when it was contemplated to transfer this iron-ore deposit NMDC stand was that management control shall remain with it. This was even though the NMDC was not to have 51% shareholding. There is no difficulty, in appreciating the stand of NMDC, for which various reasons were also given by it, that management control shall remain with it. But it was not agreed as no private operator was willing to make investment with the management control remaining with NMDC. NMDC decided to operate the mine as NMDC own project for which, as already noticed, in principal, approval was also afforded by the government. We, however, see no inherent contradiction or mala fides in the Government ultimately deciding that the NMDC shall not explore it as its own project and utilise its resources on other projects and shall transfer this deposit to a joint venture controlled by the Mittal group. The viewpoint of NMDC was duly taken note of by the Government and thereafter a conscious decision was taken to transfer this iron-ore with management control in favour of the Mittal group. Two equally strong views are quite possible on the subject of transfer of mine and NMDC loosing management control over such a valuable national asset. We, however, see no per-se illegality in the Government deciding to take one view which has resulted in the NMDC losing the management control. We would quash this decision if found to be arbitrary and mala fide. We do not think that the petitioner has been able to establish that the impugned decision is arbitrary or mala fide. Whatever view we may have, it is not legally permissible to substitute it in place of view-point of the Government.
38. We also find it difficult to accept the contention that the criteria laid down in the letter of the Government dated 24th May 1994 was tailor made for Mittal group simply on account of a clause that it is desirable that a party has national or international experience of mining. The contention was that it was known that only Mattel group or its associates had the mining experience abroad and no other industrial house has such an experience. We cannot lose sight of the fact that no industrial house was debarred from consideration on the ground of absence, of such experience. On the contrary merits and demerits of other industrial houses were also taken into consideration. None has challenged the decision of the government. On the facts and circumstances of the case the plea that the criteria was tailor made for the Mittal group deserves to be rejected.
39. While dealing with the plea of mala fides one cannot loose sight of the fact that the basic decision to go private was taken in 1991. However, in absence of private operators who may be willing to make investments without asking for management control and other factors noticed above, the Government of India did agree for development of the mine in question by NMDC as its own project. The matter, however, was.again re-examined on the receipt of the letter from the Chairman of Mittal group and ultimately the criteria as per the decision of the Government as contained in the letter dated 24th May 1994 was taken and applying the said criteria it was decided to transfer the mine in favour of the Respondent No. 7. It is no doubt true that before final decision and at intermediately stage NMDC, Planning Commission and Ministry of Finance were opposed to the transfer of the mine in the manner suggested in the letter dated 24th May, 1994. For our purposes and on the facts of the case the views proposed by different departments and even NMDC at intermediately stage are not relevant and what is relevant is the final decision taken. Further, the record shows that the views of all those who were opposed to the transfer of the mine were taken into consideration by the Government though it is a different matter that the said views did not prevail. All these factors negate the plea of mala fides strenuously urged by the petitioner. We may also notice that one of the ground given by the Government for transfer of this iron-ore deposit is that it will enable NMDC to concentrate on other deposits and would free the NMDC resources.
40. Regarding the plea that for transfer of this iron-ore deposit, considering that it contains World's best quality iron-ore with ferrous content of above 65%, the Government/NMDC could receive much higher value and this fact also demonstrates the mala fide intentions of the powers that be, there can be no quarrel with the proposition that the prospect of receiving higher value for the transfer of a Government property, is a relevant consideration, but in such matters commercial consideration is not the only consideration. The Government has to bear in mind various other factors including the interest of the industry and other relevant factors. It was not disputed that if taken only as a commercial deal with transfer of the iron-ore could possibly fetch much higher value than what was agreed to be paid by Mittal group. This concession, however, would only mean a closure scrutiny of the deal by the Court in exercise of its power of judicial review . We, however, find from the, record that the aspect of the cost factor and the value to be charged from Mittal was examined at various stages whereafter a decision was taken to charge from them the amounts spent by NMDC On a detailed examination of the record by this Court it is difficult to infer mala fides on this score. On the facts and circumstances of the case we feel that the petitioner's contention on this aspect also does not deserve to be accepted.
41. It was then contended that the industrial policy only stipulated that blocks in green field areas where necessary infrastructure like roads, rail links etc are yet to be developed should be given to the private sector and not the blocks where development work has already been done. It was contended that in the present case what has been transferred is not the green but the iron-ore deposit where considerable development work has been done. A perusal of the policy itself shows that it does not provide for a complete prohibition to transfer the developed or semi-developed blocks. The guidelines under the industrial policy only stipulate that preferably blocks in green field where public sector infrastructure is yet to be developed should be given to the private sector. The cost incurred by NMDC for the development work has been agreed to be reimbursed to it. It also cannot be seriously disputed that for full exploitation of this iron-ore deposit huge amounts were required to be spent. While some development work had been done but considerable development work had still to be undertaken. It is, therefore, not possible to accept the contention that the transfer of the iron-ore deposit is contrary to the industrial policy of the guidelines framed for transfer of such deposit to private sector.
42. For the aforesaid reasons, we find no ground to interfere in this writ petition filed as a public interest litigation. Accordingly, the writ petition is dismissed leaving the parties to bear their own costs.