STATE OF ORISSA & ORS.versusM/S MESCO STEELS LTD. & ANR.

                          [2013] 2 S.C.R. 245


                     STATE OF ORISSA & ORS.                             A
                                    v.
                 M/S MESCO STEELS LTD. & ANR.
                   (Civil Appeal No. 2206 of 2013)
                            MARCH 6, 2013
                                                                        B
          [T.S. THAKUR AND GYAN SUDHA MISRA, JJ.]

         Constitution of India, 1950:

          Art. 226 - Writ petition - Challenging intra-departmental     c
     communication proposing to consider re-a/location of lease
     area for mining iron ore - Held: High Court was in error in
     proceeding on an assumption that a final decision had been
     taken and in quashing what was no more than an inter-
     departmental communication constituting at best a step in the      0
     process of taking a final decision by the Government - The
     writ petition in that view was pre-mature and ought to have
     been disposed of as such - Mines and minerals - Iron ore.

           Art. 226 - Writ petition - Order by High Court to maintain
     status quo - Issuance of show cause notice by government           E
     - Held: Issue of show cause notice did not interfere with status
)    quo - Once the show cause notice was issued, High Court
     could have directed the respondent-company to respond to
     the same and disposed of the writ petition reserving liberty to
     it to take recourse to appropriate remedy - Since the show         F
     cause notice is not without jurisdiction, Government to
     consider the reply that may be submitted by respondent and
     pass a reasoned order on the subject.

          In response to the advertisement inviting                     G
    • applications for grant of prospecting licenses and mining
      leases for iron ore in the notified area, the respondent-
      company and others submitted applications. It was
      required that the lessee would set up two steel plants and
                                  245                                   H
   246.     SUPREME COURT REPORTS            (2013] 2 S.C.R


A would utilize the entire iron ore extracted from the lease
  area for meeting the captive requirement of such steel
  plants and no commercial tracking of the mining material
  would be carried out by it. Ultimately, by letter dated
  17.3.2000, the State Government sanctioned the grant of
B lease in favour of the respondent-company. However,
  when it was pointed out that some area in the proposed
  lease in favour of the respondent-company was
  overlapping with the area recommended for allotment to
  the Orissa Mining Corporation Ltd. and some area came
c under forest land attracting the Provisions of Forest
  Conservation Act, 1980, the Director of Mining, by letter
  dated 19.9.2006 recommended re-allocation of resources
  based on the requirement of iron ore for the existing steel
  plant set up by the respondent-company. It was further
  recommended that the respondent-company should not
0
  be permitted to carry on any trading activity in iron ore
  removed from the area to be allocated in its favour. This
  intra departmental communication was challenged by the
  respondent-company in a writ petition before the High
E Court, which, by order dated 1.2.2007, directed
  maintenance of status quo. However, the State
  Government issued a notice dated 6.2.2007 to the
  respondent-co·mpany to show cause as to why the
  overlapping area of 469.25 hectares of State PSU and
  921.258 hectares granted in excess of the captive
F requirement of the respondent-company be not deducted
  from total mining lease area of 1519.980 hectares. The
  High Court ignored the show cause notice, quashed the
  letter dated 19.9.2006, and directed the State Government
  to execute a formal mining lease in favour of the
G respondent-company.

      In the instant appeal filed by the State Government,
  the questions for consideration before the High Court
  were: (1) Whether the writ petition filed by the.
H respondent-company was premature, the same having
      STATE OF ORISSA & ORS. v. MESCO STEELS LTD. 247
                        &ANR.
     . been filed against an inter-departmental communication          A
       that did not finally determine any right or obligation of the
       parties?; (2) Whether the show cause notice could be
       ignored by the High Court simply because it had been
       issued in violation of the interim order passed by it
       requiring the parties to maintain status quo?; and              B
       (3)Whether the show cause notice was without
       jurisdiction and could, therefore, be quashed?·
          Allowing the appeal, the Court

           HELD:                                                       c
      Question No.1
           1. It is obvious from a conjoint reading of letter dated
       12.1.2006 and communication dated 19.9.2006 sent by the
       Director of Mines in response thereto that a final decision D
       on the subject had yet to be taken by the Government. It
       is only after the Government provisionally decided to
     . resume the area in part or full that a show cause notice
       could have been issued. To put the matter beyond any
       pale of controversy, an unequivocal statement has been E
      made at the bar on behalf of the State Government that
,)    no final decision regarding resumption of any part of the
      lease area has been taken by the State Government so
      far and all that had transpired till date must necessarily
      be taken as provisional. Such being the case, the High F
      Court was in error in proceeding on an assumption that
      a final decision had been taken and in quashing what
      was no more than an inter-departmental communication
      constituting at best a step in the process of taking a final
      decision by the Government. The writ petition in that view G
      was pre-mature and ought to have been disposed of as
     such. [para 15) [258-8, E-H, 259-A]

     Question No.2

          2. It is true that the High Court had by an interlocutory    H
     248      SUPREME COURT REPORTS           [2013) 2 S.C.R.


  A order directed the parties to maintain status quo, but the
    issue of show cause notice did not interfere with the
    status quo. It simply enabled the respondent-company to
    respond to the proposed action. However, once the show
    cause notice was issued, the High Court could have
  B directed the respondent-company to respond to the
    same and disposed of the writ petition reserving liberty
    to it to take recourse to such remedy as may have been
    considered suitable by it depending upon the final order
    that the Government passed on the said notice. The
  c respondent-company had not assailed the validity of the
    show cause notice on the ground of jurisdiction or
    otherwise. The High Court could not simply ignore the
    notice even if it was issued in breach of the order passed
    by it. The High Court could have taken the show cause
    notice as a reason to relegate the parties to a procedure
  0
    which was just and fair and in which the respondent
1    could urge all its contentions whether on facts or in law.
    [para 16] [259-8-E, F-H]

     Question No.3
 E
        3. So long as the show cause notice is not without
   jurisdiction as indeed it does not appear to be so, the
   question whether the grounds taken in the same provide
   a good basis for proposed action can be left open for the
 F Government to decide. The Government would carefully
   consider the reply which the respondent may submit to
   the said show cause notice and pass a reasoned order
   on the subject. [para 18] [260-D-E, G]
        T.N. Godavarman Thirumulkpad v. Union of India &
                                     =
 G Ors. 1996 (9) Suppl. SCR 982 (1997) 2 SCC 267 - cited.
                         Case Law Reference:
           1996 (9) Suppl. SCR 982        cited      para 12

 H
 STATE OF ORISSA & ORS. v. MESCO STEELS LTD. 249
                   & ANR.
     CIVIL APPELLATE JURISDICTION : Civil Appeal No.                 A
 2206 of 2013.

     From the Judgment & Order dated 16.05.2~08 of the High
 Court of Orissa at Cuttack in W.P. (C) No. 14044 of 2006.

     U.U. Lalit, Kirti Renu Misra, Shibashish Misra for the          B
 Appellants.

     Rakesh Dwivedi, Sanjit Mohanty, Naveen Kumar, Nikhil
 Sharma, Preetika Dwivedi, R.K. Rathore, Shailender Saini, A.
 Dev Kumar, D.S. Mahra for the Respondents.                         c
      The Judgment of the Court was delivered by

      T.S. THAKUR, J. 1. Leave granted.

       2. This appeal arises out of a judgment and order dated      D.
  16th May, 2008 passed by the High Court of Orissa at Cuttack
  whereby Writ Petition No.14044 of 2006 filed by the
- respondent-company has been allowed, an inter-departmental
  communication in the form of a letter dated 19th September,
  2006 addressed by the Director of Mines to Joint Secretary to     E
  Government of Orissa quashed and by writ of mandamus the
  State Government directed to execute a mining lease for an
  area measuring 1519.980 hectares in favour of the respondent-
  company.
                                                                    .F
       3. By Notification No.647/91 dated 23rd August, 1991, the
  Government of Orissa de-reserved and threw open Iron/
  Manganese Ore areas spreading over 282.46 square miles in
  five blocks located in Keonjhar and Sundergarh districts in the
  State. Applications were then invited from interested private
  parties in terms of Rule 59 of the Mineral Concession Rules,      G
  1960 for grant of prospecting licenses and mining leases in
\ respect of the said blocks. The exercise was, it appears,
  intended to boost the economy of the State by ensuring
  optimum utilisation of its mineral reserves and in the process         ..
  generating employment opportunities for the predominantly         H
    250      SUPREME COURT REPORTS                [2013] 2 S.C.R. ·


A tribal population inhabiting the two districts of the State. The
  invitation to apply for leases and to set up steel plants was open
  to all leading steel manufacturers.

        4. In response to the advertisement notice applications
  were received from different parties including one filed by
8
  respondent-Mesco Steels Ltd. These applications appear to
  have been evaluated, culminating in a conditional
  recommendation made by the State Government in favour of
  the respondent-company. One of the conditions which the State
  Government imposed in exercise of its power under Rule 27
C (3) of the Mineral Concession Rules, 1960 required that the
  lessee shall set up two full-fledged Steel Plants within a
  reasonable time to be intimated by the lessee at the time of
  issue of the terms and conditions for the grant of the proposed
  mining lease. The other condition required that the lessee would
D utilise the entire iron ore extracted from the lease area for
  meeting the captive requirement of the Steel Plants to be set
  up at Duburi and Jakhapura and that no commercial trading of
  the mining material shall be carried out by it.

E       5. By an order dated 7th January, 1999 the Government
  of India, Ministry of Steel and Mines, Department of Mines,
  conveyed the approval of the Central Government for grant of
  the mining lease for extraction of iron ore from an area
  measuring 1011.480 hectares in villages Kadakala and
F Luhakala besides an area measuring 508.500 hectares in
  villages Sundara and Pidapokhari in district Keonjhar for a
  period of 30 years. The approval was subject to the State
  Government ensuring compliance of the amended provisions
                                                                       ·-
  of the Mines and Minerals (Regulation and Development) Act,
  1957 and the Rules made thereunder besides the provisions
G of the Forest (Conservation) Act, 1980 and Notification dated
  27th January, 1994 issued in terms thereof.

       6. On receipt of the approval from the Central Government
  the State Government conveyed to the respondent-company the
H terms and conditions subject to which it proposed to grant a ·
· STATE OF ORISSA & ORS. v. MESCO STEELS LTD. 251
             & ANR. [T.S. THAKUR, J.]
  mining lease for mining of iron ore from the area mentioned         A
  above which included 377.690 hectares of forest land in
  villages Sundara and Pidapokhari of Keonjhar district. A letter
  dated 8th February, 1999 issued by the State Government to
  the respondent-company stipulated the terms and conditions
  that would govern the proposed mining lease and required the        B
  respondent-company to convey its acceptance to the same. In
  response, the respondent-company by its letter dated 15th
  February, 1999 conveyed its unconditional acceptance of the
  terms and conditions stipulated in the letter mentioned earlier.
  The acceptance letter was followed by another letter dated 13th     c
  March, 1999 by which the respondent-company informed the
  State Government that it had already taken steps for
  preparation of a mining plan and initiated action for preparation
  and approval of de-reservation proposal for the mining lease
  in village Sundara and Pidapokhari over an area measuring           D
· 508.500 hectares said to be forest land. What is significant is
  that the respondent-company also pointed out that it was on the
  verge of completion of its Steel Plant at Kalinga Nagar,
  Industrial Complex, Sukinda, P.O. Danagadi, District Jajpur,
  Orissa which was expected to be commissioned by April/May,          E
  1999. The State Government eventually sanctioned the grant
   of a lease in favour of the respondent-company to the extent
   indicated earlier in terms of its order dated 17th March, 1999.

        7. By a letter dated 19th June, 2000 addressed to the
 respondent-company the State Government pointed out that the         F
 company had failed to submit the required mining plan and
 obtain the approval of Ministry of Environment and Forest,
 Government of India, in regard to forest land involved in the
 proposed mining lease despite extension of time allowed to the
 respondent-company by the Government in terms of its letter          G
 dated 11th October, 1999. The State Government further
 pointed out that on account of the company's inaction in the
 matter of setting up the proposed two steel plants, IDCO had
 initiated action for cancellation of allotment of 3100 acres of
 land allotted in favour of MESCO Kalinga Steel Plant, the sister     H
                                                       "·
    252      SUPREME COURT REPORTS                (2013] 2 S.C.R.


A concern of the respondent-company, for the proposed steel
  plant, captive power plant and township. The letter in that
  backdrop invited the respondent-company for a personal
  hearing in terms of Rule 26(1) of the Mineral Concessions
  Rules, 1960 to discuss whether the iron ore required by the
B respondent-company for the steel plant which was already in
  existence could be assessed to enable the company to retain
  the iron ore deposits required for the said plant and restore back
  the remainder to the Government.

         8. The respondent-company acknowledged receipt of the
C   letter above mentioned and, inter alia, pointed out that the
    mining plan for the entire area had been prepared and
    submitted separately on 31st January, 2000. It was also pointed
    out that out of the total extent covered by the proposed lease
    only 508.500 hectares was forest land for which extent alone
D   was a diversion proposal required to be submitted. It also
    referred to certain other steps taken by the company like survey
    and demarcation of the area which was underway. More
    importantly, the company stated that it had already invested
    Rs.57.12 crores in the project but had to put the same on hold
E   on account of the steel market passing through a lean phase
    because of which all steel majors were facing problems due
    to a glut in the market. The respondent-company claimed to
    have undertaken substantial work for developing the mine
    including financial participation by a Canadian company and
F   assured the Government that the proposed project would
    create enormous job opportunities for the people of Orissa.

       9. For nearly four years thereafter the matter appears to
  have remained pending for a final decision at different
G administrative levels in the Government. What is significant is
  that by letter dated 26th May, 2004 the Director of Mines,
  Orissa, wrote to the Joint Secretary, Department of Steel and
  Mines, Government of Orissa, inter alia, pointing out that an
  area measuring 469.25 hectares included in the proposed
  lease in favour of the respondent-company was overlapping
H
 STATE OF ORISSA & ORS. v. MESCO STEELS LTD. 253
            & ANR. [T.S. THAKUR, J.]
'·with the area recommended for allotment to the Orissa Mining           A
  Corporation Ltd. and that even though the Government had
  moved for elimination of the said overlapping area in terms of
  Director's letter dated 1st June, 2000, no formal Government
  order in the matter had been received. The Director further
  pointed out that D.F.O., Keonjhar had reported in terms of its         B
  letters dated 15th January, 2004 and 7th February, 2004 that
  major portion of the surveyed and demarcated area came under
  Khandadhar D.P.F. and was reported to be forest land as per
  column 7 of the D.L.C. report to which effect an affidavit had
  also been filed before this Court by the State Government. It          c
  was also mentioned that the Mining Officer had reported that
  an area measuring 692.6953 hectares out of the surveyed and
  demarcated area of 802.6678 hectares came under forest land
  which attracted the provisions of Forest Conservation Act, 1980.
  Clearance from the Ministry of Environment and Forests,                D
  Government of India, was, therefore, absolutely necessary for
  execution of any mining lease in respect of the said area and
  till such time this essential pre-condition was not fulfilled, the
  execution of the lease deed was not legally permissible. By
  another letter dated 19th Siaptember, 2006, the Director of            E
  Mines recommended re-allocation of resources based on the
  requirement of iron ore for the existing steel plant set up by the
  respondent-company. It was further recommended that the
  respondent-company should not be permitted to carry on any
  trading activity in iron ore removed from the area to be allocated
  in its favour based on its actual requirement for the existing unit.   F

     10. Aggrieved by the said inter-departmental
 communication the respondent-company filed Writ Petition
 No.14044 of 2006 before the High Court of Orissa at Cuttack
 in which the company prayed for quashing of the                         G
 recommendations made by the Director of Mines proposing to
 reduce the lease area granted to the respondent-company and
 prayed for a mandamus directing the State Government to
 execute the mining lease in respect of the entire 1519.980
 hectares of land in the villages mentioned earlier. By an order         H
    254       SUPREME COURT REPORTS                [2013] 2 S.C.R.


A   dated 1st February, 2007 the High Court directed maintenance
    of status quo. Despite the said order, however, the Government
    of Orissa issued a notice dated 6th February, 2007 by which it
    called upon the respondent-company to show cause as to why
    the overlapping area of 469.25 hectares of the State PSU and
B   921.258 hectares granted in excess of the captive requirement
    of the unit set up by the respondent-company may not be
    deducted from the total mining lease area of 1519.980 granted
    to the company. The High Court ignored the show cause notice
    primarily on the ground that the same had been issued in the
c   teeth of the interim order by which the parties had been directed
    to maintain status quo, and eventually came to the conclusion
    that the proposed reduction of the mining lease area whether
    on account of the alleged overlapping of the areas with the area
    approved for Orissa Mining Corporation or on account of the.
    failure of the respondent-company and its sister concern to set
0
    up the second steel plant was not justified. The High Court held
    that although the State Government had not issued any final
    order so far regarding the deduction of the area yet since a final
    decision appeared to have been taken by it, thereby implying
    that the issue of a show cause notice after taking of such a
E   decision was a mere formality. In coming to that conclusion, the
    High Court placed reliance upon paragraph 8 of the counter
    affidavit filed by the State Government before the High Court.
    The High Court also held that in the absence of a mining lease
    in favour of the respondent-company, it could not take the risk
F   of setting up of a steel plant. The High Court accordingly
    quashed letter dated 19th September, 2006 and by mandamus            •
    directed the State Government to execute a formal mining
    lease in favour of the respondent-company. The present appeal
    assails the correctness of the said judgment of the High Court
G   as already noticed earlier.

       11. Appearing for the appellant, Mr. U.U. Lalit, learned
  senior counsel, made a three-fold submission before us.
  Firstly, he contended that the writ petition filed by the
H respondent-company was manifestly premature as the
 STATE OF ORISSA & ORS. v. MESCO STEELS LTD. 255
            & ANR. [f.S. THAKUR, J.]
  Government had not taken any final decision that could have             A
  been challenged by the respondent-company nor was the writ
  petition, according to the learned counsel, maintainable against
  a mere inter-departmental letter dated 19th September, 2006,
  which did not by itself finally decide any right or obligation of
  the parties so as to furnish a cause of action to the respondent        B
  to challenge the same in the extra ordinary writ jurisdiction of
  the High Court. Secondly, it was contended that even if the
  letter could be described as a final decision taken by the State
  Government in regard to the reduction of the lease area, the
  respondent-company ought to have taken recourse to                      c
  proceedings under Section 30 of the Act before the Central
  Government instead of rushing to the High Court in a writ
  petition. Thirdly, it was contended that the very issue of a show
  cause notice to the respondent-company suggesting reduction
  of the lease area after assessment of the actual requirement
                                                                          0
  by reference to the plant already set up, meant that the
  Government had not taken any final decision in the matter and
  that the respondent-company could say whatever it intended to
  say in opposition to the action proposed in the show cause
· notice where upon the Government could notify a final order on
                                                                          E
  the same, which order could then be challenged by the
  respondent-company either before the Central Government or
  before the High Court in a writ petition if otherwise permissible.
  Inasmuch as the High Court ignored the show cause notice and
  proceeded on the assumption that the same was an exercise
  in futility, it fell in a serious error, argued Mr. Lalit. The proper   F
  course, according to the learned counsel, was to allow the State
  Government to take a final view on tha§how cause notice after
  considering the response which the respondent-company may
  have to make.
                                                                          G
      12. On behalf of the respondent-company it was contended
 by Mr. Rakesh Dwivedi, learned senior counsel, that although
 the show cause notice issued by the appellant-State had not
 been specifically challenged in the writ proceedings before the
 High Court, this Court could look into the notice and examine            H
    256      SUPREME COURT REPORTS               (2013) 2 S.C.R.


A whether the same had been validly issued on grounds and
  material that are legally tenable. He urged that although the
  State Government may be competent to recall its
  recommendations in exceptional situations, any such exercise
  of powers of recall can never be exercised arbitrarily or
B whimsically. At any rate, the exercise of power of recall was,
  according to the learned counsel, wholly unjustified in the facts
  and circumstances of this case as the whole attempt of the
  Government appeared to be to somehow deprive the
  respondent-company of the benefit of the mining lease already
c sanctioned in its favour. It was also contended that the question
  of overlapping of the area had since been examined and
  rejected by the State Government as was apparent from the
  Minutes of the Meeting held in the office of the Chief Minister
  on 29th October, 2001, a copy whereof has been placed on
  record as Annexure R-1. It was'also contended that the State
0
  Government was making much ado about nothing regarding the
  setting up of the second steel plant and that the same was no
  more than a pretext to deny to the respondent-company its
  rightful due under the sanction order issued by the Central
  Government and the grant made by the State. It was contended
E by Mr. Dwivedi that the requirement of an approved mining plan
  which was one of the conditions for the grant of lease had
  already been complied with while the execution of a lease
  deed could be made subject to the clearance of the project and
  the grant of a no objection by the Ministry of Environment and
F Forest under Section 2 of the Forest (Conservation) Act, 1980.
  The order passed by the High Court could to that extent be
  modified, argued Mr. Dwivedi. Inasmuch as the High Court had
  not taken note of the requirement of such clearance being
  essential not only under the Act aforementioned but also
G because of the directions issued by this Court in T.N.
  Godavarman Thirumulkpad v. Union of India & Ors. (1997) 2
    sec  267, it had no doubt committed a mistake but that did
  not warrant, setting aside of the entire order passed by the High
  Court.
H
 STATE OF ORISSA & ORS. v. MESCO STEELS LTD. 257
            & ANR. [T.S. THAKUR, J.)
     13. We have given our anxious consideration to the           A
submissions made at the bar. The following questions, in our
opinion, arise for determination:

     ( 1) Whether the writ petition filed by the respondent-
     company was premature, the same having been filed
                                                                  8
     against an inter-departmental communication that did not
     finally determine any right or obligation of the parties?

     (2) Whether the show cause notice could be ignored by
     the High Court simply because it had been issued in
     violation of the interim order passed by it requiring the    C
     parties to maintain status quo?

     (3) Whether the show cause notice was without jurisdiction
     and could, therefore, be quasheq?
                                                                  D
     14. We propose to deal with the 1questions ad seriatim.

Regarding Question No.1

     15. The writ petition, as already noticed above, was
directed against a communication that had emanated from the       E
office of Director of Mines and brought forward certain factual
aspects relevant to the question whether a lease deed could
be immediately executed in favour of the respondent-company.
A careful reading of the said communication would show that
it was issued in pursuance of a letter dated 12th January, 2006   F
from the Joint Secretary, Government of Orissa to the Director
of Mines and another letter dated 29th August, 2006. By the
former letter the Joint Secretary to the Government had
instructed the Director of Mines to take action pursuant to
certain directions issued by the Chief Minister of Orissa. This   G
included making a real assessment of the requirement of
respondent-company and permitting execution of a lease deed
subject to clearance of the Ministry of Environment and Forest,
Government of India. The instructions issued to the Director
of Mines also required him to resume the excess area for
reallocation of the same to other deserving parties. The
                                                        I   •
                                                                  H
    258      SUPREME COURT REPORTS                 (2013] 2 S.C.R.


A  Director .of Mines had responded to the said communication
   and assessed the mineral deposits in the area by reference to
   maps and surveys and made a recommendation back to the
   State Government. It is obvious from a conjoint reading of letter
   dated 12th January, 2006 and communication dated 19th
B September, 2006 sent by the Director of Mines in response
   thereto that a final decision on the subject had yet to be taken
   by the Government, no matter the Government may have
   provisionally decided to follow the line of action indicated in its
   communication dated 12th January, 2006 issued under the
c  signature of the Joint Secretary, Department of Steel and
   Mines. It is noteworthy that there was no challenge to the
   communication dated 12th January, 2006 before the High Court
   nor was any material placed before us to suggest that any final
   decision was ever taken by the Government on the question of
D deduction of the area granted in favour of the respondent so
   as to render the process of issue of show cause notice for
    hearing the respondent-company an exercise in futility. On the
   contrary, the issue of the show cause notice setting out the
   reasons that impelled the Government to claim resumption of
   a part of the proposed lease area from the respondent-
E company clearly suggested that the entire process leading up           •
   to the issue of the show cause notice was tentative and no final
  ·decision on the subject had been taken at any level. It is only
    after the Government provisionally decided to resume the area
    in part or full that a show cause notice could have been issued.
F To put the matter beyond any pale of controversy, Mr. Lalit made
    an unequivocal statement at the bar on behalf of the State
    Government that no final decision regarding resumption of any
    part of.the lease area has been taken by the State Government
    so far and all that had transpired till date must necessarily be
G taken as provisional.. Such being the case the High Court was
    in error in proceeding on an assumption that a final decision
    had been taken and in quashing what was no more than an
    inter-departmental communication constituting at best a step
    in the process of taking a final decision by the Government. The
H writ petition in that view was pre-mature and ought to have been
STATE OF ORISSA & ORS. v. MESCO STEELS LTD. 259
           & ANR. [T.S. THAKUR, J.]   .

disposed of as such. Our answer to question No.1 is                A
accordingly in the affirmative.

Regarding Question No.2

       16. In the light of what we have said while deciding
question No.1 above, this question should not hold us for long. B
It is true that the High Court had by an interlocutory order
directed the parties to maintain status quo, but whether the said
order had the effect of preventing the State Government from
issuing a show cause notice was arguable. The issue of show
cause notice did not interfere with the status quo. It simply C
enabled the respondent-company to respond to the proposed
action. Be that as it may, once the show cause notice was
issued, the High Court could have directed the respondent-
company to respond to the same and disposed of the writ
petition reserving liberty to it to take recourse to such remedy D
as may have been considered suitable by it depending upon
the final order that the Government passed on the said notice.
What was significant was that the respondent-company had not
assailed the validity of the show cause notice on the ground of
jurisdiction or otherwise. If the validity of the show cause notice E
was itself in question on the ground that the Government had
no jurisdiction to issue the same, nothing prevented the
company from maintaining a writ petition and challenging the
notice on that ground. The High Court would in that event have
had an opportunity to examine the validity of the notice. In the F
absence of any such challenge the High Court could not simply
ignore the notice even if it was issued in breach of the order
passed by the Court. It was one thing to prevent further steps ·
being taken pursuant to the notice issued by the Government
but an entirely different thing to consider the notice to be non G
est in the eye of law. The High Court coul~ have taken the show
caµse notice as a reason to relegate the parties to a procedure
which was just and fair and in which the respondent could urge
all its contentions whether on facts or in law. Our answer to
question No.2 is, therefore, in the negative.
                                                                   H
    260      SUPREME COURT REPORTS                [2013] 2 S.C.R.


A   Regarding Question No.3

       17. Although it is not necessary for us now to examine the
  question of validity of the show cause notice as the same was
  not questioned before the High Court in the writ petition filed
B by the respondent-company, we may to the credit of Mr.
  Dwivedi, learned senior counsel appearing for the respondent-
  company, mention that he did not seriously challenge the validity
  of the notice on the ground of jurisdiction. Mr. Dwivedi fairly
  conceded that the State Government could, in appropriate
  situations, exercise the option of recalling or modifying its
C recommendations but contended that the pre!?ent case did not
  present a situation that could justify such a recall.

        18. We do not propose to make any comment or express
  any opinion to the merits of the show cause notice. So long as
D the notice is not without jurisdiction as indeed it does not appear
  to be so, the question whether the grounds taken in the same
  provide a good basis for proposed action can be left open for
  the Government to decide. All that we need say is that learned
  counsel for the parties made detailed submissions in regard
E to the grounds given in the notice and the validity thereof from
  their respective points of view and in support of their respective
  versions. Some of these grounds and submissions were quite
  attractive also. But so long as the matter is yet to be examined
  by the State Government, we consider it unnecessary to
F prejudice the issues or express any opinion about the merits
  of the said contentions on either side. The proper course, in
  our opinion, would be to leave the contentions available to the
  parties open for being determined by competent authority in the
  Government who would, in our opinion, do well to carefully
G consider the reply which the respondent may submit to the said
  show cause notice and pass a reasoned order on the subject.
  Question No.3 is answered accordingly.

       19. In the result we allow this appeal, set aside the
  judgment and order passed by the High Court and direct that
H the respondent-company shall submit its reply to the show
STATE OF ORISSA & ORS. v. MESCO STEELS LTD. 261
           & ANR. (T.S. THAKUR, J.]
cause notice dated 6th February, 2007 issued by the State          A
Government within three months from today. The Government
may then upon consideration of the reply so submitted pass a
reasoned order on the subject within two months thereafter
under intimation to the respondent. If the order so made is, for
any reason found to be unacceptable by the respondent-             B
company, it shall have the liberty to take recourse to
appropriate proceedings before an appropriate forum in
accordance with law.              ·

       20. Parties are left to bear their own costs.
                                                                   c
R.P.                                             Appeal allowed.