Supreme Court of India
SANDUR MANGANESE & IRON ORES LTD.versusSTATE OF KARNATAKA & ORS.
- Citation
- 2010 INSC 603
- Decided
- 13 September 2010
- Disposal
- Case Partly allowed
- Bench
- P SATHASIVAM
Holding
The State Government's recommendation and the Chief Minister's proceedings were invalid as they violated Section 11 and Rules 59/60 of the MMDR Act, and applications made prior to the notification cannot be considered, requiring a fresh consideration of all applications.
Summary
The case concerned the renewal and re‑grant of mining leases for iron and manganese ores in Karnataka. Sandur Manganese & Iron Ores Ltd. and MSPL Ltd. challenged the Karnataka State Government’s recommendation to grant a mining lease to Jindal Vijayanagar Steel Ltd. and Kalyani Steels Ltd., arguing that the recommendation violated Section 11 of the Mines and Minerals (Development and Regulation) Act, 1957 and Rules 59 and 60 of the Mineral Concession Rules, 1960. The Supreme Court held that the State Government, as a statutory delegate of the Union, must exercise its powers strictly in accordance with the Act and Rules; it cannot consider applications made before a notification under Rule 59(1) nor rely on criteria outside Section 11(3) such as past investments or captive consumption. Consequently, the recommendation dated 06‑12‑2004 and the Chief Minister’s proceedings were declared invalid, the Division Bench’s order was set aside, and the State was directed to reconsider all applications afresh. The appeals were allowed in part and the matter was not remitted to the Central Government.
Issues considered
- Whether the State Government's recommendation dated 06.12.2004 and the Chief Minister's proceedings contravene Section 11 of the MMDR Act and Rules 59 and 60 of the MC Rules.
- Whether an application made prior to the notification dated 15.03.2003 can be entertained together with applications made pursuant to that notification.
- Whether the Karnataka High Court's order in Ziaulla Sharieff's case permits consideration of the pre‑notification application.
- Whether Rule 35 of the MC Rules justifies the State Government's recommendation in favour of Jindal and Kalyani.
- Whether the 'captive consumption' criterion from Tata Iron and Steel Co. Ltd. v. Union of India applies despite not being listed in Section 11(3) or Rule 35.
- Whether past commitments by the State Government to applicants with existing steel plants are relevant for lease grant.
- Whether the recommendation in favour of Jindal and Kalyani is saved by the law of equity.
- Whether the reasoning of the Single Judge and the Division Bench is justified.
- Whether the matter should be remitted to the Central Government.
Legislation cited
- Constitution of Indias. Article 162
- Mines and Minerals (Development and Regulation) Act, 1957s. 11(1), s. 11(2), s. 11(3), s. 11(4), s. 11(5), s. 5
Subjects
mining leaseMMDR ActSection 11Rule 59Rule 60statutory interpretationequitycaptive consumptionstate vs central jurisdictionpriority of applications
Judgment
\ [201 OJ 11 S.C.R. 240
A SAN DUR MANGANESE & IRON ORES LTD.
v.
STATE OF KARNATAKA & ORS.
(Civil Appeal No. 7944 of 2010)
SEPTEMBER 13, 2010
B
[P. SATHASIVAM AND H.L. DATTU, JJ.]
Mines and Minerals (Development and Regulation) Act,
1957 - s. 11(1), (2), (3), (4), (5) - Mineral Concession Rules,
C 1960 - rr. 59, 60 and 35 - Mining lease - Grant of - Renewal
of mining lease in favour of 'S' Company but not for the entire
area- Applications by 'S' for lease over certain area within the
deleted area - Rejected by State Government - Notification
ulr. 59(1) by State Government notifying large area for re-grant
o of mining lease including area applied by 'S' - Invitation of
applications from public - Fresh application by 'S', 'MSPL'
and 'K' pursuant to the Notification - However, application by
'J' made only prior to the Notification :- Recommendation by
State Government to Central Government for approval of
E proposed grant in favour of 'J' and 'K' which was subsequently
approved by Central Government - Writ petition challenging
the recommendation - Single Judge of High Court quashing
the grant in favour of 'J' and 'K' - Division Bench setting aside
the order - On appeal, held: State Government cannot justify
F grant based on criteria that are de hors the MMDR Act and
MC Rules - State Government's recommendation and the
proceedings of Chief Minister was contrary to the provisions
of s. 11 and rr. 59 and 60 and not valid in law - J's application
made prior to the Notification could not be entertained along
with the applications made pursuant to the Notification -
G Proposed investment in mines and in the industry based on
the minerals is a relevant factor - Criteria of captive
consumption not a controlling factor to grant fresh lease -
State Government has no authority under the Act to make
H 240
SANDUR MANGANESE & IRON ORES LTD. v. 241
STATE OF KARNATAKA & ORS.
commitments to any person that it will, in future, grant a mining A
/ease in the event that person makes investment in any
project - Recommendation in favour of 'J' and 'K' cannot be
saved by law of equity- Flaw in the recommendation of State
Government requires re-consideration, thus, matter cannot be
remitted to the Central Government - Order of Division Bench B
as well as the decision of State Government and the Central
Government quashed - State Government directed to
consider all applications afresh - Mines and minerals.
Power of State Government under the Act and the Rules
- Extent of - Held: State Government is denuded of all C
legislative and executive power under Entry 23 of List-I/ read
with Article 162 after passing of the MMDR Act - State
Government is purely a delegate of Parliament and a statutory
functionary, for the purposes of s. 11 (3), hence it cannot act
in a manner that is inconsistent with the provisions of s. 11(1) D
in" the grant of mining /eases - Constitution of India, 1950 -
Article 162, List II Entry 23.
Interpretation of statutes - Rule of construction - When
statute vests certain power in an Authority to be exercised in E
a particular manner - Held: Authoriiy has to exercise the
power in the manner provided in the statute itself - Any
deviation therein, cannot be sustained.
Ex-Ruler of Sandur State (now appellant Company)
F
was granted lease for 20 years for mining of Iron and
Manganese Ores in respect of 29 sq. miles falling within
the boundaries of the Sandur State. The appellant
Company invested in mining of Ores. After the expiry of
20 years, the lease was not renewed for the entire area
as given in the original lease. In 1992, 'HG' was granted G
60 hectares out of the same applied area. The appellant
Company again applied for grant of lease within the area
deleted from its original lease but the same was rejected.
The appellant Company filed a revision petition before the
H
242 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A Government of India and the matter was remanded to the
State Government. Thereafter, 'MSPL' made an
application to the State Government for grant of mining
lease over an area which was previously held by Sandur
and also sought relaxation of the conditions specified in
B Rule 59(1) of the Mineral Concession Rules, 1960.
Subsequently, 'J' Company also made an application for
grant over the same area. The State Government made a.
recommendation to the Central Government for grant of
lease to the 'MSPL'. While the matter was under
c consideration, one 'ZS' filed a writ petition seeking
declaration that he was entitled for grant of a mining
lease in his favour. However, the Central Government
returned the proposal of the State Government directing
it to await an environmental study.
D On 26/27 .02.2002, the State Government by a letter
conveyed to the appellant Company that out of the area
of 513.16 hectares applied for by the appellant Company,
only an extent of 256 hectares (640 acres) was available
to it. The appellant Company again filed a revision
E petition. On 15.03.2003, the State Government issued a
Notification under Rule 59(1) of the Rules, notifying the
availability of a large area for re-grant of mining lease
which was referred to as 'Held Area Notification' including
the area applied by the appellant Company. The appellant
F Company applied for the grant of mining lease over an
area of 200 hectares in the notified area afresh. On
29.07.2003, the Government of India directed the State
Government to consider the appellant's application.
However, the State Government did not pass any order.
G Pursuant to the Notification, 'MSPL' made a fresh
~pplication for grant of mining lease over the notified
area. 'K' and 88 other applicants also applied. However,
'J' did not apply. On 06.12.2004, the State Government
made a recommendation to the Central Government
H
SAN DUR MANGANESE & IRON ORES LTD. v. 243
STATE OF KARNATAKA & ORS.
under Section 5 of the Mines and Minerals (Development A
and Regulation) Act, 1957 for approval of the proposed
grant of mining lease to 'J' and 'K'. 'MSPL' and some of
the applicants made representations to the Central
Government against the said recommendation made by
the State Government. The appellant Company as also B
'MSPL' filed separate writ petitions challenging the
recommendation dated 06.12.2004 of the State
Government. During pendency, the Central Government
gave its approval for grant of mining lease in favour of
'J' and 'K'. The Single Judge of the High Court by order c
dated 07 .08.2008 quashed the Notification dated
15.03.2003 and the mining licences granted in favour of
'J' and 'K'. The Division Bench of the High Court by order
dated 05.06.2009 upheld the validity of Notification of the
State Government dated 15.03.2003 and the proceedings
0
dated 06.12.2004 and consequently approval of the
Central Government were held valid. Therefore, the
instant Special Leave Petitions were filed.
The questions which arose for consideration in these
appeals were as follows: E
(i) Whether the State Government's recommendation
dated 06.12.2004 and the proceedings of the Chief
Minister are contrary to the provisions of Section 11
of the Act and Rules 59 and 60 of MC Rules and not F
valid in law.
(ii) Whether the application made by respondent-'J'
prior to the Notification dated 15.03.2003 is capable
of being entertained along with the applications made
pursuant to the said notification. G
(iii) Whether the order of the High Court of Karnataka
in the case of 'ZS' permit the consideration of the
application made by the respondent-'J' prior to the
Notification dated 15.03.2003. H
244 SUPREME COURT REPORTS [2010] 11 S.C.R.
A (iv) Whether Rule 35 of the MC Rules justify the
recommendation of the State Government in favour
of 'J' and 'K'.
(v) Whether the criterion of 'captive consumption'
referred to in Tata Iron and Steel Co. Ltd. vs. Union
B
of India (1996) 9 SCC 709 was applicable to the
instant case despite not being one of the factors
referred to in Section 11 (3) of the MMDR Act or Rule
35 of the MC Rules.
c (vi) Whether factors such as the past commitments
by the State Government to applicants who have
already set up steel plants, are relevant for grant of
lease despite the MMDR Act and the MC Rules
constituting a complete Code.
D
(vii) Whether the iecommendation in favour of 'J' and
'K' is saved by t~e operation of the Law of Equity.
(viii) Whether the Single Judge as well as the Division
Bench of the High Court are justified in arriving at the
E said conclusion.
(ix) Whether it is advisable to remit the matter to the
Central Government.
Partly allowing the appeals, the Court
F
HELD: 1.1. A perusal of the proceedings of the Chief
Minister shows that no clear reasons were given to show
as to why 'J' and 'K' were preferred over other applicants.
There was no plausible reason why the applications of
G the appellants were not considered favourably. A
summary of the applications was prepared and at the
end certain columns were left blank which the Chief
Minister filled by hand and then signed the proceedings.
(Para 18) (281-B-C]
H
SANDUR MANGANESE & IRON ORES LTD. v. 245
STATE OF KARNATAKA & ORS.
1.2. The evaluation of all 111 applications was done A
in three successive stages in a manner not envisaged by
Section 11 of the Mines and Minerals (Development and
Regulation) Act, 1957. No such procedure of three stage
consideration or differentiation between individuals and
Companies and those Companies with existing B
investments and those without existing investment is
envisaged in Section 11. The proceedings of the Chief
Minister, at no level, considered the various guiding
criteria mentioned in Section 11 (3). Only one criteria,
namely, 'proposed investment' was taken into account in c
evaluating some applications. However, two irrelevant
points were taken into account, namely, (i) whether or not
the applicant holds a mining lease in the State, and (ii) the
amount of their past investment in steel plant. The
proceedings recommended in favour of 'J' and 'K' was 0
justified by the special reasons specifically stated at the
very end in terms of Section 11(5). [Paras 19 and 20] [281-
D-F; 282-B-D]
1.3. A plain reading of Section 11 (5) makes it amply
clear that it would apply to favour a later applicant over E
an earlier applicant which is relevant only in the event that
the main provision of Section 11 (2) relating to preference
of prior applicants applies and not in the case of
Notification inviting applications, whether it is under the
first proviso to Section 11 (2) or 11 (4) under the later F
proviso, upon Notification, by deeming fiction all
applications are treated as having been received on the
same date. [Para 20] [282-G-H; 283-A]
1.4. The proceedings of the Chief Minister also violate G
Section 11 (4). Sub-section (4) permits only the
applications made pursuant to the Notification to be
taken into account and not applications made prior to the
Notification. The Notification referred to in the first
proviso to Section 11 (2) is intended only to invite H
applications in respect of 'virgin areas'. In the case of
246 SUPREME COURT REPORTS [201 O] 11 S.C.R.
A previously held areas covered by Notification dated
15.03.2003, applications made prior to the Notification
could not be entertained because they were pre-mature.
[Para 21] [283-A-F]
B 1.5. In view of the specific parliamentary declaration,
there is no question of the State having any power to
frame a policy de hors the MMDR Act and the Rules.
[Paras 22, 24 and 25] [283-F-G; 287-B-D]
State of Orissa vs. M.A. Tulloch and Co. (1964) 4 SCR
C 461; Baijnath Kedio vs. State of Bihar and Ors. (1969) 3 SCC
838; Hingir Rampur Coal Co. Ltd. vs. State of Orissa 1961
(2) SCR 537; State of West Bengal vs. Kesoram Industries
Ltd. and Ors. (2004) 10 SCC 201; Bharat Coking Coal Ltd.
vs. State of Bihar and Ors. (1990) 4 SCC 557; State of Assam
D and Ors. vs. Om Prakash Mehta and Ors. (1973) 1 SCC 584;
Quarry Own~rs' Association vs. State of Bihar and Ors. (2000)
8 sec 655/ relied on.
1.6. It is not open to the State· Government to justify
E grant based on criteria that are de hors to the MMDR Act
and the MC Rules. The exercise has to be done strictly
in accordance with the statutory provisions and if there
is any deviation, the same cannot be sustained. It is the
normal rule of construction that when a statute vests
certain power in an authority to be exercised in a
F particular manner then the said authority has to exercise
it only in the manner provided in the statute itself. [Para
28] [287-G-H]
C.I. T. Mumbai vs. Anjum M.H. Ghaswala and Ors. (2002)
G 1 SCC 633; Captain Sube Singh and Ors. vs. Lt. Governor
of Delhi and Ors. (2004) 6 sec 440; State of U. P. vs.
Singhara Singh and Ors. (1964) 4 SCR 485, relied on.
TISCO vs. u. 0.1. and Anr. (1996) 9 sec 709,
H distinguished.
SANDUR MANGANESE & IRON ORES LTD. v. 247
STATE OF KARNATAKA & ORS.
2.1. Section 11 (1) provides preferential right to the A
holder of reconnaissance permits or a prospecting
licencee who has identified mineral resources in the area
allotted to him for grant of a mining lease, subject to
certain conditions specified in the proviso appended
thereto. The over-riding character of the priority given to B
the successful prospecting licencee or reconnaissance
permit-holder is clear from the fact that each of the
subsequent sub-sections in Section 11 is made subject
to Section 11 (1 ). Section 11 (2) gives preference to a prior
applicant for grant of reconnaissance permit, prospecting c
licence or mining lease over later applicants where the
State Government has not issued any Notification. The
analysis of the Report of the Committee to Review the
Existing Laws and Procedure for Regulation and
Development of Minerals makes it clear that the main
D
provision in Section 11 (2) applies to 'virgin areas'; and
that an area that is previously held or reserved would
require a Notification for it to become available. The first
proviso to Section 11 (2) carves out an exception to the
preferential right based on priority of applications in point
of time refe1:.red to in the main provision. It makes it clear E
that where the State Government subsequently issues a
notification inviting applications for grant, the prior and
subsequent applications to the Notification would be
considered as if they were filed on the same day and no
priority in order of time would be given. The second . F
proviso requires the State Government to examine the
matters set out in Section 11 (3) while considering the
applications for grant. Under the ordinary principles of
statutory interpretation, the first proviso to Section 11 (2)
embraces the field that is covered by the main provision. G
Thus; the Notification calling for applications referred to
in the first proviso to Section 11 (2) applies only to virgin
areas. [Paras 31, 32 and 33] [290-D-H; 291-A-D; 292-C-E]
Indian Metals and Ferro Alloys Ltd. vs. Union of India and H
248 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A Ors. 1992 Supp. 1 SCC 91; Abdul Jabar vs. State of J&K.
AIR 1957 SC 281; Ram Narain Sons vs. Asst. CST 1955 (2)
SCR 483, relied on.
2.2. Section 11 (3) specifies the matter relevant for
8 purposes of second proviso to Section 11 (2). Section
11 (3)(d) provides that "the investment which the applicant
proposes to make in the mines and in the industry based
on minerals" and it speaks about investment proposed
to be made and not past investments. Thus, it confines
the concept of "captive consumption of minerals to
C proposed investment and not past investments". Even
the residuary clauses in Section 11 (3)(e) are limited to
'matters as may be prescribed', which would necessarily
mean matters prescribed by Rules. [Para 35] [293-C-F]
D BSNL Ltd. and Anr. vs. BPL Mobile Cellular Ltd. and Ors.
(2008) 13 sec 597, referred to.
2.3. Sub-section (4) of Section 11 contemplates a
situation where a Notification is issued inviting
E applications for an area for grant. In contrast to the first
proviso to Section 11 (2), it provides that all applications
received pursuant to a Notification shall be considered
simultaneously without assigning any priority in point of
time, and after taking into account the matters specified
in Section 11 (3). Section 11 (4), in effect, covers exactly
F the same field as the first and second proviso to Section
11 (2) read along with Section 11 (3) with one difference,
i.e., unlike the first proviso to Section 11 (2), it provides for
consideration of only those applications that are made
pursuant to the Notification and not those made prior to
G the Notification. Notification under Section 11 (4) is
consistent with Rule 59(1) read with Rule 60 insofar as
applications received prior to the notification would not
be entertained. The first proviso to Section 11 (2) was
being added to cover virgin areas, then provided for the
H
SAN DUR MANGANESE & IRON ORES LTD. v. 249
STATE OF KARNATAKA & ORS.
addition of Section 11 (4), in order to ensure that the A
Notification referred to in Rule 59(1) together with Rule
60 would not render ultra vires the MMDR Act. It cannot
be said that the first proviso of Section 11 (2) would cover
Notifications under Rule 59(1) because this would render
Section 11 (4) otiose and redundant. [Para 36) [293-F-H; B
294-A-D)
J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs. State
of UP. AIR 1961 SC 1170; O.P. Sing/a and Anr. vs. Union
of India and Ors. (1984) 4 sec 450, referred to.
c
2.4. Section 11 (5) carves out an exception to the
preference in favour of prior applicants in the main
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 D
the main provision of Section 11 (2) and to make a grant
in favour of a latter applicant as compared to an earlier
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 E
such a case, both the first proviso to Section 11 (2) and
Section 11 (4) make it clear that all applications will be
considered together as having been received on the
same date. Thus, the proceedings of the Chief Minister
and the recommendation dated 06.12.2004 are contrary F
to the Scheme of the MMDR Act as they were based on
Section 11 (5) which had no application at all to
applications made pursuant to the Notification dated
15.03.2003. [Para 37) [294-F-H; 295~A]
2.5. Section 11 (4) would apply to a Notification issued G
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
was reserved for exploitation by the State Government or
under Section 17A of the Act, shall not be available for H
250 SUPREME COURT REPORTS [2010] 11 S.C.R.
A grant 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
B Rule 59(1). As per r. 60, an application for grant of
connaissance permit, prospecting licence or mining
lease in respect of an area whose availability is required
to be notified under Rule 59 shall, if no notification is
issued; or where Notification is issued, the 30-days
c black-out period specified in the Notification pursuant to
Rule 59(1 )(i)(ii) has not expired, be deemed to be pre-
mature and shall not be entertained. Section 11 (4) is
consistent with Rules 59 and 60 when it provides for
consideration only of applications made pursuant to a
Notification. The consideration of applications made prior
0
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
E interpretation under which Notifications would be issued
under Section 11 (4) in the case of categories of areas
covered by Rule 59(1) of the Rules. [Para 38) [295-B-G]
2.6. The Division Bench erred in concluding that
applications made prior to the Notification under Rule
F 59(1) which are pre-mature and cannot be entertained
under Rule 60 would revive upon issuance of the
Notification. The conclusion is against basic principles of
statutory interpretation. The effect of Rule 60 is couched
in negative language that is mandatory in nature. The
G · purpose of Rule 59(1 ), which is to ensure that mining
lease areas are not given by State Governments to favour
persons of their choice without notice to the general
public would be defeated. The Single Judge correctly
interpreted Section 11 read with Rules 59 and 60. [Paras
H 39 and 41) [295-H; 296-A-B; 297-B-C]
SANDUR MANGANESE & IRON ORES LTD. v. 251
STATE OF KARNATAKA & ORS.
Amritlal Nathubhai Shah and Ors. vs. Union Government A
of India and Anr. (1976) 4 SCC 108; State of Tamil Nadu vs.
M.S. Hindstone and Ors. (1981) 2 SCC 205; State of UP. vs.
Babu Ram Upadhya (1961) 2 SCR 679; Gujarat Pradesh
Panchayat Parishad amd Ors. vs. State of Gujarat and Ors.
(2007) 7 SCC 718, referred to. B
2.7. The Division Bench concluded that if Rule 60 is
interpreted to render applications made prior to Rule 59(1)
Notification non est, it would make Rule 59(2) unworkable
because persons normally apply for mining lease areas
along with an application for relaxation under Rule 59(2). C
The conclusion is clearly misplaced. It is only the request
under Rule 59(2) of any person for relaxation in respect
of an area that is considered and not the application for
· grant. Only after the relaxation under Rule 59(2) by the
Central Government of the requirement of Notification D
under Rule 59(1) that applications could be considered
for grant of mining lease. Section 11 (2) alongwith Rules
59 and 60 should be interpreted that Section 11 (2) is to
cover virgin areas alone. Thus, the application made py
'J' prior to the Notification cannot be entertained along E
with the applications made pursuant to the Notification
dated 15.03.2003 because it is Section 11 (4) which covers
the Notification along with Rule 59(1) and not the first
proviso to Section 11(2) of the Act. [Para 41] [297-E-H;
298-A-C] F
3. A perusal of the order of the High Court in the writ
• petition filed by 'ZS' shows that the State Government
was directed to consider only the application of 'MSPL'
and the applications filed by the impleading applicants G
and others pursuant to the Notification dated 15.03.2003
in accordance with law and in terms of the provisions of
the MMDR Act and MC Rules. The High Court did not
issue any direction to consider all applications made prior
to the Notification. There was no mandamus from the
H
252 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A High Court to consider prior applications. The word
'others' qualify the phrase 'pursuant to' and not the class
of applicants who had applied even prior to the 'Held Area
Notification' dated 15.03.2003. The High Court merely
directed the State Government to consider the
B applications in accordance with the provisions of the
MMDR Act and MC Rules. The said order was passed
without going into the specific provisions in the Act or
Rules. The order does not deal with the interpretation of
Section 11 or Rules 59 and 60. Hence, the orders of the
c High Court in the case of 'ZS' do not permit the
consideration of application by 'J' which was made prior
to the Notification dated 15.03.2003. [Para 42] [298-E-H;
299-A-B]
4.1. Rule 35 permits the State Government to
D differentiate between the 'end use' of the minerals for the
purpose of sub-section (2) of Section 11 in addition to the
matters in Section 11 (3). Rule 35 does not differentiate
between 'proposed' and 'existing' end use. In the instant
case, all the parties, namely, 'MSPL', the appellant
E Company, 'J' and 'K' expressed their intention to use iron
ore from the mines for producing steel and, therefore, the
same 'end use' requirement is satisfied. Therefore, it
could have enabled the State Government to take into
account the claim of 'J' and 'K', whose past investments
F would not have qualified on the 'proposed' investment
criterion under Section 11 (3)(d), in addition to 'MSPL' and
the appellant Company. This could have been a basis to
exclude those with proposed investments in steel plants
from consideration. [Para 43] [300-A-C]
G
4.2. Rule 35 specifies one additional factor apart from
the factors set out in Section 11 (3). The plain language
of Rule 35 requires its application only in cases covered
by Section 11 (2) and not by Section 11 (4). Therefore, to
the extent that it is Section 11(4) that covers Notification
H
SAN DUR MANGANESE & IRON ORES LTD. v. 253
STATE OF KARNATAKA & ORS.
under Rule 59(1) and not Section 11 (2). The State A
Government committed an error in relying on Rule 35 to
exclude 'MSPL' and the appellant Company on the
premise that it is intended to give preference to those
who have made existing investments in industries based
on iron ore and that the respondents-'J' and 'K', qualify B
on the said consideration. However, Rule 35 only permits
the State Government to take additional factor of the 'end
use' of the minerals and not the existing investments
made by the applicants. The respondents also do not
satisfy the requirements under Section 11 (3)(d) which c
talks solely about proposed investments to be made and
not the existing ones. [Para 44] [300-D-G]
5. Section 11 (4) and second proviso to Section 11 (2)
provide that the State Government may grant, inter alia,
a mining lease after taking into consideration the matters D
specified in Section 11 (3). Section 11 (3)(d) specifies "the
investment which the applicant proposes to make in the
mines and in the industry based on the minerals" as one
of such matters and on a plain interpretation, it is clear
that only the proposed investment is a relevant factor. If E·
the Legislature had intended that it should include past
investments also, the use of the word 'proposed' is
superfluous, which could never be the case. The
respondents did not point out any other provision in the
MMDR Act or the MC Rules permitting grant of mining F
lease based on past commitments or for captive
purposes in existing industries. [Para 45] [301-B-D]
Tata Iron and Steel Co. Ltd. vs. Union of India (1996) 9
sec 709, distinguished. G
Indian Charge Chrome Ltd. and Anr. vs. Union of India
and Ors. (2006) 12 sec 331, referred to.
6.1. The State Government is denuded of all
legislative and executive power under Entry 23 of List-II H
254 SUPREME COURT REPORTS [2010] 11,.S.C.R.
A read with Article 162 after passing of the MMDR Act. The
State Government is purely a delegate of Parliament and
a statutory functionary, for the 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
· B MMDR Act in the grant of mining leases. Section 2 of the
Act clearly states that the regulation of mines and mineral
development comes within the purview of the Union
Government and not the State Government. The
respondents have not been able to point out any other
c provision in the MMDR Act or MC Rules permitting grant
of mining lease based on past commitments. The State
Government has no authority under the MMDR Act to
make commitments to any person that it will, in future,
grant a mining lease in the event that the person makes
D 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
proceed to hotify a particular area. Further, having
notified the area, the State Government certainly could
E 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). (Para 48] (302-
D-H; 303-A-D]
6.2. The State Government cannot grant mining
F leases keeping in mind any considerations apart from
the ones mentioned in the MMDR Act and MC Rules. Thus,
no extraneous considerations such as past commitments
made by the State Government to 'J' and 'K' who have
already set up steel plants can be entertained by the State
G Government while granting mining leases and the State
Government must abide by the Act and Rules. [Para 49]
State of Assam and Ors. vs. Om Prakash Mehta and Ors.
AIR 1973 SC 678; Quarry Owners' Association vs. State of
Bihar and Ors. (2000) 8 SCC 655; State of Orissa vs. M.A.
H
SANDUR MANGANESE & IRON ORES LTD. v. 255
STATE OF KARNATAKA & ORS.
Tulloch and Co. (1964) 4 SCR 461; Baijnath Kedio vs. State A
of Bihar and Ors. (1969) 3 SCC 838; State of West Bengal
vs. Kesoram Industries Ltd. and Ors. (2004) 10 SCC 201;
Bharat Coking Coal Ltd. vs. State of Bihar and Ors. (1990) 4
SCC 557; C.I. T. Mumbai vs. Anjum M.H. Ghaswala and Ors.
(2002) 1 SCC 633; Captain Sube Singh and Ors. vs. Lt. B
Governor of Delhi and Ors. _(2004) 6 SCC 440; State of U.P.
vs. Singhara Singh and Ors. (1964) 4 SCR 485, relied on.
7. The Law of Equity cannot save the
recommendation in favour of 'J' and 'K' because equity C
stands excluded when a matter is governed by statute.
Where the field is covered expressly by Section 11 of the
MMDR Act, equitable considerations cannot be taken into
account to assess 'J' and 'K', when the recommendation
in their favour is in violation of statute. 'K' did not have a
commitment from the State Government regarding its iron D
ore needs. In the proceedings of the State Government,
there is only a statement that it may apply for a lease. 'J'
emphasized that it has already set up its steel plant based
on the commitments made by the State Government to
grant a mining lease and it is in need of iron ore for these E
steel plants. Commitments made by the State Government
cannot be a relevant factor for grant of lease in the teeth
of the consideration set out in Section 11 (3). If that was
to be the sole criterion, the State Government ought not
to have notified the area as 'Held Area Notification' dated F
15.03.2003. Since the entire field of granting mining lease
is covered by MMDR Act and MC Rules, the State
Government cannot use any consideration apart from the
ones mentioned in the Act and Rules. [Paras 50 and 51)
[304-D-H; 306-B] G
Kedar Lal vs. Hari Lal Sea (1952) SCR 179; Raja Ram
vs. Aba MarutiMali (1962) Supp. 1 SCR 739, referred to.
8.1. The Division Bench erred in concluding that the
application made by 'J' prior to the Notification could be H
256 SUPREME COURT REPORTS (2010) 11 S.C.R.
A entertained along with the applications made pursuant to
the Notification because it is not Section 11 (4) which
covers the said Notification under Rule 59(1) but the first
proviso to Section 11 (2). The Division Bench did not even
mention Section 11 (4) in its reasoning apart from stray
B references even though the conclusion of the Single
Judge hinged on how Section 11 (4) would be rendered
otiose and redundant if the first proviso to Section 11 (2)
was taken as governing the consideration of applications
under a Notification pursuant to Rule 59(1 ). It also erred
c in concluding that the applications made prior to
Notification under R4le 59(1) which are pre-mature and
cannot be entertained under Rule 60 would revive upon
issuance of the Notification. Had that been the intention
of the Legislature, there was no reason for the
Legislature to take pains under Rule 60(b) that an
0
application made during the period of 30 days specified
in the Notification also would be pre-mature and could not
be entertained. If the decision of the Division Bench is
taken to its, logical conclusion, then it would result in
reading a proviso at the end of Rule 60 to the effect that
E once the 30 days' period specified in the Notification
contemplated by Rule 59(1) sub-clause (ii) is over, pre-
matur~ applications would revive. After taking such pains
to make it clear that the application would not be.
entertained until the end of 30 days' period, surely the
F Legislature itself would have inserted such proviso in
Rule 60 if that were its intention. If such pre-mature
applications are allowed to be entertained, it would result
in the State Government giving out mining leases to
favoured persons without notice to the general public.
G [Paras 52 and 53) [306-D-H; 307-A-B]
8.2. The conclusion arrived at by the Division Bench
that if Rule 60 is interpreted to render applications made
prior to Rule 59(1) Notification non est, in that event, it
H would make Rule 59(2) unworkable because persons will
SANDUR MANGANESE & IRON ORES LTD. v. 257
STATE OF KARNATAKA & ORS.
normally apply mining lease areas along with an A
application for relaxation under Rule 59(2), is clearly
misplaced. It is only the request under Rule 59(2) for
relaxation in respect of an area that is considered and not
the application for grant. It is only after the relaxation
under Rule 59(2) by the Central Government of the B
requirement of the Notification under Rule 59(1) that the
applications could be considered for grant of mining
lease. Though the Single Judge in his order dated
07.08.2008 quashed the communication/recommendation
of the State Government dated 06.12.2004 proposing to c
grant mining lease to 'J' and 'K', however, the Single
Judge traveled much beyond the reliefs sought for in the
writ petition and quashed the entire Notification No.
Cl.16:MMM.2003 dated 15.03.2003. While approving earlier
part of the order and quashing the communication/ 0
recommendation of the State Government dated
06.12.2004, the other observations/directions are not
warranted in the light of the provisions of the Act and the
Rules. The said observations/directions are deleted.
[Paras 54 and 55) [307 -C-HJ
E
9.1. The Central Government considers only the
materials forwarded by the State Government along with
its recommendation. If the recomm~~dation of the. State
Government cannot be upheld in layv. all consequential
orders including the subsequent apJ)roval by the Central F
Government are also liable to be quashed. If the very
same recommendation of the State Government is sent
back to the Central Government on the administrative
side in its role as an approving authority under Section
5(1) without setting aside the impugned judgment, it is G
more likely that the Central Government would simply
follow its previous order. In that event, the Central
Government would be influenced by the judgment
passed by the Division Bench upholdi~g the grant made
in favour of 'J' and 'K'. Such an exercise would be in the H
258 SUPREME COURT REPORTS [2010] 11 S.C.R.
A nature of post-decisional hearing which would be
impermissible. As on date the Central Government hears
revision petitions through an Executive Officer and
without participation of a Judicial Member. The exact
procedure of the revisional tribunal has kept changing
B over the last few months. It would not be an independent
and efficacious alternative forum. When there was no
valid recommendation by the State Government for the
grant of lease, there cannot be any valid approval of the
Central · Government relying on. defective
c recommendation. [Para 56] [308-B-H; 309-A-C]
H.L. Trehan and Ors. vs. Union of India and Ors. (1989)
1 SCC 764; K.I. Shephard and Ors. vs. Union of India and
Ors. (1987) 4 SCC 431; Shekhar Ghosh vs. Union of India
and Anr. (2007) 1 SCC 331; Union of India vs. R. Gandhi,
D President, Madras Bar Association JT 2010 (5) SC 553,
relied on.
Pavani Sridhara Rao vs. Govt. of A.P and Ors. (1996) 8
SCC 298; State of Kera/a vs. Puthenkavu N.S.S. Karayogam
E and Anr. (2001) 10 SCC 191; Indian Charge Crome Ltd. and
Anr. v. Union of India and Ors. (2006) 12 SCC 331, referred
to.
Barnard vs. National Dock Labour Board (1953) 1 All E.R.
F 1113; McFoy vs. United Africa C~. (1961) All E.R. 1169,
referred to. ·
I
9.2. The recommendation o~ the State Government
dated 06.12.2004 is not valid with reference to the
provisions of MMDR ~ct and the ~ules, hence the invalid
G recommendation cannot be lookied into by the Central
Government. The proviso to Secqon 5(1) itself provides
only for the Central Government ~ither to grant or reject
its approval to the State Governrtjent's recommendation
in the case of mining lease for a m~neral such• as iron ore
H \ I,
SANDUR MANGANESE & IRON ORES LTD. v. 259
STATE OF KARNATAKA & ORS.
in the Fi.rst Schedule. Such consideration on the A
administrative side does not involve consideration of all
the applicants based on their mining lease applications
and after giving an opportunity of hearing. Inasmuch as
the Central Government does not have all relevant
materials before it, it may not be in a position to substitute B
itself for the State Government and it would not be proper,
in fact, it would be inconsistent with the provisions of the
MMDR Act and the Rules, to frame the issue on the
administrative side of the Central Government. Even
otherwise, inasmuch as there is a flaw in the c
recommendation of the State Government which requires
re-consideration, the request for remitting the matter to
the Central Government for its decision is rejected. [Para
56) [309-C-G]
10. The impugned order of the Division Bench of the D
High Court in Writ Appeal No. 5084 of 2008 and allied
matters as well as the decision of the State Government
dated 26/27 .02.2002 and the subsequent decision of the
Central Government dated 29.07.2003 are quashed. The
'
State Government is directed to consider all applications E
afresh in light of the interpretation of Section 11 of the Act
and Rules 35, 59 and 60 of MC Rules and make a
recommendation to the Central Government within the
stipulated period. [Para 57) [309-H; 310-A-C]
F
Case Law Reference:
(1964) 4 SCR 461 Relied on.' Para 22, 49
(1969) 3 sec 838 Relied on. Para 22, 49
1961 (2) SCR 537 Relied on. Para 22 G
(2004) 10 sec 201 Relied on. Para 23, 49
(1990) 4 sec 557 Relied on. Para 24, 49
(1973) 1 sec 584 Relied on. Para 26 H
260 SUPREME COURT REPORTS [2010] 11 S.C.R.
A (2000) 8 sec 655 Relied on. Para 27, 49
(2002) 1 sec 633 Relied on. Para 28, 49
(2004) 6 sec 440 Relied on. Para 28, 49
(1964) 4 SCR 485 Relied on. Para 28, 49
B
(1996) 9 sec 109 Distinguished. Para 29, 46
1992 Supp. 1 sec 91 Relied on. ·Para 33
AIR 1957 SC 281 Relied on. Para 33
c
1955 (2) SCR 483 Relied on. Para 33
(2008) 13 sec 597 Referred to. Para 35
AIR 1961 SC 1170 Referred to. Para 36
'
D (1984) 4 sec 450 Referred to. Para 36
(1976) 4 sec 108 Referred to. Para 40
(1981) 2 sec 205 Referred to. Para 41
E (1961) 2 SCR 679 Referred to. Para 41
(2001) 1 sec 118 Referred to. Para 41
(2006) 12 sec 331 Referred to. Para 47
AIR 1973 SC .678 Referred to. Para 49
(1952) SCR 179 Referred to. Para 50
(1962) Supp. 1 SCR 739 Referred to. Para 50
(1953) 1 All E.R. 1113 Referred to. Para 56
(1961) All E.R. 1169 Referred to. Para 56
(1996) 8 sec 298 Referred to. Para 56
(2001) 10 sec 191 Referred to. Para 56
(1989) 1 sec 764 Relied on. Para 56
SANDUR MANGANESE & IRON ORES LTD. v. 261
STATE OF KARNATAKA & ORS.
(1987) 4 sec 431 Relied on. Para 56 A
(2007) 1 sec 331 Relied on. Para 56
JT 2010 (5) SC 553 Relied on. Para 56
CIVIL APPELLATE JURISDICTION: Civil Appeal No. B
7944 of 2010.
From the Judgment & Order dated 05.06.2009 of the High
Court of Karnataka at Bangalore in W.A. No. 5084 of 2008.
With c
C.A.Nos. 7945-54, 7955-61 of 2010
K.K. Venugopal, Krishnan Venugopal, Uday Tiwary, Abir
Phukan, Sidharth Singh, A. Raghunath, Shyam Mohan, Nishant,
A. V., P.V. Dinesh, P. Rajesh, P.V. Vinod, T.P. Sindhu, D
Athouba K., Sunil Dogra, A. Venayagam Balan, Harshad V.
Hameed, Kuriakose Varghese, K. Rajeev, 8. Agrawal, Rajeev
Mehta for the Appellant.
Dushant Dave, D.L.N. Rao, Bhardwaj S. Iyengar, Sadri E
Vishal, Prashant Kumar, M. Gireesh Kumar, S.K. Kulkarni, A.S.
Kulkarni, AP & J Chambers, Manu Nair, P.C. Sen, R. Sharma
Mark Disouza, Suresh A. Shroff & Co., Anitha Shenoy, Rashmi
Nand Kumar, S. Udaya Kumar Sagar. Bina Madhavan,
Biswanath Agrawalla, Vivek Chib, Rajiv Mehta, K.N. Phanindra,
F
Kiran Suri, Aparna Bhat Mattoo, S.J. Amith, Nazneen Ahmed,
Ravindra Keshavrao Adsure for the Respondents.
The Judgment of the Court was delivered by
P. SATHASIVAM, J. 1. Leave granted in all the special G
leave petitions.
2. These appeals seek to challenge the common judgment
and order of the Division Bench of the High Court of Karnataka
dated 05.06.2009 arising out of Writ Appeal No. 5084 of 2008
H
262 SUPREME COURT REPORTS [2010) 11 S.C.R.
A and allied matters and the decision of the State Government
dated 26127.02.2002 as well as the Central Government dated
29.07.2003.
3. The appellants in these appeals are Sandur Manganese
& Iron Ores Ltd. (in short "Sandur") and Mis MSPL Ltd. The
8
principal respondents are Mis Kalyani Steels Ltd. (in short
"Kalyani") and Mis Jindal Vijayanagar Steels Ltd. (in short
"Jindal"). Apart from tnese, the State of Karnataka and the Union
of India are also arrayed as respondents.
C 4. Factual matrix:
(a) The case of Sandur (Petitioner in SJ_P (C) No. 22077
of 2009) is as follows:
(i) Shri Y.R. Ghorpade, ex-Ruler of Sandur State, was
D granted lease for mining of Iron & Manganese Ores under Order
No. GEO.Ms.068 dated 26.02.1953, for a period of 20 years
commencing from 01.01.1954 to the extent of29 sq .. miles, falling
within the boundaries of the Sandur State. On 18.01.1954, the
appellant-Company was incorporated as a Private Limited
E Company under the provisions of the Companies Act, 1956. On
21123.06.1956, a lease was transferred in favour of the Company
as per Government Order No. 1.1432-38 GE43.55-22. On
28.11.1964, the Company was converted into a Public Limited
Company. In 1965, the Company, with the aim of value addition
F to Ores mined by the Company and also to industrial area, set
up a 15 MVA.. Metal and Ferro Alloys Plant at Vyasankere near
Hospet at a substantial capital cost. In 1980, Sandur also set up
two more 20 MVA Furnaces in the Plant for manufacture of Ferro-
Silicon by entering into an agreement with the State Government
G and the Karnataka Electricity Board to receive power at a viable
tariff. On 19.09.1973, upon applying for renewal of the abovesaid
lease, the Company was allotted an area of 20 sq. miles only
instead of 29 sq. miles which was leased earlier. However, the
H
SANDUR MANGANESE & IRON ORES LTD. v · 263
STATE OF KARNATAKA & ORS. [P. SAtHASIVAM,. J.]
said area is reserved for ;exhloitation byt~e National Mineral A
Development Corporationl«inlshort "NMDC")-a Government of
India Undertaking. When the. company noti~ed thqt the NMDC
did not initiate any Mining "Lease Applicatidn on the said area,
then on 29.09.1987, it applied for mining lease over an area of
2 sq. miles witpin the said deleted area. On 25.01.1989, ~he B
State Government rejected the application on the ground that~he
area applied for was alrecidy reserved by NMDC. However,
NMDC was not granted lleiiise and in 1992, one Sri H.G.
Rangangoud was granted 60 Hectares out of the same applied
area. c
(ii) Again, on 24.06.1993, again the Company applied ifor
grant of lease over an area of 513.16 Hectares within the ar1ea
deleted from its original lease but it was rejected by the St9te
Government on the ground that the area applied by them has
overlapped with the area granted to one Sri Rangangoud and D
nine others. On 11.12.1993, the Company challenged the above
decision of the State Government by filing a Revision Petition
before the Government of India, Ministry of Coal and Mines, New
Delhi. On 09.04.1999, the Government of India by holding that
the order passed by the State Government was in violation of E
Rule 26 (1) of the Mineral Concession Rules, 1960 (hereinafter
referred to as "MC Rules") and opposed to the principles of
natural justice remanded the matter to the State Government for
early disposal as per the provisions of Mines & Minerals
(Development and Regulation) Act, 1957 (hereinafter referred F
to as the "MMDR Act") and the Rules framed thereunder. On 26/ .
27.02.2002, the Company got a letter from the State Government
that out of the area of 513.16 Hectares applied for by it, only an
extent of 256 Hectares (640 acres) was available and it could
choose either Block A (168 Acres or 67 Hectares) or Block B G
(472 Acres or 189 Hectares).
(iii) On 13.05.2002, the Company filed a revision petition
before the Government of India against the said decision of the
State Government. On 15.03.2003, the State Government
H
264 SUPREME COURT REPORTS [2010] 11 S.C.R.
A issued a Notification in exercise of its power under Rule 59 of
the MC Rules reserving the entire area calling for applications
from the general public for grant of mining leases and by notifying
large extent of previously held areas as available for grant of
mines including the area applied by the appellant-Company. On
B 16.04.2003, the appellant-Company, by way of abundant
caution, applied afresh for grant of mining lease over an area of
200 Hectares in the notified area without prejudice to its rights
for consideration of its earlier application dated 24.06.1993. On
29.07.2003, the Government of India allowed the revision petition
C filed by the appellant-Company and directed the State
Government to consider the application dated 24.06.1993 filed
by the appellant-Company on merits, in terms of order dated
09.04.1999 of the Revisional Authority and pass a final order in
the case. In spite of this order, the State Government has not
passed any order. On 06.12.2004, a letter was issued by the
D State Government seeking approval of the Central Government
for grant of lease to other applicants i.e. Jindal & Kalyani. Being
aggrieved by the said recommendation, on 11.06.2007, the
appellant-Company filed Writ Petition No. 8971 of 2007 before
the High Court. The learned single Judge clubbed this writ petition
E along with W.P. No. 21608 of 2005 filed by another applicant-
MSPL Ltd. On 07.08.2008, the learned single Judge,quashed
the Notification dated 15.03.2003 and the Mining Licences
granted in favour of Jindal and Kalyani with certain observations.
F (iv) On 22.08.2008, Jindal-Respondent No.5 herein filed
W.A. No. 5026 of 2008 in the High Court. Being aggrieved by
the order passed by the learned single Judge, Sandur preferred
Writ Appeal No. 5084 of 2008 before the High Court. By the
impugned common order dated 05.06.2009, the Division Bench
G of the High Court set aside the order of the learned single Judge
dated 07.08.2008 and upheld the validity of Notification of the
State Government dated 15.03.2003 and the proceedings dated
06.12.2004 and the consequential approval of the Central
Government were held valid. Aggrieved by the said order, the
H
SANDUR MANGANESE & IRON ORES LTD. v. 265
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
appellant-Company has filed S.L.P.(C) No. 22077 of 2009 A ·
before this Court.
(b) The case of MSPL (Petitioner in SLP (C) Nos. 22943-
22952 of 2009) is as follows:
(i) MSPL Limited filed above SLPs against the common B
judgment and order dated 05.06.2009 passed by the High Court
of Karnataka in W.A. Nos. 5024, 5026, 5032, 5052, 5053, 5064-
5066, 5077 and 5145/2008 setting aside the judgment of the
learned single Judge dated 07.08.2008 in the writ petitions.
c
(ii) On 24.05.2001, MSPL Ltd. made an application to the
Director of Mines & Geology (hereinafter referred to as "the
Mines Director") for grant of a mining lease over an extent of
298.5 Hectares in the area known as Eddinpada in
Kumaraswamy Range of the State of Karnataka which was part o
of a mining lease previously held by the appellant-Company in
S.L.P. (C) No. 22077 of 2009. On 30.08.2001, the State of
Karnataka requested the Central Government to relax the
conditions set out in Rule 59(1) in favour of MSPL Ltd. under Rule
59(2). While the matter was under consideration of the Central E
Government, one Ziaullah Sharieff (another applicant for a
mining lease) filed Writ Petition No. 35915 of 2001 (GM-MMS)
before the High Court seeking declaration that he is entitled for
grant of a mining lease in his favour. On 21.12.2001, the Central
Government returned all proposals for grant of mining lease
pending before it to the State Government to await the report of F
the Regional Environmental Impact Assessment of the Bellary-
Hospet Region by National Environmental Engineering
Research Institute (NEERI).
(iii) On 13.05.2002, Sandur filed a revision before the G
Central Government under Rule 54 of the MC Rules challenging
the proposal of the State Government dated 30.08.2001, in
favour of the MSPL. During pendency of the said revision,
Sandur also filed W.P. No. 22767 of2002 seeking a mandamus
to the Central Government to consider its revision petition. On H
266 SUPREME COURT REPORTS [2010) 11 S.C.R.
A 24.10.2002, Jindal made an application for grant of mining lease
over a part of the same area previOU$1y held and surrendered
by Sandur. On 15.03.2003, the State Government issued
Notification informing the general public that the areas
mentioned in the annexure thereof were available for grant under
B Rule 59 of the Rules and interested persons were requested to
file applications for grant of mining leases. On 16.04.2003,
pursuant to the said notification, MSPL made an application for
the same area previously held by Sandur. On 29.07.2003, the
Central Government rejected the revision petition of MSPL. On
c 20.12.2003, MSPL made further submissions before the Mines
Director. On 30.04.2004, the respondent-Mines Director sent a
notice to the MSPL for making submissions. Again on
06.10.2004, the Under Secretary to the new State Government,
Mines (C & I Department) issued another notice under Rule 26(1)
of the Rules requiring/the MSPL to appear before the Hon'ble
0
Chief Minister of Karnataka to make a presentation for sanction
of lease. MSPL put-forth its claim and submitted a detailed
presentation to the Principal Secretary to the Chief.Minister.
Vide letter dated 06.12.2004, the State Government sought the
E approval of the Central Government under Section 5(1) of the
MMDR Act to grant lease to Jindal over an area of 200. 73
Hectares and Kalyani over an area of 179. 70 Hectares in respect
of a part of the land mentioned in S.No.1 to the Notification dated
15.3.2003. On 15.12.2004, MSPL made representations both
to the Minister for Mines and to the Secretary, Department of
F Mines in the Central Government against the said proposal. On
21.12.2004, a further representation was made to the Secretary,
Department of Mines. Against the said approval, two others
preferred writ petitions before the High Court for quashing of the
said proposal. MSPL filed application for impleadment in the
G said writ petitions and the same was rejected by the learned
single Judge vide order dated 21.07.2005.
(iv) On 12.09.2005, MSPL preferred writ petition being W.P.
No. 21608 of 2005 before the High Court challenging the
H recommendation in favour of Jindal and Kalyani. On 05.06.2006/
SANDUR MANGANESE & IRON ORES LTD. v. 267
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.)
27.06.2006, the Central Government granted approval to the A
recommendation dated 06.12.2004 of the State Government for
grant of mining lease in favour of Jindal and Kalyani. Vide
judgment dated 07.08.2008, learned single Judge of the High
Court allowed W.P. No. 21608 of 2005 quashing the
recommendation. Against the judgment of the learned single 8
Judge, Jindal and Kalyani preferred W.A. Nos. 5026 & 5028 of
2008 respectively, before a Division Bench of the High Court.
MSPL also filed W.A. No. 5057 of 2008 challenging the same
judgment of the learned single Judge save and except to the
extent that the recommendations of the State Government to the C
Central Government insofar as it recommended the grant of
mining to Jindal and Kalyani was quashed. A large number of
other writ appeals were also filed, heard together and disposed
of by a common judgment and order dated 05.06.2009.
5. Heard Mr. Nariman, learned senior counsel for Sandur, D
Mr. K.K. Venugopal and Mr. Krishnan Venugopal, learned senior
advocates for MSPL, Mr. Harish N. Salve, learned senior counsel
for Jindal, Mr. Dushyant Dave, learned senior counsel for Kalyani
and Mr. Ashok Haranahalli, learned Advocate General for the
State of Karnataka. E
6. Main issues:-
(a) Whether the State Government's recommendation
dated 06.12.2004 and the proceedings of the Chief
Minister are contrary to the provisions of Section 11 F
of the Act and Rules 59 and 60 of MC Rules and not
valid in law.
(b) Whether the respondent-Jindal's application dated
24.10.2002 made prior to the Notification dated G
15.03.2003 is capable of being entertained along
with the applications made pursuant to the said
notification.
(c) Whether the order of the High Court of Karnataka in
H
268 SUPREME COURT REPORTS [2010] 11 S.C.R.
A Ziaul/a Sharieff's case permit the consideration of
the respondent-Jindal's application dated
24.10.2002 made prior to the notification dated
15.03.2003.
(d) Whether Rule 35 of the MC Rules justify the
B recommendation of the State Government in favour
of the Respondents-Jindal and Kalyani.
(e) Whether the criterion of "captive consumption"
referred to in Tata Iron and Steel Co. Ltd. vs. Union
c of India, ( 1996) 9 SCC 709, have any application in
this case despite not being one of the factors
referred to in Section 11 (3) of the MMDR Act or Rule
35 of the MC Rules.
(f) Whether factors such as the past commitments by
D
the State Government to applicants who have already
set up steel plants, matter for consideration for grant
of lease despite the MMDR Act and the MC Rules
constituting a complete Code.
E (g) Whether the recommendation in favour of
respondents-Jindal and Kalyani saved by the
operation of the Law of Equity.
(h) Whether the learned single Judge as well as the
F Division Bench are justified in arriving at such
conclusion.
(i) Whether it is advisable to remit it to the Central
Government.
G 7. Before considering various issues as mentioned above,
let us refer relevant provisions of the Act and the Rules
concerned to the issues in question. The Preamble of the MMDR
Act, as amended by Act 38 of 1999, makes it clear that it is
intended for the development and regulation of mines and
H minerals under the control of Union. The relevant provisions from
SANDUR MANGANESE & IRON ORES LTO. v. 269
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
the Act are: A
"2. Declaration as to the expediency of Union contro/.-lt
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 herein 8
after provided.
3. Definitions:-ln this Act, unless the context otherwise
requires:-
a. "minerals" includes all minerals except mineral oils; c
b.
c. "mining lease" means a lease granted for the purpose
of undertaking mining operations, and indudes a sub-lease
granted for such purpose; D
d ........
e.
f ........ E
g. "p!:.ospecting licence" means a licence granted for the
purpose of undertaking pruspecting operations;
h. "prospecting operations" means any operations
F
undertaken fer the purpose of exploring, locating or proving
mineral deposits;
(ha) "reconnaissance operations" means any operations
undertaken for preliminary prospecting of a mineral through
regional, aerial, geophysical or geochemical surveys and G
geological mapping, but does not include pitting, trenching,
drilling (except drilling of boreholes on a grid specified from
time to time by the Central Government) or sub-su_rface
excavation;
H
270 SUPREME COURT REPORTS [2010) 11 S.C.R.
".i
A (hb) "reconnaissance permit" means a permit granted for
the purpose of undertaking reconnaissance operations; and.
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
B
licencee 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
c permit holder or the licensee, as the case may be,-
( 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
E Act; and
(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
licence, as the case may be, or within such further period,
F
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 prospecting
G 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 preferential right to be considered for
H grant of reconnaissance permit, prospecting licence or
SANDUR MANGANESE & IRON ORES LTD. v. 271
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
mining lease, as the case may be, over the applicant whose A
application was received later:
Provided that where an area is available for grant of
reconnaissance permit, prospecting licence or mining
lease, as the case may be, and the State Government has
8
invited applications by notification in the Official Gazette for
grant of such permit, licence or lease, all the applications
received during the period sepcified in such notification and
the applications which had been received prior to the
publication of such notification in respect of the lands within C
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:
Provided further that where any such applications are
received on the same day, the State Government, after D
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 applications as it may deem fit.
E
(3) The matters referred to in sub-section (2) are the
following:-
a. any special knowledge of, or experience in,
reconnaissance operations, prospecting operations
or mining operations, as the case may be, F
possessed by the applicant;
b. the financial resources of the applicant;
c. the nature and quality of the technical staff employed G
or to be employed by the applicant;
d. the investment which the applicant proposes to make
in the mines and in the industry based on the
minerals;
H
272 SUPREME COURT REPORTS [2010] 11 S.C.R.
A e. such other matters as may be prescribed.
(4) Subject to the provisions of sub-section (1), where the
State Government notifies in the Official Gazette an area
for grant of reconnaissance permit, prospecting licence or
mining lease, as the case may be , all the applications
B
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
taking into consideration the matters specified in sub-
c 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.
(5) Notwithstanding anything contained in sub-section (2),
D but subject to the provisions of sub-section (1 ), the State
Government may, for any special reasons to be recorded,
grant a reconnaissance permit, prospecting licence or
mining lease, as the case may be, to an applicant whose
application was received later in preference to an
E application whose application was received earlier:
Provided that in respect of minerals specified in the First
Schedule, prior approval of the Central Government shall
be obtained before passing any order under this sub-
section."
F
8. In exercise of the powers conferred by Section 13 of the
Act, the Central Government framed rules called the Minerals
Concession Rules, 1960. We are concerned only with the
following Rules:-
G
"35. Preferential rights of certain persons. - Where two or
more persons have applied for a reconnaissance permit or
a prospecting licence or a mining lease in respect of the
same land, the State Government shall, for the purpose of
sub-section(2) of Section 11, consider, besides the matters
H
SAN DUR MANGANESE & IRON ORES LTD. v. 273
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
mentioned in clauses (a) to (d) of sub-section(3) of Section A
11, the end use of the mineral by the applicant.
59. Availability of area for regrant to be notified. - (1) No
area -
(a) which was previously held or which is being held 8
under a reconnaissance permit or a prospecting
licence or a mining lease; or
(b) which has been reserved by the Government or any
local authority for any purpose other than mining; or C
(c) in respect of which the order granting a permit or
licence or lease has been revoked under sub-rule (1)
of rule 7A or sub-rule(1) of rule15 or sub-rule(1) of
rule 31, as the case may be; or
D
(d) in respect of which a notification has been issued
under the sub-section (2) or sub-section·(4) of
Section 17; or
(e) which has been reserved by the State Government E
under Section 17A bf the Act
. shall be a~~,lable for grant unless -
Q)~~ entry to th~ ett.,~)ct that t~~ area is available for grant is
~ae in the register referred to in sub-rule (2) of rule 70 or F
sub-rule (2) of rule 21 or sub-rule (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 G
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
274 SUPREME COURT REPORTS [2010] 11 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 17A of the Act is proposed to be granted
to a Government Company, no notification under clause (ii)
shall be required to be issued:
B
Provided also that where an area held under a
reconnaissance permit or a prospecting licence, as the
case may be, is granted in terms of sub-section(1) of section
11, no notification under clause (ii) shall be required to be
C issued ..
/
(2) The Central Government may, for reasons to be recorded
in writing, relax the provisions of sub-rule (1) in any special
case.
0 .-" 60. Premature applications. -Appl,ication for the grant of
a reconnaissance permit, prospecting I
licence or mining
lease in respect of areas whose availability for grant is
required to be notified under rule 59 shall, if -
E (a) no notification has been issued, under that rule; or
(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 9. In the light of the above statutory provisions, let us
consider the issues framed, one by one, and test the validity or
otherwise of the decision of the State Government as well as the
order passed by the learned single Judge and the Division
Bench of the High Court.
G
10. As mentioned earlier, .by the impugned common
judgment dated 05.06.2009, the Division Bench reversed the
judgment of the learned single Judge and held that the
applications for grant of mining lease made prior to notification
H under Rule 59 of the MC Rules could be considered for grant
SANDUR MANGANESE & IRON ORES LTD. v. 275
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
along with applications filed pursuant to the notification. In the A
case on hand, the application was made by Jindal prior to the
notification. The Division Bench upheld the recommendations
dated 06.12.2004 of the State Government together with the
proceedings of the Chief Minister which were the basis for the
recommendation under Section 5(1) of the MMDR Act to the B
Central Government for approval of grant of mining lease in
favour of Jindal and Kalyani. It is seen from the records that on
24.05.2001, MSPL made an application to the State
Government for grant of mining lease over an area of 298.5
hectares in Eddinpada area in Kumaraswamy range of the State C
of Karnataka and also sought relaxation of the conditions
specified in Rule 59(1) of the MC Rules. This area was previously
held under a mining lease by Sandur. Subsequently, on
24.10.2002, Jindal also made an application for grant over the
same area. The State Government made a recommendation to
the Central Government for grant of lease to the MSPL and D
sought relaxation of the conditions set out in Rule 59(1 ). However,
it is not in dispute that the Central Government returned the
proposal of the State Government directing it to await an
environmental study being carried out by the NEERI.
E
11. The materials placed further show that on 15.03.2003,
the State Government issued a Notification under Rule 59(1) of
the MC Rules notifying the availability of a large area for re-grant
of mining lease which was referred to as the "Held Area
Notification". Pursuant to the same, MSPL made a fresh F
application on 16.04.2003 for grant of mining lease over the
notified area. Kalyani and 88 other applicants also applied
pursuant to the said Notification. Admittedly, Jindal did not apply
pursuant to the "Held Area Notification". even though some of
its sister concerns applied for the grant. On 06.12.2004, the G
State Government made a recommendation to the Central
Governrr1ent under Section 5 of the MMDR Act for approval of
the proposed grant of mining lease to Jindal and Kalyani. MSPL
and some of the applicants made representations to the Central
Government against the said recommendation made by the H
276 SUPREME COURT REPORTS [2010) 11 S.C.R.
A State Government. Challenging the recommendation dated
06.12.2004 of the State Government, writ petitions were filed by
the aggrieved companies before the High Court. During the
pendency of the writ petitions, the Central Government gave its
approval for grant of mining lease in favour of Jindal and Kalyani
B on 05.06.2006 and 27 .06.2006 respectively. By judgment dated
07.08.2008, the learned single Judge allowed the writ petitions
filed by MSPL and Sandur as well as others and quashed the
grant on the ground among others, that Jindal's application prior
to the "Held Area Notification" could not have been entertained
C in view of Section 11 (4) of the MMDR Act and Rules 59 and 60
of the MC Rules. The Division Bench, by judgment and order
dated 05.06.2009, reversed the judgment passed by the learned
single Judge. With this background, let us discuss the issues
formulated above.
D Issue (a)
"Whether the State Government's recommendation dated
06. 12. 2004 and the proceedings of the Chief Minister are
contrary to the provisions of Section 11 of the Act and
E Rules 59 and 60 of MC· Rules and not valid in law."
12. Mr. Nariman and Mr. K.K. Venugopal, learned senior
counsel appearing for the Sandur and MSPL respectively, by
taking us through the entire proceedings of the Chief Minister,
vehemently contended that the State Government was pre-
F determined to grant the lease in favour of Jindal and Kalyani.
They also contended that there is no clear reason as to why
Jindal and Kalyani alone were given preference and the
applications of MSPL, Sandur and others were not considered
favourably. They also highlighted that all that is done is the
G reproduction of the details mentioned in their applications and
at the end, certain columns were left blank in which the Chief
Minister has filled in by hand, after which he has signed the
proceedings. They also pointed out that though relevant criteria
is provided under Section 11 (3) of the Act, only one criteria,
H namely, the proposed investment, is taken into account while
SAN DUR MANGANESE & IRON ORES LTD. v. 277
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
evaluating the applicants. It is their grievance that the special A
reason mentioned in the recommendation is only to favour Jindal
and Kalyani. Even if it is so, according to them, the decision of
the State Government is violative of Section 11(4) of the Act which
permits only applications made pursuant to the Notification to
be taken into account and not applications made prior to the B
Notification. Both the learned senior counsel, relying on Rule 35,
pointed out that the recommendations made to justify preference
taking into account past investments by steel companies cannot
be sustained. In any event, according to them, in view of Section
2 of the Act, State Legislature is denuded of its legislative power c
to make any law with respect to the regulation of mines and
mineral development. Finally, it was pointed out that there is no
question of framing policy such as the Karnataka Mineral Policy
to give out mining leases independently of the MMDR Act and
the Rules. On the other hand, Mr. Harish N. Salve and Mr. D
Dushyant Dave, learned senior counsel appearing for Jindal and
Kalyani, by drawing our attention to the very same provisions and
the orders of the courts, submitted that the recommendations
made by the State Government is in terms of the provisions of
the Act and Rules and the Division Bench was right in affirming
E
the same.
13. It is useful to refer notification dated 15.03.2003 issued
by the Government of Karnataka which reads thus:
"GOVERNMENT OF KARNATAKA F
NO. Cl/16/MMM/2003
Government of Karnataka Secretariat
Ms. Building
Bangalore, Dated 15.03.2003 G
NOTIFICATION
It is hereby informed for the mining public that the area
noted in the annexure is available for regrant under rule 59
of Mineral Concession Rules, 1960.
H
278 SUPREME COURT REPORTS [2010) 11 S.C.R.
A The application for grant of mining lease shall be
received by the Director of Mines and Geology, No.49,
"Khanij Bhavan", D.Devaraj Urs Road, Bangalore-01, after
30 days from the date of publication of the notification in the
Official Gazette. If the day notified for receiving the
B application happens to be a Public Holiday or General
Holiday, applications will be received on the next working
day under amended Rules. The sketch of the area is
available for inspection at the office of the Director,
Department of Mines and Geology, Khanija Bhavan,
c D.Devaraj Urs Road, Bangalore-01 during working hours
on all working days.
The mining public should note that the availability of
the area published here in is subject to the clearance from
the Revenue Department for mining activities and
D compliance of the MM (D&R) Act, 1957 and the M.C.Rules
and all other relevant Acts and Rules by the applicants. In
case the area is found to consist of Forest Lands, the
clearance from the Forest Department under Section (2) of
the Forest (Conservation) Act, 1980 for utilizing the area for
E non-forest activities should be obtained by the applicants.
Interested persons are advised to inspect the area
and satisfy themselves about the availability of mineral
deposits (as the area is previously under held. MUPL block)
F and the present status of the land there is before making
application for mining lease.
BYORDERANDINTHENAMEOFTHE
GOVERNOR OF KARNATAKA
(A.B. SIDDHANTI)
G Under Secretary to Govt. (Mines),
Commerce and Industries Department."
14. After expiry of the cut-off date, as mentioned in the said
notification, hearing was conducted by the Chief Minister under
Rule 26A of the Rules. The order of the Chief Minister shows that
H as per the direction of the High Court in a writ petition filed by
SANDUR MANGANESE & IRON ORES LTD. v. 279
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
Ziaulla Sharieff, the State has to consider their applications in A
accordance with law along with other applications. It is the claim
of the State that as per the said decision, it was necessary to
consider the applications filed for grant of mining lease over the
area in question before the issue of Notification on 15.03.2003
along with applications received in response to the said B
Notification. Para 3 of the order of the Chief Minister shows that
21 applications were filed for grant of mining lease over the area
in question before the notification was issued and 90
applications were received in response to the notification. In all,
the Chief Minister has considered 111 applications for grant of c
mining lease. The order further shows that notice under Rule
26(1) of the Rules was issued to all the applicants to appear for
hearing on 12.10.2004 at 4.00 PM to make presentation for
sanction of mining lease in their favour. On 12.10.2004, the
hearing was adjourned. According to the State, applicants were
0
heard on different dates. Out of 111 applicants, 85 applicants
attended the hearing and 75 applicants gave their written
representations. On 16.10.2004, the hearing was again
adjourned, 72 applicants attended and 9 applicants submitted
their written representations. Again, the hearing was held on E
25.10.2004, 76 applicants attended and 27 a'pplicants submitted
their written submissions. On 04.11.2004, 16 applicants
attended the hearing and 7 applicants submitted their written
submissions.
15. The order of the Chief Minister further shows that out of F
111 applications, 55 are companies/firms and 30 are
individuals. Out of 111 applicants, 11 have given more than one
application in the name of their sister companies/partnership
firms etc. The proceeding further shows that all applications were
examined under Section 11 (5) of the Act with a view to provide G
an opportunity to all the applicants who have filed their
applications on subsequent days i.e. after 16.04.2003. The order
further shows that out of 30 individuals who have applied for
mining lease, only 3 applicants hold mining lease in the State
and the remaining 27 applicants do not hold any mining lease. H
280 SUPREME COURT REPORTS [2010] 11 S.C.R.
A Some of the individuals are local people and have some past
experience in mining. Some of them are qualified engineers.
Most of the applicants have indicated that they would be
exporting ore or would be supplying it to the local market. The
order proceeds that none of them have indicated any proposal
B for the value addition to the ore. The Chief Minister, after
considering them, do not merit any consideration for grant of
mining lease, rejected all those applications. It is brought to our
notice that no one from that category challenged the same in the
court of law.
c 16. After rejecting those applications, the impugned
proceeding shows that a total number of 55 companies/firms
have applied for mining lease and the details furnished by them
have been incorporated in a tabular form in para 9. In para 10 of
the order, it was stated that out of 55 companies/firms who have
D applied for mining lease, only 12 companies/firms were having
mining lease in the State. Some of the companies have already
established their units in the State and they have requested the
sanction of mining lease for using the ore for captive consumption
and for value addition to the ore. Some of the firms who are
E willing to invest huge amounts in mining industry have indicated
that they require the mines for exporting ore and for supplying it
to the local market. Some of the companies have already
established their units in Karnataka by investing huge amounts
. and they are depending upon local market for their raw material,
F that is, iron ore .. In para 11 of the order, it is stated that since the
request of such of the companies is for 'captive consumption'
and for 'value addition', they deserve consideration over others.
In para 12, the order refers those who established steel ' plants
in Karnataka. Finally, after quoting Rule 35 which provides for
G preferential rights for certain persons and by arriving at a
conclusion that "it is desirable to allot the mining areas to
applicants who have already established their plants in the State
by investing huge amounts", and by invoking Rule 35 of the MC
Rules, the Chief Minister recommended or in other words filled
H up dotted lines by mentioning Jindal and Kalyani.
SANDUR MANGANESE & IRON ORES LTD. v. 281
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
17. It is the grievance of the appellants, namely, Sandurand A
MSPL that the proceedings of the Chief Minister shows that the
State,Government was pre-determined to grant the lease in
favour of Jindal and Kalyani.
18. A perusal of the proceedings of the Chief Minister shows 8
that no clear reasons were given to show as to why Jindal and
Kalyani were preferred over other applicants. There is also no
plausible reason why the applications of the appellants herein
were not considered favourably. A summary of the applications
was prepared and at the end certain columns were left blank
which the Chief Minister filled by hand and then signed the C
proceedings.
19. The evaluation of all 111 applications has been done in
three successive stages in a manner not envisaged by Section
11. In the first stage of the process, the applications by individuals D
were discarded. In the second stage, those by companies as a
whole and in the third stage, only companies with existing
investment in steel plants out of which Jindal and Kalyani were
chosen without any special or adequate reason. In fact, no such
procedure of three stage consideration or differentiation E
between individuals and companies and those companies with
existing investments and those without existing investment is
envisaged in Section 11. As rightly pointed out by learned senior
counsel for the appellants, the proceedings of the Chief Minister,
at no level, consider the various guiding criteria mentioned in F
Section 11 (3) as mentioned below:
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;
H
282 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A d. the investment which the applicant proposes to make
in the mines and in the industry based on the
minerals;
e. such other matters as may be prescribed."
B 20. It is true that among the criteria mentioned, only one
criteria, namely, "proposed investment" is taken into account in
evaluating some applications. However, as mentioned above,
in the said proceedings, two irrelevant points were taken into
account, namely, (i) whether or not the applicant holds a mining
C lease in the State and (ii) the amount of their past investment in
steel plant. It is equally true that the proceedings recommended
in favour of Jindal and Kalyani was justified by the special
reasons specifically stated at the very end in terms of Section
11 (5) which is reproduced below:-
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
E m.ining lease, as the case may be, to an applicant whose
application was received later in preference to an
application whose application was received earlier:
Provided that in respect of minerals specified in the First
Schedule, prior approval of the Central Government shall
F be obtained before passing any order under this sub-
section."
A plain reading of the above provision makes it amply clear
that it would apply to favour a later applicant over an earlier
G applicant which is relevant only in the event that the main
provision of Section 11 (2) relating to preference of prior
applicants applies and not in the case of notification inviting
applications, whether it is under the first proviso to Section 11 (2)
or 11 (4) under the later/proviso, upon notification, by deeming
H fiction all applications are treated as having been received on
SANDUR MANGANESE & IRON ORES LTD. V; 283
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
the same date. A
21. Apart from the above infirmity, the proceedings of the
Chief Minister also violate Section 11 (4) of the Act which reads
thus:
"(4) Subject to the provisions of sub-section (1 ), where the B
State Government notifies in the Official Gazette an area
for grant of reconnaissance permit, prospecting licence or
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 C
simultaneously as if all such applications have been
received on the same day and the State Government, after
taking into consideration the matters specified in sub-
s~ction (3), may grant the reconnaissance permit,
prospecting licence or mining lease, as the case may be, D
to such one of the applicants as it may deem fit."
The above sub-section permits only the applications made
pursuant to the notification to be taken into acco1:1nt and not
applications made prior to the notification. The notification E
referred to in the first proviso to Section 11 (2) is intended only
to invite applications in respect of "virgin areas". In the case of
previously held areas covere'.' by present notification dated
15.03.2003, applications made prior to the notification cannot
be entertained because they are premature.
F
22. We have already adverted to Section 2 of the MMDR
Act, which is a parliamentary declaration, makes it clear that the
State Legislature is denuded of its legislative power to make any
law with respect to the regulation of mines and mineral
• development to the extent provided in the MMDR Act. (Vide G
State of Orissa vs. M.A. Tulloch & Co. (1964) 4 SCR 461). In
Baijnath Kedia vs. State of Bihar and Others, (1969) 3 SCC 838,
a Constitution Bench of this Court reiterated the above view.
Argument of the appellant in that case was that, apart from the
provisions of the 2nd proviso to Section 10 added to the Land H
284 SUPREME COURT REPORTS [2010] 11 S.C.R.
A Reforms Act, 1950 in 1964, by Act IV of 1965 and second sub-
rule added to Rule 20 of the Bihar Minor Mineral Concession
Rules, 1964, there is no power to modify the terms. It was further
contended that these provisions of law are said to be outside
the competence of the State Legislature and the Bihar
B Government. With regard to the State Legislature, it was
contended that the scheme of the relevant entries in the Union
and the State List is that to the extent to which regulation of mines
and mineral development is declared by Parliament by law to
be expedient in the public interest, the subject of legislation is
c withdrawn from the jurisdiction of the State Legislature and,
therefore, Act 67of1957 (MMDR Act) leaves no legislative field·
to the Bihar Legislature to enact Act 4 of 1955 amending the
Land Reforms Act. Answering those questions, the Constitution
bench has held thus:
D "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 control
should rest in Central Government. To what extent such a
E declaration can go is for Parliament to determine 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
F State after such declaration and trenching 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
G made to contradict it. There are also two decisions of this
Court reported in the Hingir Rampur Coal Co. Ltd. v. State
of Orissa, 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 Legislature. If the
H
SANDUR MANGANESE & IRON ORES LTD. v. 285
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
impugned legislation falls within the ambit of such scope it A
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
Central Government the regulation of mines and 8
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 outfrom the terms of that Act.
In this connection we may notice what was decided in the C
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 legislation. It was held
that the declaration was effective even if the rules
contemplated under the Act of 1948 had not been made. D
However, considering further whether a declaration made
by a Dominion Law could be regarded as a declaration
made by Parliament for the purpose of 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. E
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
lease granted under the Act of 1948. The State Legislature F
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
payment of fees due from July 1957 to March 1958 and the G
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
Parliament under Entry 54 and that Act covered the same
H ,
286 SUPREME COURT REPORTS [2010] 11 S.C.R.
A 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.
Where a superior legislature evinced an intention to cover
B 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 the
conflicting Acts but by the mere existence of two pieces of
legislation. As Section 18(1) covered the entire field, there
c
was no scope for the argument that till rules were framed
under that Section, room was available."
The Constitution Bench after considering Hingir Rampur
Coal Co. Ltd. vs. State ofOrissa, 1961 (2) SCR 537 and M.A.
D Tulloch (supra) held that in view of the two undermentioned
rulings of this Court and by enacting Section 15 of Act67of1957,
the Union of India has taken all the power to itself and authorized
the State Government to make ~ules for the regulation of leases.
By the declaration and the enactment of Section 15, the whole
E of the field relating to minor minerals came within the jurisdiction
of Parliament and no scope was left for the enactment of the
second proviso to Section 10 in the Land Reforms Act. The
enactment of the proviso was, therefore, without jurisdiction.
F 23. In State of West Bengal vs. Kesoram Industries Ltd. and
Others, (2004) 1o sec 201, after referring to earlier judgments
including M.A. Tulloch (supra) and Baijnath Kedio (supra), the
Constitution Bench held as under:
"95 ......... All that the Court has said is that the 1957
G enactment covers the field of legislation as to the regulation
of mines and the development of minerals. As Section 2
itself provides and indicates, the assumption of control in
public interest by the Central Government is on: (1) the
regulation of mines, (it) the development of minerals, and
H (iii) to the extent hereinafter provided. The scope and extent
SAN DUR MANGANESE & IRON ORES LTD. v. 287
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
.
of declaration cannot and could not have been enlarged by A
the Court nor has it been done. The effect is that no State
Legislature shall have power to enact any legislation
touching: (1) the regulation of mines, (ii) the development of
minerals, and (iii) to the extent provided by Act 67of1957 ....
" B
24. In the same way, the State is also denuded of its
executive power in regard to matters covered by the MMDR Act
and the Rules. [vide Bharat Coking Coal Ltd. vs. State of Bihar
& Ors., (1990) 4 sec 557].
c
25. In view of the specific parliamentary declaration as
discussed and explained by this Court in various decisions, there
is no question of the State having any power to frame a policy
de hors the MMDR Act and the Rules.
D
26. In State of Assam & Ors. vs. Om Prakash Mehta & Ors.,
(1973) 1 SCC 584, this Court in paragraph 12 held that the
MMDR Act, 1957 and the MC Ru.les, 1960 contain complete
code in respect of the grant and renewal of prospecting licences
as well as mining leases in lands belonging to Government as E
well as lands belonging to private persons.
27. Again this Court in Quarry Owners' Association vs. State
of Bihar & Ors., (2000) 8 SCC 655, held that both the Central
and the State Government act as mere delegates of Parliament
while exercising powers under the MMDR Act and the MC Rules. F
28. It is not open to the State Government to justify grant
based on criteria that are de hors to the MMDR Act and the MC
Rules. The exercise has to be done strictly in accordance with
the statutp_ry provisions and if there is any deviation, the same G
cannot be sustained. It is the normal rule of construction that when
a statute vests certain power in an authority to be exercised in a
particular manner then the said authority has to exercise it only
in the manner provided in the statute itself. This principle has
been reiterated in C./. T Mumbai vs. Anjum M.H. Ghaswa/a & H
288 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A Ors., (2002) 1 SCC 633 at 644, Captain Sube Singh & Ors. vs.
Lt. Governor of Delhi & Ors., (2004) 6 SCC 440 and State of
UP. vs. Singhara Singh & Ors., (1964) 4 SCR 485.
29. Mr. Harish N. Salve and Mr. Dushyant Dave, by drawing
our attention to the decision of this Court in TISCO vs. U 0.1. &
8
Anr., (1996) 9 SCC 709, submitted that inasmuch as this Court
had upheld the grants based on "captive consumption", there is
no flaw or error in the recommendation of the State Government
dated 06.12.2004. A perusal of the above decision clearly
shows that it concerned with Section 8(3) of the MMDR Act which
C requires consideration of the extremely general criterion of the
interests of mineral development before granting second
renewal of a mining lease. Unlike in Section 11.(3), no further
criteria was specified and it was in this background, this Court
upheld on the facts of that case that relevant material taken into
D account by the Committee set up by the Central Government
rightly included "captive consumption". In view of the factual
situation, the said decision can have no bearing on initial grants
of mining lease where the only permissible criteria are the
matters set out in Section 11 (3) of the MMDR Act.
E
Issue (b)
"Whether the respondent-Jindal's application dated 24.10.2002
made prior to the Notification dated 15.03.2003 is capable of
being entertained along with the applications made pursuant to
F the said notification."
30. The next vital issue that arises in this case is whether
Jindal's application dated 24.10.2002 made prior to the
Notification dated 15.03.2003 inviting applications for previously
G held area could be considered in view of Section 11 (4) of the
MMDR Act read with Rules 59 and 60 of the MC Rules. Before
considering the above aspect, it is relevant to note the stand
taken by Jindal that in 2001, one Ziaulla Sharieff filed a writ
petition being Writ Petition No 35915 of 2001 seeking a
H declaration that he was entitled to a mining lease in respect of
SAN DUR MANGANESE & IRON ORES LTD. v. 289
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.)
388 acres of land in Sandur Taluk, Bellary District. It was pointed A
out that in the said writ petition, MSPL was arrayed as
respondent No.3 and Sandur was arrayed as Respondent No.7.
Three sister concerns of Jindal were also arrayed as
respondents. During the pendency of the said writ petition, the
State Government issued a notification dated 15.03.2003 inviting B
applications from the general public for mineral concessions
over large areas of the State of Karnataka. It was further pointed
out that the area concerned in the said writ petition as also the
area concerned in the present appeals were included in the said
notification. By judgment and order dated 29.03.2004, the High c
Court disposed of Writ Petition No. 35915 of 2001 with the
following direction "in view of the subsequent notification issued
by the State Government dated 15.03.2003, inviting that the area
is available for grant, the State Government is now expected not
only to consider the applications pending before it but also the D
applications that may be filed pursuant to the above said
notification notwithstanding the earlier recommendation made
by the second respondent." Learned senior counsel appearing
for Jindal submitted that the State Government had acted on the
basis of the Ziau/la Sharieff's case and empowered the Director E
of Mines and Geology to hear applications that were filed prior
to the issuance of the notification dated 15.03.2003 and were
pending on the date of the said notification. Whether such
direction saves the State Government's decision in considering
the Jindal's application which was made well prior to the
notification dated 15.03.2003. F
31 . In order to determine whether it is Section 11 (4) or the
first proviso to Section 11 (2), it is relevant to understand the
intention of the legislature in enacting Section 11 of the MMDR
Act and Rules 59 and 60 of MC Rules as being part of single G
statutory scheme governing the grant of reconnaissance permits,
prospecting licences and mining leases. The amendments to
MMDR Act in 1999 which inserted and re-drafted Section 11 had
their origin in the Report of the Committee to Review the Existing
Laws and Procedure for Regulation and Development of H
290 SUPREME COURT REPORTS [2010] 11 S.C.R.
A Minerals set up by the Ministry of Mines, Government of India,
submitted in January, 1998. We are concerned about para
2.1.21 of the Report which reads as under:
" ... The concept of first-come, first-serve has become
B necessary in vieyv of the fact that the Act does not provide
for inviting applications through advertisement for grant of
PUML in respect of virgin areas. No doubt, there is provision
in Rule 59 of MCR for advertisement of an area earlier held
under PLIML with provision for relaxation." In this
background, the Committee recommended the introduction
c of the proviso to Section 11 (2) permitting calling for
applications by way of a notification. There is a distinction
between virgin areas and areas covered under Rule 59 and
Section 11 (2) ought to be interpreted to cover virgin areas
alone." ·
D
If we consider Section 11 with the aid of the said Report, it makes
it clear that Section 11 (1) provides preferential right to the holder
of reconnaissance permits or a prospecting licencee who has
identified mineral resources in the area allotted to him for grant
E of a mining lease, subject to certain conditions specified in the
proviso appended thereto. The over-riding character of the
priority given to the successful prospecting licencee or
reconnaissance permit-holder is clear from the fact that each of
the subsequent sub-sections in Section 11 is made subject to
F Section 11 (1 ).
32. It is also clear that the main provision in Section 11 (2)
gives preference to a prior applicant for grant of reconnaissance
permit, prospecting licence or mining lease over later applicants
where the State Government has not issued any notification. The
G analysis of the Report makes it clear that the main provision in
Section 11 (2) applies to "virgin areas". It further makes it clear
that to the extent that an area that is previously held or reserved
would require a notification for it to become available. The first
proviso to Section 11 (2) carves out an exception to the
H preferential right based on priority of applications in point of time
SANDUR MANGANESE & IRON ORES LTD. v. 291
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
referred to in the main provision. It makes it clear that where the A
State Government subsequently issues a notification inviting
applications for grant, the prior and subsequent applications to
the notification would be considered as if they were filed on the
same day and no priority in order of time would be given. The
second proviso requires the State Government to examine the B
matters set out in Section 11 (3) while considering the
applications for grant.
33. The Committee's Report, particularly, para 2.1.2Jwhich
we extracted in the earlier paras, makes it clear that this C
provision was inserted because the Act does not provide for
advertisement of virgin areas and the State Government was
perfectly within the rights to issue an advertisement inviting
applications even for virgin areas. In this regard, it is useful to
mention that this Court had suggested an almost identical
change in the un-amended Section 11 in Indian Metals and D
Ferro Alloys Ltd. vs. Union of India & Ors., 1992 Supp. 1 SCC
91 at page 127 para 35.
"35. Now, to turn to the contentions urged before us: Dr
Singhvi, who appeared for ORIND, vehemently contended E
that the rejection of the application of ORIND for a mining
lease was contrary to the statutory mandate in Section 11 (2);
that, subject only to the provision contained in Section 11 (1)
which had no application here, the earliest applicant was
entitled to have a preferential right for the grant of a lease; F
and that a consideration of the comparative merits of other
applicants can arise only in a case where applications have
been received on the same day. It is no doubt true that
Section 11 (2) of the Act read in isolation gives such an
impression which, in reality, is a misleading one. We think G
that the sooner such an impression is corrected by a
statutory amendment the better it would be for all concerned.
On a reading of Section 11 as a whole, one will realise that
the provisions of sub-section (4) completely override those
of sub-section (2). This sub-section preserves to the S.G.
H
292 SUPREME COURT REPORTS [201 O] 11 S.C.R.
A a right to grant a lease to an applicant out of turn subject to
two conditions: (a) recording of special reasons and (b)
previous approval of the C.G. It is manifest, therefore, that
the S.G. is not bound to dispose of applications only on a
"first come, first served" basis. It will be easily appreciated
B that this should indeed be so for the interests of national
mineral development clearly require in the case of major
minerals, that the mining lease should be given to that
applicant who can exploit it most efficiently. A grant of ML,
in order of time, will not achieve this result."
C Even under ordinary principles of statutory interpretation, the first
proviso to Section 11 (2)1embraces the field that is covered by
the main provision. [Vide Abdul Jabarvs. State of J&K., AIR 1957
SC 281 (para 8) and Ram Narain Sons vs. Asst. CST, 1955
(2) SCR 483 at 493].
D
Accordingly, we are of the view that the notification calling for
applications referred to in the first proviso to Section 11 (2)
applies only to virgin areas.
E 34. It is the claim of Jindal and Kalyani that the proviso to
Section 11 (2) of the Act sets out a plenary rule for consideration
of applications for mining leases where the State Government
has invited applications for mineral concessions by notification
in the official gazette and the applications pending on the date
of notification must be considered simultaneously with
F applications filed in response to the notification and within the
notification period. It is also their claim that since there is no
provision in the rules empowering the State Government to issue
notification inviting applications for mineral concessions apart
from Rule 59(1 }, it is asserted by Jindal and Kalyani that a
G notification inviting applications for mineral concessions in the
proviso to Section 11 (2) must necessarily relate only to a
notification under Rule 59(1) inviting applications for mineral
concessions in previously held or reserved lands. Therefore,
according to them, the proviso's stipulation that applications for
H mineral concessions pending on the date of the said notification
SAN DUR MANGANESE & IRON ORES LTD. v. 293
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
inviting applications must be considered, must necessarily apply A
to applications pending in receipt of previously held lands. It is
also contended that the proviso to Section 11 (2) and Rule 59(1)
use identical phraseology when referring to areas (available for
grant). It was pointed out that since this language is not present
in Section 11 (4), this suggests strongly that Rule 59(1 ), the s
proviso to Section 11 (2), Section 11 (3) and Rule 35 form a
composite code dealing with the consideration of applications
for mineral concessions over lands thrown open for grant by way
of notification under Rule 59(1) and that Section 11 (4) does not
apply to such applications. c
35. We have already held that Section 11 (3) specifies the
matter relevant for purposes of second proviso to Section 11 (2).
We also referred to the Committee's Report. In accordance with
the recommendation in the said Report, Section 11 (3)(d) was
added as part of the substitution of Section 11 in the year 1999. D
Sub-section (d) provides that "the investment which the applicant
proposes to make in the mines and in the industry based on
minerals" and it speaks about investment proposed to be made
and not past investments. Thus it confines the concept of"captive
consumption of minerals to proposed,investment and not past E
investments". Even the residuary clauses in Section 11 (3)(e) are
limited to "matters as may be prescribed", which would
necessarily mean matters prescribed by rules. This is fortified
by decision of this Court in BSNL Ltd. & Anr. vs. BPL Mobile
Cellular Ltd. & Ors., (2008) 13 SCC 597, para 45. F
36. We have already quoted sub-section (4) of Section 11
which contemplates a situation where a notification is issued
inviting applications for an area for grant. In contrast to the first
proviso to Section 11 (2), it provides that all applications received G
pursuant to a notification shall be considered simultaneously
without assigning any priority in point of time, and after taking
into account the matters specified in Section 11 (3). Section
11 (4 ), in effect, covers exactly the same field as the first and
second proviso to Section 11 (2) read along with Section 11 (3)
H
294 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A with one difference, i.e., unlike the first proviso to Section 11 (2),
it provides for consideration of only those applications that are
made pursuant to the notification and not those made prior to
the notification. Notification under Section 11 (4) is consistent with
Rule 59(1) read with Rule 60 insofar as applications received
B prior to the notification would not be entertained. The first proviso
to Section 11 (2) was being added to cover virgin areas, then
provided for the addition of Section 11 (4), in order to ensure that
the notification referred to in Rule 59(1) together with Rule 60
would not render ultra viresthe MMDR Act. In view of the same,
c the contention on behalf of Jindal and Kalyani that the first proviso
of Section 11 (2) would cover notifications under Rule 59(1) is
unacceptable because this would render Section 11 (4) otiose
and redundant. In J.K. Cotton Spinning & Weaving Mills co. Ltd.
vs. State of UP., AIR 1961 SC 1170 and O.P. Sing/a & Anr. vs.
D Union of India & Ors. (1984) 4 SCC 450, this Court held that a
provision in a statute must not be so interpreted as to reduce
another provision to a "useless lumber" or a "dead letter". lfwe
accept the said position, it would result in anomalous
consequences of rendering Rule 60 ultr;; vires the first proviso
E to Section 11 (2). In fact, this has been highlighted by the Central
Government in their affidavit filed before the High Court.
37. 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 provision of
F 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
applicant for special reasons to be recorded in writing. It also
G 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 together as having been
received on the same date. In view of our interpretation, the
H proceedings of the Chief Minister and the recommendation
SAN DUR MANGANESE & IRON ORES LTD. v. 295
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
dated 06.12.2004 are contrary to the Scheme of the MMDR Act A
as they were based on Section 11 (5) which had no application
at all to applications made pursuant to the notification dated
15.03.2003.
38. We have already extracted Rules 59 and 60 and analysis
B
of those rules confirms the interpretation of Section 11 above
and the conclusion that it is Section 11 (4) which would apply to
a Notification issued under Rule 59(1 ). Ru!e 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 has C
been reserJed for exploitation by the State Government or under
Section 17A of the Act, shall not be available for grant 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 D
out in Rule 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 Rule 59(1 )(i)(ii) has not
expired, shall be deemed to be premature and shall not be E
entertained. 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 to the Notification,
as required by the first proviso to Section 11 (2), is clearly F
inconsistent with Rules 59 & 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 under Section 11(4) in the case of categories
of areas covered by Rule 59(1 ). In those circumstances, we are G
unable to accept the argument of lec:Hned senior counsel for
Jindal and Kalyani with reference to those provisions.
39. The Division Bench has clearly erred in concluding that
applications made prior to the notification under Rule 59(1) which
H
296 SUPREME COURT REPORTS [2010] 11 S.C.R.
A are premature and cannot be entertained under Rule 60 would
revive upon issuance of the Notification. This conclusion goes
against basic principles of statutory interpretation. We have
already pointed out the effect of Rule 60 which is couched in
negative language that is mandatory in nature. Further, if that was
B the intention of the Legislature, there was no reason for the ,.
Legislature to take pains to state in Rule 60(b) that an application
made during the black-out period of 30 days specified in the
Notification also would be premature and could not be
entertained. Accordingly, the interpretation placed by the
c Division Bench on Rule 60 would result in reading in a proviso
at the end of Rule 60 to the effect that once the 30-days black··
out period specified in the Notification contemplated by Rule
59(1 )(ii) is over, premature applications would revive. After taking
such pains to make it clear that the applications would not be
entertained until the end of the 30-days,period, surely the
0
Legislature itself would have inserted such a proviso at the end
of Rule 60 if that were its intention.
40. In Amritla/ Nathubhai Shah & Ors. vs. Union
Government of India & Anr., (1976) 4 SCC 108 (para 7), this
E Court observed as follows:
"..... 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,
F under Rule 59, for making the area 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 of 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 by the State Government for the
G
purpose stated in its notification, 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 premature. The Central Government was thus
H
SANDUR MANGANESE & IRON ORES LTD. v. 297
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
justified in rejecting the revision applications which were A
filed against the orders of rejection passed by the State
Government."
41. Even thereafter, this Court has consistently taken the
position that applications made prior to a Notification cannot be
B
entertained. In our view, the purpose of Rule 59(1), which is to
ensure that mining lease areas are not given by State
Governments to favour persons of their 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 C
Court in State of Tamil Nadu vs. M.S. Hindstone & Ors., (1981)
2 sec 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 D
has been reiterated in State of UP. vs. Babu Ram Upadhya,
(1961) 2 SCR 679 at 701 and Gujara·t Pradesh Panchayat
Parishad & Ors. vs. State of Gujarat & Ors., (2007) 7 SCC 718.
The Division Bench did not advert to these aspects as analyzed
by the learned single Judge. On the other hand, the Division E
Bench accepted Jindal's contention that if Rule 60 is interpreted
to render applications made prior to Rule 59(1) Notification non
est, it would make Rule 59(2) unworkable because persons
normally apply for mining lease areas along with an application
for relaxation under Rule 59(2). This conclusion is clearly F
misplaced. It is only the request under Rule 59(2) of any person
for relaxation in respect of an area that is considered and not
the application for grant. Only after the relaxation under Rule 59(2)
by the Central Government of the requirement of Notification
under Rule 59(1) that applications could be considered for grant G
of mining lease. The decision relied on by the learned senior
counsel for Jindal in TISCO (supra), (paras 42, 44 and 47), that
applications made by certain parties were considered after a
relaxation under Rule 59(2) cannot be taken as laying down any
law. It is also seen that consideration of the applications made H
298 SUPREME COURT REPORTS [2010] 11 S.C.R.
A by various parties in the TISCO's case was pursuant to the
directions issued by this Court and not independently by the State
Government under Section 11 of the Act. As a matter of fact, the
issue whether premature applications revived for consideration
after the relaxation under Rule 59(2) was neither expressly raised
B nor decided in the TISCO's case. In the light of the above
discussion about Section 11 (2) alongwith Rules 59 and 60, it
should be interpreted that Section 11 (2) is to cover virgin areas
alone. In view of the same, the Jindal's application made prior
to the Notification cannot be entertained along with the
c applications made pursuant to the Notification dated 15.03.2003
because it is Section 11 (4) which covers the said Notification
along with Rule 59(1) and not the first proviso to Section 1 ·1 (2)
as contended by the respondents.
Issue (c)
D
Whether the order of the High Court of Karnataka in Ziaul/a
Sharieff's (supra) permit the consideration of the Jindal's
application dated 24.10.2002 which was made prior to the
notification dated 15.03.2003.
E
42. We have already discussed this issue. In addition to the
same, perusal of the order of the High Court in Writ Petition No.
35915 of 2001 shows that the State Government was directed
to consider only the application of the MSPL and the applications
filed by the impleading applicants and others pursuant to the
F Notification dated 15.03.2003 in accordance with law and in
terms of the provisions of the MMDR Act and MC Rules. In other
words, the High Court did not issue any direction to consider all
applications made prior to the notification. To put it clear, there
was no mandamus from the High Court to consider prior
G applications. The word "others" qualify the phrase "pursuant to"
and not the class of applicants who had applied even prior to
the "Held Area Notification" dated 15.03.2003. As a matter of
fact, the High Court had merely directed the State Government
to consider the applications in accordance with the provisions
H of the MMDR Act and MC Rules. Even otherwise, the said order
SAN DUR MANGANESE & IRON ORES LTD. v. 299
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
was passed without going into the specific provisions in the Act A
or Rules. Further, the order does not deal with the interpretation
of Section 11 or Rules 59 and 60. Hence, the order of the High
Court of Karnataka in Ziaul/a Sharieff's case does not permit
the consideration of Jindal's application dated 24.10.2002 which
was made prior to the notification dated 15.03.2003. B
Issue (d):
Whether Rule 35 of the MC Rules justify the
recommendation of the State Government and the
proceedings of the Chief Minister in favour of the C
Respondents - Jindal & Kalyani?
"Rule 35. Preferential rights of certain persons - Where
two or more persons have applied for a reconnaissance
permit or a prospecting licence or a mining lease in respect 0
of the same land, the State Government shall, for the
purpose of sub-section (2) of section 11, consider besides
the matters mentioned in clauses (a) to (d) of sub-section
(3) of section 11, the end use of the mineral by the applicant.
"
E
We have already adverted to the proceedings of the Chief
Minister which heavily relied on Rule 35 to justify the
recommendation in favour of the respondents - Jindal and
Kalyani on the premise that it is intended to give preference to
those who have made existing investments in industries based F
on iron ore and both of them qualify on this consideration. From
a plain reading of Rule 35, it is clear that the rule permits the State
Government to differentiate between the "end use" of the
minerals for the purpose of sub-section (2) of Section 11 in
addition to the matters in Section 11 (3). In the case on hand, all G
the parties, namely, MSPL, Sandur, Jindal and Kalyani
expressed their intention to use iron ore from the mines for
producing steel and, therefore, the same "erid use" requirement
is satisfied.
H
300 SUPREME COURT REPORTS [201 O] 11 S.C.R.
A 43. Rule 35, at best, permits the State Government to
differentiate between different "end uses", for example, the use
of iron ore to produce sponge iron instead of steel, or the use of
gold in jewellery as compared to medicines. Further, Rule 35
does not differentiate between "proposed" and "existing" end
B use. Therefore, it could have enabled the State Government to
take into account the claim of the respondents - Jindal and
Kalyani, whose past investments would not have qualified on the
"proposed" investment criterion under Section 11 (3)(d), in
addition to MSPL and Sandur. This could have been a basis to
c exclude those with proposed investments in steel plants from
consideration.
44. It is also relevant to point out that Rule 35 specifies one
additional factor apart from the factors set out in Section 11 (3).
The plain language of Rule 35 requires its application only in .·
D cases covered by Section 11 (2) and not by Section 11 (4).
Therefore, to the extent that it is Section 11 (4) that covers
Notification. under Rule 59(1) and not Section 11 (2), in this way
also, the State Government committed an error in relying on Rule
35 to exclude the appellants, i.e., MSPL and Sandur. To justify
E the recommendation in favour of the respondents-Jindal and
Kalyani, in the proceedings of the Chief Minister, State heavily
relied on Rule 35 on the premise that it is intended to give
preference to those who have made existing investments in
industries based on iron ore and that the respondents - Jindal
F and Kalyani, qualify on this consideration. However, as discussed
above, Rule 35 only permits the State Government to take
additional factor of the "end use" of the minerals and not the
existing investments made by the applicants. Moreover, relying
on the existing investments made, the respondents also does
G not satisfy the requireme~ under Section 11 (3)(d) which talks
solely about proposed investments to be made and not the
existing ones.
Issue (e):
H Whether the criterion of captive consumption referred to
SANDUR MANGANESE & IRON ORES LTD. v. 301
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
in the TISCO's case has no application to the present case A
because it is not one of the factors referred to in Section
11 (3) or even in Rule 35.
45. The criterion of captive consumption referred to in
T/SCO's case (supra) does not have any application in this case, B
which we will refer in the later part of this paragraph. Section
11 (4) and even the second proviso to Section 11 (2) provide that
the State Government may grant, inter alia, a mining lease after
taking into consideration the matters specified in Section 11 (3).
Section 11 (3){d) specifies "the investment which the applicant C
proposes to make in the mines and in the industry based on t_he
minerals" as one of such matters and on a plain interpretation, it
is clear that only the proposed investment is a relevant factor. If
the Legislature had intended that it should include past
investments also, the use of the word "proposed" is superfluous,
which could never be the case. Learned senior counsel D
appearing for the respondents have not pointed out any other
provision in the MMDR Act or the MC Rules permitting grant of
mining lease based on past commitments or for captive
purposes in existing industries.
E
46. As observed in the earlier paragraphs, the strong
reliance placed by the respondent-Jindal on the decision of this
Court in TISCO's case (supra) (Paras 9, 15,20,25,27,34,54,56
& 57) is misplaced. This case concerned solely on the
interpretation of Section 8(3) of the MMDR Act in the context of F
a second renewal of a mining lease in favour of TISCO, and not
a fresh grant. It is, in this context the phrase "interest on mineral
development" in Section 8(3) was interpreted to include captive
requirements. On the other hand, the case of fresh grant is
covered by Section 11 of the MMDR Act. Paragraph 54 of the G
T/SCO's case (supra) makes it clear that the case concerned is
chromite whose known reserves were not abundant, whereas iron
ore is in abundance. Even otherwise,. this judgment is of no
assistance even on Rule 59(1) of the MC Rules since it was a
case of relaxation by the Central Government under Rule 59(2),
H
302 SUPREME COURT REPORTS [2010] 11 S.C.R.
A as is clear from paragraph 15 of the judgment.
4 7) It is useful to mention that subsequent to the decision in
TISCO (supra), this Court in Indian Charge Chrome Ltd. & Anr.
vs. Union of India & Ors., (2006) 12 SCC 331 (Paras 20 & 26)
held that considerations of captive mining cannot be the
8
controlling factor for grant of lease.
Issue (f}:
Whether factors such as past commitments made by the
c State Government to applicants who have already set up
steel plants is not a relevant matter for consideration for
grant of lease.
48. As discussed earlier, the State Government is denuded
of all legislative and executive power under Entry 23 of List-II read
0 with Article 162 after passing of the MMDR Act which are as
under:-
"Entry 23, List II: Regulation of mines and mineral
development subject to the provisions of List I with respect
E to regulation and development under the control of the
Union."
"Article 162. Extent of executive power of State.-
Subject to the provisions of this Constitution, the executive
power of a State shall extend to the matters with respect to
F
which the Legislature of the State has power to make laws.
Provided that in any matter with respect to which the
Legislature of a State and Parliament have power to make
laws, the executive power of the State shall be subject to,
G and limited by, the executive power expressly conferred by
this Constitution or by any law made by Parliament upon the
Union or authorities thereof."
It is clear that the State Government is purely a delegate of
H Parliament and a statutory functionary, for the purposes of
SANDUR MANGANESE & IRON ORES LTD. v. 303
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
Section 11 (3) of the Act, hence it cannot act in a manner that is A
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 within the purview of the Union Government
and not the State Government. As a matter of fact, the s
respondents have not been able to point out any other provision
in the MMDR Act or MC Rules permitting grant of mining lease
based on past commitments. As rightly pointed out, the State
Government has no authority under the MMDR Act to make
commitments to any person that it will, in future, grant a mining c
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 proceed to notify a particular area.
Further, having notified the area, the State Government certainly
0
could not thereafter to honour an alleged commitment by ousting
other applicants even if they are more deserving on the merit
criteria as provided in Section 11 (3).
49. In the case of State of Assam & Ors. vs. Om Prakash
Mehta & Ors., AIR 1973 SC 678, this Court observed that the E
MMDR Act and MC Rules contain the complete code in respect
of the grant and renewal of prospecting licences as well as
mining leases in lands belonging to Government. In Quarry
Owners Association (supra), this Court again reaffirmed the
notion that both the Central as well as the State Government act F
as a mere delegates of Parliament while exercising the powers
under the Act and Rules. [Vide M.A. Tulloch (supra), Baijnath
Kedio (supra), Kesoram's case (supra), and Bharat Cooking
Coal Ltd. (supra)]. From this, it becomes amply clear that the
State Government has divested of legislative and executive G
powers with respect to mines and minerals development. In
addition to the same, Anjum M.H. Gaswala (supra), Captain
Sube Singh (supra), Singhara Singh's case (supra), this Court
repeatedly held that the field of granting mining leases is covered
by express statute and rules and the grants must be made in H
304 SUPREME COURT REPORTS [2010] 11 S.C.R.
A accordance with the provisions of the Act and Rules and no other
consideration. From a perusal of the above settled legal position,
it becomes clear that the State Government cannot grant mining
leases keeping in mind any considerations apart from the ones
mentioned in the MMDR Act and MC Rules. In those
B circumstances, no extraneous considerations such as past
commitments made by the State Government to Jindal and
Kalyani who have already set up steel plants can be entertained
by the State Government while granting mining leases and must
abide by the Act and Rules.
C Issue (g):
Whether the recommendation in favour of Jindal and
Kalyani saved by operation of law of equity?
0 50. The Law of Equity cannot save the recommendation in
favour of Jindal and Kalyani because it is a well settled principle
that equity stands excluded when a matter is governed by statute.
This principle was clearly stated by this Court in the cases of
Kedar Lal vs. Hari Lal Sea, (1952) SCR 179 at 186 and Raja
E Ram vs. Aba Maruti Mali (1962) Supp. 1 SCR 739 at 745. It is
clear that where the field is covered expressly by Section 11 of
the MMDR Act, equitable considerations cannot be taken into
account to assess Jindal and Kalyani, when the
recommendation in their favour is in violation of statute. It was
pointed out that Kalyani does not have a commitment from the
F State Government regarding its iron ore needs. In the
proceedings of the State Government, there is only a statement
that it may apply for a lease. No doubt, Jindal has emphasized
that it has already set up its steel plant based on the
commitments made by the State Government to grant a mining
G lease and it is in need of iron ore for these steel plants. As
observed earlier, commitments made by the State Government
cannot be a relevant factor for grant of lease in the teeth of the
consideration set out in Section 11 (3). If that was to be the sole
criterion, the State Government ought not to have notified the
H area vide 'Held Area Notification' dated 15.03.2003.
. SANDUR MANGANESE & IRON ORES LTD. v. 305
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
51. It was also pointed out that Jindal has been mining a A
lease area of 85.50 hectares of Mysore Minerals Limited, a
Public Sector Undertaking through a joint venture in terms of the
commitment made by the State Government. In addition, the
State Government has made a recommendation for grant of
mining lease in favour of Jindal and its sister concerns in the B
following areas:
(i) 188.128 hectares in favour of M/s JSW Steel Limited
in Donimalai Range, Sandur Taluk, Bellary District.
(ii) 181.70 hectares in favour of M/s. Vijaynagara C
Minerals Pvt. Ltd. In Donimalai Range, SandurTaluk,
Bellary District.
(iii) 184.14 hectares in favour of M/s. South We!$t Mining
Ltd. In Donimalai Range, Sandur Taluk, Bellary D
District.
(iv) 200.73 hectares in favour of Mis JVSL in
Kumaraswamy range of Sandur Taluk, Bellary
District, which si the subject matter of the present
SLP. E
As a matter of fact, MSPL had filed an affidavit in this regard
before the Division Bench. It is not clear whether Jindal has
specifically denied the specific grants. By drawing our attention
to certain factual details, it was contended that Jindal has so F
much iron ore and it actually exported iron ore for which reliance
was made to its annual reports during the years 2002-03 to 2005-
06. On the other hand, it is the claim of the MSPL that in
accordance with Section 11 (3)(d) it had proposed to set up a
steel plant for which it required iron ore. It was also brought to G
our notice that it had received permission from the State
Government in this regard. With reference to the allegation that
MSPL has a mining lease over an area of 722.94 hectares, it
was pointed out that in actua! it has a lease over an area of 347 .22
hectares only. On 05.00.2009, MSPL filed an affidavit before the H
306 SUPREME COURT REPORTS [2010] 11 S.C.R.
A Division Bench stating that it holds only a single mining lease
granted over five decades ago and the major proportion of which
has been afforestated. It is also their grievance that the iron ore
reserves in this lease have almost been exhausted over a period
of 58 years, since 1952. The remaining iron ore cannot support
s a steel plant of the size that is being set up by MSPL. Sinct:! the
entire field of granting mining lease is covered by MMDR Act
and MC Rules, the State Government cannot use any
consideration apart from the ones mentioned in the Act and Rules.
C Issue (h):
About the impugned judgments of the single Judge and
Division Bench:
52. In view of our conclusion, the Division Bench has erred
D in concluding that the Jindal's application made prior to the
Notification can be entertained along with the applications made
pursuant to the said Notification because it is not Section 11 (4)
which covers the said Notification under Rule 59(1) but the first
proviso to Section 11 (2). As a matter of fact, the Division Bench
E did not even mention Section 11 (4) in its reasoning apart from
stray references even though the conclusion of the learned single
Judge hinged on how Section 11 (4) would be rendered otiose
and redundant if the first proviso to Section 11 (2) was taken as
governing the consideration of applications under a Notification
pursuant to Rule 59(1 ).
F
53. The Division Bench has also faulted in arriving at the
conclusion that the applications made prior to Notification under
Rule 59(1) which are premature and cannot be entertained under
Rule 60 would revive upon issuance of the Notification which is
G clearly not the case. As pointed out earlier, had that been the
intention of the Legislature, there was no reason for the
Legislature to take pains under Rule 60(b) that an application
made during the period of 30 days specified in the Notification
also would be premature and could not be entertained. If the
H decision of the Division Bench is taken to its logical conclusion,
SANDUR MANGANESE & IRON ORES LTD. v. 307
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
then it would result in reading in a proviso at the end of Rule 60 A
to the effect that once the 30 days' period specified in the
Notification contemplated by Rule 59(1) sub-clause (ii) is over,
premature applications would revive. After taking such pains to
make it clear that the application would not be entertained until
the end of 30 days' period, surely the Legislature itself would not B
have inserted such proviso in Rule6Qifthatwere its intention. If
such premature applications are allowed to be entertained, it
would result in the State Government giving out mining leases
to favoured persons without notice to the general public.
54. The Division Bench has also accepted Jindal's C
contention that if Rule 60 is interpreted to render applications
made prior to Rule 59(1) Notification non est, in that event, it
would make Rule 59(2) unworkable because persons will
normally apply mining lease areas along with an application for
relaxation under Rule 59(2). In view of our earlier reasons, this D
conclusion is clearly misplaced. It is ~mly the request under Rule
59(2) for relaxation in respect of an area that is considered and
not the application for grant. It is only after the relaxation under
Rule 59(2) by the Central Government of the requirement of the
Notification under Rule 59(1) that the applications could be E
considered for grant of mining lease.
55. Though the learned single Judge in his order dated
07.08.2008 quashed the communication/recommendation of the
State Government dated 06.12.2004 proposing to grant mining F
lease to Jindal and Kalyani, however, the learned single Judge
traveled much beyond the reliefs sought for in the writ petition
and quashed the entire Notification No. Cl.16:MMM.2003 dated
15.03.2003. In our view, while approving earlier part of his order
and quashing the communication/recommendation of the State G
Government dated 06.12.2004, the other observations/
directions are not warranted in the light of the provisions of the
Act and the Rules. The said observations/directions are deleted.
H
308 SUPREME COURT REPORTS (2010] 11 S.C.R.
A Issue (i):
Whether it is advisable to remit it to the Central
Government:
56. Learned senior counsel appearing for Jindal and Kalyani
B requested that inasmuch as the Central Government has already
given its approval under Section 5 of the MMDR Act in their
favour during the pendency of the writ petition, if this Court feels
that fresh decision is to be arrived, the same may be remitted to
the Central Government. In the earlier part of our judgment, we
C have pointed out that the Central Government considers only the
materials forwarded by the State Government along with its
recommendation. As rightly pointed out, ifthe recommendation
of the State Government cannot be upheld in law, all
consequential orders including the subsequent approval by the
D Central Government are also liable to be quashed. It is useful to
refer Barnard vs. National Dock Labour Board (1953) 1 All E.R.
1113 at 1120 para 1, McFoy vs. United Africa Co. (1961) All
E.R. 1169, Pavani Sridhara Rao vs. Govt. of A.P & Ors. (1996)
8 SCC 298 {para 5) and State of Kera/a vs. Puthenkavu N. S.S.
E Karayogam & Anr., (2001) 10 SCC 191 (para 9). If the very
same recommendation of the State Government is sent back to
the Central Government on the administrative side in its role as
an approving authority under Section 5( 1) without setting aside
the impugned judgment, it is more likely that the Central
F Government would simply follow its previous order. In that event,
the Central Government would be influenced by the judgment
passed by the Division Bench upholding the grant made in favour
of Jindal and Kalyani. Such an exercise would be in the nature
of post-decisional hearing which would be impermissible. [Vide
G H.L. Trehan & Ors. vs. Union of India & Ors., (1989) 1SCC764
(paras 12 & 13) K. /. Shephard & Ors. vs. Union of India & Ors.,
(1987) 4 SCC 431 (para 16) and Shekhar Ghosh vs. Union of
India & Anr., (2007) 1 SCC 331]. It is also brought to our notice
that as on date the Central Government hears revision petitions
H through an Executive Officer and without participation of a
SAN DUR MANGANESE & IRON ORES LTD. v. 309
STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]
Judicial Member. It is also pointed out that the exact procedure A
of the revisional Tribunal has kept changing over the last few
months. It is clear that it would not be an independent and
efficacious alternative forum in terms of the guidelines laid down
by the Constitution Bench in Union of India vs. R. Gandhi,
President, Madras Bar Association, JT 2010 (5) SC 553. As B
observed by three Judge Bench of this Court in Indian Charge
Chrome Ltd. (supra), when there was no valid recommendation
by the State Government for the grant of lease, there cannot be
any valid approval of the Central Government relying on the
defective recommendation. We have already concluded that the c
recommendation of the State Government dated 06.12.2004 is
not valid with reference to the provisions of MMDR Act and the
Rules, hence the invalid recommendation cannot be looked into
by the Central Government. Further, proviso to Section 5(1) itself
provides only for the Central Government either to grant or reject D
its approval to the State Government's recommendation in the
case of mining lease for a mineral such as iron ore in the First
Schedule. In our view, such consideration on the administrative
side does not involve consideration of all the applicants based
on their mining lease applications and after giving an opportunity
of hearing. Inasmuch as the Central Government does not have E
all relevant materials before it, it may not be in a position to
substitute itself for the State GovE' ··nment and, if not, it would be
proper, in fact, it would be inconsistent with the provisions of the
MMDR Act and the Rules to frame the issue on the administrative
side of the Central Government. Even otherwise, inasmuch as F
we have heard the matter at length and we satisfy that there is a
flaw in the recommendation of the State Government which
requires reconsideration, we reject the request for remitting the
matter to the Central Government for its decision.
G
Conclusion:
57. In the light of the above discussion, the impugned order
of the Division Bench of the High Court dated 05.06.2009 in Writ
Appeal No. 5084 of 2008 and allied matters as well as the
H
310 SUPREME COURT REPORTS [2010] 11 S.C.R.
A decision of the State Government dated 26/27.02.2002 and the
subsequent decision of the Central Government dated
29.07.2003 are quashed. We direct the State Government to
consider all applications afresh in light of our interpretation of
Section 11 of the Act and Rules 35, 59 and 60 of MC Rules and
B make a recommendation to the Central Government within a
period of four months from the date of receipt of the copy of this
judgment. It is made clear that we have not expressed anything
on the eligibility or merits of any of the parties before us and our
conclusion as to the decision of the State Government is based
c on the interpretation of the statutory provisions mentioned above
for which we adverted to certain factual details of the parties. The
State Government is free to consider the applications and take
a decision one way or other in accordance with law, as-discussed
above, within the time scheduled.
D 58. All the appeals are allowed to the extent mentioned
above. No costs.
N.J. Appeals partly allowed.
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