TMI Blog2006 (12) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited (hereinafter referred to as, GMR ) filed O.J.C. No. 2236 of 2002 in the High Court of Orissa challenging the decision of the State Government to grant a lease of the extent of 436.295 hectares to the Orissa Mining Corporation Limited (hereinafter referred to as, OMC ) against a recommendation to grant a lease to it of an extent of 43.579 hectares out of it. The said Writ Petition was allowed by the High Court of Orissa and the said decision is challenged by OMC in C.A. No. 6787 of 2004 and in C.A. No. 6788 of 2004. 3. M/s Jindal Strips Ltd. (hereinafter referred to as, JINDAL ) challenged in the High Court of Orissa by way of Writ Petition No. 7575 of 2003 the decision of the State Government to recommend the grant of the lease in favour of OMC ignoring its own claim for a lease and the said Writ Petition was got transferred to this Court and is numbered as Transferred Case No. 21 of 2005. This case also challenges the recommendation of the State Government for grant of a lease to OMC of the remaining extent of 436.295 hectares. 4. The proposal of the State Government to grant a lease to OMC was also challenged by I.C.C.L. before the Orissa High Court in Writ Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia. It is mainly available in the State of Orissa in the Sukinda Valley. An extent of 1812.993 hectares of land was granted on mining lease to Tata Iron and Steel Company (hereinafter referred to as, TISCO ) on 22.10.1952. The lease was for 20 years. In the year 1972, TISCO obtained a renewal of the lease, but the area was reduced to 1261.476 hectares. This renewal was again for 20 years. Before the expiry of the term, TISCO applied in the year 1991 for renewal of the lease for a further period of 20 years in respect of the entire extent of 1261.476 hectares. The State Government recommended the renewal and the Central Government granted its approval under Section 8(3) of the Mines and Minerals (Regulation and Development) Act, 1957. But, at the instance of some interested persons, the Central Government reviewed its decision and granted approval for renewal of the lease only in respect of 650 hectares, roughly half of the original area. TISCO challenged the said decision to reduce the extent, by way of a writ petition in the High Court of Orissa. I.C.C.L., Indian Metals Ferro Alloys ('IMFA', for short), JINDAL and ISPAT also filed writ petitions in the High Court of O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered by the Dash Committee. This recommendation was challenged by I.C.C.L. in the Orissa High Court in O.J.C. 1830 of 1999. Meanwhile, on 22.3.1999, this Court in the FACOR's appeal upheld the recommendations of Sharma Committee as also the recommendation of the State Government dated 29.6.1997 allotting 50% of 855.476 hectares to the four applicants then claiming and leaving out 436.295 hectares for distribution by way of lease among other needy entities. This Court directed that the remaining 436.295 hectares be allotted after the report of the Dash Committee. It may be noted here that after Mr. Dash left the scene, the Committee came to be known after his successor, as the Chahar Committee. 9. The Orissa High Court, meanwhile, dismissed the Writ Petition, O.J.C. No. 1830 of 1999 filed by I.C.C.L. challenging the decision recommending an out of turn lease to Nava Bharat. I.C.C.L., as we have noticed in the beginning, has challenged that decision in the appeals. Subsequently, the Orissa Government decided that the balance extent of 436.295 hectares be granted on lease to OMC and that decision also has been challenged in the High Court and the High Court held the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments raised before us, the two important provisions of the Mines and Minerals (Regulation and Development) Act, 1957 that fall for our consideration are Sections 11 and 17A. The challenge to the grant of lease to Nava Bharat involves interpretation of Section 11 and the role of the various sub-sections therein. The challenge to the recommendation of the State Government to grant the balance extent to OMC involves interpretation of Section 17A and the nature of power conferred thereunder. What is the effect of the prior proceedings in this Court will also arise. In the background facts of this case, Rule 59 of the Mineral Concession Rules, 1960 has also relevance. This is for the reason that the area was previously held under lease by TISCO and it would become available for grant only on compliance with Rule 59(1) or in terms of Rule 59 (2), whereunder a power is vested with the Central Government to relax the provisions of sub-Rule (1). 11. Section 10 of the Act provides for applications for prospecting licences or mining leases being made to the State Government by a person interested. Section 11 deals with the preferential right amongst such applicants for the grant of a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t had directed that the balance area of 855.476 hectares be allotted to the four applicants other than TISCO that were in the fray at that stage. We think it appropriate to set down here, sub-section (5) of Section 11 with the proviso thereto: 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 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. It is the case of Nava Bharat that though it had applied later, its application was considered and the lease to it recommended and got approved in view of the exercise of power by the State Government under sub-Section (5) of Section 11 of the Act. We shall consider this aspect at the appropriate stage. 12. Section 17A deals with reservation of area for purposes of conser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) decisions rendered by this Court. Similarly, the case of OMC is that the power under Section 17A was independent of any other power, or the power under Section 11 and it was always open to the State Government, no doubt, with the approval of the Central Government, to reserve any area that may be available for exploitation by a corporation owned or controlled by the Government. OMC was such a corporation and the State Government having made that recommendation to the Central Government, it was for the Central Government to take a decision on the question of approval as contemplated by sub-Section (2) of Section 17A of the Act and on the grant of such approval it was perfectly open to the State Government to grant a lease in respect of the balance 436.295 hectares to OMC and there was nothing in the prior decisions of this Court which stood in the way or which could control the exercise of power, the independent power, by the State Government under Section 17A of the Act. The case of those who oppose the stand of OMC is that in the light of the prior decisions of this Court and the binding directions issued therein, and the stand it had adopted earlier, the State Government could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation has not arisen in this case. Under sub-section (2) of Section 17A, with the approval of the Central Government, the State Government may reserve any area not already held under any prospecting licence or mining lease for undertaking the exploitation through a Government company or corporation owned or controlled by it and on fulfilling the conditions referred to in sub-section (2) and in an appropriate case, also the conditions of sub-section (3). Again, the exercise of power by the State Government under sub-section (2) of Section 17A has no reference to the entertaining of applications under Section 11 or the preferences available thereunder. The area in question was under a mining lease to TISCO and after the mining lease expired, the area of 436.295 hectares had not been leased out to any other person. According to us, nothing stands in the way of the State Government seeking the approval of the Central Government for the exploitation of that area in respect of a precious metal ore by a Government company or a corporation owned or controlled by it like OMC. Therefore, it cannot be said that the recommendation made by the State Government is per se invalid or that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any time could be considered sound and logical, the question in the present case has to be viewed in the background of events leading to the said decision and the context in which that decision was taken so as to determine whether the alleged change of so-called policy is mala fide or arising out of colourable exercise of power with the sole purpose of defeating the prior judgments of the court and especially the direction of the Orissa High Court in favour of GMR. It is true that on the prior occasions when the dispute before the High Court and before this Court centered round the entitlement of various applicants for grant of fresh leases after the TISCO lease was not renewed in full, the stand of the State Government was that it would abide by the recommendations of Dash Committee transformed into Chahar Committee. But it is difficult to postulate that the adoption of such a stand in the context of the disputes then arising, could estop the State from taking a decision under Section 17A(2) of the Act to recommend to the Central Government that the compact area left, which was the only balance area left, be granted on lease to the Government controlled Corporation, OMC so as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany or corporation owned or controlled by it. This is exactly what is sought to be done by the State Government in this case, of carrying on the mining operations in the balance area through a corporation owned or controlled by the State Government. We are therefore of the view that the recommendation of the State Government for the approval of the Central Government for leasing out the extent to OMC is well within the power of the State Government under Section 17A(2) of the Act. The heading of the Section cannot control the natural effect of sub-section (2) of Section 17A of the Act or the power conferred by it. That provision deals specifically with the power of the State Government to carry on mining operations through a corporation owned or controlled by it. The said argument cannot also be accepted to invalidate the decision of the State Government to seek the approval of the Central Government for grant of lease to OMC of the balance area left, in a bloc. 19. We also do not find any substance in the contention that the decision to grant a lease of the remaining extent to OMC is irrational in the context of the performance of OMC and the other attendant circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment has already rejected the request of the State Government for reserving the area for exploitation by OMC. 21. Then the question is whether there is anything in the process of decision making by the State Government that makes the decision itself vitiated. What is contended is that the Chahar Committee had recommended that the distribution be made among the various applicants and that OMC was not eligible for getting a lease of any extent. It was when that recommendation was put up that the concerned Minister made a noting indicating a sudden turn around, recommending consideration of the question whether the lands or the area available with the State, should also be divided among the private operators and whether it would not be in the interests of a just and equitable distribution of the ore and the protection of the environment, to have the area in a bloc for being exploited by OMC. It is true that the earlier stand of the Government was that leases could be granted to private players including industries established in the State for captive mining. But, when the recommendation of the Chahar Committee was put up before him for his final view, it was open to the Minister ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounce on it at this stage. 22. It is urged that it was a volte-face by the Minister concerned and what changed in three days between the stand till then adopted and the note made has not been explained. What is put forward is that the Chahar Committee report itself justified such a change in perspective and if the taking of such a decision of this nature is not precluded by the prior proceedings, the recommendation of the Minister was a rational one and the Cabinet was justified in approving it. We have already held that the orders earlier made by this Court did not preclude such a decision being taken. There is nothing to show that the noting was not made bona fide or that any extraneous consideration influenced it. When the occasion arose, the Minister made the noting. It put forward a relevant point of view. There is no merit in the contention that it was a hurried turn around on the part of the Minister. 23. We are therefore satisfied that the decision of the State Government to seek the approval of the Central Government for grant of a lease to OMC, a corporation controlled by it, could not be held to be invalid. 24. In this context, it was contended that the State Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered by the Central Government when it considers the request of the State Government for approval under Section 17A(2) of the Act. 26. In our view, the High Court was not right in holding that what had transpired thus far, or the directions of this Court earlier made, precluded the State Government from exercising the power and seeking approval in terms of Section 17A(2) of the Act. As we have held, the State Government could exercise that power until a grant is actually made since it is an overriding power. The taking up of a particular stand earlier, cannot also preclude the exercise of that power. Whether it has laid itself open to claims for damages by its prior actions is a different question and that cannot control the exercise of the power under Section 17A of the Act. 27. Now, we come to the lease proposed to be granted to Nava Bharat. In view of our upholding the decision of the State Government subject to approval by the Central Government, the lease proposed has to be found to be still born; or that the decision no more survives. But it is necessary to consider the contentions put forward, since the question would become relevant if for any reason, the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no proper reasons are given for overriding the preferences of others especially in the light of the directions of this Court while deciding to grant a lease in favour of Nava Bharat. Notwithstanding the valiant effort in that behalf made by learned Senior Counsel for Nava Bharat to salvage the grant made to it, we are of the view that on the facts and in the circumstances of the case, the decision to grant a lease to Nava Bharat out of turn was not justified, legal or proper. 30. When the State Government made the recommendation for grant of a lease to Nava Bharat, the infirmities in that recommendation were pointed out by the Central Government, in its letter dated 27.6.2001. The violation of Rule 59 was also pointed out. Instead of placing the letter before the Chief Minister or the Cabinet and obtaining directions thereon, the Steel and Mines Department on its own chose to send a letter dated 30.6.2001 purporting to conform to the requirements. When the matter reached the Chief Minister and the Cabinet, the decision taken was to withdraw the earlier request for grant of approval of lease to Nava Bharat. On the materials, it is clear that the letter dated 30.6.2001 sent by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of the prior orders of this Court or on the ground that adequate details are not forthcoming. In the latter contingency, it is for the Central Government to seek such further details from the State Government as it deems fit and thereafter to come to a decision. 33. The decisions of the High Court of Orissa are thus set aside. The appeals are allowed in the manner indicated above. The State Government is directed to make a proper request in terms of Section 17A(2) of the Act and the Central Government is directed to take a decision thereon bearing in mind all the aspects as indicated hereinbefore. What is to happen thereafter will depend upon the decision the Central Government takes and the consequences that flow therefrom. Those are aspects that will have to be tackled at the appropriate time, if the need or occasion for it arises. 34. Since, this matter has been pending for years and what is involved is exploitation of a precious mineral, we direct the State Government and the Central Government to comply with the directions we have made expeditiously. The State Government should send its request within a period of four months from today with all relevant details ..... X X X X Extracts X X X X X X X X Extracts X X X X
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