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for quashing (i) the decision of the Department of Mines and Geology, Government of Jharkhand contained in the letter dated September 13, 2005 whereby the State Government sought to withdraw the recommendation for grant of mining lease made in favour of the appellants in the subject iron ore bearing areas in Mauza Ghatkuri, West Singhbhum District, Jharkhand (ii) the order of the Ministry of Mines, Government of India whereunder the said Ministry returned the recommendation made by Government of Jharkhand in favour of each of the appellants (iii) for declaring the Notifications dated December 21, 1962 and February 28, 1969 issued by the Government of Bihar and the Notification dated October 27, 2006 issued by the Government of Jharkhand null and void and (iv) directing the respondents to proceed under Rule 59(2) of the Mineral Concession Rules, 1960 (for short, ‘1960 Rules’) for grant of mining lease to each of the appellants in the iron ore bearing areas in Ghatkuri as applied.…No one 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…….” Mines and minerals are a part of the wealth of a nation. The public interest is very much writ large in the provisions of MMDR Act and in the declaration under Section 2 thereof. The ownership of the mines vests in the State of Jharkhand in view of the declaration under the provisions of Bihar Land Reforms Act, 1950 which act is protected by placing it in the Ninth Schedule added by the First Amendment to the Constitution. Iron is a mineral necessary for industrial development. In view of the pendency of these appeals, and the stay orders sought by the appellants therein, grant of lease of iron-ore mines to the public sector undertakings could not be made for over six years. The State of Jharkhand and the people at large have thereby suffered. In view thereof we would have been justified in imposing costs on the appellants.

REPORTABLE

Seal of Jharkhand State

Seal of Jharkhand State (Photo credit: Wikipedia)

 

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3285 OF 2009
Monnet Ispat and Energy Ltd. …… Appellant

Vs.

Union of India and Ors. ……
Respondents

WITH
CIVIL APPEAL NO. 3286 OF 2009
CIVIL APPEAL NO. 3287 OF 2009
CIVIL APPEAL NO. 3288 OF 2009
CIVIL APPEAL NO. 3289 OF 2009
CIVIL APPEAL NO. 3290 OF 2009

 

 
JUDGMENT
R.M. LODHA, J.

Introduction

This group of six appeals occupied considerable judicial time.
These matters were heard on ten days between November 2, 2011 and
November 29, 2011. Although the facts differ from one another in some
respects but since fundamental issues appeared to be common and all these
matters arise from a common judgment dated April 4, 2007 passed by the
Division Bench of the Jharkhand High Court at Ranchi, we have heard all
these matters together which are being disposed of by this common judgment.
Prayers
2. The prayers in the writ petitions filed by the appellants
before the High Court also differ. However, principally the reliefs
prayed for by the appellants in their writ petitions were for quashing (i)
the decision of the Department of Mines and Geology, Government of
Jharkhand contained in the letter dated September 13, 2005 whereby the
State Government sought to withdraw the recommendation for grant of mining
lease made in favour of the appellants in the subject iron ore bearing
areas in Mauza Ghatkuri, West Singhbhum District, Jharkhand (ii) the order
of the Ministry of Mines, Government of India whereunder the said Ministry
returned the recommendation made by Government of Jharkhand in favour of
each of the appellants (iii) for declaring the Notifications dated
December 21, 1962 and February 28, 1969 issued by the Government of Bihar
and the Notification dated October 27, 2006 issued by the Government of
Jharkhand null and void and (iv) directing the respondents to proceed
under Rule 59(2) of the Mineral Concession Rules, 1960 (for short, ‘1960
Rules’) for grant of mining lease to each of the appellants in the iron
ore bearing areas in Ghatkuri as applied.
Bihar Land Reforms Act
3. Bihar Land Reforms Act, 1950 (for short, ‘1950 Bihar Act’) came
to be enacted by the Bihar Legislature to provide for the transference to
the State of the interest of proprietors and tenure holders in land of the
mortgagees and lessees of such interest including interest in mines and
minerals and other matters connected therewith. It came into force on
September 25, 1950. Chapter II of the 1950 Bihar Act deals with vesting of
an estate or tenure in the State and its consequences. The State Government
has been empowered under Section 3 to declare that the estates or tenures
of a proprietor or tenure holder, as may be specified in the notification/s
from time to time, to become vested in the State. Section 4 provides for
consequences of vesting of an estate or tenure in the State. Section 4 has
undergone amendments on few occasions. To the extent it is relevant,
Section 4 of the 1950 Bihar Act reads as follows :
“4. Consequences of the vesting of an estate or tenure in the
State.—Notwithstanding anything contained in any other law for the
time being in force or any contract and notwithstanding any non-
compliance or irregular compliance of the provisions…………..on the
publication of the notification under sub-section (1), of section 3
or sub-section (1) or sub-section (2) of section 3A, the following
consequences shall ensue and shall be deemed always to have ensued,
namely;
a) Such estate or tenure including the interests of the proprietor
or tenure-holder in any building or part of a building comprised
in such estate or tenure ……… as also his interest in all sub
soil including any rights in mines and minerals whether
discovered or undiscovered or whether been worked or not,
inclusive of such rights of a lessee of mines and minerals,
comprised in such estate are tenure (other than the interests of
raiyats or under – raiyats) shall, with effect from the date of
vesting, vest absolutely in the State free from all encumbrances
and such proprietor or tenure-holder shall cease to have any
interest in such estate or other than the interests expressly
saved by or under the provisions of this Act”.

 

 

4. The brief facts relating to each of these appeals may be
noticed now.

Factual features

Civil Appeal No. 3285 of 2009, Monnet Ispat and Energy Ltd. Vs.Union of
India and Ors.

 

5. The appellant company, referred to as Monnet, is registered
under the Companies Act, 1956. Monnet is engaged in the business of mining,
production of steel, ferro-alloys and power. Monnet decided to set up an
integrated steel plant in Hazaribagh District with a proposed investment of
Rs. 1400 crores. A Memorandum of Understanding (MOU) was entered into
between Monnet and the State Government on February 5, 2003. The main
raw material for the integrated steel plant is iron ore. On January 29,
2004, Monnet made an application to State of Jharkhand, referred to as
State Government, for mining lease of iron ore over an area of 3566.54
hectares in Mauza Ghatkuri for the purpose of the proposed steel plant.

5.1. It is the case of Monnet that after consideration of the
application and following the necessary procedure contemplated under the
Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter
referred to as ‘the 1957 Act’) and the 1960 Rules, the State Government in
August, 2004 recommended Monnet’s application to the Government of India
for grant of mining lease of iron ore over an area of 705 hectares in Mauza
Ghatkuri under Section 5(1) and Section 11(5) of the 1957 Act. The
recommendation was made after the State Government was satisfied that the
said mining block was suitable for exploitation and met the requirement of
Monnet. The recommendation was also made on priority basis as Monnet
fulfilled the essential objectives of the industrial policy of the State
with commitment for investment and growth of employment and social sector
under its aegis.

5.2. The Ministry of Mines, Government of India, on receipt of the
recommendation of the State Government, sought for certain clarifications
from the State Government vide their communication dated September 6, 2004.
The State Government is said to have responded to the said communication
and clarified the position in their reply of November 17, 2004. The State
Government reiterated the recommendation in favour of Monnet setting out
the comparative merit of all such proposals.

5.3. On November 17, 2004, the District Mining Officer, Chaibasa
informed the Secretary, Department of Mines and Geology, Government of
Jharkhand that certain portions of Mauza Ghatkuri and the adjoining areas
were reserved for public sector exploitation under the two Notifications
issued by the Government of Bihar on December 21, 1962 and February 28,
1969. He further suggested that approval of the Central Government under
Rule 59(2) of the 1960 Rules should be obtained by the State Government for
grant of leases in this area to avoid complications.

5.4. The Central Government vide its letter dated June 15, 2005
informed that a joint meeting of officers of Ministry of Mines, Government
of India and concerned officers of the State Government be held to clarify
certain issues in connection with the Ghatkuri Reserve Forest.

5.5. On June 29, 2005, a joint meeting of the officials of the
Central Government and State Government on the issues relating to
proposals for grant of mining leases in Ghatkuri was held wherein the
Secretary of the State Government is stated to have requested the Central
Government to hold on the processing of the pending applications.

5.6. On September 13, 2005, the State Government requested the
Central Government to return the proposals of mining lease of nine out of
ten applicants, including Monnet.

5.7. On September 14, 2005, a joint meeting of the officials of the
State Government and the Central Government took place. In that meeting
also the officials of the State Government informed the Central Government
that it has decided to withdraw nine pending mining lease proposals,
including that of Monnet.

5.8. Monnet has averred that compartment no. 5 which was
recommended for allocation to it was not at all affected by reservation.
Block No. D (500 acres) which is overlapping with compartment no. 5
(recommended in favour of Monnet) was earlier lease area of M/s. Rungta
Sons Pvt. Ltd. (for short, ‘Rungta’). The said lease was granted to
Rungta for twenty years upto September 3, 1995. Monnet claims that
application for renewal was not submitted by Rungta one year prior to
expiry of their lease and their lease automatically expired on September
3, 1995. Moreover, only 102.25 hectares area has been overlapping with
compartment no. 5 (out of the 705 hectares recommended by the State
Government for Monnet). Monnet has thus, set up the case that the area
recommended by the State Government for grant of mining lease to it was not
under any previous reservation for any public sector undertaking.

5.9. On March 6, 2006, the Government of India passed an order
accepting the request of the State Government dated September 13, 2005 for
withdrawal of the mining proposals made in favour of applicants, including
Monnet.

Civil Appeal No. 3286 of 2009, Adhunik Alloys & Power Ltd. Vs. Union of
India and Ors.

6. The appellant M/s. Adhunik Alloys & Power Limited, referred
to as Adhunik, is a company registered under the provisions of the
Companies Act, 1956. It carries on business of iron and steel. Adhunik
intended to set up 2.2 MTPA integrated steel plant at Kandra in the
State of Jharkhand. The first phase of this integrated steel plant is said
to have been completed and commissioned in June, 2005. The work for
completion of phase-II has been going on. On September 1, 2003, Adhunik
made an application to the State Government for grant of mining lease
over an area of 8809.37 acres (3566.54 hectares) in Mauza Ghatkuri for iron
ore for captive consumption of its proposed integrated steel plant at
Kandra, Jharkhand.

6.1. On September 16, 2003, the Deputy Commissioner, Chaibasa
forwarded Adhunik’s application along with few others to the Director of
Mines, Jharkhand.

6.2. As the applications were overlapping, the Director of Mines
called Adhunik and other applicants for a meeting on December 26, 2003. The
Director of Mines gave hearing to the applicants, including Adhunik.
6.3. On February 26, 2004, an MOU was entered into between the State
Government and Adhunik in connection with an integrated steel plant at
Village Kandra in the District of Seraikela – Kharswan setting out the
details of the project; capacity per annum, project cost and implementation
period.

6.4. On August 4, 2004, the State Government recommended Adhunik’s
case to the Central Government for grant of mining lease for iron ore for
captive consumption over an area of 426.875 hectares. In its letter dated
August 4, 2004 seeking prior approval of the Central Government for grant
of mining lease for iron ore in favour of Adhunik, the State Government
gave various reasons justifying grant of mining lease to Adhunik.

6.5. Adhunik claims that substantial progress has been made in
construction of its Rs. 790 crores integrated steel plant and the plant has
been seriously affected due to shortage of iron ore.

Civil Appeal No. 3287 of 2009, Abhijeet Infrastructure Ltd. Vs. Union of
India and Ors.

7. The appellant M/s. Abhijeet Infrastructure Limited, referred
to as Abhijeet, was earlier known as Abhijeet Infrastructure Pvt.
Limited. Abhijeet has been in the business of iron and steel for last
many years. On November 21, 2003, Abhijeet submitted the application to the
State Government for mining lease over an area of 1633.03 hectares in
Mauza Ghatkuri for iron ore and manganese for captive consumption of its
proposed Sponge Iron Plant and Ferro-Alloys Plant in Village Rewali, Block
Katkamsandi, District Hazaribagh. On February 26, 2004, an MOU was entered
into between Abhijeet and the State Government for setting up a Sponge Iron
Plant and Ferro-Alloys Plant at suitable location in the State of
Jharkhand.

7.1. On August 5, 2004, the State Government took a decision to
grant a mining lease to Abhijeet for iron ore for captive consumption over
an area of 429 hectares not overlapping with the area of any other
applicant in Mauza Ghatkuri. The State Government sought prior approval of
the Central Government vide its letter dated August 5, 2004 for grant of
mining lease to Abhijeet.

7.2. Abhijeet has averred that based on firm and definite
commitment of the State Government in the form of MOU dated February 26,
2004 it has taken all required steps including the steps for getting
acquisition of land in village Kud, Rewali and Damodih.

 

Civil Appeal No. 3288 of 2009, Ispat Industries Limited Vs. Union of India
and Ors.

8. The appellant, Ispat Industries Limited, referred to as
Ispat, is a company registered under the Companies Act, 1956. According to
Ispat, it is one of the largest steel producers in the private sector and
has got vast resources and technical experience. Ispat intended to set up
an integrated steel plant in the State of Jharkhand and accordingly made
an application to the State Government for grant of mining lease over an
area of 725.32 hectares in Village Rajabeda in West Singhbhum District for
iron ore.

8.1. The State Government took a decision on August 5, 2004 to grant
a mining lease over an area of 470.06 hectares for captive consumption of
iron ore in respect of the area not overlapping with the area of any other
major mineral. The State Government on August 5, 2004 also wrote to the
Central Government seeking their prior approval in the matter.

Civil Appeal No. 3289 of 2009, Jharkhand Ispat Private Limited Vs. Union of
India and Ors.

9. Jharkhand Ispat Private Limited, to be referred as Jharkhand
Ispat, is a registered company having their registered office in Ramgarh,
District Hazaribagh, State of Jharkhand. Jharkhand Ispat runs a Sponge
Iron and Steel Plant in Ramgarh.

9.1. Jharkhand Ispat applied to the State Government for grant of
iron ore mining lease over an area of 950.50 hectares at Mauza Ghatkuri.
It also entered into an MOU dated February 26, 2004 with the State
Government for establishment of sponge iron and steel plant in the
Hazaribagh District. As per para 4 of the MOU, State Government would
assist Jharkhand Ispat in selecting the area for iron and other minerals
as per requirement depending upon quality and quantity. The State
Government agreed to grant mineral concession as per existing law.

9.2. On August 4, 2004, the State Government prepared a report
containing its decision and proposal in favour of Jharkhand Ispat for grant
of mining lease over an area of 346.647 hectares at Mauza Ghatkuri and
forwarded the same to the Ministry of Mines, Government of India.

Civil Appeal No. 3290 of 2009, Prakash Ispat Limited Vs. Union of India and
Ors.

10. The appellant Prakash Ispat Limited, referred to as Prakash, is
a company registered under the Companies Act, 1956. Prakash carries on
business in steel and claims to have annual turnover of Rs.2200 crores.
Prakash applied to the State Government for mining lease of iron ore over
an area of 1000 hectares in Mauza Ghatkuri on January 20, 2004 for captive
consumption of the proposed Steel Plant at Amadia Gaon in West Singhbhum
District.

11. On March 26, 2004, the State Government entered into an MOU
with Prakash for setting up Mini Blast Furnace etc., at the proposed
investment of Rs. 71.40 crores. On August 4, 2004, the State Government
took a decision to grant mining lease for iron ore to Prakash for captive
consumption over an area of 294.06 hectares and recommended to the Central
Government for their prior approval.

12. It may be mentioned here that the facts concerning various
meetings between the officials of the State Government and Central
Government; the communications exchanged between the two, including the
communication of the State Government dated September 13, 2005; the
communication of the District Mining Officer, Chaibasa dated November 17,
2004 to the Department of Mines and Geology, State of Jharkhand and the
rejection of the proposal have not been repeated while narrating the facts
of the appellants –Adhunik, Abhijeet, Ispat, Jharkhand Ispat and Prakash as
these facts have already been noted while narrating the facts in the matter
of Monnet.

The main issue

13. The foremost point that arises for consideration is whether
the Notifications dated December 21, 1962 (to be referred as 1962
Notification) and February 28, 1969 (to be referred as 1969 Notification)
issued by the State of Bihar and the Notification dated October 27, 2006
(referred to as 2006 Notification) issued by the State of Jharkhand are
legal and valid. It is a little complex point, because it involves
threading one’s way through statutory provisions contained in 1957 Act and
1960 Rules. I shall set them out to the extent these are relevant after
noticing the arguments advanced on behalf of the parties.

14. Mr. Ranjit Kumar, learned senior counsel for Monnet , did
initially raise the plea that 1962 and 1969 Notifications were never
published in the official gazette but on production of gazette copies of
these Notifications by learned senior counsel for the State of Jharkhand,
the plea with regard to the non-publication of these Notifications was not
carried further.

1962 Notification

15. The 1962 Notification issued by the erstwhile State of Bihar
reads as under:
“NOTIFICATION
The 21st December, 1962
No. A/MM-40510/62-6209/M – It is hereby notified for the
information of public that the following iron ore bearing
areas in this State are reserved for exploitation of the
mineral in the public sector:-

Name of the district – Shinghbhum

Description of the areas reserved.

1. Sasangda Main Block –

BOUNDARY
South – The southern boundary is the same as the
northern boundary. It starts from the
Bihar, Orissa boundary opposite the
gorge of the southern tributary of
Megnahatu nala and runs west-north-west
along the gorge till the foot of the
hill.
East – The boundary between the States of Bihar and
Orissa.

East & South – East Bihar-Orissa boundary from 2680 upto
a point 2-3/4 miles north-east of it,
meeting the southern boundary of
Sasangda Main Block.
North – The northern boundary is the same as the
southern boundary of Sasangda Main
Block and follows the gorge at just
over one mile northwards of .2935.
5. Dirisumburu Block –
BOUNDARY

South and South-West Starting from the Churu Ikir Nala at
about 5 furlongs east – north-east of
Kiriburu Kolaiburu village (220 11’30”
: 85 14’), in east-south-east
direction for one mile.
South-East – From the above end towards north-east for
2-1/2 miles to reach a point ½ miles
north west of Bahada village (22
11’30”: 85 17’30”).
North-East – From the above end north – westwards upto
the gorge at coordinate location 20
13’ : 85 18”.
North-West – From the above location south-westwards
along the fact of the hill
Dirishumburu and the foot of the
adjoining Hakatlataburu to meet the
starting point of the Churu Ikir Nala
east-north-east of Kolaiburu village.

6. Banalata Block –
BOUNDARY

 

South-East – A line running west-north-west-east-south-
east passing through 2.20 feet contour
at the south-western and of the
Banlata ridge south-east – From 2 -1/2
furlongs east of 2187 north east wards
upto ½ mile north-west of Pechahalu
village (22 16’ : 85 20’) and from
here north-north – east upto 3
furlongs east-south-east of 2567
Painsira Buru).
North – From the above and in west-north-west direction
across the hill for five furlongs to
reach the north-west slope of the
hill.
West – From above end in general south-south-west
directing along the flank of the hill
to reach the south-west boundary at
three furlongs north-west 2187.

By order of the Governor of Bihar
Sd/- (B.N. Sinha)
Secretary to Government”
1969 Notification

16. Then, on February 28, 1969 the following Notification was
issued:
“GOVERNMENT OF BIHAR
DEPARTMENT OF MINES & GEOLOGY

NOTIFICATION

Patna, the 28th February, 1969
Phalgun, 1890 – S

No.B/M6-1019/68-1564/M

It is hereby notified for information of public that Iron
Ore bearing areas of 416 acres (168.349 Hectares) situated
in Ghatkuri Reserved Forest Block No. 10 in the district of
Singhbhum are reserved for exploitation of mineral in the
public sector. For full details in this regard District
Mining Officer, Chaibasa should be contacted.
By order of the Governor of Bihar
Sd/- (C.P. Singh)
Dy. Secretary to Government”

2006 Notification

17. The State of Jharkhand issued a Notification on October 27,
2006 which reads as follows:

“DEPARTMENT OF MINES & GEOLOGY, RANCHI
NOTIFICATION
The 27th October, 2006

No. 3277 – It is hereby notified for the information of the general
public that optimum utilization and exploitation of the mineral
resources in the State and for establishment of mineral based
industry with value addition thereon, it has been decided by the
State Govt. that the iron ore deposits at Ghatkuri would not be
thrown open for grant of prospective licence, mining lease or
otherwise for the private parties. The deposit was at all material
times kept reserved vide gazette notification No. A/MM-40510/62-
6209/M dated the 21st December, 1962 and No. B/M-6-1019/68-1564/M
dated the 28th February, 1969 of the State of Bihar. The mineral
reserved in the said area has now been decided to be utilized for
exploitation by Public Sector undertaking or Joint Venture project
of the State Govt. which will usher in maximum benefits to the
State and which generate substantial amount of employment in the
State.

The aforesaid notification is being issued in public interest and
in the larger interest of the State.

The defining co-ordinates of the reserved area enclosed
here with for reference.

By order of the Governor
S.K. Satapathy
Secretary to Government

Description of the area reserved in Ghatkuri is given below:-
District: Singhbhum
Main Block: Ghatukuri
Limiting co-ordinate points of the reserved area of Ghatkuri as per
the notification dated 21st December 1962 and 28th February 1969
published in the Bihar Gazette are given below:
xxx xxx xxx
Sd/- Vijoy Kumar
Director I/c Geology Directorate”

 

 

Contentions

18. Learned senior counsel for the appellants highlighted different
aspects while setting up challenge to the 1962, 1969 and 2006
Notifications. Mr. Ranjit Kumar, learned senior counsel for Monnet
focussed more on factual aspects peculiar to Monnet. I shall refer to the
factual aspects highlighted by Mr. Ranjit Kumar in the later part of the
judgment. While assailing validity of 1962, 1969 and 2006 Notifications,
he referred to the provisions of 1957 Act and submitted that reservation
was part of a regulatory regime. According to him, ‘regulation of mines’
means regulatory regime which has been taken over by the Central Government
and that would include ‘reservation’. He would submit that a proprietary
right should not be mixed up with inherent right insofar as mining is
concerned.
19. Mr. C.A. Sundaram, learned senior counsel for Ispat argued
that the 2006 Notification was bad in law for (1) 1962 and 1969
Notifications were not valid and as such could not be relied upon to give
sanctity to the 2006 Notification; (2) 2006 Notification attempted to
reserve the area for exploitation by public sector undertaking or joint
ventures when Section 17A of the 1957 Act only allows the State Government
to reserve area for public sector undertakings and non-joint ventures;
Section 17A does not envisage a private participation and (3) under Section
17A of the 1957 Act, the prior approval of the Central Government was
needed before the State could reserve any area for public sector
undertakings and no such prior approval was taken.

20. Mr. C.A. Sundaram would submit that 1962 and 1969 Notifications
were invalid since Section 18 of the 1957 Act vests power of conservation
and systematic development of minerals with Central Government; there was
statutory prohibition on the State Government to make law with regard to
conservation and development of minerals in India. Rule 59 as it stood in
1962 and 1969 envisaged a situation where reservation could be made only
for a temporary purpose or for an emergency and it did not empower the
State to reserve the area for public sector undertaking. Learned senior
counsel submitted that power of reservation by the State Government for
public sector undertakings was introduced for the first time by way of
amendment to Rule 58 of the 1960 Rules in 1980 and as such no power existed
prior to 1980 for the State Government to reserve areas for public sector
undertakings. Alternatively, he submitted that even if 1962 and 1969
Notifications were held to be validly issued with proper authority of law
at that point of time, the fact that Rule 58 was omitted in 1988 without
any saving clause necessarily meant that 1962 and 1969 Notifications were
no longer valid and could not be relied upon. He argued that current power
of reservation contained in Section 17A of the 1957 Act is consistent with
the erstwhile Rules 58/59 since Section 17A expressly requires the prior
approval of the Central Government before State Government issues any
notification for reservation of mining area for public sector undertakings.

21. The decisions of this Court in Hingir-Rampur Coal Co. Ltd. &
Ors. v. State of Orissa & Ors.[1]; State of Orissa & Anr. v. M/s M.A.
Tulloch & Co.[2]; Baijnath Kadio v. State of Bihar and Others[3]; Amritlal
Nathubhai Shah and Ors. v. Union Government of India and Another[4]; India
Cement Ltd. & Ors. v. State of Tamil Nadu and Others[5]; Orissa Cement
Ltd. v. State of Orissa & Others[6] and Maya Mathew v. State of Kerala and
Ors.[7] were cited. Mr. C.A. Sundaram sought to distinguish Amritlal
Nathubhai Shahd and submitted that in any case Amritlal Nathubhai Shahd
was not a good law.

22. Mr. L. Nageswara Rao and Dr. Abhishek Manu Singhvi, learned
senior counsel, appeared for Adhunik and argued that 1962 and 1969
Notifications were issued in contravention of law without the statutory
prior approval of the Central Government under the 1957 Act. The 2006
Notification was only a reiteration of what was contained in the 1962 and
1969 Notifications. 2006 Notification is bad in law and ultra vires of
Section 17A of the 1957 Act. It was submitted that the State Government
never adopted the 1962 and 1969 Notifications and, therefore, these
Notifications had lapsed even if passed with due authority of law. In this
regard, the judgment in Pratik Sarkar, M.B. Suresh and Jitendra Laxman
Thorve v. State of Jharkhand[8] was relied upon.

23. Mr. G.C. Bharuka, learned senior counsel appeared for Abhijeet
and submitted that till July 1963, the State Government had no power to
reserve any mineral bearing land for grant of prospecting licence or mining
lease to any given class of persons, including the public sector
undertakings. It was submitted that on declaration under Section 2 of the
1957 Act, the State Legislature was completely denuded of its power to
legislate in respect of mines and minerals and consequently, the State
Government had ceased to have any Executive power in respect of mines and
minerals though it remained to be owner of the land and the minerals. In
this regard, learned senior counsel referred to decisions of this Court in
M.A. Tulloch & Co.b; Baijnath Kadioc and Bharat Coking Coal Ltd. v. State
of Bihar & Ors.[9]. Mr. Bharuka also distinguished the decision of this
Court in Amritlal Nathubhai Shahd and submitted that though there was no
specific statutory provision of vesting power with the State Government for
reservation, but in that case the Court inferred such power from Rule 59
of the 1960 Rules. Rule 59, as originally framed in 1960, permitted
reservation only for “any purpose other than prospecting or mining for
minerals”. Vide Notification dated July 9, 1963, the words “other than
prospecting or mining for minerals” were deleted and, therefore, on
December 21, 1962 when the Notification was issued by the State of Bihar
reserving the lands in dispute for exploitation by public sector, it had no
power to do so. Learned senior counsel submitted that Amritlal Nathubhai
Shahd dealt with situation post 1963 amendment in Rule 59 and not pre-
amendment.

24. Learned senior counsel submitted that the “reservation of
mineral bearing areas for exploitation by public sector” is covered under
the declaration made by Parliament under Section 2 of the 1957 Act in view
of List I, Entry 54 of Seventh Schedule to the Constitution of India. The
topic relating to “reservation” is covered within the field of “regulating
the grant of mining lease” and that would include the power to grant or not
to grant mining lease to a particular person. The “reservation” would come
within the scope of “regulating the grant of mining lease” for which the
Central Government is given the power to make rules. The Central
Government, as a delegate of the Parliament, can frame rules with respect
to “regulating the grant of mining lease”. By placing reliance upon
Baijnath Kadioc and Bharat Coking Coali, it was submitted that whether the
rules are made or not, the topic is covered by Parliamentary Legislation
and to that extent the power of State Legislature ceased to exist. With
reference to Rule 58, it was submitted that by amendment brought in 1960
Rules in 1980, the State Governments became competent to reserve areas
for exploitation by Government or a Corporation established by any
Central, State or Provincial Act or a government company within the
meaning of Section 617 of the Companies Act. The Central Government could
frame the above rule under its rule-making power in Section 13 of 1957
Act only because the topic of reservation was covered within the
declaration under Section 2 of the 1957 Act and was well within the scope
of “to the extent hereinafter provided”.

25. In respect of validity of Notification dated October 27, 2006
issued by the State Government, it was submitted that 2006 Notification
seeks to reserve the area for “joint venture” but that is not permissible
under Section 17A of the 1957 Act. Section 17A(2) mandates that the area
should be reserved “with the approval of the Central Government” and there
was no approval granted to the 2006 Notification. Moreover, 2006
Notification by its own words, is nothing but merely an informatory
Notification having no legal significance or consequence.

26. Dr. Rajiv Dhavan, learned senior counsel made his submissions
on behalf of Jharkhand Ispat. He vehemently contended that the 1962
Notification was wholly illegal and invalid as it was totally contrary to
Rule 59 of 1960 Rules as it then stood which specifically allowed
reservation for any purpose other than prospecting or mining for minerals.
In this connection, he relied upon a decision of this Court in Janak Lal v.
State of Maharashtra and Others[10].

27. Learned senior counsel referred to changes that occurred in
1957 Act and 1960 Rules with effect from February 10, 1987. He submitted
that by virtue of Section 17A(3) which was brought in 1987 the State
Governments acquired power of reservation for specific areas with the
approval of the Central Government. From April 13, 1988 under Rule 59(2)
of the 1960 Rules, the Central Government could relax the provisions of sub-
rule (1) in any special case. According to learned senior counsel,
reservation under 1969 Notification was technically permissible because
Rule 59 was amended in 1963 by removing ‘no mining restriction’ but
reservations after 1980 and especially 1988 could be made only under a new
statutory regime.

28. Dr. Rajeev Dhavan also based his argument on the doctrine of
federalism and submitted that the State of Bihar had no legal power to
reserve the area de hors the 1957 Act. He submitted that 1957 Act was
wholly occupied field on the subject of mines and minerals and that ousts
the state legislative and congruent executive power wholly and squarely.
In support of his submissions, he referred to the decisions of this Court
in Hingir-Rampur Coal Co.a , Baijnath Kadioc , State of Assam and others v.
Om Prakash Mehta and others[11], State of W.B. v. Kesoram Industries Ltd.
and others[12] and Sandur Manganese and Iron Ores Limited v. State of
Karnataka and Others[13].

 

29. Dr. Rajeev Dhavan submitted that merely because State happens
to be the owner of the land including mines, it does not give it power to
mine or reserve outside the regime of 1957 Act and 1960 Rules. He submitted
that Amritlal Nathubhai Shah’s cased must be confined to its own facts. The
decision in Amritlal Nathubhai Shahd was founded on the specific finding
that the State’s action was consistent with Rule 59; it does not test the
proposition of a conflict between the State’s power over land and the
Union’s take over of the field of mines and minerals. Moreover, learned
senior counsel would submit that Amritlal Nathubhai Shahd failed to take
note of earlier Constitution Bench decisions of this Court. Learned senior
counsel also submitted that the decision of this Court in Kesoraml has no
application as the said decision deals with the State’s power to tax.

30. Mr. Dhruv Mehta, learned senior counsel for Prakash
submitted that prior to November 16, 1980, there was no power with the
State Governments to reserve any area for exploitation by the Government or
a Corporation established by Central or State Act or a government company.
It was only by way of amendment to Rule 58 on November 16, 1980 that for
the first time the State Governments were conferred power to reserve any
area for exploitation by the Government or a Corporation established by the
Central, State or Provincial Act or a government company. According to him,
the question for consideration in the present context should be whether
prior to 1980, the State had power either to ‘prohibit mining’ or to
‘reserve mining for public sector undertaking’. In this regard, he referred
to decisions of this Court in Baijnath Kadioc, D.K. Trivedi and Sons and
Others v. State of Gujarat and Others[14], State of Tamil Nadu v. M/s. Hind
Stone and Others[15] and Indian Metals and Ferro Alloys Ltd. v. Union of
India & Ors[16]. He submitted that in view of the above, 1962
Notification reserving iron ore area in the State of Bihar for exploitation
of mineral in public sector was clearly beyond the power of the State. He
submitted that the State did not have any inherent power to reserve any
area for mining in view of the declaration made by Parliament under Section
2 of the 1957 Act and in any case Rule 59 of the 1960 Rules, as it
originally stood, specifically excluded reservation with regard to
prospecting or mining of mineral prior to June 9, 1963.

31. As regards 2006 Notification, Mr. Mehta submitted that the
said Notification firstly, was not a fresh exercise of reservation as it
refers to reservation already made by 1962 and 1969 Notifications.
Secondly, even if it is assumed that 2006 Notification is a fresh order for
reservation in exercise of the power under Section 17A(2) of the 1957 Act,
yet the said Notification suffers from diverse infirmities, namely, (a)
there is no approval by the Central Government and (b) being an exercise of
subordinate legislation, it cannot be given retrospective effect. Reliance
was placed by the learned senior counsel on Hukam Chand etc. v. Union of
India & Ors[17].

Central Government’s Stand

32. Mr. Ashok Bhan, learned senior counsel for the Union of India
referred to Entry 54 of the Union List, Entry 23 of the State List, Article
246 of the Constitution, various Sections of 1957 Act and Rules of 1960
Rules and submitted that Central Government having taken power on to itself
by enacting 1957 Act, the legislative field relating to ‘minerals —
regulation and development’ is occupied and the Central Government was the
sole regulator. Mr. Ashok Bhan submitted that under the scheme of law,
the State Government was denuded of its power other than what flows from
the 1957 Act. In matters of regulation of mines and development of
minerals, according to Mr. Ashok Bhan, public interest is paramount.

Reply on behalf of the State Government

33. Mr. Ajit Kumar Sinha, learned senior counsel for the State of
Jharkhand, in reply, strongly contested the contentions of learned senior
counsel appearing for the appellants. He vehemently contended that the
State Government had the inherent power to reserve any area for
exploitation as the owner of the land and minerals vested in it. He
submitted that the Bihar Legislature enacted 1950 Bihar Act which received
the assent of the President and came into force on September 25, 1950.
Section 4(a) thereof vested all pre-existing estates or tenures including
rights in mines and minerals absolutely in the State free from all
encumbrances. 1950 Bihar Act has been held to be constitutionally valid by
a decision of this Court in The State of Bihar v. Maharajadhiraja Sir
Kameshwar Singh of Darbhanga and Ors.[18]. In any event, Mr. Ajit Kumar
Sinha, learned senior counsel submitted that 1950 Bihar Act has been put
in the Ninth Schedule of the Constitution and was, therefore, beyond the
pale of challenge. Moreover, the sovereign executive power of the State
Government under Article 298 of the Constitution to carry on any trade or
business and to acquire, hold and dispose of property for any purpose
comprehends and includes the power to reserve land for exploitation of its
minerals in the public sector. He heavily relied upon the decisions of this
Court in Amritlal Nathubhai Shahd, Indian Metals and Ferro Alloys Ltd.p
and Bhupatrai Maganlal Joshi and Others v. Union of India and another[19] .

34. Mr. Ajit Kumar Sinha, leaned senior counsel submitted that the
source of power for issuance of 1962, 1969 and 2006 Notifications is
clearly traceable to the relevant statutory provisions. Learned senior
counsel would submit that source of 1962 and 1969 Notifications issued by
the then State of Bihar was traceable to Rule 59 of 1960 Rules as it then
stood followed by amendment in that rule on July 9, 1963, while 2006
Notification is traceable to Section 17A(2) of 1957 Act read with Rule
59(1)(e) as inserted with effect from April 13, 1988.

35. Mr. Ajit Kumar Sinha, learned senior counsel submitted that
even otherwise there was no conflict or encroachment by the State of any
occupied field. The State has neither been divested nor barred nor
prohibited by 1957 Act or 1960 Rules. Instead, the unfettered power of
reservation vested with the State alone under Rule 59 of 1960 Rules from
1962 to 1987 and thereafter under Section 17A(2). According to him, after
1987 there is a concurrent power of reservation both with State
Governments as well as Central Government as provided in Section 17A of
the 1957 Act and Rule 59(1)(e) of the 1960 Rules. He relied upon decisions
of this Court in Lord Krishna Textile Mills v. Its Workmen[20], Life
Insurance Corporation of India v. Escorts Limited and others[21], Municipal
Corporation for City of Pune & Ors. v. Bharat Forge Co. Ltd. & Ors.[22]
and High Court of Judicature for Rajasthan v. P.P. Singh and Another[23].

36. Mr. Ajit Kumar Sinha, learned senior counsel referred to the
provisions of the 1957 Act, particularly Sections 2, 4(3), 4A, 10(1),
13(2)(e), 16(1)(b), 17(1), 17A(1)(A), 18A(6), 21(5), 28 and 30 to show
that Parliament itself contemplated state legislation for vesting of lands
containing mineral deposits in the State Government and Parliament did not
intend to trench upon powers of State legislatures under Entry 18 of List
II. He relied upon the decisions of this Court in State of Haryana and
Another v. Chanan Mal and Others[24], Ishwari Khetan Sugar Mills (P)
Limited & Ors. v. State of Uttar Pradesh and Others[25] and Kesoraml. He
heavily relied upon the expression employed in Entry 54, ‘to the extent to
which such regulation and development under the control of Union is
declared by Parliament by law’ and the expression ‘to the extent
hereinafter provided’ in Section 2 of 1957 Act and submitted that what
follows from this is that only when there is a bar or a prohibition in the
law declared by the Parliament in the 1957 Act and/or the Rules made
thereunder and if the State encroaches on the field covered/occupied then
to that extent, the act or action of the State would be ultra vires. Thus,
Mr. Ajit Kumar Sinha would submit that the power or competence of the
state legislatures to enact laws or of the State Government to issue
notification remains unaffected if the field is neither occupied nor
disclosed nor prohibited. In this regard, he referred to few decisions of
this Court, namely, Hingir-Rampur Coal Co.a, M.A. Tulloch & Cob., Baijnath
Kadioc, India Cement Limitede, Bharat Coking Coali, Orissa Cement Limitedf
and Kesoraml .

37. Learned senior counsel would submit that the Central
Government also upon examination of the applications made by the appellants
rejected the proposals on the ground of reservation made by the then State
of Bihar under 1962 and 1969 Notifications and, thus, it can be inferred
that these Notifications received post facto approval from the Central
Government. In this regard, learned senior counsel relied upon M/s Motilal
Padampat Sugar Mills Co. Ltd. V. State of U.P. & Ors.[26], Amrit Banaspati
Ltd. and Another v. State of Punjab and Another[27] , State of Punjab v.
Nestle India Ltd. and Another[28], M.P. Mathur and Others v. DTC and
Others[29] and Sandur Manganese and Iron Ores Limitedm .

38. Mr. Ajit Kumar Sinha, learned senior counsel submitted that
1962 and 1969 Notifications issued by the then State of Bihar have been
reiterated by the State Government on its formation by 2006 Notification.
He referred to Section 85 of the Bihar Reorganization Act, 2000 that
provides that the appropriate government may, before the expiration of two
years adapt and/or modify the law and every such law shall have effect
subject to the adaptations and modifications so made until altered,
repealed or amended by a competent legislature. He, thus, submitted that by
virtue of Section 85 of Bihar Reorganization Act, 2000 read with Sections
84 and 86 thereof, it is clear that the existing law shall have effect till
it is altered, repealed and/or amended.

Interveners’ view

39. Mr. Vikas Singh, Mr. Krishnan Venugopal and Mr. P.S. Narasimha,
learned senior counsel, appeared for interveners. While adopting the
arguments advanced on behalf of State of Jharkhand, Mr. Vikas Singh
submitted that reservation of minerals is inherent right vested in the
State. Mr. Krishnan Venugopal, learned senior counsel heavily relied upon
the decision of this Court in Amritlal Nathubhai Shahd and submitted that
the said decision was binding and not per incuriam as contended on behalf
of the appellants. He submitted that many provisions in 1957 Act and 1960
Rules acknowledge that all minerals vest in the State and that power to
reservation is contemplated by Rule 59 of 1960 Rules.

40. After this group of appeals was fully argued before us and the
appeals were reserved for judgment, a Special Leave Petition, Geo-Minerals
and Marketing (P) Ltd. v. State of Orissa & Ors., arising out of the
judgment of Orissa High Court in W.A. © No. 6288/2006 came up for final
disposal wherein one of the issues concerning reservation of mining area by
the Government of Orissa for exploitation in public sector was found to be
involved. We thought fit that learned senior counsel and counsel appearing
in that matter were also heard so that we can have benefit of their view-
point as well. Accordingly, we heard M/s. Harish Salve, K.K. Venugopal and
R.K. Dwivedi, learned senior counsel, on the common legal aspect.

41. I would have preferred not to burden this judgment with the
text of Entry 54 of List I, Entry 23 of List II and the relevant
provisions contained in 1957 Act and 1960 Rules but reproduction of some of
the provisions is necessary for having the point under consideration in
proper perspective.

Relevant Entries
42. Entry 54, List I, is as follows :
“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.”

43. Entry 23, List II, is as under :
“23. Regulation of mines and mineral development subject to the
provisions of List I with respect to regulation and development
under the control of the Union.”

 
Mines and Minerals (Regulation and Development) Act, 1948

44. The Mines and Minerals (Regulation and Development) Act, 1948
(for short, ‘1948 Act’) was enacted to provide for the regulation of mines
and oilfields and for the development of the minerals under Entry 36 of
the Government of India Act, 1935. It received the assent of the Governor
General on September 8, 1948 and came into effect from that date. Under
1948 Act, the Central Government framed Mineral Concession Rules, 1949.
45. 1948 Act was repealed by 1957 Act. The introduction of 1957
Act reads as follows :
“In the Seventh Schedule of the Constitution in Union List entry
54 provides for regulation of mines and minerals 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. On account of this provision
it became imperative to have a separate legislation. In order
to provide for the regulation of mines and the development of
minerals, the Mines and Minerals (Regulation and Development)
Bill was introduced in the Parliament.”

Mines and Minerals (Regulation and Development) Act, 1957 and the
Amendments
46. 1957 Act came into effect on June 1, 1958. It has been amended
from time to time.

47. Section 2 of the 1957 Act reads as follows :
“S. 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.”

48. Section 3(a),(c),(d),(e),(f), (g) and (h) defines ‘minerals’,
‘mining lease’, ‘mining operations’, ‘minor minerals’, ‘prescribed’
‘prospecting licence’ and ‘prospecting operations’ in the 1957 Act as
under:
“3(a) “minerals” includes all minerals except mineral oils;
(c) “mining lease” means a lease granted for the purpose of
undertaking mining operations, and includes a sub-lease granted
for such purpose;
(d) “mining operations” means any operations undertaken for
the purpose of winning any mineral;
(e) “minor minerals” means building stones, gravel, ordinary
clay, ordinary sand other than sand used for prescribed
purposes, and any other mineral which the Central Government
may, by notification in the Official Gazette, declare to be a
minor mineral;
(f) “prescribed” means prescribed by rules made under this
Act;
(g) “prospecting licence” means a licence granted for the
purpose of undertaking prospecting operations;
(h) “prospecting operations” means any operations undertaken
for the purpose of exploring, locating or proving mineral
deposits;”
49. The original Section 4 in 1957 Act read as follows :
“S.4. (1) No person shall undertake any prospecting or mining
operations in any area, except under and in accordance with
the terms and conditions of a prospecting licence or, as the
case may be, a mining lease, granted under this Act and the
rules made thereunder:
Provided that nothing in this sub-section shall affect any
prospecting or mining operations undertaken in any area in
accordance with the terms and conditions of a prospecting
licence or mining lease granted before the commencement of this
Act which is in force at such commencement.
(2) No prospecting licence or mining lease shall be
granted otherwise than in accordance with the provisions of this
Act and the rules made thereunder.”
50. In 1986, 1987 and 1999, Section 4 of the 1957 Act came to be
amended. After these amendments, Section 4 reads as under :
“S.4.- Prospecting or mining operations to be under licence or
lease.—(1) [30][No person shall undertake any reconnaissance,
prospecting or mining operations in any area, except under and
in accordance with the terms and conditions of a reconnaissance
permit or of a prospecting licence or, as the case may be, of a
mining lease, granted under this Act and the rules made
thereunder]:
Provided that nothing in this sub-section shall affect
any prospecting or mining operations undertaken in any area in
accordance with the terms and conditions of a prospecting
licence or mining lease granted before the commencement of this
Act which is in force at such commencement:
[31][Provided further that nothing in this sub-section
shall apply to any prospecting operations undertaken by the
Geological Survey of India, the Indian Bureau of Mines, [32][the
Atomic Minerals Directorate for Exploration and Research] of the
Department of Atomic Energy of the Central Government, the
Directorates of Mining and Geology of any State Government (by
whatever name called), and the Mineral Exploration Corporation
Limited, a Government company within the meaning of section 617
of the Companies Act, 1956:]
[33][Provided also that nothing in this sub-section shall
apply to any mining lease (whether called mining lease, mining
concession or by any other name) in force immediately before the
commencement of this Act in the Union Territory of Goa, Daman
and Diu.]
[34][(1A) No person shall transport or store or cause to be
transported or stored any mineral otherwise than in accordance
with the provisions of this Act and the rules made thereunder.]
(2) [35][No reconnaissance permit, prospecting licence or
mining lease] shall be grated otherwise than in accordance with
the provisions of this Act and the rules made thereunder.
[36][(3) Any State Government may, after prior
consultation with the Central Government and in accordance with
the rules made under section 18, [37][undertake reconnaissance,
prospecting or mining operations with respect to any mineral
specified in the First Schedule in any area within that State
which is not already held under any reconnaissance permit,
prospecting licence or mining lease].”

 
51. Section 5 of the 1957 Act, as originally enacted, provided that
no prospecting licence or mining lease should be granted by a State
Government to any person unless the conditions prescribed therein were
satisfied. It mandated previous approval of the Central Government before
grant of prospecting licence or mining lease by the State Government.
52. The original Section 5 came to be amended in 1986, 1994 and
1999. After these amendments, Section 5 now provides that a State
Government shall not grant a reconnaissance permit, prospecting licence or
mining lease to any person unless he satisfies the requisite conditions.
The provision mandates that in respect of any mineral specified in the
First Schedule, no reconnaissance permit, prospecting licence or mining
lease shall be granted except with the previous approval of the Central
Government.
53. Section 6 of 1957 Act provides for maximum area for which a
prospecting licence or mining lease may be granted. Section 7 makes
provision for the periods for which prospecting licence may be granted or
renewed and Section 8 provides for periods for which mining lease may be
granted or renewed.
54. Section 10 of the 1957 Act provides that application for
reconnaissance permit, prospecting licence or mining lease in respect of
any land in which the minerals vest in the Government shall be made to the
State Government concerned. Inter alia, it empowers the concerned State
Government to grant or refuse to grant the permit, licence or lease having
regard to the provisions of 1957 Act or 1960 Rules.

55. The original Section 11 of the 1957 Act read as follows :
“S.11.(1) Where a prospecting licence has been granted in
respect of any land, the licensee shall have a preferential
right for obtaining a mining lease in respect of that land over
any other person:
Provided that the State Government is satisfied that the
licensee has not committed any breach of the terms and
conditions of the prospecting licence and is otherwise a fit
person for being granted the mining lease.
(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 mattes 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.
(3) The matters referred to in sub-section (2) are the
following :-
(a) any special knowledge of, or experience in,
prospecting operations or mining operations, as the case may
be, possessed by the applicant;
(b) the financial resources of the applicant;
(c) the nature and quality of the technical staff
employed or to be employed by the applicant;
(d) such other matters as may be prescribed.
(4) Notwithstanding anything contained in sub-section (2)
but subject to the provisions of sub-section (1), the State
Government may for any special reasons to be recorded and with
the previous approval of the Central Government, grant a
prospecting licence or a mining lease to an applicant whose
application was received later in preference to an applicant
whose application was received earlier.”

 
56. The above provision was substituted by Act 38 of 1999 with
effect from December 18, 1999. After substitution, Section 11 now reads as
under :
“S.11. Preferential right of certain persons.—(1) Where a
reconnaissance permit or prospecting licence has been granted in
respect of any land, the permit holder or the licensee shall
have a preferential right for obtaining a prospecting licence or
mining lease, as the case may be, in respect of that land over
any other person:
Provided that the State Government is satisfied that the
permit holder or the licensee, as the case may be,—
(a) has undertaken reconnaissance operations or
prospecting operations, as the case may be, to
establish mineral resources in such land;
(b) has not committed any breach of the terms and
conditions of the reconnaissance permit or the
prospecting licence;
(c) has not become ineligible under the provisions of
this Act; and
(d) has not failed to apply for grant of prospecting
licence or mining lease, as the case may be, within
three months after the expiry of reconnaissance
permit or prospecting licence, as the case may be, or
within such further period, as may be extended by the
said Government.
(2) Subject to the provisions of sub-section (1), where
the State Government has not notified in the Official Gazette
the area for grant of reconnaissance permit or prospecting
licence or mining lease, as the case may be, and two or more
persons have applied for a reconnaissance permit, prospecting
licence or a mining lease in respect of any land in such area,
the applicant whose application was received earlier, shall have
the preferential right to be considered for grant of
reconnaissance permit, prospecting licence or mining lease, as
the case may be, over the applicant whose application was
received later:
Provided that where an area is available for grant of
reconnaissance permit, prospecting licence or mining lease, as
the case may be, and the State Government has invited
applications by notification in the Official Gazette for grant
of such permit, licence or lease, all the applications received
during the period specified in such notification and the
applications which had been received prior to the publication of
such notification in respect of the lands within such area and
had not been disposed of, shall be deemed to have been received
on the same day for the purposes of assigning priority under
this sub-section:
Provided further that where any such applications are
received on the same day, the State Government, after taking
into consideration the matter specified in sub-section (3), may
grant the reconnaissance permit, prospecting licence or mining
lease, as the case may be, to such one of the applicants as it
may deem fit.
(3) The matters referred to in sub-section (2) are the
following :–
(a) any special knowledge of, or experience in,
reconnaissance operations, prospecting operations or
mining operations, as the case may be, possessed by
the applicant.
(b) the financial resources of the applicant;
(c) the nature and quality of the technical staff
employed or to be employed by the applicant;
(d) the investment which the applicant proposes to make
in the mines and in the industry based on the
minerals;
(e) such other matters as may be prescribed.
(4) Subject to the provisions of sub-section (1), where
the Sate Government notifies in the Official Gazette an area for
grant of reconnaissance permit, prospecting license or mining
lease, as the case may be, all the applications received during
the period as specified in such notification, which shall not be
less than thirty days, shall be considered simultaneously as if
all such applications have been received on the same day and the
State Government, after taking into consideration the matter
specified in sub-section (3), may grant the reconnaissance
permit, prospecting licence or mining lease, as the case may be,
to such one of the applicants as it may deem fit.
(5) Notwithstanding anything contained in sub-section
(2), but subject to the provisions of sub-section (1), the State
Government may, for any special reasons to be recorded, grant a
reconnaissance permit, prospecting licence or mining lease, as
the case may be, to an applicant whose application was received
later in preference to an applicant whose application was
received earlier:
Provided that in respect of minerals specified in the
First Schedule, prior approval of the Central Government shall
be obtained before passing any order under this sub-section.”

 

 

57. Section 13 of the 1957 Act empowers Central Government to make
rules in respect of minerals. By virtue of the power conferred upon the
Central Government under Section 13(2)(e), 1960 Rules have been framed for
regulating the grant of, inter alia, mining leases in respect of minerals
and for purposes connected therewith.
58. Section 14 states that the provisions of Sections 5 to 13 (both
inclusive) shall not apply to quarry leases, mining leases or other mineral
concessions in respect of minor minerals. Section 15 empowers State
Governments to make rules in respect of minor minerals.
59. Section 16 provides for power to modify mining leases granted
before 25th October, 1949. The original sub-section (1) of Section 16
mandated that all mining leases granted before October 25, 1949 shall be
brought into conformity with the provisions of 1957 Act and the Rules made
under Sections 13 and 18 after the commencement of 1957 Act. Then it
provided that if the Central Government was of the opinion that in the
interest of mineral development it was expedient so to do, it might permit
any person to hold one or more such mining leases covering in any one State
a total area in excess of that specified in clause (b) of Section 6 or for
a period exceeding that specified in sub-section (1) of Section 8. Sub-
section (1) of Section 16 has been amended in 1972 and 1994.
60 By virtue of Section 17, the Central Government has been given
special powers to undertake prospecting or mining operations in certain
cases. Section 17(1) was amended in 1972. After amendment, Section 17(1)
reads as under :

“S. 17.- Special powers of Central Government to undertake
prospecting or mining operations in certain lands.—(1) The
provisions of this section shall apply in respect of land in
which the minerals vest in the Government of a State or any
other person.”

 

61. Section 17A was inserted in the 1957 Act by Act 37 of 1987.
Thereafter, sub-section (1A) was added in Section 17A by Act 25 of 1994.
Section 17A, after its amendment in 1994, reads as follows :
“S. 17A. Reservation of area for purposes of
conservation.—(1) The Central Government, with a view to
conserving any mineral and after consultation with the State
Government, may reserve any area not already held under any
prospecting licence or mining lease and, where it proposes to do
so, it shall, by notification in the Official Gazette, specify
the boundaries of such area and the mineral or minerals in
respect of which such area will be reserved.
(1A) The Central Government may in consultation with the
State Government, reserve any area not already held under any
prospecting licence or mining lease, for undertaking prospecting
or mining operations through a Government company or corporation
owned or controlled by it, and where it proposes to do so, it
shall, by notification in the Official Gazette, specify the
boundaries of such area and the mineral or minerals in respect
of which such area will be reserved.
(2) The State Government may, with the approval of the
Central Government, reserve any area not already held under any
prospecting licence or mining lease, for undertaking prospecting
or mining operations through a Government company or corporation
owned or controlled by it and where it proposes to do so, it
shall, by notification in the Official Gazette, specify the
boundaries of such area and the mineral or minerals in respect
of which such areas will be reserved.
(3) Where in exercise of the powers conferred by sub-
section (1A) or sub-section (2) the Central Government or the
State Government, as the case may be, undertakes prospecting or
mining operations in any area in which the minerals vest in a
private person, it shall be liable, to pay prospecting fee,
royalty, surface rent or dead rent, as the case may be, from
time to time at the same rate at which it would have been
payable under this Act if such prospecting or mining operations
had been undertaken by a private person under prospecting
licence or mining lease.”

 

 

62. Section 18 states that it shall be the duty of the Central
Government to take all such steps as may be necessary for the conservation
and systematic development of minerals in India and for the protection of
environment by preventing or controlling any pollution which may be caused
by prospecting or mining operations and for such purposes the Central
Government may make rules. Sub-section (2) of Section 18 empowers the
Central Government to make rules and provide for the matters stated in
clause (a) to clause (q).
63. Section 18A was inserted in 1957 Act to enable the Central
Government to authorize Geological Survey of India to carry out necessary
investigation for the purpose of obtaining information with regard to
availability of any mineral in or under any land in relation to which any
prospecting licence or mining lease has been granted by a State Government
or by any other person. Proviso that follows sub-section (1) of Section 18A
provides that in cases of prospecting licences or mining leases granted by
a State Government, no such authorization shall be made except after
consultation with the State Government. To the extent Section 18A is
relevant, it is reproduced as under :

 
“S. 18A. Power to authorize Geological Survey of India, etc.,
to make investigation.—(1) Where the Central Government is of
opinion that for the conservation and development of minerals in
India, it is necessary to collect as precise information as
possible with regard to any mineral available in or under any
land in relation to which any prospecting licence or mining
lease has been granted, whether by the State Government or by
any other person, the Central Government may authorize the
Geological Survey of India, or such other authority or agency as
it may specify in this behalf, to carry out such detailed
investigation for the purpose of obtaining such information as
may be necessary:
Provided that in the cases of prospecting licences or
mining leases granted by a State Government, no such
authorization shall be made except after consultation with the
State Government.
xxx xxx xxx xxx xxx
(6) The costs of the investigation made under this
section shall be borne by the Central Government.
Provided that where the State Government or other person
in whom the minerals are vested or the holder of any prospecting
licence or mining lease applies to the Central Government to
furnish to it or him a copy of the report submitted under sub-
section (5), that State Government or other person or the holder
of a prospecting licence or mining lease, as the case may be,
shall bear such reasonable part of the costs of investigation as
the Central Government may specify in this behalf and shall, on
payment of such part of the costs of investigation, be entitled
to receive from the Central Government a true copy of the report
submitted to it under sub-section (5).”

64. Section 19 provides that any prospecting licence or mining
lease granted, renewed or acquired in contravention of the provisions of
1957 Act or any rules or orders made thereunder shall be void and of no
effect. Section 19 underwent amendments in 1994 and 1999 but these
amendments are not of much relevance for the purposes of these matters.
65. By virtue of Section 29, the rules made or purporting to have
been made under the 1948 Act insofar as consistent with the matters
provided in 1957 Act were made to continue until superseded by the rules
made under the 1957 Act. Thus, the rules framed under 1948 Act continued to
operate until 1960 Rules were framed.

Mineral Concession Rules, 1960 and the Amendments

66. 1960 Rules were framed by the Central Government in exercise of
the powers conferred by Section 13 of the 1957 Act. These Rules were
published on November 11, 1960. As noticed above, until these Rules came
into effect, the Rules framed under 1948 Act remained operative.
67. By virtue of Rule 8, the provisions of Chapters II, III and IV
have been made applicable to the grant of reconnaissance permits as well as
grant and renewal of prospecting licences and mining leases in respect of
the land in which the minerals vest in the State Government.
68. Rule 9 provides that an application for a prospecting licence
and its renewal in respect of land in which the minerals vest in Government
shall be made to the State Government in Form B and Form D respectively.
The State Government is empowered to relax the provisions of clause (d) of
sub-rule (2) of Rule 9.
69. Chapter-IV deals with grant of mining leases in respect of land
in which the minerals vest in the Government. Sub-rule (1) of Rule 22
provides that an application for the grant of a mining lease in respect of
land in which the minerals vest in the Government shall be made to the
State Government in Form I. Sub-rule (4) of Rule 22 provides that on
receipt of the application for the grant of a mining lease, the State
Government shall take decision to grant precise area and communicate such
decision to the applicant. The applicant, on receipt of communication from
the State Government of the precise areas to be granted, is required to
submit a mining plan within a period of six months or such other period as
may be allowed by the State Government, to the Central Government for its
approval. The applicant is required to submit the mining plan, duly
approved by the Central Government or by an officer duly authorized by the
Central Government, to the State Government to grant mining lease over that
area. Sub-rule (4A) of Rule 22 is a non-obstante clause and empowers the
State Government to approve mining plan of open cast mines (mines other
than the underground mines) in respect of non-metallic or industrial
minerals set out in clauses (i) to (xxix) in their respective territorial
jurisdiction. Such power of approval of mining plan has to be exercised by
the State Government through officer or officers having qualification,
experience and post and pay-scale as set out therein. Under sub-rule (4B)
of Rule 22, the Central Government or the State Government has to dispose
of the application for approval of mining plan within a period of ninety
days from the date of receiving such application.
70. Rule 22D substituted by Notification dated January 17, 2000
makes provision for a minimum size of the mining lease.
71. Rule 26 that was substituted by Notification dated July 18,
1963 was amended in 1979, 1988, 1991 and 2002. Rule 26 now reads as under:
“26. Refusal of application for grant and renewal of mining
lease.— (1) The State Government may, after giving an
opportunity of being heard and for reasons to be recorded in
writing and communicated to the applicant, refuse to grant or
renew a mining lease over the whole or part of the area applied
for.
(2) An application for the grant or renewal of a mining lease
made under rule 22 or rule 24A, as the case may be, shall not be
refused by the State Government only on the ground that Form I
or Form J, as the case may be, is not complete in all material
particulars, or is not accompanied by the documents referred to
in sub-clauses (d),(e),(f),(g) and (h) of clause (i) of sub-rule
22.
(3) Where it appears that the application is not complete in
all material particulars or is not accompanied by the required
documents, the State Government shall, by notice, require the
applicant to supply the omission or, as the case may be, furnish
the documents, without delay and in any case not later than
thirty days from the date of receipt of the said notice by the
applicant.
72. Rule 31 provides for the time period within which lease is to
be executed. It also provides for the date of commencement of the period.
73. Rule 58, as it originally stood, read as under:

“58. Availability of areas for regrant to be notified. (1) No
area which was previously held or which is being held under a
prospecting licence or a mining lease as the case may be, or in
respect of which the order granting licence or lease has been
revoked under sub-rule (1) of rule 15 or sub-rule (1) of rule
31, shall be available for grant unless-
(a) an entry to the effect made in the register referred to in
sub-rule (2) of rule 21 or sub-rule (2) of rule 40, as the
case may be in ink; and
(b) the date from which the area shall be available for grant
is notified in the Official Gazette at least thirty days in
advance.
(2) The Central Government may, for reasons to be recorded in
writing, relax the provisions of sub-rule (1) in any special
case.”
Rule 58 was amended on November 16, 1980 and the amended Rule 58 read as
under :
“58. Reservation of area for exploitation in the public sector
etc.- The State Government may, by notification in the Official
Gazette, reserve any area for the exploitation by the
Government, a Corporation established by the Central, State or
Provincial Act or a Government company within the meaning of
section 617 of the Companies Act, 1956 (1 of 1956).”

Later on, Rule 58 has been omitted.

74. Rule 59, as originally framed in 1960 Rules, read as under:
“59. Availability of certain areas for grant to be notified.-
In the case of any land which is otherwise available for the
grant of a prospecting licence or a mining lease but in respect
of which the State Government has refused to grant a prospecting
licence or a mining lease on the ground that the land should be
reserved for any purpose, other than prospecting or mining for
minerals, the State Government shall, as soon as such land
becomes again available for the grant of a prospecting or mining
lease, grant the licence or lease after following the procedure
laid down in rule 58.”

The original Rule 59 was amended vide Notification dated July 9, 1963.
After the said amendment, the Rule read as under :

“59. – Availability of certain areas for grant to be notified.- In
the case of any land which is otherwise available for the grant of a
prospecting licence or a mining lease but in respect of which the
State Government has refused to grant a prospecting licence or a
mining lease on the ground that the land should be reserved for any
purpose, the State Government shall, as soon as such land becomes
again available for the grant of a prospecting or mining lease, grant
the licence or lease after following the procedure laid down in rule
58.”

Rule 59 was again amended in 1980. After amendment, the said rule read as
under :

“59. Availability of area for regrant to be notified-(1) No
area-
(a) which was previously held or which is being held under a
prospecting licence or a mining lease; or

(b) in respect of which an order had been made for the grant
of a prospecting licence or mining lease, but the applicant has
died before the grant of the licence or the execution of lease,
as the case may be; or

(c) in respect of which the order granting a licence or lease
has been revoked under sub-rule (1) of rule 15 or sub-rule (1)
of rule 31; or

(d) in respect of which a notification has been issued under
sub-section (2) or sub-section (4) of section 17; or

(e) which has been reserved by Government under rule 58,

shall be available for grant unless-

 
(i) an entry to the effect that the area is available for
grant is made in the register referred to in sub-rule (2)
of rule 21 or sub-rule (2) of rule 40, as the case may be,
in ink; and

 
(ii) the availability of the area for grant is notified in the
Official Gazette and specifying a date (being a date not
earlier than thirty days from the date of the publication
of such notification in the Official Gazette) from which
such area shall be available for grant:

 
Provided that nothing in this rule shall apply to the renewal of
a lease in favour of the original lessee or his legal heirs
notwithstanding the fact that the lease has already expired:

Provided further that where an area reserved under rule 58 is
proposed to be granted to a Government Company, no notification
under clause (ii) shall be required to be issued.

(2) The Central Government may, for reasons to be recorded in
writing relax the provisions of sub-rule (1) in any special
case.

 
Rule 59 was further amended on April 13, 1988. The amended Rule 59 reads as
under :

“59. Availability of area for regrant to be notified:- (1) No
area-

(a) which was previously held or which is being held under a
prospecting licence or a mining lease; or

(b) in respect of which an order had been made for the grant
of a prospecting licence or mining lease, but the applicant has
died before the grant of the licence or the execution of the
lease, as the case may be; or

(c) in respect of which the order granting a licence or lease
has been revoked, under sub-rule (1) of rule 15 or sub-rule (1)
of rule 31; or

(d) in respect of which a notification has been issued under
sub section (2) or sub-section (4) of section 17; or

(e) which has been reserved by State Government under Rule 58,
or under section 17-A of the Act shall be available for grant
unless-

(i) an entry to the effect that the area is available for
grant is made in the register referred to in sub-rule (2) of
rule 21 or sub-rule (2) of rule 40, as – the case may be, in
ink; and

(ii) the availability of the area for grant is notified in the
Official Gazette and specifying a date (being a date not earlier
than thirty days from the date of the publication, of such
notification in the Official Gazette) from which such area shall
be available for grant:

Provided that nothing in this rule shall apply to the renewal of
a lease in favour of the original lessee or his legal heirs
notwithstanding the fact that the lease has already expired:

Provided further that where an area reserved under Rule 58 or
under section 17-A of the Act to be granted to a Government
Company, no notification under clause (ii) shall be required to
be issued;

(2) The Central Government may, for reasons to be
recorded in writing relax the provisions of sub-rule (1) in any
special case.

 
75. Rule 60 of the 1960 Rules has been amended twice, first vide
Notification dated January 16, 1980 and thereafter by the Notification
dated January 17, 2000. After amendment, Rule 60 reads as under :

“60.Premature applications.—Applications for the grant of a
reconnaissance permit, prospecting licence or mining lease in
respect of areas whose availability for grant is required to be
notified under rule 59 shall, if—

(a) no notification has been issued, under that rule; or

(b) where any such notification has been issued, the period
specified in the notification has not expired, shall be
deemed to be premature and shall not be entertained.”

 

 
76. Rule 63 of the 1960 Rules provides that where previous approval
of the Central Government is required under the 1957 Act or the 1960 Rules,
the application for such approval shall be made to the Central Government
through the State Government.

77. The above provisions give us complete view of the statutory
framework and legal regime with regard to regulation of mines and mineral
development and the role and powers of the State Governments in that
regard.

Decisions

 

Hingir-Rampur Coal Co. Ltd.

78. A Constitution Bench of this Court in Hingir-Rampur Coal Co.
Ltd.a was concerned with the question of the validity of Orissa Mining
Areas Development Fund Act, 1952. Inter-alia, the contention raised on
behalf of the petitioners was that even if the cess imposed thereunder was
a ‘fee’ relatable to Entries 23 and/or 66 of List II, the same would be
ultra vires Entry 54 of List I in light of declaration made in Section 2
of the 1948 Act which read, ‘it is hereby declared that it is expedient in
the public interest that the Central Government should take under its
control the regulation of mines and oilfields and the development of
minerals to the extent hereinafter provided’ and other provisions.
79. The majority view considered the above contention as follows:

“23. The next question which arises is, even if the cess is a
fee and as such may be relatable to Entries 23 and 66 in List II
its validity is still open to challenge because the legislative
competence of the State Legislature under Entry 23 is subject to
the provisions of List I with respect to regulation and
development under the control of the Union; and that takes us to
Entry 54 in List I. This Entry reads thus: “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”. The
effect of reading the two Entries together is clear. The
jurisdiction of the State Legislature under Entry 23 is subject
to the limitation imposed by the latter part of the said Entry.
If Parliament by its law has declared that regulation and
development of mines should in public interest be under the
control of the Union, to the extent of such declaration the
jurisdiction of the State Legislature is excluded. In other
words, if a Central Act has been passed which contains a
declaration by Parliament as required by Entry 54, and if the
said declaration covers the field occupied by the impugned Act
the impugned Act would be ultra vires, not because of any
repugnance between the two statutes but because the State
Legislature had no jurisdiction to pass the law. The limitation
imposed by the latter part of Entry 23 is a limitation on the
legislative competence of the State Legislature itself. This
position is not in dispute.
24. ………… If it is held that this Act contains the declaration
referred to in Entry 23 there would be no difficulty in holding
that the declaration covers the field of conservation and
development of minerals, and the said field is indistinguishable
from the field covered by the impugned Act. What Entry 23
provides is that the legislative competence of the State
Legislature is subject to the provisions of List I with respect
to regulation and development under the control of the Union,
and Entry 54 in List I requires a declaration by Parliament by
law that regulation and development of mines should be under the
control of the Union in public interest. Therefore, if a Central
Act has been passed for the purpose of providing for the
conservation and development of minerals, and if it contains the
requisite declaration, then it would not be competent to the
State Legislature to pass an Act in respect of the subject-
matter covered by the said declaration. In order that the
declaration should be effective it is not necessary that rules
should be made or enforced; all that this required is a
declaration by Parliament that it is expedient in the public
interest to take the regulation and development of mines under
the control of the Union. In such a case the test must be
whether the legislative declaration covers the field or not.
Judged by this test there can be no doubt that the field covered
by the impugned Act is covered by the Central Act LIII of 1948.
25. It still remains to consider whether S. 2 of the said Act
amounts in law to a declaration by Parliament as required by
Article 54. When the said Act was passed in 1948 the legislative
powers of the Central and the Provincial Legislatures were
governed by the relevant Entries in the Seventh Schedule to the
Constitution Act of 1935. Entry 36 in List I corresponds to the
present Entry 54 in List I. It reads thus: “Regulation of Mines
and Oil Fields and mineral development to the extent to which
such regulation and development under Dominion control is
declared by Dominion law to be expedient in public interest”. It
would be noticed that the declaration required by Entry 36 is a
declaration by Dominion law. Reverting then to S. 2 of the said
Act it is clear that the declaration contained in the said
section is put in the passive voice; but in the context there
would be no difficulty in holding that the said declaration by
necessary implication has been made by Dominion law. It is a
declaration contained in a section passed by the Dominion
Legislature and so it is obvious that it is a declaration by a
Dominion law, but the question is: Can this declaration by a
Dominion law be regarded constitutionally as declaration by
Parliament which is required by Entry 54 in List I.”

 

 
The majority view found that the declaration by Parliament required under
Entry 54, List I was absent as the declaration under Section 2 of the 1948
Act by the Dominion Legislature was not held equivalent to declaration by
the Parliament under Section 2 of the 1957 Act.

M.A. Tulloch & Co.

80. In M.A. Tulloch & Co.b , a Constitution Bench of this Court was
concerned with legality of certain demands of fee under the Orissa Mining
Areas Development Fund Act, 1952 (Orissa Act). The Constitution Bench
considered the question, ‘whether the extent of control and regulation
provided by the 1957 Act takes within its fold the area or the subject
covered by Act 27 of 1952 Act’. The High Court had held that fee imposed
by the Orissa Act was rendered ineffective in view of the 1957 Act. The
State of Orissa was in appeal from that judgment. The Court in para 5 and
para 6 of the Report noted as follows:

“5. Before proceeding further it is necessary to specify briefly
the legislative power on the relevant topic, for it is on the
precise wording of the entries in the 7th Schedule to the
Constitution and the scope, purpose and effect of the State and
the Central legislations which we have referred to earlier that
the decision of the point turns. Article 246(1) reads:
“Notwithstanding anything in clauses (2) and (3), Parliament has
exclusive power to make laws with respect to any of the matters
enumerated in List I in the Seventh Schedule (in this
Constitution referred to as the Union List)”
and we are concerned in the present case with the State power in
the State field. The relevant clause in that context is clause
(3) of the Article which runs:
“Subject to clauses (1) and (2), the legislature of any State
… has exclusive power to make laws for such State or any part
thereof with respect to any of the matters enumerated in List II
in the seventh Schedule (in this Constitution referred to as the
‘State List’).”
Coming now to the Seventh Schedule, Entry 23 of the State List
vests in the State legislature power to enact laws on the
subject of ‘regulation of mines and mineral development subject
to the provisions of List I with respect to regulation and
development under the control of the Union’. It would be seen
that “subject” to the provisions of List I the power of the
State to enact Legislation, on the topic of “mines and mineral
development” is plenary. The relevant provision in List I is, as
already noticed, Entry 54 of the Union List. It may be mentioned
that this scheme of the distribution of legislative power
between the Centre and the States is not new but is merely a
continuation of the State of affairs which prevailed under the
Government of India Act, 1935 which included a provision on the
lines of Entry 54 of the Union List which then bore the number
Item 36 of the Federal List and an entry corresponding to Entry
23 in the State List which bore the same number in the
Provincial Legislative List. There is no controversy that the
Central Act has been enacted by Parliament in exercise of the
legislative power contained in Entry 54 or as regards the
Central Act containing a declaration in terms of what is
required by Entry 54 for it enacts by Section 2:
“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.”
It does not need much argument to realise that to the extent to
which the Union Government had taken under “its control” “the
regulation and development of minerals” so much was withdrawn
from the ambit of the power of the State legislature under Entry
23 and legislation of the State which had rested on the
existence of power under that entry would to the extent of that
“control” be superseded or be rendered ineffective, for here we
have a case not of mere repugnancy between the provisions of the
two enactments but of a denudation or deprivation of State
legislative power by the declaration which Parliament is
empowered to make and has made.
6. It would, however, be apparent that the States would lose
legislative competence only to the “extent to which regulation
and development under the control of the Union has been declared
by Parliament to be expedient in the public interest”. The
crucial enquiry has therefore to be directed to ascertain this
“extent” for beyond it the legislative power of the State
remains unimpaired. As the legislation by the State is in the
case before us the earlier one in point of time, it would be
logical first to examine and analyse the State Act and determine
its purpose, width and scope and the area of its operation and
then consider to what “extent” the Central Act cuts into it or
trenches on it.

 
In para 9, the question under consideration was whether ‘the extent of
control and regulation’ provided by 1957 Act took within its fold the area
or the subject covered by the Orissa Act. This Court in para 11 observed
that the matter was concluded by earlier decision in Hingir-Rampur Coal Co.
Ltd.a. While following Hingir-Rampur Coal Co. Ltd.a, it was observed in
para 12 of the Report that sub-sections (1) and (2) of Section 18 of 1957
Act were wider in scope and amplitude and conferred larger powers on the
Central Government than the corresponding provisions of the 1948 Act.

Baijnath Kadio
81. In Baijnath Kadioc , the validity of proviso (2) to Section
10(2) added by Bihar Land Reforms (Amendment) Act, 1964 (Bihar Act 4 of
1965) and the operation of Rule 20(2) added on December 10, 1964 by a
Notification of Governor in the Bihar Minor Mineral Concession Rules, 1964
were in issue. The Court referred to the Government of India Act, 1935,
1948 Act and 1957 Act in light of Entry 54 of List I and Entry 23 of List
II and the earlier decisions in Hingir-Rampur Coal Co. Ltd.a and M.A.
Tulloch & Co.b and observed as under :
“13. ………….Entry 54 of the Union List speaks both of
Regulation of mines and minerals development and Entry 23 is
subject to Entry 54. It is open to Parliament to declare that it
is expedient in the public interest that the control should rest
in Central Government. To what extent such a declaration can go
is for Parliament to determine and this must be commensurate
with public interest. Once this declaration is made and the
extent laid down, the subject of legislation to the extent laid
down becomes an exclusive subject for legislation by Parliament.
Any legislation by the State after such declaration and
trenching upon the field disclosed in the declaration must
necessarily be unconstitutional because that field is abstracted
from the legislative competence of the State Legislature. This
proposition is also self-evident that no attempt was rightly
made to contradict it. There are also two decisions of this
Court reported in the Hingir Rampur Coal Co. Ltd. & Ors. v.
State of Orissa & Ors. and State of Orissa v. M.A. Tulloch and
Co. in which the matter is discussed. The only dispute,
therefore, can be to what extent the declaration by Parliament
leaves any scope for legislation by the State Legislature. If
the impugned legislation falls within the ambit of such scope it
will be valid; if outside it, then it must be declared invalid.
14. The declaration is contained in Section 2 of Act 67 of 1957
and speaks of the taking under the control of the Central
Government the regulation of mines and development of minerals
to the extent provided in the Act itself. We have thus not to
look outside Act 67 of 1957 to determine what is left within the
competence of the State Legislature but have to work it out from
the terms of that Act. In this connection we may notice what was
decided in the two cases of this Court. In the Hingir Rampur
case a question had arisen whether the Act of 1948 so completely
covered the field of conservation and development of minerals as
to leave no room for State legislation. It. was held that the
declaration was effective even if the rules contemplated under
the Act of 1948 had not been made. However, considering further
whether a declaration made by a Dominion Law could be regarded
as a declaration made by Parliament for the purpose of Entry 54,
it was held that it could not and there was thus a lacuna which
the Adaptation of Laws Order, 1950 could not remove. Therefore,
it was held that there was room for legislation by the State
Legislature.
15. In the M.A. Tulloch case the firm was working a mining lease
granted under the Act of 1948. The State Legislature of Orissa
then passed the Orissa Mining Areas Development Fund Act, 1952
and levied a fee for the development of mining areas within the
State. After the provisions came into force a demand was made
for payment of fees due from July 1957 to March 1958 and the
demand was challenged. The High Court held that after the coming
into force of Act 67 of 1957 the Orissa Act must be held to be
non existent. It was held on appeal that since Act 67 of 1957
contained the requisite declaration by Parliament under Entry 54
and that Act covered the same field as the Act of 1948 in regard
to mines and mineral development, the ruling in Hingir Rampur’s
case applied and as Sections 18(1) and (2) of the Act 67 of 1957
were very wide they ruled out legislation by the State
Legislature. Where a superior legislature evinced an intention
to cover the whole field, the enactments of the other
legislature whether passed before or after must be held to be
overborne. It was laid down that inconsistency could be proved
not by a detailed comparison of the provisions of the
conflicting Acts but by the mere existence of two pieces of
legislation. As Section 18(1) covered the entire field, there
was no scope for the argument that till rules were framed under
that Section, room was available.”

 

 
Amritlal Nathubhai Shah
82. In Amritlal Nathubhai Shahd, a three-Judge Bench of this Court
was concerned with an issue similar to the controversy presented before us.
That was a case relating to grant of mining leases for bauxite in the
reserved areas in the State of Gujarat. On December 31, 1963, the
Government of Gujarat issued a Notification intimating that lands in all
talukas of Kutch district and in Kalyanpur taluka of Jamnagar district had
been reserved for exploitation of bauxite in the public sector. By another
Notification of February 26, 1964 in respect of all areas of Jamnagar and
Junagarh districts, the exploitation of bauxite was reserved in the public
sector. The appellants therein made applications to the Government of
Gujarat for grant of mining leases for bauxite in the reserved areas.
Though there were no other applications, the State Government rejected the
applications of the appellants on the ground that areas had already been
notified as reserved for the public sector. The appellants, aggrieved by
the order of the State Government moved the Central Government invoking its
revisional jurisdiction. The Central Government rejected the revision
applications. The appellants then moved the High Court but they were
unsuccessful there and from the common judgment of the High Court and the
certificate granted by it, the matter reached this Court. The Court
considered Entry 54 of List I, declaration made by Parliament in Section 2
of 1957 Act and State Legislature’s power under Entry 23 of List II, and
observed that in pursuance of its exclusive power to make laws with respect
to the matters enumerated in Entry 54 of List I, Parliament specifically
declared in Section 2 of the 1957 Act that it was 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 provided in the Act.
The State Legislature’s power under Entry 23 of List II was, thus, taken
away and the regulation of mines and development of minerals had to be in
accordance with 1957 Act and 1960 Rules. While saying so, this Court held
as follows:
“3. ………The mines and the minerals in question (bauxite) were,
however, in the territory of the State of Gujarat and, as was
stated in the orders which were passed by the Central Government
on the revision applications of the appellants, the State
Government is the “owner of minerals” within its territory, and
the minerals “vest” in it. There is nothing in the Act or the
Rules to detract from this basic fact. That was why the Central
Government stated further in its revisional orders that the
State Government had the “inherent right to reserve any
particular area for exploitation in the public sector”. It is
therefore quite clear that, in the absence of any law or
contract etc. to the contrary, bauxite, as a mineral, and the
mines thereof, vest in the State of Gujarat and no person has
any right to exploit it otherwise then in accordance with the
provisions of the Act and the Rules. Section 10 of the Act and
Chapters II, III and IV of the Rules, deal with the grant of
prospecting licences and mining leases in the land in which the
minerals vest in the Government of a State. That was why the
appellants made their applications to the State Government.”

 
83. In Amritlal Nathubhai Shahd, this Court referred to Section 4
of the 1957 Act and held that there was nothing in 1957 Act or 1960 Rules
to require that the restrictions imposed by Chapters II,III and IV of the
1960 Rules would be applicable even if State Government itself wanted to
exploit a mineral for, it was its own property. The Court held :

“4. ………There is therefore no reason why the State Government
could not, if it so desired, “reserve” any land for itself, for
any purpose, and such reserved land would then not be available
for the grant of a prospecting licence or a mining lease to any
person.”

84. The Court then considered Section 10 of 1957 Act and held as
follows :

“5……The section is therefore indicative of the power of the
State Government to take a decision, one way or the other, in
such matters, and it does not require much argument to hold that
that power included the power to refuse the grant of a licence
or a lease on the ground that the land in question was not
available for such grant by reason of its having been reserved
by the State Government for any purpose.”

85. With reference to Section 17, particularly, sub-sections (2)
and (4) thereof, the Court held that the said provisions did not cover the
entire field of the authority of refusing to grant a prospecting licence or
a mining lease to anyone else and the State Government’s authority to
reserve any area for itself was not taken away. It was further held :
“6. ………As has been stated, the authority to order reservation
flows from the fact that the State is the owner of the mines and
the minerals within its territory, which vest in it. But quite
apart from that, we find that Rule 59 of the Rules, which have
been made under Section 13 of the Act, clearly contemplates such
reservation by an order of the State Government………”

86. In Amritlal Nathubhai Shahd, the Court also considered Rules
58, 59 and 60 of the 1960 Rules and it was observed that it was not
permissible for any person to apply for a licence or a lease in respect of
a reserved area until after it becomes available for such grant. It was
held on the facts of the case that the areas under consideration had been
reserved by the State Government for the purpose stated in its
notifications and as those lands did not become available for the grant of
prospecting licence or a mining lease, the State Government was well within
its rights in rejecting the applications of the appellants under Rule 60 as
premature and the Central Government was also justified in rejecting the
revision applications which were filed against the orders of rejection
passed by the State Government.

87. In Chanan Malx, a four-Judge Bench of this Court was concerned
with constitutional validity of Haryana Minerals (Vesting of Rights) Act,
1973 (for short, ‘Haryana Act;). One of the contentions in challenging the
Haryana Act was that enactment was beyond the competence of the State
Legislature inasmuch as the filed in which the Haryana Act operated was
necessarily occupied by the provisions of 1957 Act under Entry 54 of the
Union List (List I) of the Seventh Schedule to the Constitution. The Bench
considered extensively the provisions contained in the 1957 Act and
earlier decisions of this Court in Hingir-Rampur Coal Co Ltd.a, M.A.
Tulloch & Companyb and Baijnath Kadioc . The Court then referred to Section
16(1)(b) and Section 17 of the 1957 Act and held as under :

“38. We are particularly impressed by the provisions of Sections
16 and 17 as they now stand. A glance at Section 16(1)(b) shows
that the Central Act 67 of 1957 itself contemplates vesting of
lands, which had belonged to any proprietor of an estate or
tenure holder either on or after October 25, 1949, in a State
Government under a State enactment providing for the acquisition
of estates or tenures in land or for agrarian reforms. The
provision lays down that mining leases granted in such land must
be brought into conformity with the amended law introduced by
Act 56 of 1972. It seems to us that this clearly means that
Parliament itself contemplated State legislation for vesting of
lands containing mineral deposits in the State Government. It
only required that rights to mining granted in such land should
be regulated by the provisions of Act 67 of 1957 as amended.
This feature could only be explained on the assumption that
Parliament did not intend to trench upon powers of State
legislatures under Entry 18 of List II, read with Entry 42 of
List III. Again, Section 17 of the Central Act 67 of 1957 shows
that there was no intention to interfere with vesting of lands
in the States by the provisions of the Central Act.”

 

 

 

 

 
Ishwari Khetan Sugar Mills

88. In Ishwari Khetan Sugar Millsy although question related to
constitutional validity of U.P. Sugar Undertakings (Acquisition) Act, 1971
enacted by the State of U.P. and different entries in List I and List II
were involved but with reference to the declaration made in Section 2 of
the Industries (Development and Regulation) Act, 1951 (for short, ‘IDR
Act’) vis-à-vis the State Act under challenge, the majority judgment
relying upon the earlier decisions of this Court in Baijnath Kadioc and
Chanan Malx, held that to the extent the Union acquired control by virtue
of declaration in Section 2 of the IDR Act, as amended from time to time,
the power of the State Legislature under Entry 24 of List II to enact any
legislation in respect of declared industry so as to encroach upon the
field of control occupied by IDR Act would be taken away. It was held
that 1957 Act only required that rights to mining granted in such land
should be regulated by the provisions contained therein.

M/s. Hind Stone
89. In M/s. Hind Stoneo, the question under consideration was about
the validity of Rule 8-C of the Tamil Nadu Minor Mineral Concession Rules,
1959 which provided for lease for quarries in respect of black granite to
the government corporation or by the government itself and that from
December 7, 1977 no lease for quarrying black granite should be granted to
private persons. The matter arose out of the application for renewal of
lease. The Court considered Entry 23 of List II and Entry 54 of List I of
Seventh Schedule and the earlier decisions of this Court in Hingir-Rampur
Coal Co.a, M.A. Tulloch & Companyb and Baijnath Kadioc. The Court made the
following general observations with regard to minerals and natural
resources and the scheme of 1957 Act:
“6. Rivers, Forests, Minerals and such other resources
constitute a nation’s natural wealth. These resources are not to
be frittered away and exhausted by any one generation. Every
generation owes a duty to all succeeding generations to develop
and conserve the natural resources of the nation in the best
possible way. It is in the interest of mankind. It is in the
interest of the nation. It is recognised by Parliament.
Parliament has 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. It has
enacted the Mines and Minerals (Regulation and Development) Act,
1957. We have already referred to its salient provisions.
Section 18, we have noticed, casts a special duty on the Central
Government to take necessary steps for the conservation and
development of minerals in India. Section 17 authorises the
Central Government itself to undertake prospecting or mining
operations in any area not already held under any prospecting
licence or mining lease. Section 4-A empowers the State
Government on the request of the Central Government, in the case
of minerals other than minor minerals, to prematurely terminate
existing mining leases and grant fresh leases in favour of a
Government company or corporation owned or controlled by
government, if it is expedient in the interest of regulation of
mines and mineral development to do so. In the case of minor
minerals, the State Government is similarly empowered, after
consultation with the Central Government. The public interest
which induced Parliament to make the declaration contained in
Section 2 of the Mines and Minerals (Regulation and Development)
Act, 1957, has naturally to be the paramount consideration in
all matters concerning the regulation of mines and the
development of minerals. Parliament’s policy is clearly
discernible from the provisions of the Act. It is the
conservation and the prudent and discriminating exploitation of
minerals, with a view to secure maximum benefit to the
community. There are clear signposts to lead and guide the
subordinate legislating authority in the matter of the making of
rules. Viewed in the light shed by the other provisions of the
Act, particularly Sections 4-A, 17 and 18, it cannot be said
that the rule-making authority under Section 15 has exceeded its
powers in banning leases for quarrying black granite in favour
of private parties and in stipulating that the State Government
themselves may engage in quarrying black granite or grant leases
for quarrying black granite in favour of any corporation wholly
owned by the State Government. To view such a rule made by the
subordinate legislating body as a rule made to benefit itself
merely because the State Government happens to be the
subordinate legislating body, is, but, to take too narrow a view
of the functions of that body……….”
90. The Court then considered Rule 8-C in light of the statement
made in the counter affidavit filed by the State of Tamil Nadu and it was
held that Rule 8-C was made in bona fide exercise of the rule making power
of the State Government. In paragraph 10 of the Report, the Court stated
thus:

“10. One of the arguments pressed before us was that Section 15
of the Mines and Minerals (Regulation and Development) Act
authorised the making of rules for regulating the grant of
mining leases and not for prohibiting them as Rule 8-C sought to
do, and, therefore, Rule 8-C was ultra vires Section 15. Well-
known cases on the subject right from Municipal Corporation of
the City of Toronto v. Virgo [1896 AC 88] and Attorney-General
for Ontario v. Attorney-General for the Dominions [1896 AC 348]
up to State of U.P. v. Hindustan Aluminium Corporation Ltd.
[1979 (3) SCC 229] were brought to our attention. We do not
think that “regulation” has that rigidity of meaning as never to
take in “prohibition”. Much depends on the context in which the
expression is used in the statute and the object sought to be
achieved by the contemplated regulation. It was observed by
Mathew, J. in G.K. Krishnan v. State of Tamil Nadu [1975 (1) SCC
375]: “The word ‘regulation’ has no fixed connotation. Its
meaning differs according to the nature of the thing to which it
is applied.” In modern statutes concerned as they are with
economic and social activities, “regulation” must, of necessity,
receive so wide an interpretation that in certain situations, it
must exclude competition to the public sector from the private
sector. More so in a welfare State. It was pointed out by the
Privy Council in Commonwealth of Australia v. Bank of New South
Wales [1950 AC 235]— and we agree with what was stated therein —
that the problem whether an enactment was regulatory or
something more or whether a restriction was direct or only
remote or only incidental involved, not so much legal as
political, social or economic consideration and that it could
not be laid down that in no circumstances could the exclusion of
competition so as to create a monopoly, either in a State or
Commonwealth agency, be justified. Each case, it was said, must
be judged on its own facts and in its own setting of time and
circumstances and it might be that in regard to some economic
activities and at some stage of social development, prohibition
with a view to State monopoly was the only practical and
reasonable manner of regulation. The statute with which we are
concerned, the Mines and Minerals (Development and Regulation)
Act, is aimed, as we have already said more than once, at the
conservation and the prudent and discriminating exploitation of
minerals. Surely, in the case of a scarce mineral, to permit
exploitation by the State or its agency and to prohibit
exploitation by private agencies is the most effective method of
conservation and prudent exploitation. If you want to conserve
for the future, you must prohibit in the present. We have no
doubt that the prohibiting of leases in certain cases is part of
the regulation contemplated by Section 15 of the Act.”

 

D.K. Trivedi and Sons

91. In D.K. Trivedi and Sonsn, this Court was concerned with the
constitutional validity of Section 15(1) of 1957 Act; the power of the
State Governments to make rules under that Section to enable them to charge
dead rent and royalty in respect of leases of minor minerals granted by
them and enhance the rates of dead rent and royalty during the subsistence
of such lease, the validity of Rule 21-B of the Gujarat Minor Mineral
Rules, 1966 and certain notifications issued by the Government of Gujarat
under Section 15 amending the said Rules so as to enhance the rates of
royalty and dead rent in respect of leases of minor minerals. The Court
traced the legislative history of the enactment; referred to Baijnath
Kadioc and in paragraph 27 of the Report (Pgs. 46-47) observed as follows:
“27. The 1957 Act is made in exercise of the powers conferred by
Entry 54 in the Union List. The said Entry 54 and Entry 23 in
the State List fell to be interpreted by a Constitution Bench of
this Court in Baijnath Kedia v. State of Bihar. In that case
this Court held that Entry 54 in the Union List speaks both of
regulation of mines and mineral development and Entry 23 in the
State List is subject to Entry 54. Under Entry 54 it is open to
Parliament to declare that it is expedient in the public
interest that the control in these matters should vest in the
Central Government. To what extent such a declaration can go is
for Parliament to determine and this must be commensurate with
public interest but once such declaration is made and the extent
of such regulation and development laid down the subject of the
legislation to the extent so laid down becomes an exclusive
subject for legislation by Parliament. Any legislation by the
State after such declaration which touches upon the field
disclosed in the declaration would necessarily be
unconstitutional because that field is extracted from the
legislative competence of the State legislature. In that case
the court further pointed out that the expression “under the
control of the Union” occurring in Entry 54 in the Union List
and Entry 23 in the State List did not mean “control of the
Union Government” because the Union consists of three limbs,
namely, Parliament, the Union Government and the Union
Judiciary, and the control of the Union which is to be exercised
under the said two entries is the one to be exercised by
Parliament, namely, the legislative organ of the Union, which
is, therefore, the control by the Union. The court further held
that the Union had taken all the power in respect of minor
minerals to itself and had authorized the State Governments to
make rules for the regulation of leases and thus by the
declaration made in Section 2 and the enactment of Section 15
the whole of the field relating to minor minerals came within
the jurisdiction of Parliament and there was no scope left to
the State legislatures to make any enactment with respect
thereto. The court also held that by giving the power to the
State Governments to make rules, the control of the Union was
not negatived but, on the contrary, it established that the
Union was exercising the control. One of the contentions raised
in that case was that Section 15 was unconstitutional as the
delegation of legislative power made by it to the rule-making
authority was excessive. This contention was, however, not
decided by the court as the appeals in that case were allowed on
other points.”

While dealing with the meaning of the word ‘regulation’, particularly the
expression, ‘the act of regulating, or the state of being regulated’ and
Entry 54 in the Union List, this Court stated in paragraph 31 of the Report
(Pgs. 48-49) as follows :

“31. Entry 54 in the Union List uses the word “regulation”.
“Regulation” is defined in the Shorter Oxford English
Dictionary, 3rd Edn., as meaning “the act of regulating, or the
state of being regulated”. Entry 54 reproduces the language of
Entry 36 in the Federal Legislative List in the Government of
India Act, 1935, with the omission of the words “and oilfields”.
When the Constitution came to be enacted, the framers of the
Constitution knew that since early days mines and minerals were
being regulated by rules made by Local Governments. They also
knew that under the corresponding Entry 36 in the Federal
Legislative List, the 1948 Act had been enacted and was on the
statute book and that the 1948 Act conferred wide rule-making
power upon the Central Government to regulate the grant of
mining leases and for the conservation and development of
minerals. It also knew that in the exercise of such rule-making
power the Central Government had made the Mineral Concession
Rules, 1949, and that by Rule 4 of the said Rules the extraction
of minor minerals was left to be regulated by rules to be made
by the Provincial Governments. Thus, the makers of the
Constitution were not only aware of the legislative history of
the topic of mines and minerals but were also aware how the
Dominion legislature had interpreted Entry 36 in the Federal
Legislative List in enacting the 1948 Act. When the 1957 Act
came to be enacted, Parliament knew that different State
Governments had, in pursuance of the provisions of Rule 4 of the
Mineral Concession Rules, 1949, made rules for regulating the
grant of leases in respect of minor minerals and other matters
connected therewith and for this reason it expressly provided in
sub-section (2) of Section 15 of the 1957 Act that the rules in
force immediately before the commencement of that Act would
continue in force until superseded by rules made under sub-
section (1) of Section 15. Regulating the grant of mining leases
in respect of minor minerals and other connected matters was,
therefore, not something which was done for the first time by
the 1957 Act but followed a well recognized and accepted
legislative practice. In fact, even so far as minerals other
than minor minerals were concerned, what Parliament did, as
pointed out earlier, was to transfer to the 1957 Act certain
provisions which had until then been dealt with under the rule-
making power of the Central Government in order to restrict the
scope of subordinate legislation……….”

 
Then in paragraph 33 of the Report (Pgs. 50-51), the Court with reference
to sub-section (2) of Section 13 of the 1957 Act further held:

“33. ………The opening clause of sub-section (2) of Section 13,
namely, “In particular, and without prejudice to the generality
of the foregoing power”, makes it clear that the topics set out
in that sub-section are already included in the general power
conferred by sub-section (1) but are being listed to
particularize them and to focus attention on them. The
particular matters in respect of which the Central Government
can make rules under sub-section (2) of Section 13 are,
therefore, also matters with respect to which under sub-section
(1) of Section 15 the State Governments can make rules for
“regulating the grant of quarry leases, mining leases or other
mineral concessions in respect of minor minerals and for
purposes connected therewith”. When Section 14 directs that “The
provisions of Sections 4 to 13 (inclusive) shall not apply to
quarry leases, mining leases or other mineral concessions in
respect of minor minerals”, what is intended is that the matters
contained in those sections, so far as they concern minor
minerals, will not be controlled by the Central Government but
by the concerned State Government by exercising its rule-making
power as a delegate of the Central Government. Sections 4 to 12
form a group of sections under the heading “General restrictions
on undertaking prospecting and mining operations”. The exclusion
of the application of these sections to minor minerals means
that these restrictions will not apply to minor minerals but
that it is left to the State Governments to prescribe such
restrictions as they think fit by rules made under Section
15(1). The reason for treating minor minerals differently from
minerals other than minor minerals is obvious. As seen from the
definition of minor minerals given in clause (e) of Section 3,
they are minerals which are mostly used in local areas and for
local purposes while minerals other than minor minerals are
those which are necessary for industrial development on a
national scale and for the economy of the country. That is why
matters relating to minor minerals have been left by Parliament
to the State Governments while reserving matters relating to
minerals other than minor minerals to the Central Government.
Sections 13, 14 and 15 fall in the group of sections which is
headed “Rules for regulating the grant of prospecting licences
and mining leases”. These three sections have to be read
together. In providing that Section 13 will not apply to quarry
leases, mining leases or other mineral concessions in respect of
minor minerals what was done was to take away from the Central
Government the power to make rules in respect of minor minerals
and to confer that power by Section 15(1) upon the State
Governments. The ambit of the power under Section 13 and under
Section 15 is, however, the same, the only difference being that
in one case it is the Central Government which exercises the
power in respect of minerals other than minor minerals while in
the other case it is the State Governments which do so in
respect of minor minerals. Sub-section (2) of Section 13 which
is illustrative of the general power conferred by Section 13(1)
contains sufficient guidelines for the State Governments to
follow in framing the rules under Section 15(1), and in the same
way, the State Governments have before them the restrictions and
other matters provided for in Sections 4 to 12 while framing
their own rules under Section 15(1).”

Janak Lal

92. In Janak Lalj, this Court had an occasion to consider meaning
and scope of Rule 59 of 1960 Rules. The Court considered Rule 59, as it
stood prior to amendment in 1963, and the provision after amendment. In
paragraph 6 of the Report (Pg. 123) the Court held as under :

“6. Earlier the expression “reserved for any purpose” was
followed by the words “other than prospecting or mining for
minerals”, which were omitted by an amendment in 1963. Mr.
Dholakia, learned counsel for the respondents, appearing in
support of the impugned judgment, has contended that as a result
of this amendment the expression must now be confined to cases
of prospecting or mining for minerals and all other cases where
the earlier reservation was for agricultural, industrial or any
other purpose must be excluded from the scope of the rule. We
are not persuaded to accept the suggested interpretation.
Earlier the only category which was excluded from the
application of Rule 59 was prospecting or mining leases and the
effect of the amendment is that by omitting this exception,
prospecting and mining leases are also placed in the same
position as the other cases. We do not see any reason as to why
by including in the rule prospecting and mining leases, the
other cases to which it applied earlier would get excluded. The
result of the amendment is to extend the rule and not to curtail
its area of operation. The words “any purpose” is of wide
connotation and there is no reason to restrict its meaning.”

The Court clarified that intention of amendment in 1963 was to extend the
rule and not to curtail its area of operation.

Bharat Coking Coal

93. In the case of Bharat Coking Coal l, the Court said that the
State Legislature was competent to enact law for the regulation of mines
and mineral development under Entry 23 of State List but such power was
subject to the declaration which may be made by Parliament by law as
envisaged by Entry 54 of the Union List. It was held that the legislative
competence of the State Legislature to make law on the topic of mines and
mineral was subject to parliamentary legislation. While dealing with
Section 18(1) prior to its amendment by amending Act 37 of 1986 and after
amendment, the Court held in paragraph 16 of the Report (Pg. 572) as under
:

“16. ……..The amended and unamended sections both lay down that
it shall be the duty of the Central Government to take all such
steps as may be necessary “for the conservation and development
of minerals” in India and for that purpose it may make such
rules as it thinks fit. The expression “for the conservation of
minerals” occurring under Section 18(1) confers wide power on
the Central Government to frame any rule which may be necessary
for protecting the mineral from loss, and for its preservation.
The expression ‘conservation’ means “the act of keeping or
protecting from loss or injury”. With reference to the natural
resources, the expression in the context means preservation of
mineral; the wide scope of the expression “conservation of
minerals” comprehends any rule reasonably connected with the
purpose of protecting the loss of coal through the waste of coal
mine, such a rule may also regulate the discharge of slurry or
collection of coal particles after the water content of slurry
is soaked by soil. In addition to the general power to frame
rules for the conservation of mineral,………….”

 
The Court further held in para 19 of the Report (Pgs. 575-576) as follows:

“………No doubt under Entry 23 of List II, the State legislature
has power to make law but that power is subject to Entry 54 of
List I with respect to the regulation and development of mines
and minerals. As discussed earlier the State legislature is
denuded of power to make laws on the subject in view of Entry 54
of List I and the Parliamentary declaration made under Section 2
of the Act. Since State legislature’s power to make law with
respect to the matter enumerated in Entry 23 of List II has been
taken away by the Parliamentary declaration, the State
Government ceased to have any executive power in the matter
relating to regulation of mines and mineral development.
Moreover, the proviso to Article 162 itself contains limitation
on the exercise of the executive power of the State. It lays
down that in any matter with respect to which the legislature of
a State and Parliament have power to make laws, the executive
power of State shall be subject to limitation of the executive
power expressly conferred by the Constitution or by any law made
by Parliament upon the Union or authority thereof……….”

 
Orissa Cement Ltd.

94. A three-Judge Bench of this Court in Orissa Cement Limitedf was
concerned with the validity of the levy of a cess based on the royalty
derived from mining lands by States of Bihar, Orissa and Madhya Pradesh.
The case of the petitioners therein was that similar levy had been struck
down by a seven-Judge Bench of this Court in India Cement Limitede . The
contention of the States, on the other hand, was that issue was different
from the India Cement Limitede as the nature and character of the levies
imposed by these States was different from Tamil Nadu levy. The Bench
considered Entries 52 and 54 of the Union List and Entries 18, 23, 45, 49,
50 and 66 of the State List and also considered earlier decisions of this
Court in HRS Murthy v. Collector of Chittoor[38], Hingir-Rampur Coal Co.a
, M.A. Tulloch & Co.b , Ishwari Khetan Sugar Mills (P) Ltd.y , Baijnath
Kadioc, M. Karunanidhi v. Union of India and Anr.[39], M/s. Hind Stoneo,
I.T.C. & Ors. v. State of Karnataka & Ors.[40] and Western Coalfields
Limited v. Special Area Development Authority Korba & Anr.[41]. I shall
cite paragraphs 49, 50, 51 and 53 (Pgs. 480-486) of the Report which read
as follows:

“49. It is clear from a perusal of the decisions referred to
above that the answer to the question before us depends on a
proper understanding of the scope of M.M.R.D. Act, 1957, and an
assessment of the encroachment made by the impugned State
legislation into the field covered by it. Each of the cases
referred to above turned on such an appreciation of the
respective spheres of the two legislations. As pointed out in
Ishwari Khetan, the mere declaration of a law of Parliament that
it is expedient for an industry or the regulation and
development of mines and minerals to be under the control of the
Union under Entry 52 or entry 54 does not denude the State
legislatures of their legislative powers with respect to the
fields covered by the several entries in List II or List III.
Particularly, in the case of a declaration under Entry 54, this
legislative power is eroded only to the extent control is
assumed by the Union pursuant to such declaration as spelt out
by the legislative enactment which makes the declaration. The
measure of erosion turns upon the field of the enactment framed
in pursuance of the declaration. While the legislation in Hingir-
Rampur and Tulloch was found to fall within the pale of the
prohibition, those in Chanan Mal, Ishwari Khetan and Western
Coalfields were general in nature and traceable to specific
entries in the State List and did not encroach on the field of
the Central enactment except by way of incidental impact. The
Central Act, considered in Chanan Mal, seemed to envisage and
indeed permit State legislation of the nature in question.”

 
“50. To turn to the respective spheres of the two legislations
we are here concerned with, the Central Act (M.M.R.D. Act, 1957)
demarcates the sphere of Union control in the matter of mines
and mineral development. While concerning itself generally with
the requirements regarding grants of licences and leases for
prospecting and exploitation of minerals, it contains certain
provisions which are of direct relevance to the issue before us.
Section 9, which deals with the topic of royalties and specifies
not only the quantum but also the limitations on the enhancement
thereof, has already been noticed. Section 9A enacts a like
provision in respect of dead rent……..”

 
“51. If one looks at the above provisions and bears in mind
that, in assessing the field covered by the Act of Parliament in
question, one should be guided (as laid down in Hingir-Rampur
and Tulloch) not merely by the actual provisions of the Central
Act or the rules made thereunder but should also take into
account matters and aspects which can legitimately be brought
within the scope of the said statute, the conclusion seems
irresistible, particularly in view of Hingir-Rampur and Tulloch,
that the State Act has trespassed into the field covered by the
Central Act. The nature of the incursion made into the fields of
the Central Act in the other cases were different. The present
legislation, traceable to the legislative power under Entry 23
or Entry 50 of the State List which stands impaired by the
Parliamentary declaration under Entry 54, can hardly be equated
to the law for land acquisition or municipal administration
which were considered in the cases cited and which are traceable
to different specific entries in List 11 or List III.

 
“53. These observations establish on the one hand that
the distinction sought to be made between mineral development
and mineral area development is not a real one as the two types
of development are inextricably and integrally interconnected
and, on the other, that, fees of the nature we are concerned
with squarely fall within the scope of the provisions of the
Central Act. The object of Section 9 of the Central Act cannot
be ignored. The terms of Section 13 of the Central Act extracted
earlier empower the Union to frame rules in regard to matters
concerning roads and environment. Section 18(1) empowers the
Central Government to take all such steps as may be necessary
for the conservation and development of minerals in India and
for protection of environment. These, in the very nature of
things, cannot mean such amenities only in the mines but take in
also the areas leading to and all around the mines. The
development of mineral areas is implicit in them. Section 25
implicitly authorises the levy of rent, royalty, taxes and fees
under the Act and the rules. The scope of the powers thus
conferred is very wide. Read as a whole, the purpose of the
Union control envisaged by Entry 54 and the M.M.R.D. Act, 1957,
is to provide for proper development of mines and mineral areas
and also to bring about a uniformity all over the country in
regard to the minerals specified in Schedule I in the matter of
royalties and, consequently prices ………”

 
Indian Metals and Ferro Alloys Ltd.
95. In Indian Metals and Ferro Alloys Ltd.p , a two-Judge Bench of
this Court was concerned with the principal question as to whether the
petitioners therein were entitled to obtain leases for the mining of
chrome. While dealing with the principal question and other incidental
questions, the Court considered Entry 54 of List I, Entry 23 of List II,
the 1957 Act, particularly, Sections 2, 4, 10, 11, 17A and 19 thereof and
the 1960 Rules including Rules 58, 59 and 60 thereof. While dealing with
the reservation policy of the State Government in having the area reserved
for exploitation in the public sectors, the Court observed in paragraphs
39 and 40 (Pg. 133) as follows :
“39. The principal obstacle in the way of ORIND as well as the
other private parties getting any leases was put up by the S.G.,
OMC and IDCOL. They claimed that none of the private
applications could at all be considered because the entire area
in all the districts under consideration is reserved for
exploitation in the public sector by the notification dated
August 3, 1977 earlier referred to. All the private parties have
therefore joined hands to fight the case of reservation claimed
by the S.G., OMC and IDCOL. We have indicated earlier that the
S.G. expressed its preparedness to accept the Rao report and to
this extent waive the claim of reservation. Interestingly, the
OMC and IDCOL have entered caveat here and claimed that as
public sector corporations they could claim, independently of
the S.G.’s stand, that the leases should be given only to them
and that the Rao report recommending leases to IMFA, FACOR and
AIKATH should not be accepted by us.
40. The relevant provisions of the Act and the rules have been
extracted by us earlier. Previously, Rule 58 did not enable the
S.G. to reserve any area in the State for exploitation in the
public sector. The existence and validity of such a power of
reservation was upheld in A.Kotiah Naidu v. State of A.P. (AIR
1959 AP 485) and Amritlal Nathubhai Shah v. Union Government of
India (AIR 1973 Guj. 117), the latter of which was approved by
this Court in Amritlal Nathubhai Shah v. Union of India ([1977]
1 SCR 372). (As pointed out earlier, Rule 58 has been amended in
1980 to confer such a power on the S.G.). It is also not in
dispute that a notification of reservation was made on August 3,
1977. The S.G., OMC and IDCOL are, therefore, right in
contending that, ex facie, the areas in question are not
available for grant to any person other than the S.G. or a
public sector corporation [rule 59(1), proviso] unless the
availability for grant is renotified in accordance with law
[rule 59(1)(e) ] or the C.G. decides to relax the provisions of
Rule 59(1) [rule 59(2) ]. None of those contingencies have
occurred since except as is indicated later in this judgment.
There is, therefore, no answer to the plea of reservation put
forward by the S.G., OMC and IDCOL.”

 

Then in paragraph 45 (Pgs. 136-138), while considering Section 17A (1) that
was inserted in 1957 Act by amendment in 1987, the Court held :

“45. Our conclusion that the areas in question before us were
all duly reserved for public sector exploitation does not,
however, mean that private parties cannot be granted any lease
at all in respect of these areas for, as pointed out earlier, it
is open to the C.G. to relax the reservation for recorded
reasons. Nor does this mean, as contended for by OMC and IDCOL,
that they should get the leases asked for by them. This is so
for two reasons. In the first place, the reservation is of a
general nature and does not directly confer any rights on OMC
and IDCOL. This reservation is of two types. Under Section 17A
(1), inserted in 1986, the C.G. may after consulting the S.G.
just reserve any area- not covered by a PL or a ML-with a view
to conserving any mineral. Apparently, the idea of such
reservation is that the minerals in this area will not be
exploited at all, neither by private parties nor in the public
sector. It is not necessary to consider whether any area so
reserved can be exploited in the public sector as we are not
here concerned with the scope of such reservation, there having
been no notification Under Section 17A(1) after 1986 and after
consultation with the S.G. The second type of reservation was
provided for in Rule 58 of the rules which have already been
extracted earlier in this judgment. This reservation could have
been made by the S.G. (without any necessity for approval by the
C.G.) and was intended to reserve areas for exploitation,
broadly speaking, in the public sector. The notification itself
might specify the Government, Corporation or Company that was to
exploit the areas or may be just general, on the lines of the
rule itself. Under Rule 59(1), once a notification under Rule 58
is made, the area so reserved shall not be available for grant
unless the two requirements of Sub-rule (e) are satisfied: viz.
an entry in a register and a Gazette notification that the area
is available for grant. It is not quite clear whether the
notification of March 5, 1974 complied with these requirements
but it is perhaps unnecessary to go into this question because
the reservation of the areas was again notified in 1977. These
notifications are general. They only say that the areas are
reserved for exploitation in the public sector. Whether such
areas are to be leased out to OMC or IDCOL or some other public
sector corporation or a Government Company or are to be
exploited by the Government itself is for the Government to
determine de hors the statute and the rules. There is nothing in
either of them which gives a right to OMC or IDCOL to insist
that the leases should be given only to them and to no one else
in the public sector. If, therefore the claim of reservation in
1977 in favour of the public sector is upheld absolutely, and if
we do not agree with the findings of Rao that neither OMC nor
IDCOL deserve any grant, all that we can do is to leave it to
the S.G. to consider whether any portion of the land thus
reserved should be given by it to these two corporations. Here,
of course, there are no competitive applications from
organisations in the public sector controlled either by the S.G.
or the C.G., but even if there were, it would be open to the
S.G. to decide how far the lands or any portion of them should
be exploited by each of such Corporations or by the C.G. or S.G.
Both the Corporations are admittedly instrumentalities of the
S.G. and the decision of the S.G. is binding on them. We are of
the view that, if the S.G. decides not to grant a lease in
respect of the reserved area to an instrumentality of the S.G.,
that instrumentality has no right to insist that a ML should be
granted to it. It is open to the S.G. to exercise at any time, a
choice of the State or any one of the instrumentalities
specified in the rule. It is true that if, eventually, the S.G.
decides to grant a lease to one or other of them in respect of
such land, the instrumentality whose application is rejected may
be aggrieved by the choice of another for the lease. In
particular, where there is competition between an
instrumentality of the C.G. and one of the S.G. or between
instrumentalities of the C.G. inter se or between the
instrumentalities of the S.G. inter se, a question may well
arise how far an unsuccessful instrumentality can challenge the
choice made by the S.G. But we need not enter into these
controversies here. The question we are concerned with here is
whether OMC or IDCOL can object to the grant to any of the
private parties on the ground that a reservation has been made
in favour of the public sector. We think the answer must be in
the negative in view of the statutory provisions. For the S.G.
could always denotify the reservation and make the area
available for grant to private parties. Or, short of actually
dereserving a notified area, persuade the C.G. to relax the
restrictions of Rule 59(1) in any particular case. It is.
therefore, open to the S.G. to grant private leases even in
respect of areas covered by a notification of the S.G. and this
cannot be challenged by any instrumentality in the public
sector.”

 

The legal position post amendment in 1957 Act by Central Act 37 of 1987 was
explained (para 46; Pgs. 138-139) in the following manner:
“46. Before leaving this point, we may only refer to the
position after 1986. Central Act 37 of 1986 inserted Sub-section
(2) which empowers the State Government to reserve areas for
exploitation in the public sector. This provision differs from
that in Rule 58 in some important respects-
(i) the reservation requires the approval of the C.G.;
(ii) the reservation can only be of areas not actually held
under a PL or ML;
(iii) the reservation can only be for exploitation by a
Government company or a public sector corporation (owned or
controlled by the S.G. or C.G.) but not for exploitation by the
Government as such.
Obviously, Section 17A(2) and rule 58 could not stand together
as Section 17A empowers the S.G, to reserve only with the
approval of the C.G. while Rule 58 contained no such
restriction. There was also a slight difference in their
wording. Perhaps because of this Rule 58 has been omitted by an
amendment of 1988 (G.S.R. 449E of 1988) made effective from
April 13, 1988. Rule 59, however, contemplates a relaxation of
the reservation only by the C.G. By an amendment of 1987
effective on February 10, 1987, (G.S.R. 86-E of 87) the words
“reserved by the State Government” were substituted for the
words “reserved by the Government” in Rule 59(1)(e). Later, Rule
59(1) has been amended by the insertion of the words “or Under
Section 17-A of the Act” after the words “under Rule 58″ in
Clause (e) as well as in the second proviso. The result appears
to be this:
(i) After March 13, 1988, certainly, the S.G. cannot notify any
reservations without the approval of the C.G., as Rule 58 has
been deleted. Presumably, the position is the same even before
this date and as soon as Act 37 of 1986 came into force.
(ii) However, it is open to the S.G. to denotify a reservation
made by it under Rule 58 or Section 17A. Presumably,
dereservation of an area reserved by the S.G. after the 1986
amendment can be done only with the approval of the C.G. for it
would be anomalous to hold that a reservation by the S.G. needs
the C.G.’s approval but not the dereservation. Anyhow, it is
clear that relaxation in respect of reserved areas can be
permitted only by the C.G.
(iii) It is only the C.G. that can make a reservation with a
view to conserve minerals generally but this has to be done with
the concurrence of the S.G.”
Dharambir Singh

96. In Dharambir Singh vs. Union of India & Ors.[42] , a three-
Judge Bench of this Court while considering Section 10(3) and 11(2) of the
1957 Act, observed that in grant of mining lease of a property of the
State, the State Government has a discretion to grant or refuse to grant
any prospective licence or licence to any applicant. No applicant has a
right, much less vested right, to the grant of mining lease for mining
operations in any place within the State. But, the State Government is
required to exercise its discretion subject to the requirement of the law.
Bhupatrai Maganlal Joshi
97. In Bhupatrai Maganlal Joshis, a Constitution Bench of this
Court was concerned with the correctness of the High Court’s decision on
the question whether the reservation of land for exploitation of mineral
resources in the public sector was permissible under the 1957 Act read with
1960 Rules. The High Court had answered the question in the affirmative
from which the matter reached this Court. In a very brief order this Court
agreed with the reasoning and conclusion of the High Court.
M.P. Ram Mohan Raja
98. In the case of M.P. Ram Mohan Raja vs.State of T.N.& Ors.[43] ,
this Court relied upon the decision of this Court in M/s. Hind Stoneo and
reiterated that so far as grant of mining and mineral lease is concerned no
person has a vested right in it.
Sandur Manganese and Iron Ores Limited
99 . In a comparatively recent decision in Sandur Manganese and
Iron Ores Limited.,m the diverse issues which were under consideration are
noted in paragraph 6 of the Report. The Court considered statutory
provisions contained in the 1957 Act, 1960 Rules and decisions of this
Court in Hingir-Rampur Coal Co.a , M.A. Tulloch & Co.b , Baijnath Kadioc ,
Bharat Coking Coali and few other decisions, and it was observed with
reference to Section 2 of the 1957 Act that State Legislature was denuded
of its legislative power to make any law with respect to the regulation of
mines and minerals development to the extent provided in the 1957 Act. In
paragraphs 61, 62 and 63 (Pgs. 30-31) of the Report, the Court held as
follows :

“61.- In addition to what we have stated, it is relevant to
note that Section 11(5) again carves out an exception to the
preference in favour of prior applicants in the main provision
of Section 11(2). It permits the State Government, with the
prior approval of the Central Government, to disregard the
priority in point of time in the main provision of Section 11(2)
and to make a grant in favour of a latter applicant as compared
to an earlier applicant for special reasons to be recorded in
writing. It also gives an indication that it can have no
application to cases in which a notification is issued because,
in such a case, both the first proviso to Section 11(2) and
Section 11(4) make it clear that all applications will be
considered together as having been received on the same date. In
view of our interpretation, the proceedings of the Chief
Minister and the recommendation dated 06.12.2004 are contrary to
the Scheme of the MMDR Act as they were based on Section 11(5)
which had no application at all to the applications made
pursuant to the notification dated 15.03.2003.

 
62. We have already extracted Rules 59 and 60 and analysis of
those rules confirms the interpretation of Section 11 above and
the conclusion that it is Section 11(4) which would apply to a
Notification issued under Rule 59(1). Rule 59(1) provides that
the categories of areas listed in it including, inter alia,
areas that were previously held or being under a mining lease or
which have been reserved for exploitation by the State
Government or under Section 17A of the Act, shall not be
available for grant unless (i) an entry is made in the register
and (ii) its availability for grant is notified in the Official
Gazette specifying a date not earlier than 30 days from the date
of notification. Sub-rule (2) of Rule 59 empowers the Central
Government to relax the conditions set out in Rule 59(1) in
respect of an area whose availability is required to be notified
under Rule 59 if no application is issued or where notification
is issued, the 30-days black-out period specified in the
notification pursuant to Rules 59(1)(i) and (ii) has not
expired, shall be deemed to be premature and shall not be
entertained.

 
63. As discussed earlier, Section 11(4) is consistent with
Rules 59 and 60 when it provides for consideration only of
applications made pursuant to a Notification. On the other hand,
the consideration of applications made prior to the
Notification, as required by the first proviso to Section 11(2),
is clearly inconsistent with Rules 59 and 60. In such
circumstances, a harmonious reading of Section 11 with Rules 59
and 60, therefore, mandates an interpretation under which
Notifications would be issued under Section 11(4) in the case of
categories of areas covered by Rule 59(1). In these
circumstances, we are unable to accept the argument of the
learned senior counsel for Jindal and Kalyani with reference to
those provisions.”

 

 

 
Paragraph 7 of Amritlal Nathubhai Shahd was considered in paragraph 65
of the Report and then in paragraph 66 (Pg. 32), the Bench
observed
as follows :
“66.- Even thereafter, this Court has consistently taken the
position that applications made prior to a Notification cannot
be entertained. In our view, the purpose of Rule 59(1), which is
to ensure that mining lease areas are not given by the State
Governments to favour persons of their choice without notice to
the general public would be defeated. In fact, the learned
single Judge correctly interpreted Section 11 read with Rules 59
and 60. The said conclusion also finds support in the decision
of this Court in State of Tamil Nadu v. Hindstone, (1981) 2 SCC
205 at page 218, where it has been held in the context of the
rules framed under the MMDR Act itself that a statutory rule,
while subordinate to the parent statute, is otherwise to be
treated as part of the statute and is effective. The same
position has been reiterated in State of U.P. v. Babu Ram
Upadhya (1961) 2 SCR 679 at 701 and Gujarat Pradesh Panchayat
Parishad v. State of Gujarat (2007) 7 SCC 718.”

 

 

As regards the legislative and executive power of the State under Entry 23
List II read with Article 162 of the Constitution, the Court in Sandur
Manganese and Iron Ores Limitedm in paragraph 80 (Pg. 36) stated as under
:

“80. It is clear that the State Government is purely a delegate
of Parliament and a statutory functionary, for the purposes of
Section 11(3) of the Act, hence it cannot act in a manner that
is inconsistent with the provisions of Section 11(1) of the MMDR
Act in the grant of mining leases. Furthermore, Section 2 of the
Act clearly states that the regulation of mines and mineral
development comes within the purview of the Union
Government and not the State Government. As a matter of fact,
the respondents have not been able to point out any other
provision in the MMDR Act or the MC Rules permitting grant of
mining lease based on past commitments. As rightly pointed out,
the State Government has no authority under the MMDR Act to make
commitments to any person that it will, in future, grant a
mining lease in the event that the person makes investment in
any project. Assuming that the State Government had made any
such commitment, it could not be possible for it to take an
inconsistent position and proceed to notify a particular area.
Further, having notified the area, the State Government
certainly could not thereafter honour an alleged commitment by
ousting other applicants even if they are more deserving on the
merit criteria as provided in Section 11(3).”

 

 
Whether 1962 and 1969 Notifications are ultra vires?

100. Now, in light of the above, I have to consider whether 1962 and
1969 Notifications issued by the Government of erstwhile State of Bihar
notifying for the information of public that iron ore in the subject area
was reserved for exploitation in the public sector are ultra vires and de
hors 1957 Act and 1960 Rules.

Constitutional philosophy about law making in relation to mines and
minerals

101. Entry 36 in List I (Federal List) and Entry 23 in List II
(Provincial List) in the Seventh Schedule of Government of India Act, 1935
correspond to Entry 54 in List I (Union List) and Entry 23 in List II
(State List) in our Constitution. It is interesting to note that in the
course of debate in respect of the above entries in the Government of India
Bill, the Solicitor General in the House of Commons stated that the
rationale of including only the ‘regulation of mines’ and ‘development of
minerals’ and that too only to the extent it was considered expedient in
the public interest by a Federal law was to ensure that the Provinces were
not completely cut-out from the law relating to mines and minerals and if
there was inaction at the Centre, then the Provinces could make their own
laws. Thus, powers in relation to mines and minerals were accorded to both
the Centre and States. The same philosophy is reflected in our
Constitution. The management of the mineral resources has been left with
both the Central Government and State Governments in terms of Entry 54 in
List I and Entry 23 in List II. In the scheme of our Constitution, the
State Legislatures enjoy power to enact legislation on the topics of ‘mines
and mineral development’. The only fetter imposed on the State Legislatures
under Entry 23 is by the latter part of the said entry which says ‘subject
to the provisions of List I with respect to regulation and development
under the control of the Union’. In other words, State Legislature loses
its jurisdiction to the extent to which Union Government had taken over
control, the regulation of mines and development of minerals as manifested
by legislation incorporating the declaration and no more. If Parliament by
its law has declared that regulation of mines and development of minerals
should in the public interest be under the control of Union, which it did
by making declaration in Section 2 of the 1957 Act, to the extent of such
legislation incorporating the declaration, the power of the State
Legislature is excluded. The requisite declaration has the effect of
taking out regulation of mines and development of minerals from Entry 23,
List II to that extent. It needs no elaboration that to the extent to
which the Central Government had taken under ‘its control’ ‘the regulation
of mines and development of minerals’ under 1957 Act, the States had lost
their legislative competence. By the presence of expression ‘to the extent
hereinafter provided’ in Section 2, the Union has assumed control to the
extent provided in 1957 Act. 1957 Act prescribes the extent of control and
specifies it. We must bear in mind that as the declaration made in Section
2 trenches upon the State Legislative power, it has to be construed
strictly. Any legislation by the State after such declaration,
trespassing the field occupied in the declaration cannot constitutionally
stand. To find out what is left within the competence of the State
Legislature on the declaration having been made in Section 2 of the 1957
Act, one does not have to look outside the provisions of 1957 Act but as
observed in Baijnath Kadioc , ‘have to work it out from the terms of that
Act’. In order that the declaration made by the Parliament should be
effective, the making of rules or enforcement of rules so made is not
decisive.
102. The declaration made by Parliament in Section 2 of 1957 Act
states 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 provided in the Act itself. Legal regime relating to
regulation of mines and development of minerals is thus guided by the 1957
Act and 1960 Rules. Whether reservation made by 1962 and 1969
Notifications is in any manner contrary or inconsistent with 1957 Act? In
my view not at all. Whether the impugned Notifications impinge upon the
legislative power of the Central Government? My answer is in negative.
Whether the Government of erstwhile State of Bihar did not have the power
to make reservation which it did by 1962 and 1969 Notifications? I think
there was no lack of power in the State in making such reservation. I
indicate the reasons therefor.

Management of minerals : general observations
103. First, few general observations. Minerals – like rivers and
forests – are a valuable natural resource. Minerals constitute our national
wealth and are vital raw-material for infrastructure, capital goods and
basic industries. The conservation, preservation and intelligent
utilization of minerals are not only need of the day but are also very
important in the interest of mankind and succeeding generations. Management
of minerals should be in a way that helps in country’s economic development
and which also leaves for future generations to conserve and develop the
natural resources of the nation in the best possible way. For proper
development of economy and industry, the exploitation of natural resources
cannot be permitted indiscriminately; rather nation’s natural wealth has to
be used judiciously so that it may not be exhausted within a few years.

No fundamental right in mining
104. The appellants have applied for mining leases in a land
belonging to Government of Jharkhand (erstwhile Bihar) and it is for iron-
ore which is a mineral included in the First Schedule to the 1957 Act in
respect of which no mining lease can be granted without the prior approval
of the Central Government. It goes without saying that no person can claim
any right in any land belonging to Government or in any mines in any land
belonging to Government except under 1957 Act and 1960 Rules. No person has
any fundamental right to claim that he should be granted mining lease or
prospecting licence or permitted reconnaissance operation in any land
belonging to the Government. It is apt to quote the following statement
of O. Chinnappa Reddy, J. in M/s. Hind Stoneo , albeit in the context of
minor mineral, ‘The public interest which induced Parliament to make the
declaration contained in Section 2……. has naturally to be the paramount
consideration in all matters concerning the regulation of mines and the
development of minerals’. He went on to say, ‘The statute with which we are
concerned, the Mines and Minerals (Development and Regulation) Act, is
aimed ………..at the conservation and the prudent and discriminating
exploitation of minerals. Surely, in the case of a scarce mineral, to
permit exploitation by the State or its agency and to prohibit exploitation
by private agencies is the most effective method of conservation and
prudent exploitation. If you want to conserve for the future, you must
prohibit in the present.’

State Government’s ownership in mines and minerals within its territory and
the power of reservation

105. It is not in dispute that all rights and interests, including
rights in mines and minerals in the subject area, had vested absolutely in
the erstwhile State of Bihar free from all encumbrances. At the
commencement of Constitution, the erstwhile State of Bihar was a Part-A
State specified in the First Schedule of the Constitution and prior thereto
the Province of Bihar. By virtue of Article 294, all properties and assets
which were vested in His Majesty for the purposes of the Government of
Province of Bihar stood vested in the corresponding State of Bihar. By
1950 Bihar Act, all other lands i.e., estates and tenures of whatever kind,
including the mines and minerals therein, stood vested in the State of
Bihar. Thus, all lands and minerals on or under land situate in the
erstwhile State of Bihar came to vest in it. Thereafter with effect from
November 15, 2000, the State of Jharkhand was carved out of the State of
Bihar pursuant to the Bihar Re-Organisation Act, 2000. Accordingly, all
lands, inter alia, belonging to the then State of Bihar and situated in
the transferred territories of Singhbhum (East) and Singhbhum (West)
Districts, passed to the newly created State of Jharkhand. The admitted
position is that the State Government (erstwhile Bihar and now Jharkhand)
is the owner of the subject area. Mines and minerals within its territory
vest in it absolutely. As a matter of fact it is because of this position
that the appellants made their application for grant of mining lease to the
State Government. The question now is, the regulation of mines and
development of minerals having been taken under its control by the Central
Government, whether the provisions contained in 1957 Act or 1960 Rules come
in the way of the State Government to reserve any particular area for
exploitation in the public sector.
106. The legislation on the subject of mines and minerals as
contained in 1957 Act and 1960 Rules has been extensively quoted in the
earlier part of the judgment. Suffice it to say that Section 4 is a pivotal
provision around which the legal framework for the regulation of mines and
development of minerals as laid down in 1957 Act revolves.
107. The character of the impugned Notifications making reservation
of the area set out therein for exploitation of iron ore in public sector
has to be judged in light of the provisions in 1957 Act and 1960 Rules. The
object and effect of declaration made by Parliament in Section 2 and the
provisions that follow Section 2 in 1957 Act, which have been extensively
referred to above, even remotely do not suggest that the Government of the
erstwhile State of Bihar lacked authority or competence to make reservation
of subject mining areas within its territory relating to iron ore which
vested in it for public sector undertaking by 1962 and 1969 Notifications.
Whatever way it is seen, whether ‘reservation’ topic was covered by 1957
Act when 1962 and 1969 Notifications were issued and published by the State
Government or whether the provisions of 1957 Act, as were then existing,
enabled the State Government to reserve the subject area for its own use
through the agency in public sector, I am of the opinion that since the
State Government’s paramount right over the iron ore being the owner of
the mines did not get affected by 1957 Act, the power existed with the
State Government to reserve subject areas of mining for exploitation in
public sector undertaking. It was, however, argued that by 1957 Act the
State’s ownership rights insofar as ‘development of minerals’ was concerned
stood frozen. ‘Development’ includes exploitation of mineral resources and
to allow to exploit or not to allow to exploit is all covered by 1957 Act
and by Section 4 the right of the State Government with regard to
development of minerals was taken away and the State Government ceased to
have any inherent right of reservation.
108. I do not agree. In the first place, the declaration made by
Parliament in Section 2 and the provisions that follow Section 2 in 1957
Act have left untouched the State’s ownership of mines and minerals within
its territory although the regulation of mines and the development of
minerals have been taken under the control of the Union. Section 4 deals
with activities in relation to land and does not extend to extinguish the
State’s right of ownership in such land. Section 4 regulates the right to
transfer but does not divest ownership of minerals in a State and does not
preclude the State Government from exploiting its minerals. Section 4(1)
can have no application where the State Government wants to undertake
itself mining operations in the area owned by it. On consideration of
Section 5, I am of the view that the same conclusion must follow. Section 5
or for that matter Sections 6, 9, 10, 11 and 13(2)(a) also do not take
away the State’s ownership rights in the mines and minerals within its
territory. The power to legislate for regulation of mines and development
of minerals under the control of the Union may definitely imply power to
acquire mines and minerals in the larger public interest by appropriate
legislation, but by 1957 Act that has not been done. There is nothing in
1957 Act to suggest even remotely – and there is no express provision at
all – that the mines and minerals that vested in the States have been
acquired. Rather, the scheme and provisions of 1957 Act themselves show
that Parliament itself contemplated State legislation for vesting of lands
containing mineral deposits in the State Government and that Parliament did
not intend to trench upon powers of State Legislatures under Entry 18, List
II. As noted above, the declaration made by Parliament in Section 2 of
1957 Act states that it is expedient in the public interest that the Union
should take under its control the regulation of mines and development of
minerals to the extent provided in the Act itself. The declaration made in
Section 2 is, thus, not all comprehensive.
109. The regulation of mines and development of minerals has been
taken over under its control by the Central Government to the extent it is
manifested in 1957 Act which does not contemplate acquisition of mines and
minerals. By the presence of keynote expression ‘to the extent hereinafter
provided’ in Section 2, the Union has assumed control to the extent
specified in the provisions following Section 2. In my view, although the
word `regulation’ must in the context receive wide interpretation, but the
extent of control by Union as specified in 1957 Act has to be construed
strictly. The decisions of this Court in M.A. Tulloch & Co.b, Baijnath
Kadioc, Bharat Coking Coali and few other decisions where this Court has
held with reference to declaration made by Parliament in Section 2 of 1957
Act and the provisions of that Act that the whole of the legislative field
was covered were in the context of specific State legislations under
consideration. In the context of subject State legislation, the whole
legislative field was found to be occupied by the Central law. The same is
the position in the case of Hingir-Rampur Coal Co.a where whole of the
legislative field relating to ‘minerals’ was found to be covered by the
declaration made in Section 2 of the 1948 Act in the context of the State
legislation under consideration. In Hingir-Rampur Coal Co.a while
examining the constitutional validity of the Orissa Mining Areas
Development Fund Act, 1952 this Court held that the State Act was covered
by the 1948 Act. In M.A. Tulloch & Companyb , this Court was concerned with
the same Orissa Act which was under consideration in Hingir-Rampur Coal
Co.a and in light of Section 18(1) of the 1957 Act which was under
consideration it was held that the intention of Parliament was to cover the
entire field. In Baijnath Kadioc, this Court was concerned with the
constitutional validity of proviso (2) to Section 10(2) added by Bihar Land
Reforms (Amendment) Act, 1964. While examining the constitutional validity
of the above provision, the Constitution Bench of this Court analysed 1957
Act. In light of Entry 54 in List I and Entry 23 in List II the
observation that whole of the legislative field was covered by the
Parliamentary declaration read with 1957 Act was with reference to the
State legislations under consideration and the whole of the legislative
field was found to be occupied by 1957 Act. Similar observations in various
other decisions by this Court were made in the context of the topic under
consideration.
110. I am supported in my view by a three-Judge Bench decision of
this Court in Orissa Cement Limitedf wherein it was emphatically asserted
that in the case of a declaration under Entry 54, the legislative power of
the State Legislatures is eroded only to the extent control is assumed by
the Union pursuant to such declaration as spelt out by the legislative
enactment which makes the declaration. The three-Judge Bench on careful
consideration said, ‘The measure of erosion turns upon the field of the
enactment framed in pursuance of the declaration. While the legislation in
Hingir-Rampur Coal Co.a and M.A.Tulloch & Co.b was found to fall within
the pale of the prohibition, those in Chanan Malx, Ishwari Khetan Sugar
Millsy and Western Coalfields Limitedoo were general in nature and
traceable to specific entries in the State List and did not encroach on the
field of the Central enactment except by way of incidental impact’.
111. Secondly, after enactment of 1957 Act and 1960 Rules made
thereunder, the Central Government has all throughout understood that the
State Governments as owner of mines and minerals within their territory
have inherent right to reserve any particular area for exploitation in the
public sector. This position is reflected from the order of the Central
Government that was passed by it and which was under challenge in Amritlal
Nathubhai Shahd. In its order the Central Government had stated, ‘….The
State Government had the inherent right to reserve any particular area for
exploitation in the public sector. Mineral vest in them and they are owners
of minerals…….and Central Government are in agreement with the State
Government in so far as the reservation of areas is concerned…..”
112. The above position held by the Central Government has been
approved by this Court in Amritlal Nathubhai Shahd. I have already
referred to the facts in the case of Amritlal Nathubhai Shahd and the
issue involved therein – an issue similar to the controversy presented
before us – in earlier part of this judgment. In Amritlal Nathubhai
Shahd, the Court referred to Section 4 of 1957 Act and it was held that
there was nothing in 1957 Act or 1960 Rules to conclude as to why the State
Government could not , if it so desired, ‘reserve’ any land for itself, for
any purpose, and such reserved land would then not be available for the
grant of a prospecting licence or a mining lease to any person. The Court
then pointed out, ‘the authority to order reservation flows from the fact
that the State is the owner of the mines and the minerals within its
territory’. It was also held that quite apart from that, Rule 59 of 1960
Rules clearly contemplated reservation by an order of the State Government.
The above legal position has been reiterated by this Court in Indian Metals
and Ferro Alloys Ltd.p .

Whether Amritlal Nathubhai Shah is not a binding precedent

113. Learned senior counsel for the appellants, however, vehemently
contended that Amritlal Nathubhai Shahd is not a binding precedent being
per incuriam inasmuch as earlier judgments of this Court have not been
considered and applied. It was argued that decision in Amritlal Nathubhai
Shahd was limited to its own facts and that decision did not deal with
reservation prior to amendment in Rule 59. In that case Notification was of
December 31, 1963 whereunder lands in particular areas had been reserved
for exploitation of bauxite in the public sector. At that time Rule 59 of
1960 Rules had been amended and, moreover, that was a case of exploitation
of mineral by the State itself and in case of exploitation other than by
State it could only be done in accord with the 1957 Act and 1960 Rules.
114. I am afraid that the distinguishing features highlighted by
learned senior counsel for the appellants are not substantial and do not
persuade me not to follow Amritlal Nathubhai Shahd. The judgment of this
Court in Amritlal Nathubhai Shahd establishes the distinction between the
power of reservation to exploit a mineral as its own property on the one
hand and the regulation of mines and mineral development under the 1957 Act
and the 1960 Rules on the other. The authority of the State Government to
make reservation of a particular mining area within its territory for its
own use is the offspring of ownership; and it is inseparable therefrom
unless denied to it expressly by an appropriate law. By 1957 Act that has
not been done by Parliament. Setting aside by a State of land owned by it
for its exclusive use and under its dominance and control, in my view, is
an incident of sovereignty and ownership. There is no incongruity or
inconsistency in the decisions of this Court in Hingir-Rampur Coal Co.a,
M.A. Tulloch & Co.b, Baijnath Kadioc and Amritlal Nathubhai Shahd . The
Bench in Amritlal Nathubhai Shahd was alive to the legal position
highlighted by this Court in Hingir-Rampur Coal Co.a, M.A. Tulloch & Co.b
and Baijnath Kadioc although it did not expressly refer to these decisions.
This is apparent from the observations made in para 3 wherein it has been
stated that in pursuance of its exclusive power to make laws with respect
to the matters enumerated in Entry 54 of List I in the Seventh Schedule,
Parliament specifically declared in Section 2 of the 1957 Act that it was
expedient in the public interest that the Union should take under its
control, regulation of mines and the development of minerals to the extent
provided therein. The Bench noticed that State Legislature’s power under
Entry 23 of List II was, thus, taken away and regulation of mines and
mineral development had therefore to be in accordance with the 1957 Act and
1960 Rules. The legal position exposited in Amritlal Nathubhai Shahd is
that even though the field of legislation with regard to regulation of
mines and development of minerals has been covered by the declaration of
the Parliament in Section 2 of the 1957 Act, but that can not justify the
inference that the State Government has lost its right to the minerals
which vest in it as a property within its territory and hence no person has
a right to exploit the mines other than in accordance with the provisions
of the 1957 Act and the 1960 Rules. The authority of the State Government
to order reservation flows from the fact that it is the owner of the mines
and the minerals within its territory. Such authority is also traceable to
Rule 59 of 1960 Rules.
115. Yet another considerable point was made that 1962 and 1969
Notifications are not relatable to statutory provisions contained in 1957
Act and 1960 Rules. Reference was made to Sections 17 and 18 and Rules 58
and 59 of 1960 Rules and it was argued that these provisions are indicative
of the position that reservation made by the State Government for
exploitation of minerals in public sector was unsupportable and
unsustainable in law.

Section 17 – not all – comprehensive provision
116. I am of the opinion that Section 17 is not all – comprehensive
on the subject of refusal to grant prospecting licence or mining lease.
Section 17 has nothing to do with public or private sector. It does not
deal directly or indirectly with the State Government’s right for
reservation of its own mines and minerals. Its application is not general
but it is confined to a specific situation where the Central Government
proposes to undertake prospecting or mining operations in any area not
already held under any prospecting licence or mining lease. The above view
with regard to Section 17 finds support from Amritlal Nathubhai Shahd.
Insofar as Section 18 is concerned, it basically confers additional rule
making power upon the Central Government for achieving the objectives,
namely, conservation and systematic development of minerals articulated
therein. If the State Government makes reservation in public interest with
respect to minerals which vest in it for exploitation in public sector, I
fail to see how such reservation can be seen as impairing the obligation
cast upon the Central Government under Section 18.

Rule 59 and Janak Lal
117. It is true that Rule 58 as it existed originally did not enable
the State Government to reserve any area in the State for exploitation of
minerals in public sector. But Rule 59 did recognise the State Government’s
authority to make reservation for any purpose. It was, however, argued
by Dr. Rajiv Dhavan that Rule 59, as it then stood, allowed reservation
for any purpose other than prospecting or mining for minerals. He relied
upon decision of this Court in Janak Lalj. In Janak Lalj, admittedly the
disputed area was reserved for nistar purposes. When an application for
grant of mining lease was earlier made by a third party it was rejected on
the ground that it was so reserved. It was also an admitted position before
this Court that the procedure under Rule 58 was not followed before grant
was made in favour of respondent no. 4 therein and no opportunity was given
to any other person before entertaining application of respondent no. 4. In
the backdrop of the above admitted position, the Court considered the
question whether Rule 59 was attracted or not. The High Court had accepted
the argument of the respondents that the expression ‘reserved for any
purpose’ in Rule 59 did not cover a case where the area was reserved for
nistar purposes or for any purpose other than mining. This Court did not
accept the High Court’s view. While construing Rule 59 as it originally
existed and the amendment brought in Rule 59 by deleting the words, ‘other
than prospecting or mining for minerals’, the Court said that the result of
the amendment was to extend the rule and not to curtail its area of
operation. It was held that words ‘any purpose’ was of wide connotation and
there was no reason to restrict its meaning.
118. Janak Lal,j in my opinion, does not help the contention
canvassed on behalf of the appellants. The expression, ‘other than
prospecting or mining for minerals’ that formed part of original Rule 59,
in my view, was not of much significance and did not impede the State
Government’s authority to make reservation of any area for exploitation in
public sector founded on its ownership over that area. It was because of
this that this insignificant and inconsequential expression was later on
deleted from Rule 59 in 1963. Rule 59, accordingly, continued to recognise
the State Government’s right to reserve any area for mining within its
territory for any purpose including exploitation in public sector. In
Amritlal Nathubhai Shahd, this position has been expressly affirmed when it
said, “but quite apart from that, we find that Rule 59 of the Rules which
have been made under Section 13 of the Act, clearly contemplates such
reservation by an order of the State Government”.

Repeal of Rule 58 and Section 17A
119. Rule 58 was amended in 1980 whereby it expressly provided that
the State Government may by Notification in the official gazette reserve
any area for exploitation by the Government, a corporation established by
the Central, State or Provincial Act or a Government company within the
meaning of Section 617 of the Companies Act. Rule 58 has been omitted from
1960 Rules as the provision for reservation has now been expressly made by
insertion of Section 17A in 1957 Act. According to Section 17A(2), the
State Government with the approval of the Central Government may reserve
any area not already held under any prospecting licence or mining lease to
undertake prospecting or mining operations through a Government company or
a corporation owned or controlled by it. In terms of Section 17A(2), any
reservation made by the State Government after coming into force of that
Section must bear approval of the Central Government.
120. From the above, it becomes clear that what was implied by the
provisions originally contained in 1957 Act and 1960 Rules insofar as
authority of the State Government to reserve any area within its territory
for mining in public sector has been made explicit first by amendment in
Rule 58 in 1980 and later on by introduction of Section 17A in 1957 Act by
virtue of amendment effective from 1987.
121. It was also argued by Mr. C.A. Sundaram, learned senior counsel
for one of the appellants that even if 1962 and 1969 Notifications were
held to be validly issued with proper authority of law at that point of
time, the fact that Rule 58 was omitted in 1988 without any saving clause
necessarily meant that these Notifications were no longer valid and could
not be relied upon. He argued that current power of reservation contained
in Section 17A of 1957 Act is consistent with erstwhile Rules 58/59 since
Section 17A expressly requires the approval of the Central Government
before any State Government issues any notification for reservation of
mining area in public sector.
122. The impact of omission of Rule 58 in 1988 from 1960 Rules and
the introduction of Section 17A in 1957 Act in the context of reservation
of the mining area by the State Government for public sector exploitation
came up for direct consideration by this Court in Indian Metals and Ferro
Alloys Ltd.p. In the earlier part of the judgment I have already quoted
the relevant portion of the decision of this Court in Indian Metals and
Ferro Alloys Ltd.p. The Court referred to the relevant amendments in 1957
Act and 1960 Rules and categorically held that reservations made prior to
insertion of Section 17A continue in force even after the introduction of
Section 17A. The reservations made by the State Government in 1977 before
omission of Rule 58 and amendment in Rule 59 and insertion of Section 17A
in 1957 Act were, thus, held to be unaffected.

123. Having carefully considered Section 17A, I have no hesitation
in holding that the said provision is prospective. There is no indication
in Section 17A or in terms of the Amending Act that by insertion of
Section 17A the Parliament intended to alter the pre-existing state of
affairs. The Parliament does not seem to have intended by bringing in
Section 17A to undo the reservation of any mining area made by the State
Government earlier thereto for exploitation in public sector. The
Parliament has no doubt plenary power of legislation within the field
assigned to it to legislate prospectively as well as retrospectively. As
early as in 1951 this Court in Keshavan Madhava Menon v. State of
Bombay[44] had stated about a cardinal principle of construction that
every statue is prima facie prospective unless it is expressly or by
necessary implication made to have retrospective operation. Unless there
are words in the statute sufficient to show the intention of the
Legislature to affect existing rights, it is deemed to be prospective only.
In Principles of Statutory Interpretation (Seventh Edition, 1999) by
Justice G.P. Singh, the statement of Lord Blanesburg in Colonial Sugar
Refining Co. v. Irving[45] and the observations of Lopes, L.J. in
Pulborough Parish School Board Election, Bourke v. Nutt[46] have been noted
as follows :

“In the words of Lord Blanesburg, “provisions which touch a
right in existence at the passing of the statute are not to be
applied retrospectively in the absence of express enactment or
necessary intendment.” “Every statute, it has been said”,
observed Lopes, L.J., “which takes away or impairs vested rights
acquired under existing laws, or creates a new obligation or
imposes a new duty, or attaches a new disability in respect of
transactions already past, must be presumed to be intended not
to have a retrospective effect”.

 

 
124. Where an issue arises before the Court whether a statute is
prospective or retrospective, the Court has to keep in mind presumption of
prospectivity articulated in legal maxim nova constitutio futuris formam
imponere debet non praeteritis, i.e., ‘a new law ought to regulate what is
to follow, not the past’. The presumption of prospectivity operates
unless shown to the contrary by express provision in the statute or is
otherwise discernible by necessary implication.

125. The aspects, namely, (i) 1993 mineral policy framed by the
Central Government envisaged permission of captive consumption of minerals
across the country; (ii) in 1994 Central Government asked all the state
governments to de-reserve 13 minerals including iron ore and directed them
to take steps accordingly; (iii) confirmation by the Government of Bihar
to the Central Government in 1994 that no mining areas were reserved for
public sector undertaking in the then State of Bihar; (iv) confirmation by
the State Government in 2001 to Central Government that there are no
reserved areas in the State and (v) in 2004, the recommendation by the
State Government in favour of the appellants to the Central Government for
grant of prior approval and reminder in 2005, in my view, have no impact
and effect on the validity of 1962 and 1969 Notifications. The above acts
of the Government of Bihar and the Government of Jharkhand in ignorance of
1962 and 1969 Notifications cannot be used as a sufficient ground for
invalidating these Notifications. If a state government has power to
reserve mineral bearing area for exploitation in public sector – and I have
already held that the then Government of Bihar had such power – the act of
reservation vide 1962 and 1969 Notifications is not rendered illegal or
invalid. I am clearly of the view that lack of knowledge on the part of the
State Government about the reservation of areas for exploitation in public
sector vide 1962 and 1969 Notifications does not affect in any manner the
legality and validity of these Notifications once it has been found that
these Notifications have been issued by the erstwhile State of Bihar in
valid exercise of power which it had.

 

Validity of 2006 Notification
126. On October 27, 2006, the State Government issued a
Notification declaring its decision that the iron ore deposits at Ghatkuri
would not be thrown open for grant of prospecting licence, mining licence
or otherwise for private parties. In the said Notification, it was noted
that the deposits were at all material times kept reserved by 1962 and 1969
Notifications issued by the State of Bihar. It was further mentioned in the
Notification that mineral reserved in Ghatkuri area has now been decided to
be utilized for exploitation by public sector undertaking or joint venture
project of the State Government as they would usher in maximum benefits to
the State and would generate substantial amount of employment in the State.
2006 Notification states that it has been issued in the public interest and
in the larger interest of the State for optimum utilization and
exploitation of the mineral resources in the State and for establishment of
mineral based industry with value addition thereon. It was argued that 2006
Notification is bad for the same reasons for which 1962 and 1969
Notifications are bad in law and invalid. The argument is noted to be
rejected. For 1962 and 1969 Notifications are not and have not been found
by me to suffer from any legal infirmity. 2006 Notification mentions factum
of reservation made by 1962 and 1969 Notifications. It is founded on the
policy of the State Government that such reservation will usher in maximum
benefits to the State and would also generate substantial amount of
employment in the State. The public interest is, thus, paramount. The State
Government had authority to do that under Section 17A(2) of 1957 Act read
with Rule 59(1)(e) of 1960 Rules.
127. It was, however, argued on behalf of the appellants that 2006
Notification has attempted to reserve the area for exploitation by public
sector undertaking or in joint venture project whereas Section 17A(2) of
1957 Act allows the State Government to reserve area for a government
company or corporation owned or controlled by it and not in joint venture
project. The submission was that 2006 Notification is an attempt to bring
in indirectly private companies through joint venture project although,
Section 17A clearly does not envisage private participation.
128. The mineral reserved in the said area by 2006 Notification has
been decided to be utilized for exploitation by public sector undertaking
or joint venture project of the State Government. 2006 Notification does
mention reservation for joint venture project of the State Government but,
in my opinion, the said expression must be understood to be confined to an
instrumentality having the trappings and character of a government company
or corporation owned or controlled by the State Government and not outside
of such instrumentality.
129. The types of reservation under Section 17A and their scope have
been considered by this Court in Indian Metals and Ferro Alloys Ltd.p in
paragraphs 45 and 46 (pgs. 136-139) of the Report. I am in respectful
agreement with that view. However, it was argued that Section 17A(2)
requires prior approval of the Central Government before reservation of any
area by the State Government for the public sector undertaking. The
argument is founded on incorrect reading of Section 17A(2). This provision
does not use the expression, ‘prior approval’ which has been used in
Section 11. On the other hand, Section 17A(2) uses the words, ‘with the
approval of the Central Government’. These words in Section 17A(2) can not
be equated with prior approval of the Central Government. According to me,
the approval contemplated in Section 17A may be obtained by the State
Government before the exercise of power of reservation or after exercise of
such power. The approval by the Central Government contemplated in Section
17A(2) may be express or implied. In a case such as the present one where
the Central Government has relied upon 2006 Notification while rejecting
appellants’ application for grant of mining lease, it necessarily implies
that the Central Government has approved reservation made by State
Government in 2006 Notification otherwise it would not have acted on the
same. In any case, the Central Government has not disapproved reservation
made by the State Government in 2006 Notification.
130. Two more contentions advanced on behalf of the appellants, one,
with regard to 2006 Notification and the other with regard to 1962 and
1969 Notifications may be briefly noticed. As regards 2006 Notification it
was contended that it was not legally valid as it has been made operative
with retrospective effect. In respect of 1962 and 1969 Notifications, it
was argued that the State Government had never adopted these Notifications
and, accordingly, these Notifications lapsed. None of these two arguments
has any merit. 2006 Notification has not been given retrospective operation
as contended on behalf of the appellants. I have already held that 2006
Notification is prospective. Mere reference to 1962 and 1969 Notifications
in 2006 Notification does not make 2006 Notification retrospective.
131. The other argument that 1962 and 1969 Notifications had lapsed
as the State Government never adopted them is also without any merit and
substance. The new State of Jharkhand was carved out of the erstwhile State
of Bihar and it came into existence by virtue of the Bihar Reorganisation
Act, 2000. Section 85 of that Act provides that the appropriate Government
may before expiration of two years adapt and/or modify the law and every
such law shall have effect subject to adaptation and modification so made
until altered, repealed or amended by a competent Legislature. In light of
Section 85 of the Bihar Reorganisation Act read with Sections 84 and 86
thereof, position that emerges is that the existing law shall have effect
until it is altered, repealed and/or amended. Since the new State of
Jharkhand had not altered, repealed and/or amended 1962 and 1969
Notifications issued by the erstwhile State of Bihar, it cannot be said
that 1962 and 1969 Notifications had lapsed. Moreover, in 2006
Notification, 1962 and 1969 Notifications and their effect have been
mentioned and that also shows that 1962 and 1969 Notifications continued to
operate. The expression, ‘the deposit was at all material times kept
reserved vide Gazette Notification No. A/MM-40510/62-6209/M dated 21st
December, 1962 and No. B/M-6-1019/68-1564/M dated 28th February, 1969 of
the State of Bihar’ leaves no manner of doubt that 1962 and 1969
Notifications continued to operate and did not lapse.
Principles of promissory estoppel

132. The doctrine of promissory estoppel is now firmly established
and is well accepted in India. Its nature, scope and extent have come up
for consideration before this Court time and again. One of the leading
cases of this Court on the doctrine of promissory estoppel is the case of
Motilal Padampat Sugar Millsz . In that case, the Court elaborately and
extensively considered diverse facets and aspects of doctrine of
promissory estoppel. That was a case where the appellant was primarily
engaged in the business of manufacture and sale of sugar and it had also a
cold storage plant and a steel foundry. On October 10, 1968 a news item was
carried in the newspaper/s that the State of Uttar Pradesh had decided to
give exemption from sales tax for a period of three years under Section 4-A
of the U.P. Sales Tax Act to all new industrial units in the State with a
view to enabling them, “to come on firm footing in developing stage”.
Motilal Padampat Sugar Millsz on the basis of the above news, addressed a
letter to the Director of the Industries stating that in view of the Sales
Tax Holiday announced by the Government, it intended to set up a
hydrogeneration plant for manufacture of vanaspati and sought confirmation
whether proposed industrial unit would be entitled to sales tax holiday for
a period of three years from the date it commenced production. The
Director of Industries replied that there would be no sales tax for three
years on the finished product of the vanaspati from the date it got power
connection for commencing production. Motilal Padampat Sugar Millsz then
started taking steps for establishment of the factory. It entered into
agreement for procuring plant and machinery and also took diverse steps and
considerable progress in the setting up of the vanaspati factory took
place. Later on, the State Government had a second thought on the question
of exemption of sales tax and, ultimately, the government took a policy
decision that new vanaspati units in the State which go into commercial
production by September 30, 1970 would be given only partial concession in
sales tax for a period of three years. Motilal Padampat Sugar Millsz took
up the matter with the Government and in the meanwhile its production
started on July 2, 1970 which was also intimated to the functionaries of
the State. Having been denied total sales tax holiday although promised
earlier by the Director of Industries, it filed a writ petition before the
High Court. The principal argument advanced on behalf of Motilal Padampat
Sugar Millsz was that on a categorical assurance of the State Government
that it would be exempted from payment of sales tax for a period of three
years from the date of commencement of production that it established a
hydrogeneration plant for manufacture of vanaspati. The assurance was given
by the State Government intending or knowing that it would be acted on by
it and in fact by acting on it, it altered its position and, therefore, the
State Government was bound on the principle of promissory estoppel to
honour the assurance and exempt it from sales tax for a period of three
years. In backdrop of these facts, when the matter reached this
Court, the Court considered the nature, scope and extent of the doctrine of
promissory estoppel. In paragraph 8 of the Report, the Court considered
the view of Justice Denning, as he then was, in the Central London
Property Trust Ltd. v. High Trees House Ltd.[47] wherein Denning, J. had
considered Jorden v. Money[48]. This Court also referred to in paragraph
8, the opinions in Hughes v. Metropolitan Railway Company[49] , Birmingham
and District Land Co., v. London and North Western Rail Co.[50] which were
considered by Justice Denning in the High Treesuu case. The Court also
considered the decisions in Durham Fancy Goods Ltd. v. Michael Jackson
(Fancy Goods) Ltd.[51], Evenden v. Guildford City Association Football Club
Ltd.[52] and Crabb v. Arun District Council[53] and culled out the legal
position as follows :
“8. …… The true principle of promissory estoppel, therefore,
seems to be that where one party has by his words or conduct
made to the other a clear and unequivocal promise which is
intended to create legal relations or affect a legal
relationship to arise in the future, knowing or intending that
it would be acted upon by the other party to whom the promise is
made and it is in fact so acted upon by the other party, the
promise would be binding on the party making it and he would not
be entitled to go back upon it, if it would be inequitable to
allow him to do so having regard to the dealings which have
taken place between the parties, and this would be so
irrespective of whether there is any pre-existing relationship
between the parties or not.”

 

 
Then in para 9, the Court stated that it was a doctrine evolved by equity
in order to prevent injustice. The Court pointed out that where promise is
made by a person knowing that it would be acted on by the person to whom it
is made and in fact it is so acted on, it is inequitable to allow the party
making the promise to go back upon it.
133. In para 13, the development of doctrine of promissory estoppel
in England was noticed by observing, “that even in England where the
Judges, apprehending that if a cause of action is allowed to be founded on
promissory estoppel it would considerably erode, if not completely
overthrow, the doctrine of consideration, have been fearful to allow
promissory estoppel to be used as a weapon of offence, it is interesting to
find that promissory estoppel has not been confined to a purely defensive
role”.

134. In Motilal Padampat Sugar Millsz, the Court also referred to
American law on the subject. In para 14 after observing, ‘the doctrine of
promissory estoppel has displayed remarkable vigour and vitality in the
hands of American Judges and it is still rapidly developing and expanding
in the United States”, the Court referred to Article 90 of American Law
Institute’s “Restatement of the Law of Contracts” and the statement at page
657 of Volume 19 of American Jurisprudence.

135. The Court then considered the view of Justice Cardozo in
Allengheny College v. National Chautauque County Bank[54] and Orennan v.
Star Paving Company[55] and noted as follows :

“14. There are also numerous cases where the doctrine of
promissory estoppel has been applied against the Government
where the interest of justice, morality and common fairness
clearly dictated such a course. We shall refer to these cases
when we discuss the applicability of the doctrine of equitable
estoppel against the Government. Suffice it to state for the
present that the doctrine of promissory estoppel has been taken
much further in the United States than in English and
Commonwealth jurisdictions and in some States at least, it has
been used to reduce, if not to destroy, the prestige of
consideration as an essential of valid contract. Vide Spencer
Bower and Turner’s Estoppel by Representation (2d) p. 358.

136. The Court then considered to what extent the doctrine of
promissory estoppel was applicable against the Government. After referring
to few decisions of the English courts and the American courts, the
decisions of this Court in Union of India v. Indo-Afghan Agencies[56],
Collector of Bombay v. Municipal Corporation of the City of Bombay[57],
Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar Municipal
Council[58], M. Ramanatha Pillai v. State of Kerala[59], Assistant
Custodian v. Brij Kishore Agarwala[60], State of Kerala v. Gwalior Rayon
Silk Manufacturing Co. Ltd.[61], Excise Commissioner, U.P., Allahabad v.
Ram Kumar[62], Bihar Eastern Gangetic Fishermen Co-operative Society Ltd.
v. Sipahi Singh[63] and Radhakrishna Agarwal v. State of Bihar[64] were
considered.

137. After entering into detailed consideration as noted above, in
Motilal Padampat Sugar Millsz , this Court exposited the legal position
that the doctrine of promissory estoppel may be applied against the State
even in its governmental, public or sovereign capacity where it is
necessary to prevent fraud or manifest injustice. The following position
was culled out:

“The promissory estoppel cannot be invoked to compel the
Government or even a private party to do an act prohibited by
law.
To invoke the doctrine of promissory estoppel it is not
necessary for the promisee to show that he suffered any
detriment as a result of acting in reliance on the promise. The
detriment is not some prejudice suffered by the promisee by
acting on the promise but the prejudice which would be caused to
the promisee, if the promisor were allowed to go back on the
promise.
Whatever be the nature of function which the Government is
discharging, the Government is subject to the rule of promissory
estoppel and if the essential ingredients of this rule are
satisfied the Government can be compelled to carry out the
promise made by it.”

 
138. In Union of India and Others v. Godfrey Philips India
Limited[65] (para 9, page 383 of the Report), this Court stated as
follows:
“9. Now the doctrine of promissory estoppel is well established
in the administrative law of India. It represents a principle
evolved by equity to avoid injustice and, though commonly named
promissory estoppel, it is neither in the realm of contract nor
in the realm of estoppel. The basis of this doctrine is the
interposition of equity which has always, true to its form,
stepped in to mitigate the rigour of strict law. This doctrine,
though of ancient vintage, was rescued from obscurity by the
decision of Mr. Justice Denning as he then was, in his
celebrated judgment in Central London Property Trust Ltd. v.
High Trees House Ltd. The true principle of promissory estoppel
is that where one party has by his word or conduct made to the
other a clear and unequivocal promise or representation which is
intended to create legal relations or effect a legal
relationship to arise in the future, knowing or intending that
it would be acted upon by the other party to whom the promise or
representation is made and it is in fact so acted upon by the
other party, the promise or representation would be binding on
the party making it and he would not be entitled to go back upon
it, if it would be inequitable to allow him to do so, having
regard to the dealings which have taken place between the
parties. It has often been said in England that the doctrine of
promissory estoppel cannot itself be the basis of an action: it
can only be a shield and not a sword: but the law in India has
gone far ahead of the narrow position adopted in England and as
a result of the decision of this Court in Motilal Padampat Sugar
Mills v. State of U.P. it is now well settled that the doctrine
of promissory estoppel is not limited in its application only to
defence but it can also found a cause of action. The decision of
this Court in Motilal Sugar Mills case contains an exhaustive
discussion of the doctrine of promissory estoppel and we find
ourselves wholly in agreement with the various parameters of
this doctrine outlined in that decision.”
139. The doctrine of promissory estoppel also came up for
consideration before this Court in Delhi Cloth and General Mills Limited v.
Union of India[66]. In para 18 (page 95) of the Report the Court stated as
follows :
“18. Here the Railways Rates Tribunal apparently, appears to
have gone off the track. The doctrine of promissory estoppel has
not been correctly understood by the Tribunal. It is true, that
in the formative period, it was generally said that the doctrine
of promissory estoppel cannot be invoked by the promisee unless
he has suffered “detriment” or “prejudice”. It was often said
simply, that the party asserting the estoppel must have been
induced to act to his detriment. But this has now been explained
in so many decisions all over. All that is now required is that
the party asserting the estoppel must have acted upon the
assurance given to him. Must have relied upon the representation
made to him. It means, the party has changed or altered the
position by relying on the assurance or the representation. The
alteration of position by the party is the only indispensable
requirement of the doctrine. It is not necessary to prove
further any damage, detriment or prejudice to the party
asserting the estoppel. The court, however, would compel the
opposite party to adhere to the representation acted upon or
abstained from acting. The entire doctrine proceeds on the
premise that it is reliance based and nothing more.”

140. A two-Judge Bench of this Court in Amrit Banaspati Company
Limitedaa entered into consideration of the extent and applicability of
doctrine of promissory estoppel and after considering earlier decisions of
this Court in Indo-Afghan Agenciesddd , Motilal Padampat Sugar Millsz ,
Godfrey Philips India Limitedmmm and Delhi Cloth and General Mills
Limitednnn culled out the legal position that if a representation was
made by an official on behalf of the Government then unless such
representation is established to be beyond scope of authority it should be
held binding on the Government. However, if such representation was
contrary to law then such representation was unenforceable. Then the Court
stated (para 10, page 424) as follows:

“10. But promissory estoppel being an extension of principle of
equity, the basic purpose of which is to promote justice founded
on fairness and relieve a promisee of any injustice perpetrated
due to promisor’s going back on its promise, is incapable of
being enforced in a court of law if the promise which furnishes
the cause of action or the agreement, express or implied, giving
rise to binding contract is statutorily prohibited or is against
public policy……”

141. In Kasinka Trading & Anr. v. Union of India and Anr.[67] , the
Court was principally concerned with the invocation of the doctrine of
promissory estoppel in the facts and circumstances of the case obtaining
therein. The Court considered the decision of this Court in Indo-Afghan
Agenciesddd and the successive decisions. The Court held in (paras 11-12,
pages 283-284) as under:

“11. The doctrine of promissory estoppel or equitable estoppel
is well established in the administrative law of the country. To
put it simply, the doctrine represents a principle evolved by
equity to avoid injustice. The basis of the doctrine is that
where any party has by his word or conduct made to the other
party an unequivocal promise or representation by word or
conduct, which is intended to create legal relations or effect a
legal relationship to arise in the future, knowing as well as
intending that the representation, assurance or the promise
would be acted upon by the other party to whom it has been made
and has in fact been so acted upon by the other party, the
promise, assurance or representation should be binding on the
party making it and that party should not be permitted to go
back upon it, if it would be inequitable to allow him to do so,
having regard to the dealings, which have taken place or are
intended to take place between the parties.
12. It has been settled by this Court that the doctrine of
promissory estoppel is applicable against the Government also
particularly where it is necessary to prevent fraud or manifest
injustice. The doctrine, however, cannot be pressed into aid to
compel the Government or the public authority “to carry out a
representation or promise which is contrary to law or which was
outside the authority or power of the officer of the Government
or of the public authority to make”. There is preponderance of
judicial opinion that to invoke the doctrine of promissory
estoppel clear, sound and positive foundation must be laid in
the petition itself by the party invoking the doctrine and that
bald expressions, without any supporting material, to the effect
that the doctrine is attracted because the party invoking the
doctrine has altered its position relying on the assurance of
the Government would not be sufficient to press into aid the
doctrine. In our opinion, the doctrine of promissory estoppel
cannot be invoked in the abstract and the courts are bound to
consider all aspects including the results sought to be achieved
and the public good at large, because while considering the
applicability of the doctrine, the courts have to do equity and
the fundamental principles of equity must for ever be present to
the mind of the court, while considering the applicability of
the doctrine. The doctrine must yield when the equity so demands
if it can be shown having regard to the facts and circumstances
of the case that it would be inequitable to hold the Government
or the public authority to its promise, assurance or
representation.”

 
Then in paragraph 20 of the Report while distinguishing the facts under
consideration which were not found to be analogous to the facts in Indo-
Afghan Agenciesddd and Motilal Padampat Sugar Mills, the Court stated
(Para 20-21, pages 287-288) as follows:

“20. The facts of the appeals before us are not analogous to the
facts in Indo-Afghan Agencies or M.P. Sugar Mills. In the first
case the petitioner therein had acted upon the unequivocal
promises held out to it and exported goods on the specific
assurance given to it and it was in that fact situation that it
was held that Textile Commissioner who had enunciated the scheme
was bound by the assurance thereof and obliged to carry out the
promise made thereunder. As already noticed, in the present
batch of cases neither the notification is of an executive
character nor does it represent a scheme designed to achieve a
particular purpose. It was a notification issued in public
interest and again withdrawn in public interest. So far as the
second case (M.P. Sugar Mills case) is concerned the facts were
totally different. In the correspondence exchanged between the
State and the petitioners therein it was held out to the
petitioners that the industry would be exempted from sales tax
for a particular number of initial years but when the State
sought to levy the sales tax it was held by this Court that it
was precluded from doing so because of the categorical
representation made by it to the petitioners through letters in
writing, who had relied upon the same and set up the industry.
21. The power to grant exemption from payment of duty,
additional duty etc. under the Act, as already noticed, flows
from the provisions of Section 25(1) of the Act. The power to
exempt includes the power to modify or withdraw the same. The
liability to pay customs duty or additional duty under the Act
arises when the taxable event occurs. They are then subject to
the payment of duty as prevalent on the date of the entry of the
goods. An exemption notification issued under Section 25 of the
Act had the effect of suspending the collection of customs duty.
It does not make items which are subject to levy of customs duty
etc. as items not leviable to such duty. It only suspends the
levy and collection of customs duty, etc., wholly or partially
and subject to such conditions as may be laid down in the
notification by the Government in “public interest”. Such an
exemption by its very nature is susceptible of being revoked or
modified or subjected to other conditions. The supersession or
revocation of an exemption notification in the “public interest”
is an exercise of the statutory power of the State under the law
itself as is obvious from the language of Section 25 of the Act.
Under the General Clauses Act an authority which has the power
to issue a notification has the undoubted power to rescind or
modify the notification in a like manner. From the very nature
of power of exemption granted to the Government under Section 25
of the Act, it follows that the same is with a view to enabling
the Government to regulate, control and promote the industries
and industrial production in the country. Notification No. 66 of
1979 in our opinion, was not designed or issued to induce the
appellants to import PVC resin. Admittedly, the said
notification was not even intended as an incentive for import.
The notification on the plain language of it was conceived and
issued on the Central Government “being satisfied that it is
necessary in the public interest so to do”. Strictly speaking,
therefore, the notification cannot be said to have extended any
‘representation’ much less a ‘promise’ to a party getting the
benefit of it to enable it to invoke the doctrine of promissory
estoppel against the State. It would bear repetition that in
order to invoke the doctrine of promissory estoppel, it is
necessary that the promise which is sought to be enforced must
be shown to be an unequivocal promise to the other party
intended to create a legal relationship and that it was acted
upon as such by the party to whom the same was made. A
notification issued under Section 25 of the Act cannot be said
to be holding out of any such unequivocal promise by the
Government which was intended to create any legal relationship
between the Government and the party drawing benefit flowing
from of the said notification. It is, therefore, futile to
contend that even if the public interest so demanded and the
Central Government was satisfied that the exemption did not
require to be extended any further, it could still not withdraw
the exemption.”

The Court went on to observe (paras 24 and 25, pages 289-290) as under:
“24. It needs no emphasis that the power of exemption under
Section 25(1) of the Act has been granted to the Government by
the Legislature with a view to enabling it to regulate, control
and promote the industries and industrial productions in the
country. Where the Government on the basis of the material
available before it, bona fide, is satisfied that the “public
interest” would be served by either granting exemption or by
withdrawing, modifying or rescinding an exemption already
granted, it should be allowed a free hand to do so. We are
unable to agree with the learned counsel for the appellants that
Notification No. 66 of 1979 could not be withdrawn before 31-3-
1981. First, because the exemption notification having been
issued under Section 25(1) of the Act, it was implicit in it
that it could be rescinded or modified at any time if the public
interest so demands and secondly it is not permissible to
postpone the compulsions of “public interest” till after 31-3-
1981 if the Government is satisfied as to the change in the
circumstances before that date. Since, the Government in the
instant case was satisfied that the very public interest which
had demanded a total exemption from payment of customs duty now
demanded that the exemption should be withdrawn it was free to
act in the manner it did. It would bear a notice that though
Notification No. 66 of 1979 was initially valid only up to 31-3-
1979 but that date was extended in “public interest”, we see no
reason why it could not be curtailed in public interest.
Individual interest must yield in favour of societal interest.
25. In our considered opinion therefore the High Court was
perfectly right in holding that the doctrine of promissory
estoppel had no application to the impugned notification issued
by the Central Government in exercise of its powers under
Section 25(1) of the Act in view of the facts and circumstances,
as established on the record.”

142. In State of Orissa and Ors. v. Mangalam Timber Products
Limited[68] , this Court held that to attract applicability of the
principle of estoppel it was not necessary that there must be a contract in
writing entered into between the parties. Having regard to the facts of the
case under consideration, the Court held that it was not satisfied even
prima facie that it was a case of an error committed by the State
Government of which it was not aware. While observing that the State
cannot take advantage of its own omission, the Court held that having
persuaded the respondent therein to establish an industry and that party
having acted on the solemn promise of the State Government, purchased the
raw material at a fixed price and also sold its products by pricing the
same taking into consideration the price of the raw material fixed by the
State Government, the State Government cannot be permitted to revise the
terms for supply of raw material adversely to the interest of that party.
143. In Nestle India Limitedbb, the applicability of doctrine of
promissory estoppel again came up for consideration before this Court.
Inter alia, the Court considered the earlier decisions of this Court in
Indo-Afghan Agenciesddd, Motilal Padampat Sugar Millsz, Godfrey Philips
India Limitedmmm, Mangalam Timber Products Limitedppp , Amrit Banaspati
Company Limitedaa and Kasinka Tradingooo . The Court followed Godfrey
Philips India Limitedmmm which was found to be close to the facts of that
case. The Court did not accept the argument canvassed on behalf of the
State of Punjab that the overriding public interest would make it
inequitable to enforce the estoppel against the State Government.

144. In Bannari Amman Sugars Ltd. v. Commercial Tax Officer &
Ors.[69], the development of doctrine of promissory estoppel was noted
(paras 5-7, pages 631-633) and it was held as under:
“5. Estoppel is a rule of equity which has gained new dimensions in
recent years. A new class of estoppel has come to be recognised by
the courts in this country as well as in England. The doctrine of
“promissory estoppel” has assumed importance in recent years though
it was dimly noticed in some of the earlier cases. The leading case
on the subject is Central London Property Trust Ltd. v. High Trees
House Ltd., (1947) 1 K.B. 130 The rule laid down in High Trees
case again came up for consideration before the King’s Bench in
Combe v. Combe [(1951) 2 KB 215]. Therein the Court ruled that the
principle stated in High Trees case is that, where one party has,
by his words or conduct, made to the other a promise or assurance
which was intended to affect the legal relations between them and
to be acted on accordingly, then, once the other party has taken
him at his word and acted on it, the party who gave the promise or
assurance cannot afterwards be allowed to revert to the previous
legal relationship as if no such promise or assurance had been made
by him, but he must accept their legal relations subject to the
qualification which he himself has so introduced, even though it is
not supported in point of law by any consideration, but only by his
word. But that principle does not create any cause of action, which
did not exist before; so that, where a promise is made which is not
supported by any consideration, the promise cannot bring an action
on the basis of that promise. The principle enunciated in High
Trees case was also recognised by the House of Lords in Tool Metal
Mfg. Co. Ltd. v. Tungsten Electric Co. Ltd. [(1955) 2 All ER 657].
That principle was adopted by this Court in Union of India v. Anglo
Afghan Agencies (AIR 1968 SC 718) and Turner Morrison and Co. Ltd.
v. Hungerford Investment Trust Ltd.[(1972) 1 SCC 857]. Doctrine of
“promissory estoppel” has been evolved by the courts, on the
principles of equity, to avoid injustice. “Promissory estoppel” is
defined in Black’s Law Dictionary as an estoppel.
“which arises when there is a promise which promisor should
reasonably expect to induce action or forbearance of a definite
and substantial character on part of promisee, and which does
induce such action or forbearance, and such promise is binding
if injustice can be avoided only by enforcement of promise”.
So far as this Court is concerned, it invoked the doctrine in Anglo
Afghan Agencies case in which it was, inter alia, laid down that
even though the case would not fall within the terms of Section 115
of the Indian Evidence Act, 1872 (in short “the Evidence Act”)
which enacts the rule of estoppel, it would still be open to a
party who had acted on a representation made by the Government to
claim that the Government should be bound to carry out the promise
made by it even though the promise was not recorded in the form of
a formal contract as required by Article 299 of the Constitution.
[See Century Spg. & Mfg. Co. Ltd. v. Ulhasnagar Municipal Council,
[(1970) 1 SCC 582], Radhakrishna Agarwal v. State of Bihar,
[(1977)3 SCC 457], Motilal Padampat Sugar Mills Co. Ltd. v. State
of U.P., [(1979) 2 SCC 409], Union of India v. Godfrey Philips
India Ltd. [(1985) 4 SCC 369] and Ashok Kumar Maheshwari (Dr.) v.
State of U.P. [(1998) 2 SCC 502].
6. In the backdrop, let us travel a little distance into the past
to understand the evolution of the doctrine of “promissory
estoppel”. Dixon, J., an Australian jurist, in Grundt v. Great
Boulder Gold Mines Pty. Ltd. [(1939) 59 CLR 641 (Aust HC) laid down
as under:
“It is often said simply that the party asserting the estoppel
must have been induced to act to his detriment. Although
substantially such a statement is correct and leads to no
misunderstanding, it does not bring out clearly the basal
purpose of the doctrine. That purpose is to avoid or prevent a
detriment to the party asserting the estoppel by compelling the
opposite party to adhere to the assumption upon which the former
acted or abstained from acting. This means that the real
detriment or harm from which the law seeks to give protection is
that which would flow from the change of position if the
assumptions were deserted that led to it.”
The principle, set out above, was reiterated by Lord Denning in
High Trees case. This principle has been evolved by equity to avoid
injustice. It is neither in the realm of contract nor in the realm
of estoppel. Its object is to interpose equity shorn of its form to
mitigate the rigour of strict law, as noted in Anglo Afghan
Agencies case and Sharma Transport v. Govt. of A.P. [(2002) 2 SCC
188]
7. No vested right as to tax-holding is acquired by a person who is
granted concession. If any concession has been given it can be
withdrawn at any time and no time-limit should be insisted upon
before it was withdrawn. The rule of promissory estoppel can be
invoked only if on the basis of representation made by the
Government, the industry was established to avail benefit of
exemption. In Kasinka Trading v. Union of India [(1995) 1 SCC 274]
it was held that the doctrine of promissory estoppel represents a
principle evolved by equity to avoid injustice.”

 

145. In M.P. Mathurcc , the Court was concerned with the question
whether on the facts of the case, the plaintiffs could compel transfer of
tenements in their favour on the basis of promissory estoppel. The Court
(para 14, page 716 of the Report) observed as follows :

“………The term “equity” has four different meanings, according to
the context in which it is used. Usually it means “an equitable
interest in property”. Sometimes, it means “a mere equity”,
which is a procedural right ancillary to some right of property,
for example, an equitable right to have a conveyance rectified.
Thirdly, it may mean “floating equity”, a term which may be used
to describe the interest of a beneficiary under a will.
Fourthly, “the right to obtain an injunction or other equitable
remedy”. In the present case, the plaintiffs have sought a
remedy which is discretionary. They have instituted the suit
under Section 34 of the 1963 Act. The discretion which the court
has to exercise is a judicial discretion. That discretion has to
be exercised on well-settled principles. Therefore, the court
has to consider—the nature of obligation in respect of which
performance is sought, circumstances under which the decision
came to be made, the conduct of the parties and the effect of
the court granting the decree. In such cases, the court has to
look at the contract. The court has to ascertain whether there
exists an element of mutuality in the contract. If there is
absence of mutuality the court will not exercise discretion in
favour of the plaintiffs. Even if, want of mutuality is regarded
as discretionary and not as an absolute bar to specific
performance, the court has to consider the entire conduct of the
parties in relation to the subject-matter and in case of any
disqualifying circumstances the court will not grant the relief
prayed for (Snell’s Equity, 31st Edn., p. 366)……..”
146. In my view, the following principles must guide a Court where
an issue of applicability of promissory estoppel arises:

(i) Where one party has by his words or conduct made to the other clear
and unequivocal promise which is intended to create legal relations or
affect a legal relationship to arise in the future, knowing or
intending that it would be acted upon by the other party to whom the
promise is made and it is, in fact, so acted upon by the other party,
the promise would be binding on the party making it and he would not
be entitled to go back upon it, if it would be inequitable to allow
him to do so having regard to the dealings which have taken place
between the parties, and this would be so irrespective of whether
there is any pre-existing relationship between the parties or not.

(ii) The doctrine of promissory estoppel may be applied against the
Government where the interest of justice, morality and common fairness
dictate such a course. The doctrine is applicable against the State
even in its governmental, public or sovereign capacity where it is
necessary to prevent fraud or manifest injustice. However, the
Government or even a private party under the doctrine of promissory
estoppel cannot be asked to do an act prohibited in law. The nature
and function which the Government discharges is not very relevant. The
Government is subject to the rule of promissory estoppel and if the
essential ingredients of this doctrine are satisfied, the Government
can be compelled to carry out the promise made by it.

(iii) The doctrine of promissory estoppel is not limited in its application
only to defence but it can also furnish a cause of action. In other
words, the doctrine of promissory estoppel can by itself be the basis
of action.

(iv) For invocation of the doctrine of promissory estoppel, it is
necessary for the promisee to show that by acting on promise made by
the other party, he altered his position. The alteration of position
by the promisee is a sine qua non for the applicability of the
doctrine. However, it is not necessary for him to prove any damage,
detriment or prejudice because of alteration of such promise.

(v) In no case, the doctrine of promissory estoppel can be pressed into
aid to compel the Government or a public authority to carry out a
representation or promise which is contrary to law or which was
outside the authority or power of the officer of the Government or of
the public authority to make. No promise can be enforced which is
statutorily prohibited or is against public policy.

(vi) It is necessary for invocation of the doctrine of promissory estoppel
that a clear, sound and positive foundation is laid in the petition.
Bald assertions, averments or allegations without any supporting
material are not sufficient to press into aid the doctrine of
promissory estoppel.

(vii) The doctrine of promissory estoppel cannot be invoked in abstract.
When it is sought to be invoked, the Court must consider all aspects
including the result sought to be achieved and the public good at
large. The fundamental principle of equity must forever be present
to the mind of the court. Absence of it must not hold the Government
or the public authority to its promise, assurance or representation.

Principles of legitimate expectation
147. As there are parallels between the doctrines of promissory
estoppel and legitimate expectation because both these doctrines are
founded on the concept of fairness and arise out of natural justice, it is
appropriate that the principles of legitimate expectation are also noticed
here only to appreciate the case of the appellants founded on the basis
of doctrines of promissory estoppel and legitimate expectation.
148. In Union of India and Others v. Hindustan Development
Corporation and Others[70], this Court had an occasion to consider nature,
scope and applicability of the doctrine of legitimate expectation. The
matter related to a government contract. This Court in paragraph 35 (Pgs.
548-549) observed as follows :
“35. Legitimate expectations may come in various forms and owe their
existence to different kind of circumstances and it is not possible to
give an exhaustive list in the context of vast and fast expansion of
the governmental activities. They shift and change so fast that the
start of our list would be obsolete before we reached the middle. By
and large they arise in cases of promotions which are in normal course
expected, though not guaranteed by way of a statutory right, in cases
of contracts, distribution of largess by the Government and in
somewhat similar situations. For instance discretionary grant of
licences, permits or the like, carry with it a reasonable expectation,
though not a legal right to renewal or non-revocation, but to
summarily disappoint that expectation may be seen as unfair without
the expectant person being heard. But there again the court has to see
whether it was done as a policy or in the public interest either by
way of G.O., rule or by way of a legislation. If that be so, a
decision denying a legitimate expectation based on such grounds does
not qualify for interference unless in a given case, the decision or
action taken amounts to an abuse of power. Therefore the limitation is
extremely confined and if the according of natural justice does not
condition the exercise of the power, the concept of legitimate
expectation can have no role to play and the court must not usurp the
discretion of the public authority which is empowered to take the
decisions under law and the court is expected to apply an objective
standard which leaves to the deciding authority the full range of
choice which the legislature is presumed to have intended. Even in a
case where the decision is left entirely to the discretion of the
deciding authority without any such legal bounds and if the decision
is taken fairly and objectively, the court will not interfere on the
ground of procedural fairness to a person whose interest based on
legitimate expectation might be affected. For instance if an authority
who has full discretion to grant a licence prefers an existing licence
holder to a new applicant, the decision cannot be interfered with on
the ground of legitimate expectation entertained by the new applicant
applying the principles of natural justice. It can therefore be seen
that legitimate expectation can at the most be one of the grounds
which may give rise to judicial review but the granting of relief is
very much limited. It would thus appear that there are stronger
reasons as to why the legitimate expectation should not be
substantively protected than the reasons as to why it should be
protected. In other words such a legal obligation exists whenever the
case supporting the same in terms of legal principles of different
sorts, is stronger than the case against it. As observed in Attorney
General for New South Wales case: [(1990) 64 Aust LJR 327]: “To strike
down the exercise of administrative power solely on the ground of
avoiding the disappointment of the legitimate expectations of an
individual would be to set the courts adrift on a featureless sea of
pragmatism. Moreover, the notion of a legitimate expectation (falling
short of a legal right) is too nebulous to form a basis for
invalidating the exercise of a power when its exercise otherwise
accords with law.” If a denial of legitimate expectation in a given
case amounts to denial of right guaranteed or is arbitrary,
discriminatory, unfair or biased, gross abuse of power or violation of
principles of natural justice, the same can be questioned on the well-
known grounds attracting Article 14 but a claim based on mere
legitimate expectation without anything more cannot ipso facto give a
right to invoke these principles. It can be one of the grounds to
consider but the court must lift the veil and see whether the decision
is violative of these principles warranting interference. It depends
very much on the facts and the recognised general principles of
administrative law applicable to such facts and the concept of
legitimate expectation which is the latest recruit to a long list of
concepts fashioned by the courts for the review of administrative
action, must be restricted to the general legal limitations applicable
and binding the manner of the future exercise of administrative power
in a particular case. It follows that the concept of legitimate
expectation is “not the key which unlocks the treasury of natural
justice and it ought not to unlock the gates which shuts the court out
of review on the merits”, particularly when the element of speculation
and uncertainty is inherent in that very concept. As cautioned in
Attorney General for New South Wales case the courts should restrain
themselves and restrict such claims duly to the legal limitations. It
is a well-meant caution. Otherwise a resourceful litigant having
vested interests in contracts, licences etc. can successfully indulge
in getting welfare activities mandated by directive principles
thwarted to further his own interests. The caution, particularly in
the changing scenario, becomes all the more important.”

While observing as above, the Court observed that legitimacy of an
expectation could be inferred only if it was founded on the sanction of law
or custom or an established procedure followed in regular and natural
sequence. Every such legitimate expectation does not by itself fructify
into a right and, therefore, it does not amount to a right in the
conventional sense.
149. A three-Judge Bench of this Court in P.T.R. Exports (Madras)
Pvt. Ltd. & Ors. v. Union of India & Ors.[71] while dealing with the
doctrine of legitimate expectation in paras 3, 4 and 5 (Pages. 272-273)
stated as follows :

“3………The doctrine of legitimate expectation plays no role when
the appropriate authority is empowered to take a decision by an
executive policy or under law. The court leaves the authority to
decide its full range of choice within the executive or
legislative power. In matters of economic policy, it is a
settled law that the court gives a large leeway to the executive
and the legislature. Granting licences for import or export is
by executive or legislative policy. Government would take
diverse factors for formulating the policy for import or export
of the goods granting relatively greater priorities to various
items in the overall larger interest of the economy of the
country. It is, therefore, by exercise of the power given to the
executive or as the case may be, the legislature is at liberty
to evolve such policies.
4. An applicant has no vested right to have export or import
licences in terms of the policies in force at the date of his
making application. For obvious reasons, granting of licences
depends upon the policy prevailing on the date of the grant of
the licence or permit. The authority concerned may be in a
better position to have the overall picture of diverse factors
to grant permit or refuse to grant permission to import or
export goods. The decision, therefore, would be taken from
diverse economic perspectives which the executive is in a better
informed position unless, as we have stated earlier, the refusal
is mala fide or is an abuse of the power in which event it is
for the applicant to plead and prove to the satisfaction of the
court that the refusal was vitiated by the above factors.
5. It would, therefore, be clear that grant of licence depends
upon the policy prevailing as on the date of the grant of the
licence. The court, therefore, would not bind the Government
with a policy which was existing on the date of application as
per previous policy. A prior decision would not bind the
Government for all times to come. When the Government is
satisfied that change in the policy was necessary in the public
interest, it would be entitled to revise the policy and lay down
new policy. The court, therefore, would prefer to allow free
play to the Government to evolve fiscal policy in the public
interest and to act upon the same. Equally, the Government is
left free to determine priorities in the matters of allocations
or allotments or utilisation of its finances in the public
interest. It is equally entitled, therefore, to issue or
withdraw or modify the export or import policy in accordance
with the scheme evolved. We, therefore, hold that the
petitioners have no vested or accrued right for the issuance of
permits on the MEE or NQE, nor is the Government bound by its
previous policy. It would be open to the Government to evolve
the new schemes and the petitioners would get their legitimate
expectations accomplished in accordance with either of the two
schemes subject to their satisfying the conditions required in
the scheme. The High Court, therefore, was right in its
conclusion that the Government is not barred by the promises or
legitimate expectations from evolving new policy in the impugned
notification.”

150. In the case of M.P. Oil Extraction and Another v. State of
M.P. and Ors.[72], this Court considered an earlier decision in Hindustan
Development Corporationrrr and in paragraph 44 (pg. 612) of the Report
held that the doctrine of legitimate expectation had been judicially
recognized. It operates in the domain of public law and in an appropriate
case, constitutes a substantive and enforceable right.
151. In J.P. Bansal v. State of Rajasthan and Anr.[73] , it was
stated that both doctrines – promissory estoppel and legitimate
expectation – require satisfaction of the same criteria and arise out of
the principle of reasonableness.
152. A note of caution sounded in Bannari Amman Sugars Ltd.qqq is
worth noticing. The Court observed that legitimate expectation was
different from anticipation; granting relief on mere disappointment of
expectation would be too nebulous a ground for setting aside a public
exercise by law and it would be necessary that a ground recognized under
Article 14 of the Constitution was made out by a litigant.
153. It is not necessary to multiply the decisions of this Court .
Suffice it to observe that the following principles in relation to the
doctrine of legitimate expectation are now well established:

(i) The doctrine of legitimate expectation can be invoked as a
substantive and enforceable right.

(ii) The doctrine of legitimate expectation is founded on the principle of
reasonableness and fairness. The doctrine arises out of principles of
natural justice and there are parallels between the doctrine of
legitimate expectation and promissory estoppel.

(iii) Where the decision of an authority is founded in public interest as
per executive policy or law, the court would be reluctant to interfere
with such decision by invoking doctrine of legitimate expectation.
The legitimate expectation doctrine cannot be invoked to fetter
changes in administrative policy if it is in the public interest to do
so.

(iv) The legitimate expectation is different from anticipation and an
anticipation cannot amount to an assertible expectation. Such
expectation should be justifiable, legitimate and protectable.

(v) The protection of legitimate expectation does not require the
fulfillment of the expectation where an overriding public interest
requires otherwise. In other words, personal benefit must give way to
public interest and the doctrine of legitimate expectation would not
be invoked which could block public interest for private benefit.

 

Whether doctrines of promissory estoppel and legitimate expectation
attracted

154. I may now examine whether the doctrines of promissory estoppel
and the legitimate expectation help the appellants in obtaining the reliefs
claimed by them and whether the actions of the State Government and the
Central Government are liable to be set aside by applying these doctrines.
155. Each of the appellants has raised the pleas of promissory
estoppel and legitimate expectation based on its own facts. It is not
necessary to narrate facts in each appeal with regard to these pleas as
stipulations in the MOUs entered into between the respective appellants and
the State Government are broadly similar. For the sake of convenience, the
broad features in the matter of Adhunik may be considered. The MOU was made
between the State Government and Adhunik on February 26, 2004. Adhunik is
involved in diversified activities such as production of sponge iron and
steel, generating power etc. The preamble to the MOU states that the
Government of Jharkhand is desirous of utilization of its natural resources
and rapid industrialization of the State and has been making efforts to
facilitate setting up of new industries in different locations in the
State. It is stated in paragraph 2 of the MOU, “in this context the
Government of Jharkhand is willing to extend assistance to suitable
promoters to set up new industries” (emphasis supplied). Adhunik expressed
desire of setting up manufacturing/generating facilities in the State of
Jharkhand. Proposed Phase-I comprised of setting up Sponge Iron Plant and
Pelletaisation Plant while Phase-II comprised of Sponge Iron Plant, Power
Plant, Coal Washery, Mini Blast Furnace, Steel Melting/LD/IF and Iron Ore
Mining and Phase-III comprised of establishment of Power Plant. Para 4 of
MOU states that Adhunik requires help and cooperation of the State
Government in several areas to enable them to construct, commission and
operate the project. The State Government’s willingness to extend all
possible help and cooperation is stated in the above MOU. Para 4.3 of
MOU records that the State Government shall assist in selecting the area
for Adhunik for iron ore and other minerals as per requirement of the
company depending upon quality and quantity. The State Government also
agreed to grant mineral concession as per existing Acts and Rules.
156. In pursuance of the above MOU, the State Government through
its Deputy Secretary, Mining and Geology Department recommended to the
Government of India through its Joint Director, Mining Ministry on August
4, 2004 to grant prior approval under Section 11(5) and Section 5(1) of
the 1957 Act for grant of mining lease to Adhunik for a period of 30
years in the area of 426.875 hectares. The reasons for such recommendation
were stated by the State Government in the above communication. In the
above communication, it was stated that Adhunik had signed MOU with the
State Government for making a capital investment of Rs. 790 crores in
establishment of an industry based on iron ore mineral in the State. The
steps taken by Adhunik were also highlighted.
157. Adhunik’s case is that on the basis of definite commitment and
firm promise made by the State Government for grant of captive mines as
stipulated in the MOU and the State’s Industrial Policy, it acted
immediately on the MOU and has invested more than Rs. 100 crores to
construct and commission the plant and facilities in Phase-I of the MOU and
it has employed about 3500 people directly and indirectly for
construction and operation of plant in Phase-I. According to Adhunik, it
has ordered equipments and machinery for Phase-II and Phase-III at a cost
of Rs. 25 crores and has also made further financial commitments for more
than Rs. 1000 crore to set up the expansion. Adhunik claims to have also
borrowed a sum of Rs. 60 crores from banks and financial institutions and
invested that sum in the proposed project.
158. According to Adhunik, no integrated steel plant can be viable
in the State of Jharkhand without captive iron ore mines and without the
definite promise of the State Government to grant the captive mines and it
would not have acted on the MOU to make such a huge investment if the State
Government were not to make available captive iron ore mines. Adhunik has
also stated that in the absence of grant of captive iron ore mines, it has
been suffering huge and irreparable losses due to (a) shortage in supply
of iron ore due to poor availability, (b) it has to purchase from the
market poor quality of iron ore and (c) extra cost due to abnormal market
prices compared to the actual cost of captive iron ore.
159. What the State Government had expressed in MOU is its
willingness to extend all possible help and cooperation in setting up the
manufacturing/generating facilities by Adhunik. The clause in MOU states
that the State Government shall assist in selecting the area for iron ore
and other minerals as per requirement of the company depending upon quality
and quantity. The State Government agreed to grant mineral concession as
per existing Act and Rules. As a matter of fact, when the MOU was entered
into, the State Government was not even aware about the reservation of the
subject mining area for exploitation in the public sector. It was on
November 17, 2004 that the District Mining Officer, Chaibasa informed the
Secretary, Department of Mines and Geology, Government of Jharkhand that
certain portions of Mauza Ghatkuri and the adjoining areas were reserved
for public sector under 1962 and 1969 Notifications issued by the erstwhile
State of Bihar. The District Mining Officer suggested to the State
Government that approval of the Central Government should be obtained for
grant of leases to the concerned applicants. In his communication, he
stated that the fact of reservation of the subject area in public sector
vide 1962 and 1969 Notifications was brought to the knowledge of the
Director of Mines, Jharkhand but he did not take any timely or adequate
action in the matter. In view of the fact that the subject mining area had
been reserved for exploitation in pubic sector under 1962 and 1969
Notifications, in my opinion, the stipulation in the MOU that the State
Government shall assist in selecting the area for iron ore and other
minerals as per requirement of the company and the commitment to grant
mineral concession cannot be enforced. For one, the stipulation in the
MOU is not unconditional. The above commitment is dependent on
availability and as per existing law. Two, if the State Government is
asked to do what it represented to do under the MOU then that would amount
to asking the State Government to do something in breach of these two
Notifications which continue to hold the field. The doctrine of promissory
estoppel is not attracted in the present facts, particularly when promise
was made – assuming that some of the clauses in the MOU amount to promise
– in a mistaken belief and in ignorance of the position that the subject
land was not available for iron ore mining in the private sector. I do not
think that the State Government can be compelled to carry out what it
cannot do in the existing state of affairs in view of 1962 and 1969
Notifications. In my opinion, the State Government cannot be held to be
bound by its commitments or assurances or representations made in the MOU
because by enforcement of such commitments or assurances or
representations, the object sought to be achieved by reservation of the
subject area is likely to be defeated and thereby affecting the public
interest. The overriding public interest also persuades me in not
invoking the doctrines of promissory estoppel and legitimate expectation.
For the self-same reasons none of the appellants is entitled to any relief
based on these doctrines; their case is no better.
160. As a matter of fact, on coming to know of 1962 and 1969
Notifications, the State Government withdrew the proposals which it made
to the appellants and reiterated the reservation by its Notification dated
October 27, 2006 expressly “in public interest and in the larger interest
of the State”.
161. The act of the State Government in withdrawing the
recommendations made by it to the Central Government in the above factual
and legal backdrop cannot be said to be bad in law on the touchstone of
doctrine of promissory estoppel as well as legitimate expectation. The act
of the State Government is neither unfair nor arbitrary nor it suffers
from the principles of natural justice. The Government of India upon
examination of the proposals rejected them on the ground that subject area
was under reservation and not available for exploitation by private
parties. In these circumstances, if the clauses in the MOU are allowed to
be carried out, it would tantamount to enforcement of promise, assurance
or representation which is against law, public interest and public
policy which I am afraid cannot be permitted.
162. On behalf of the appellants, it was also argued that the 1962
and 1969 Notifications had remained in disuse for about 40 years and it is
reasonable to infer that these two Notifications no longer operated. In
this regard, the doctrine of quasi repeal by desuetude was sought to be
invoked.

Doctrine of desuetude
163. The doctrine of desuetude and its applicability in Indian
Jurisprudence have been considered by this Court on more than one occasion.
In the case of State of Maharashtra v. Narayan Shamrao Puranik & Ors.[74],
the Court noted the decision of Scrutton, L.J. in R. v. London County
Council[75] and the view of renowned author Allen in “Law in the Making”
and observed that the rule concerning desuetude has always met with general
disfavour. It was also held that a statute can be abrogated only by express
or implied repeal; it cannot fall into desuetude or become inoperative
through obsolescence or by lapse of time.

164. In Bharat Forge Co. Ltd.v, inter alia, the argument was raised
that the Notifications of June 17, 1918 have not been implemented till date
and therefore these Notifications were dead letter and stood repealed
“quasily”. A three-Judge Bench of this Court entered into consideration of
the doctrine of desuetude elaborately. After noticing the English law and
Scots law in regard to the doctrine of desuetude, the Court noted the
doctrine of desuetude explained in Francis Bennion’s Statutory
Interpretation; Craies Statute Law (7th Edn.) and Lord Mackay’s view in
Brown v. Magistrate of Edinburgh[76].
165. The Court also referred to “Repeal and Desuetude of Statutes”,
by Aubrey L. Diamond wherein a reference has been made to the view of
Lord Denning, M.R. in Buckoke v. Greater London Council[77]. Having noticed
as above, the Court in paragraph 34 (pages 446-447) of the Report stated :

“34. Though in India the doctrine of desuetude does not appear
to have been used so far to hold that any statute has stood
repealed because of this process, we find no objection in
principle to apply this doctrine to our statutes as well. This
is for the reason that a citizen should know whether, despite a
statute having been in disuse for long duration and instead a
contrary practice being in use, he is still required to act as
per the “dead letter”. We would think it would advance the cause
of justice to accept the application of doctrine of desuetude in
our country also. Our soil is ready to accept this principle;
indeed, there is need for its implantation, because persons
residing in free India, who have assured fundamental rights
including what has been stated in Article 21, must be protected
from their being, say, prosecuted and punished for violation of
a law which has become “dead letter”. A new path is, therefore,
required to be laid and trodden.”

166. In Cantonment Board, MHOW and Anr. v. M.P. State Road Transport
Coroporation[78], this Court had an occasion to consider the doctrine of
desuetude while considering the submission that the provisions of Madhya
Pradesh Motor Vehicles Taxation Act, 1947 stood repealed having been in
disuse. The Court considered the earlier decision in Bharat Forge Co. Ltd.v
and held that to apply principle of desuetude it was necessary to
establish that the statute in question had been in disuse for long and the
contrary practice of some duration has evolved. It was also held that
neither of these two facts has been satisfied in the case and therefore
the doctrine of desuetude had no application.

167. From the above, the essentials of doctrine of desuetude may be
summarized as follows :

(i) The doctrine of desuetude denotes principle of quasi
repeal but this doctrine is ordinarily seen with disfavour.
ii) Although doctrine of desuetude has been made applicable
in India on few occasions but for its applicability, two
factors, namely, (i) that the statute or legislation has not
been in operation for very considerable period and (ii) the
contrary practice has been followed over a period of time
must be clearly satisfied. Both ingredients are essential
and want of anyone of them would not attract the doctrine of
desuetude. In other words, a mere neglect of a statute or
legislation over a period of time is not sufficient but it
must be firmly established that not only the statute or
legislation was completely neglected but also the practice
contrary to such statute or legislation has been followed for
a considerable long period.

 
Whether doctrine of desuetude attracted in respect of 1962 and 1969
Notifications

168. Insofar as 1962 and 1969 Notifications are concerned, I am of
the view that doctrine of desuetude is not attracted for more than one
reason. In the first place, the Notifications are of 1962 and 1969 and non-
implementation of such Notifications for 30-35 years is not that long a
period which may satisfy the first requirement of the doctrine of
desuetude, namely, that the statute or legislation has not been in
operation for a very considerable period. Moreover, State of Jharkhand came
into existence on November 15, 2000 and it can hardly be said that 1962 and
1969 Notifications remained neglected by the State Government for a very
considerable period. As a matter of fact, in 2006, the State Government
issued a Notification mentioning therein about the reservation made by 1962
and 1969 Notifications. Thus, the first ingredient necessary for invocation
of doctrine of desuetude is not satisfied. Secondly, and more importantly,
even if it is assumed in favour of the appellants that 1962 and 1969
Notifications remained in disuse for a considerable period having not been
implemented for more than 30-35 years, the second necessary ingredient that
a practice contrary to the above Notifications has been followed for a
considerable long period and such contrary practice has been firmly
established is totally absent. As a matter of fact, except stray grant of
mining lease for a very small portion of the reserved area to one or two
parties there is nothing to suggest much less establish the contrary usage
or contrary practice that the reservation made in the two Notifications
has been given a complete go by.
Additional submissions on behalf of Monnet
169. The main submissions raised on behalf of the appellants having
been dealt with, I may now consider certain additional submissions made on
behalf of Monnet. It was argued by Mr. Ranjit Kumar, learned senior counsel
for Monnet that the State Government in its letter to recall the
recommendation made in favour of the appellant set up the ground of
overlapping with the lease of Rungta but it mala fide suppressed the
fact of expiry of lease of Rungta in 1995 and also that the said area had
been notified for regrant in the Official Gazette on July 3, 1996. He
would contend that Rule 24A of the 1960 Rules provides for an application
for renewal of lease to be made one year prior to the expiry of lease but
no application for renewal was made by Rungta within this time and,
therefore, Rungta had no legal right over the overlapping area.

170. It was submitted by Mr. Ranjit Kumar that the appellant –
Monnet had produced two maps before the High Court and this Court (one was
prepared by the District Mining Officer in 2004) that depicted that the
area recommended for grant to the appellant was not covered by 1962 or
1969 Notifications.
171. It was submitted on behalf of Monnet that the case of Monnet
was identical to the case of M/s. Bihar Sponge Iron Ltd. and the State
Government had discriminated against the appellant vis-à-vis the case of
M/s. Bihar Sponge Iron Ltd.

172. Mr. Ranjit Kumar also submitted that there has been violation
of the statutory right of hearing in terms of Rule 26 of the 1960 Rules.
He submitted that order was not communicated to Monnet by the State
Government and thereby its remedy under Rule 54 of 1960 Rules was taken
away. The violation of principles of natural justice goes to the root of
the matter and on that ground alone the decision of the State Government to
recall the recommendation and the decision of the Central Government in
summarily rejecting and returning application are bad in law. Reliance in
this regard was placed on a decision of Privy Council in Nazir Ahmad v.
King-Emperor[79] and also a decision of this Court in Nagarjuna
Construction Company Ltd. v. Government of Andhra Pradesh & Ors.[80].

173. Mr. Ranjit Kumar also argued that once recommendation was made
by it to the Central Government, in view of proviso to Rule 63A of the
1960 Rules, the State Government had become functus officio and ceased to
have any power to recall the recommendation already made on any ground
whatsoever. In this regard he relied upon Jayalakshmi Coelho v. Oswald
Joseph Coelho[81].

174. Relying upon the decision of this Court in Mohinder Singh Gill
and Anr. v. The Chief Election Commissioner, New Delhi, & Ors.,[82] it
was submitted that the reasons originally given in an administrative order
cannot be supplanted by other reasons in the affidavits or pleadings before
the Court. He submitted that as regards Monnet, the initial reason by the
State Government was not founded on reservation but later on it tried to
bring the ground of reservation in fore by supplanting reasons.

175. Mr. Ranjit Kumar vehemently contended that as per the State
Government’s own case initially, the land that was recommended for mining
lease to Monnet was not under the reserved area and, therefore, Monnet’s
writ petition ought not to have been heard and decided with the group
matters. He also referred to interim order passed by this Court on
August 18, 2008, the meeting that took place between the Central Government
and the State Government pursuant thereto and the subsequent interim order
of this Court dated December 15, 2008.

176. I have carefully considered the submissions of Mr. Ranjit
Kumar. Most of the above submissions were not argued on behalf of Monnet
before the High Court. The submissions were confined to the issue of
reservation, the legality and validity of 1962, 1969 and 2006
Notifications, consequent illegal action of the State Government in
recalling the recommendation and of the Central Government in summarily
rejecting the appellant’s application.

177. In paragraph 17 of the impugned judgment, the arguments of the
learned senior counsel for Monnet have been noticed. It transpires
therefrom that many of the above arguments were not advanced including
the issue of overlapping with the area of Rungta. In the list of
dates/synopsis of the special leave petition, Monnet has not raised any
grievance that arguments made on its behalf before the High Court were
not correctly recorded or the High Court failed to consider any or some of
its arguments. Criticism of the High Court judgment is thus not justified
and I am not inclined to go into above submissions of Mr. Ranjit Kumar for
the first time.

178. It is too late in the day for Monnet to contend that its case
could not have been decided with group matters and in any case the matter
should be remanded to the High Court for reconsideration on the issues,
namely, (a) whether the area recommended for the appellant was overlapping
with Rungta only to the extent of 102.25 hectares out of total 705
hectares recommended for appellant; (b) whether after expiry of lease
Rungta’s area was renotified for grant in 1996; (c) what was the reason
for the State Government to withdraw the recommendation made in favour of
the appellant when the alleged overlapping with Rungta was only to the
extent of 102.25 hectares and (d) is withdrawal of appellant’s
recommendation arbitrary when reservation vide 1962 Notification did not
apply to the area recommended in favour of the appellants. Monnet’s writ
petition was decided by the High Court with group matters as the arguments
advanced on its behalf were identical to the arguments which were canvassed
on behalf of other writ petitioners. The State Government recalled its
recommendations by a common communication and the Central Government
returned the recommendations and rejected applications for mining lease
made by the writ petitioners by a common order.

179. The State Government had full power to recall the
recommendation made to the Central Government for some good reason. Once
1962 and 1969 Notifications issued by the erstwhile State of Bihar and 2006
Notification issued by the State of Jharkhand have been found by me to be
valid and legal, the submissions of Mr. Ranjit Kumar noted above pale in
insignificance and are not enough to invalidate the action of the State
Government in recalling the recommendation made in favour of Monnet. The
valid reservation of subject mining area for exploitation in public sector
disentitles Monnet – as well as other appellants – to any relief.
180. It is well settled that no one has legal or vested right to the
grant or renewal of a mining lease. Monnet cannot claim a legal or vested
right for grant of the mining lease. It is true that by the MOU entered
into between the State Government and Monnet certain commitments were made
by the State Government but firstly, such MOU is not a contract as
contemplated under Article 299(1) of the Constitution of India and
secondly, in grant of mining lease of a property of the State, the State
Government has a discretion to grant or refuse to grant any mining lease.
Obviously, the State Government is required to exercise its discretion,
subject to the requirement of law. In view of the fact that area is
reserved for exploitation of mineral in public sector, it cannot be said
that the discretion exercised by the State Government suffers from any
legal flaw.

181. The case of discrimination vis-a-vis M/s Bihar Sponge Iron
Limited argued on behalf of Monnet was not pressed before High Court and
is not at all established. The argument with regard to violation of
principles of natural justice is also devoid of any substance. The
recommendation in favour of Monnet to the Central Government was simply a
proposal with certain pre-conditions. For withdrawal of such proposal by
the State Government, in my view, no notice was legally required to be
given. Moreover, no prejudice has been caused to it by not giving any
notice before recalling the recommendation as it had no legal or vested
right to the grant of mining lease. The area is not available for grant of
mining lease in the private sector. For all these reasons, I do not find
that the case of Monnet stands differently from the other appellants.

Conclusion

182. In view of the foregoing reasons, there is no merit in these
appeals and they are dismissed. There shall be no order as to costs.

 

 

 

…………………….J.
(R. M.Lodha)

July 26, 2012
New Delhi.
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
CONTEMPT PETITION © NO. 14 OF 2009
IN
CIVIL APPEAL NO. 3287 OF 2009

 
Abhijeet Infrastructure Ltd. ……
Petitioner
Vs.
Chief Secretary, State of Jharkhand ……
Respondent

 

ORDER
I find from the proceedings that no notice has been issued in
the contempt petition. The proceeding of January 28, 2009 reveals
that the Court only ordered copy of the contempt petition to be
supplied to learned counsel appearing for the State of Jharkhand to
enable it to file its response. In the order passed on January 28,
2009, the Court made it very clear that it was not inclined to
issue any notice in the contempt petition. Now, since the appeal
preferred by Abhijeet Infrastructure Ltd., has been dismissed, the
contempt petition is also liable to be dismissed and is dismissed.

 

 
…………………….J.
(R.
M.Lodha)
New Delhi
July 26, 2012

 

 

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

Civil Appeal No. 3285 OF 2009

Monnet Ispat & Energy Ltd. … Appellant
Versus

Union of India and Ors. … Respondents
with

Civil Appeal No. 3286 OF 2009

Adhunik Alloy and Power Ltd. … Appellant
Versus

Union of India and Ors. … Respondents
with

Civil Appeal No. 3287 OF 2009

Abhijeet Infrastructure Pvt. Ltd. … Appellant
Versus

Chief Secretary, State of Jharkhand and Ors. … Respondents

with

Civil Appeal No. 3288 OF 2009

Ispat Industries Ltd. … Appellant
Versus

Union of India and Ors. … Respondents

with

Civil Appeal No. 3289 OF 2009

Jharkhand Ispat Pvt. Ltd. … Appellant
Versus

Union of India and Ors. … Respondents
with

Civil Appeal No. 3290 OF 2009

Prakash Ispat Ltd. … Appellant
Versus

Union of India and Ors. … Respondents

and
Contempt Petition (C) No.14 OF 2009

in

Civil Appeal No.3287 OF 2009
J U D G E M E N T
H.L. Gokhale J.

All these appellants claim to be companies interested in
developing iron and steel projects, and therefore sought grant of leases of
iron-ore mines situated in the state of Jharkhand. Applications of ten such
companies including the appellants were forwarded by the Government of
Jharkhand sometime around August 2004 to the Union of India, for its
consideration for grant of lease in certain areas. Subsequently, on
realising that those areas were reserved for exploitation in the public
sector, the State Government by its letter dated 13.09.2005, sought to
withdraw nine of these proposals including those of all the appellants.
The Central Government however, did not merely return the nine proposals,
but rejected the same by its letter dated 6.3.2006 addressed to the
Government of Jharkhand. All these appellants therefore, along with some
others filed writ petitions to challenge these two letters dated 13.9.2005
and 6.3.2006, and sought a direction to grant the mining leases to them in
the proposed areas, and to seek appropriate reliefs. The Writ Petitions
filed by the six appellants herein were respectively bearing following nos.
(1) W.P. (C) No. 4151 of 2006, (2) W.P. (C) No. 1769 of 2006, (3) W.P. (C)
No. 2629 of 2006, (4) W.P. (C) No. 5527 of 2006, (5) W.P. (C) No. 7636 of
2006 and (6) W.P. (C) No. 7363 of 2006. All those writ petitions were
dismissed by a Division Bench of the Jharkhand High Court by a common
judgment and order dated 4.4.2007. Being aggrieved by the same, six of
them have filed these appeals to this Court.
2. An interim order came to be passed in these appeals on
7.5.2007, that until further orders no fresh leases shall be granted in
respect of the disputed mining area. We may note that at one stage same
workable arrangements were considered by this Court but they did not
materialise. These appeals have been admitted thereafter on 30.4.2009. The
Union of India and the State of Jharkhand are the main contestants in all
these appeals, though a few other entities like the National Mineral
Development Corporation (NMDC), Tata Iron Steel Company (TISCO) and Arclor
Mittal (India) Ltd. have intervened to oppose them. Learned Senior Counsels
Sarvashri C.A. Sunderam, Dr. Rajeev Dhawan, Ranjit Kumar, Dhruv Mehta, Dr.
Abhishek Manu Singhvi, L. Nageswara Rao, and G.C. Bharuka have appeared in
support of these appeals. Senior Counsels Shri Dilip Sinha, and Shri Ashok
Bhan have appeared for the State of Jharkhand, and Union of India
respectively. Shri P.S. Narasimha, Senior counsel for NMDC, Shri Vikas
Singh, Senior Counsel for TISCO, Shri Krishnan Venugopal, Senior counsel
for Arclor Mittal (India) Ltd. and Shri J.K. Das, learned counsel for M/s
Rungta Sons Pvt. Ltd., have appeared to oppose these appeals.

Facts leading to these appeals:-

3. The facts in all these appeals are by and large similar. We may
refer to the facts of the first Civil Appeal in the case of M/s Monnet
Ispat and Energy Ltd. (for short ‘Monnet’) as somewhat representative. It
is the case of Monnet that it wanted to set-up an iron and steel plant in
the State of Jharkhand. It was ready to invest an amount of Rs.1400 crores
on this project, and for that purpose it was interested in the allotment of
iron and manganese ore mines situated in the Ghatkhuri Forest area of West
Singhbhum District (which has its headquarters at Chaibasa). A high level
meeting was held in Ranchi for that purpose on 7.7.2002 between the
officers of Monnet and Jharkhand Government, subsequent to which, minutes
of the meeting were drawn recording the discussion between the two parties.
Thereafter, a memorandum of understanding (MOU) was arrived at between the
Government of Jharkhand and Monnet on 5.2.2003, for the establishment of an
integrated steel plant. The MOU reaffirmed the commitment of Monnet to
establish the integrated steel plant, and that of the Government of
Jharkhand to provide therefor the land containing iron and manganese ore
mines, a coal block and other facilities. The MOU recorded that the plant
will produce sponge iron of the capacity of 4 lac tonnes per annum, and
mild steel of 2 lac tonnes and alloy steel of 2 lac tonnes. It was
expected to provide employment to 10,000 persons. The MOU recorded that
the State Government agrees to recommend the proposal of Monnet to
Government of India, for the allotment of areas containing iron ore and
manganese ore deposits and coal blocks situated in Ghatkhuri Forest area of
West Singhbhum District. This clause reads as follows:-
III. MINES:
COAL:……..
IRON ORE AND MANGANESE ORE: The State Government agrees to
recommend to Government of India for the allotment of iron ore
and manganese ore deposits expected to contain sufficient
reserves to cater the needs of the project. The iron ore
reserves suitable for sponge iron making as identified are
Ghatkhuri area in Chaibasa District. The State Government also
agrees to recommend to Government of India for allotment of
additional mines able deposits in West Singhbhum area to cater
the project need.”
We may as well note that paragraph VII (d) of the MOU stated as follows:-
In the event of non-implementation of the project,
support/commitment of the State Government in the MOU shall be
deemed to be withdrawn.

4. Accordingly, the Jharkhand Government vide its letter dated
6.8.2004 recommended the proposal of Monnet to Union of India under Section
5 (1) and 11 (5) of the Mines and Minerals (Development and Regulation)
Act, 1957 (hereinafter referred to “MMDR Act”). The letter stated that
some 58 applications were received, seeking grant of the mining leases over
an area of 3566.54 hectares in Ghatkhuri reserved forest. All applicants
were given sufficient opportunity of hearing. As far as Monnet is
concerned, State Government had recommended the amended area of 705
hectares for the consent of the Central Government for grant of lease under
Section 5 (1) of the Act. The letter also stated that priority was being
given to Monnet in terms of Section 11 (3) of the Act on the basis of its
technical mineral based industry and financial capacity.

5. On receiving that application and after considering that the
mining lease was to be granted for a period of 30 years, the Central
Government asked the State Government, vide its letter dated 6.9.2004, to
forward its justification in support of the proposal, since in its view an
adequate justification, in the interest of mineral development, had not
been sent. The State Government explained its position, vide its reply
dated 17.11.2004, as to why priority was given to Monnet, and sought the
approval of Government of India under Sections 5 (1) and 11 (5) of MMDR
Act. It enclosed therewith a comparative statement of the claims of 58
applicants who had applied for grant of mining leases of iron ore on
3566.54 hectares area in the reserved forest at Mauza Ghatkhuri in West
Singhbhum District.

6. It so happened that at that stage the District Mining Officer
of Chaibasa brought it to the notice of the concerned authorities of State
Government, by his letter dated 17.11.2004, that the undivided state of
Bihar (when Jharkhand was a part of it) had reserved certain areas for the
exploitation of minerals in the public sector, by its notification dated
21.12.1962, and it included the recommended area of Singhbhum District.
This notification had been followed by another notification of the
undivided State of Bihar dated 28.2.1969 which reiterated that an area of
168.349 hectares in Ghatkhuri reserved forest block no.10 in district of
Singhbhum was reserved for exploitation of minerals in public sector. A
copy of the said notification had been marked to the District Mining
Officer, Chhaibasa.

 

7. The two notifications read as follows:-
(1) Government of Bihar
Department of Industries & Mines (Mines)

NOTIFICATION:
Patna, the 21 December, 1962
30th Agrahand, 1884-S

Memo No. A/MM-40510/6209/M. It is hereby notified for the information of
public that the following iron ore bearing areas in this State are reserved
for exploitation of the mineral in the public sector.
|Name of the | |Description of the areas reserved |
|District | | |
|Singhbhum |1. |Sasangda Main Block:- Boundary |
| |South |The southern boundary is the same as the |
| | |northern boundary. It starts from the |
| | |Bihar, Orissa Bound Opposite the George |
| | |of southern tributary of Meghahatu nala |
| | |and runs west-north-west along with the |
| | |gorge till the foot of the hill. |
| |East |The boundary between the States of Bihar |
| | |and Orissa. |
| |North and |The south western boundary of the |
| |North-West|property of Shri M.L. Jain (M.L. 20) |
| | |which starts from Bihar-Orissa boundary |
| | |south. |
| | |South-West of 3039 and runs in a |
| | |north-west direction upto 8 miles north |
| | |west of 2939. From here the boundary |
| | |reaches the sadly south of 2069. |
| |West |From saddle south of 2069, southwards |
| | |along the foot of the main hill, meeting |
| | |the north-west corner of Kiriburu Block. |
| |Sasangda | |
| |North-East| |
| |Block | |
| |South |Bihar, Orissa boundary |
| |East |Property of Shri W.V. |
| |North |Upto northern corner of M.L. No. 20 |
| |West | |
| |6. |Bhalata Block |
| |Boundary |A line running west-north-west-east-south|
| |South-West|each passing the ugh 2200 feet contour at|
| | |the south-western and of the Bhanalata |
| | |ridge south-east-From 21 furlongs east of|
| | |2181 north-east wards upto north-west |
| | |pochanalu village (22016’850 20’) and |
| | |from here north-north-east upto 3 |
| | |furlongs east-sough-east of 2567 |
| | |(Painsira Buru) |
| |North |From the above end in west north west |
| | |direction across the hill for five |
| | |furlongs to reach the north west sloped |
| | |the hill |
| |West |From above and in general |
| | |south-south-west direction along the |
| | |flank of the hill to reach the south-west|
| | |boundary at three furlongs north-west |
| | |2187. |

By the order of the
Governor of Bihar
Sd/-
B.N. Sinha
Secretary to Government

Memo No. 6209/M Patna, the 21st Dec., 1962
30 Agrah

Copy forwarded to the Superintendent, Secretariat Press, Gulzarbagh, Patna
for publication of the notification in the next issue of the Bihar Gazette.

2. He is also requested to kindly supply two hundred copies of the
Gazette notification to this Department.

Sd/-
B.N. Sinha
Secretary to Government
Memo No. 6209/M Patna, the 21st Dec., 1962
30 Agrahan, 1884-S

Copy forwarded to the Commissioner of Chhotanagpur Division,
Ranchi/All District Officers/All District Mining Officers for information.

Sd/-
B.N. Sinha
Secretary to Government

(2)
GOVERNMENT OF BIHAR
DEPARTMENT OF MINES AND GEOLOGY
NOTIFICATION

Patna, the 28th February, 1969
Phalgun, 1890-S

No. B/M6-1019/68-1564/M. It is hereby notified for information of public
that Iron Ore bearing areas of 416 acres (168.348 hectares) situated in
Ghatkuri Reserved Forest Block No. 10 in the district of Singhbhum are
reserved for exploitation of mineral in the public sector. For full
details in this regard District Mining Officer, Chaibasa should be
contacted.
By the order of Governor of Bihar
Sd/-
C.P. Singh
Dy. Secretary to Government

Memo No. 1564/M Patna, the 28th February, 1969.

Copy forwarded to the Superintendent, Secretariat Press, Gulzarbagh,
for favour of public of the Notification in the Extra-ordinary issue of the
Bihar Gazette at any early date.

2. 100 spare copies of the notification may also be sent to this
Department immediately.
Sd/-
Dy. Secretary to Government

Memo No. 1564/M Patna, the 28th February, 1969

Copy forwarded to the Dy. Commissioner, Singhbhum/Dy. Director of Mines, 2,
College Road, Circuit House Area, Jamshedpur 7/ District Mining Officer,
Singhbhum, Chaibasa/Director, Mines, Bihar/Dy. Director of Geology,
Bihar/Advisor in Geology, Bihar for information.
Sd/-
C.P. Singh
Dy. Secretary to Government

8. Thereafter, in continuation with the correspondence with the
State Government, the Central Ministry of Mines by its letter dated
15.6.2005, wrote to the Secretary to the State Government, Department of
Mines, seeking a meeting of the concerned officers of the State Government
and the Ministry of Mines of the Central Government for the clarification
on the following issues:-

(i) The State Government had rejected even those applicants who were
prior applicants but were not willing to set up the mineral
based industry in the State. This stipulated condition of State
Government is not as per the National Mineral Policy.

(ii) As against the applicants at Sl. Nos.18, 20, 23, 29, 33, 41, 44
and 58, the State Government had stated that they had not
submitted any solid proposals. The Central Government wanted to
know what the State Government meant by ‘solid proposals’.

(iii) There was wide variation between the area recommended and the
proposed plant capacity.

(iv) The total area of the ten proposals came to 3693.05
hectares whereas the total area reported to be available in
Ghatkhuri was 3566.54 hectares. It was also stated that in the
case of the proposal of M/s Bihar Sponge Iron Ltd., the total
area in Ghatkhuri reserve forest was shown as 4692.46 hectares.

9. It was in this background that the Government of Jharkhand
called back nine out of the ten proposals (excluding the one in favour of
Bihar Sponge Iron Ltd.), by its letter dated 13.9.2005. The letter
specifically stated that the proposals overlapped the areas reserved for
the public undertakings and the areas already held by two other companies.
This was one of the two letters impugned in the writ petitions to the High
Court. This letter reads as follows:-
“Government of Jharkhand
Mines and geological department
No.Khni (Chaya)-78/03 (Part)-501/M-C Ranchi
Dated 13.09.2005
From: Arun Kumar Singh
Secretary to the Government

To,

Sh. Anil Subramaniam
Under Secretary
Ministry of Mines
Government of India
Shastri Bhawan,
New Delhi – 110 001.

Sub: In connection with return of recommendations sent for mining
lease of Iron ore in the reserved Forest Land in Mauza Ghat
Khuri, under the West Singhbhum District.

Sir,

Kindly refer to your letter No.5/40/2004/MIV dated 30.08.2005 on
the above mentioned subject. Proposal was sent by the mines and
mineral department Jharkhand, for sanction of mining lease to 10
companies for mining of iron ore and Manganese Mineral, in the
reserved Forest Land in Mauza Ghat Kuri (West Singhbhu
District), in the light of Section 5(1) and 11(5) of the Mines
and Mineral (Regulation and Development) Act, 1957.
|Sl. No. |Name of the company |
|1. |S/Shri Bihar Sponge Iron Ltd. |
|2. |S/Shri Ispat Industriest Ltd. |
|3. |S/Shri Vimal Deep Steel Pvt. Ltd. |
|4. |S/Shri Abhijeet Infrastructure Pvt. Ltd. |
|5. |S/Shri Ujjwal Minerals Pvt. Ltd. |
|6. |S/Shri Adhunik Alloy and Power Ltd. |
|7. |S/Shri Prakash Ispat Ltd. |
|8. |S/Shri Monnet Ispat Ltd. |
|9. |S/Shri Steeko Power Ltd. |
|10. |S/Shri Jharkhand Ispat Pvt. Ltd. |
On analysis in the department, it has become clear that out of the
10 proposals above said sent in the past, leaving apart Bihar Sponge
and Iron Ltd. at Sl. No.1, the rest of the nine proposals over-lap
the public undertaking/ S/Shri General Produce Company Madhu Bazar
Chhaibasa and S/Shri Rungta Sons Ltd. Chhaibasa.
After complete consideration, the Government has taken this decision
that out of the ten proposals sent in the past, leaving apart the
proposal of S/Shri Bihar Sponge Iron Ltd., in connection with the
rest of the nine proposals, for consideration as per law, they may
be called back from the ministry of mines Government of India.
In the light of the above said it is requested that kindly
return the above said mines proposals to the mines and minerals
department Jharkhand Ranchi, so that by reconsidering on them,
further action could be taken at the level of the State Government.
Yours faithfully
Sd/-
(Arun Kumar Singh)
Secretary to the Government”

10. The Government of India, however, did not merely return those
nine proposals, but summarily rejected the same on the very grounds stated
in the letter of Government of Jharkhand. It sent a letter accordingly to
the Government of Jharkhand on 6.3.2006. This is the other letter which
was under challenge in the writ petitions to the High Court. The letter
reads as follows:-
“REGISTERED
GOVERNMENT OF INDIA
MINISTRY OF MINES

No. 5/55/2004-M.IV New Delhi, the 6th March,
2006

To
The Secretary to the Government of Jharkhand,
Deptt. of Mines and Geology
Ranchi (Jharkhand)

Sub: Request made by State Government to return various proposals for
grant of mining lease for iron and manganese ore in Mauza Bokna,
District West Singhbhum, Jharkhad.

Sir,
I am directed to refer to the request made by the State
Government vide its letter no. 501/M dated 13.9.2005 on the subject
mentioned above and to summarily reject and return (in original) the
following nine proposals which had been earlier sent to this Ministry for
grant of prior approval under section 5(1) of the Mines and Minerals
(Development and Regulation) Act, 1957 on the ground that the recommended
areas in said the nine proposals either fall in areas or overlap areas
which are either reserved for exploitation by Public Sector Undertaking
(PSU) or held by the other applicants namely M/s Rungta Sons Pvt. Ltd. and
M/s General Produce Company:-

|S.No |Name of |State Government Ref/ |Area (in |Details of |
| |applicant |date |hects.) in |overlapping|
| |Company | |Mauja |areas |
| | | |Ghatkuri | |
| | | |Dist. West | |
| | | |Singhbhum | |
|1. |M/s Ispat |i) Kh. Ni. (Pa. |470.06 |Held by M/s|
| |Industries |Singhbhum)-78/03-115/D| |General |
| |Ltd. |.S.M./M dated 5.8.2004| |Produce |
| | |ii) 1516/M dt. | |Company |
| | |24.11.2004 | | |
|2. |M/s Bimal Deep|i) Kh. Ni. (Pa. |112.072 |Reserved |
| |Steel Pvt. |Singhbhum)-78/03-131/D| |for PSU |
| |Ltd. |.S.M./M dated 4.8.2005| | |
| | |ii) 519/M dated | | |
| | |24.11.2004 | | |
|3. |M/s Abhijeet |i) Kh. Ni. (Pa. |429.00 |Reserved |
| |Infrastructure|Singhbhum)-78/03-117/D| |for PSU |
| |Pvt. Ltd. |.S.M./M dated 4.8.2004| | |
| | |ii) 519/M dated | | |
| | |24.11.2004 | | |
|4. |M/s Ujjawal |i) Kh. Ni. (Pa. |103.00 |Reserved |
| |Mineral Pvt. |Singhbhum)-78/03-114/D| |for PSU |
| |Ltd. |.S.M./M dated 4.8.2004| | |
| | |ii) 1520/M dated | | |
| | |24.11.2004 | | |
|5. |M/s Adunik |i) Kh. Ni. (Pa. |426.875 |Reserved |
| |Alloya & Power|Singhbhum)-78/03-111/D| |for PSU |
| |Ltd. |.S.M./M dated 4.8.2004| | |
| | |ii) 1518/M dated | | |
| | |24.11.2004 | | |
|6. |M/s Prakash |i) Kh. Ni. (Pa. |294.06 |Reserved |
| |Ispat Lgtd. |Singhbhum)-78/03-110/D| |for PSU |
| | |.S.M./M dated 4.8.2005| | |
| | |ii) 1515/M dated | | |
| | |24.11.2004 | | |
|7. |M/s Monnet |i) Kh. Ni. (Pa. |705.00 |Held by M/s|
| |Ispat |Singhbhum)-78/03-118/D| |Rungta Sons|
| | |.S.M./M dated 6.8.2005| |Pvt. Ltd. |
| | |ii) 1497/M dated | | |
| | |17.11.2004 | | |
|8. |M/s Steco |i) Kh. Ni. (Pa. |400.00 |Held by M/s|
| |Power Ltd. |Singhbhum)-78/03-101/0| |Rungta Sons|
| | |3-134/M dated | |Pvt. Ltd. |
| | |16.10.2004 | | |
| | |ii) 1515/M dated | | |
| | |22.1.2005 | | |
|9. |M/s Jharkhand |i) Kh. Ni. (Pa. |346.647 |Held by M/s|
| |Ispat Pvt. |Singhbhum)-78/03-12/D.| |General |
| |Ltd. |S./M dated 4.8.2004 | |Produce |
| | | | |company |
Yours faithfully
Sd/-
(Anil Subramaniam)
Under Secretary to the Government of
India”
11. In these appeals we are basically concerned with the legality
of the decision of the State Government seeking to withdraw its
recommendations for mining leases, and the subsequent decision of the
Central Government to reject those very recommendations. We may record
that the Government of Jharkhand had issued one more notification
subsequently, dated 27.10.2006, by which it was decided that the areas
described in the 1962 and 1969 notifications will not be given to anyone,
except to the public sector undertakings or joint venture projects of the
State. The appellants amended their Writ Petitions in the High Court and
challenged the subsequent notification also. This notification reads as
follows:-

THE JHARKHAND GAZETTE
EXTRA ORDINARY
PUBLISHED BY AUTHORITY

No. 581 8 Kartik 1928 (S) Ranchi, Monday the 30th October, 2006

DEPARTMENT OF MINES & GEOLOGY, RANCHI
NOTIFICATION

The 27th October, 2006

No. 3277 It is hereby notified for the information of the general
public that for optimum utilization and exploitation of the mineral
resources in the State and for establishment of mineral based industry with
value addition thereon, it has been decided by the State Government that
the iron ore deposits at Ghatkuri would not be thrown open for grant of
prospecting licence, mining lease or otherwise for the private parties.
The deposit was at all material times kept reserved vide gazette
notification No. A/MM-40510/62-6209/M dated the 21st December, 1962 and no.
B/M-6-1019/68-1564/M dated the 28th February, 1969 of the State of Bihar.
The mineral reserved in the said area has now been decided to be utilized
for exploitation by Public Sector undertaking or Joint Venture Project of
the State Government which will usher-in maximum benefit to the State and
which generate substantial amount of employment in the State.
The aforesaid notification is being issued in public interest and in
the larger interest of the State.
The defining co-ordinates of the reserved area enclosed here with for
reference.

By order of the Governor.
S.K. Satapathy.
Secretary to Government

Submissions on behalf of the appellants:-
12. (i) There is not much difference between the facts of the other
appellants and Monnet, except that as far as the appellant in Civil Appeal
No.3286/2009 i.e. Adhunik Alloy and Power Ltd. (‘Adhunik’ for short) is
concerned, it contends that based on the forwarding of its proposal by the
State Government to the Central Government, it had made some substantial
investment. It had already invested some 82 crores of rupees out of its
proposed investment of Rs.790 crores, and therefore it had a better case on
the basis of promissory estoppel. Additional material is placed on the
record of its Civil Appeal in justification the investment made by the
appellant.
(ii) Since the facts of all these appeals are by and large similar, though
various submissions have been raised on behalf of the appellants, they are
also by and large similar, and complimentary to each other. The learned
senior counsels appearing for the respective parties have, however,
emphasised various facets of facts and law with good research put in.
13. (i) Shri C.A. Sunderam, learned senior counsel appearing for
Ispat Industries Ltd. (‘Ispat’ for short) firstly submitted that after the
MMDR Act was passed in exercise of the power of the Union Government under
List I Entry 54 of the Seventh Schedule of the Constitution of India, the
State Government had no longer any power to issue the notifications making
any reservations in favour of public sector undertakings and the
notifications of the 1962 and 1969 were bad in law. These notifications
which were defended as being issued under Section 4(a) of the Bihar Land
Reforms Act, 1950, could not be valid after the passing of the MMDR Act.
This is because Entry No. 23 List II (State List) of the Seventh Schedule
giving power to the State Government specifically stated that it was
subject to the provisions of the entries in List I (Union List) in this
behalf. Entry No. 54 of List I states that Regulation of Mines and Mineral
development is within the power of the Union Government, to the extent a
declaration is made by Parliament in that behalf in public interest, and
such a declaration has been made and is to be found in Section 2 of the
MMDR Act. This being the position, the provisions of Bihar Land Reforms
Act 1950 (Act No. XXX of 1950) (Bihar Act, for short) cannot be pressed
into service by the respondents.
(ii) Shri Sundaram contended that the field was already occupied by the
MMDR Act when these notifications were issued, since the Parliament had
already legislated on the field. Section 17 and 17A of the MMDR Act give
special power to the Central Government to undertake the mining operations
and effect reservations. Section 18 of the Act casts a duty on the Central
Government to take steps for the conservation and systematic development of
minerals and for the protection of environment by preventing or controlling
any pollution which may be caused by the prospecting or mining operations.
These powers were not with the State Government. The reservations in the
notifications of 1962 and 1969 will therefore have to be held as outside
the powers of the State Government
(iii) This will be the position even when read with Rule 59 (1) (e)
of the Mineral Concession Rules, 1960 (M.C. Rules 1960 in short) which
speaks about reservation of areas by the State Government and re-grant
thereof. Even the subsequent notification of 27.10.2006, providing for a
joint venture is contrary to 17A of MMDR Act, and therefore bad in law.
(iv) Shri Sundaram submitted that the High Court’s view that the State
Government had the inherent power over the mining areas was equally
erroneous.

14. (i) Learned senior counsel Dr. Rajeev Dhawan appearing for the
appellant in C.A. No. 3289/2009 i.e. Jharkhand Ispat Pvt. Ltd. (‘Jharkhand
Ispat’ for short) mainly canvassed two submissions. Firstly, in view of the
federal structure of Indian Constitution, and the provisions of MMDR Act,
any mining can be done only under the MMDR Act with Central permission,
though mining is included is in the State List. In this behalf, Dr. Dhawan
took us through the Constitution Bench judgments of this Court in Hingir-
Rampur Coal Co. Ltd. & Ors. Vs. State of Orissa & Ors. reported in AIR 1961
SC 459, State of Orissa & Anr. Vs. M/s M.A. Tulloch & Co. reported in AIR
1964 SC 1284 and Baijnath Kadio Vs. State of Bihar and Others reported in
1969 (3) SCC 838, and submitted that the subsequent judgment of this Court
in Amritlal Nathubhai Shah Vs. Union of India reported in 1976 (4) SCC 108
which has been relied upon by the State of Jharkhand and accepted by the
High Court to repel the challenge, did not consider these three judgments
and the true import of the propositions laid down therein.

(ii) Secondly, the Learned Counsel submitted that the State Government’s
decision was ultra-vires to Section 17A (2) of the MMDR Act. He relied
upon Para 6 of the judgment of this Court in Janak Lal Vs. State of
Maharashtra reported in 1989 (4) SCC 121 to draw the distinction between un-
amended Rule 59 and new Rule 59. In his view, the 2006 notification was
also invalid since it was only a revival of 1962 and 1969 notifications.

(iii) It was then submitted that the appellant has also set up a factory
and reliance was placed on the doctrine of promissory estoppel and
legitimate expectations. It was also contended that the two notifications
were not acted upon and suffered from Desuetude. Lastly, it was submitted
that the State Government cannot act unreasonably in view of the provision
of Article 19 (1) (g) of the Constitution.

15. Learned Senior Counsel Shri Ranjit Kumar, appearing for Monnet
raised the following additional submissions.

(i) The State Government did not have the power to issue the two
notifications in 1962 and 1969 under the rules as they then
existed, particularly the notification of 1962, since the Rule
58 of the concerned rules as then existing did not give any such
power to the State Government.

(ii) Rule 58 has been deleted without any saving clause by the
amendment Act No. 36 of 1986.

(iii) The two notifications of 1962 and 1969 providing for reservation
in favour of the public sector undertakings suffered on account
of ‘Desuetude’, since they were never acted upon.

(iv) In view of the proviso Rule 63A, once a recommendation is made,
the State Government becomes functus officio, and it has no
power to recall the recommendation.

(v) The right of hearing of Monnet was affected in as much as the
decision of the State Government to reject its application was
taken behind its back. It was not provided with any opportunity
of being heard under Rule 26, of the M.C. Rules 1960 before
refusing to grant the mining lease. Besides, their remedy to
file a revision to the Central Government under Rule 54 thereof
was affected.

(vi) The appellants disputed the fact that at the time of rejection
of their applications, M/s Rungta Sons were having any
subsisting allotment in their favour. It was submitted that the
grant in favour of M/s Rungta Sons had already expired, and in
fact they had applied for renewal in 2006. The area recommended
to Monnet was not under any previous reservation of any public
sector undertaking or otherwise.

(vii) There was unjustified discrimination in favour of Bihar Sponge
Iron Ltd. since their case was supposed to be similar to that of
Monnet.

(viii) The decision of the State Government was hit by the
doctrine of promissory estoppel, since in the meanwhile Monnet
had deposited Rs.50 lacs with the State Government for allotment
of land, and it was taking further steps expecting the
allotment.

(ix) The provisions of the MMDR Act and the MC Rules will have to be
read to mean that the regulatory regime has been taken over by
the Central Government, and the State Government will have to be
held as without any power to impose reservations.

16. Learned senior counsel Shri Dhruv Mehta, appearing for Prakash
Ispat Ltd. in C.A. No.3290/2009 submitted that as stated in Section 14 of
MMDR Act, Sections 5 to 13 of the act do not apply to minor minerals, and
the State Govt’s. power is only to regulate the minor minerals under
Section 15 of the Act. In this behalf he referred to the judgment of this
Court in D.K. Trivedi and Sons Vs. State of Gujarat reported in 1986 Supp
(1) SCC 20. He submitted that the rule making power with respect to major
minerals was only with the Central Government. The State Government had no
power until Rule 59 was amended in 1980 to provide reservation for public
sector concerning the major minerals. He further submitted that rule making
power cannot be exercised retrospectively and relied upon Hukam Chand Vs.
Union of India reported in 1972 (2) SCC 601. He contended that in view of
the provision in Rule 59 of the MC Rules 1960, an area which has been
reserved can be made available for re-grant to private sector, and in
support of this proposition he referred to the judgment of this Court in
Indian Metals and Ferro Alloys Ltd. VS. Union of India reported in 1992
Supp (1) SCC 91.

17. Learned senior counsel Shri Abhishek Manu Singhvi and L.
Nageswara Rao, appearing for Adhunik submitted that the High Court had
committed an error in relying upon the above referred amended Rule 59. The
1962 notification was issued when prospecting and mining was not within the
jurisdiction of the State Government The judgment of this Court in Air
India Vs. Union of India reported in 1995 (4) SCC 734 (para 4 to 8) was
relied upon to submit that subordinate legislation can survive the repeal
of a statute only when it is saved. It was further submitted that the
impugned notifications were issued without prior approval of the Central
Government and were therefore bad in law.

18. (i) Learned senior counsel Shri G.C. Bharuka, appearing for
Abhijeet Infrastructure Pvt. Ltd. (‘Abhijeet’ for short) submitted that
Central Government had opened up the minerals for private participants. In
1962, the Government had no power to issue the notification in the absence
of any legislation conferring any executive power. He relied upon the
judgment of this Court in Bharat Coking Coal Ltd. Vs. State of Bihar
reported in 1990 (4) SCC 557 (para 19), and submitted that the State can
act only under a legislation or under Article 162 by way of an executive
order and not otherwise. He submitted that the 1962 notification was
issued under the un-amended Rule 59, and that time there was no power to
issue such notification. In his view the subsequent notification dated
27.10.2006 which is issued under Section 17A (2) was also bad in law
because it was issued without the prior approval of the Central Government

(ii) It was then submitted by Shri Bharuka, that Abhijeet’s proposal was
sent to the Central Government on 06.08.2004. State Government withdrew it
on 13.09.2005, and Central Government rejected it on 06.03.2006. In the
meanwhile the petitioner took steps for investment. He relied upon two
judgments to explain the import of the doctrine of promissory estoppel,
namely M/s Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh
reported in 1979 (2) SCC 409 and State of Punjab Vs. Nestle India Ltd.
reported in 2004 (6) SCC 465. He canvassed the Contempt Petition moved by
Abhijeet by contending that Abhijeet ought to have been granted lease in
pursuance of this Court’s earlier order dated 15.12.2008.

Reply on behalf of the State of Jharkhand

19. Learned Senior Counsel Shri Ajit Kumar Sinha, appearing for the
State of Jharkhand, traced the power of the State Government to reserve the
mines situated within its territory for Public Sector Undertakings, to
begin with, to the State’s ownership of the Mines. He submitted that these
mines and minerals vested absolutely in it, and this position was
fortified in view of the declaration of the consequences of vesting to be
found in Section 4(a) of the Bihar Act. The validity of this provision had
been upheld by a Constitution Bench of this Court way back in State of
Bihar Vs. Kameshwar Singh reported in AIR 1952 SC 252. In any case, the
Act had been placed at Entry No. 1 in Ninth Schedule which was added by
Constitution (First Amendment) Act, 1951 and was protected by Article 31-B.
As held by this Court in Waman Rao Vs. Union of India reported in 1981 (2)
SCC 362, the Act was clearly beyond the pale of challenge. The State had
the inherent power to reserve any area for exploitation in its capacity as
the owner of the land and the minerals vested therein. The Sovereign
executive power of the State under Article 298 of the Constitution to carry
on any trade or business and to acquire, hold and dispose of the property
and make contracts, certainly included the power to reserve the land for
exploitation of its minerals by the public sector.

20. It was further submitted by Shri Sinha, that there was no
conflict between the right of the State Government to deal with the mines
as the owner thereof, and the provisions of the MMDR Act. The MMDR Act
does not disturb the ownership of the mines and minerals of the State in
the land situated within its territory. The power to issue appropriate
notifications concerning the mines and minerals situated within the State
is not taken away by any of the provisions of the MMDR Act. In the instant
case the Central Government, in its counter affidavit at para 5 (a) and
para 10 filed before the High Court, had given deemed/de-jure approval to
the reservation upon examination of the 1962 & 1969 notifications. This
was apart from the impugned order, dated 6.3.2006, rejecting the proposals
of the appellants on the ground that the recommended areas in the said nine
proposals were either reserved for public sector undertakings, or
overlapped the areas held by M/s. Rungta Sons Pvt. Ltd. and M/s. General
Produce Company. In the counter affidavit filed in this appeal by the
Central Government, it has been specifically stated in paragraph 5 that the
State Government is the ‘owner of the minerals.’

21. It was submitted by Shri Sinha that the notifications of 1962
and 1969 continued to be applicable and protected even after the creation
of state of Jharkhand by virtue of Section 85 of the Bihar Reorganisation
Act, 2000, which provides that the existing laws prior to reorganization
shall have effect till they are altered, repealed or amended. Shri Sinha,
pointed out that the notifications of 1962 and 1969 had, in fact, been
reiterated by the State of Jharkhand vide its notification dated
27.10.2006.

22. He submitted that the power to issue the impugned notifications
was very much available under the MMDR Act and the Rules 58 and 59 of the
M.C. Rules as they stood at the relevant time. The notification dated
27.10.2006 was clearly traceable to Section 17A (2) of the MMDR Act. The
mere absence of mentioning of the source of power in the concerned
notifications did not make them ineffective. Shri Sinha relied upon
paragraph 13 of the judgment of this Court in Dr. Ram Manohar Lohia Vs.
State of Bihar reported in AIR 1966 SC 740 in support of this proposition.

23. With respect to doctrine of Desuetude, Shri Sinha submitted
that for this doctrine to apply, two conditions have to be satisfied, viz.
(i) there must be a considerable period of neglect, and (ii) there must be
a contrary practice for a considerable time. In the instant case no such
neglect or contrary practice had been shown. The area of mines has been
kept reserved, and no mining lease in the reserved area has been granted to
anyone contrary to the notifications. He relied in this behalf upon
paragraph 15 of the judgment of this Court in State of Maharashtra vs.
Narayan Shamrao Puranik reported in 1982 (3) SCC 519, and paragraphs 30 to
36 of Municipal Corporation for City of Pune vs. Bharat Forge Co. Ltd.
reported in 1995 (3) SCC 434, as well as paragraph 16 of Cantonment Board
Mhow vs. M.P. State Road Transport Corpn. reported in 1997 (9) SCC 450.

24. With respect to the submissions on promissory estoppel and
legitimate expectations, Shri Sinha submitted that these principles were
based on equity, and when a matter was governed by a statute, equity will
give way. Besides, the promises as claimed were against the public policy
and could not be enforced. He relied upon paragraph 10 of Amrit Vanaspati
Co. Ltd. vs. State of Punjab reported in 1992 (2) SCC 411, paragraph of 12
M.P.Mathur vs. DTC reported in 2006 (13) SCC 706, and paragraph 83 of
Sandur Manganese & Iron Ores Ltd. vs. State of Karnataka reported in 2010
(13) SCC 1.

25. Shri Sinha submitted that MOU between the Appellants and the
State Government could not be treated as a contract under Article 299 (1)
of the Constitution of India. It was neither enforceable nor binding.
Based on the MOU, the State Government had made a recommendation which was
only a proposal. Besides, no one had any legal or vested right for the
grant or renewal of a mining lease. In this behalf, he relied upon
paragraph 13 of State of Tamil Nadu vs. M/s Hind Stone reported in 1981 (2)
SCC 205, paragraph 4 of Dharambir Singh vs. Union of India reported in 1996
(6) SCC 702, paragraph 13 of M.P. Ram Mohan Raja vs. State of Tamil Nadu
reported in 2007 (9) SCC 78, paragraphs 19 to 22 and 28 of State of Kerala
vs. B. Six Holiday Resorts (P) Ltd. reported in 2010 (5) SCC 186, and
paragraph 4 of Sandur Manganese & Iron Ores Ltd. vs. State of Karnataka
reported in 2010 (13) SCC 1.

26. Last but not the least, Shri Sinha pointed out that the
controversy in the present matter was fully covered by the judgment of a
bench of three Judges of this Court in Amritlal (supra) wherein the facts
were by and large similar. This Court has clearly held in that judgment
that the mines and minerals within its territory did vest in the State
Government, and it had the full authority to reserve the exploitation
thereof for the benefit of public undertakings. There was no conflict
between this judgment, and the three judgments in the cases of Hingir-
Rampur Coal Co., M.A. Tulloch & Co. and Baijnath Kadio (supra).

Reply on behalf of Union of India
27. The Learned Senior Counsel Shri Ashok Bhan, appearing for Union
of India supported the submissions of Shri Sinha. He submitted that the
mines and minerals in the State of Jharkhand were owned by the State of
Jharkhand, and it had the right to deal with the same appropriately within
the scheme of the MMDR Act. It had every right to reserve certain areas
for the exclusive utilisation of the Public Sector Undertakings, or to give
a direction to avoid overlapping. He pointed out that the proposals
forwarded by the State Government were examined by the Central Government .
It had accepted the reasons contained in the State Government’s letter
dated 13.9.2005, and therefore rejected nine out of the ten proposals. He
drew our attention to the following paragraphs from the affidavit filed by
the Central Government in the High Court. In para 5 (a) of its Counter
Affidavit in reply to the Writ Petition filed by Monnet in the High Court,
the Under Secretary, in the Ministry of Mines stated that ‘the request of
the State Government has been examined by the Central Government, and all
nine proposals including the proposal recommended in favour of the
petitioner have been rejected and returned to the State Government on
06.03.2006.’ In para 10, it was further stated as follows:-

“10. That, as referred herein above, as per information of the
State Government the proposals which were submitted to the Central
Government seeking prior approval u/s 5 (1) of the Mines and Minerals
(Development & Regulation) Act, 1957, either fall in the areas
reserved for exploitation by the Public Sector or overlap with the
area earlier held or being presently held by others and therefore on
the request of State Government, examined by Central Government, and
after rejection returned the proposal to the State Government on
06.03.2006. Under the circumstances if the State Government desires
to grant the area under mining lease to a person other than a public
sector, it is required to firstly de-reserve the area, notify the same
under Rule 59 (1) of the Mineral Concession Rules, 1960 and therefore
in present situations the petitioner has no case and writ petition is
liable to be dismissed.”
Submissions on behalf of the intervenors

28. (i) Shri Das Learned Counsel appearing for M/s Rungta Sons pointed
out that Rungta had a mining lease in their favour and were entitled to
seek the renewal thereof. Therefore, the appellants could not have been
granted any lease, in any way overlapping with the mining area allotted to
Rungta Sons.

(ii) Learned Senior Counsels Sarvashri Narasinha, Vikas Singh & Krishnan
Venugopal have appeared for the interveners to oppose these appeals. Their
submissions have been similar to that of Shri Sinha.
29. After the hearing of these appeals was concluded, another SLP
arising out of the judgment of Orissa High Court in W.A. No.6288 of 2006
(Geo Minerals and Marketing (P) Ltd. V. State of Orrisa & ors.) came up for
consideration wherein one of the issues involved was regarding reservation
of mining areas for public sector. The counsel appearing in that matter for
the respective parties viz. Senior counsel Sarvashri Harish Salve, KK
Venugopal and RK Dwivedi were therefore heard on this issue. Their
submissions were similar to those of the respective parties appearing in
the present appeals.

 

Consideration of the submissions of the rival parties:

Authority of the State of Jharkhand to deal with the mines and
minerals within its territory

30. It was submitted on behalf of the State of Jharkhand as well as
by Union of India that the mines and minerals within the territory of the
State are owned by the State of Jharkhand, and it has full authority to
deal with the same. This authority flows from Section 4 (a) of the Bihar
Land Reforms Act, 1950. As against that, the counsel for the appellants
have challenged the authority of the State of Jharkhand to deal with the
mines and minerals on the ground that after the passing of the MMDR Act,
the authority of the State Government has come to be curtailed. To examine
this issue we may look into some of the salient provisions of the Bihar
Act. To begin with the Preamble of the Act declares its objective in
following terms:

‘ An Act to provide for the transference to the State of the
interests of proprietors and tenure holders in land of the
mortgagees and lessees of such interests including interests in
trees, forests , fisheries , jalkars, ferries, hats, bazaars, mines
and minerals and to provide for the constitution of a Land
Commission for the State of Bihar with powers to advise the State
Government on the agrarian policy to be pursued by the State
Government consequent upon such transference and for other matters
connected therewith.’
Section 3 of the Act provides for issuance of notifications of vesting of
estates and tenures in the state. Section 4 provides for the consequences
of the vesting namely that they shall vest absolutely in the state free
from all encumbrances. Section 4(a) of the Bihar Act reads as follows:

 

 

4. Consequences of the vesting of an estate or tenure in the State-
[Notwithstanding anything contained in any other law for the time
being in force or any contract and notwithstanding any non- compliance
or irregular compliance of the provisions of sections 3, 3A and 3B
except the provisions of sub-section (1) of section 3 and sub-section
(1) of section 3A , on the publication of the notification under sub-
section (1) , of section 3 or sub-section (1) or sub-section (2) of
section 3A, the following consequences shall ensue and shall be deemed
always to have ensued, namely:]
(a) 2[xxx] Such estate or tenure including the interests of the
proprietor or tenure-holder in any building or part of a building
comprised in such estate or tenure and used primarily as office or
cutchery for the collection of rent of such estate or tenure, and his
interests in trees, forests, fisheries, jalkars, hats, bazars, 3[mela]
and ferries and all other sairati interests , as also his interest in
all subsoil including any rights in mines and minerals whether
discovered or undiscovered, or whether been worked or not, inclusive of
such rights of a lessee of mines and minerals, comprised in such estate
or tenure (other than the interests of raiyats or under – raiyats)
shall, with effect from the date of vesting, vest absolutely in the
State free from all incumbrances and such proprietor or tenure- holder
shall cease to have any interest in such estate or other than the
interests expresslly saved by or under the provisions of this Act.
Besides, we must also note that the Constitutional validity of this
provision has already been upheld by a Constitution Bench of this Court in
State of Bihar Vs. Kameshwar Singh reported in AIR 1952 SC 252 by a
detailed judgment where at the end of it in Para 237 the Court has declared
the Bihar Act to be valid except as regards S. 4(b) and S.23 (f), which
were declared to be unconstitutional and void.
31. Ownership denotes a complex of rights as the celebrated author
Salmond states in his treatise on Jurisprudence (see page 246 of the
Twelfth Edition):

 
‘44. The idea of ownership

Ownership denotes the relation between a person and an
object forming the subject-matter of his ownership. It consists in
a complex of rights, all of which are rights in rem, being good
against all the world and not merely against specific persons.
Though in certain situations some of these rights may be absent, the
normal case of ownership can be expected to exhibit the following
incidents.
First, the owner will have a right to possess the thing
which he owns……….
Secondly, the owner normally has the right to use and
enjoy the thing owned: the right to manage it, i.e., the right to
decide how it shall be used; and the right to the income from it.
Whereas the right to possess is a right in the strict sense, these
rights are in fact liberties: the owner has a liberty to use the
thing, i.e. he is under no duty not to use it, in contrast with
others who are under a duty not to use or interfere with it.’
The right of the State of Jharkhand to deal with the mines and minerals
within its territory including reserving the same for Public Sector
Undertakings, or to direct avoidance of overlapping while granting leases
of mines, obviously flows from its ownership of those mines and minerals.

32. (i) It was submitted by the appellants that the power of the State
Government under Entry 23, List II of the Seventh Schedule was subject to
the provision of Entry No. 54 of List I. Entry 54 of List I states that
regulation of Mines and Minerals Development is within the power of the
Union Government to the extent a declaration is made by the Parliament in
that behalf, and such a declaration has been made in Section 2 of the MMDR
Act. Having stated so, it becomes necessary to understand the extent of
this control of the Union Government, and for that we must see the scheme
of the Act with respect to the powers of the Central Government and the
State Government to deal with the mines and minerals. This was also the
approach adopted by a Constitution Bench of this Court in Ishwari Khetan
Sugar Mills (P) Ltd. Vs. State of U.P. reported in 1980 (4) SCC 136 and
later by a bench of three Judges in Orissa Cement Ltd. Vs. State of Orissa
reported in 1991 Supp.(1) SCC 430.

(ii) In Ishwari Khetan (supra) the Constitution Bench was concerned with
the validity of the provisions of U.P. Sugar Undertakings (Acquisition)
Act, 1971 enacted by the State of U.P. It was canvassed that the State’s
power to legislate in respect of industries under Entry 24 of List II is
taken away to the extent of the declaration in that respect made by
Parliament under Entry 52 of List I. After examining the relevant
provisions, the Constitution Bench held in para 24 as follows:-

“24. It can, therefore, be said with a measure of
confidence that legislative power of the States under Entry 24, List II
is eroded only to the extent control is assumed by the Union pursuant
to a declaration made by the Parliament in respect of declared industry
as spelt out by legislative enactment and the field occupied by such
enactment is the measure of erosion. Subject to such erosion, on the
remainder the State legislature will have power to legislate in respect
of declared industry without in any way trenching upon the occupied
field…….”

 

(iii) In Orissa Cement Ltd. (supra) a bench of three Judges of this Court
was concerned with the validity of the levy of a cess on mining imposed by
State of Orissa, and the competence of the State Legislation was challenged
on the backdrop of MMDR Act and Entry 54 of the Union List. After
referring to the judgment in Ishwari Khetan (supra) the Court stated as
follows in paragraph 49:-

“…..As pointed out in Ishwari Khetan, the mere declaration
of a law of Parliament that it is expedient for an industry or the
regulation and development of mines and minerals to be under the
control of the Union under Entry 52 or Entry 54 does not denude the
State Legislatures of their legislative powers with respect to the
fields covered by the several entries in List II or List III.
Particularly, in the case of declaration under Entry 54, this
legislative power is eroded only to the extent control is assumed by
the Union pursuant to such declaration as spelt out by the
legislative enactment which makes the declaration. The measure of
erosion turns upon the field of the enactment framed in pursuance of
the declaration……”

 

33. On this background we may look to the relevant provisions of
the MMDR Act. Section 4 (1) of the MMDR Act lays down that prospecting or
mining operations are to be done as per the provisions of the license or
lease. Section 4(3) does not restrain the State Government from
undertaking these operations in the area within the State though, when it
comes to the minerals in the First Schedule, it has to be done after prior
consultation with the Central Government. This Section 4 reads as follows:

4. Prospecting or mining operations to be under licence or
lease:-
No person shall undertake any reconnaissance, prospecting or mining
operations in any area, except under and in accordance with the terms
and conditions of a reconnaissance permit or of a prospecting licence
or, as the case may be, of a mining lease, granted under this Act and
the rules made thereunder]:
Provided that nothing in this sub-section shall affect any prospecting
or mining operations undertaken in any area in accordance with the
terms and conditions of a prospecting licence or mining lease granted
before the commencement of this Act which is in force at such
commencement:
[Provided further that nothing in this sub-section shall apply to any
prospecting operations undertaken by the Geological Survey of India,
the Indian Bureau of Mines, [the Atomic Minerals Directorate for
Exploration and Research] of the Department of Atomic Energy of the
Central Government, the Directorates of Mining and Geology of any
State Government (by whatever name called), and the Mineral
Exploration Corporation Limited, a Government company within the
meaning of section 617 of the Companies Act, 1956:
Provided also that nothing in this sub-section shall apply to any
mining lease (whether called mining lease, mining concession or by any
other name) in force immediately before the commencement of this Act
in the Union Territory of Goa, Daman and Diu.
(1A) No person shall transport or store or cause to be transported or
stored any mineral otherwise than in accordance with the provisions of
this Act and the rules made thereunder.
(2) [No reconnaissance permit, prospecting licence or mining lease]
shall be granted otherwise than in accordance with the provisions of
this Act and the rules made thereunder.
[(3) Any State Government may, after prior consultation with the
Central Government and in accordance with the rules made under section
18,1[undertake reconnaissance, prospecting or mining operations with
respect to any mineral specified in the First Schedule in any area
within that State which is not already held under any reconnaissance
permit, prospecting licence or mining lease.
34. The authority to grant the reconnaissance permit, prospecting
license or mining lease on the conditions which are mentioned in Section 5
of the Act is specifically retained with the State Government. However,
with respect to the minerals specified in First Schedule, it is added that
previous approval of the Central Government is required. Thus, with respect
to the minerals which are specified in the First Schedule to the Act, this
has to be done only after prior consultation with and approval of the
Central Government. The provision does not in any way detract from the
ownership and the authority of the State Government to deal with the mines
situated within its territory. The only restriction is with respect to the
minerals in the First Schedule which are specified minerals. Part-C of this
schedule includes iron-ore and manganese ore at Entries No. 6 and 9. This
Section 5 reads as follows:-

“5. Restrictions on the grant of prospecting licences or mining
leases
(1) A State Government shall not grant a [reconnaissance permit,
prospecting licence or mining lease] to any person unless such person-
a) is an Indian national, or company as defined in sub-section (1) of
section 3 of the Companies Act, 1956 (1 of 1956); and
(b) satisfies such conditions as may be prescribed:
Provided that in respect of any mineral specified in the First
Schedule, no [reconnaissance permit, prospecting licence or mining
lease] shall be granted except with the previous approval of the
Central Government.
Explanation.-For the purposes of this sub-section, a person shall be
deemed to be an Indian national,-
(a) in the case of a firm or other association of individuals, only if
all the members of the firm or members of the association are citizens
of India; and
(b) in the case of an individual, only if he is a citizen of India.
(2) No mining lease shall be granted by the State Government unless it
is satisfied that-
(a) there is evidence to show that the area for which the lease is
applied for has been prospected earlier or the existence of mineral
contents therein has been established otherwise than by means of
prospecting such area; and
(b) there is mining plan duly approved by the Central Government, or
by the State Government, in respect of such category of mines as may
be specified by the Central Government, for the development of mineral
deposits in the area concerned.”
35. Section 10 of the Act deals with the procedure for obtaining
the necessary licences. It makes it very clear the application is to be
made to the State Government, and it is the right of the State Government
either to grant or refuse to grant the permit, licence or lease. This
section reads as follows:-

10. Application for prospecting licences or mining leases-
(1) An application for [a reconnaissance permit, prospecting licence or
mining lease] in respect of any land in which the minerals vest in the
Government shall be made to the State Government concerned in the
prescribed form and shall be accompanied by the prescribed fee.
(2) Where an application is received under sub-section (1), there shall
be sent to the applicant an acknowledgment of its receipt within the
prescribed time and in the prescribed form.
(3) 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 the2[permit, licence or
lease].
36. Again, it is the right of the State Government to give
preferences in the matters of granting lease, though this right is
regulated by the provisions of Section 11 of the Act. Sub-section 1 of
this Section lays down that one who has done the reconnaissance or
prospecting work earlier, will have a preferential right for obtaining a
prospective licence or a mining lease in respect of that land. Sub-section
2 lays down that where any area is not notified for reconnaissance or
prospecting or mining earlier, the application which is received first will
be considered preferentially. It is however, further stated that where
applications are invited by any particular date, then all of the
applications received by that date will be considered together. Sub-section
3 of Section 11 lays down the factors to be considered while granting the
licence which are:

(3) The matters referred to in sub-section (2) are the following:-

(a) any special knowledge of, or experience in, reconnaissance
operations, prospecting operations or mining operations, as the
case may be, possessed by the applicant;

(b) the financial resources of the applicant;

(c) the nature and quality of the technical staff employed or to
be employed by the applicant;

(d) the investment which the applicant proposes to make in the
mines and in the industry based on the minerals;

(e) such other matters as may be prescribed.”

 
Sub-section 5 lays down that if there are any special reasons, the State
can grant the licence to a party whose application might have been received
later in time, but after recording the special reasons. This sub-section
again makes it clear that where any such out of turn allotment is to be
done with respect to a mineral specified in First Schedule, prior approval
of the Central Government will be required. Thus, although the Central
Government is given the authority to approve the applications with respect
to the specified minerals, that does not take away the ownership and
control of the State Government over the mines and minerals within its
territory.

37. Senior Counsel Shri Sundaram had contended that Section 17 and
17A of the MMDR Act give special power to the Central Government to
undertake the mining operations and effect reservations. Section 18 of the
Act casts a duty on the Central Government to protect the environment and
to prevent pollution that may be caused by mining operations. These powers
were not with the State Government. Therefore, the reservations in the
notifications of 1962 and 1969 were outside the powers of the State
Government. Thus, Sections 17 and 17(A) of the Act were pressed into
service to canvass the reduction in the authority of the State Government.
Section 17 (1) gives the power to the Central Government to undertake
prospecting and mining operations in certain lands. However, such
operations have also to be done only after consultation with the State
Government as stated in sub-section (2) thereof. Besides, sub-section (3)
requires the Central Government also to pay the reconnaissance permit fee
or prospecting fee, royalty, surface rent or dead rent as the case may be.
Section 17A gives the power to the Central Government to reserve any area
not held under any prospecting licence or mining lease with a view to
conserving any minerals. However that power is also to be exercised in
consultation with the State Government. Similarly, under Sub-section (2)
of Section 17A, State Government may also reserve any such area, though
with the approval of the Central Government. Thus, these sections and the
duty cast on the Central Government under Section 18 do not affect the
ownership of the State Government over the mines and minerals within its
territory, or to deal with them as provided in the statute.

38. The provisions of the MMDR Act contain certain regulations.
However, to say that there are certain provisions regulating the exercise
of power is one thing, and to say that there is no power is another. The
provisions of the Act do not in any way take away or curtail the right of
the State Government to reserve the area of mines in public interest, which
right flows from vesting of the mines in the State Government. It is
inherent in its ownership of the mines. In the present case we are
concerned with the challenge to the letter of the State Government dated
13.9.2005, and that of the Central Government dated 6.3.2006, and the
challenge to the notification dated 27.10.2006 issued by the State
Government. There is no difficulty in accepting that the Central Government
does have the power to issue a direction as contained in the letter dated
6.3.2006. As far as the notification of 27.10.2006 is concerned, the same
is also clearly traceable to Section 17A (2) of the Act. This Section 17A
(2) reads as follows:-

“(2) The State Government may, with the approval of the Central
Government, reserve any area not already held under any prospecting
licence or mining lease, for undertaking prospecting or mining
operations through a Government company or corporation owned or
controlled by it and where it proposes to do so, it shall, by
notification in the Official Gazette, specify the boundaries of such
area and the mineral or minerals in respect of which such areas will
be reserved.”

As can be seen, this sub-section requires the approval of the Central
Government for reserving any new area which is not already held through a
Government Company or Corporation, and where the proposal is to do so. The
notification of 27.10.2006 refers to the previous notifications of 1962 and
1969 whereunder the mining areas in the Ghatkuri forest were already
reserved, and reiterates the decision of the State Government that the
minerals which were already reserved in the Ghatkuri area under the two
notifications will continue to be utilised for exploitation by public
sector undertakings or joint venture projects of the State Government.
Therefore this notification of 27.10.2006 did not require the approval of
the Central Government.

 

39. When it comes to the challenge to the letter dated 13.9.2005,
it is seen that the State Government states therein that nine out of the
ten proposals overlap the areas meant for public undertakings and two other
companies, and therefore the proposals were called back. The power to take
such a decision rests in the State Government in view of its ownership of
the mines, though there may not be a reference to the source of power.
Absence of reference to any particular section or rule which contains the
source of power will not invalidate the decision of the State Government,
since there is no requirement to state the source of power as has already
been held by this Court in the case of Dr. Ram Manohar Lohia (supra).
40. The appellants have referred to Rules 58 and 59 to contend that
there rules do not give the power to the State Government to reserve the
mines for public sector. We may therefore, refer to the Rules 58 and 59 of
M.C. Rules as amended from time to time.
Rule 58 and 59 of M.C. Rules as framed in 1960 read as follows:-
“58. Availability of areas for re-grant to be notified-
(I) No area which was previously held or which is being held under a
prospecting licence or a mining lease or in respect of which an order
had been made for the grant thereof but the applicant has died before
the execution of licence or lease, as the case many be, or in respect
of which the order, granting licence or lease has been revoked under
sub-rule (1) of rule 15 or sub-rule (1) of rule 31, shall be available
for grant unless-

a) an entry to the effect is made in the register referred to in sub-
rule (2) of rule 21 or sub-rule (2) of rule 40, as the case may
be, in ink; and

b) the date from which the area shall be available for grant is
notified in the official Gazette at least 30 days in advance.

(2) The Central Government may, for reasons to be recorded in
writing, relax the provisions of sub-rule (1) in any special case.)
“Rule 59. Availability of certain areas for grant to be
notified- In the case of any land which is otherwise available for the
grant of a prospecting licence or a mining lease but in respect of
which the State Government has refused to grant a prospecting licence
or a mining lease on the ground that the land should be reserved for
any purpose other than prospecting or mining the minerals, the State
Government shall, as soon as such land becomes again available for the
grant of a prospecting or mining lease, grant the license or lease
after following the procedure laid down in rule 58.
41. (i) Rule 58 was amended on 16.11.1980 and the amended Rule 58 reads
as under:-
“58. Reservation of area for exploitation in the public
sector etc.- The State Government may, by notification in the Official
Gazette, reserve any area for the exploitation by the Government, a
Corporation established by the Central, State or Provincial Act or a
Government company within the meaning of section 617 of the Companies
Act, 1956 (1 of 1956)
(ii) Rule 59 was amended first on 9.7.1963 and later in 1980 along with
Rule 58. The amended Rule 59 as amended on 9.7.1963 reads as follows:-
“Rule 59. Availability of certain areas for grant to be
notified- In the case of any land which is otherwise available for
the grant of a prospecting licence or a mining lease but in respect
of which the State Government has refused to grant a prospecting
licence or a mining lease on the ground that the land should be
reserved for any purpose, the State Government shall, as soon as
such land becomes again available for the grant of a prospecting or
mining lease, grant the license or lease after following the
procedure laid down in Rule 58.”

(iii) Rule 59 when amended in 1980 reads as follows:-
“ 59. Availability of area for regrant to be notified- (1) No
area-
a) which was previously held or which is being held under a
prospecting licence or a mining lease; or
b) in respect of which an order had been made for the grant of a
prospecting licence or mining lease, but the applicant has died
before the grant of the licence or the execution of the lease,
as the case may be; or
c) in respect of which the order granting a licence or lease has
been revoked under sub-rule (1) of rule 15 or sub-rule (1) of
rule 31; or
d) in respect of which a notification has been issued under sub
section (2) or sub-section (4) of section 17; or
e) which has been reserved by Government under rule 58, shall be
available for grant unless-
i) an entry to be effect that the area is available for
grant is made in the register referred to in sub-rule
(2) of rule 21 or sub-rule (2) of rule 40, as the case
may be, in ink; and
ii) the availability of the area for grant is notified in
the Official Gazette and specifying a date (being a date
not earlier than thirty days from the date of the
publication of such notification in the Official
Gazette) from which such area shall be available for
grant:
Provided that nothing in this rule shall apply to the renewal of a
lease in favour of the original lessee or his legal heirs
notwithstanding the fact that the lease has already expired: Provided
further that where an area reserved under rule 58 is proposed to be
granted to a Government Company, no notification under clause (i)
shall be required to be issued.
(2) The Central Government may, for reasons to be recorded in
writing relax the provisions of sub-rule (1) in any special case.)”

 

42. Rule 58 has been subsequently deleted, whereas Rule 59 was
amended on 13.4.1988. It now reads as follows:-
59. Availability of area for regrant to be notified- (1) No
area-
(a) which was previously held or which is being held under a
reconnaissance permit or a prospecting licence or a mining
lease; or
(b) which has been reserved by the Government or any local
authority for any purpose other than mining; or
(c) in respect of which the order granting a permit or licence
or lease has been revoked under sub-rule (1) of rule 7A or
sub-rule (1) of rule 15 or sub-rule (1) of rule 31, as the
case may be; or
(d) in respect of which a notification has been issued under
sub-section (2) or sub-section (4) of section 17; or
(e) which has been reserved by the State Government or under
section 17A of the Act,
shall be available for grant unless-

i) an entry to the effect that the area is available for
grant is made in the register referred to insub-rule
(2) of rule 7D or sub-rule (2) of rule 21 or sub-rule
(2) of rule 40, as the case may be; and
ii) the availability of the area for grant is notified in
the Official Gazette and specifying a date (being a
date not earlier than thirty days from the date of the
publication of such notification in the Official
Gazette) from which such area shall be available for
grant:
Provided that nothing in this rule shall apply to the
renewal of a lease in favour of the original lessee or his legal
heirs notwithstanding the fact that the lease has already
expired.
Provided further that where an area reserved under rule 58
or under section 17A of the Act is proposed to be granted to a
Government company, no notification under clause (ii) shall be
required to be issued:
Provided also that where an area held under a
reconnaissance permit or a prospecting licence, as the case may
be, is granted interms of sub-section (1) of section 11, no
notification under clause (ii) shall be required to be issued.

(2) The Central Government may, for reasons to be recorded in
writing, relax the provisions of sub-rule (1) in any special case.”
43. (i) The notification of 1969 is clearly protected under Rule 59 as
amended on 9.7.1963, in as much as the rule clearly states that the State
Government can refuse to grant a mining lease, should the land be reserved
for any purpose. As far as the notification of 1962 is concerned, it is
submitted by the appellants that the Rules 58 and 59 as they stood prior
thereto did not contain a specific power to reserve the land for any
purpose, in the manner it was incorporated in Rule 59 by the amendment of
9.7.1963. As can be seen, these rules provide as to when the reserved area
can be notified for re-grant. The Rules lay down the requirement of making
an entry in the register maintained in that behalf, and issuance of a
notification in the official gazette about the availability of the area for
grant. These provisions are made to ensure transparency. The reference to
the judgment in Janak Lal (supra) does not take forward the case of the
appellants, since as stated in that judgment the result of the amendment in
the rule is only to extend the rule, and not to curtail the area of its
operation. The judgment in terms states that the purpose of these rules is
obviously to enable the general public to apply for the proposed lease.
(ii) Rule 58 as it originally stood, provided for two contingencies. One
contingency is where the applicant has died before the execution of licence
or lease, and the other is where the order granting licence or lease has
been revoked. Rule 59 as originally drafted provided for the third
contingency, namely, where the State Government had earlier refused to
grant a prospecting licence or mining lease in respect of certain land on
the ground that it was reserved for some other purpose, (e.g.
environmental), and such land becomes available for grant. For all these
three contingencies, the procedure laid down in Rule 58 was required to be
followed, namely making of an entry in the specified register, and
notifying in the official gazette the date from which the area will be
available for grant.
44. The appellants then contended by referring to the amended Rule
59 that because the power to reserve the land ‘for any purpose’ was
specifically provided thereunder from 9.7.1963, such power did not exist in
the Rules 58 and 59 as they stood prior thereto. It is not possible to
accept this construction, for the reason as stated above that the Rules 58
and 59 as they originally stood, merely dealt with three contingencies
where the prescribed procedure was required to be followed. This cannot
mean that when it comes to reservation of mining areas for public
undertakings, such power was not there with the State Government prior to
the amendment of 1963. The over-view of various sections of the act done
by us clearly shows that the power to grant the mining leases is
specifically retained with the State Government even with respect to the
major minerals, though with the approval of the Central Government. The
power to effect such reservations for public undertakings, or for any
purpose flows from the ownership of the mines and minerals which vests with
the State Government. The amendment of Rule 59 in 1963 made it clear that
the State can reserve land ‘for any purpose’, and the amendment of Rules 58
and 59 in 1980 clarified that State can reserve it for a public corporation
or a Government company. These amendments have been effected only to make
explicit what was implicit. These amendments can not be read to nullify the
powers which the State Government otherwise had under the statute. In the
present matter we are concerned with the challenge to the power of the
State Government to issue the letter of withdrawal dated 13.9.2005 which is
issued in view of the two notifications of 1962 and 1969. The challenge to
the validity of the said letter will therefore have to be repelled.
45. Learned Senior Counsel Shri Mehta had relied upon Indian Metals
and Ferro Alloys Ltd. (supra) to contend that an area which is reserved can
be made available for re-grant to private sector. However, that situation
can arise when the area becomes de-reserved, and thereafter the specified
procedure is followed. The following statement in para 45 of the very
judgment cannot be ignored in this behalf:-

“…..Under Rule 59(1), once a notification under Rule 58 is made, the
area so reserved shall not be available for grant unless the two
requirements of sub-rule (e) are satisfied: viz. an entry in a
register and a gazette notification that the area is available for
grant……”

Thus, when such a decision to de-reserve the area for re-grant is taken,
the above two requirements are expected to be followed. In the instant
case there was no such occasion since no such decision had been taken by
the State Government. Once the State Government realised that the
concerned areas were reserved for the exploitation in public sector, it
withdrew the proposals forwarding the applications of the appellants to the
Central Government, and it was fully entitled to do the same.
46. It was then contended by Shri Mehta that the State Government’s
power is only to regulate the minor minerals under Section 15 of the Act,
since, that section gives power to the State Government to make rules in
respect of minor minerals, and since Section 14 states that Sections 5 to
13 do not apply to minor minerals. On the other hand the over view of the
provisions from sections 4 to 17A as done above clearly shows the power of
the State Government either to grant or not to grant the mining leases,
prospecting licenses and reconnaissance permits and to regulate their
operations even with respect to the major minerals specified in First
Schedule to the act though with the previous approval of the Centre
Government. This would include the power to effect reservations of mining
areas for the public sector. The reliance on Bharat Coking Coal (supra) is
also untenable for the reason that the judgment lays down that the
executive power of the State is subject to the law made by the Parliament.
There is no conflict with the proposition in the facts of this case. The
power of the State flows from its ownership of the mines, and it is not in
any way taken away by the law made by the Parliament viz. the MMDR Act or
the MC rules. It is therefore not possible to accept the submission of
Shri Ranjit Kumar that because a regulatory regime is created under the Act
giving certain role to the Central Government, the power to effect
reservations is taken away from the State Government. The reference to the
judgment of this Court in D.K. Trivedi & Sons (supra) in this behalf was
also misconceived. In that matter a bench of two Judges, of this Court,
held section 15 (1) of MMDR Act to be constitutional and valid. The court
also held that the rule making power of the State Government, thereunder,
did not amount to excessive delegation of legislative power to the
executive. In that matter no such submission that the powers of the State
Government were restricted only to section 15 was under consideration
47. Similarly, the reliance on Hukam Chand (supra) was also
misconceived in as much as in the present case there is no such issue of
exercising rule making power retrospectively. Nor has the proposition in
Air India (supra) any relevance in the present case since this is not a
case of saving any provision after the repeal of a statute. The action of
the State cannot as well be faulted for being unreasonable to be hit by
Article 19(1) (g) of the Constitution of India since all that the State has
done is to follow the Statute as per its letter and its true spirit.

48. Learned Senior Counsel Shri Ranjit Kumar had contended that
once the State Government had recommended the proposal to the Central
Government for grant of mineral concession it becomes functus-officio in
view of the provision of Rule 63 A of the MC Rules, 1960, and it cannot
withdraw the same. As far as this submission is concerned, firstly it is
seen from the impunged judgment that this plea was not canvassed before the
High Court. Besides, in any case, ‘recommendation’ will mean a complete
and valid recommendation after an application for grant of mining lease is
made under Rule 22 with all full particulars in accordance with law. In
the instant case the State Government found that its own proposal was a
defective one, since it was over-lapping a reserved area. In such a case,
the withdrawal thereof by the State Government cannot be said to be hit by
Rule 63A. In any case, the Central Government subsequently rejected the
proposal, and hence not much advantage can be drawn from the initial
forwarding of the appellants’ proposal by the State Government.

49. It is also contended that Monnet was not afforded hearing.
The submission of denial of hearing under Rule 26 by the State Government
is not raised in the Writ Petition. It is material to note that another
plea is raised in Para 2 (XVI) of their Writ Petition, namely, that central
government ought to have given a hearing before issuing the rejection
order, though no specific provision from the rules was pointed out in that
behalf. The plea that the appellants could not resort to their remedy of
revision under Rule 54 against the letter of State Government dated
13.9.2005 cannot be accepted for the reason that it is the appellants who
chose to file their writ petition directly to the High Court to challenge
the same (along with Central Government letter dated 6.3.2006) without
exhausting that remedy. The Central Government cannot be faulted for the
same. Incidentally, the Petition nowhere states as to how Monnet came to
know about these internal communications between the state and the central
government. The other petitioners claim to have learnt about the same
through a newspaper report, and Adhunik claims to have got the copies
thereof through an application under the Right to Information Act, 2005.

50. The appellants had relied upon three judgments of the
Constitution Benches of this Court in Hingir-Rampur Coal Co., M.A. Tulloch
& Co. and Baijnath Kadio (supra). In Hingir-Rampur Coal Co. (supra), the
Constitution Bench was concerned with the question of legality of the cess
under the Orissa Mining Ares Development Fund Act, 1952. One of the
grounds canvassed was that the said legislation was bad in law for being in
conflict with the previous Mines and Minerals (Regulation and Development)
Act, 1948, which was also a Central Act. It was contended that the central
legislation was referable to Entry No.54 of the Union List from the Seventh
Schedule. It occupied the field and therefore the state legislation which
was referable to Entry No.53 was beyond the competence of the state
legislature. The Court found that the areas covered by the two acts were
substantially the same. However, the 1948 Act was a pre-constitution act
and the relevant provisions of the constitution were held to be
prospective. The Court therefore, held that unless the declaration under
Section 2 of the 1948 Act was made after the Constitution came into force,
it will not satisfy the requirement of Entry No.54. The cess and the
Orissa Act were therefore not held to be bad in law. What this Court
observed in Para 23 in this behalf is relevant for our purpose…………….

“23. The next question which arises is, even if the cess is a
fee and as such may be relatable to Entries 23 and 66 in List II its
validity is still open to challenge because the legislative competence
of the State Legislature under Entry 23 is subject to the provisions
of List I with respect to regulation and development under the control
of the Union; and that takes us to Entry 54 in List I. This Entry
reads thus: “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”. The effect of reading the two Entries together is clear.
The jurisdiction of the State Legislature under Entry 23 is subject to
the limitation imposed by the latter part of the said Entry. If
Parliament by its law has declared that regulation and development of
mines should in public interest be under the control of the Union to
the extent of such declaration the jurisdiction of the State
Legislature is excluded. In other words, if a Central Act has been
passed which contains a declaration by Parliament as required by Entry
54, and if the said declaration covers the field occupied by the
impu8gned Act the impugned Act would be ultra vires, not because of
any repugnance between the two statutes but because the State
Legislature had no jurisdiction to pass the law. The limitation
imposed by the latter part of Entry 23 is a limitation on the
legislative competence of the State Legislature itself. The position
is not in dispute.”

(emphasis supplied)

51. In M.A. Tulloch & Co. (supra), the Constitution Bench was
concerned with legality of certain demands of fee under the Orissa Mining
Areas Development Fund Act, 1952, and the same question arose as to whether
the provisions of the Orissa Act were hit by the MMDR Act, 1957 in view of
Entry No.54 of the Union List. The validity of the state act was canvassed
under Entry No.23 of the State List and was accepted as not hit by the
provisions of the MMDR Act, 1957. The Court held the Orissa Act and the
demand of fee to be valid. What this Court observed in Para 5 is relevant
for our purpose………..

“5. ………….It does not need much argument to realise that to the
extent to which the Union Government had taken under “its control”
“the regulation and development of minerals” so much was withdrawn
from the ambit of the power of the State Legislature under Entry 23
and legislation of the State which had rested on the existence of
power under that entry would to the extent of that “control” be
superseded or be rendered ineffective, for here we have a case not of
mere repugnancy between the provisions of the two enactments but of a
denudation or deprivation of State legislative power by the
declaration which Parliament is empowered to make and has made.”

 

52. In Baijnath Kadio (supra), this Court was concerned with the
validity of second proviso of Section 10 of the Bihar Land Reforms Act,
1964 for being in conflict with the provisions concerning miner minerals
under the MMDR Act, 1957. The Court followed the propositions in Hingir-
Rampur Coal Co. and M.A. Tulloch Co. and found that the field was not open
to the State Legislature, since it was covered under the Central Act.

53. As can be seen from these three judgments, if there is a
declaration by the Parliament, to the extent of that declaration, the
regulation of mines and minerals development will be outside the scope of
the State Legislation as provided under Entry No.54 of the Centre List.
Presently, we are not concerned with the conflict of any of the provisions
under the MMDR Act, either with any State Legislation or with any Executive
Order under a State Legislation issued by the State Government. The
submission of the appellant is that the Jharkhand Government was not
competent at all to issue the notifications of 1962 and 1969 reserving the
mine areas for public undertaking. The answer of the State Government is
that it is acting under the very MMDR Act, and the notifications are within
the four corners of its powers as permitted by the Central Legislation.

54. All these issues raised by the appellants have already been
decided by a bench of three Judges of this Court in Amritlal Nathubhai Shah
Vs. Union of India reported in 1976 (4) SCC 108. In that matter also the
Government of Gujarat had issued similar notifications dated 31.12.1963 and
26.2.1964 reserving the lands in certain talukas for exploitation of
bauxite in public sector. The applications filed by the appellant for
grant of mining lease for bauxite were rejected by the State Government.
The revision application filed by the appellant to the Central Government
was also rejected by its order which stated that the State Government was
the owner of the minerals within its territory and the minerals vest in it,
and also that the State Government had the inherent right to reserve any
particular area for exploitation in the public sector. The Gujarat High
Court had accepted this view.

55. While affirming this view, this Court in Amritlal Nathubhai
(supra) held in clear terms that the power of the State Government arose
from its ownership of the minerals, and that it had the inherent right to
deal with them. In para 3 of its judgment the Court observed as follows:-

“3. It may be mentioned that in pursuance of its exclusive
power to make laws with respect to the matters enumerated in entry
54 of List I in the Seventh Schedule, Parliament specifically
declared in Section 2 of the Act that it was 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
provided in the Act. The State Legislature’s power under entry 23
of List II was thus taken away, and it is not disputed before us
that regulation of mines and mineral development had therefore to
be in accordance with the Act and the Rules. The mines and the
minerals in question (bauxite) were however in the territory of the
State of Gujarat and, as was stated in the orders which were passed
by the Central Government on the revision applications of the
appellants, the State Government is the “owner of minerals” within
its territory, and the minerals “vest” in it. There is nothing in
the Act or the Rules to detract from this basic fact. That was why
the Central Government stated further in its revisional orders that
the State Government had the “inherent right to reserve any
particular area for exploitation in the public sector”. It is
therefore quite clear that, in the absence of any law or contract
etc. to the contrary, bauxite, as a mineral, and the mines thereof,
vest in the State of Gujarat and no person has any right to exploit
it otherwise than in accordance with the provisions of the Act and
the Rules. Section 10 of the Act and Chapters II, III and IV of the
Rules, deal with the grant of prospecting licences and mining
leases in the land in which the minerals vest in the Government of
a State. That was why the appellants made their applications to the
State Government.”

 
56. The Court traced the power of the State Government to refuse to
grant lease, to Section 10 of the MMDR Act. It held that this section
clearly included the power either to grant or refuse to grant the lease on
the ground that the land in question was not available having been reserved
by the State Government for any purpose. In para 5 of its judgment this
Court has held as follows:-

“5. Section 10 of the Act in fact provides that in respect
of minerals which vest in the State, it is exclusively for the
State Government to entertain applications far the grant of
prospecting licences or mining leases and to grant or refuse the
same. The section is therefore indicative of the power of the State
Government to take a decision, one way or the other, in such
matters, and it does not require much argument to hold that that
power included the power to refuse the grant of a licence or a
lease on the ground that the land in question was not available for
such grant by reason of its having been reserved by the State
Government for any purpose.”

 
57. In para 6 of the judgment, this Court rejected the argument
that since Section 17 of the Act provides for the powers of the Central
Government to undertake prospecting or mining operations, the State
Government could not be said to have the power for reservations. The first
part of this para reads as follows:-

“6. We have gone through Sub-sections (2) and (4) of
Section 17 of the Act to which our attention has been invited by Mr.
Sen on behalf of the appellants for the argument that they are the
only provisions for specifying the boundaries of the reserved areas,
and as they relate to prospecting or mining operations to be
undertaken by the Central Government, they are enough to show that
the Act does not contemplate or provide for reservation by any other
authority or for any other purpose. The argument is however
untenable because the aforesaid sub-sections of Section 17 do not
cover the entire field of the authority of refusing to grant a
prospecting licence or a mining lease to anyone else, and do not
deal with the State Government’s authority to reserve any area for
itself. As has been stated, the authority to order reservation flows
from the fact that the State is the owner of the mines and the
minerals within its territory, which vest in it…………….”

 
58. The Judgment referred to Rule 59 of the M.C. Rules also, and
held that it clearly contemplates such reservation by the order of the
State Government In para 7 this Court held in this behalf as follows:-

“7..…..A reading of Rules 58, 59 and 60 makes it quite
clear that it is not permissible for any person to apply for a
licence or lease in respect of a reserved area until after it
becomes available for such grant, and the availability is notified
by the State Government in the Official Gazette. Rule 60 provides
that an application for the grant of a prospecting licence or a
mining lease in respect of an area for which no such notification
has been issued, inter alia, under Rule 59, for making the area
available for grant of a licence or a lease, would be premature, and
“shall not be entertained and the fee, if any, paid in respect of
any such application shall be refunded.” It would therefore follow
that as the areas which are the subject matter of the present
appeals had been reserved by the State Government for the purpose
stated in its notifications, and as those lands did not become
available for the grant of a prospecting licence or a mining lease,
the State Government was well within its rights in rejecting the
applications of the appellants under Rule 60 as premature. …..”

 
59. In view of the discussion as above, the judgment in Amritlal
(supra) cannot be said to be stating anything contrary to the propositions
in Hingir-Rampur Coal Co., M.A. Tulloch & Co. and Baijnath Kadio (supra),
but is a binding precedent. The notifications impugned by the appellants in
the present group of appeals were fully protected under the provisions of
MMDR Act, and also as explained in Amritlal (supra).

 
Desueutde

60. The submissions with respect to the two notifications suffering
on account of Desuetude has also no merit, as the law requires that there
must be a considerable period of neglect, and it is necessary to show that
there is a contrary practice of a considerable time. The appellants have
not been able to show anything to that effect. The authorities of the
State of Jharkhand have acted the moment the notifications were brought to
their notice, and they have acted in accordance therewith. This certainly
cannot amount to deusteude.

Promissory Estoppel and Legitimate Expectations

61. As we have seen earlier, for invoking the principle of
promissory estoppel there has to be a promise, and on that basis the party
concerned must have acted to its prejudice. In the instant case it was
only a proposal, and it was very much made clear that it was to be approved
by the Central Government, prior whereto it could not be construed as
containing a promise. Besides, equity cannot be used against a statutory
provision or notification.

62. What the appellants are seeking is in a way some kind of a
specific performance when there is no concluded contract between the
parties. An MOU is not a contract, and not in any case within the meaning
of Article 299 of the Constitution of India. Barring one party (Adhunik)
other parties do not appear to have taken further steps. In any case, in
the absence of any promise, the appellants including Aadhunik cannot claim
promissory estoppel in the teeth of the notifications issued under the
relevant statutory powers. Alternatively, the appellants are trying to
make a case under the doctrine of legitimate expectations. The basis of
this doctrine is in reasonableness and fairness. However, it can also not
be invoked where the decision of the public authority is founded in a
provision of law, and is in consonance with public interest. As recently
reiterated by this Court in the context of MMDR Act, in Para 83 of Sandur
Manganese (supra) ‘it is a well settled principle that equity stands
excluded when a matter if governed by statute’. We cannot entertain the
submission of unjustified discrimination in favour of Bihar Sponge and Iron
Ltd. as well for the reason that it was not pressed before the High Court
nor was any material placed before this Court to point out as to how the
grant in its favour was unjustified.

Epilogue

63. Before we conclude, we may refer to the judgment of this Court
in State of Tamil Nadu Vs. M/s Hind Stone reported in AIR 1981 SC 711
wherein the approach towards this statute came up for consideration. In
that matter this Court was concerned with Rule 8-C of the Tamil Nadu Minor
Mineral Concessions Rule, 1959 framed by the Government of Tamil Nadu under
Section 15 of the MMDR Act. This rule provided as follows:-

“8-C. Lease of quarries in respect of black granite to
Government Corporation, etc.

1) Notwithstanding anything to the contrary contained in
these rules, on and from 7th December 1977 no lease
for quarrying black granite shall be granted to
private persons.

2) The State Government themselves may engage in
quarrying black granite or grant leases for quarrying
black granite in favour of any corporation wholly
owned by the State Government.

Provided that in respect of any land belonging to any
private person, the consent of such person shall be obtained for
such quarrying or lease”

 
64. Although in Hind Stone the Court was concerned with the
provision of this rule which was concerning a minor mineral, while
examining the validity thereof this Court (per O. Chinnappa Reddy J.) has
made certain observations towards the approach and the scope of MMDR Act
which are relevant for our purpose. Thus in para 6, it was observed as
follows:-

“6…………….The public interest which induced Parliament to
make the declaration contained in Section 2 of the Mines and
Minerals (Regulation and Development) Act, 1957, has naturally
to be the paramount consideration in all matters concerning the
regulation of mines and the development of minerals,
Parliament’s policy is clearly discernible from the provisions
of the Act. It is the conservation and the prudent and
discriminating exploitation of minerals, with a view to secure
maximum benefit to the community……………..”

 
65. Again in para 9, this Court observed:-

“9……….Whenever there is a switch over from ‘private sector’
to ‘public sector’ it does not necessarily follow that a change of
policy requiring express legislative sanction is involved. It depends
on the subject and the statute. For example, if a decision is taken
to impose a general and complete ban on private mining of all minor
minerals, such a ban may involve the reversal of a major policy and so
it may require legislative sanction. But if a decision is taken to
ban private mining of a single minor mineral for the purpose of
conserving it, such a ban, if it is otherwise within the bounds of the
authority given to the Government by the Statute, cannot be said to
involve any change of policy. The policy of the Act remains the same
and it is, as we said, the conservation and the prudent and
discriminating exploitation of minerals, with a view to secure maximum
benefit to the community. Exploitation of minerals by the private
and/or the public sector is contemplated. If in the pursuit of the
avowed policy of the Act, it is thought exploitation by the public
sector is best and wisest in the case of a particular mineral and, in
consequence the authority competent to make the subordinate
legislation makes a rule banning private exploitation of such mineral,
which was hitherto permitted we are unable to see any change of policy
merely because what was previously permitted is no longer permitted.”

Last but not least, in para 13 this Court observed as follows:-

“13……No one 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…….”

 

66. Mines and minerals are a part of the wealth of a nation. They
constitute the material resources of the community. Article 39(b) of the
Directive Principles mandates that the State shall, in particular, direct
its policy towards securing that the ownership and control of the material
resources of the community are so distributed as best to subserve the
common good. Thereafter, Article 39(c) mandates that state should see to
it that operation of the economic system does not result in the
concentration of wealth and means of production to the common detriment.
The public interest is very much writ large in the provisions of MMDR Act
and in the declaration under Section 2 thereof. The ownership of the mines
vests in the State of Jharkhand in view of the declaration under the
provisions of Bihar Land Reforms Act, 1950 which act is protected by
placing it in the Ninth Schedule added by the First Amendment to the
Constitution. While speaking for the Constitution Bench in Waman Rao
(supra) Chandrachud, C.J. had following to state on the co-relationship
between Articles 39 (b) and (c) and the First Amendment:-

“26. Article 39 of the Constitution directs by clauses
(b) and (c) that the ownership and control of the material resources of
the community are so distributed as best to subserve the common good;
that the operation of the economic system does not result in the
concentration of wealth and means of production to the common
detriment. These twin principles of State Policy were a part of the
Constitution as originally enacted and it is in order to effectuate the
purpose of these Directive Principles that the 1st and the 4th
Amendments were passed…..”

 

 

 

 

67. What is being submitted by the appellants is that the State
Government cannot issue such notifications for the reasons which the
appellats have canvassed. We, however, do not find any error in the letter
of withdrawal dated 13.9.2005 issued by the State of Jharkhand, and the
letter of rejection dated 6.3.2006 issued by the Union of India for the
reasons stated therein. In our view, the State of Jharkhand was fully
justified in declining the grant of leases to the private sector operators,
and in reserving the areas for the public sector undertakings on the basis
of notifications of 1962, 1969 and 2006. All that the State Government has
done is to act in furtherance of the policy of the statute and it cannot be
faulted for the same.

68. For the reasons stated above we do not find any merit in these
appeals and they are all dismissed. The interim orders passed therein will
stand vacated.

69. The Contempt Petition (C) No.14/2009 is filed by Abhijeet is
for the alleged breach of an earlier order dated 15.12.2008. The order
dated 28.01.2009 makes it clear that no notice was issued on the Contempt
Petition. Since the appeal is being disposed of and dismissed, the
Contempt Petition is also dismissed.

70. Iron is a mineral necessary for industrial development. In
view of the pendency of these appeals, and the stay orders sought by the
appellants therein, grant of lease of iron-ore mines to the public sector
undertakings could not be made for over six years. The State of Jharkhand
and the people at large have thereby suffered. In view thereof we would
have been justified in imposing costs on the appellants. However,
considering that important questions of law were raised in these appeals,
we refrain from doing the same. The parties will therefore, bear their own
costs.

 
…………………………………..J.
( H.L. Gokhale )

New Delhi
Dated: 26 July, 2012

———————–
[1] AIR 1961 SC 459
[2] AIR 1964 SC 1284
[3] 1969 (3) SCC 838
[4] 1976 (4) SCC 108
[5] 1990 (1) SCC 12
[6] 1991 Suppl. (1)SCC 430
[7] 2010 (4) SCC 498
[8] 2008 (56) 1 BLJR 660
[9] 1990 (4) SCC 557
[10] 1989 (4) SCC 121

[11] 1973 (1) SCC 584
[12] 2004 (10) SCC 201
[13] 2010 (13) SCC 1
[14] 1986 (Suppl.) SCC 20
[15] 1981 (2) SCC 205
[16] 1992 Supp (1) SCC 91
[17] 1972 (2) SCC 601
[18] 1952 SCR 889
[19] 2001 (10) SCC 476
[20] AIR 1961 SC 860
[21] 1986 (1) SCC 264
[22] 1995 (3) SCC 434
[23] 2003 (4) SCC 239
[24] 1977 (1) SCC 340
[25] 1980 (4) SCC 136
[26] 1979 (2) SCC 409
[27] 1992 (2) SCC 411
[28] 2004 (6) SCC 465
[29] 2006 (13) SCC 706
[30] Subs. by Act 38 of 1999, sec. 5, for certain words (w.e.f.18-12-
1999).
[31] Ins. by Act 37 of 1986, sec. 2 (w.e.f. 10-2-87)
[32] Subs. by Act 38 of 1999, sec. 5, for “the Atomic Minerals Division”
(w.e.f. 18-12-1999)
[33] Ins. by Act 16 of 1987, sec. 14 (w.r.e.f. 1-10-1963).
[34] Ins. by Act 38 of 1999, sec. 5 (w.e.f. 18-12-1999)
[35] Subs. by Act 38 of 1999, sec. 5, for “No prospecting licence or
mining lease” (w.e.f. 18-12-
1999)
[36] Ins. by Act 37 of 1986, sec. 2 (w.e.f. 10-2-1987)
[37] Subs. by Act 38 of 1999, sec. 5, for certain words (w.e.f. 18-12-
1999)
[38] AIR (1965) SC 177
[39] (1979) 3 SCC 431
[40] 1985 (Supp) SCC 476
[41] 1982 (1) SCC 125
[42] 1996 (6) SCC 702
[43] 2007 (9) SCC 78
[44] AIR 1951 SC 128
[45] (1905) AC 369
[46] (1894) 1 QB 725, p. 737
[47] (1956) 1 All ER 256
[48] (1854) 5 HLC 185
[49] (1877) 2 AC 439
[50] (1889) 40 Ch D 268
[51] (1968) 2 All ER 987
[52] (1975) 3 All ER 269
[53] (1975) 3 All ER 865
[54] 57 ALR 980
[55] (1958) 31 Cal 2d 409
[56] (1968) 2 SCR 366
[57] (1952) SCR 43
[58] (1970) 1 SCC 582
[59] (1974) 1 SCR 515
[60] (1975) 1 SCC 21
[61] (1973) 2 SCC 713
[62] (1976) 3 SCC 540
[63] (1977) 4 SCC 145
[64] (1977) 3 SCC 457
[65] (1985) 4 SCC 369
[66] (1988) 1 SCC 86
[67] 1995 (1) SCC 274
[68] (2004) 1 SCC 139
[69] (2005) 1 SCC 625
[70] (1993) 3 SCC 499
[71] (1996) 5 SCC 268
[72] (1997) 7 SCC 592
[73] (2003) 5 SCC 134
[74] (1982) 3 SCC 519
[75] LR (1931) 2 KB 215 (CA)
[76] 1931 SLT (Scots Law Times Reports) 456, 458
[77] (1970) 2 All ER 193
[78] (1997) 9 SCC 450
[79] AIR 1936 PC 253
[80] (2008) 16 SCC 276
[81] (2001) 4 SCC 181
[82] (1978) 1 SCC 405

———————–
1

 

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