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Ferro Alloys Corporation Ltd. Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 824 of 1972
Judge
Reported inILR1977Delhi189
ActsMines and Minerals (Regulation and Development) Act, 1957 - Sections 10, 11(1), 11(2) and 11(4); Mineral Concession Rules, 1960 - Rule 58
AppellantFerro Alloys Corporation Ltd.
RespondentUnion of India and ors.
Advocates: G.L. Sanghvi,; A.K. Sanghi,; B. Dutta,;
Cases ReferredIn Pioneer Motors Ltd. v. Nagercoil Municipal Council
Excerpt:
.....government to depart from the priorities mentioned in sub-sections (1) & (2) show that the state government has to act in accordance with the priorities mentioned in sub-sections (1) & (2) of section 11 and only in a very special case it may make a departure or an exception. it cannot be said that an exception provided in a provision creates a right. whether the state government in its wisdom wishes to invoke the exception in a particular case is not a matter open to judicial review unless gross illegality or mala fides are shown. moreover, the powers of the high court for interference under article 226 cannot be extended in every set of circumstances. unless there is an error patent on the face of the record or there is a gross illegality interference under article 226 of..........and the grant of the mining lease over the said area in favor of the third respondent. the state government, respondent no. 2 (then known as the state of mysore) notified the aforesaid area by a notification dated june 4, 1970 as being open for grant of a mining lease. the said notification is purported to have been issued in pursuance of rule 58 of the rules. the third respondent and some others filed applications for grant of mining lease on july 4, 1970. the petitioner filed its application for mining lease over the said area on august 12, 1970 though the application was dated august 7, 1970. the state government on march 3, 1971 recommended the application of the third respondent to central government for the grant of the mining lease. the approval of the central government.....
Judgment:

Prakash Narain, J.

(1) This case raises somewhat important questions of interpretation of certain provisions of the Mines and Minerals (Regulations & Development) Act, 1957, hereinafter referred to as the Act, and the Mineral Concession Rules, 1960 hereinafter referred to as the Rules, framed under the said Act-

(2) The dispute relates to the rejection of the petitioner's application for the grant of a mining lease over an area comprising of 159.28 acres in Hulikatte Village of Chitradurga District in the State of Karnataka and the grant of the mining lease over the said area in favor of the third respondent. The State Government, Respondent No. 2 (then known as the State of Mysore) notified the aforesaid area by a notification dated June 4, 1970 as being open for grant of a mining lease. The said notification is purported to have been issued in pursuance of Rule 58 of the Rules. The third respondent and some others filed applications for grant of mining lease on July 4, 1970. The petitioner filed its application for mining lease over the said area on August 12, 1970 though the application was dated August 7, 1970. The State Government on March 3, 1971 recommended the application of the third respondent to Central Government for the grant of the mining lease. The approval of the Central Government to the grant of the mining lease to the third respondent was given on May 27, 1971 and a mining lease was granted to the third respondent on June 14,1971. A few days later the State Government by its communication dated June 18, 1971 informed the petitioner that its application is rejected. The precise communicated to the petitioner was as under :-

'Iam directed to state that your mining lease application mentioned above is rejected for the reason that an earlier application of M/s Bharat Parikh & Co. over an area is under consideration for grant. Hence the area is not free for grant'.

(3) The petitioner had thereupon filed a revision petition to the Central Government under Rule 54 of the aforesaid Rules which in its turn after considering the grounds of revision, comments of the State Government, counter-comments submitted by the petitioner as well as the counter-comments submitted by the third respondent herein which was imp leaded as a party to the revision, dismissed the revision filed by the petitioner. The grounds on which the revision petition was dismissed were communicated to the petitioner by a letter dated April 7, 1972. The present petition has, thereforee, been filed by the petitioner challenging the legality and validity of the order by which its application for grant of mining lease was rejected by the State Government, the mining lease was granted to the third respondent and the challenge to the said two actions before the Central Government failed by the dismissal of the petitioner's revision petition.

(4) Before I proceed to examine the rival contentions it would be advantageous to read and notice the relevant provisions of the Act and the Rules.

(5) By virtue of the provisions of Section 1(2) the Act extends to the whole of India. Section 4 of the Act lays down that 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 license or, as the case may be, a mining lease, granted under the Act and the Rules made there under. Sub-section (2) of Section 4 prohibits grant of prospecting license or mining lease otherwise than in accordance with the provisions of the Act and the Rules made there under.

(6) Section 5 of the Act places restrictions on persons or parties who can be granted a prospecting license or a mining lease by the State Government. Indeed, it lays down certain necessary qualifications which must pre-exist before an applicant is considered for the grant. Section 7 specifies the period for the grant of a prospecting license while Section 8 specifies the period for the grant of a mining lease or a renewal thereof. Section 10 and Section 11 of the Act read as under :-

'10.Application for prospecting licenses or mining leases.- (1) An application for a prospecting license or a mining lease in respect of any land in which the minerals vest in the Government 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 acknowledgement 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 there under, grant or refuse to grant the license or lease. 11. Preferential right of certain persons.-(1) Where a prospecting license 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 license 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 license 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 license 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 license 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 license or a mining lease to an applicant whose application was received later in preference to an applicant whose application was received earlier.'

(7) Section 13 empowers the Central Government to make roles in respect of minerals while Section 15 empowers the State Government to make rules in respect of minor minerals. Section 28 lays down that all rules made and notifications issued by the Central Government shall be laid before each House of Parliament. Section 30 empowers the Central Government of its own motion or an application made within the prescribed time by the aggrieved party to revise any order made by a State Government or other party in exercise of the power conferred upon it by or under the Act.

(8) The rules referred to earlife were promulgated by the Central Government in exercise of the powers conferred on it by Section 13 of the Act. Rule 22 lays down 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 the prescribed form and' shall be accompanied by prescribed fee. Rule 24, inter alia, lays down that an application for grant of mining lease shall be disposed of within twelve months from the date of its receipt. Rule 26 provides that the State Government may, for reasons to be recorded in writing and communicated to the applicant, refuse to grant or renew a raining lease over the whole or part of the area applied for. Rule 34 reads as under :-

'34.Manner of exercise of preferential rights for mining lease.-A mining lease to any person who has a preferential right thereto under sub-section (1) of Section 11, may at his option, be granted to him either for the whole of the area for which he holds the prospecting license or such part or parts thereof as he may select but the State Government may for any special reasons to be recorded in writing reduce the area or exclude a portion there from.'

(9) Rule 54 provides for the period of limitation and the fee payable in revisions preferred to the Central Government. It also provides that in every application for revision against the order of the State Government refusing to grant a prospecting license or a mining lease, any person to whom a prospecting license or mining lease was gran- ted in respect of the same area or a part thereof shall be imp leaded as a party. Rule 58 reads as under :-

'58.Available areas for regrant-to benotified.- (1) No area which was previously held or which is being held under a prospecting license or a mining lease or in respiect of which an order had been made for the grant thereof but the applicant has died before the execution of a license or lease, as the case may be, or in respect of which the order granting license 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 thirty days in advance. (2) The Central Government may, for reasons to be recorded in writing, relax the provisions of sub-rule (i) in any special case.'

Rule 60 reads as under :-

'60.Premature applications.-Applications for the grant of a prospecting license or a mining lease in respec; of the areas in which- (a) no notification has been issued under rule 58 or rule 59; or (b) if 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 and the fee, if any, paid in respect of any such application shall be refunded.'

(10) The petitioner contends (a) that its application had to be considered along with the application of others, particularly the third respondent and even if the third respondent is considered to have a preferential right, the whole matter had to be looked at subject to the petitioner's right to have its application considered in accordance with provisions of Section 11(4) of the Act and the failure of the State Government to do so amounts not only to a denial of equal protection of laws to the petitioner but violation of statutory provisions ; (b) that the' application of the third respondent was premature on a reading of the provisions of Rule 58 and the date of the notification of the State Government, and so, could not be entertained by virtue of the provisions of Rule 60; (e) that the order of the State Government is not a speaking order and is vitiated being without any rationale; and (d) the order of the Central Government passed in revision is vitiated because no proper hearing was given to the petitioner and so, the principles of natural justice must be deemed to have been violated. The order of the Central Government is also stated to be had because it perpetuates illegality committed by the State Government and upholds the violation of Article 14 of the Constitution by the State Government.

(11) On the first of the four points mentioned above all that has been agitated at the bar is that the State Government on the very face of the order that it has passed must be held to have ignored the provisions of sub-section (4) of Section 11 of the Act. The order of the State Government has already been reproduced earlier. Assuming that the third respondent's application was validly received, there can be no dispute that it was received earlier in point of time than the application of the petitioner. thereforee, assuming a preferential right in the third respondent what has to be seen is whether the petitioner's application could be rejected merely on the ground that the application of the third respondent was under consideration and so, the area was no longer open to grant as far as the petitioner was concerned. Without looking into the merits of the petitioner's application to find out whether the preferential right envisaged by subsection (2) of Section 11 could be ignored for special reasons as envisaged by sub-section (4) of Section 11 vis-a-vis the petitioner. In other words, what has to be seen is whether sub-section (4) of Section 11 is mandatory or directory. In my opinion, 'the rule regarding priority is clearly set out in sub-section (1), (2) and (3) of Section 11. The contingency mentioned in sub-section (4) of Section 11 is an exception to the general rule and cannot be held to be mandatory. Apart from the use of the term 'may' in sub-section (4) of Section 11 the provision regarding the State Government having to record special reasons and taking the) previous approval of the Central Government to depart from the priorities mentioned in sub-sections (1) and (2) shows that the State Government has to act in accordance with the priorities mentioned in sub-sections (1) and ( 2) 'of Section 11 and only in a very special case it may make a departure or an exception. It cannot be said that an exception provided in a provision creates a right. Whether the State Government in its wisdom wishes to invoke the exception in a particular case is not a matter open to judicial review unless gross illegality or mala fide are shown. I am of the view that the powers of the High Court for interference under Article 226 cannot be extended in every set of circumstances. Unless there is an error patent of the face of the record or there is a gross illegality interference under Article 226 of the Constitution is not called for. Exercise of a discretion even if erroneous cannot be interfered with. The matter of priorities is laid down statutorily by sub-sections (1) and (2) of Section 11. The aspect referred to in sub-section (4) of Section 11 can only be regarded as a discretionary aspect. Even if there has been an error in not exercising discretion referred to in sub-section (4) interference is uncalled for.'

(12) In M. Dastgir Saheb M. Mohiddin v. Union of India and others, Air 1964 P&H; 432(1), a learned single Judge of the Punjab High Court sitting in circuit in Delhi dealt with the questions of priorities. Under Section 11 of the Mines and Minerals (Regulation and Development) Act, 1957. That Section was in pari materia to Section 11 of the present Act. Construing the provisions of that section and the rules framed under the Act of 1957, Shamsher Bahadur, It was held that the Government had jurisdiction to decide the matter of priority under Section 11 of the Act of 1957 and if an erroneous view was taken of the principle of 'First come first served' embodied in Section 11 and the rules made under the Act of 1957, it was not such a patent error which would call for interference by the High Court. I am in respectful agreement with these observations.

(13) I have already observed that, in my opinion, Section 11(4) is directory and not mandatory. Besides the language of sub-section (4) of Section 11 on which I have dilated, the difference between the phraseology in which sub-section (1) is couched is a further pointer to the fact that whereas sub-sections (1) and (2) are mandatory, sub-section (4) is directory. I am fortified in coming to this conclusion by a bench decision of the Mysore High Court in Mysore Cements Ltd. and another v. The Union of India and others, Air 1972 Mys 149(2), wherein my learned brothers of that court were considering Section 11 of the Act of 1957 which, as I have already noticed earlier, is in pari materia to Section 11 of the present Act.

(14) One may look at the whole question from yet another aspect. Sub-section (4) of Section 11 merely makes an application who has come later eligible for having his application considered if he makes out a special case. There is no right as such to have his application considered. In the face of the preferential rights mentioned in subsections (1) and (2) of Section 11 the right contemplated by section 11(4) is rather a weak right. Reliance on behalf of the petitioner on the observations of the Supreme Court in Choughule and Co. Private Ltd. v. Union of India and others, : AIR1971SC2021 is of little avail. The impugned order was struck down in that case, inter alia, because the State Government had not considered preferential claim of the rival claimants in that case or the relevant merits of the claims to the lease put forward by the contending parties. The preferential and rival claims that were to be considered were in the context of sub-sections (1), (2) and (3) of Section 11 of the Act of 1957, similar to sub-sections (1), (2) and (3) of Section 11 of the Act. The Supreme Court was not concerned with the exception postulated by sub-section 4. Similarly, the rule laid down by a bench of this Court in, Kangra Valley State Company Ltd. v. The Union of India and others, I.L.R. 73 Delhi 923(4) is also of little avail. What was observed by the learned Chief Justice speaking for the bench in respect of sub-section (4) of Section 11 of the Act of 1957 was that if the words used in the statute are, prima facie, enabling the courts will readily infer a duty to exercise power which is invested in aid of enforcement of a right public or private of a citizen. So, where the petitioner-company had invited the State Government, as also the Central Government, to determine its rights under sub-section (1) and sub-section (4) of Section 11, but no findings have been given on these questions either by the State Government or by the Central Government, then though the sub-section used the word 'may' yet the Central Government had a duty to determine the rights of the petitioner-company claimed under sub-section (4) of Section 11 of the said Act. Before this rule can be said to be attracted it has first to be aflirrna.tielvestablished that the petitioner either asked the State Government or the Central Government to determine its rights under sub-sections (1) and (4) of Section 11. It is nowhere stated in the petition that the petitioner ever a^ked the State Government or the Central Government to consider any preferential right made by it. A copy of the application that the petitioner moved for the grant of the mining lease to the State Government is Annexure 'A' to the petition. it dees not set out any particulars or a request that for any special reasons the petitioner be considered for grant of the mining leale in preference to others. Indcided, Clause (xxiii) of Para 3 of the application which requires givin' of any other particulars etc. is left blank. No copy of the revision application filed before the Central Government has been produced on the record. Copy of the communication giving reasons for rejection of the revision by the Central Government has been produced which Annexure. The order of the Central Government deals with this aspect and says that the petitioner had not adduced any evidence to show 'hat it had furnished any special reasons why the mining lease should have been granted to it in preference to an earlier application. The first contention of the petitioner, thereforee, has no force.

(15) The second contention of the petitioner is that the application of respondent No. 3 received by the State Government on July 4, 1970 was premature and could not be entertained in view of the speci fic provisions of Rules 58 & 60. It may be recalled that the notification that was issued by the State Government was dated June 4, 1970. The argument, thereforee, is that inasmuch as the application of respondent No. 3 was received prior to the expiry of 30 days from the date of the notification it was premature and could not be entertained in view. of the prohibition contained in Rule 60. Rule 58(1)(b) lays down .that an area available for grand of lease or license has to be notified at least 30 days in advance of the date from which it would be available. Rule 60, clause (b) lays down that an application shall be deemed to be premature and shall not be entertained and the fec. if any, paid in respect of any such application shall be refunded, if the period specified in the notification postulated by Rule 58 has not expired. The controversy, thereforee, is within the narrow ambit as to whether the date of the notification in the present case, namely, June 4, 1970, is to be counted for purpose of computing 30 days or has to be excluded. If it is held that it is to be included in computing 30 days, then no difficulty arises but if it has to be excluded, then the question will arise as to whether the application of respondent No. 3 would at all be considered by the State Government.

(16) This point was not .initially taken by the petitioner in the revision preferred to the Central Government and was taken only by letter dated January 25, 1972. The order of the Central Government shows that it has dealt with the point despite the same having been raised at a late stage. The finding of the Central Government that the State Government was entitled to count 30 days from June 4, so that by the time the applications were received on July 4, 30 days had already elapsed. No reason is given for this finding.

(17) The petitioner's application was rejected primarily for the reason hat earlier applications received on July 4, 1970 were under consideration of the State Government. It is contended that inasmuch as the earlier applications could not be entertained at all under Rule 60, having been received on July 4, 1970, prior to the expiry of 30 days from the date of the notification the only application before the State Government that could be considered was that of the petitioner. thereforee, the delay in raising this point was not material as it goes to the very root of the matter and the jurisdiction of the S ate Government to entertain the application of, inter alia, respondent No. 3.

(18) Section 9 of the General Clauses Act reads as under :-

'9(1)In any (Central Act) or Regulation made after the commencement of this Act, it shall be sufficient, for the purpose of excluding the first in a series of days or any other period of time, to use the word 'from', and, for the purstpose of including the last in a series of days or any other period of time, to use the word 'to'.'

From a reading of the above provision it is clear that the use of the word 'from' would result in excluding the first in a series of days or any other period of time in any central Act or regulation. thereforee, when Rule 58(1) (b) speaks of 'at least 30 days in advance' it means 30 clear days.

(19) In Satya Narayan Agarwal v. Baidyanath Mandal and others, : AIR1972Pat29 a bench of that court relying on Rambharo- selal Gohoi v. State of Madhya Pradesh, Air 1955 Nag 35(6), observed that the rule of law is that when words such as so many 'clear days' or so many days 'at least' are used, the two terminal days must be excluded. The bench quoted with approval the rule of interpretation laid down by Maxwell on the Interpretation of statutes, 10th Edition at page 351 in the following words :-

'AGAIN,when so many 'clear days', or so many days 'at least', are given to do an act or 'not less than' so many days are to intervene, both the terminal days are excluded from the computation............'

(20) In Damineni Sangayya and another v. State of Andhra Pradesh and others, Air 1962 A P 462(7), it was held that where expression 'not less than so may days' occur in enactments, there are two terminal points, and the period specified must be outside those two terminal points. The court was considering the provisions of Section 57 of the Motor Vehicles Act which uses the expression'not less than six weeks'.

(21) In Pioneer Motors Ltd. v. Nagercoil Municipal Council, : [1961]3SCR609 the Supreme Court also enunciated the same rule as in the above noted two decisions and held that the words 'not being less than one month' in the proviso to Section 78 of the Travancore District Municipalities Act implied that clear one month's notice was necessary to be given that is, both the first day and the last day of the month had to be excluded. It however, observed that the provision in regard to time in the context must be held to be directory and not mandatory. Inasmuch as that seemed to be the legislative intent gathered from the use of the words 'reasonable period' before the words 'not being less than one month' in the relevant provision which was held to be significant the latter observation is not relevant for this case.

(22) In my view reading the provisions of Rule 58(1) (b) and clause (b); of Rule 60 it is clear that notice of the availability of any area had to be given by publishing a notification in the official gazette giving 30 clear days. An application received before the expiry of those 30 days could not at all be entertained and had to be ignored. So much so that fee, if any, paid in respect of any such application had to be refunded. Admittedly, the application of respondent No. 3 and 7 and others were received on July 4, 1970 before the expiry of 30 clear days and so, it must be held that the entertaining of those applications was without jurisdiction.

(23) Mr. Dutta, learned counsel for the Central Government urged that inasmuch as the Central Government has considered this aspect even if the decision is erroneous it should not be disturbed. I cannot accept this contention. First, the Central Government has given no reasons for its findings. Secondly, this is a jurisdictional aspect. Rule 60 prohibits entertaining of premature applications and if the Slate Government has entertained a premature application it must be held to have acted! without jurisdiction and contrary to the statutory provision embodied in Rule 60.

(24) The third contention on behalf of the petitioner is that the order of the State Government not being a speaking order is liable to be quashed. There is no force in this contention. The order may be correct or incorrect but inasmuch as it gives a reason for not considering the petitioner's application it cannot be said that it is a nonepeaking order.

(25) The last contention on behalf of the petitioner is that the order of the Central Government in revision should be struck down because the Central Government's order was passed in breach of the principles of natural justice inasmuch as it failed to give a personal hearing to the petitioner. There is no force in this contention. Nothing has been brought to my notice which shows that either the Act or the rules postulate a personal hearing. The petitioner submitted his revision petition and written arguments. These were .fully considered. It is not shown which aspect could have been further dilated upon had there been a personal hearing.

(26) After the hearing of the petitioner learned counsel for the State Government had taken time to seek instructions and find out whether the State Government was prepared to reconsider the whole matter afresh. I, accordingly, said that I would reserve judgment and would not pronounce it for some time but the counsel should make a mentioned if any instructions were received. Although more than three months have expired since judgment was reserved, no mention has been made. I, thereforee, decide not to wait any further and proceed to judgment.

(27) In view of my finding that the State Government acted without jurisdiction in entertaining the application of respondent No. 3 and all other applications received on July 4, 1970 and inasmuch as the petitioner's application was rejected only because of the earlier application of respondent No. 3 being under consideration for grant of lease, the order of the State Government contained in the communication dated June 17/18, 1971 is quashed, as also the State Government's order dated June 14, 1971 granting the mining lease in favor of respondent No. 3. The order of the Central Government as contained in the communication dated April 17, 1972 is also hereby quashed. A writ is issued in terms of the above order. I also issue a writ of mandamus to respondents I and 2 to reconsider the question of granting of mining lease over the area in question afresh in accordance with law. The petitioner will be entitled to its costs. Counsel's fee Rs. 350.


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