1. In this Writ Petition an order of the Central Government under Rule 54 of the Mineral Concession Rules, which is in the following terms, is challenged:
'I am directed to refer to your revision application dated 25-7-1963 and letter dated 1-9-1964 on the above subject and to say that after careful consideration of the grounds stated therein, the Central Government have come to the conclusion that there is no valid ground for interfering with the decision of the Government of Andhra Pradesh rejecting your application for grant of mining lease for manganese over an area of 19-88 acres in B. S. No. 15 of Kothakana village, Cheepurapalli Taluk, Srikakulam District. Your application for revision is, therefore, rejected.
Under Secretary to the Govt of India.'
2. It is easy to recognise in the order a formula which is ever being repeated in such matters. If the name of the village, the Survey Numbers and the extent of land are changed, this Order could well to be the order which was quashed by the Supreme Court in Bhagat Raja v. Union of India, : 3SCR302 , or an order which I quashed in Silver Mining Company v. Government of Andhra Pradesh etc., W. P. No. 516 of 1965 (AP) on the ground that the order gave no reasons for rejecting the revision.
3. Sri P. Ramachandra Reddy, leaned counsel for the 3rd respondent urges that this case does not fall within the principles laid down by the Supreme Court in Bhagat Raja's case. : 3SCR302 because in the present case the reasons for rejection of the revision were so obvious that they did not require to be restated. According to him the 3rd respondent was the first to apply for the grant of a mining lease in respect of the land in question and the State Government was therefore bound to prefer him to all other applicants under S. 11(2) of the Mines and Minerals. (Regulation and Development) Act, 1957. He submits that the fact that the 3rd respondent was the earliest applicant was not in dispute and therefore the State Government and the Central Government had no option but to grant the mining lease in favour of the 3rd respondent. Sri Manohar appearing for the Central Government submits that it is only in cases where the reasons stated by the State Government are vague and obscure. it is necessary for the Central Government to state its reasons while rejecting a revision. It is necessary to state a few facts in order to appreciate these arguments.
4. The Inam estate of Kottakara in Chipurupalli Taluk was abolished and taken over by the Government under the Estate Abolition Act on 24-7-1962. Survey and Settlement operations are still in progress in this village. Prior to the taking over of the estate one Acham Naidu had been granted a mining lease by the Inamdars of the village for a period of ten years from 17-3-1953. The Government claimed that the lease in favour of Acham Naidu was contrary to the provisions of chapter 5 of the Mineral Concession Rules and that it did not bind them and therefore they were not bound to notify that the area was available for grant of mining lease before making a grant of a mining lease in favour of any one. The 3rd respondent, one T. C. Appala Naidu and the petitioner applied to the State Government for the grant of a mining lease in respect of an extent of Ac. 19-88 cents of land in B. S. No. 15 of Kottakara Village. Their applications were received by the Government on 24-7-1962, 11-8-1962 and 30-8-1962 respectively. The State Government by its order dated 13-6-1963 granted (sic) the lease to the petitioner on the ground that under S. 11(2) of the Mines and Minerals (Regulation and Development) Act, 1957 the 3rd respondent was entitled to preference as his application was received earlier than the applications of the rest. The order of the State Government also mentioned that the prior concurrence of the Central Government had been obtained for the grant of a mining lease to the 3rd respondent.
5. The petitioner preferred a revision to the Central Government under R.54 of the Mineral Concession Rules of 1960. In his grounds of revision the petitioner mentioned that when he applied for the grant of a mining lease of certain lands in a neighbouring village his application was rejected as premature by G. O. Ms. No. 1698 dated 7-11-1960 on the ground that the survey and Settlement Proceedings in that village had not been completed. Though admittedly the Survey and Settlement proceedings in Kottakara Village had not been completed the State Government granted a mining lease to the 3rd respondent. According to him he was misled by G. O. Ms. No. 1698 dated 7-11-1960 into thinking that applications filed during the pendency of Survey and Settlement proceedings would not be considered by the State Government. When he learnt that the 3rd respondent had submitted an application he also submitted an application for the grant of a lease. According to him either all the applications should have been rejected as premature or all applications should have been considered on the same footing without any preference being given to the person applying first. The petitioner also submitted that he had long experience of manganese mining and that he was one of the leading exporters of manganese whereas the 3rd respondent was only a beginner without any experience and without any financial resources.
The Central Government obtained the comments of the State Government under Rule 55 (1) of the Mineral Concession Rules. Almost the whole of the comment of the State Government was an explanation for not notifying the availability of the area for the grant of a lease. The comments however dealt with paragraphs 5 and 6 of the Revision Petition of the petitioner where he referred to his experience and the fact that he was one of the leading exporters of manganese ore. It did not touch upon the other grounds raised by the petitioner in his revision namely, that the 3rd respondent should not have been preferred merely on the ground that his application was first in point of time since it was thought that no applications for grant of leases would be entertained when Survey and Settlement proceedings were in progress. The State Government in its comment generally stated that the Mineral Concession Rules did not prohibit the grant of aiming lease before the completion of Survey and Settlement proceedings, but did not meet the point expressly raised by the petitioner that earlier it had held in G. O. Ms. No. 1698 that applications received during the progress of Survey and Settlement proceedings would be treated as premature. After obtaining the comments of the State Government the Central Government passed the impugned order.
6. According to Mr. Ramachandra Reddy, learned counsel for the respondent, statement of reasons by the Central Government in a case like the present was superfluous since the reason for the preference shown to the 3rd respondent was patent. He had been preferred because his application was received first. It is true that under S. 11(2) where two or more persons apply for a mining lease in respect of the same land the applicant whose application is received earlier has a preferential right over applicants whose applications are received later. Section 11 also provides that where several applications are received on the same day certain matters like special knowledge, experience, financial resources, availability of technical assistance, etc, should be considered for the purpose of deciding who should be granted lease Sub-s. (4) of S.11 provides that the State Government may for special reasons to be recorded and with the previous approval of the Central Government grant a lease contrary to the provisions of S. 11(2) .
According to Sri Ramachandra Reddy, sub-s. (4) of Section11 reserves to the State Government. with the prior approval of the Central Government, the right to grant a mining lease contrary to the provisions of Section 11(2) but that it confers no right on a party to claim in revision before the Central Government that he should be preferred notwithstanding the provisions of S. 11(2) . His argument is that where the State Government has granted the lease to the earliest applicant under Section 11(2) it will not be open to the Central Government to consider any special grounds for granting a lease to someone else. The Central Government gets jurisdiction to examine the question whether a later applicant should be preferred to an earlier applicant only if the State Government seeks its approval under S. 11(2) . In other words, whenever the State Government grants a mining lease to the person whose application is received first the Central Government has no right to interfere.
7. I am unable to agree with the contentions of Sri Ramachandra Reddy, Section11 is in the following terms:
'11 Preferential right of certain persons:
(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 prosecuting licence or a mining lease in respect of the same land, the applicant whose application was received earlier shall have a preferential right for the grant of the licence or lease as the case may be, over an applicant whose application was received later:
Provided that where any such applications are received on the same day, the State Government, after taking into consideration the matters specified in sub-section (3), may grant the prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit. (3) The matters referred to in sub-section (2) are the following:
(a) any special knowledge of or experience in, prosecuting 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.'
In my opinion the several sub-sections of S.11 must be read together. Section 11(1) provides that person who has a prospecting licence should be preferred in the matter of grant of a mining lease subject to his not having committed any breach of the conditions of the prospecting licence and his being a fit person for being granted a mining lease. The preference to be shown to him is not therefore absolute and it is open to a rival applicant to show that he is not a fit person for being granted a mining lease. Similarly sub-section (2) provides for preference being shown to a person whose application is received first. But it is open to any applicant who has applied late to point out any special reasons why the lease should not be granted to the earliest applicant, but should be granted to him. In such a case the State Government may act under sub-section (4) and grant the lease to the later applicant after obtaining the previous approval of the Central Government.
In order to prevent arbitrary action on the part of the State Government, sub-section (4) provides that the State Government must record the special reasons and obtain the previous approval of the Central Government. This does not mean that where the State Government does not consider that there are any special reasons the Central Government is precluded from considering the question whether there are any special reasons for preferring a later applicant to an earlier applicant. The Central Government acting in revision under Rules 54 and 55 of the Mineral Concession Rules will naturally have and can exercise all the powers that the State Government had and could have exercised in dealing with applications for mining leases. Rule 55 (4) is couched in sufficiently wide terms to enable the Central Government to do so. It is as follows:
'After considering the records referred to in sub-rule (3), the Central Government may confirm, modify or set aside the order or pass such other order in relation thereto as the Central Government may deem just and proper.'
I do not also agree with Sri Ramachandra Reddy that the matters mentioned in sub-section (3) of Section11 can be considered only when dealing with applications received on the same day and cannot be considered when the Government acts under sub-section (4) of Section11. The special reasons contemplated by sub-section (4) may include the matters mentioned in sub-section (3), among other matters, I am therefore of the view that the right of revision given to a party under Rule 54 of the Mineral Concession Rules is not mere nothing in cases where the State Government professes to act under Section 11(2) of the Act. If that be so, the Central Government cannot avoid stating its reasons for rejecting the revision and if it does not state its reasons it is the duty of the High Court to quash the order. I cannot also agree with the contention of Sri Manohar that it is only in cases where the reasons given by the State Government are vague or obscure that the Central Government must state its reasons. In dealing with a revision the Central Government must consider not merely the reasons given by the State Government but the attack upon those reasons by the revision petitioners.
In the passage in the judgment of the Supreme Court at page 1610 on which Mr. Manohar relies the learned Judges of the Supreme Court were merely giving an illustration as to why in certain circumstances it was imperative that the Central Government should state its own reasons. The illustration was clearly not meant to be exhaustive of the circumstances when the Central Government was bound to give reasons.
In my view the recent judgment of the Supreme Court in : 3SCR302 has placed the matter beyond controversy. In W. P. No. 516 of 1965 (AP), an order of the Central Government in identical terms was considered by me and following the judgment of the Supreme Court I held in that case that the Central Government in dealing with revisions under Rules 54 and 55 of the Mineral Concession Rules is bound to state reasons for its decision. It is not necessary for me to reiterate what I have already said except to add. that nothing that I have heard from Mr. Ramachandra Reddy or Mr. Manohar induces me to change my view. The Writ Petition is, therefore, allowed. The order of the Central Government is quashed and the Central Government is directed to rehear the Revision Petition filed by the petitioner and dispose it of in accordance with law. The petitioner is entitled to his costs.
Advocate's fee Rs. 100/-
8. Petition allowed.