Uttarakhand High Court
Ultratech Cement Limited vs State Of Uttarakhand And Others on 30 December, 2016
Author: Sudhanshu Dhulia
Bench: Sudhanshu Dhulia
Reserved Judgment
Reserved on: 22.10.2016
Delivered on: 30.12.2016
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Writ Petition (M/S) No. 1105 of 2015
Ultratech Cement Ltd. ... Petitioner
Vs
State of Uttarakhand & others ... Respondents
With
Writ Petition (M/S) No. 1124 of 2015
Ultratech Cement Ltd. ... Petitioner
Vs
State of Uttarakhand & others ... Respondents
Mr. Jaideep Gupta, Senior Advocate assisted by Mr. Aditya Kumar Chaudhary,
Advocate for the petitioner.
Mr. P.C. Bisht, Standing Counsel for the State.
Mr. Rakesh Thapliyal, Assistant Solicitor General for the Union of India.
Hon'ble Sudhanshu Dhulia, J. (Oral)
The petitioner before this Court is a Company which manufactures cement. In both the writ petitions, the first prayer is for issuance of a writ, order or direction in the nature of mandamus commanding the respondents to grant petitioner a prospective licence for mining at "Tuini", District Dehradun and at "Someshwar" in District Almora, in the State of Uttarakhand. The second prayer is for a writ, order or direction in the nature of mandamus to declare the provisions of Section 10A of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 as ultra vires and unconstitutional being violative of Article 14 and 19 (1) (g) of the Constitution of India.
2. The matter relates to mining of minerals called "limestone" and "shale". These minerals are the main -2- components or the raw materials for the manufacture of cement. As the Hon'ble Judges of Andhra Pradesh High Court in a recent judgment in the case of Coromandel Mining & Exports Pvt. Ltd., Hyderabad & others Vs. Union of India & others, decided on 11.09.2015, (to which we shall refer in a while), have observed that procurement of these vital raw materials have a direct impact on the profitability of these companies and the standard practice therefore is to acquire mineral concession rights and locate factories in close proximity so the mining areas (limestone and shale in the present case), so that minerals can be captively consumed by the cement industry. With the above objective in mind, the petitioner moved an application for grant of a prospective licence under the Mining Act before the authorities in Uttarakhand. All the same, during the pendency of their application due to the amendment in the Mines and Minerals (Development and Regulation) Act, their application has been made ineligible. Hence these petitions.
3. Before coming to the factual and legal aspect of the matter, it would be worthwhile to state as to what the Principal Act i.e. the Mines and Minerals (Development and Regulation) Act, 1957 stood for, and what necessitated changes in the Act in form of the amendments in the year 2015.
4. Entry 54 of List I to the Seventh Schedule reads as under:-
"54. Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest."
5. The Mines and Minerals (Development and Regulation) Act, 1957 (from hereinafter referred to as "the -3- MMDR Act"), was enacted by the Parliament in the year 1957 with the following declaration in Section 2, which reads as under:-
"Section 2. Declaration as to the expediency of Union control.- It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided."
6. During the tenth-five-year plan, reforms were being contemplated in the mining sector as it was observed that there was still inadequate investment in the mineral sector and the present laws caused tremendous procedural delays. The absence of adequate infrastructure in the mining areas was also a major concern. A necessary step to bring in reforms in the sector was to bring changes in the MMDR Act, 1957.
7. The MMDR 2011 Bill was then drafted and referred to the Standing Committee of Parliament on coal and steel for examination. The Standing Committee submitted its 36th report on MMDR on 07.05.2013 and while the Ministry was in the process of carrying out the final amendments, as per the report in the MMDR Bill, 2011, the Bill itself lapsed with the dissolution of the 15th Lok Sabha.
8. Meanwhile, two seminal judgments of the Hon'ble Supreme Court were pronounced, which had a major influence in the shaping of 2015 amendment in the MMDR Act.
9. These two cases are:-
(a) Centre for Public Interest Litigation and others Vs. Union of India and others, reported in (2012) 3 SCC, 1,
(b) Natural Resources Allocation, In Re, Special Reference No. 1 of 2012, reported in (2012) 10 SCC 1.-4-
10. The first of this case is Centre for Public Interest Litigation & others Vs. Union of India & others, which was decided by the Hon'ble Supreme Court on 02.02.2012, is commonly known as the 2G case.
11. In 2G case, the Hon'ble Apex Court had emphasized that the State being a trustee of the people, while distributing natural resources should be guided by "equality and larger public good", as these were constitutional principles. It then concluded that there being an inherent flaw of arbitrariness, even a danger of favourtism, in the "first come first serve"
policy, the Hon'ble Judges leaned in favour of "public auction", as a fair and impartial method of distributing natural resources. The relevant paragraph in the above decision which incapsulate the finding in the decision is paragraph 89, which is reproduced as below:-
"89. In conclusion, we hold that the State is the legal owner of the natural resources as a trustee of the people and although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles including the doctrine of equality and larger public good."
And then in paragraph 96, it said as under:-
"96. In our view, a duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first-come-first-served when used for alienation of natural resources/public property are likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process."-5-
12. Thus open auction was declared to be the best method for transferring or alienating natural resources.
13. All the same, the Union of India sought certain clarifications in the matter and hence a reference was made to the Apex Court by the President of India, under Article 143 (1) of the Constitution of India. The Apex Court in its opinion on 27.09.2012 on the Presidential Reference dated 12.04.2012 (Special Reference No. 1 of 2012 under Article 143 (1) of the Constitution of India), gave its opinion as under:-
"Regard being had to the aforesaid precepts, we have opined that auction as a mode cannot be conferred the status of a constitutional principle. Alienation of natural resources is a policy decision, and the means adopted for the same are thus, executive prerogatives. However, when such a policy decision is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximizing private entrepreneurs, adoption of means other than those that are competitive and maximize revenue may be arbitrary and face the wrath of Article 14 of the Constitution. Hence, rather than prescribing or proscribing a method, we believe, a judicial scrutiny of methods of disposal of natural resources should depend on the fact and circumstances of each case, in consonance with the principles which we have culled out above. Failing which, the Court, in exercise of power of judicial review, shall term the executive action as arbitrary, unfair, unreasonable and capricious due to its antimony with Article 14 of the Constitution."
In conclusion, our answer to the first set of five questions is that auctions are not the only permissible method for disposal of all natural resources across all sectors and in all circumstances."
14. In the above case (Natural Resources Case), Hon'ble Mr. Justice Khehar, while endorsing the majority opinion, supplemented it by emphasizing that in cases where natural resources are being made available by the State to private persons for commercial exploitation or for individual gains then the effort of the State must be towards maximization of revenue returns, as that would be the best way of ensuring -6- common good and public interest. In conclusion it was stated as follows:-
"The policy of allocation of natural resources for public good can be defined by the legislature, as has been discussed in the foregoing paragraphs. Likewise, policy for allocation of natural resources may also be determined by the executive. The parameters for determining the legality and constitutionality of the two are exactly the same. In the aforesaid view of the matter, there can be no doubt about the conclusion recorded in the main opinion that auction which is just one of the several price recovery mechanisms, cannot be held to be the only constitutionally recognized method for alienation of natural resources. That should not be understood to mean that it can never be a valid method for disposal of natural resources (refer to paras 186 to 188 of my instant opinion).
I would, therefore, conclude by stating that no part of the natural resource can be dissipated as a matter of largesse, charity, donation or endowment, for private exploitation. Each bit of natural resource expended must bring back a reciprocal consideration. The consideration may be in the nature of earning revenue or may be to "best subserve the common good". It may well be the amalgam of the two. There cannot be a dissipation of material resources free of cost or at a consideration lower than their actual worth. One set of citizens cannot prosper at the cost of another set of citizens, for that would not be fair or reasonable."
15. The natural resources case did not truly upset the findings of the 2G case, albeit the findings were modified and it was declared that though public auction cannot be given the status of a constitutional principle, as it may not be applicable in every given situation, yet the Constitution Bench emphasized that the prime consideration for the distribution of natural resources will always be "public good and equality". Alienation of natural resources and the manner adopted for the distribution will always remain a policy decision, which has to be framed within our constitutional principles. The Constitutional Bench clarified the position as under:-
"However, when such a policy decision is not backed by a social or welfare purpose, and precious and scare natural resources are alienated for -7- commercial pursuits of profit maximizing private entrepreneurs, adoption of means other than those that are competitive and maximize revenue may be arbitrary and face the wrath of Article 14 of the Constitution. Hence, rather than prescribing or proscribing a method, we believe, a judicial scrutiny of methods of disposal of natural resources should depend on the facts and circumstances of each case, in consonance with the principles which we have culled out above. Failing which, the Court, in exercise of power of judicial review, shall term the executive action as arbitrary, unfair, unreasonable and capricious due to its antimony with Article 14 of the Constitution."
16. The stand taken by the Union of India, before this Court is that the above two decisions of the Hon'ble Apex Court greatly influenced Union of India at a time when it was already in the process of bringing changes in the MMDR Act. In the light of the above decisions, the matter was once again referred to a Committee which after wide consultations with many State Governments, prepared a draft amendment in January, 2015. All the same, since both the Houses of Parliament were not in Session, therefore after the approval of the Cabinet an ordinance was promulgated by the President of India on 12.01.2015 called M.M.D.R. Amendment Ordinance, 2015.
17. The ordinance was thereafter placed before both the Houses of the Parliament and thereafter it was replaced by the MMDR Amendment Act, 2015.
18. The most important provision in the amendment is Section 10A of the Mines and Minerals (Development and Regulation) Act, which reads as under:-
"10A. Rights of existing concession-holders and applicants.- (1) All applications received prior to the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015- (2) Without prejudice to sub-section (1), the following shall remain eligible on and from the date of commencement of the -8- Mines and Minerals (Development and Regulation) Amendment Act, 2015-
(a) applications received under section 11A of this Act;"
(b) where before the commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 a reconnaissance permit or prospecting licence has been granted in respect of any land for any mineral, the permit holder or the licencee shall have a right for obtaining a prospecting licence followed by a mining lease, or a mining lease, as the case may be, in respect of that mineral in that land, if the State Government is satisfied that the permit holder or the licencee, as the case may be,-
(i) has undertaken reconnaissance operations or prospecting operations, as the case may be, to establish the existence of mineral contents in such land in accordance with such parameters as may be prescribed by the Central Government;
(ii) has not committed any breach of the terms and conditions of the reconnaissance permit or the prospecting licence;
(iii) has not become ineligible under the provisions of this Act; and
(iv) has not failed to apply for grant of prospecting licence or mining lease, as the case may be, within a period of three months after the expiry of reconnaissance permit or prospecting licence, as the case may be, or within such further period not exceeding six months as may be extended by the State Government;
(c) where the Central Government has communicated previous approval as required under sub-section (1) of section 5 for grant of a mining lease, or if a letter of intent (by whatever name called) has been issued by the State Government to grant a mining lease, before the commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, the mining lease shall be granted subject to fulfillment of the conditions of the previous approval or of the letter of intent within a period of two years -9- from the date of commencement of the said Act:
Provided that in respect of any mineral specified in the First Schedule, no prospecting licence or mining lease shall be granted under clause (b) of this sub-section except with the previous approval of the Central Government."
19. Sub-section (1) of Section 10A makes ineligible all pending applications on the date of commencement of MMDR Amendment Act, 2015. The effective date here would be 12.01.2015 as that is the date when the ordinance was promulgated. All pending applications for grant of any kind of mining licence or activity were made ineligible. Sub-section (2) of Section 10A of the Mines and Minerals (Development and Regulation) Act, all the same, creates three kinds of exceptions, where applications though pending on 12.01.2015 have not been made ineligible. These exemptions are contained in sub-section (2) (b) & (c) of Section 10A.
20. These exceptions are first where an application is received under Section 11A of the existing Act. An application under Section 11A of the existing Act would be an application, which was for the purposes of grant of mining activity relating to coal or lignite, and where the Central Government allows such an activity only by way of an auction, or competitive bidding. This is therefore an entirely different category, already in tune with the present changes and understandably there was no challenge at the hands of the petitioner, either on the validity of this exception nor was any equivalence claimed, as is being done for other exemptions.
21. Second exemption is granted to such applicants, in whose favour even before the commencement of the Amendment Act, 2015 (i.e. before 12.01.2015), a reconnaissance permit or a prospective licence was granted. In such cases a prospective licence followed by a mining lease, or
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straightway a mining lease (as the case might be), was to be the consequence, in spite of the amendment, subject, however, to the satisfaction of the State Government that such a permit holder fulfills certain conditions which have been given under Section 10A (2) (b) (i) to (iv) of the MMDR Act. The conditions being that he has not committed any breach of the terms and conditions or that he was not made ineligible under the provisions of this Act, etc. In other words, where a person had already been granted a reconnaissance permit or prospective licence, he was to be treated differently and his application was not made ineligible.
22. The third exception, under sub-section (2) (c) is the one where a Letter of Intent (from hereinafter referred to as "LOI"), has been issued by the State Government for grant of a mining lease before the MMDR Amendment Act, 2015 had commenced. In that case as well, the mining lease has to be granted.
23. Apart from the insertion of Section 10A in the MMDR Act, by way of amendment, many other provisions of the existing MMDR Act have been suitably amended where the emphasis is now on public auction of natural resources. This is the significant change from the earlier policy contained in the original MMDR Act, 1957 where for most of the minerals, mining rights were given not on the basis of auction but on the basis of first-come-first-served. Auction is now the Rule! Before this Court, however, the petitioner has only challenged the constitutionality of Section 10A of the Act. There is no other challenge.
24. In this background, we shall now examine the case of the present petitioners.
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25. Before we come to the core issue, two objections, purely legal, raised by the learned Assistant Solicitor General in defence of the amendment must be dealt with.
26. Learned Assistant Solicitor General for Union of India would argue that the Principal Act i.e. Mines and Minerals (Development and Regulation) Act, 1957 as well as the Amended Act of 2015 would be law having protection of Article 31(A) (1) (e) of the Constitution of India and therefore since it is a law dealing with Article 31(A) (1) (e) of the Constitution, it cannot be held to be void on the ground that it is inconsistent with, or takes away or abridges any of the right conferred by Article 14 or Article 19 of the Constitution of India.
27. The relevant part of Article 31A states as follows:-
31A. Saving of laws providing for acquisition of estates, etc.-
(1)...................
(a)...................
(b)...................
(c)...................
(d)...................
(e) the extinguishment or modification of any rights accruing by virtue of any agreement, lease or licence for the purpose of searching for, or winning, any mineral or mineral oil, or the premature termination or cancellation of any such agreement, lease or licence, shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14 or article 19.
28. Since the admitted position here is that as on 12.01.2015, no rights had accrued in favour of the petitioner "either by an agreement, lease or licence for the purposes of searching for or winning, or any mineral", nor is it a case for "premature termination or cancellation or any such agreement
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or lease or licence", the above provision has no application to the present case.
29. The second argument of the learned Assistant Solicitor General for the Union of India is that since the Mines and Minerals (Development and Regulation) Act, 1957 was brought in the Ninth Schedule to the Constitution of India, which is the Central Act No. 67 of 1957 it is protected under Article 31B of the Constitution of India and it cannot be deemed to be void or even to have become void, on ground of being inconsistent with Part III of the Constitution or on grounds of it taking away or abridging any of the rights given in Part III of the Constitution of India.
30. The submissions of the learned Assistant Solicitor General for the Union of India on this aspect are not acceptable. What has been specified in the Ninth Schedule is the Mines and Minerals (Development and Regulation) Act, 1957, and not the Mines and Minerals Regulations Amendment Act of 2015. Though the Principal Act stands inoculated from any attack as to the invasion of rights under Part III of the Constitution, this cover is not available to the 2015 Amendment, as the amendment in question is not a part of the Ninth Schedule.
31. To get protection of Ninth Schedule and Article 31B of the Constitution of India, it is necessary that the amended provisions must also be brought in the Ninth Schedule. Since, this has not been done, the protection cannot be given to the amending provision. This aspect has been considered by the Hon'ble Apex Court in the case of Godavari Sugar Mills Limited Vs. S.B. Kamble and others, reported in (1975) 1 SCC 696, where the constitutional validity of amendment brought in the Maharashtra Agricultural Lands (Ceiling on
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Holdings) Act, 1961 was under challenge. Whereas the original Act i.e. Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961 was specified in the Ninth Schedule and hence protected under Article 31B of the Constitution of India, the amending provisions were not. The Court held that the same protection could not be given to the amendment brought out in the year 1968 and 1970, for the following reasons:-
"The protection and immunity afforded by Article 31B is, however, restricted to the provisions of the Act or Regulation as they exist on the date the Act or Regulation is included in the Ninth Schedule. The inclusion of the Act and Regulation would protect not only the principal Act or Regulation which is included in the Ninth Schedule but also the amendments which have been made therein till the date of its inclusion in the Ninth Schedule, even though the constitutional amendment by which the Act or Regulation is included in the Ninth Schedule refers only to the principal Act and Regulation and not to the amendments thereof. The protection or immunity enjoyed by the Act or Regulation, including the amendments thereof till the date of its inclusion in the Ninth Schedule would not, however, extend to the amendments made in the Act or Regulation after the date of its inclusion in the Ninth Schedule. The reason for that is that the inclusion of an Act or Regulation in the Ninth Schedule can be brought about only by means of an amendment of the Constitution. The amendment of the Constitution can be carried out in accordance with Article 368 of the Constitution. Such a power is exercised not by the Legislature enacting the impugned law but by the authority, which makes the constitutional amendment under Article 368, viz., the prescribed majority in each House of Parliament. Such a power can be exercised in respect of an existing Act or Regulation of which the provisions can be scrutinized before it is inserted in the Ninth Schedule. It is for the prescribed majority in each House to decide whether a particular Act or Regulation should be inserted in the Ninth Schedule, and if so, whether is should be so inserted in its entirety or partly. In case the protection afforded by Article 31B is extended to amendments made in an Act or Regulation subsequent to its inclusion in the Ninth Schedule, the result would be that even those provisions would enjoy the protection which were never scrutinized and could not in the very nature of things have been scrutinized by the prescribed majority vested with the power of amending the Constitution. It would, indeed, be tantamount to giving a power to the State Legislature to
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amend the Constitution in such a way as would enlarge the contents of Ninth Schedule to the Constitution."
32. Even though the amendment here is not by the State Legislative but by Parliament, yet the procedure which ought to be followed in bringing a statute under the Ninth Schedule has not been followed and the ratio laid down by the Hon'ble Apex Court would squarely apply here as well.
33. We now deal with the main issues.
34. According to the learned senior counsel for the petitioner under the un-amended provision, there were three kinds of mining operations, which could be granted.
35. These were, (a) Reconnaissance permit, (b) Prospective licence (c) Mining lease "A reconnaissance operation", is defined under Section 3(ha) of the Old Act, which reads as under:-
"3(ha) "reconnaissance operations" means any operations undertaken for preliminary prospecting of a mineral through regional, aerial, geophysical or geochemical surveys and geological mapping, but does not include pitting, trenching, drilling (except drilling of boreholes on a grid specified from time to time by the Central Government) or sub-surface excavation."
36. For a reconnaissance operation a permit has to be given by the authorities and such a permit has been defined under Section 3(hb) of the Old Act, which reads as under:-
""reconnaissance permit" means a permit granted for the purpose of undertaking reconnaissance operations."
37. As the very name reconnaissance would suggest, it is a permit granted for very limited purposes, which for doing survey of a prospective mining activity in future through
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regional, aerial, geophysical or geochemical surveys and geological mapping in order to ascertain the prospect of mining in the area.
38. The second is a "prospective operations", which has been defined under Section 3(h) of the Old Act, which reads as under:-
"3(h) "prospecting operations" means any operations undertaken for the purpose of exploring, locating or proving mineral deposits."
39. For a prospective operation, a licence has to be taken under Section 3(g) of the Old Act. "Prospecting licence"
has been defined under Section 3(g) of the Old Act, which reads as under:-.
"3(g) "prospecting licence" means a licence granted for the purpose of undertaking prospecting operations."
The third and the most important is the mining operations. "Mining operations" has been defined under Section 3(d) of the Old Act, which reads as under:-
"3(d) "mining operations" means any operations undertaken for the purpose of winning any mineral."
40. The mining operation can only be done on the basis of mining lease and the "mining lease" has been defined under Section 3(c) of the Old Act, which reads as under:-
"3(c) "mining lease" means includes natural gas and petroleum."
41. Learned senior counsel for the petitioner would argue that what has been described above would be three different stages in mining activity. All of them, however, require a valid permission from the Government.
42. Admittedly it is not necessary in the case of minerals such as limestone or shale, that an applicant must
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first secure a reconnaissance permit, before venturing for a prospective licence. One can straightway go for a prospective licence, which was actually being done in this case by the petitioner. The petitioner had applied for a prospective licence and was granted an LOI. The learned senior counsel for the petitioner has narrated a long list of dates since 20.06.2012, when it had first moved an application under Rule 9 of the Mineral Concession Rules, 1960 for grant of a prospective licence in Tehsil Tiuni, District Dehradun for an area measuring 2421 Hectares. Thereafter LOI was issued on 09.12.2013 which resulted in demarcation of area depositing of fee, followed by a series of paper work and the fulfillment of all the conditions given in the LOI. Broadly the petitioner went through a similar procedure for the grant of prospective licence at Someshwar, District Almora. All the same, before this licence could actually be given, comes the Ordinance on 12.01.2015 making its application ineligible and bringing to naught everything taken place so far.
43. The learned senior counsel for the petitioner - Mr. Jaideep Gupta would firstly argue that "all applications" in sub-section (1) of Section 10A of the Amended Act should be read as only such applications which were merely pending before the concerned authority. In other words, applications where nothing further than a mere pendency had accrued, or where nothing worthwhile had happened. The learned senior counsel for the petitioner would emphasize that in their case it is not a case of a mere pendency of an application, as things had moved much further in their case. He takes this Court to a series of correspondence with the respondent - authority and the Letter of Intent given in their favour. The conditions fulfilled by the petitioner as per LOI, and the huge amount of money, spent on survey work undertaken by the petitioner.
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The learned senior counsel therefore builds up a case that in their case a prospective licence was now merely a formality and therefore the petitioner cannot be made ineligible, as it had already covered a substantial distance!
44. The second argument of the petitioner which is an extension of his first argument would be that it is actually a case of unreasonable classification under sub-section (2) of Section 10A of the Amended Act, where discrimination has been done in his case due to wrong classification or to be more precise due to "under classification", as the petitioner's counsel Sri Jaideep Gupta would put it. The reasons for this according to the petitioner would be that when a person who has done much less work than the petitioner, has been exempted under sub-section (2) of Section 10A, petitioner as well could easily be exempted. The petitioner compares his case with those who have been granted a "reconnaissance permit". According to the petitioner, a reconnaissance activity is a 'lower stage' of mining activity, compared to a prospective operation, and since the petitioner had already been given an LOI for prospective operation, the petitioner was better placed as compared to those who only had a reconnaissance permit in their favour. The learned senior counsel would further argue that a prospecting licence has not been done away with completely under the new law. Under Rule 5 of the Rules known as "The Mineral (Mining by Government Company) Rules, 2015", a prospective licence can be granted to a person who is holding a reconnaissance permit. Therefore, it is not a situation where a prospective licence cannot be given for any lack of provision.
45. The learned Assistant Solicitor General Sri Rakesh Thapliyal who appears on behalf of Union of India, rebuts the submissions of the learned senior counsel for the petitioner
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and submits that for all practical purposes on 12.01.2015, all the petitioner had to its credit was a mere application which was pending consideration for grant of a prospective licence. Admittedly, LOI had been issued by the Government of Uttarakhand for grant of a prospective licence to the petitioner, but nothing further had taken place. In fact, there is no provision of LOI before the grant of a prospective licence under the law. Section 10A (2) (c) only exempts such cases from the ineligibility clause where an LOI for the purposes of "mining lease" has been granted. The petitioner is admittedly not in that category. No LOI had been granted in his favour for the purposes of a mining lease (it was only an LOI for prospective licence in case of the petitioner). Consequently its application being an application which was pending on the due date i.e. on 12.01.2015, stood ineligible.
46. Sri Rakesh Thapliyal would further argue that henceforth as per the amended provision of law, mining lease can only be granted on the basis of a public auction. Public auction is now the mandate of law. It is in tune with the law laid down by the Hon'ble Apex Court both in the case of 2G as well as in the Natural Resources case, the learned counsel would stress.
47. It must be stated at the very outset that during the course of the arguments, the learned senior counsel for the petitioner as well as the counsel for the respondent/Union of India had submitted that there are already two decisions, one of the Andhra Pradesh High Court and the other of Madhya Pradesh High Court on the subject, where a challenge to the constitutionality of the present amendment of 2015 have been dismissed by the two High Courts. The two decisions referred to are of the Andhra Pradesh High Court in the case of Coromandel Mining & Exports Pvt. Ltd., Hyderabad &
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others Vs. Union of India & others, decided on 11.09.2015 and the decision of Madhya Pradesh High Court in the case of Savita Rawat Vs. State of M.P. & others, decided on 11.03.2016. The learned senior counsel for the petitioner Sri Gupta though submits that some of the points he has raised in the present case are somewhat different to what were raised before the two High Courts. The two judgments have been studied. These judgments do answer most of the queries raised by the petitioner before this Court. All the same, all the submissions raised by the learned senior counsel for the petitioner and their rebuttal at the hands of the respondents, shall be duly noted.
48. The first and the second argument of the petitioner are broadly the same i.e., that the pending application of the petitioner be exempted from the ineligibility clause and should be treated as exempted under sub-section (2) of Section 10A. The question therefore is whether the amendment can be read down as is being propositioned by the counsel. The learned Judges of Madhya Pradesh High Court, while taking notice of this precise pleading have ruled against the petitioner on the ground that the exemptions granted under clause (b) of sub- section (2) is where either a reconnaissance permit or a prospective licence "has been granted", which would mean that only such cases have been exempted, where an order to that effect has been passed under the Rules. Contrary to what has been argued by the learned senior counsel for the petitioner before this Court, the fact of the matter remains that the application of the petitioner which was for grant of a prospective licence, till such a licence has actually been granted, irrespective of LOI, would still be an application which remained pending on the day. Merely because an LOI was issued in favour of the petitioner, for grant of a prospective licence does not materially affect the situation as neither a reconnaissance permit nor a prospective licence was
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yet granted to the petitioner. The grant of LOI, for the purposes of a prospective licence, of which there is no provision, either under the Old Act or in the Amendment, does not crystallize in any form of right in favour of the petitioner.
49. This aspect has been considered at length by the Madhya Pradesh High Court (in Savita Rawat). After giving a wide reference to a catena of judgments of Hon'ble Apex Court and Privy Council on the subject it came to the conclusion that no rights in a situation like this actually accrues in favour of the petitioner, in spite of the long pendency of their applications. Similar view has also been taken by the Hon'ble Judges of Andhra Pradesh High Court. Mere pendency of an application, which did not result in any statutory action on the part of the State or State authorities, (in form of either grant of a reconnaissance permit or a prospective licence), cannot be construed as accrual of any right in favour of the applicant. The petitioners had not crossed the stage before it could claim any right in its favour as stipulated under sub- section (2) of Section 10A of the Act.
"The provision in vogue i.e. clause (b) of sub-section (2) of Section 10A when understood in the context of above principle of law leaves no iota of doubt that unless the conditions stipulated therein are fulfilled i.e. upon granting of reconnaissance permit/prospecting licence, the incumbent has further fulfilled the conditions stipulated in sub-
clauses (i) (ii), (iii) and (iv) of clause (b) of sub- section (2) only then a right accrue for obtaining a prospecting licence followed by a mining lease or a mining lease. It in no unambiguous terms obliterate, consideration of any application irrespective of the stage it is."
50. The Hon'ble Judges of the Madhya Pradesh High Court have referred to a decision of the Apex Court in case of Commissioner of Municipal Corporation, Shimla v. Prem Lata (2007) 11 SCC 40, where it was observed by their Lordships as under:-
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"It is now well-settled that where a statute provides for a right, but enforcement thereof is in several stages, unless and until the conditions precedent laid down therein are satisfied, no right can be said to have been vested in the person concerned. The law operating in this behalf, in our opinion is no longer res integra."
51. Evidently the Legislature has not included the case of the petitioner in the exemption categories such as we have discussed above. An application which remained pending on the date of the promulgation of this Ordinance, such as the case of the petitioner, stands now as ineligible. If the Court is persuaded to read the case of petitioner also under the exemption category as is being pleaded, then that would amount to providing something in the statute which presumably the Legislature intentionally sought to omit. It cannot be a case of Casus Omissus. If this Court includes the case of the petitioner under the exemptions granted in sub- section (2) (b) & (c) of Section 10A then it would not be merely an exercise in construction, but would amount to legislation.
52. It is by now settled that the Courts must give affect to the purpose and the object of the Act and if a clear and unambiguous meaning is reflected from the statute then that should be adhered to. In UCO Bank and another Vs. Rajinder Lal Capoor, reported in (2008) 5 SCC 257, the Hon'ble Apex Court held as under:-
"All the regulations must be given a harmonious interpretation. A court of law should not presume a casus omissus but if there is any, it shall not supply the same. If two or more provisions of a statute appear to carry different meanings, a construction which would give effect to all of them should be preferred."
53. As regarding the long pendency of the application of the petitioner is concerned, merely because the application of the petitioner for grant of a prospective licence has remained
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pending that itself would not bring a case in favour of the petitioner.
54. In State of Tamil Nadu v. Hind Stone (1981) 2 SCC 205, the Hon'ble Apex Court held as under:-
"While it is true that such applications should be dealt with within a reasonable time, it cannot on that account be said that the right to have an application disposed of in a reasonable time clothes an applicant for a lease with a right to have the application disposed of on the basis of the rules in force at the time of the making of the application. None has a vested right to the grant or renewal of a lease and none can claim a vested right to have an application for the grant or renewal of a lease dealt with in a particular way, by applying particular provisions. In the absence of any vested rights in anyone, an application for a lease has necessarily to be dealt with according to the rules in force on the date of the disposal of the application despite the fact that there is a long delay since the making of the application."
55. The third argument of the petitioner would be that considering the fact that much water has flown in his case and the Government was about to grant a prospecting licence to the petitioner but presuming it to be still technically an application before the concerned authority, it could be made ineligible only after affording an opportunity of hearing to the petitioner. The learned senior counsel for the petitioner would submit that this much can always be read into the provision of Section 10A of the Amended Act and petitioner can be made ineligible only after affording an opportunity of hearing. For this he relies upon a decision of Hon'ble Apex Court in C.B. Gautam Vs Union of India & others reported in 1993 (1) SCC 73.
56. A decision is only an authority for what it actually decides. Since each decision of the Hon'ble Apex Court emanates from a specific fact, it will not act as a precedent for
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all future cases. Only the principle of law, which was applied by the Courts for reaching the decision, can be called as a binding precedent.
57. Whether there was any such binding precedent in C.B. Gautam case as is being argued?
58. In C.B. Gautam, what was under challenge was the newly inserted Chapter XX-C in the Income Tax Act, wherein, inter alia, Sections 269UC and 269UD were inserted. Under the new provision, if it comes to the knowledge of the authority that in a given transaction of immovable property, there has been an undervaluation for the purposes of evasion of tax, then the appropriate authority had powers to order for the compulsory purchase of that property for the amount equal to the amount shown as consideration. The argument of the petitioner before the Hon'ble Apex Court was that before taking recourse to this harsh measure, there was no provision for giving the concerned person any opportunity of hearing, particularly when there was no provision for an appeal or revision against the said order. It was under these circumstances that the Hon'ble Apex Court had held that the orders passed for compulsory purchase under Section 269UD of the Income Tax Act were bad as it did not afford any opportunity of hearing. One could therefore submit that under these circumstances, an opportunity of hearing was read in the statute by the Hon'ble Apex Court.
59. All the same, the issue before the Hon'ble Apex Court in C.B. Gautam case was entirely different. It was a case where with the amendment in the statute, a preemptive or compulsory purchase was to be done by the Central Government if the authority was convinced that there has been an undervaluation in order to evade tax. It was a case, where the action of the State authorities had civil consequences, yet it was being done without affording any
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opportunity of hearing to the different parties. This was hence held to be in violation of the principles of natural justice and fair play. This, however, is not a situation at hand. It is not a case, as discussed above where the petitioner had acquired any kind of right over any property. Petitioner is not being deprived of any of his rights, i.e. rights which had accrued in its favour. Hence, the case cited by the learned senior counsel for the petitioner has absolutely no application in the present matter. In any case, the Legislature in its wisdom has not given a provision for opportunity of hearing and in the opinion of this Court rightly so for no right had accrued in favour of the petitioner or a person who stood on a similar footing.
60. The learned senior counsel for the petitioner has also drawn the attention of this Court to the expenses incurred by the petitioner so far, particularly after LOI was given in its favour. All the same, no advantage would lie in favour of the petitioner on this aspect, assuming the expenses have been incurred. This is so for the reasons that even under the un-amended law no rights, even preferential rights, were created in favour of a person who had incurred expenses during prospective mining. Only "the investment which the applicant proposes to make in the mines and in the industry", could have been a consideration under Section 11 (3) (d).
61. Finally the challenge to the constitutionality of the 2015 Amendment has to be examined. The petitioner before this Court has only challenged the constitutional validity of Section 10A, which has been inserted vide 2015 Amendment and there has been neither any challenge nor argument raised before this Court on any other provision of law contained in the 2015 Amendment Act. Whether Section 10A is violative of Article 14 of the Constitution of India, has to be seen.
62. As we have already examined the principal argument of the petitioner was not as to the constitutional
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validity of Section 10A but the focus of the argument was that the pending application of the petitioner for grant of mining rights should not be categorized as "ineligible", and rather it should be construed by the Court as eligible, considering the long pendency of the petitioner's application and an LOI being granted in his favour for prospective mining. It is only when a case for inclusion cannot be made out, that the petitioner in the alternative, has challenged the vires of the new Amendment.
63. A presumption lies as to the validity of a legislation. Even though trite, it must be stated that a legislation can be declared as ultra vires only on two grounds. First on the ground of lack of legislative competence and the second if it is violative of any of the fundamental rights enshrined in Part III of the Constitution of India. There is no third ground available under the law.
64. As far as legislative competence is concerned, no challenge has been made on that score, obviously enough, as the amendment clearly falls under Entry 5 of List 1 to the Seventh Schedule, which is regarding the regulation of mines and minerals development, an aspect which has already been discussed in the preceding paragraphs of the present order. The only challenge of the petitioner now is to the validity of the new Amendment on the touchstone of Article 14 of the Constitution of India. The focus of the argument here again is that it is a classic case of lack of classification. The petitioner would argue that under clause (2) (b) exemptions have been given in those cases where a reconnaissance permit or a prospective licence has been granted and under sub-section (2) (c) of Section 10A even in a case where a Letter of Intent has been issued by the Government for grant of a mining lease. Here the argument of the petitioner would be that whereas an exception has been created and exemption granted
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to a person who has done much less work than the present petitioner, such as the one who has been granted a reconnaissance permit, the petitioner, in whose favour an LOI for a prospective licence had been issued has not been included under the exemption clause. Hence the classification is unreasonable. The other argument of the petitioner would be that for all practical purposes a prospective licence had been given in favour of the petitioner or at least it must be understood that in principle the Government had agreed to grant a prospective licence to the petitioner as the petitioner had met all terms and conditions contained in its LOI. Therefore, the petitioner ought to be treated or at least at par with those in whose favour a prospective licence had been issued.
65. In case the petitioner cannot be taken under sub- section (2) (b) then his case ought to have been considered under sub-section (2) (c) where an exemption again has been created in favour of a person in whose favour an LOI has been issued by the State Government for grant of a mining lease. The argument of the petitioner would be that at least an LOI has been issued in his favour, not for a mining lease, but at least for a prospective licence and therefore he should be treated at par with such persons in whose favour LOI has been issued for mining lease.
66. In order to support his case, learned senior counsel for the petitioner Mr. Jaideep Gupta relies upon two judgments of the Hon'ble Apex Court. The first is Kunnathat Thathunni Moopil Nair vs. State of Kerala and another, reported in AIR 1961 SCC 552 (V 48 C 81), and the second would be Kumari Shrilekha Vidyarthi and others vs. State of U.P. and others, reported in (1991) 1 SCC 212.
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67. Having gone through the aforesaid judgments, I find that these cases have absolutely no application in the present case.
68. In Kunnathat Thathunni Moopil Nair case, which was filed by the petitioner under Article 32 of the Constitution of India, the petitioner had impugned the constitutionality of Travancore-Cochin Land Tax Act, XV of 1955 as amended by Act No. X of 1957, by which, inter alia, all land owners had to pay a tax called "land tax", at a flat rate of Rs.2, per acre of land. The argument before the Constitution Bench of the Hon'ble Apex Court, which gave its decision in favour of the petitioner by 4:1, was that there has been no survey of land, most of it being private forest, and without there being proper survey or classification of land a flat tax of Rs.2 per acre of land was hit by Article 14 of the Constitution of India. It was argued that due to non-classification of the land, a land which may be nothing but arid desert is liable for the same rate of tax as a land which gives a good yield of crop every year. It is for this reason that the majority opinion of the Hon'ble Apex Court held as under:-
"It is clear, therefore, that inequality is writ large on the Act and is inherent in the very provisions of the taxing section. It is also clear that there is no attempt at classification in the provisions of the Act. Hence, no more need be said as to what could have been the basis for a valid classification. It is one of those cases where the lack of classification creates inequality. It is, therefore, clearly hit by the prohibition to deny equality before the law contained in Art. 14 of the Constitution. Furthermore, Sec. 7 of the Act, quoted above, particularly the latter part, which vests the Government with the power wholly or partially to exempt any land from the provisions of the Act, is clearly discriminatory in its effect and, therefore, infringes Art. 14 of the Constitution."
69. But this is not the case before this Court. The amendment does in its sweep makes all pending applications as ineligible under sub-section (1) of Section 10A, yet the
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reason why this was being done has already been narrated in the preceding paragraphs where amendment made in the Mines and Minerals (Development and Regulation) Act, 1957 was long due and was particularly necessitated in the light of the two seminal judgments of the Hon'ble Apex Court in the case of 2G and the Natural Resources case. Emphasis is on public auction. True, auction as a method for disposal of natural resources does not have a constitutional mandate in its favour as held in the Natural Resources case, yet in most cases it has to be preferred as against other methods. Now the Legislature mandates the application of this principle for distribution of mineral resources which has a sanction of law. Nothing has been shown to prove that this method would be violation of Article 14 of the Constitution of India. The Andhra Pradesh High Court as well as the Madhya Pradesh High Court have both upheld the validity of the amendment, and the challenge thrown by the petitioner before them inter alia on ground that the amendment is violative of Article 14 of the Constitution of India was dismissed. The two decisions, both by Division Benches, in my humble opinion give a precise and correct assessment, as to the constitutional validity of the 2015 amendment, and I am therefore in respectful agreement with the conclusions given in the two judgments.
70. Moreover, the first-cum-first-served principle was replaced with a more equitable and transparent system of open auction. At the same time, the Legislature did make a classification by keeping out certain applications from becoming ineligible, as they had either crossed a certain stage or had performed reconnaissance work or prospective mining consequent to a valid reconnaissance permit or prospective licence, respectively. Similarly an exception was created when an LOI had already been issued for mining lease. Therefore it cannot be said that there was no classification. It is also a valid classification and is based on a rationale, which has a
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nexus with the object sought to be achieved. Therefore, it is not a case where there has been any lack of classification, under classification or even unreasonable classification. The first case law cited by the petitioner, therefore, has no application in the present case.
71. The second case cited by the petitioner is Kumari Shrilekha Vidyarthi and others, where a circular was passed by the then U.P. Government in the year 1990 terminating the engagement of all Government Advocates, etc which was held to be violative of Article 14 of the Constitution of India. The circular was held to be violative of "Legal Remembrance Manual", and further there was absolutely no application of mind by the concerned authority as to either the work or conduct of the counsels before termination of their contract. Again this is not the case before this Court. In fact, Kumari Shrilekha Vidyarthi case has absolutely no implication in the present matter. The petitioners in Kumari Shrilekha Vidyarthi case had at least some rights accrued in their favour and they were all aggrieved by their disengagement by an omnibus government circular, which was without application of mind. In the present case, the challenge is not to an administrative circular but to a Parliamentary Statute. Moreover, unlike in Kumari Shrilekha Vidyarthi the petitioner had no rights accrued earlier in their favour as far as mining was concerned, and therefore, Kumari Shrilekha Vidyarthi has no application to the facts of this case.
72. The classifications made in Section 10A are not unreasonable, rather they have a rationale and a nexus with the object sought to be achieved and therefore the challenge in terms of any violation of Article 14 of the Constitution of India fails. The remaining challenge is only as to whether the amendment is arbitrary.
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73. A statute, however, cannot be declared as unconstitutional on the ground that it is arbitrary. A seminal decision on this aspect by the Hon'ble Apex Court is of the State of A.P. and others Vs. McDowell & Co. and others, reported in 1996 3 SCC 709, which has been cited with approval by a recent Supreme Court decision in the case of Rajbala and others Vs. State of Haryana and others, reported in (2016) 2 SCC 445, wherein it has been emphasized that the courts do not undertake task of declaring a statute as unconstitutional on the ground that the Legislation is arbitrary, "since such an exercise implies a value judgment and courts do not examine the wisdom of legislative choices unless the legislation is otherwise violative of some specific provision of the Constitution."
74. Consequently the two writ petitions fail as there is no merit in their challenge thrown to the validity of the Mines and Minerals (Development and Regulation) Amendment Act, 2015. The writ petitions stand dismissed accordingly.
75. Having made the above determination, it must now be stated that during the course of the arguments in the present case a practicing Advocate of this Court Sri Devesh Upreti had apprised this Court that he had earlier filed a PIL before this Court being WPPIL No. 10 of 2014 (Devesh Upreti Vs. State of Uttarakhand & others), which was against grant of any mining rights to the petitioner. In the earlier round of litigation, which was in the nature of a Public Interest Litigation against the then proposed mining at Someshwar and Tuini in Uttarakhand, the present petitioner was one of the respondents,* and it was argued by the petitioner that mining activity in the hill region of Uttarakhand** would be detrimental to the environment and forest, considering the * The said PIL was against the proposed mining activity at Tuini and Someshwar, the areas for which now the pending application of present petitioner has been made ineligible.
** Both Tuini and Someshwar lie in the hill region of Uttarakhand.
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fragile land and the topography of the region. Reliance was also placed on a seminal decision of the Hon'ble Apex Court in the case of Rural Litigation and Entitlement Kendra, Dehradun & others vs. State of UP & others, reported in (1985) 2 SCC 431, by which mining activities have been stopped in Doon Valley of Uttarakhand. The writ petition, however, was disposed of by the Division Bench of this Court by passing the following order on 29.04.2014:-
"Pursuant to the earlier order of this Court, an affidavit has been filed by respondent No. 4, whereby and under, respondent No. 4 has stated that it has not yet started prospecting and is gearing-up to prospect within the area as has been permitted by the licence granted by the State, but will not prospect in any part of the land, which has been dealt with by the Hon'ble Supreme Court in its judgment rendered in the case of Rural Litigation and Entitlement Kendra, Dehradun & others vs. State of UP & others, reported in (1985) 2 SCC 431. It appears that, under the Minerals Concession Rules, 1960, it is permissible to grant licence to prospect. Therefore, grant of licence, in the instant case, by the State in favour of respondent No. 4 for prospecting, being permissible under the law, cannot be said to be counter productive to public interest.
In those circumstances, we dispose of this writ petition with a request to the State Government to ensure that no prospecting is done within the area dealt with by the Hon'ble Supreme Court in the judgment referred to above."
76. Mr. Jaideep Gupta, Senior Counsel for the petitioner admitted the position that the directions contained in Rural Litigation case, subject to their applicability, are liable to be followed.
77. Since the filing of the Public Interest Litigation and the orders passed therein have been brought to the knowledge
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of this Court it would, therefore, be necessary to state that the directions given by the Hon'ble Apex Court in Rural Litigation case must be followed and apart from the application of the mining laws, authorities must ensure that mining activities should not be detrimental to the forest and environment, as that too is a mandate of law! (Sudhanshu Dhulia, J.) 30.12.2016 Ankit