Andhra HC (Pre-Telangana)
Andhra Cements Limited, Hyd. vs Government Of Andhra Pradesh And Others on 16 October, 2000
Equivalent citations: 2000(6)ALD404, 2000(6)ALT165, AIR 2001 ANDHRA PRADESH 62, (2000) 6 ANDHLD 404 (2000) 6 ANDH LT 165, (2000) 6 ANDH LT 165
ORDER M.S. Liberhan, C.J.
1. The appellant (hereinafter referred to as "the petitioner") impugned the order dated 14-7-1999 whereby its application for grant of prospecting licence for limestone in the areas in villages Kesavapalli, Alugupadu, Shankarapuram and Gokuiapadu was rejected by the first respondent. The petitioner sought for the directions to the respondent to issue prospecting licence for mining lease.
2. The petitioner is a public limited company claiming to be in the field of manufacturing cement. In the year 1987 the petitioner had applied for prospecting licence in respect of limestone in the areas in Kesavapalli, Alugumallipadu, Sankarapuram and Gognlapadu villages of Guntur District. It proclaimed the potentiality of manufacturing cement to the tune of 1.1 million tonnes per annum. Prior to 1990 the Company became sick. It applied to the Board for Industrial and Financial Reconstruction (hereinafter referred to as "BIFR") in the year 1990 for rehabilitation under the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "Act of 1985). The BIFR provided a rehabilitation scheme. Production was revived in December, 1994 in terms of the rehabilitation scheme. Limestone mines on leases with the petitioner were claimed to be not of high grade. It was not able to improve the quality of the cement. Petitioner alleged to have located high-grade quarries of limestone as referred above. It applied for prospecting mining licence according to the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter referred to as "the Act") and the Minor Mineral Concession Rules, 1960 (hereinafter referred to as "the Rules") on 19-10-1994. The application for prospecting licence was in the form of bunch of applications i.e., four individual applications.
3. The first respondent issued a show-cause notice dated 29-4-1999. Referring to the prospecting licence application dated 19-10-1994, the petitioner was informed that on the basis of the recommendation of the Director of Mines and Geology it is proposed to reject its application for grant of prospecting licence for limestone. The notice was with respect to over an area of 324.3 hectares in S.Nos.569 and 571/1 of Kasanapalli village. The proposed ground for declining the prospecting licence was that the applicant has already been recommended for renewal of five mining lease applications, and three mining licence applications. One more application was under process. Altogether covering a total area of 448.72 hectares equivalent to 1108.79 acres would be on lease with the petitioner. The reserves contained in these areas covered by its application for renewal are expected to be sufficient even taking into account its proposed expansion. Petitioner was asked to show-cause in terms of Rule 12(1) of the Rules as to why its application for prospecting licence dated 19-10-1994 should not be declined. Similar show-cause notices were issued on the pan materia grounds with respect to Shankarapuram in S.No.1002/2 and 1000/1, S.Nos.14 and 15 of Gokulapadu, S.Nos.92, 93 of Alugumallipadi. Explanation was offered on 17-5-1999 stating that the reserves contained in the leases or proposed leases expected to be sufficient was false. The Director of Mines and Geology's recommendation was made to wrongfully favour a third party.
4. The petitioner filed a reply to the show-cause notice. It is averred that the petitioner was the first applicant, in point of time. No limestone deposits, as alternative deposits are available for its plant. There are BIFR's binding directions that the petitioner was the first applicant, in point of time. No limestone deposits, as alternative deposits are available for its plant. There are BIFR's binding directions that mining is not to be permitted to the third party near its plant. The recommendation is on account of vested interest to deprive the petitioner of its legitimate legal right. The Director of Mines and Geology neither considered its representation dated 28-l-1999 nor any reasons for rejecting the same were given. Facts contained in those representations were not considered. Referred to the details covered by the existing mining leases, applied mining leases, pending release of mining leases being grossly insufficient as required in limestone reserves. The applicant sought the copies of notes and documents of Director of Mines and Geology. Rejection of the recommendation of the Director of Mines and Geology and to revise the same in accordance with the legal position and natural justice and equity was sought. The petitioner's applications for prospecting mining licence were made in October, 1994. They were made after the change of management under BIFR order dated 16-10-1994. These were most viable additional reserves available essential to augment the grossly meagre limestone reserves. These mines available to the plant are with respect to area of 300.5 acres, 57.72 acres, 423.87 acres, 582.82 acres, 52.18 acres in Kasanapalli, Shankarapur, Peddannapadu, Gokulapadu, Hasinapadu respectively. The petitioner claimed for prospecting licence, in terms of the Rules. It was claimed that for the Nadikudi plant the petitioner does not have adequate limestone reserves inspite of the mining leases already granted or under consideration. The reserves are the lowest in the cement industry being a plant of its size according to the norms of NCBM and it is only the grant of prospecting licence which would provide it the survival. Reference was made to some applications of Gujarat Ambuja for granting the prospecting licence for limestone quarries. It was suggested a licence to set up an industry at some other site might be granted. The petitioner applied for prospecting licence as having already established plant based on the commercially exploitable reserves near the existing plant. It was pointed out that there are no other mines available other than the one for which the prospecting licence has been applied. The reserves applied for prospecting licence cannot be allowed to any other party in view of the order of BIFR dated 16-6-1994. It ordains, "to renew grant of licence for limestone mining under the provisions of Mines and Minerals (Regulation and Development) Act of 1957 and Minor Mineral Concession Rules, 1960, Mining not to be allowed to any third part near Andhra Cements Plant". The same is binding on one and all including the State of Andhra Pradesh in view of Section 32(1) of Act of 1985. The disputed mines are located at a distance of 15 to 18 kms., from the plant. It was alleged since Gujarat Ambuja, ACC, etc., are mining in an area within a distance of 5 to 18 kms., of its establishment consequently petitioner has a right to do so. Capacity to expand was pointed out. It was further mentioned that they are in the process of revised rehabilitation plan with additional investment for expansion capacity. Previous dues to the State are said to be cleared by March, 1988. Rehabilitation was taken up with the co-operation of the State Government, banks, financial institutions and it has commenced. Its unit at Vijayawada has not become operational on account of lack of cement demand. Similarly, its Vizag plant too is running below capacity due to demand constraints. The petitioner sought the encouragement from the State for achievement of the installed capacity rather than permitting a new unit. Emphasis was laid on pointing out the object and the hidden desire of one Gujarat Ambuja to set up a factory in the State on account of the sales-tax exemption, etc. jeopardising the prospects of the existing plant of the petitioner. The petitioner's mining of lease with reference to additional area of 199.65 acres was not implemented. The Central Government ordered to do so. The petitioner in the alternative asked an opportunity for a personal hearing to make oral submissions. The details of existing reserves and expected reserves were annexed with the application dated 28-1-1999 to the Director General of Mines and Geology pointing out how the same are less than the NCBM norms.
5. The mismanagement by the erstwhile Managing Director in the year 1992-93 and the company's operation having come to standstill so much so that the company did not have money even to pay the wages or power charges was pointed out. The company was taken over by the Dunkans for the revival of the company. The areas applied for prospecting licence are within a radius of 22 to 25 kms. It was represented that the requirement of reserves according to NCBM norms is 1325 m. tonnes and possibly 168 m. tonnes which is equal to the norms referred to by the applicant. It has given up certain areas from mining for various reasons.
6. The respondent considered the reply and declined to grant prospecting licence vide its order dated 14-7-1999. It was held that the applicant's company has already been recommended for renewal of five mining lease applications and three mining licences and one more mining lease application is under process. The total area under the mining leases granted or in the process of granting is 1008,79 acres. The five applications for renewal of its existing leases in Nadikudi in Guntur district cover an area of 511.91 acres. Another area of 300.97 acres of Ganapadu was recommended for renewal in the year 1991-92 wherein the reserves are 126.69 million tonnes and probable reserves are 24.30 million tonnes and with possible reserves of 24.35 million tonnes. Thus the total reserves worked out to be 175.41 m. tonnes. Similarly, reference was made to other renewal applications. After considering the total reserves put together the authority came to the conclusion that the availability to be of more than 234 million tonnes besides four other applications for grant of lease are under process. The authorities came to the conclusion that granting the leases with respect to 1554.2 acres in Krishna district was also taken note of. On further calculations it came to the conclusion that if only 50% of the reserves mined and brought to the main plant, plant can sustain for 50 years and meet the future requirements of it as per the expansion plan of the company. Thus, its application for prospecting licence was rejected so as to consider other deserving applicants to exploit and explore in a scientific manner and to contribute to the industrial growth of the State.
7. The petitioner challenged the impugned order dated 14-7-1999 inter alia on the sole ground that no opportunity of personal hearing was granted inspite of its having submitted a detailed explanation to the notices served on it. The finding of fact that the quantity of minerals to the extent of 235.45 m. tonnes is available is totally incorrect. It is exaggerated. It is based on statistics which are fundamentally incorrect. The State declined to grant the prospecting licence for extraneous reasons for granting the licence to a third party.
8. The only contention raised and argued before the learned single Judge was that the impugned order suffers from violation of principles of natural justice as no personal hearing was granted. No other point was urged before the learned single Judge.
9. It would be expedient to notice in brief the mechanism provided by the statute for grant of mining lease. The Act defines minerals, prospecting licence, which envisage a licence for the purpose of undertaking a prospecting operation which further means an operation undertaken for the purpose of exploring, locating or proving mineral deposits. Section 6 of the Act limits the maximum area to 25 sq.kms., with respect to which licence or mining lease can be granted, with one or more prospecting licences. The lease may be granted in respect of an area, which is not compact or contiguous. In exceptional cases for reasons to be recorded in writing the State may grant licence and lease over and above the maximum extent of 25 sq. kms. Procedural mechanism for applying for prospecting licence and mining leases in respect of land where the mineral vests in the Government has been provided by Sections 10 to 13. The applicant is required to apply to the Government in a specified form. The Government having regard to the statutory provisions of the Act or the Rules made thereunder to grant or refuse to grant the licence or lease may grant or decline the application. It is provided that a holder of a prospecting licence or the applicant who has applied earlier than the other shall have a preferential right for mining lease. It requires the Government to satisfy that the licensee has undertaken the operation. It has not committed any breach of the terms and conditions. It is otherwise fit for mining lease. It has special knowledge or an experience in prospecting operation, financial resources. The applicant, nature and quality of technical staff employed and such other matters as prescribed would be taken into consideration. It would be expedient at this stage, to notice in verbatim the statutory provision on which the Counsel for the petitioner has laid emphasis during the course of arguments.
"Section 11(2): Subject to the provisions of sub-section (1), where two or more persons have applied for a prospecting licence or a mining lease in respect of the same land, the applicant whose application was received earlier shall have a preferential right for the grant of the licence or lease, as the case may be, over an applicant whose application was received later :
Provided that where any such applications are received on the same day, the State Government, after taking into consideration the matters specified in sub-section (3), may grant the prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit.
Section 10(3) provides: "On receipt of an application under this section, the State Government may, having regard to the provisions of this Act and any rules made thereunder, grant or refuse to grant the licence or lease".
10. Section 13 confers power on the Central Government to make Rules. Chapter III of the Rules provides for mechanism for grant of prospecting licence in respect of the land in which the mineral vests in the Government. It requires the application to the made to the Government in Form B accompanied by the fee prescribed, on valid clearance certificate prescribed by the State Government and an affidavit with respect to income tax returns, paid income-tax process including on the basis of self-assessment showing particular areas mineral-wise, already holding of the prospecting licence, his having applied and not granted, being applied simultaneously, his having obtained licence on the area and the consent of the owner for the starting of prospecting operation, staling that no dues are outstanding. The State would acknowledge the receipt of the application and dispose of the application for grant and renewal of prospecting licence in terms of Rule 11, which is not relevant for our purposes. Rule 12 on which emphasis has been laid again and again to impugn the order on the ground that personal hearing was not granted runs thus:
"Refusal of application for prospecting licence :--(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 prospecting licence over the whole or part of the area applied for.
(1-A) An application for the grant or renewal of a prospecting licence made under Rule 9 shall not be refused by the State Government only on the ground that Form B or Form E, as the case may be, is not complete in all material particulars, or is not accompanied by the documents referred to in clauses (d), (e), (f) and (g) of sub-rule (2) of said rule.
(1-B) 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 thirty days from the date of reccipt of the said notice by the applicant.
(2) An application for the grant of a prospecting licence shall not be refused on the ground only that, in the opinion of the State Government, a mining lease should be granted for the area for which the application for a prospecting licence has been made :
Provided that where applications for the grant of prospecting licence and applications for the grant of mining lease in respect of the same area are received on the same date or on different dates within a period of thirty days the applications for the grant of mining lease shall, if the area was previously held and worked under a mining lease, be disposed of before the applications for the grant of prospecting licence are considered."
11. The learned single Judge has taken note of the various precedents cited at the Bar. To be fair to the learned Counsel though not referred to before us they may be noted here thus :
State of Tamil Nadu v. Hind Stone, , F.N. Roy v. Collector of Customs, , Madhya Pradesh Industries Ltd. v. Union of India, , Union of India v. Jyothi Prakash Mitter, , Farid Ahmed v. Municipal Corporation of Ahmedabad, , Carborundum Universal Ltd. - v. Central Board of Direct Taxes, (1989) Supp 2 SCC 462, State of Maharashtra v. Lok Shikshan Sanstha, , Union of India v. G.R. Prabhavalkar, , Union of India v. Jesus Sales Corporation, , Travancore Rayons v. Union of India, ATR 1971 SC 862, Schmidt v. Secretary of State for Home Affairs, 1969 (2) Chan. 149, Ridge v. Baldwin, 1964 AC 40, Breen v. Amalgamated Engineering Union, 1971 (2) QB 175, British Oxygen Co. v. Board of Trade, 1971 AC 610, Mc Innes v. Onslow-Fane, 1978 (1) WLR 1520, Regina v. Huntingdon) D.C., Ex.P. Cowan, 1984(1) WLR 501.
12. The learned single Judge came to the conclusion that (i) personal hearing is neither a part of the principle of natural justice nor inherent in the statutory rules, (ii) that the minerals which are the natural resources and the wealth of the people vest in the people of the sovereign democratic republic of India. Licence for exploitation of the same can be granted in public interest keeping in view the prudent and discriminating exploitation of minerals with a view to secure maximum benefit to the community and to conserve the natural resources of the nation in the best possible way. Refusal of the application for prospecting licence does not amount to infringement of any vested right as none can claim any vested right for grant of prospecting licence. The right if any is only for the consideration of the application in accordance with the Rules. After noticing the various principles laid down in innumerable judgments cited at the Bar, the learned single Judge concluded that the personal hearing is not a quit essential or integral part of hearing or principles of natural justice unless the circumstances are so exceptional that without oral hearing a person cannot put up an effective defence. Personal hearing depends upon the view of the adjudicatory body. It was observed that there is nothing in the Rules suggesting the factors which may have to be taken into consideration by the State Government for grant or refusal of an application for prospecting licence. Inherently it is an administrative act. A wide discretion is conferred upon the State Government in deciding the application for grant of a prospecting licence as basically, it is a request of a person in the nature of asking a privilege or grant of the State largesse. What is the requirement in such an administrative action and especially for judicial review is that the exercise of power or the decision is fair and free from arbitrariness, which is found to be the case in hand. The learned single Judge found as a fact that (i) the Government gave a notice, (ii) An opportunity of being heard in the matter was granted, (iii) Objections preferred by the petitioner were considered, (iv) Reasons for rejection of the application for prospecting licence have been recorded in the decision, (v) No new grounds or extraneous considerations have been taken into consideration as such in the impugned order. Undisputed facts of it already having leases and a further lease required to be granted in terms of the order of the Central Government with respect to 445.0 acres in Jayanthi Nagger, Krishna district were taken notice. It was a fact only taken notice of but not taken as a ground against the petitioner. There are no irrelevant considerations. Mere mentioning of an admitted fact in the impugned order is not an extraneous consideration or an omission serious enough to vitiate the decision on the ground of extraneous consideration. The State while disposing of the application has taken the material factors into consideration especially factors not prohibited by any statute and has come to a fair conclusion declining application for prospecting licence as the petitioner has neither any vested nor statutory right to get a prospecting licence. It was a fair consideration of the application. The respondent has not subjected the petitioner to any unfair or arbitrary treatment.
13. The learned Counsel for the petitioner impugned the order on the grounds that (i) the personal hearing is inherent in Rule 12, especially when it has been asked for. Petitioner would have brought to the notice of the respondent-State the provisions of the scheme of rehabilitation in the BIFR order. The Government was a party. Order provides that no other party would be allowed to mine near the plant of the petitioner, (ii) The plan submitted by the Andhra Pradesh became irrelevant because of efflux of time as reliance has been placed on the mining plans of 1992, which do not hold well after the expiry of five years. The petitioner was meted out step-motherly treatment. The area given in hectares compared to other plants with respect to their capacities is much larger area in view of the admitted requirement of 114 m. tonnes, and the petitioner having surrendered lease with respect to Krishnapalli with respect to 28.75 m. tonnes. Thus there is no sufficient material available for mining in order to meet the demands of the petitioner-company.
14. The learned Counsel for the petitioner in order to support his submissions relied on (1998) 4 SCC 194. The learned Counsel for the first respondent submitted that the Government has relied upon the plan submitted by the petitioner in respect of the applications made in 1992.
15. The petitioner has put up no plan for prospecting licence. The petitioner filed no IBM approved plans. The State Government on a fair consideration has come to a conclusion as a finding of fact that there is sufficient material in the mining leases granted to the petitioner for 50 years henceforth.
16. In (1998) 4 SCC 464 the Hon'ble Supreme Court, in the contextual facts of the termination of a service of an employee, on the ground the appointment was made contrary to statute, rules, and regulations in irregular or unauthorised manner shall be terminated without notice, observed that the principle of natural justice of audi alteram partem has to be read into the statutory provisions. As to arrive at a conclusion the appointment being contrary to the provisions or suffers from irregularities, a finding has to be recorded for which necessarily enquiry has to be made as to whether such appointment was contrary to the provisions of the Act. Does the enquiry meet an issue of notice as in the absence of which such conclusion would not be just, fair and reasonable? An observation was made that the law is settled that non-arbitrariness is an essential facet of Article 14 pervading the entire realm of State action governed by Article 14 of the Constitution. In view of the above circumstances, it was observed that opportunity of hearing, as a principle of natural justice has to be read into.
17. Even in the judgements relied upon by the learned Counsel for the petitioner, no observations have been made that granting an opportunity of personal hearing or oral hearing is sine qua non for principle of natural justice.
18. Where the state of mind of an actor or State is relevant, or where one's right to property or any other right - be it statutory, legal - is being adversely affected by an order or where artificial veil has to be pierced in to arrive at a substance or truth of the fact or whether in particular and peculiar facts and circumstances, after due enquiry, the authority is required to come to a conclusion be it a judicial or quasi-judicial act, even in the administrative action, in peculiar and particular circumstances, the principles of natural justice have been held to be rule of law. Article 14 of the Constitution, envisages a dealing to be fair, just, non-arbitrary and bereft of caprices.
19. From the various principles of natural justice culled out from all precedents and various commentaries it emergers that the development of administration and growing awareness of constitutional rights, dignity, administration according to the facts and circumstances and the functions, the authority is discharging, the principles of natural justice got embedded in the process.
20. It has been repeatedly held that connotation of principle of natural justice as accepted in civil society lies in fairness, openness, bereft of bias, impartiality, objectivity, absence of pre-conception, predisposition, informed attitude, reasoning, avoidance of hilling below the belt, granting opportunity to stale one's case which is processual procedure, method of elimination of arbitrariness of the authority, free in action, avoidance of opposition of vast administration, exercise of powers properly for proper purpose, devoid of misguided or extraneous consideration, ensured by the authority to arrive at a fair decision. Avoiding injustice to the injured person or injury to the public interest and to fulfill the trust reposed by the people and investing them with openness of governance are the relevant considerations when the order of the administration or the authority is tested on the touch stone of the principle of natural justice. There is no gain saying that these principles of natural justice are hallmark of civilised society.
21. There are neither any words nor principle of universal application describing the principle of natural justice in a straight jacket with the definite definition applicable to all situations. It depends on the facts and circumstances of each case, nature of administrative act, statutory rule and the procedure required to be followed.
22. Lord Bridge in Lloyds v. Mecmockan, observed as far back as in 1888 that "the so called rules of natural justice are not engraved on the tabloid of the stone to use the phrase. The requirement of fairness demands that any body domestic, administrative or judicial has to make a decision which will affect the rights of individuals depending upon the character and nature of the decision making body, the kind of decision which it has to make and the statutory or other framework within which it operates. In particular, it is well established that when the statute has conferred on any body power to make decision affecting an individual the Courts will not require the procedure prescribed by the statute to be followed but readily implies so much and no more to be introduced by way of additional procedural safeguards as well to ensure the attainment of fairness". The rules of natural justice cannot be left unbridled. Rather they have to be tailored to meet a particular situation keeping the public policy in view. It is a matter of discretion to be exercised reasonably and not petrified question of law.
23. The administration or administrative justice can never be attained by sporadic observations of the so called principles of natural justice. Providing a reasonable opportunity is nothing but a step in aid to win the confidence of the people at large in the administration.
24. Some of the considerations for which no finality can be prepared while considering the violation of principles of natural justice have EO be kept in view while determining what principle of natural justice required to be observed or what they are i.e. (1) expression of a statute, (2) nature of right affected; (3) manner of disposal provided; (4) objective criteria if any adopted; (5) the effect of the decision on the other person and other indicia afforded by the statute and so forth. The principle of natural justice cannot be adumbrated by the authorities in order to provide for enterprising litigant or party to make much of the slack that still exists.
25. We need not delve into what particular rule of principles of natural justice should apply and which has been violated as it depends on the facts of each case. The only underlying principle of natural justice is to reach a just decision by an authority before adversely affecting any legal, statutory or constitutional right of a person by judging impartially and objectively without any preconception.
26. It was observed in , that principle of natural justice cannot be petrified or fitted into rigid moulds; they are flexible and turn on facts and circumstances of each case. One of the tests propounded by the decisions in 1980s is has there been any unfair deal by an authority? Has a party been hit below the belt? Has a partly been given a just opportunity to state its case? It has been categorically observed that absence of personal hearing by itself does not violate any principle of natural justice. Personal hearing is just a processual stage. It cannot be inherently part of principles of natural justice in the absence of which the action ordinarily should not be set aside or cannot be sustained. Principles of natural justice do not provide any form or procedure and they do not envisage variety of hearings or representations or counter representations.
27. In 1991 (2) JT 43, it was observed that one has to see whether the grievance made with respect to hearing resulted in deflecting the course of justice. It is well established that authorities are entrusted to discharge administrative or executive functions. There is no presumption for requirement of compliance with principles of natural justice. Although it is envisaged that the authorities would not act unfairly and in appropriate cases the Court would imply the observance of principles of natural justice in the discharge of administrative function in order to act fairly. Administrative power cannot claim the principles of natural justice to be untouchable or erosion in their discretionary executive functions.
28. It has been observed from time to time that good administration demands fair play in action. It improves the quality of governance. Prof. Jackson observed with respect to fairness:
"Fair play in action, duty to act fairly used to refer not to the obligation of observation of principles of natural justice but on the contrary refer to a standard of behaviour which increasingly the Courts required to be followed even in circumstances where duty to observe is inapplicable."
29. Justice does not have any elaboration of procedure, since administration must move in certain circumstances too quickly to meet the eventuality of the particular case. The very nature of principles of natural justice having been violated, the person cannot impugn the action in view of the chosen mode to comply with the principles of natural justice having been violated as action means loss or inconvenience to those affected by it.
30. In the scheme of the Constitution and power vested by Article 226 of the Constitution inherently made the Courts are the guardians of justice. Courts are always at liberty of probing and weighing what should have been normal procedure in particular circumstances. The authority can be asked to put forward its reasons to see if they outweigh the interest of justice.
31. Statutorily under the Act, Rules and Regulations, minerals vest in the Stale. It is the State largesse. Right to licence for mining or prospecting licence for mining cannot be termed as a statutory right to the State largesse. It is for the State to permit or not in exercise of its administrative jurisdiction to exploit use of natural resources in public interest. The extent, quantity, quality, area and other innumerable considerations and factors are within the realm of the State administration.
32. The learned single Judge, after noticing the innumerable precedents on the rule of audi alteram partem (the principle of natural justice) held, after observing that the rule being the integral part of Rule 12: (I) The Government is required to provide an opportunity of being heard to the applicant. (II) State is bound to record the reasons for rejecting the application for prospecting licence. (III) The decision is required to be fair and free from arbitrariness.
33. On the question of personal hearing, the learned single Judge culled out the principles in the language of the Supreme Court :
"There is no rule of natural justice that at every stage a person is entitled to personal hearing, (ii) An opportunity of hearing is not necessarily be of persona! hearing; it can be by written representation, (iii) Whether hearing to be personal or by written representation, depends on facts of each case, though ordinarily it is the discretion of the authority, (iv) Solely on the ground that the order was made without affording an opportunity of personal hearing cannot be rendered to be invalid in exercise of power of judicial review, especially when a party is likely to be affected by a decision have an opportunity of making a representation, (v) Personal hearing in every situation is not necessary and there can be compliance of requirements of the natural justice of hearing when a right to represent is given and the decision is made on consideration thereof, (vi) When all the circumstances have been taken into account, non-giving of opportunity of personal hearing before the applications are rejected cannot be a sine qua non for validity or legality of an order, (vii) Consideration of a representation is a sufficient compliance with the principle of natural justice. (viii)The inherent principle of natural justice is an opportunity of hearing to be provided before an adverse order is passed. The requirement stands complied with by affording an opportunity to a person concerned to present his case before the authority and it is left to the discretion of the quasi-judicial authority to decide whether personal hearing is necessary and quit essential in the facts and circumstances of a case."
34. In , which has been considered in the earlier judgments and from which the above principles have been culled out, it was held to the effect that when the Collector of Customs was required to determine the complicated questions and their appreciation required familiarity with chemical composition, physical properties of an article subject to excise duty though the Rules do not require personal hearing, but as an abundant caution, the Government was required to exercise the judicial power and personal hearing was considered to be necessary. It is not the case in hand.
35. The learned single Judge after relying on 1969 (2) CHAN.149, 1964 AC 40, 1971 (2) QB 175, 1971 AC 610 observed that; i) where a person is being deprived of his liberty or property, order should not ordinarily be passed without giving opportunity of hearing but it is a different situation when they have no right except by licence of the Crown; ii) an administrative body in proper cases has to give opportunity of making representation, which again depends upon when a person has some right or interest or legitimate expectation of which it would not be fair to deprive him without hearing what he has to say, iii) if a man seeks a privilege to which he has no particular claim, such as appointment to some post or the other, then he can be turned away without a word and he need not be heard. While considering the case of a grant by the State in exercise of its administrative power under a statute, it was considered whether the Act read as a whole indicates a policy required to be followed or any guidance given to the authorities for grant, the authorities are required to exercise the discretion in accordance with the policy of guidance. It is in such a situation declining of grant can be set at naught, if the power has been exercised in bad faith or unreasonably exercised as to show that there cannot have been any real or genuine exercise of discretion, it is a general principle that authority exercising the power should not shut its ears to an application. Emphasis has been laid that though the authority should hear and not refuse to listen but that does not mean there need be an oral hearing. While considering broadly the eventualities or classification after observing that there is no clear or excessive classification observed that first category is of the cases, called the forfeiture cases, which means the decision which takes away some existing right; second are the application cases where the decision merely refuses to grant application or a right that he seeks or a licence to do certain acts; thirdly is a category of expectation cases where one has some legitimate expectation from what has already happened that his application would be granted. Other category is of existing licence holder applies for renewal. For instance, for admission into membership or a licence, hearing may not be required while dismembering would require.
36. While in almost similar circumstances in hand, in 1984(1) WL 501, where the provisions of the statute required to inform the applicant for entertainment licence the substance of any objection and to give an opportunity of making representation in reply, it was observed:
"I am not going to lay down - because it does not seem to be necessary to do so -any clear requirement as to what these representations should be or in what form they should be. I do not think it necessarily follows that an oral hearing should take place; it may well be that in many cases written representations will suffice. I think it is for the local authority to decide if in particular case hearings are required or to lay down their own procedure in this respect, but that some such opportunity is required. I have no doubt."
37. In sum and substance, the inherent principle of natural justice is fairness in arriving at the decision, absence of arbitrariness, which passes through or is inherent in the principle of law in a civilised society.
38. The learned single Judge on the touchstone of the above said principles, on a question of fact, came to the conclusion that there are no provisions of the Act or the Rules made thereunder which provide statutorily or otherwise the grounds on which an application for prospecting licence may be rejected by the Government. The only embargo on the right of the Government to reject an application for grant of prospecting licence is not to refuse on any of the formal grounds like, Form A and Form B not complied in all particulars or is not accompanied by the documents referred therein. There are no factors in the case pointed out that have to be taken into consideration either for grant or refusal of application for prospecting licence. Absolute discretion has been conferred on the State Government to grant prospecting licence. It was further observed that the application by the interested person is in the nature of asking a privilege. The application is to be considered in reasonable and fair manner and it cannot be dismissed on whimsical grounds.
39. We are fully in agreement with the observations of the learned single Judge. We have been taken through the statutory provisions. Neither the Counsel for the parties has pointed anything out nor we found by reading of the Rules and the Act, that there is any embargo put on the discretion of the State to dispose of the largesse of mining by way of prospecting licence. In order to safeguard the interest of the State and as an absolute discretion it provided that the application has to be rejected by spelling out reasons for rejection and after the applicant has been heard. The opportunity of being heard has been provided by the delegated Legislation i.e., by Rules. We need not delve into what is the consequence of right of hearing provided by Legislation or delegated Legislation. It would suffice to say that the right of being heard for application of prospecting licence was ensured. There is no ambiguity. Mere reading of the rule does not imbibe in it inherently a right of personal hearing a must. As observed in the earlier part of the judgment and the principles culled out from various decisions, personal hearing is not the absolute principle of natural justice. It firmly stands established, who are responsible for passing the order are required to consider about the modalities of hearing. While exercising discretion facts and circumstances of each case are to be kept in view. Providing for an opportunity to make a representation is sufficient compliance with the principle of natural justice, especially when the ground has been pointed out in an objection served in the form of show-cause notice to the applicant.
40. In interpreting the statutory principle, the purposive approach to statutory interpretation is one of the recognised principles of interpretation of statutes. Rules empowers the authorities to exercise administrative power. It is inherent to act fairly in public interest, state interest, environmental interest, so on and so forth, without hedging their exercise of discretion. To ensure fairness in their administrative actions, statutorily it has been ordained that (i) the applicant would be heard, (ii) The order of rejection would contain the reasons. It is nowhere provided nor it can be spelt out that merely by giving a right of being heard or recording of a reason will clothe the order of discharge of the functions by the authority as quasi-judicial order or authority or judicial order or authority. One is required to see the fairness in the process adopted by the authorities in coming to conclusions for the reasons recorded in the order.
41. In our considered view, no penal order has been passed against the petitioner. It did not suffer from adverse order. In the impugned order of the respondent, it was categorically found as a fact from the material on record or supplied with the application that the petitioner had been recommended for renewals and the decision arrived at on a question of fact of the number of teases or licences is not disputed at the Bar to draw an inference to exercise the discretion of granting a privilege of the State in favour of the petitioner by the administrative authorities. Granting a prospecting licence or not is an administrative discretion. The respondent has further relied upon the plans and other documents submitted by the petitioner to hold that the petitioner is having sufficient leases for exploiting the mines of lime for its factory. No IBM approved plans were filed by the petitioner.
42. The petitioner by producing additional material papers attempted to establish a question of fact with respect to the quantum of material available, the area available on lease either renewed or under the process of renewal or of granting new leases including the prospecting licences within the area. This question of fact was not argued before the learned single Judge. It is a material question of fact. The same cannot be permitted to be raised for the first time in an appeal to set up a new case. The only point argued before the learned single Judge was the non-granting of a personal hearing. Nothing was pointed out as to what solid facts the petitioner would have brought out in a personal hearing other than the ones that were put in its representation. We find no force in the submission of the learned Counsel for the petitioner that the finding of fact arrived at by the authorities, that the petitioner has got requisite area and quantity of limestone even for its future needs including the enhanced production, is not correct.
43. We find force in the submission of the learned Counsel for the respondent that the show-cause notice was served. The order declining the grant of prospecting licence does not take into consideration the leases other than those given in the show cause notice. If some averments have been made at all in the written statement, that cannot reflect the mind of the decision making authority at the time of making the decision. It is well established as laid down in that neither reasons can be supplied nor can be taken out to validate an order. Even the facts sought to be introduced by way of putting the additional papers are not supported by any affidavit. The respondent had no opportunity even to rebut the same. A new case cannot be permitted to be made out in appeal especially on a question of fact. Without going into the arithmetical or mathematical rigmarole and enigma put forward by the Counsel for the petitioner, we are of the firm view that the impugned order does not suffer from violation of any principles of natural justice or statutory rule either by not granting an opportunity of personal hearing or on account of taking any extraneous factors into consideration or not taking into consideration the relevant factors which were not pointed out in the-show cause notice.
44. While granting a licence, no questions or rights are determined. It is inherently an administrative action. The State denies its privilege because it believes it is not reasonable to grant the State largesse. The State in order to control the unbridled discretion of the administrative authority has provided that the authority declining the largesse of the State to the applicant would record reasons for the same. The reasons recorded cannot be subjected to judicial review until the reasons are de hors the record, or extraneous factors have been taken into consideration or relevant factors have been ignored or the decision arrived at is perverse to an extent that no reasonable man could come to such a conclusion. Even if two opinions are possible in exercise of judicial review, the decision arrived at by the administrator, in the absence of any malice, mala fide, and bias, has to be preferred. The authority exercising the discretion and the control over the State largesse should not be fettered or threatened where the exercise of the authority is proper. Judicial view cannot be substituted to that of the administrative view. In exercise of administrative power, there are innumerable considerations like public interest, environmental interest, development of industry, providing for a fair competition, equitable distribution, forestall monopoly, development of the State, attracting industry from other regions, so on and so forth.
45. It is well established that exercise of power is subject to strict principles of hearing where the action is authorised on a specific ground. As observed in the earlier part of the judgment, there are no specific grounds provided either under the Act or the Rules for the exercise of the administrative control over the State largesse. It is well left with the discretion of the administrative authorities to grant a prospecting licence or to refuse for any reasons of course subject to the condition that reasons are required to be produced in the order and an opportunity of hearing has to be granted to the applicant, though we may hasten to add, providing of hearing does not imbibe in it inherently a personal hearing or even service of show-cause notice. Issuance of notice, granting of hearing and nature of notice arc dependant on the facts and circumstances of each case. We may add that hearing cannot be extended further to an enquiry or a judicial or quasi-judicial proceeding.
46. We have been taken through the letter dated 29-4-1999 issued by the respondent to the petitioner wherein it was specified that the State proposes to reject its application for grant of prospecting licence for lime stone on the ground that the applicant has already been recommended for five renewals of mining lease applications and three mining licence applications and one more application is under process altogether covering a total extent of 1108.79 acres and the reserves contained in the area are expected to be sufficient even taking their proposed expansion. Thus, in pith and substance, it was brought to the notice of the petitioner, the reasons for declining the issuance of prospecting licence. The petitioner made a representation which was considered and for the reasons recorded, the licence was declined. A mere attribution that the State wants to give the prospecting licence to some other institution by itself cannot be termed to be mala fide specially when so such licence has been issued as yet said to be till date, though it is not disputed that the application of a different company made on an advertisement issued by the respondent is under consideration. It has been held in (1997) 6 SCC 280 that when the contents of the proposed order are brought home to the parties affected by actually communicating the same, it substantially complies with the service of a valid essential notice. We are satisfied that the above referred notice has brought facts to the notice of the petitioner, which is sufficient compliance, not only of the principles of natural justice but also the tetter and spirit of the rule, though the rule never envisaged the service of any notice of a proposed action. It only ordained an opportunity of hearing to be given on an application made and the reason to be recorded for declining the application. In administrative actions, judicial or quasi-judicial processual mechanisms cannot be imbibed. It cannot be raised to the pedestal of an adversarial trial. In Administrative Law by Neil and Hawke it has been observed: [p.143] "person seeking a licence asking for an oral hearing together with notice and material against him so that he can adduce evidence before the Board of an allegation which might appear in such a case, the Board declined the prayer and the order having been challenged on the ground of violation of principles of natural justice, it has been held that the Board has discharged its necessary limited obligation in relation to the principles of natural justice and it reached an honest conclusion without bias and without reference to any capricious policy". Service of an outline of the order or outline of the charge for declining the licence was held to be sufficient compliance of the principles of natural justice.
47. The learned Counsel for the petitioner laid emphasis that the B1FR scheme in its order passed on 6-6-1994 provided that no other party would be allowed to mine near the plant of the petitioner. It further provided that no prospecting licence applied for would be granted. Undisputedly, the company, which applied for the prospecting licence, js at a distance of about 18 to 25 kilometres away from the petitioner's. 25 kilometres by any stretch of imagination cannot be said to be near the plant of the petitioner. Nothing has been pointed out as to the square kilometre of area made available to the company. Though the respondent claims it to be 25 kilometres, but taking as put by the Counsel for the petitioner to be 18 kilometres, the mines cannot be termed to be near the plant over which the petitioner has got any vested right. When the BIFR passed the order, the applicant has never applied for the prospecting licence. It is much later the prospecting licence has been applied for. It is not disputed that in spite of the fact that the company having been established as far back as 1980 and the lease having been granted, for the reasons best known to it, may be attributed to the previous management, it has not been able to take off thus causing loss to the industrial development of the State. A mere bright future or prospecting plans by itself does not bar the State from dealing with its natural resources for the better development of the State by providing opportunity to other institutions, though no such licence as yet been granted. If we may say so, it is unfair on the part of the petitioner to assume bias and forestall a competitor company to establish a factory exploiting the mines within the area if any allotted. The petitioner cannot assume any monopoly and a greater privilege than what was already granted to it while establishing the factory. This expectation of the petitioner is contrary to a just expectation and against the very principle and policy of opening the market providing competition for the betterment of the public interest over the interest of a business house.
48. Lastly and not leastly, the learned Counsel for the petitioner laid emphasis that the petitioner has a preferential right for prospecting licence having applied prior to any other institution. A reading of the statutory provision provides that it has got a preferential right only if the two companies are being considered simultaneously or the application of the petitioner is under consideration. Herein, the application of the petitioner was rejected. The petitioner cannot claim a preferential right over the respondent when the application is being rejected for the just reason as produced in the order. The preferential right only comes into consideration in case of subsisting application. When there is no subsisting application, the question of preferential right does not arise. Even the claimed preferential right is subject to the further embargo that the State would be at liberty to usurp the preferential right for special reasons to be given against the preferential claimant and grant the licence to any other person with the previous approval of the Central Government. No licence as yet has been granted and the question of preferential right, in view of the peculiar facts and circumstances, does not arise.
49. For the reasons recorded above, we find no force in the appeal and it is accordingly dismissed. No costs.