TMI Blog2013 (5) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment decides to invoke the provisions of Section 11(5) of the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as the MM(D R) Act ) , special reasons for the same in terms of guidelines dated 24th June, 2009 issued by the Ministry of Mines, Government of India be recorded in writing. The State Government was directed to complete the entire exercise within specified period. 3. The factual matrix of the case is as follows: The availability of two sets of land for fresh grant of lease was notified by the State of Orissa vide Notification dated 20th August, 1991 issued under Rule 59(1) of the Mineral Concession Rules, 1960. The first set comprised of 85.60 acres plus 94.47 acres of land in Village Kansar and Village Gokhurang of Balangir District which had earlier been granted on lease in favour of Shri S.K. Padhi and Shri B.K. Agarwal. These leases were subsequently surrendered to the State Government and were, therefore, available for re-grant. The State Government vide notification dated 20th August, 1991 notified the availability w.e.f. 24th October,1991. The second set of land comprised of 283.06 square miles in Horomoto G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority dated 27th September, 2007 was challenged by one Dhananjay Kumar Dagara before the Orissa High Court in a Writ Petition being W.P(C) No. 15315 of 2007. It was challenged on the ground that the directions for simultaneous consideration of all applications affects the preferential rights of the first day applicants under Section 11(2) of the MM(D R) Act. In the said Writ Petition No. 15315 of 2007, Geomin Minerals Marketing (P) Ltd. filed an application for intervention. The intervention application was dismissed by the Orissa High Court on 22nd February, 2008 with the observation that Geomin Minerals Marketing (P) Ltd. may take independent steps in respect of its grievance. On 2nd May, 2008 the Orissa High Court by judgment in W.P(C) No.15315 of 2007 held that there was no preferential right for the applicant. The High Court thus dismissed the writ petition and upheld the order of the Revisional Authority dated 27th September, 2007. 6. Geomin Minerals Marketing (P) Ltd. filed another Writ Petition being W.P(C) No.6484 of 2008 praying expeditious disposal of all pending applications for mineral concessions filed by it, based on its right arising from Rule 63-A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udremukh Company, the State Government issued a notice to Geomin Minerals Marketing (P) Ltd. under Rule 12(1) of the MC Rules giving them opportunity of being heard. The officials of the Geomin Minerals Marketing (P) Ltd. attended the hearing. Thereafter, by a minutes of the meeting, inter se merits of all applicants was prepared by the State of Orissa on 17th October, 2008, but no recommendation was made. Therefore, Geomin Minerals Marketing (P) Ltd. filed a Writ Petition being W.P(C) No.23 of 2009 inter alia with the following prayer: Order the opposite parties to dispose of all pending applications for Mineral Concessions filed by the petitioner and set out in the petition in accordance with its vested right to preferential consideration in view of the fact that the petitioner s applications have been filed on the first date of availability and eligibility. Issue a writ of prohibition or any other appropriate writ, order or direction restraining the opposite parties from considering applications for Mineral Concessions of later applicants to the petitioner until the applications of the petitioner are first considered and disposed of by according priority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rential right of Geomin Minerals Marketing (P) Ltd. under Section 11 of the MM (D R) Act and validity of recommendation made by the State Government under Section 11(5) of the said Act in favour of POSCO. Both the issues were determined by the High Court in favour of Geomin Minerals Marketing (P) Ltd., and against the POSCO. Referring to Section 11(2), (3) and (4) the High Court held that the Geomin Minerals Marketing (P) Ltd. has preferential right for grant of licence and lease and that the recommendation made by the State Government under Section 11 (5) in favour of POSCO is invalid. 11. The judgment aforesaid has been challenged by Geomin Minerals Marketing (P) Ltd. by filing an appeal as no specific direction has been given for issuance of licence in its favour. The POSCO and the Government of Orissa have also challenged the judgment by filing their respective appeals. No separate appeal has been preferred by Kudremukh Company or Jindal Steel and Power Ltd. or any other, but some of them have filed intervention applications and petitions for impleadment. Accordingly, at the time of hearing of the appeals, respondents and interveners were heard and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of public interest. If the gap between POSCO and the other applicants, even in regard to the very considerations specified in Section 11(3) is so vast, then, in such a case, the very same factors, qualitatively and quantitatively, would attract Section 11(5) as well. In any event, in this case, there is one factor which beyond doubt attracts Section 11(5), and that is the sophisticated and advanced finex technology, which not only reduces pollution but is also able to utilize low grade ore to make steel. Section 11(5) would clearly be attracted on this ground alone, and, in whatever manner one approaches the issue, POSCO has rightly been recommended by the State Government for grant of the Prospecting Licence. 13.5 The recommendation dated 9.1.2009 made in favour of POSCO falls within the parameters of Sections 11(3) and 11(5) of the MM(D R) Act. The State Government followed the direction of the Revisional Authority (Central Government ) dated 27.9.2007, which was upheld by the High Court and had become final, and simultaneously considered the inter se merits of all the applicants whose PL applications were pending disposal before the State Government. It was afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany, was taken over by one Navayuga Steel Limited . In the submission of the appellant, the experience and/or qualifications of Navayuga Steel Limited cannot be used in support of Geomin s application made in the year 1991, since the merit of an applicant for a prospecting license/mining lease would have to be judged as on the date of the application itself, as otherwise the process of selection would be rendered arbitrary if an applicant is permitted to add to its qualifications after knowing the relative qualifications of other applicants. If this is permitted, such a process of adding to one s qualifications would become never-ending. In any event, if in substance and in effect a totally new entity has been permitted to be brought into existence, by transfer of substantial shares to another company, the original applicant can no more claim priority o its application as its character has undergone a substantial transformation. 13.9 The reliance by Kudremukh Company on Section 11(1) of the Act is wholly erroneous, as (admittedly) no reconnaissance permit was ever granted in its favour. Under Section 11(1) of the MM(D R) Act, preference can be claimed if an applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of consideration. In view of Rule 8(C) of Mineral Concession Rules it cannot be said that Section 11 will be applicable from the date of consideration. As per the ratio of the judgement in Sandur Manganese Iron Ores Limited v. State of Karnataka (2010) 13 SCC 1 if amended Section 11 is applied then Geomin Minerals Marketing (P) Ltd. is entitled for benefit of the aforesaid judgment. 14.4 Memorandum of Understanding or the arrangements outside the provisions of the MM(D R) Act cannot be used to trample on the rights of prior or same day applicants. This principle is to be followed irrespective of whether the unamended or amended Section 11 is applied. 14.5 First Day Applicant enjoys and is entitled to priority over all subsequent days applications including the POSCO application which was made on 27th September, 2005 i.e. after about 14 years from the date of the Geomin applications. Stand of the State of Orissa: 15. Mr. Rakesh Dwivedi, learned senior counsel for the State of Orissa to the facts as noticed above contended as follows: 15.1 Initially a recommendation was made to the Central Government in favour of POSCO for an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f POSCO. Thus, their PL applications cover an area which is overwhelmingly distinct from the area recommended for POSCO. Consequently, JSPL had not filed any Writ Petition nor had applied for impleadment before the High Court. It has chosen to move an intervention application belatedly in the SLP filed by Geomin. This application has not been allowed and it is liable to be rejected. The PL Application No. 2122 dated 27/9/2005 for 6828.54 hectares filed by POSCO India was considered and they were considered to be a front runner and possessing outstanding merit in comparison to all other applicants. They proposed to set up a World's first steel plant project using FINEX technology which was a next generation eco-friendly process which allows direct use of cheap iron ores fines and non-coking coal as feed stock and has consequently lower emissions as compared to blast furnace. They had assured captive consumption of the mineral at their plant at Paradip which was to be a port based steel plant. It was likely to create huge employment and generate huge revenue. 15.4 In Part-F, Summary, it has been noted that only two companies i.e. POSCO India Ltd. and Jindal Stripes have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at a conclusion that POSCO was more meritorious from the point of scientific exploration and mining, mobilization of financial resources, use of eco- friendly and resources use efficient technology investments including the steel plant project and general of employment and revenue. In addition, the State Government has also invoked the provisions of Section 11(5) of the Act. 15.6 Further stand of the State of Orissa is that: Geomin's application PL No.1334 dated 29/10/1991 cannot be considered to be a prior application in view of the following facts: Geomin had made 7 PL applications for different areas to the State Government of Orissa. An area of 186 hectares in Village Rantha, District Sundergarh applied vide application No.1334 dated 29.10.1991 is overlapping. Thus, the area recommended for POSCO includes about 186 hectares of area applied for by Geomin. 15.7 The order of the High Court dated 14th July, 2008 had been passed in the context of PL Application No.1338 in Malantoli Block. This has nothing to do with the area recommended for POSCO. After the above High Court order, Geomin made a representation with respect to PL Application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in's applications regarding the process of evaluation of applications over Khandhar Block. District Sundargarh. 15.9 If the provisions operating at the time of the applications are to be considered then Geomin's application would stand rejected in terms of Rule 24(3) of Mineral Concession Rules, 1960 which was omitted on 7.01.1993. Secondly, the Geomin's application was highly deficient and the deficiencies were partially removed which were provided after the notice issued. Moreover, Geomin first placed reliance on 0.5 MTPA steel plant being set up by its group company AXL Industries then offered to set up the said project by itself. Thereafter relied upon 12 MTPA steel plant being set up by Navyuga Group which acquired 50% equity stake was later increased to 70% of the equity share. Application was sought to be considered on this basis. Therefore, Geomin's application is effectively and substantively of October/December, 2007. 15.10 Section 11 as amended by Act 38 of 1999 w.e.f. 18th December, 1999, would apply. The contention of Geomin that the old provisions would apply is incorrect. This matter is not res integra. In the case of State of Tamil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11(2) and (3) of the Act. But ultimately made the purported recommendation in favour of POSCO under Section 11(5) of the Act, which is not applicable. 16.4 Section 11(5) would be applicable only if the area is non-notified and the State Government has for 'special reasons' wants to give preference to a later applicant to an application which was received earlier. The 'special reasons' need not be other than what has been mentioned in Section 11(3) but may be over and above the reasons mentioned in Section 11(3). Section 11(5) will have no application where applications are considered simultaneously for areas which are notified, which is the present case. The recommendation dated 9.01.2009 made by the State Government is not sustainable. 17. As far as the contentions raised by Geomin Mienrals claiming priority by virtue of being an earlier applicant, it was submitted that the said contention no longer holds force after the amendment of Section 11(2) of the Act. As per the amended Section 11(2), all applications which were made during the period of notification and all applications received prior to the publication and had not been disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue emerges for consideration is whether the writ petition was premature and in the case of applicants whether pre amended Section 11 or amended Section 11 of the MM(D R) Act is applicable. 21. Before deciding the aforesaid issues it is relevant to note that the issue relating to competence of the State Government to make reservation and the 1962 notification issued by the State Government reserving certain areas fell for consideration before this Court in Monnet Ispat and Energy Limited v. Union of India Ors. (2012) 11 SCC 1. In the said case, this Court held that 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 MM(D R) 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 control, is an incident of sovereignty and ownership. In the light of aforesaid observation made by this Court in Monnet Ispat Energy v. Union of India Ors. (2012) 11 SCC 1 and in view of the relevant facts of the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Government itself cannot undertake prospective or mining operations without having prior consultation with the Central Government as per Section 4(3) of the Act, and if prospecting licence or mining lease is to be granted to any other person, then previous approval of Central Government is to be obtained under proviso to Section 5(1). The consideration of recommendation made by the Central Government for grant of prior approval is an exclusive jurisdiction of the Central Government under the MM(D R) Act, 1957 and there is no good reason for pre-empting the Central Government from considering the merits of the recommendation. 24. Until the Central Government has passed an order either granting or refusing approval under Section 5(1) and Section 11(5) of the Act, it would not be permissible for any person to file a writ petition under Article 226 of the Constitution of India and any such petition if filed would be premature. In the instant case, the High Court committed a grave error of law in proceeding to observe that 'special reasons' did not exist on invoking Section 11(5) and that there was no comparison of merits in the record. The record has been shown to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing:- (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 considered. 11(4). Notwithstanding anything contained in subsection (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. Post amended provisions of Section 11(2), (3), (4) and (5) are as follows: 11(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 le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit. 11(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 a 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. 27. The State of Orissa and some others have taken plea that amended Section 11, as amended by Act 38 of 1999 w.e.f. 20th December, 1999, would apply. 28. According to the State of Orissa the preferential right envisaged in Section 11(1) is considerably distinct from the preference envisaged by Section 11(2). It is only in the case of Section 11(1) where a person has already held a reconnaissance permit or a prospective licence that he gets a preferent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 said sub-section. Thus under amended Proviso to Section 11(2), even those applications received prior to the publication but had not been disposed of, shall be deemed to have been received on the same day for the purpose of assigning priority under the said sub Section. 33. According to us, this is not the stage to decide as to whether in the present case the pre-amended or amended Section 11(2) shall be applicable and thereby priority should be assigned under pre-amended or amended Section 11(2) as the matter has already been considered by the State Government and recommendation is required to be considered by the Central Government under Section 5(1) of the Act. The Central Government is required to go t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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