Supreme Court of India
MONNET ISPAT & ENERGY LTD.versusUNION OF INDIA AND ORS.
- Citation
- 2012 INSC 305
- Decided
- 26 July 2012
- Disposal
- Dismissed
- Bench
- RAJENDRA MAL LODHA
Holding
The State Government, as owner of mines and minerals within its territory, has the inherent power to reserve any area for exploitation in the public sector, and such reservations are not contrary to the Mines and Minerals (Regulation and Development) Act, 1957.
Summary
The appellants, companies engaged in iron and steel production, entered into Memorandums of Understanding with the State Government of Jharkhand for mining leases of iron ore in the Ghatkuri area. The State Government recommended their applications to the Central Government for prior approval. However, upon discovering that the subject area had been reserved for public sector exploitation by notifications issued in 1962 and 1969 by the erstwhile State of Bihar, the State Government withdrew its recommendations. The Central Government subsequently rejected the applications. The appellants challenged the validity of the 1962, 1969, and a subsequent 2006 notification, as well as the withdrawal and rejection letters. The Supreme Court held that the State Government, as owner of mines and minerals within its territory, has the inherent power to reserve areas for public sector exploitation. The Court found that the notifications were valid and not contrary to the Mines and Minerals (Regulation and Development) Act, 1957. It further held that the doctrines of promissory estoppel and legitimate expectation were not applicable because the promises were made in ignorance of the existing reservations and enforcing them would be against public interest. The appeals were dismissed.
Issues considered
- Whether the notifications dated 21.12.1962, 28.2.1969, and 27.10.2006 reserving iron ore areas for public sector exploitation are legal and valid?
- Whether the State Government has the power to reserve mining areas for public sector exploitation under the Mines and Minerals (Regulation and Development) Act, 1957?
- Whether the doctrines of promissory estoppel and legitimate expectation are attracted in the facts of the case?
- Whether the doctrine of desuetude applies to the 1962 and 1969 notifications?
- Whether the withdrawal of recommendations by the State Government and the rejection by the Central Government were valid?
Legislation cited
- Bihar Land Reforms Act, 1950s. 3, s. 4
- Bihar Re-organisation Act, 2000s. 84, s. 85, s. 86
- Constitution of Indias. Art. 19(1)(g), s. Art. 294, s. Art. 299, s. Art. 39, s. First Schedule, s. Seventh Schedule List I Entry 54, s. Seventh Schedule List II Entry 18, s. Seventh Schedule List II Entry 23
- Mineral Concession Rules, 1960s. 22, s. 22D, s. 26, s. 31, s. 58, s. 59, s. 60, s. 63, s. 63A, s. 8, s. 9
- Mines and Minerals (Regulation and Development) Act, 1957s. 10, s. 11, s. 13, s. 14, s. 15, s. 16, s. 17, s. 17A, s. 18, s. 18A, s. 19, s. 2, s. 29, s. 4, s. 5, s. 6, s. 9
Subjects
Mines and MineralsReservation for Public SectorOwnership of MineralsPromissory EstoppelLegitimate ExpectationDesuetudeConstitutional LawInterpretation of StatutesMineral Concession RulesBihar Land Reforms Act
Judgment
[2012] 7 S.C.R. 644
A MONNET ISPAT & ENERGY LTD.
v.
UNION OF INDIA AND ORS.
(Civil Appeal No. 3285 of 2009 etc.)
JULY 26, 2012
B
[R.M. LODHA, AND H.L. GOKHALE, JJ.]
Constitution of India, 1950:
c Art.294, First Schedule - State Government's ownership
in mines and minerals within its territory - Held: Erstwhile
State of Bihar being a part-A State specified in First Schedule
and prior thereto the Province of Bihar, by virtue of Art. 294
all properties and assets which were vested in His Majesty for
0 the purpose of the Government of Province of Bihar stood
vested in corresponding State of Bihar - By the Bihar Act,
1950, all other lands, i.e. estates and tenures of whatever kind
including the mines and minerals therein stood vested in the
State of Bihar - Pursuant to Bihar Re-Organisation Act, 2000,
E all land, inter alia, belonging to the then State of Bihar and
situated in the transferred territories passed to the newly
created State of Jharkhand which is the owner of the subject
area - Mines and minerals within its territory vest in it
absolutely - Bihar Land Reforms Act, 1950 - Bihar Re-
organization Act, 2000 - Jurisprudence-' Ownership'.
F
Seventh Schedule - List I, Entry 54, List II, Entry 23 read
with Entry 18 - Minerals - Iron ore - Right of State
Government to reserve mining area for public sector
exploitation - Held: The authority of State Government flows
G from the fact that it is the owner of the mines and the minerals
within its territory - Rule 59 of 1960 Rules clearly
contemplates reservation by an order of State Government -
Provisions that follow s.2 of 1957 Act have left untouched the
State's ownership of mines and minerals within its territory
H 644
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 645
AND ORS.
although regulation of mines and the development of minerals A
have been taken under control of the Union - Therefore,
reservation made by State Government under Notifications
dated 21.12.1962, 28.02.1969 and 27.10.2006 is not at all
contrary to or inconsistent with 1957 Act- These notifications
do not impinge upon the legislative power of the Central B
Government - Mines and Minerals (Regulation and
Development) Act, 1957 - ss. 2 to 17-A - Mineral Concession
Rules 1960 - rr. 58, 59 and 63A.
Arts. 19(1)(g), 39, and 299 - Right to carry on any trade
or business - Government contracts - State Government of C
Jharkhand recommending to Union Government to grant
mining lease to certain companies - Subsequently, realizing
that the subject area had already been reserved for public
sector exploitation, it withdrew the proposal and issued a
further notification declaring that iron ore deposits in the D
subject area would not be thrown to private sector - Held: No
person has any fundamental right or any right to claim that
he should be granted mining lease or prospecting licence or
permitted reconnaissance operation in any land belonging to
Government except under 1957 Act and the 1960 Rules - It E
is true that by the MOU entered into between State
Government and appellants, certain commitments were made
by State Government but firstly, such MOU is not a contract
as contemplated under Art. 299(1) and secondly, in grant of
mining lease of a property of the State, the State Government F
has discretion to grant or refuse to grant any mining lease -
Obviously, State Government is required to exercise its
discretion, subject to the requirement of law - In view of the
fact that the area is reserved for exploitation of mineral in
public sector, it cannot be said that the discretion exercised G
by State Government suffers from any legal flaw.
Mines and Minerals (Regulation and Development) Act,
1957:
s. 17-A read with rr. 58 and 59 of 1960 Rules - Approval H
646 SUPREME COURT REPORTS [2012] 7 S.C.R.
A of Central Government for grant of mining lease - Held: Rule
58 as amended in 1980 expressly provided that the State
Government by Notification in the official gazette can reserve
any area for exploitation in public sector - The amendments
have been effected only to make explicit what was implicit and
B they cannot be read to nullify the powers which the State
Government otherwise had under the statute - On coming into
force of s.17-A, r.58 has been omitted - According to s.17-
A(2). the State Government with the approval of Central
Government may reserve any area not already held under any
C mining lease, to undertake mining operations in public sector
- Section 17-A is prospective in nature - The reservations
made prior to insertion of s.17-A continue to be in force -
Besides, approval contemplated by s.17-A may be obtained
by State Government before exercise of power of reservation
or after exercise of such power - It may be express or implied
0
- Interpretation of Statutes - Prospective operation.
Interpretation of Statutes:
Prospective operation of a statutory provision - Held:
E Presumption of prospectivity operates unless shown to the
contrary by express provision or is discernible by necessary
implication - Maxim - 'Nova constitution futuris formam
imponere debet non praete ritis.'
Administrative Law:
F
Doctrines of promissory estoppel and legitimate
expectation - Explained - Held: Doctrine of promissory
estoppel is not attracted when promise was made in a
mistaken belief - State Government had agreed to grant
G mineral concession as per existing Act and Rules - As a
matter of fact, when the MOU was entered into, State
Government was not even aware about the reservation of the
subject mining area for exploitation in public sector - In view
of the fact that the subject mining area had been reserved for
H exploitation in pubic sector under 1962 and 1969 Notifications,
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 647
AND ORS.
the stipulation in the MOU that the State Government shall A
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 because firstly, the
stipulation in the MOU is not unconditional - Secondly, if the
State Government is asked to do what it represented to do B
under the MOU then that would amount to asking the State
Government to do something in breach of the Notifications
which continue to hold the field - Thus, the doctrines of
promissory estoppel and legitimate expectation are not
attracted in the instant case - There is no error in the letter of c
withdrawal dated 13.9.2005 issued by State of Jharkhand and
the letter of rejection dated 6.3.2006 issued by Union of India.
' Doctrine of desuetude - Explained - Held: Insofar as
1962 and i 1969 Notifications are concerned, the doctrine of
des.uetude is not attracted for the reasons: Firstly, non- D
implementation of such Notifications for 30-35 years is not
that 'long a period which may satisfy the requirement of the
doctrine of desuetude - Secondly, 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 E
much less to establish the contrary usage or contrary practice
that the reservation made in the two Notifications has been
given a complete go by- Further, since the State of Jharkhnd
has not altered, repealed and/or amended the 1962 and the
1969 Notifications, the same cannot be said to have lapsed F
- Bihar Reorganization Act, 2000 - ss. 84, 85 and 86.
The appellants, engaged in the business of
production of iron and steel etc. were stated to have
entered into Memorandums of Understanding with the G
State Government of Jharkhand whereunder the latter
was stated to have agreed to assist them in selecting the
area for iron ore and other minerals as per requirement.
In August 2004, the State Government forwarded
applications of ten companies, including the six
appellants, with its recommendation to the Government H
648 SUPREME COURT REPORTS [2012] 7 S.C.R.
A of India for grant of mining lease of iron ore in the subject
area. However, on 17.11.2004 the District Mining Officer
informed the Secretary, Department of Mines and
Geology, Government of Jharkhand that the subject area
was reserved for public sector exploitation under
B Notifications dated 21.12.1962 and 28.2.1969 issued by
the Government of Bihar. Consequently, the Government
of Jharkhand by its letter dated 13.9.2005 sought to
withdraw nine of the said proposals including those of
all the appellants. On 6.3.2006, the .Central Government
c passed an order accepting the request of the State
Government. Subsequently, by Notification dated
27.10.2006, the State Government also declared that the
iron ore deposits in the subject area (where the
appellants were proposed the mining leases and was at
all material times kept reserved by the 1962 and 1969
0
Notifications issued by State of Bihar) would not be
thrown open for grant of prospecting licence, mining
licence or otherwise for private parties. The appellants
filed writ petitions before the High Court challenging the
letters dated 13.9.2005 and 6.3.2006 as also the
E Notification dated 21.12.1962, 28.2.1969 and 27 .10.2006,
and prayed for a direction to grant them mining leases
as proposed. The writ petitions were dismissed by the
High Court.
F In the instant appeals filed by the companies, the
main issue for consideration of the Court was: whether
the Notifications dated 21.12.1962 and 28.2.1969 issued
by the State of Bihar and the Notification dated
27.10.2006 issued by the State of Jharkhand were legal
G and valid.
Dismissing the appeals, the Court
HELD: (Per R.M. Lodha. J.)
H 1.1. In the Constitution of India, 1950, management
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 649
AND ORS.
of mineral resources has been left with both the Central A
Government and State Governments in terms of Entry 54
in List I and Entry 23 in List II of the Seventh Schedule.
In the scheme of the Constitution, the State Legislatures
enjoy power to enact legislation on the topics of 'mines
and mineral development'. The only fetter imposed on the B
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'. If Parliament by its law has
declared that regulation of mines and development of c
minerals should in public interest be under the control of
the Union, which it did by making declaration in s.2 of the
Mines and Minerals (Regulation and Development) Act,
1957, to the extent of such legislation incorporating the
declaration, the power of the state legislature is excluded. D
The declaration made by Parliament in s.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. The requisite declaration has
the effect of taking out regulation of mines and E
development of minerals from Entry 23, List II to that
extent. As the declaration made in s. 2 trenches upon the
State Legislative power, it has to be construed strictly.
By the presence of keynote expression 'to the extent
hereinafter provided' in s.2, the Union has assumed F
control to the extent provided in 1957 Act. The 1957 Act
prescribes the extent of control and specifies it. The
declaration made in s.2 is, thus, not all comprehensive.
Legal regime relating to regulation of mines and
development of minerals is thus guided by the 1957 Act G
and the Mineral Concession Rules 1960 Rules. However,
in order that the declaration made by Parliament should
be effective, the making of rules or enforcement of rules
so made is not decisive.[para 101-102, 108 and 109]
[765-G-H· 766-A-H· 767-A-B· 771-E-F] H
' ' '
650 SUPREME COURT REPORTS [2012) 7 S.C.R.
A Hingir-Rampur Coal Co. Ltd. & Ors. v. State of Orissa &
Ors. 1961 SCR 537 =AIR 1961 SC 459; State of Orissa &
Anr. v. Mis M.A. Tulloch & Co. 1964 SCR 461 =AIR 1964
SC 1284; Baijnath Kadio v. State of Bihar and Others 1970
(2) SCR 100 =1969 (3) SCC 838; Bharat Coking Coal Ltd. v.
B State of Bihar & Ors. 1990 (3) SCR 744 = 1990 (4) SCC 557;
D.K. Trivedi and Sons and Others v. State of Gujarat and
Others 1986 SCR 479 = 1986 Suppl. SCC 20; HRS Murthy
v. Collector of Chittoor 1964 SCR 666=AIR (1965) SC 177,
M. Karunanidhi v. Union of India and Anr. 1979 (3) SCR 254 =
c 1979 (3) SCC 431 , Dharambir Singh vs. Union of India 1996
(6) Suppl. SCR 566 = 1996 (6) SCC 702 13; Bhupatrai
Magan/a/ Joshi and Others v. Union of India and another 2001
(10) SCC 476; M.P. Ram Mohan Raja vs. State of T.N.& Ors.
2007 (5) SCR 576 = 2007 (9) SCC 78; Sandur Manganese
& Iron Ores Ltd. vs. State of Karnataka 2010 (11) SCR 240 =
0
2010 (13) sec 1 - referred to.
1.2. Iron-ore is a mineral included in the First
Schedule to the 1957 Act in respect of which no mining
lease for it can be granted without the prior approval of
E the Central Government. No person has any fundamental
right or for that matter any right to claim that he should
be granted mining lease or prospecting licence or
permitted reconnaissance operation in any land
belonging to Govern!llent, except under 1957 Act and the
F Mineral Concession Rules1960. [para 104] [767-H; 768-A-
C]
State of Tamil Nadu v. Mis. Hind Stone and Others 1981
(2) SCR 742 = 1981 (2) sec 205 - relied on
G 2.1. Minerals constitute the national wealth and are
vital raw-material for infrastructure, capital goods and
basic industries. For proper development of economy
and industry, the exploitation of natural resources cannot
be permitted indiscriminately; rather nation's natural
H wealth has to be used judiciously. Surely, in the case of
,
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 651
AND ORS.
a scarce mineral, to permit exploitation by the State or its A
agency and to prohibit exploitation by private agencies
is the most effective method of conservation and prudent
exploitation. [para 103-104] [767-D-F; 768-D-E]
State Government's ownership in Mines and B
Minerals and the power of reservation:
2.2. 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 C
from all encumbrances. At the time of commencement of
the Constitution, the erstwhile State of Bihar was a Part-
A State specified in the First Schedule to the Constitution
and prior thereto the Province of Bihar. By virtue of Art.
294 all properties and assets which were vested in His D
Majesty for the purpose of the Government of Province
of Bihar, stood vested in the corresponding State of
Bihar. By the Bihar Land Reforms Act, 1950, all other
lands, i.e. estates and tenures of whatever kind, including
the mines and minerals therein, stood vested in the State
E
of Bihar. Pursuant to the Bihar Re-Organization Act, 2000,
all lands, inter alia, belonging to the then State of Bihar
situated in the transferred territories, including the
subject area of the instant appeals, passed to the newly
created State of Jharkhand. The admitted position is that
the State Government (erstwhile Bihar and now Jharkhand)
F
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. [para 105] [768-F-H; 769-A-C] G
2.3. 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 H
652 SUPREME COURT REPORTS [2012] 7 S.C.R.
A in public sector undertaking. [para 107] [770-8-C]
2.4. It cannot be said that by 1957 Act, State
Government's ownership rights in so far as
'development of minerals' was concerned, stood frozen.
In the first place, the declaration made by Parliament in
8
s.2 and the provisions that follow s.2 of 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
c 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
D minerals. Section 4(1) can have no application where the
State Government wants to undertake itself mining
operations in the area owned by it. Further, s.5 or, for that
matter, ss. 6, 9, 10, 11 and 13(2)(a) also do not take away
the State's ownership rights in the mines and minerals
E 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
F 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
G State legislation for vesting of lands containing mineral
deposits in the State Government and did not intend to
trench upon powers of State Legislatures under Entry 18,
List II. The declaration made in s.2 of the 1957 Act is not
all comprehensive. It does not contemplate acquisition of
H mines and minerals. Although the word 'regulation' must
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 653
AND ORS.
in the context receive wide interpretation, but the extent A
of control by the Union as specified in the 1957 Act has
to be construed strictly. This Court in Orissa Cement
Limited has 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 B
assumed by the Union pursuant to such declaration as
spelt out by the legislative enactment which makes the
declaration. [para 107,108, 109 and 110] [770-C-E-H; 771-
A-D-E-F; 772-F-G]
Orissa Cement Ltd. v. State of Orissa & Others 1991 (2) C
SCR 105 = 1991 (1) Suppl. SCC 430; State of Haryana
and Another v Chanan Mal and Others 1976 (3) SCR 688 =
1977 (1) SCC 340;, lshwari Khetan Sugar Mills (P) Limited
& Ors. v. State of Uttar Pradesh and Others 1980
(3) SCR 331 = 1980 (4) SCC 136; Western Coalfields Limited D
v. Special Area Development Authority Korba & Anr. 1982
(2) SCR 1 = 1982 (1) SCC 125 - relied on
2.5. Secondly, after enactment of 1957 Act and 1960
Rules, the Central Government has all throughout E
understood that the State Governments, as owners of
mines and minerals within their territory, have inherent
right to reserve any particular area for exploitation in the
public sector. [para 111] [773-B]
Amritlal Nathubhai Shah and Ors. v. Union Government F
of India and Another 1977 (1) SCR 372 = 1976 (4) SCC 108;
and Indian Metals and Ferro Alloys Ltd. v. Union of India &
Ors 1990 (2) Suppl. SCR 27 = 1992 (1) Suppl. SCC 91-
relied on
G
2.6. The judgment of this Court in Amritlal Nathubhai
Shah establishes the distinction between the power (of
State Government) 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 H
654 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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 is an incident of sovereignty and
ownership. It cannot be said that Amritlal Nathubhai Shah
is not a binding precedent being per incuriam inasmuch
c as earlier judgments of this Court have not been
considered and applied. There is no incongruity or
inconsistency in the decisions of this Court in Hingir-
Rampur Coal Co., M.A. Tulloch & Co., Baijnath Kadio and
Amritlal Nathubhai Shah. The Bench in Amritlal Nathubhai
Shah was alive to the legal position highlighted by this
0
Court in Hingir-Rampur Coal Co., M.A. Tulloch & Co. and
Baijnath Kadio although it did not expressly refer to these
decisions. The legal position exposited in Amritla/
Nathubhai Shah is that even though the field of
E legislation with regard to regulation of mines and
development of minerals has been covered by the
declaration of Parliament in s. 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
F 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
G traceable to Rule 59 of 1960 Rules. [para 113-114] [774-
E-H; 775-A-E]
2.7. Thus, the reservation made by 1962 and 1969
Notifications is not at all contrary or inconsistent with
H 1957 Act. The impugned Notifications do not impinge
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 655
AND ORS.
upon the legislative power of the Central Government. The A
Government of erstwhile State of Bihar had the power to
make reservation which it did by 1962 and 1969
Notifications. There was no lack of power in the State in
making such reservation.[para 102] [767-8-C]
B
2.8. It can also not be said that in view of ss. 17 and
18 of the 1957 Act, the 1962 and the 1969 Notifications are
not relatable to statutory provisions contained in 1957 Act
and 1960 Rules. Section 17 is not all-comprehensive on
the subject of refusal to grant prospecting licence or C
mining lease and it 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 D
mining operations in any area not already held under any
prospecting licence or mining lease. Insofar as s. 18 is
concerned, it basically confers additional rule making
power upon the Central Government for achieving the
objectives, namely, conservation and systematic E
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, such reservation cannot be seen as
impairing the obligation cast upon the Central F
Government u/s 18. [para 115-116] [775-F-H; 776-A-D]
2.9. Rule 59 continued to recognize the State
Government's right to reserve any area for mining within
its territory for any purpose including exploitation in G
public sector. [para 118] [777-E]
Amritlal Nathubhai Shah and Ors. v. Union Government
of India and Another 1977 (1) SCR 372 = 1976 (4) SCC 108 -
relied on
H
656 SUPREME COURT REPORTS [2012] 7 S.C.R.
A Janak Lal v. State of Maharashtra and Others 1989 (3)
SCR 830 = 1989 (4) sec 121 - cited
2.10. 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
8
exploitation by the Government, a corporation
established by the Central, State or Provincial Act or a
Government company within the meaning of s.617 of the
Companies Act. Rule 58 has been omitted from 1960
Rules as the provision for reservation has now been
C expressly made by insertion of s.17 A in 1957 Act.
According to s.17 A(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
D through a Government company or a corporation owned
or controlled by it. In terms of s. 17A(2), any reservation
made by the State Government after coming into force of
that Section must bear approval of the Central
Government. Thus, what was implied by the provisions
E 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 s.17A in 1957 Act by virtue of
F amendment effective from 1987. [para 119 and 120] [777-
G-H; 778-A-D]
2.11. With regard to the impact of omission of r. 58
in 1988 from 1960 Rules and the introduction of s. 17A in
1957 Act in the context of reservation of the mining area
G by the State Government for public sector exploitation,
this Court in Indian Metal and Ferro Alloys Ltd. has
categorically held that reservations made prior to
insertion of s. 17A continue to be in force even after the
introduction of s. 17A. This Court holds that s.17 A is
H prospective. There is no indication in s.17A or in terms
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 657
AND ORS.
of the Amending Act that by insertion of s.17 A Parliament A
intended to alter the pre-existing state of affairs.
Parliament does not seem to have intended by bringing
in s.17 A to undo the reservation of any mining area made
by the State Government earlier thereto for exploitation
in public sector. Where an issue arises before the court B
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 c
of prospectivity operates unless shown to th"e contrary
by express provision in the statute or is otherwise
discernible by necessary implication. [para 122-124] [778-
G-H; 779-A-B; 780-C-D]
Keshavan Madhava Menon v. State of Bombay 1951 D
SCR 228 =AIR 1951 SC 128 - referred to.
Colonial Sugar Refining Co. v. Irving (1905) AC 369;
Pu/borough Parish School Board Election, Bourke v. Nutt
(1894) 1 QB 725, p. 737 - referred to. E
Principles of Statutory Interpretation (Seventh Edition,
1999) by Justice G.P. Singh - referred to.
2.12. If a state government has power to reserve
mineral bearing area for exploitation in public sector - F
and the then Government of Bihar had such power - the
act of reservation by 1962 and 1969 Notifications is not
rendered illegal or invalid. The aspects, namely, (i) 1993
mineral policy framed by the Central Government
envisaged permission of captive consumption of G
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 H
658 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B favour of the appellants to the Central Government for
grant of prior approval and reminder in 2005, 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
C and 1969 Notifications cannot be used as a sufficient
ground for invalidating these Notifications. Lack of
knowledge on the part of the State Government about the
reservation of areas for exploitation in public sector by
1962 and 1969 Notifications does not affect in any manner
the legality and validity of these Notifications once it has
0
been found that these Notifications have been issued by
the erstwhile State of Bihar in valid exercise of power
which it had. [para 125] [780-E-H; 781-A-C]
3.1. As regards the Notification dated 27 .10.2006, it
E 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 mentions the factum of reservation
F 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
G Government had authority to do that u/s 17A(2) of 1957
Act read with Rule 59(1)(e) of 1960 Rules. 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
H Government. 2006 Notification does mention reservation
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 659
AND ORS.
for joint venture project of the State Government but, the A
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. [para 126 and 128] [781-E-H; 782- B
A-D-E]
Indian Metals and Ferro Alloys Ltd. v. Union of India &
Ors 1990 (2) Suppl. SCR 27 = 1992 (1) Suppl. SCC 91-
relied on
c
3.2. The approval by the Central Government
contemplated in s.17A may be obtained by the State
Government before the exercise of power of reservation
or after exercise of such power. It may be express or
implied. In a case such as the present one where the D
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 the State Government
in 2006 Notification otherwise it would not have acted on E
the same. In any case, the Central Government has not
disapproved reservation made by the State Government
in 2006 Notification.Further, the 2006 Notification has not
been given retrospective operation; it is prospective.
Mere reference to 1962 and 1969 Notifications in the 2006 F
Notification does not make it retrospective. [para 129-
130] [783-A-C, E-F]
4.1. The doctrine of promissory estoppal is firmly
established and is well accepted in India. The following
principles must guide a court where an issue of G
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 H
660 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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
D 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
E 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
F 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.
G
(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.
H
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 661
AND ORS.
(iv) For invocation of the doctrine of promissory A
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. B
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 c
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 D
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 E
assertions, averments or allegations without
any supporting material are not sufficient to
press into aid the doctrine of promissory
estoppel.
F
(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 G
the mind of the court. Absence of it must not
hold the Government or the public authority to
its promise, assurance or representation. [para
132 and 146) [784-E; 801-F-H; 802-A-H; 803-A-
E] H
662 SUPREME COURT REPORTS [2012] 7 S.C.R.
A Mis Motilal Padampat Sugar Mills Co. Ltd. V. State of
UP. & Ors. 1979 (2) SCR 641 = 1979 (2) SCC 409; Union
of India and Others v. Godffey Philips India Limited 1985
(3) Suppl. SCR 123 = 1985 (4) SCC 369; and Delhi Cloth
and General Mills Limited v. Union of India 1988 (1) SCR
B 383 = 1988 (1) SCC 86; Amrit Vanaspati Co. Ltd. vs. State
=
of Punjab 1992 (2) SCR 13 1992 (2) SCC 411; State of
Orissa and Ors. v. Mangalam Timber Products Limited 2003
Suppl. SCR 476 =2004 (1) SCC 139; State of Punjab v.
Nestle India Ltd. and Another 2004 (2) Suppl. SCR =
2004
C (6) SCC 465; Union of India v. lndo-Afghan Agencies [1968)
2 SCR 366; Collector of Bombay v. Municipal Corporation
of the City of Bombay (1952) SCR 43, Century Spinning and
Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council 1970
=
(2) SCR 854 1970 (1) SCC 582, M. Ramanatha Pillai v.
State of Kera/a (1974) 1 SCR 515, Assistant Custodian v. Brij
0
=
Kishore Agarwala 1975 (2) SCR 359 1975 (1) SCC 21,
State of Kera/av. Gwalior Rayon Silk Manufacturing Co. Ltd.
1974 (1) SCR 671 = 1973 (2) sec 713 I Excise
Commissioner, UP., Allahabad v. Ram Kumar 1976 Suppl.
SCR 535 = 1976 (3) SCC 540, Bihar Eastern Gangetic
E Fishermen Co-operative Society Ltd. v. Sipahi Singh 1978 (1)
SCR 375 = 1977 (4) SCC 145 and Radhakrishna Agarwal
v. State of Bihar 1977 ( 3) SCR 249 = 1977 (3) SCC 457;
Kasinka Trading & Anr. v. Union of India and Anr. 1994 (4)
=
Suppl. SCR 448 1995 (1) SCC 274; Bannari Amman
F Sugars Ltd. v. Commercial Tax Officer & Ors. (2005) 1 SCC
625 - referred to
Central London Property Trust Ltd. v. High Trees House
Ltd. (1956) 1 All ER 256; Jorden v. Money (1854) 5 HLC 185;
G Hughes v. Metropolitan Railway Company (1877) 2 AC 439,
Birmingham and District Land Co., v. London and North
Western Rail Co. (1889) 40 Ch D 268; Durham Fancy Goods
Ltd. v. Michael Jackson (Fancy Goods) Ltd. (1968) 2 All ER
987, Evenden v. Guildford City Association Football Club Ltd.
H (1975) 3 All ER 269 and Crabb v. Arun District Council (1975)
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 663
AND ORS.
3 All ER 865; Allengheny College v. National Chautauque A
County Bank 57 ALR 980 and Grennan v. Star Paving
Company (1958) 31 Cal 2d 409- referred to
4.2. The following principles in relation to the doctrine
of legitimate expectation are well established:
B
(i) The doctrine of legitimate expectation can be
invoked as a substantive and enforceable
right.
(ii) The doctrine of legitimate expectation is c
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.
D
(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 E
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 F
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 G
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
H
664 SUPREME COURT REPORTS [2012] 7 S.C.R.
A doctrine of legitimate expectation would not be
invoked which could block public interest for
private benefit. [para 153] [809-C-H; 810-A]
MP. Oil Extraction and Another v. State of MP. and Ors.
1997 ( 1 ) Suppl. SCR 671 = (1997) 7 SCC 592; J.P. Bansal
B v. State of Rajasthan and Anr. (2003) 5 SCC 134; Union of
India and Others v. Hindustan Development Corporation and
Others 1993 (3) SCR 128 = (1993) 3 sec 499; P. T. R.
Exports (Madras) Pvt. Ltd. & Ors. v. Union of India & Ors. 1996
(2) Suppl. SCR 662 = (1996) 5 SCC 268 - referred to.
c
4.3. The State Government had 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
o of the subject mining area for exploitation in the public
sector. It was on November 17, 2004 that the District
Mining Officer informed the Secretary, Department of
Mines and Geology, Government of Jharkhand that the
subject area was reserved for public sector under 1962
E and 1969 Notifications issued by the erstwhile State of
Bihar. In view of the fact that the subject mining area had
been reserved for exploitation in pubic sector under 1962
and 1969 Notifications, the stipulation in the MOU that the
State Government shall assist in selecting the area for
F 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 commitment is
dependent on availability and as per existing law. Two, if
the State Government is asked to do what it represented
G 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. [para
159] [812-E-G; 813-A-D]
H 4.4. The doctrine of promissory estoppel is not
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 665
AND ORS.
attracted in the facts, particularly, when promise was A
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. The
State Government cannot be compelled to carry out what B
it cannot do in the existing state of affairs in view of 1962
and 1969 Notifications. 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 c
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 this Court in not invoking the
doctrines of promissory estoppal and legitimate D
expectation. Thus, none of the appellants is entitled to
any relief based on these doctrines. [para 159) [813-D-G]
4.5. 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 E
reiterated the reservation by its Notification dated October
27, 2006 expressly "in public interest and in the larger
interest of the State". The act of the State Government in
withdrawing the recommendations made by it to the
Central Government in the factual and legal backdrop F
cannot be said to be bad in law on the touchstone of
doctrine of promissory estoppal as well as legitimate
expectation. The act of the State Government is neither
unfair nor arbitrary nor does it suffer from the principles
of natural justice. [para 160-161) [813-H; 814-A-C] G
5.1. As regards, the doctrine of desuetude and its
applicability, the essentials of doctrine of desuetude may
be summarized as follows:
H
666 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c
ingredients are essential and want of anyone
of them would not attract the doctrine of
desuetude. [para 167] [816-D-G]
State of Maharashtra v. Narayan Shamrao Puranik & Ors.
=
D 1983 (1) SCR 655 (1982) 3 SCC 519; Cantonment Board,
MHOW and Anr. v. M.P. State Road Transport Corporation
1997 (3) SCR 813 = (1997) 9 SCC 450; Municipal
Corporation for City of Pune vs. Bharat Forge Co. Ltd. 1995
( 2 ) SCR 716 = 1995 (3) SCC 434 - referred to
E
R. v. London County Council LR (1931) 2 KB 215 (CA);
Brown v. Magistrate of Edinburgh 1931 SLT (Scots Law
Times Reports) 456; and Buckoke v. Greater London
Council (1970) 2 All ER 193 - referred to.
F Francis Bennion's Statutory Interpretation; Craies Statute
Law (7th Edn.) and" Repeal and Desuetude of Statutes" by
Aubrey L. Diamond; referred to
5.2. Insofar as 1962 and 1969 Notifications are
G concerned, the 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
H desuetude. Moreover, State of Jharkhand came into
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 667
AND ORS.
existence on November 15, 2000 and it can hardly be said A
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. Secondly, as a B
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 c
a complete go by. [para 168] [817-B-D, F-G]
5.4. It can also not be said that 1962 and 1969
Notifications had lapsed as the State Government never
adopted them. In the light of s.85 of the Bihar
Reorganisation Act read with ss. 84 and 86 thereof, D
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 E
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. [para 131] [783-
G; 784-A-C] F
/. T.C. & Ors. v. State of Karnataka & Ors. 1985 Suppl.
SCR 145 = 1985 Suppl. SCC 476; Maya Mathew v. State
of Kera/a and Ors. 2010 (3) SCR 16 = 2010 (4) sec 498;
Pratik Sarkar, MB. Suresh and Jitendra Laxman Thorve v. G
State of Jharkhand 2008 (56) 1 BLJR 660; Lord Krishna
Textile Mills v. Its Workmen 1961 SCR 204 = 1961 AIR 860;
Life Insurance Corporation of India v. Escorts Limited and
others 1985 (3) Suppl. SCR 909 = 1986 (1) SCC 264; and
High Court of Judicature for Rajasthan v. P.P. Singh and H
Another 2003 (1) SCR 593 = 2003 (4) SCC 239; Nagarjuna
668 SUPREME COURT REPORTS [2012] 7 S.C.R.
A Construction Company Ltd. v. Government of Andhra
Pradesh & Ors. 2008 (14) SCR 859 = (2008) 16 SCC 276;
Jayalakshmi Coelho v. Oswald Joseph Coelho 2001 (2)
SCR 207 = (2001) 4 SCC 181; and Mohinder Singh Gill and
Anr. v. The Chief Election Commissioner, New Delhi, & Ors.,
B (1978) 1 SCC 405; Nazir Ahmad v. King-Emperor AIR 1936
PC 253; and Sir Kameshwar Singh of Darbhanga and Ors.
1952 SCR 889; - cited.
Per Gokhale, J
C 1.1. Section 3 of the Bihar Land Reforms Act, 1950
provides for issuance of notification of vesting the estates
and tenures in the State. Section 4 provides for
consequences of the vesting, namely, that they shall vest
absolutely in the State free from all encumbrances.
D Ownership denotes a complex of rights. 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
E flows from its ownership of those mines and minerals.
[para 30 and 31] [849-B; 850-C-D; 851-A-B]
State of Bihar vs. Kameshwar Singh 1952 SCR 1056=
AIR 1952 SC 252, referred to.
F Salmond on Jurisprudence (Twelfth Edn. 246) - referred
to.
1.2. Entry 54 of List I states that regulation of Mines
and Minerals Development is within the power of the
G Union Government to the extent a declaration is made by
Parliament in that behalf, and such a declaration has been
made in s. 2 of the MMDR Act. [para 32(i)] [851-C]
lshwari Khetan Sugar Mills (P) Limited & Ors. v. State of
Uttar Pradesh and Others 1980 (3) SCR 331 = 1980 (4)
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 669
AND ORS.
SCC 136; Orissa Cement Ltd. v. State of Orissa & Others 1991 A
(2) SCR 105 = 1991 (1) Suppl. SCC 430 - referred to
1.3. 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 8
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. The authority to grant the reconnaissance C
permit, prospecting license or mining lease on the
conditions which are mentioned in s.5 of the Act is
specifically retained with the State Government. However,
with respect to the minerals specified in the First
Schedule (which include iron-ore), it is added that
previous approval of the Central Government is required. D
[para 33 and 34) [852-F-H; 854-D]
1.4. Section 10 of the Act deals with the procedure
for obtaining the necessary licences. It makes it very clear
that the application is to be made to the State E
Government, and it is the right of the State Government
either to grant or refuse to grant the permit, licence or
lease. 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 s. 11 of the Act. F
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. [para 35-36) [855-G-H; 856-D- G
E; 857-E]
1.5. S.ection 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 H
670 SUPREME COURT REPORTS [2012] 7 S.C.R.
A Government as stated in sub-s. (2) thereof. Besides, sub-
s. (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
s 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-s.(2) of s.17 A, the State Government may also reserve
c any such area, though with the approval of the Central
Government. Thus, these sections and the duty cast on
the Central Government u/s 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. [para 37] [857-H; 858-A-D]
0
2.1. The provisions of the MMDR Act contain certain
regulations. 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
E flows from vesting of the mines in the State Government.
It is inherent in its ownership of the mines. [para 38] [858-
D-F]
2.2. The Central Government does have the power to
F 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 s.17 A (2) of the Act. This
sub-section requires the approval of the Central
Government for reserving any new area which is not
G 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 subject area were already reserved, and
reiterates the decision of the State Government that the
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 671
AND ORS.
minerals which were already reserved in the area under A
the two notifications will continue to be utilised for
exploitation by public sector undertakings or joint
venture projects of the State Government. Therefore, the
notification dated 27.10.2006 did not require the approval
of the Central Government. [para 38] [858-G; 859-C-E] B
2.3. As regards 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, C
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 D
State Government, since there is no requirement to state
the source of power. [para 39] [859-F-G]
Dr. Ram Manohar Lohia Vs. State of Bihar 1966 SCR
709 =AIR 1966 SC 740 - relied on E
2.4. The notification of 1969 is clearly protected under
r.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
F
purpose. [para 43(i)] [864-0-E]
2.5. As far as the notification of 1962 is concerned, it
cannot be said 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 rr. G
58 and 59 as they stood prior thereto. The provisions of
the Act clearly show 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 H
672 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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 r. 59 in 1963 made it clear that the State
can reserve land 'for any purpose', and the amendment
B of rr.58 and 59 in 1980 clarified that the State can reserve
it for a public corporation or a Government company.
These amendments have been effected only to make
explicit what was implicit, and they can not be read to
nullify the powers which the State Government otherwise
c had under the statute. [para 43-44] [864-E; 865-D-H;. 866-
A]
Janak Lal v. State of Maharashtra and Others 1989 (3)
SCR 830 = 1989 (4) SCC 121 - held inapplicable
D Indian Metals and Ferro Alloys Ltd. v. Union of India &
Ors 1990 (2) Suppl. SCR 27 = 1992 (1) Suppl. SCC 91 -
held inapplicable
2.6. It cannot be said that in view of s.15, the State
E Government's power is only to regulate the minor
minerals. The provisions from ss.4 to 17A clearly show
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 the
F First Schedule to the act though with the previous
approval of the Central Government. This would include
the power to effect reservations of mining areas for the
public sector. [para 46] [866-G; 867-A-B]
G Bharat Coking Coal Ltd. v. State of Bihar & Ors. 1990
(3) SCR 744 = 1990 (4) SCC 557- held inapplicable
2.7. The power of the State flows from its ownership
of the mines, and it is not in any way taken away by the
H law made by Parliament viz. the MMDR Act or the MC
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 673
AND ORS.
Rules. Therefore, it cannot be said that because a A
regulatory regime is created under the MMDR Act giving
certain role to the Central Government, the power to
effect reservations is taken away from the State
Government. [para 46] [867-C-D]
B
D.K. Trivedi and Sons and Others v. State of Gujarat and
Others 1986 SCR 479 =1986 Suppl. SCC 20 Hukam Chand
etc. v. Union of India & Ors 1973 (1) SCR 896=1972 (2) SCC
601- distinguished
2.8. The action of the State cannot as well be faulted C
for being unreasonable to be hit by Art. 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.
[para 47] [867-G-H]
D
2.9. As regards the plea 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 r.63
A of the MC Rules, 1960, and it cannot withdraw the same, E
it is significant to note that, firstly, the impugned judgment
shows 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 r. 22
with all full particulars in accordance with law. In the F
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 r.63A.
In any case, the Central Government subsequently G
rejected the proposal. [para 48] [868-A-D]
2.10. As regards the plea that the appellants could
not resort to their remedy of revision under r.54 against
the letter of State Government dated 13.9.2005, suffice it H
674 SUPREME COURT REPORTS [2012] 7 S.C.R.
A to say 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
B nowhere states as to how the appellant came to know
about these internal communications between the State
and the Central Government. [para 49] [868-F-H]
2.11. From the judgments of the Constitution
Benches of this Court in Hingir-Rampur Coal Co., M.A.
C Tulloch & Co. and Baijnath Kadio, it is evident that if there
is a declaration by 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 54 of the Centre List.
D In the instant matter, the Court is 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. As regards the case of the appellants that
E the State Government was not competent at all to issue
the notifications of 1962 and 1969 reserving the mining
areas for public undertaking, in Amritlal Nathubhai Shah's
case, this Court has held in clear terms that the power of
the State Governme11t arose from its ownership of the
F minerals, and that it had the inherent right to deal with
them. [para 50,53 and 55] [869-B; 871-D-F; 872-C]
Amritlal Nathubhai Shah Vs. Union of India 1977 (1)
SCR 372 = 1976 (4) sec 108 - relied on
G Hingir-Rampur Coal Co. Ltd. & Ors. v. State of Orissa &
Ors. 1961 SCR 537 = AIR 1961 SC 459; State of Orissa &
Anr. v. Mis M.A. Tulloch & Co. 1964 SCR 461 AIR 1964 SC
1284; Baijnath Kadio v. State of Bihar and Others 1970 (2)
SCR 100 = 1969 (3) SCC 838 - referred to.
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 675
AND ORS.
2.12. The judgment in Amritlal cannot be said to be A
stating anything contrary to the propositions in Hingir-
Rampur Coal Co., M.A. Tulloch & Co. and Baijnath Kadio,
but is a binding precedent. The notifications impugned
by the appellants in the instant group of appeals were
fully protected under the provisions of MMDR Act, and B
also as explained in Amritlal. [para 59] [875-C]
3.1. It cannot be said that the two notifications suffer
on account of desuetude. The law requires that there
must be a considerable period of neglect, and it is C
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 D
desuetude. [para 60] [875-D-F]
3.2. For invoking the principle of promissory estoppal
there has to be a promise, and on that basis the party
concerned must have acted to its prejudice. In the instant E
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. What the F
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 Art. 299 of the
Constitution. Barring the appellant in C. A. No 3286 of G
2009, other appellants do not appear to have taken
further steps. In any case, in the absence of any promise,
the appellants cannot claim promissory estoppal in the
teeth of the notifications issued under the relevant
statutory powers. [para 61-62] [875-F-H; 876-A-B]
H
676 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 3.3. The doctrine of legitimate expectation 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 has been reiterated by this Court
in Sandur Manganese 'it is a well settled principle that
B equity stands excluded when a matter is governed by
statute'. [para 62) [876-C-D]
Sandur Manganese & Iron Ores Ltd. vs. State of
Karnataka 2010 (11) SCR 240 = 2010 (13) SCC 1 - relied
C on
4.1. Mines and minerals are a part of the wealth of a
nation. They constitute the material resources of the
community. Art. 39(b) of the Directive Principles mandates
that the State shall, in particular, direct its policy towards
D securing that the ownership and control of the material
resources of the community are so distributed as best to
sub-serve the common good. Article 39(c) mandates that
the State should see to it that operation of the economic
system does not result in the concentration of wealth and
E 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 u/s 2 thereof. The
ownership of the mines vests in the State of Jharkhand
in view of the declaration under the provisions of Bihar
F Land Reforms Act, 1950 which Act is protected by
placing it in the Ninth Schedule. [para 66] [878-G-H; 879-
A-B]
State of Tamil Nadu Vs. Mis Hind Stone [1981) 2 SCR
742 =AIR 1981 SC 711; and Waman Rao Vs. Union of India
G 1981 (2) SCR 1 = 1981 (2) sec 362- relied on
4.2. There is no 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
H for the reasons stated therein. The State Government
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 677
AND ORS.
was fully justified in declining the grant of leases to the A
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 which cannot be faulted. [para 67) B
[879-F-G]
Air India Vs. Union of India 1995 (2) Suppl. SCR
175=1995 (4) SCC 734; Mis Motila/ Padampat Sugar Mills
Co. Ltd. V. State of UP. & Ors. 1979 (2) SCR 641 = 1979 (2)
SCC 409 State of Punjab v. Nestle India Ltd. and Another C
2004 (2) Suppl. SCR 135 = 2004 (6) SCC 465; State of
Maharashtra vs. Narayan Shamrao Puranik 1983 (1) SCR
655 =1982 (3) SCC 519; Municipal Corporation for City of
Pune & Ors. v. Bharat Forge Co. Ltd. & Ors. 1995 (2)
SCR 716 = 1995 (3) SCC 434; Cantonment Board Mhow vs. D
M.P. State Road Transport Corpn. 1997 (3) SCR 813 =1997
(9) SCC 450; Amrit Banaspati Ltd. and Another v. State of
Punjab and Another 1992 (2) SCR 13=1992 (2) SCC 411;
M.P. Mathur and Others v. OTC and Others 2006 (9) Suppl.
SCR 519 = 2006 (13) SCC 706; Dharambir Singh vs. Union E
of India 1996 (6) Suppl. SCR 566 = 1996 (6) SCC 702; M.P.
Ram Mohan Raja vs. State of Tamil Nadu 2007
(5) SCR 576 = 2007 (9) SfC 78; State of Kera/a v. B. Six
Holiday Resorts {P) Ltd. 2010 (3) SCR 1 = 2010 (5) SCC 186
- cited. F
Case Law Reference:
Per R. M. Lodha,J.
1961 SCR 537 referred to para 21 G
1964 SCR 461 referred to para 21
1970 (2) SCR 100 referred to para 21
1977 (1) SCR 372 relied on para 21
H
678 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 1989 (1) Suppl. SCR 692 referred to para 21
1991 (2) SCR 105 referred to para 21
2010 (3) SCR 16 cited para 21
2008 (56) 1 BLJR 660 cited para 21
B
1990 (3) SCR 744 referred to para 23
1989 (3) SCR 830 referred to para 26
2010 (11) SCR 240 referred to para 28
c
1986 SCR 479 referred to para 30
1981 (2) SCR 742 relied on para 30
1990 (2) Suppl. SCR 27 relied on para 30
D 1973 (1) SCR 896 referred to para 31
1952 SCR 889 cited para 33
2001 (10) sec 476 referred to para 33
E 1961 SCR 204 cited para 35
1985 (3) Suppl. SCR 909 cited para 35
1995 (2) SCR 716 referred to para 35
2003 (1) SCR 593 cited para 35
F
1976 (3) SCR 688 relied on para 36
1980 (3) SCR 331 relied on para 36
1979 (2) SCR 641 referred to para 37
G referred to para 37
1992 (2) SCR 13
2004 (2) Suppl. SCR 135 referred to para 37
2006 (9) Suppl. SCR 519 referred to para 37
H 1964 SCR 666 referred to para 94
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 679
AND ORS.
1979 (3) SCR 254 referred to para 94 A
1985 Suppl. SCR 145 cited para 94
1982 (2) SCR 1 relied on para 94
1996 (6) Suppl. SCR 566 referred to para 96
B
2007 (5) SCR 576 referred to para 98
1951 SCR 228 referred to para 123
(1905) AC 369 referred to para 123
c
(1894) 1 QB 725, p. 737 referred to para 123
(1956) 1 All ER 256 referred to para 131
(1854) 5 HLC 185 referred to para 131
(1877) 2 AC 439 referred to para 131 D
(1889) 40 Ch D 268 referred to para 131
(1968) 2 All ER 987 referred to para 132
(1975) 3 All ER 269 referred to para 132 E
(1975) 3 All ER 865 referred to para 132
57 ALR 980 referred to para 135
(1958) 31 Cal 2d 409 referred to para 135
F
(1968) 2 SCR 366 referred to para 136
(1952) SCR 43 referred to para 136
1970 (2) SCR 854 referred to para 136
G
(1974) 1 SCR 515 referred to para 136
1975 (2) SCR 359 referred to para 136
1974 (1) SCR 671 referred to para 136
1976 Suppl. SCR 535 referred to para 136 H
680 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 1978 (1) SCR 375 referred to para 136
1977 (3) SCR 249 referred to para 137
1985 (3) Suppl. SCR 123 referred to para 138
1988 (1) SCR 383 relied on para 139
B
1994 (4) Suppl. SCR 448 referred to para 141
2003 Suppl. SCR 476 referred to para 142
2004 (6) Suppl. SCR 264 referred to para 144
c
1993 (3) SCR 128 referred to para 148
1996 (2) Suppl. SCR 662 referred to para 148
1997 (1) Suppl. SCR 671 referred to para 150
D 2003 (2) SCR 933 referred to para 151
1983 (1) SCR 655 referred to para 163
(1931) 2 KB 215 (CA) referred to para 163
E 1931 SLT
(Scots Law Times
Reports)456 referred to para 163
(1970) 2 All ER 193 referred to para 163
F 1997 ( 3) SCR 813 referred to para 166
AIR 1936 PC 253 referred to para 172
2008 (14) SCR 859 cited para 172
G 2001 (2) SCR 207 cited para 173
1978 (2) SCR 272 referred to para 174
As Per Gokhale, J
1961 SCR 537 referred to para 14
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 681
AND ORS.
1961 SCR 537 referred to para 14 A
1964 SCR 461 referred to para 14
1970 (2) SCR 100 referred to para 14
1977 (1) SCR 372 relied on para 14
B
1989 (3) SCR 830 held inapplicablepara 14
1973 (1) SCR 896 distinguished para 16
1990 (2) Suppl. SCR 27 held inapplicable para 16
c
[1986] SCR 479 distinguished para 16
1995 (2) Suppl. SCR 175cited para 17
1990 ( 3) SCR 744 held inapplicablepara 18
1979 (2) SCR 641 cited para 18 D
2004 (2) Suppl. SCR 135 cited para 18
1952 SCR 1056 referred to para 19
1981 (2) SCR 1 relied on para 19 E
1966 SCR 709 relied on para 22
1983 (1) SCR 655 cited para 23
1995 (2) SCR 716 cited para 23
F
1997 (3) SCR 813 cited para 23
1992 (2) SCR 13 cited para 24
2006 (9) Suppl. SCR 519 cited para 24
G
2010 (11) SCR 240 relied on para 24
1981 (2) SCR 742 relied on para 25
1996 (6) Suppl. SCR 566 cited para 25
2007 (5) SCR 576 cited para 25 H
682 SUPREME COURT REPORTS (2012] 7 S.C.R.
A 2010 (3) SCR 1 cited para 25
1980 (3) SCR 331 referred to para 32
1991 (2) SCR 105 referred 10 para 32
[1985] 2 SCR 175
B
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3285 of 2009 etc.
From the Judgment & Order dated 04.04.2007 of the Higl'
c Court of Jharkhand at Ranchi in Writ Petition {Civil) No. 4151
of 2006.
WITH
CA. Nos. 3286, 3287, 3288, 3289 & 3290 of 2009.
D
Con. Pel (C) No. 14 of 2009 in C.A. No. 3287 of 2009.
Dt: Abhishek M. Slnghvi, Or. Rajeev Dhawan, Ohruv Mehta,
Ajit Kr. Sinha, P.S. Narasimha, T.S. Doabia, Ashok Bhan, J.K.
Oas, Krishnan Venugopal, Sanjiv Sen, Gaurav Goel, Sun1l Mitlal,
E Pulkit Sharma, E.G. Agrawala, Omar Ahmad, Prashant Mehta,
Sunita Bankoti (for Suresh A. Shroff & Co.), Jaya Bharukha,
Guru Partap, (for Devashish Bharukha), Sanjeev K. Kapoor,
Zafar lnayat, Gaurav Juneja, Yogesh V. Kotemath, Rohlni Misra,
Rahu1 Chandra (for Khaltan & Co.), K.B. Rohtagi, Mahesh
F Kasana, Aparana Rohatgi Jain, B. Vijayatakshmi Menon, Rohit
Choudhary, Preeti Khiwani, Sri Ram Krishnan, Garvesh Kabra,
Gaurav Pratap (for Devashish Bharuka), Ratan Kumar
Choudhary, Brahmajeet Mishra, N.N. Singh, S.
Chandrashekhar, Ashwarya Sinha, Sunil Kumar Jain, Aneesh
G Mittal, Sachin Sharma, Sridhar Potaraju, Gaichang Ganmei,
Sriram Parakkat, D. Siri Rao, Annapurna, Sandeep Grover,
Siddhartha (for Luthra & Luthra), Madhurima Talia, Sadhana
Sandhu, Sunita Sharma, Gargi Khanna, S.S. Rawat (for D.S.
Mahra), Avijeet Bhujabal, P.P. Nayak (for Paramanand Gaur),
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 683
AND ORS.
S.K. Divakar, Chhaya Kumari for the appearing parties. A
The Judgments & order of the Court was delivered by
R.M. LODHA, J.
Introduction B
1. 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 c
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.
D
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 E
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
F
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 G
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')
H
684 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
C 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
D 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:
E
"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
F
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;
G (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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 685
AND ORS. [R.M. LODHA, J.]
been worked or not, inclusive of such rights of a lessee of A
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 8
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.
c
Factual features
Civil Appeal No. 3285 of 2009, Monnet lspat and Energy
Ltd. Vs.Union of India and Ors.
5. The appellant company, referred to as Monnet, is D
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 E
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 F
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 G
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
H
686 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
C 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
D 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
E 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
F 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
G 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
H relating to proposals for grant of mining leases in Ghatkuri was
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 687
AND ORS. [R.M. LODHA, J.]
held wherein the Secretary of the State Government is stated A
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 8
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 C
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 D
reservation. Block No. D (500 acres) which is overlapping with
compartment no. 5 (recommended in favour of Monnet) was
earlier lease area of Mis. 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 E
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).
F
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 G
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.
H
688 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
of iron and steel. Adhu nik 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-I I has been going on. On September 1,
C 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.
D
6.1. On September 16, 2003, the Deputy Commissioner,
Chaibasa forwarded Adhunik's application along with few others
to the Director of Mines, Jharkhand.
E 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
F 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.
G 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
H mining lease for iron ore in favour of Adhunik, the State
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 689
AND ORS. [R.M. LODHA, J.]
Government gave various reasons justifying grant of mining A
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
8
iron ore.
Civil Appeal No. 3287 of 2009. Abhiieet Infrastructure Ltd.
Vs. Union of India and Ors.
7. The appellant M/s. Abhijeet Infrastructure Limited, c
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 D
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 E
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 F
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.
G
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.
H
690 SUPREME COURT REPORTS (2012] 7 S.C.R.
A Civil Appeal No. 3288 of 2009, lspat Industries Limited Vs.
Union of India and Ors.
8. The appellant. lspat Industries Limited, referred to as
lspat, is a company registered under the Companies Act, 1956.
B According to lspat, it is one of the largest steel producers in
the private sector and has got vast resources and technical
experience. lspat 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
C 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
D 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 lspat Private
E Limited Vs. Union of India and Ors.
9. Jharkhand lspat Private Limited, to be referred as
Jharkhand lspat, is a registered company having their
registered office in Ramgarh, District Hazaribagh, State of
Jharkhand. Jharkhand lspat runs a Sponge Iron and Steel Plant
F in Ramgarh.
9.1. Jharkhand lspat 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
G 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
lspat in selecting the area for iron and other minerals as per
requirement depending upon quality and quantity. The State
H Government agreed to grant mineral concession as per existing
law.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 691
AND ORS. [R.M. LODHA, J.]
Government agreed to grant mineral concession as per existing A
law.
9.2. On August 4, 2004, the State Government prepared
a report containing its decision and proposal in favour of
Jharkhand lspat for grant of mining lease over an area of 8
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 lspat Limited Vs.
Union of India and Ors.
c
10. The appellant Prakash lspat 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 D
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 E
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. F
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 G
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, lspat, H
692 SUPREME COURT REPORTS [2012] 7 S.C.R.
A Jharkhand lspat 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
B 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
C 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.
D
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
E 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
F 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
G areas in this State are reserved for exploitation of the
mineral in the public sector:-
Name of the district - Shinghbhum
H Description of the areas reserved.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 693
AND ORS. [R.M. LODHA, J.]
1. Sasangda Main Block - A
BOUNDARY
South - The southern boundary is the same as
the northern boundary. It starts from
the Bihar, Orissa boundary opposite B
the gorge of the southern tributary of
Megnahatu nala and runs west-north-
west along the gorge till the foot of the
hill.
c
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 D
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 E
just over one mile northwards of .2935.
5. Dirisumburu Block -
BOUNDARY
F
South and South-West Starting from the Churu lkir 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. G
South-East - From the above end towards north-
east for 2-1/2 miles to reach a point Yi
miles north west of Bahada village (22
11 '30": 85 17'30").
H
694 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B
Dirishumburu and the foot of the
adjoining Hakatlataburu to meet the
starting point of the Churu lkir Nala
east-north-east of Kolaiburu. village.
c 6. Banalata Block -
BOUNDARY
South-East - A line running west-north-west-east-
south-east passing through 2.20 feet
D contour at the south-western and of the
Banlata ridge south-east - From 2 -1/
2 furlongs east of 2187 north east
wards upto Yi mile north-west of
Pechahalu village (22 16' : 85 20') and
E from here north-north - east upto 3
furlongs east-south-east of 2567
Painsira Buru).
North - From the above and in west-north-west
F direction across the hill for five furlongs
w reach the north-west slope of the
hill.
West- From above end in general south-
south-west directing along the flank of
G the hill to reach the south-west
boundary at three furlongs north-west
2187.
By order of the Governor of Bihar
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 695
AND ORS. [R.M. LODHA, J.]
Sd/- (B.N. Sinha) A
Secretary to Government"
1969 Notification
16. Then, on February 28, 1969 the following Notification
was issued: B
"GOVERNMENT OF BIHAR
DEPARTMENT OF MINES & GEOLOGY
NOTIFICATION
Patna, the 28th February, 1969 C
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 D
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 E
Sd/- (C.P. Singh)
Dy. Secretary to Government"
2006 Notification
17. The State of Jharkhand issued a Notification on F
October 27, 2006 which reads as follows:
"DEPARTMENT OF MINES & GEOLOGY, RANCHI
NOTIFICATION
The 27th October, 2006 G
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 H
696 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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-
B 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
c 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
D here with for reference.
By order of the Governor
S.K. Satapathy
Secretary to Government
E Description of the area reserved in Ghatkuri is given
below:-
District: Singhbhum
Main Block: Ghatukuri
F
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:
G xxx xxx xxx
Sd/- Vijoy Kumar
Director l/c Geology Directorate"
Contentions
H 18. Learned senior counsel for the appellants highlighted
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 697
AND ORS. [R.M. LODHA, J.]
different aspects while setting up challenge to the 1962, 1969 A
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 B
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 c
with inherent right insofar as mining is concerned.
19. Mr. C.A. Sundaram, learned senior counsel for lspat
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 D
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) E
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.
F
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 G
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 H
698 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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 P<ules in 1980 and as such
no power existed prior to 1980 for the State Government to
reserve areas for public sector undertakings. Alternatively, he
s 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.
c 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.
0
21. The decisions of this Court in Hingir-Rampur Coal Co.
Ltd. & Ors. v. State of Orissa & Ors.8; State of Orissa & Anr.
v. Mis M.A. Tulloch & Co. b; Baijnath Kadio v. State of Bihar
and Othersc; Amritlal Nathubhai Shah and Ors. v. Union
E Government of India and Another<1; India Cement Ltd. & Ors.
v. State of Tamil Nadu and Others•; Orissa Cement Ltd. v.
State of Orissa & Others' and Maya Mathew v. State of Kera/a
and Ors. 9 were cited. Mr. C.A. Sundaram sought to distinguish
Amritlal Nathubhai Shahdd and submitted that in any case
F Amritlal Nathubhai Shahd was not a good law.
22. Mr. L. Nageswara Rao and Dr. Abhishek Manu
a. AIR 1961 SC 459.
G b. AIR 1964 SC 1284.
c. 1969 (3) sec 838.
d. 1976 (4) sec 108.
e. 1990 (1) sec 12.
t. 1991 Suppl. (1) sec 430.
H 9. 2010 (4) sec 498.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 699
AND ORS. [R.M. LODHA, J.]
Singhvi, learned senior counsel, appeared for Adhunik and A
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 B
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 c
v. State of Jharkhandh 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 D
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 E
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.;. Mr. Bharuka also distinguished the decision of F
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 G
"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,
h. 2008 (56) 1 BLJR 660.
i. 1990 (4) sec 557. H
700 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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 Amritla/ Nathubhai Shahd dealt with
situation post 1963 amendment in Rule 59 and not pre-
s 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
C 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
D 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 Coa/i, it was submitted that
E 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
F 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
G 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,
H 2006 issued by the State Government, it was submitted ~hat
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 701
AND ORS. [R.M. LODHA, J.]
2006 Notification seeks to reserve the area for "joint venture" A
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 B
informatory Notification having no legal significance or
consequence.
26. Dr. Rajiv Dhavan, learned senior counsel made his
submissions on behalf of Jharkhand lspat. He vehemently
contended that the 1962 Notification was wholly illegal and C
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 Othersi. D
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 E
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 F
· 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 G
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
j. 1989 (4) sec 121 H
702 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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 othersk, State of WB.
B v. Kesoram Industries Ltd. and others 1 and Sandur
Manganese and Iron Ores Limited v. State of Karnataka and
Others"'.
29. Dr. Rajeev Dhavan submitted that merely because
C 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 Nathlibhai Shahd was founded on the
specific finding that the State's action was consistent with Rule
D 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
E 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
F 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
G 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
k. 1973 c1 l sec 584.
1. 2004 (10) sec 201.
H m. 2010 (13) sec 1.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 703
AND ORS. [R.M. LODHA, J.]
government company. According to him, the question for A
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", B
State of Tamil Nadu v. Mis. Hind Stone and Others0 and
Indian Metals and Ferro Alloys Ltd. v. Union of India & OrsP.
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 c
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 D
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 E
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 F
retrospective effect. Reliance was placed by the learned senior
counsel on Hukam Chand etc. v. Union of India & Ors"-.
Central Government's Stand
32. Mr. Ashok Bhan, learned senior counsel for the Union G
n. 1986 (Suppl.) SCC 20.
o. 1981 (2) sec 20s.
p. 1992 Supp (1) sec 91.
q. 1972 (2) sec 601. H
704 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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
D 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
E 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
F of Bihar v. Maharajadhiraja Sir Kameshwar Singh of
Darbhanga and Ors.'. 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
G 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
H r. 1952 SCR 889.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 705
AND ORS. [R.M. LODHA, J.]
Court in Amritla/ Nathubhai Shahd, Indian Metals and Ferro A
Alloys Ltd. P and Bhupatrai Magan/al Joshi and Others v. Union
of India and another6.
34. Mr. Ajit Kumar Sinha, leaned senior counsel submitted
that the source of power for issuance of 1962, 1969 and 2006 8
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 i 960 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 C
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 D
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 E
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!, Life Insurance Corporation of
India v. Escorts Limited and othersu, Municipal Corporation F
for City of Pune & Ors. v. Bharat Forge Co. Ltd. & Ors. v and
High Court of Judicature for Rajasthan v. P.P. Singh and
Another"'.
36. Mr. Ajit Kumar Sinha, learned senior counsel referred
G
s. 2001 c10) sec 476.
t. AIR 1961 SC 860.
u. 1986 (1) sec 264.
v. 1995 (3) sec 434.
w. 2003 (4) sec 239. H
706 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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 Othersx, lshwari Khetan Sugar
Mills (P) Limited & Ors. v. State of Uttar Pradesh and Othersr
and Kesoraml1• He heavily relied upon the expression employed
c 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
0 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
E 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.•, M.A. Tulloch &
Cob., Baijnath Kadioc, India Cement Limitede, Bharat Coking
Coal, Orissa Cement Limitedf and Kesoram 1
•
F
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
G 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
Mis Motilal Padampat Sugar Mills Co. Ltd. V. State of U.P.
x. 1977 (1) sec 340.
H y. rnao (4) sec 136.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 707
AND ORS. [R.M. LODHA, J.]
& Ors.', Amrit Banaspati Ltd. and Another v. State of Punjab A
and Another•, State of Punjab v. Nestle India Ltd. and
Anothefib, M.P. Mathur and Others v. OTC and Otherscc and
Sandur Manganese and Iron Ores Limitedmm.
38. Mr. Ajit Kumar Sinha, learned senior counsel submitted
8
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 C
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, D
repealed and/or amended.
lnterveners' view
39. Mr. Vikas Singh, Mr. Krishnan Venugopal and Mr. P.S.
E
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
F
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. G
z. 1979 (2) sec 409.
aa. 1992 (2) sec 411.
bb. 2004 (6) sec 465.
cc. 2006 (13) sec 106. H
708 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
cal'.l have benefit ·of their view-point as well. Accordingly, we
C heard Mis. 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
D 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 :
E
"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."
F
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."
G
Mines and Minerals (Regulation and Development) Act,
1948
44. The Mines and Minerals (Regulation and Development)
H Act, 1948 (for short, '1948 Act') was enacted to provide for the
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 709
AND ORS. [R.M. LODHA, J.]
regulation of mines and oilfields and for the development of the A
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,
1W9. B
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 C
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 D
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,
E
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 : F
"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 G
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: H
710 SUPREME COURT REPORTS [2012] 7 S.C.R.
A "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;
B (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
c 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;
D
(g) "prospecting licence" means a licence granted for the
purpose of undertaking prospecting operations;
(h} "prospecting operations" means any operations
E 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
F 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
G
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.
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 711
AND ORS. [R.M. LODHA, J.]
(2) No prospecting licence or mining lease shalrbe granted A
otherwise than in a_ccordance 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 B
reads as under :
"5.4.- Prospecting or mining operations to be. under
licence or lease.-(1) dd[No person shall undertake any
reconnaissance, prospecting or mining operations in any
area, except under and in accordance with the terms and c
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 D
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:
E
••[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 F
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:] G
dd. Subs. by Act 38 of 1999, sec. 5, for certain words (w.e.f. 18-12-1999).
ee. Ins. by Act 37 of 1986, sec. 2 (w.e.f. 10-2-87).
ff. Subs. by Act 38 1999, sec. 5, for "the Atomic Minerals Division" (w.e.f. 18-
12-1999) H
712 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 99[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.]
B
hh[(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.]
c (2) ;;[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.
D H[(3) Any State Government may, after prior
consultation with the Central Government and in
accordance with the rules made under section 18,
kk[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
E
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
F 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.
G gg. Ins. by Act 16 of 1987, sec 14 (w.r.e.f. 1-10-1963).
hh. Ins. by Act 38 of 1999, sec. 5 (w.e.f. 18-12-1999).
ii. Subs. by Act 38of1999, sec 5, for "No prospecting licence of mining lease'(
w.e.f. 18-12-1999).
jj. Ins. by Act 37 of 1986, sec. 2 (w.e.f. 10-12-1987)
H kk. Subs. by Act 38 of 1999, sec. 5, for certain words (w.e.f. 8-12-1999).
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 713
AND ORS. [R.M. LODHA, J.]
52. The original Section 5 came to be amended in 1_986, A
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 B
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 C
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.
D
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 E
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:
F
"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 G
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.
H
714 SUPREME COURT REPORTS [2012] 7 S.C.R.
A (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
B 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-
c 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
D following :-
(a) any special knowledge of, or experience in,
prospecting operations or mining operations, as
the case may be, possessed by the applicant;
E (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.
F
(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,
G 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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 715
AND ORS. [R.M. LODHA, J.]
with effect from December 18, 1999. After substitution, Section A
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 8
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,- c
{a) has undertaken reconnaissance operations or
prospecting operations, as the case may be, to
establish mineral resources in such land;
D
{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 E
(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 licenc;:e, as the case may be, F
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 G
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 H
716 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B
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
c 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:
D
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,
E 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 :-
F (a) any special knowledge of, or experience in,
reconnaissance operations, prospecting operations
or mining operations, as the case may be,
possessed by the applicant.
G (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
H make in the mines and in the industry based on the
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 717
AND ORS. [R.M. LODHA, J.]
minerals; A
(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 B
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 C
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.
D
(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
E
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 F
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 G
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 H
718 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
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
C 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
D 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
E 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
F 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
G 17A by Act 25 of 1994. Section 17A, after its amendment in
1994, reads as follows :
"S. 17 A. Reservation of area for purposes of
conservation.-(1) The Central Government, with a view
to conserving any mineral and after consultation with the
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 719
AND ORS. [R.M. LODHA, J.]
State Government, may reserve any area not already held A
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. B
(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
c
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.
D
(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 E
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.
F
(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 G
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
H
720 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
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
C 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
D 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
E 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
F
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,
G 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:
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 721
AND ORS. [R.M. LODHA, J.]
Provided that in the cases of prospecting licences A
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 B
(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 c
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 D
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}."
E
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 F
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 G
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.
H
722 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8 framed under 1948 Act remained operative.
67. By virtue of Rule 8, the provisions of Chapters 11, Ill and
IV have been made applicable to the grant of reconnaissance
permits as well as grant and renewal of prospecting licences
C 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
0 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
E (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
F 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
G 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)
H of Rule 22 is a non-obstante clause and empowers the State
Government to approve mining plan of open cast mines (mines
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 723
AND ORS. [R.M. LODHA, J.]
other than the underground mines) in respect of non-metallic A
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 (48) of B
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,
c
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: D
"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, E
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 F
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.
G
(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
H
724 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
commencement of the period.
73. Rule 58, as it originally stood, read as under:
"58. Availability of areas for reg rant to be notified. (1)
c 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-
D
(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
E 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."
F
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
G 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,
H 1956 (1 of 1956)."
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 725
AND ORS. [R.M. LODHA, J.]
Later on, Rule 58 has been omitted. A
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 B
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 C
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."
D
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 E
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 F
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 : G
"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 H
726 SUPREME COURT REPORTS [2012] 7 S.C.R.
A (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
B
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
c
(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
D 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
E 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:
F 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
G 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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 727
AND ORS. [R.M. LODHA, J.]
any special case. A
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- B
(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 C
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 D
(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 E
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 F
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 G
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 H
728 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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;
B
(2) The Central Government may, for reasons to be
recorded in writing relax the provisions of sub-rule (1) in
any special case.
c 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
D
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
E
(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."
F 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.
G
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.
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 729
AND ORS. [R.M. LODHA, J.]
Decisions A
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. lnter-alia, B
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 C
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.
D
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 E
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 F
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 G
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 H
730 SUPREME COURT REPORTS [20121 7 S.C.R.
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
B 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
c 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
D 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
E 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
F 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
G 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
H 1948.
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 731
AND ORS. [R.M. LODHA, J.]
25. It still remains to consider whether S. 2 of the said Act A
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 B
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 c
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 ciear 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 D
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
E
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 F
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 G
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
H
732 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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),
D 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
E
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
F 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
G 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
H
MONNET ISPAr & ENERGY LTD. v. UNION OF INDIA 733
AND ORS. [R.M. LODHA, J.]
topic of "mines and mineral development" is plenary. The A
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 B
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 C
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:
D
"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."
E
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
F
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 G
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 H
734 SUPREME COURT REPORTS (2012] 7 S.C.R.
A 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
B 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
C 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
D 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.
E 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
F 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 11 and the earlier decisions in Hingir-Rampur Coal Co. Ltd.•
and M.A. Tulloch & Co. b and observed as under :
G
"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
H control should rest in Central Government. To what extent
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 735
AND ORS. [R.M. LODHA, J.]
such a declaration can go is for Parliament to determine A
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 B
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 c
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 D
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 E
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 F
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 G
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 H
736 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B
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
c 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
D 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.
E 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
F 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."
G Amritlal Nathubhai Shah
82. In Amritla/ 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
H State of Gujarat. On December 31, 1963, the Government of
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 737
AND ORS. [R.M. LODHA. J.]
Gujarat issued a Notification intimating that lands in all talukas A
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 8
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 C
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 D
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 11, 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 E
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 F
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) G
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.
H
738 SUPREME COURT REPORTS [2012] 7 S.C.R.
A There is nothing in the Act or the Rules to detra~t 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
8 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, Ill and IV of the Rules, deal with the grant of
c 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."
D 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 11,111 and IV of the 1960 Rules would be applicable
even if State Government itself wanted to exploit a mineral for,
E 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
F
or a mining lease to any person."
84. The Court then considered Section 10of1957 Act and
held as follows :
G "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
H the land in question was not available for such grant by
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 739
AND ORS. [R.M. LODHA, J.]
reason of its having been reserved by the State A
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 B
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 C
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. ........ " D
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 E
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
F
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.
G
87. In Chanan Mal', 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 H
740 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B in Hingir-Rampur Coal Co Ltd.•, M.A. Tulloch & Companyb
and Baijnath Kadio 0 • 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
c 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
D 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
E 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 coul~ only be
explained on the assumption that Parliament did' not intend
F to trench upon powers of State legislatures under Entry 18
of List II, read with Entry 42 of List Ill. 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."
G
lshwari Khetan Sugar Mills
88. In /shwari Khetan Sugar Milfsv although question
related to constitutional validity of U.P. Sugar Undertakings
(Acquisition) Act, 1971 enacted by the State of U.P. and
H different entries in List I and List II were involved but with
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 741
AND ORS. [R.M. LODHA, J.]
reference to the declaration made in Section 2 of the Industries A
(Development and Regulation) Act, 1951 (for short, 'IDR Act')
vis-a-vis the State Act under challenge, the majority judgment
relying upon the earlier decisions of this Court in Baijnath
Kadioc and Chanan Mal\ held that to the extent the Union
acquired control by virtue of declaration in Section 2 of the IDR B
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 c
land should be regulated by the provisions contained therein.
Mis. Hind Stone
89. In Mis. Hind Stone0 , the question under consideration
was about the validity of Rule 8-C of the Tamil Nadu Minor D
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 E
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. 0 , M.A. Tulloch &
Companyt' and Baijnath Kadioc. The Court made the following
general observations with regard to minerals and natural F
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 G
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
H
742 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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
D
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
E 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'!? policy is clearly
F 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
G 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
H stipulating that the State Government themselves may
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 743
AND ORS. [R.M. LODHA, J.]
engage in quarrying black granite or grant leases for A
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 B
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 C
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 D
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 E
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) sec 229] were brought to our
attention. We do not think that "regulation" has that rigidity F
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]: G
"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
H
744 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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
D
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
E
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
F 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
G
91. In D.K. Trivedi and Sons", 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
H respect of leases of minor minerals granted by them and
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 745
AND ORS. [R.M. LODHA, J.]
enhance the rates of dead rent and royalty during the A
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 B
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 C
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 D
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 E
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 F
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 G
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 H
746 SUPREME COURT REPORTS [2012) 7 S.C.R.
A 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 fLniher 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
B 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
c 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
D
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',
E 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
F
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
G
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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 747
AND ORS. [RM. LODHA, J.]
on the statute book and that the 1948 Act conferred wide A
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, 8
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 c
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, D
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 E
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, F
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 G
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: H
748 SUPREME COURT REPORTS [2012] 7 S.C.R.
A "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
B 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
c 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
D
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
E 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
F 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
G 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
H relating to minor minerals have been left by Parliament to
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 749
AND ORS. [R.M. LODHA, J.]
the State Governments while reserving matters relating to A
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 s
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 c
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 D
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 E
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
F
92. In Janak LaP, 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:
G
"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 H
750 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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
D
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.
E Bharat Coking Coal
93. In the case of Bharat Coking Coal, 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
F 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
G amending Act 37of1986 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
H take all such steps as may be necessary "for the
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 751
AND ORS. [R.M. LODHA, J.]
conservation and development of minerals" in India and for A
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. B
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 c
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 D
the conservation of mineral, ............. "
The Court further held in para 19 of the Report (Pgs. 575-576)
as follows:
" ......... No doubt under Enfry 23 of List II, the State E
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 F
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 G
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 H
752 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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 .......... "
B Orissa Cement Ltd.
94. A three-Judge Bench of this Court in Orissa Cement
Limited 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
C therein was that similar levy had been struck down by a seven-
Judge Bench of this Court in India Cement Limited• . The
contention of the States, on the other hand, was that issue was
different from the India Cement Limited• as the nature and
character of the levies imposed by these States was different
D 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', Hingir-Rampur
Coal Co.•, M.A. Tulloch & Co. b, lshwari Khetan Sugar Mi/ls
E (P) Ltd.Y, Baijnath Kadioc, ·M. Karunanidhi v. Union of India
and Anr. mm , Mis. Hind Stoneo, I. T. C. & Ors. v. State of
Kamataka & Ors. nn and Western Coalfields Limited v. Special
Area Development Authority Korba & Anr. 00 • I shall cite
paragraphs 49, 50, 51 and 53 (Pgs. 480-486) of the Report
F 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
G the impugned State legislation into the field covered by it.
II. AIR (1965) SC 177.
mm. (1979) 3 sec 431.
nn. 1985 (Supp) SCC 476.
H oo. 1982 (1) sec 125.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 753
AND ORS. [R.M. LODHA, J.]
Each of the cases referred to above turned on such an A
appreciation of the respective spheres of the two
legislations. As pointed out in lshwari 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 B
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 Ill. Particularly, in the
case of a declaration under Entry 54, this legislative power
is eroded only to the extent control is assumed by the c
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 D
within the pale of the prohibition, those in Chanan Mal,
lshwari 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
E
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 F
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. G
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. ......." H
754 SUPREME COURT REPORTS [2012] 7 S.C.R.
A "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
B 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
c 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
D
administration which were considered in the cases cited
and which are traceable to different specific entries in List
11 or List Ill.
"53. These observations establish on the one hand that the
E 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
int.egrally interconnected and, on the other, that, fees of the
nature we are concerned with squarely fall within the scope
F 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
G 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
H all around the mines. The development of mineral areas
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 755
AND ORS. [R.M. LODHA, J.]
is implicit in them. Section 25 implicitly authorises the levy A
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 B
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 ......... "
lndia11_ Metals and Ferro Alloys Ltd.
c
95. In Indian Metals and Ferro Alloys Ltd.p , a two-Judge
Bench or 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 D
Entry 54 of List I, Entry 23 of List 11, 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 E
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 F
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. G
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
H
756 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B
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
c 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
D 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]
E 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
F 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
G 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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 757
AND ORS. [R.M. LODHA, J.]
out earlier, it is open to the C.G. to relax the reservation A
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 B
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 c
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 D
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 E
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 F
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 G
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 H
758 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c
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
D
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
E 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,
F 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
G 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
H question we are concerned with here is whether OMC or
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 759
AND ORS. [R.M. LODHA, J.]
IDCOL can object to the grant to any of the private parties A
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 B
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 c
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:
D
"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 E
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; F
(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. G
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
H
760 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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,
B 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"
c 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
D same even before this date and as soon as Act 37of1986
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,
E 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
F 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."
G
Dharambir Singh
96. In Dharambir Singh vs. Union of India & Ors.PP, a
H pp. 1996 (6) sec 102.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 761
AND ORS. [R.M. LODHA, J.]
three-Judge Bench of this Court while considering Section A
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 B
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
c
97. In Bhupatrai Magan/al Joshi•, 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 D
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
E
98. In the case of M.P. Ram Mohan Raja vs. State of
T.N.& Ors.qq, 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. F
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 G
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,
qq. 2001 (9) sec 78. H
762 SUPREME COURT REPORTS [2012] 7 S.C.R.
A Bharat Coking Coal; 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
B 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
c 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
D 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
E 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
F 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
G
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
H
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 763
AND ORS. [R.M. LODHA, J.]
Section 17A of the Act, shall not be available for grant A
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 B
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 c
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 D
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 E
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." F
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 G
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
H
764 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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 UP. v. Babu
c Ram Upadhya (1961) 2 SCR 679 at 701 and Gujarat
Pradesh Panchayat Parishad v. State of Gujarat (2007)
1 sec 718."
As regards the legislative and executive power of the State
under Entry 23 List II read with Article 162 of the Constitution,
D the Court in Sandur Manganese and Iron Ores Limited"' 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
E 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
F 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
G
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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 765
AND ORS. [R.M. LODHA, J.]
proceed to notify a particular area. Further, having notified A
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)."
B
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 C
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 D
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 E
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 F
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. G
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'. H
766 SUPREME COURT REPORTS [20121 7 S.C.R.
A 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
B 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
c 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
0
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
E 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
F 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
G 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
H 1957 Act states that it is expedient in the public interest that
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 767
AND ORS. [R.M. LODHA, J.]
the Union should take under its control the regulation of mines A
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 B
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 c
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 D
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 E
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 F
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 G
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 H
768 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
0. Chinnappa Reddy, J. in Mis. Hind Stone0 , albeit in the
context of minor mineral, 'The public interest which induced
c 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
0
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
E 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
F 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
G 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
H tenures of whatever kind, including the mines and minerals
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 769
AND ORS. [R.M. LODHA, J.]
therein, stood vested in the State of Bihar. Thus, all lands and A
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 B
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 c
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 D
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 E
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.
F
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 G
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 H
770 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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
0
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
E 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
F 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
G 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
H within its territory. The power to legislate for regulation of mines
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 771
AND ORS. [R.M. LODHA, J.]
and development of minerals under the control of the Union may A
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 B
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 c
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 D
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 E
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 F
specified in 1957 Act has to be construed strictly. The
decisions of this Court in M.A. Tulloch & Co. b, Baijnath Kadio 0 ,
Bharat Coking Coal 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 G
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.• where whole of the H
772 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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.• while examining the constitutional validity
of the Orissa Mining Areas Development Fund Act, 1952 this
B Court held that the State Act was covered by the 1948 Act. In
M.A. Tulloch & Companyl' , this Court was concerned with the
same Orissa Act which was under consideration in Hingir-
Rampur Coal Co.• and in light of Section 18(1) of the 1957
Act which was under consideration it was held that the intention
c of Parliament was to cover the entire field. In Baijnath Kadio",
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
0
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
E 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 Limitecf wherein it was
F 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
G 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.• and M.A. Tulloch & Co.b was found to fall within the pale
of the prohibition, those in Chanan Ma/X, lshwari Khetan Sugar
H Mif/sY and Western Coalfield" Limitedoo were general in nature
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 773
AND ORS. [R.M. LODHA, J.]
and traceable to specific entries in the State List and did not A
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
8
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 C
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 D
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 E
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 F
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 G
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 Ferr° Alloys Ltd.P.
H
774 SUPREME COURT REPORTS (2012] 7 S.C.R.
A 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
B 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
C 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
D 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
E 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 S.tate
F 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
G 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. 0 , 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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 775
AND ORS. [R.M. LODHA, J.]
this Court in Hingir-Rampur Coal Co.•, M.A. Tulloch & Co.b A
and Baijnath Kadio 0 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 B
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 c
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 Shahct
is that even though the field of legislation with regard to
regulation of mines and development of minerals has been D
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
E
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 F
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 G
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 - H
776 SUPREME COURT REPORTS [2012J 7 S.C.R.
A 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
B 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,
c 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
0
can be seen as impairing the obligation cast upon the Central
Government under Section 18.
Rule 59 and Janak Lal
E 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
F 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 La/i. In Janak La/i,
admittedly the disputed area was reserved for nistar purposes.
When an application for grant of mining lease was earlier made
G 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 perscn before entertaining application
H of respondent no. 4. In the backdrop of the above admitted
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 777
AND ORS. [RM. LODHA, J.]
position, the Court considered the question whether Rule 59 A
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 B
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 c
connotation and there was no reason to restrict its meaning.
118. Janak La/,i 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 D
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 E
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 F
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 G
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 H
778 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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.
c 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
D 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
E 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
F 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.
G 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
H Ltd.P. In the earlier part of the judgment I have already quoted
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 779
AND ORS. [R.M. LODHA, J.]
the relevant portion of the decision of this Court in Indian Metals A
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 B
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 C
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 D
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" had stated abo.ut a
cardinal principle of construction that every statue is prima facie E
prospective unless it 1s 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 F
Justice G.P. Singh, the statement of Lord Blanesburg in
Colonial Sugar Refining Co. v. lrvings• and the observations
of Lopes, L.J. in Pu/borough Parish School Board Election,
Bourke v. Nuftlt have been noted as follows :
G
"In the words of Lord Blanesburg, "provisions which touch
rr. AIR 1951 SC 128.
ss. (1905) AC 369.
tt. (1894) 1 QB 725, p. 737. H
780 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
C 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
D 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
E cons1:1mption 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
F 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
G 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
H
MONNET ISPAl & ENERGY LTD. v. UNION OF INDIA 781
AND ORS. [R.M. LODHA, J.]
mineral bearing area for exploitation in public sector - and I A
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 B
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
c
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 D
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 E
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 F
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 G
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
H
782 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
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
C 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.
D 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,
E 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
F scope have been considered by this Court in Indian Metals and
Ferro Alloys Ltd.Pin 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
G 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
H Central Government'. These words in Section 17A(2) can not
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 783
AND ORS. [R.M. LODHA, J.]
be equated with prior approval of the Central Government. A
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 B
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 c
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 D
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. E
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 F
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 G
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 H
784 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
s 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
c to operate. The expression, 'the deposit was at all material
times kept reserved vide Gazette Notification No. NMM-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
D continued to operate and did not lapse.
Principles of promissory estoppal
132. The doctrine of promissory estoppel is now firmly
established and is well accepted in India. Its nature, scope and
E 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 Motila/
Padampat Sugar Mills' . In that case, the Court elaborately and
extensively considered diverse facets and aspects of doctrine
F 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
G 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 Mills'
on the basis of the above news, addressed a letter to the
Director of the Industries stating that in view of the Sales Tax
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 785
AND ORS. [R.M. LODHA, J.]
Holiday announced by the Government, it intended to set up a 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. Tl1e Director of Industries replied that
there would be no sales tax for three years on the finished B
product of the vanaspati from the date it got power connection
for commencing production. Motilal Padampat Sugar Mills'
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 c
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 D
given only partial concession in sales tax for a period of three
years. Motilal Padampat Sugar Mills' 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 31though
promised earlier by the Director of Industries, it filed a writ E
petition before the High Court. The principal argument
advanced on behalf of Motilal Padampat Sugar Mills' 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 F
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 G
to honour the as~urance 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 H
786 SUPREME COURT REPORTS [2012] 7 S.C.R.
A Justice Denning, as he then was, in the Central London
Property Trust Ltd. v. High Trees House Ltd. uu wherein
Denning, J. had considered Jorden v. Money"'. This Court also
referred to in paragraph 8, the opinions in Hughes v.
Metropolitan Railway Company-, Birmingham and District
B Land Co., v. London and North Western Rail Co.xx which were
considered by Justice Denning in the High Trees"" case. The
Court also considered the decisions in Durham Fancy Goods
Ltd. v. Michael Jackson (Fancy Goods) Ltd.YY, Evenden v.
Guildford City Association Football Club Ltd. zz and Crabb v.
C Arun District Council••• 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
D 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
E 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
F 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
uu. (1956) 1 All ER 256.
G w. (1854) 5 HLC 185.
ww. (1877) 2 AC 439.
xx. (1889) 40 Ch D 268.
Y'f· (1968) 2 All ER 987.
zz (1975) 3 All ER 269.
H aaa. (1975) 3 All ER 865.
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 787
AND ORS. [R.M. LODHA, J.)
that where promise is made by a person knowing that it would A
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 8
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 C
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 Mills', the Court also
referred to American law on the subject. In para 14 after D
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 Americ.an Law
lnstitute's "Restatement of the Law of Contracts" and the E
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
F
County BanJ<bbb and Drennan v. Star Paving Companyxc 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 G
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.
bbb. 57 ALR 980.
CCC. (1958) 31 Cal 2d 409. H
788 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
C Government. After referring to few decisions of the English
courts and the American courts, the decisions of this Court in
Union of India v. lndo-Afghan Agenciesddd, Collector of
Bombay v. Municipal Corporation of the City of Bombaye••,
Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar
Municipal Council'", M. Ramanatha Pillai v. State of
D Keralaggg' Assistant Custodian v. Brij Kishore Agarwa/ahhh,
State of Kera/av. Gwalior Rayon Silk Manufacturing Co. Ltd.iii,
Excise Commissioner, UP., Allahabad v. Ram Kumariil, Bihar
Eastern Gangetic Fishermen Co-operative Society Ltd. v.
Sipahi Singhkkk and Radhakrishna Agarwal v. State of Bihar 11
E were considered.
137. After entering into detailed consideration as noted
above, in Moti/al Padampat Sugar Mills2, this Court exposited
the legal position that the doctrine of promissory estoppel may
F be applied against the State even in its governmental, public
ddd. (1968) 2 SCR 366.
eee. (1952) SCR 43.
fff. (1970) 1 sec 582.
G ggg. (1974) 1 SCR 515.
hhh. sec 21.
(1975) 1
iii. (1973) 2 sec 713.
iii· (1976) 3 sec 540.
kkk. (1977) 4 sec 145.
H 111. (1977) 3 sec 457.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 789
AND ORS. [R.M. LODHA, J.]
or sovereign capacity where it is necessary to prevent fraud or A
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.
B
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 C
would be caused to the promisee, if the promiser 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 D
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
Limitedmmm (para 9, page 383 of the Report), this Court stated E
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 F
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 G
rescued from obscurity by the decision of Mr. Justice
Denning as he then was, i.n his celebrated judgment in
Central London Property Trust Ltd. v. High Trees House
mmm.(1985) 4 sec 369.
H
790 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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
D 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
E 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."
F 139. The doctrine of promissory estoppel also came up
for consideration before this Court in Delhi Cloth and General
Mills Limited v. Union of lndiannn_ In para 18 (page 95) of the
Report the Court stated as follows :
"18. Here the Railways Rates Tribunal apparently, appears
G 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
H nnn. (1988) 1 sec 86.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 791
AND ORS. [R.M. LODHA, J.]
by the promisee unless he has suffered "detriment" or A
"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 B
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 c
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 D
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 lndo-Afghan E
Agenciesddd, Motilal Padampat Sugar Mil/S', Godfrey Philips
India Limitecrmm and Delhi Cloth and General Mills Limited"""
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 F
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:
G
"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
H
792 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
Anr. , the Court was principally concerned with the invocation
000
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 Inda-Afghan
C Agencies<Jdd 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
D 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
E 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
F 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
G 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
H ooo. 1995 (1) sec 274.
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 793
AND ORS. [R.M. LODHA, J.]
authority "to carry out a representation or promise which A
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 B
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 c
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, D
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 E
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 F
to the facts in Inda-Afghan Agencies<Jdd and Matilal 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 G
to the facts in Inda-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
H
794 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c
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
D
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
E 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
F 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
G 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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 795
AND ORS. [R.M. LODHA, J.]
of the State under the law itself as is obvious from the A
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 B
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 c
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, D
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 E
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 F
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 G
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: H
796 SUPREME COURT REPORTS [2012] 7 S.C.R.
A "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
B 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
c 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
D
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
E 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. 66of1979 was initially valid only up to 31-
3-1979 but that date was extended in "public interest", we
F 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
G 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."
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 797
AND ORS. [R.M. LODHA, J.]
142. In State of Orissa and Ors. v. Mangalam Timber A
Products LimitedPPP, 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 B
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 c
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 D
interest of that party.
143. In Nestle India Limitecft>b, 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 Inda-Afghan Agenciesddd, Motilal Padampat E
Sugar Mills', Godfrey Philips India Limitedmmm, Mangalam
Timber Products LimitedPPP, Amrit Banaspati Company
Limited"" and Kasinka Trading" 00 • The Court followed Godfrey
Philips India Limitecrmm which was found to be close to the
facts of that case. The Court did not accept the argument F
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 G
Officer & Ors. qqq, the development of doctrine of promissory
estoppel was noted (paras 5-7, pages 631-633) and it was held
as under:
ppp. (2004) 1 sec 139.
qqq. c2005) 1 sec 625.
H
798 SUPREME COURT REPORTS [2012] 7 S.C.R.
A "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
B 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
c 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
D
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
E 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
F 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
G 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
H as an estoppel.
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 799
AND ORS. [R.M. LODHA, J.]
"which arises when there is a promise which A
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 B
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 C
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 D
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 E
UP., [(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 F
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 G
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 H
800 SUPREME COURT REPORTS [2012] 7 S.C.R.
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
B 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
c 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]
D
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
E 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."
F
145. In M.P. Mathurcc"c, 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
G 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
H means "a mere equity", which is a procedural right ancillary
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 801
AND ORS. [RM. LODHA, J.]
to some right of property, for example, an equitable right A
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 B
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 c
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 D
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 E
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: F
(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 G
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 H
802 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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.
B
(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
c 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
D 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
E 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
F 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,
G 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.
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 803
AND ORS. [R.M. LODHA, J.]
(v) In no case, the doctrine of promissory estoppel can A
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 B
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 C
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 D
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 E
of it must not hold the Government or the public
authority to its promise, assurance or
representation.
Principles of legitimate expectation
F
147. As ther.e 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 G
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
H
804 SUPREME COURT REPORTS [2012] 7 S.C.R.
A Development Corporation and Others'", 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 :
B
"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
c 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
D 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
E 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
F 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
G 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
H rrr. (1993) 3 sec 499.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 805
AND ORS. [R.M. LODHA, J.]
to have intended. Even in a case where the decision is left A
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 B
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 c
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 D
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 E
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 F
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 G
violation of principles of natural justice, the same can be
questioned on the weir-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 H
806 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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
D
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
E 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
F 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.
G 149. A three-Judge Bench of this Court in P. T.R. Exports
(Madras) Pvt. Ltd. & Ors. v. Union of India & Ors. sss while
dealing with the doctrine of legitimate expectation in paras 3,
4 and 5 (Pages. 272-273) stated as follows :
H sss. (1996) s sec 268.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 807
AND ORS. [R.M. LODHA, J.]
"3 ......... The doctrine of legitimate expectation plays no A
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 B
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 c
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 D
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 E
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 F
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 G
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 H
808 SUPREME COURT REPORTS [2012) 7 S.C.R.
A 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
8 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
c accrued right for the issuance of permits on the MEE or
NOE, 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
D
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."
E 150. In the case of M.P. Oil Extraction and Another v.
State of M.P. and Ors. 111, this Court considered an earlier
decision in Hindustan Development Corporation'" and in
paragraph 44 (pg. 612) of the Report held that the doctrine of
legitimate expectation had been judicially recognized. It
F 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.""", it
was stated that both doctrines - promissory estoppel and
G 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
ttt. (1997) 7 sec 592.
H uuu. (2003) s sec 134.
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 809
AND ORS. [R.M. LODHA, J.]
Sugars Ltd.qqq is worth noticing. The Court observed that A
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. B
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:
c
(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. D
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 E
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 F
do so.
(iv) The legitimate expectation is different from
anticipation and an anticipation cannot amount to
an assertible expectation. Such expectation should G
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 H
810 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
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
C 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
0 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.
E 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
F 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
G 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/LO/IF and Iron Ore Mining and Phase-
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 811
AND ORS. [R.M. LODHA, J.]
Ill comprised of establishment of Power Plant. Para 4 of MOU A
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 B
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. c
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 D
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 E
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 F
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 G
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-
11 and Phase-Ill at a cost of Rs. 25 crores and has also made
further financial commitments for more than Rs. 1000 crore to
H
812 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
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
C 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.
D
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
E 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
F 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
G 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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 813
AND ORS. [R.M. LODHA, J.)
sector vide 1962 and 1969 Notifications was brought to the A
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 s
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 c
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 D
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 avaiiable 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 E
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 F
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 G
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 H
814 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
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
C 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
D 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
E 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
F 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. wv, the Court noted the
decision of Scrutton, L.J. in R. v. London County Councif'W'W
and the view of renowned author Allen in "Law in the Making"
G 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
WI. (1982) 3 sec 519.
H WWW. LR (1931) 2 KB 215 (CA).
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 815
AND ORS. [R.M. LODHA, J.]
into desuetude or become inoperative through obsolescence A
or by lapse of time.
164. In Bharat Forge Co. Ltd!, inter alia, the argument
was raised that the Notifications of June 17, 1918 have not been
implemented till date and therefore these Notifications were 8
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 C
Interpretation; Craies Statute Law (7th Edn.) and Lord Mackay's
view in Brown v. Magistrate of Edinburghxxx.
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. D
Greater London Councif'!YY. 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 E
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
F
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 G
has been stated in Article 21, must be protected from their
being, say, prosecuted and punished for violation of a law
xxx. 1931 SLT (Scots Law limes Reports) 456, 458.
YY'f· (1970) 2 All ER 193. H
816 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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 Coroporationzzz, this Court had an
8 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! and held that to apply
C 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.
D 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.
E
(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
F 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
G 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
H zzz.. (1997) 9 sec 450.
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 817
AND ORS. [R.M. LODHA, J.]
contrary to such statute or legislation has been A
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 B
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, C
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 D
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 E
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 F
practlce 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 G
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 H
818 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
C 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
D 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
E Monnet was identical to the case of M/s. Bihar Sponge Iron Ltd.
and the State Government had discriminated against the
appellant vis-a-vis the case of Mis. 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
F 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
G 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"""" and also
H aaaa. AIR 1936 PC 253.
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 819
AND ORS. [R.M. LODHA, J.]
a decision of this Court in Nagarjuna Construction Company A
Ltd. v. Government of Andhra Pradesh & Ors.bbb
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
B
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 Coelhocccc.
174. Relying upon the decision of this Court in Mohinder C
Singh Gill and Anr. v. The Chief Election Commissioner, New
Delhi, & Ors., dddd 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 D
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 E
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
F
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. G
Ranjit Kumar. Most of the above submissions were not argued
bbbb. c2008) 16 sec 276.
cccc. c2001 > 4 sec 181.
dddd. (1978) 1 sec 405. H
820 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
C 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
D 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
E 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
F 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
G 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
H on behalf of other writ petitioners. The State Government
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 821
AND ORS. [R.M. LODHA, J.]
recalled its recommendations by a common communication and A
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 B
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 C
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.
D
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 E
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 F
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.
G
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
H
822 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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.
C 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.
D
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
E 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.,
F has been dismissed, the contempt petition is also liable to be
dismissed and is dismissed.
H.L. GOKHALE J. 1. All these appellants claim to be
companies interested in developing iron and steel projects, and
G 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.
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 823
AND ORS. [H.L. GOKHALE, J.]
that those areas were reserved for exploitation in the public A
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 B
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 c
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 D
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 E
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 F
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 G
Mehta, Dr. Abhishek Manu Singhvi, L. Nageswara Rao, and
G.C. Bharuka have appeared in support of these appeals.
Senior Counsel Shri A.K. 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, H
824 SUPREME COURT REPORTS (2012] 7 S.C.R.
A 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:-
8
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 lspat and Energy Ltd. (for short 'Monnet') as
somewhat representative. It is the case of Monnet that it wanted
C 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
D 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
E 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
F 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
G 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:-
H
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 825
AND ORS. [H.L. GOKHALE, J.]
Ill. MINES: A
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 B
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 C
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:- D
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 E
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 F
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 G
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.
H
826 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
C 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
D 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
E 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
F 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
G Department of Industries & Mines (Mines)
NOTIFICATION:
Patna, the 21 December, 1962
30th Agrahand, 1884-S
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 827
AND ORS. [H.L. GOKHALE, J.]
Memo No. A/MM-40510/6209/M. It is hereby notified for the A
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
B
the District
Singhbhum 1. Sasangda Main E\lock:- Boundary
South The southern boundary is the
same as the northern boundary. It
starts from the Bihar, Orissa
c
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. D
East The boundary between the States
of Bihar and Orissa.
North and The south western boundary of
North-West the property of Shri M.L. Jain E
(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 F
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 G
corner of Kiriburu Block.
Sasangda
North-East
Block
South Bihar, Orissa boundary H
828 SUPREME COURT REPORTS [2012] 7 S.C.R.
A East Property of Shri W.V.
North Upto northern corner of M.L.
No. 20
West
B 6. Bhalata Block
Boundary A line running west-north-west-
South-West east-south each passing the ugh
2200 feet contour at the south-
western and of the Bhanalata ridge
c 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
D 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
E 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.
F
By the order of the
Governor of Bihar
Sd/-
~.N. Sinha
G Secretary to Government
,..._
Memo No. 6209/M Patna, the 21st Dec., 1962
30 Agrah
Copy forwarded to the Superintendent, Secretariat Press,
H Gulzarbagh, Patna for publication of the notification in the next
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 829
AND ORS. [H.L. GOKHALE, J.]
issue of the Bihar Gazette. A
2. He is also requested to kindly supply two hundred copies of
the Gazette notification to this Department.
Sd/-
B.N. Sinha B
Secretary to Government
Memo No. 6209/M Patna, the 21st Dec., 1962
30 Agrahan, 1884-S
Copy forwarded to the Commissioner of Chhotanagpur C
Division, Ranchi/All District Officers/All District Mining Officers
for information.
Sd/-
B.N. Sinha
Secretary to Government D
(2) GOVERNMENT OF BIHAR
DEPARTMENT OF MINES AND GEOLOGY
NOTiFICATION
Patna, the 28th February, 1969
Phalgun, 1890-S E
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 F
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 G
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- H
830 SUPREME COURT REPORTS [2012J 7 S.C.R.
A 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/-
B 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,
c 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
D 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
E 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
F 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.
G (ii) As against the applicants at SI. 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'.
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 831
AND ORS. [H.L. GOKHALE, J.]
(iii) There was wide variation between the area A
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 8
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 C
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 D
Court. This letter reads as follows:-
"Government of Jharkhand
Mines and geological department
No.Khni (Chaya)-78/03 (Part)-501/M-C Ranchi
E
Dated 13.09.2005
From: Arun Kumar Singh
Secretary to the Government
To,
Sh. Anil Subramaniam F
Under Secretary
Ministry of Mines
Government of India
Shastri Bhawan,
New Delhi - 110 001. G
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.
H
832 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B
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.
c Name of the company
SI. No.
1. S/Shri Bihar Sponge Iron Ltd.
2. S/Shri lspat lndustriest Ltd.
D 3. S/Shri Vimal Deep Steel Pvt. Ltd.
4. S/Shri Abhijeet Infrastructure Pvt. Ltd.
5. S/Shri Ujjwal Minerals Pvt. Ltd.
E
6. S/Shri Adhunik Alloy and Power ltd.
7. S/Shri Prakash lspat ltd.
8. S/Shri Monnet lspat ltd.
9. S/Shri Steeko Power ltd.
F
10. S/Shri Jharkhand lspat Pvt. Ltd.
On analysis in the department, it has become clear that
out of the 10 proposals above said sent in the past, leaving
G apart Bihar Sponge and Iron ltd. at SI. 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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 833
AND ORS. [H.L. GOKHALE, J.]
this decision that out of the ten proposals sent in the past, A
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.
B
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.
c
Yours faithfully
Sd/-
(Arun Kumar Singh)
Secretary to the Government"
10. The Government of India, however, did not merely D
return those nine proposals, but summarily rejected the same
on the vP.ry 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 E
as follows:-
"REGISTERED
GOVERNMENT OF INDIA
MINISTRY OF MINES F
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 G
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
H
834 SUPREME COURT REPORTS [2012] 7 S.C.R.
A Singhbhum, Jharkhad.
Sit,
I am directed to refer to the request made by the
State Government vide its letter no. 501/M dated
B 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
c 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
D Company:-
S. Name of applicant State Government Area (in Details of
No Company Ref/ date heels.) overlapping
in Mauja areas
Ghatkuri
E Dist. West
Singhbhum
1. M/s lspat Industries i) Kh. Ni. (Pa. 470.06 Held by M/s
Ltd. Singhbhum)-78/03- General
115/D.S.M./M Produce
F dated 5.8.2004 Company
ii) 1516/M dt.
24.11.2004
2. Mis Bimal Deep i) Kh. Ni. (Pa. 112.072 Reserved for
Steel Pvt. Ltd. Singhbhum)- PSU
78/03-131/D.S.M./
G M dated 4.8.2005
ii) 519/M dated
24.11.2004
3. M/s Abhijeet i) Kh. Ni. (Pa. 429.00 Reserved for
Infrastructure Pvt. Singhbhum)- PSU
Ltd. 78/03-117/D.S.M.
H /M dated
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 835
AND ORS. [H.L. GOKHALE, J.]
4.8.2004 A
ii) 5191M
dated 24.11.2004
4. Mis Ujjawal Mineral i) Kh. Ni. (Pa. 103.00 Reserved for
Pvt. ltd. Singhbhum )-781 PSU
03-11410.S.M./M
dated 4.8.2004 B
ii) 15201M
dated 24.11.2004
5. Mis Adunik Alloya i) Kh. Ni. (Pa. 426.875 Reserved for
& Power ltd. Singhbhum)- PSU
78103-11110.S.M./M
dated 4.8.2004 c
ii) 15181M dated
24.11.2004
6. Mis Prakash i) Kh. Ni. (Pa. 294.06 Reserved for
lspat ltd. Singhbhum)- PSU
78103-11010.S.M./M
D
dated 4.8.2005
ii) 15151M
dated 24.11.2004
7. Mis Monnet lspat i) Kh. Ni. (Pa. 705.00 Held by Mis
Singhbhum)- Rungta Sons
78103-11810.S.M./M Pvt. ltd. E
dated 6.8.2005
ii) 14971M
dated 17.11.2004
13. Mis Steco Power i) Kh. Ni. (Pa. 400.00 Held by Mis
ltd. Singhbhum)-781 Rungta Sons
03-101103-1341M Pvt. ltd. F
dated 16.10.2004
ii) 15151M
dated 22.1.2005
9. Mis Jharkhand i) Kh. Ni. (Pa. 346.647 Held by Mis
lspat Pvt. ltd. Singhbhum)-78103- General
1210.S./M Produce G
dated 4.8.2004 company
Yours faithfully
Sd/-
(Anil Subramaniam) H
836 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
C 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 GAZETIE
EXTRA ORDINARY
D PUBLISHED BY AUTHORITY
No. 581 8 Kartik 1928 (S) Ranchi, Monday the 30th October,
2006
DEPARTMENT OF MINES & GEOLOGY, RANCHI
E 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
F 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
G 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
H which will usher-in maximum benefit to the State and which
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 837
AND ORS. [H.L. GOKHALE, J.]
generate substantial amount of employment in the State. A
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. B
By order of the Governor.
S.K. Satapathy.
Secretary to Government
Submissions on behalf of the appellants:- c
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 D
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 E
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 F
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 G
appearing for lspat Industries Ltd. ('lspat' 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 H
838 SUPREME COURT REPORTS [2012) 7 S.C.R.
A 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
B 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
c 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
D 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
E 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
F 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
G (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.
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 839
AND ORS. [H.L. GOKHALE, J.]
(iv) Shri Sundaram submitted that the High Court's view A
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.
8
Jharkhand lspat Pvt. ltd. ('Jharkhand lspat' 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 C
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. Mis M.A. Tulloch & Co. reported in
AIR 1964 SC 1284 and Baijnath Kadio Vs. State of Bihar and
Others reported in 1969 (3) sec 838, and submitted that the D
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 conl>ider these
three judgments and the true import of the propositions laid E
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 F
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 G
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 H
840 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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.
c
(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
D 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
E 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
F
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.
G
(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
H Rungta Sons had already expired, and in fact they
MONNET ISPAT & ENERGY L"fD. v. UNION OF INDIA 841
AND ORS. [H.L. GOKHALE, J.]
had applied for renewal in 2006. The area A
recommended to Monnet was not under any
previous reservation of any public sector
undertaking or otherwise.
(vii) There was unjustified discrimination in favour of
8
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 C
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
0
regime has been taken over by the Central
Government, and the State Government will have to
be held as without any power to impose
re::ervations.
16. Learned senior counsel Shri Dhruv Mehta, appearing E
for Prakash lspat 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. F
Trivedi and Sons Vs. State of Gujarat reported in 1986 Supp
(1) sec 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 G
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 1~60, an area which has been reserved H
842 SUPREME COURT REPORTS (2012] 7 S.C.R.
A 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
8
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
C 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
D 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
E 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
F 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
G 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.
H State Government withdrew it on 13.09.2005, and Central
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 843
AND ORS. [H.L. GOKHALE, J.]
Government rejected it on 06.03.2006. In the meanwhile the A
petitioner took steps for investment. He relied upon two
judgments to explain the import of the doctrine of promissory
estoppel, namely Mis 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 B
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
c
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 D
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 E
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) sec 362, the Act was clearly F
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, G
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 H
844 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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,
0
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
E 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
F 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
G 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
H upon paragraph 13 of the judgment of this Court in Dr. Ram
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 845
AND ORS. [H.L. GOKHALE, J.]
Manohar Lohia Vs. State of Bihar reported in AIR 1966 SC A
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 B
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 C
in State of Maharashtra vs. Narayan Shamrao Puranik
reported in 1982 (3) sec 519, and paragraphs 30 to 36 of
Municipal Corporation for City of Pune vs. Bharat Forge Co.
Ltd. reported in 1995 (3) sec 434, as well as paragraph 16
of Cantonment Board Mhow vs. M.P. State Road Transport D
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 E
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 MP.Mathur vs. OTC reported in F
2006 (13) sec 706, and paragraph 83 of Sandur Manganese
& Iron Ores Ltd. vs. State of Kamataka reported in 2010 (13)
sec 1.
25. Shri Sinha submitted that MOU between the Appellants
and the State Government could not be treated as a contract G
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
H
846 SUPREME COURT REPORTS [2012] 7 S.C.R.
A grant or renewal of a mining lease. In this behalf, he relied upon
paragraph 13 of State of Tamil Nadu vs. Mis 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 MP. Ram Mohan Raja vs. State of Tamil
B Nadu reported in 2007 (9) SCC 78, paragraphs 19 to 22 and
28 of State of Kera/a vs. B. Six Holiday Resorts (P) Ltd.
reported in 201 O (5) SCC 186, and paragraph 4 of Sandur
Manganese & Iron Ores Ltd. vs. State of Karnataka reported
in 2010 (13) sec 1.
C 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
D 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
E (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
F 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,
G 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.
H He drew our attention to the following paragraphs from the
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 847
AND ORS. [H.L. GOKHALE, J.]
affidavit filed by the Central Government in the High Court. In A
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 B
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 C
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 D
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 E
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." F
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, G
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 H
848 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
C 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:
D 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,
E 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,
F 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:
G '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
H constitution of a Land Commission for the State of Bihar
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 849
AND ORS. [H.L. GOKHALE, J.]
with powers to advise the State Government on the A
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
8
vesting of estates and tenures in the state. Section 4 provides
for the consequences of the vesting namely that t~ey 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 C
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 D
of sections 3, 3A and 38 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 E
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 F
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 G
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 H
850 SUPREME COURT REPORTS (2012] 7 S.C.R.
A 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
B 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.
c
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):
D '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
E 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.
F 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
G 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.'
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 851
AND ORS. [H.L. GOKHALE, J.]
The right of the State of Jharkhand to deal with the mines and A
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 B
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, C
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 D
Government to deal with the mines and minerals. This was also
the approach adopted by a Constitution Bench of this Court in
/shwari Khetan Sugar Mills (P) Ltd. Vs. State of UP. reported
in 1980 (4) sec 136 and later by a bench of three Judges in
Orissa Cement Ltd. Vs. State of Orissa reported in 1991 E
supp.(1) sec 430.
(ii) In lshwari 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 F
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:-
G
"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 H
852 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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 ....... "
B
(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
C Act and Entry 54 of the Union List. After referring to the judgment
in /shwari Khetan (supra) the Court stated as follows in
paragraph 49:-
" ..... As pointed out in lshwari Khetan, the mere
declaration of a law of Parliament that it is expedient for
D 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 Ill. Particularly, in the
E 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
F 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
G 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:
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 853
AND ORS. [H.L. GOKHALE, J.]
4. Prospecting or mining operations to be A
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 B
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 C
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:
D
[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 E
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: F
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. G
(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. H
854 SUPREME COURT REPORTS [2012] 7 S.C.R.
A (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.
B [(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
c 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
D 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,
E 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
F 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
G
(1) A State Government shall not grant a [reconnaissance
permit, prospecting licence or mining lease] to any person
unless such person-
H a) is an Indian national, or company as defined in sub-
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 855
AND ORS. [H.L. GOKHALE, J.]
section (1) of section 3 of the Companies Act, 1956 (1 of A
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 B
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,- c
(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. D
(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 E
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 F
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 G
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:-
H
856 SUPREME COURT REPORTS [2012) 7 S.C.R.
A 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
B
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
c 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
D 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
E 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
F 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:
G
(3) The matters referred to in sub-section (2) are the
following:-
(a) any special knowledge of, or experience in,
reconnaissance operations, prospecting operations
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 857
AND ORS. [H.L. GOKHALE, J.]
or mining operations, as the case may be, A
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; B
(d) the investment which the applicant proposes to
make in the mines and in the industry based on the
minerals;
c
(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 D
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 E
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
F
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 G
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, H
858 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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 17 A, State
c 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.
0
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
E in anyway 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
F 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
G 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
H
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 859
AND ORS. [H.L. GOKHALE, J.]
under any prospecting licence or mining lease, for A
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 B
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 C
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
D
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. E
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 F
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 p_ower will not invalidate the G
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
H
860 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
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
C 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)
D 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
E (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
F 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
G lease but in respect of which the State Governm_ent 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
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 861
AND ORS. [H.L. GOKHALE, J.)
~ain available for the grant of a prospecting or mining A
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:- B
.. "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 C
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 D
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 E
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 F
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) G
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 beeD made for the H
862 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B
(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
c (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
D 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
E 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
F
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.
G
(2) The Central Government may, for reasons to be
recorded in writing relax the provisions of sub-rule (1) in
any special case.)"
H 42. Rule 58 has been subsequently deleted, whereas Rule
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 863
AND ORS. [H.L. GOKHALE, J.]
59 was amended on 13.4.1988. It now reads as follows:- A
59. Availability of area for reg rant to be notified- (1)
No area-
(a) which was previously held or which is being held
under a reconnaissance permit or a prospecting B
licence or a mining lease; or
(b) which has been reserved by the Government or any
local authority for any purpose rther than mining; or
(c) in respect of which th0 order granting a permit or
c
licence or lease har be.3n 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 D
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 ojf the Act, E
shall be available for grant u_nless-
(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 F
(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
G
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 H
864 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
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
C 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
o 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
E 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
F 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
G reference to the judgment in Janak Lal (supra) does not take
forward the case of the appellants, since as stated in that
judgment the liesult 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
H obviously to enable the general public to apply for the proposed
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 865
AND ORS. [H.L. GOKHALE, J.]
lease. A
(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
B
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 C
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 D
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 E
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 F
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 G
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. H
866 SUPREME COURT REPORTS {2012] 7 S.C.R.
A These amendments have been effected only to make explicit
what was implicit. These amendments can not be read lo 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 lo is.>ue the
B 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 Shrl Mehta had relied upon
Indian Metals and Ferro Alloys Ltd (supra) to contend that an
C area which is reseived 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:-
0
" ..... Under Rule 59(1), once a notification under Rule 58
is made, the area so reseived shall not be avanable for
grant unless the two requirements of sub-rule (e) are
satisfied: viz. an entry in a register and a gazette
E notification that the area is available for grant...... • '
Thus, When such a decision to de-reseive 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
F Once the State Government realised that the concerned areas
were reserved for the exploitation in public sector, ii withdrew
the proposals forwarding the applications of the appellants to
the Central Government, and it was fully entitled lo do the same.
G 46. It was then contended by Shri Mehta that the State
Govemmenfs 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
H lo minor minerals. On the other hand the over view of the
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 867
AND ORS. [H.L. GOKHALE, J.]
provisions i;om sections 4 to 17A as done above clearly shows A
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 B
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 c
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 D
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 0. K.
Trivedi & Sons (supra) in this behalf was also misconceived.
In that matter a bench of two Judges, of this Court, held section E
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 F
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 G
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. H
868 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c ·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
0 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
E 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
F 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
G 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
H between the state and the central government. The other
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 869
- AND ORS. [H.L. GOKHALE, J.]
petitioners claim to have learnt about the same through a 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 B
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 C
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 D
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, E
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 F
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 G
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 H
870 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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
D
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)
E
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
F 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
G 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
H ambit of the power of the State Legislature under Entry 23
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 871
- AND ORS. [H.L. GOKHALE, J.]
and legislation of the State which had rested on the A
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 B
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 C
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 D
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 E
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
F
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 G
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 H
872 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
C 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:-
D "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
E 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
F 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,
G
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
H
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 873
AND ORS. [H.L. GOKHALE, J.]
is therefore quite clear that, in the absence of any law or A
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 1O of the
Act and Chapters 11, Ill and IV of the Rules, deal with the B
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
c
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 D
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 E
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 F
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 G
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:- H
874 SUPREME COURT REPORTS [2012] 7 S.C.R.
A "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
B 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
c 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
D
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
E 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
F 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
G
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 o.f 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
H
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 875
AND ORS. [H.L. GOKHALE, J.]
by the State Government for the purpose stated in its A
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
II
premature ...... B
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
c
group of appeals were fully protected under the provisions of
MMDR Act, and also as explained in Amritlal (supra).
Desueutde
D
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
E
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 F
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 G
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.
H
62. What the appellants are seeking is in a way some kind
876 SUPREME COURT REPORTS (2012] 7 S.C.R.
A 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
B 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
c 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
0
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
E 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
F 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
G as follows:-
"8-C. Lease of quarries in respect of black
granite to Government Corporation, etc. -
(1) Notwithstanding anything to the contrary contained
H in these rules, on and from 7th December 1977 no lease
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 877
AND ORS. [H.L. GOKHALE, J.]
for quarrying black granite shall be granted to private A
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
8
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"
c
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 0.
Chinnappa Reddy J.) has made certain observations towards
the approach and the scope of MMDR Act which are relevant D
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 E
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 F
benefit to the community ................. "
65. Again in para 9, this Court observed:-
"9 .......... Whenever there is a switch over from G
'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
H
878 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
B 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
c 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
D
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
E 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
F 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 Prrnciples mandates that the State shall,
G 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
H the concentration of wealth and means of production to the
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 879
AND ORS. [H.L. GOKHALE, J.]
common detriment. The public interest is very much writ large A
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 B
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
(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 D
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 ..... "
E
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 F
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 G
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
H
880 SUPREME COURT REPORTS [2012] 7 S.C.R.
A 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
8
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.
C 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 m?de for over
six years. The State of Jbarkhand and the people at large have
thereby suffered. In view thereof we would have been justified
D 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.
R.P. Appeals dismissed.
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