Andhra Pradesh High Court - Amravati
Bharat Gold Mines All Employees ... vs State Of Andhra Pradesh, on 5 August, 2022
HON'BLE SRI JUSTICE R. RAGHUNANDAN RAO
W.P.Nos.15965 & 21750 of 2018
COMMON ORDER:
Both these writ petitions, filed by the Cooperative Societies said to be
representing the interests of the employees of the Bharat Gold Mines
Limited, raise the same issues, and as such, they are being disposed of by
this common order.
2. M/s. Bharat Gold Mines Limited, (hereinafter referred to as
the company) which was involved in mining of gold in various extents of
land situated in the States of Karnataka and Andhra Pradesh had become
a sick company and had been referred, vide reference No.505 of 1992
dated 30.06.2000, to the Board of Industrial and Financial Reconstruction
(BIFR) for formulation of a scheme for reviving the fortunes of this
company. After reviewing all the possible schemes, the BIFR passed an
order dated 12.06.2000 recommending winding up of the company. The
reference was numbered as C.O.P.No.180 of 2000 before the Hon'ble High
Court of Karnataka.
3. The appeal filed against the decision of the BIFR dated
12.06.2000 before the appellate authority, under the Sick Industrial
Companies Act, 1985 (for short "the SICA) came to be dismissed on
15.11.2000. The order of the appellate authority was challenged before
the Hon'ble High Court of Karnataka by way of several writ petitions. A
learned Single Judge, by a common order dated 16.03.2001 allowed the
writ petitions. The Union of India filed W.A.Nos.1747 to 1757 of 2001
against the orders of the learned Single Judge and a Division Bench of the
Hon'ble High Court of Karnataka set aside the order of the learned Single
Judge holding that there is no infirmity in the orders passed by the BIFR
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and appellate authority, and consequential orders passed by the Central
Government dated 21.01.2001 permitting closure of the company under
Section 25 (O) of the Industrial Disputes Act, 1947.
4. In a parallel proceeding, writ petitions had been filed against
the orders of termination of the services of various employees of the
company and the same came to be quashed by a learned Single Judge on
19.07.2004 directing that the directions of the Division Bench in its order
dated 26.09.2003 in W.A.Nos.1747 to 1757 of 2001 should be treated as
directions of the learned Single Judge also.
5. Subsequent to these orders, the employees of the company
formed into a Forum and proposed a scheme for takeover of the assets of
the company and for operating the mines. This Forum offered a sum of
Rs.100 crores for purchase of the assets of the company.
6. The Director in the Ministry of Mines, Government of India,
replying to this offer, issued a letter dated 07/08.08.2006 to the Managing
Director of the company, stating that the offer of the Forum was
considered and the Government was of the view that the offer of the
Forum for transfer of assets of the company can only be considered on
the basis of the market value of such assets. It was also stated, in the
letter, that an internal assessment of the value of the assets had been
made, but the said valuation does not bring out the market value and the
government proposed to invite global bids for the assets of the company
to arrive at a market value. Upon such a value being obtained, it would be
open to the Forum or society, formed by the employees, to make a
counter offer and the highest bid received or the value assessment made
by the in-house committee, whichever is higher, would be accepted as the
amount payable by the Forum. Apart from this, the Government also
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required that the said Forum or proposed society would undertake to pay
certain amounts, apart from the sale value payable for the assets of the
company, on priority basis to the erstwhile employees of the company.
7. Thereafter a global tender was sought to be floated and C.A.
No. 993 of 2006 was filed in C.O.P. No. 180 of 2000, for approval of the
Global tender. At that stage M/s Bharath Earth Movers Limited, a sub
lessee of the Company for some of the land in the possession of the
Company, filed an application, before the Hon'ble High Court of
Karnataka, objecting to the proposal. It was the case of M/s. Bharat Earth
Movers Limited that sale of the assets of the Company would amount to
revival of the company and any attempt to revive the company would
have to be done under the aegis of the BIFR and not by the Company
Court in a reference petition before the high Court for winding up of the
company. This objection was rejected by the learned Company Judge of
the Hon'ble High Court of Karnataka on the ground that the tender was
for ascertainment of the value of the assets of the Company and the sale
of assets of the company cannot be equated to revival of the company.
8. The learned Company Judge, by order dated 03.07.2009,
had directed that the proposal of the Government of India dated
7/8.08.2006 should be carried forward and directed certain corrections in
the global tender document.
9. This decision of the learned Company Judge was appealed
against by way of O.S.A.Nos.32, 34, 39 and 40 of 2009 and the same
were allowed, on 01.02.2010, by a Division bench, setting aside the order
made by the learned Company Judge. Against the said orders, S.L.P.(Civil)
No.10023 of 2011 and other SLPs were filed before the Hon'ble Supreme
Court. The Hon'ble Supreme Court, by order dated 09.07.2013, had
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disposed of the SLPs by setting aside the order of the Division Bench and
permitted the Government of India to proceed with the global tender in
accordance with the decision taken by the Cabinet in terms of the offer
dated 07/08.08.2006.
10 After the Hon'ble Supreme Court had passed the above
directions, the matters have remained in limbo and no further steps seem
to have been taken for floating the global tender or for valuation of the
assets of the company, on the basis of which the employee organisations
can make an offer for taking over the assets of the company.
11. While the matters stood thus, an application for renewal of
the lease granted to the company, over an extent of Ac.551.00 acres of
land had been filed. This renewal application was rejected and the lease
over another parcel of land admeasuring Ac.105.24 of land, situated in
Andhra Pradesh, had been determined vide memo No.
20611/M.III(2)/2003, dated 18.11.2006. The revision against this memo
was dismissed on 09.06.2011. W.P.No.3055 of 2013 filed against the said
revisional order was dismissed as withdrawn on 27.04.2021. Apart from
this, the leases expired, by efflux of time, on 29.08.2008 and 03.11.2013.
The Government of Andhra Pradesh, after the expiry of the said leases,
had issued a notification bearing No.8322-MBA/2017-1, dated 23.04.2018,
calling for tenders for grant of mining lease for extraction of gold over the
aforesaid land to an extent of 262.01 hectares of land in Chigarigunta-
Bisanatham Mineral Block, Onnappanyanikothur Village, Gudupalli Mandal,
Chittoor District. The said notification has been challenged by two
separate employee organisations of the company, who are the petitioners
herein, by way of these two writ petitions.
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12. During the pendency of these two writ petitions, M/s.NMDC
Limited, a public sector corporation, which had participated in the tender
process, was the successful bidder and is now ready to take up mining
activity in the said block of land. However, further steps could not be
taken up, in view of the interim directions of this court, dated 01.05.2018,
permitting the auction process to go on, without finalising the same.
13. The case of the employees organisations is that the
directions of the learned Company Judge in C.A.No.993/2006 dated
03.07.2009 and the judgment of the Hon'ble Supreme Court dated
09.07.2013 in S.L.P.(Civil).No.10023 of 2011 are to the effect that a global
tender needs to be floated for the sale of the assets of the company and
the employees organisations would be entitled for first right of refusal on
the highest bid obtained in the global tender. In view of the above
directions, the auction of leasehold rights of the area mentioned above,
would violate these directions as the said leasehold rights would form part
of the assets of the company and cannot be alienated in this manner.
14. The petitioners would also contend that despite amendment
to the Mines And Minerals (Development And Regulation) Act, 1957 (for
short the 'MMDR Act'') in 2015, the Central Government continues to have
control over the said lands and the State cannot step into the shoes of the
Government of India for grant of such leasehold rights. The petitioners
further contend that even if this tender is to be treated as a global tender,
as directed by the learned Company Judge in Hon'ble High Court of
Karnataka and the Hon'ble Supreme Court of India, the same is not in
accordance with the said directions as the tender was not circulated or
advertised worldwide. A further contention is that the leases stand
automatically extended by a further period of 50 years, by virtue of
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Section 8A of the MMDR Act and the company continues to have leasehold
rights over the said block.
15. The learned Advocate General appearing for the State of
Andhra Pradesh, which is arrayed as the 1st respondent, would submit
that the tender process, initiated and completed by the 1st Respondent, is
not in violation of the directions given by the learned Company Judge and
the Hon'ble Supreme Court of India. He submits that the said directions
are for conduct of a global tender, for the purpose of arriving at a
valuation, for sale of the assets of the company and to give first right of
refusal to the employee organisations in such tender process. He would
submit that it is only the assets of the company which would be the
subject mater of such a process. The learned Advocate General contends
that the leasehold rights over the block area, which is now being offered
by the Government, were the assets of the company till 29.08.2008 and
03.11.2013. Thereafter, upon expiry of the leases, the company does not
have any right over the said land and the said leasehold rights ceased to
be the assets of the company. In such circumstances, auctioning of the
leasehold rights of the above block area does not run counter to the
directions mentioned above. He would further submit that the provisions
of section 8A of the MMDR Act would not be applicable as sub section (9)
of Section 8A clearly excludes leases, which had expired before the
section 8A came into force, in 2015, from the benefit of deemed extension
of lease provided under section 8A.
16. The learned Advocate general, relying upon, section 5 of the
MMDR Act contends that a global tender is not possible as Section 5
restricts the grant of leasehold rights only to Indian citizens and Indian
companies or entities. He would further submit that the 1st respondent
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was not a party to any of the proceedings before the Hon'ble High court
of Karnataka and the Hon'ble Supreme Court and would not be bound by
the directions given in those proceedings.
17. Sri K. Raghavachari, learned counsel appearing for M/s.
NMDC, which has been impleaded as respondent No.5 in W.P.No.15965 of
2018, would contend that the 5th respondent, which is a public sector
corporation, has bid huge amounts of money for obtaining the mining
rights over the said area and any delay in completion of the handing over
process would cause immense loss to M/s. NMDC and also to the State
and the country at large, as non-exploitation of the gold reserves in the
area will deprive the State and the Central Governments, and various
reviews would be generated from restarting of mining operations in the
area. He would submit that it would be in the public interest to complete
the process at the earliest.
18. Heard M/s Indus law firm appearing for the petitioner in
W.P. No. 15965 of 2018, Sri G.L.V.Ramana Murthy, learned counsel
appearing for the petitioner in W.P.No.21750 of 2018, learned Advocate
General appearing for the 1st respondent-State and Sri K. Raghava Chary,
learned counsel appearing for the successful bidder.
Consideration of the Court:
19. The undisputed facts are that M/s. Bharat Gold Mines
Limited had been recommended for, winding up and dissolution, by the
BIFR on the ground that there is no possibility for revival of the said
company. In the process of carrying out the winding up of the company,
the employees of the company had proposed purchase of the assets of
the company from the Government of India, which was the primary
shareholder of the company. This proposal was acceptable to the
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Government of India provided the market value of the assets was received
by the Government of India. For this purpose, the Government of India
had proposed a global tender to be floated to arrive at the market value
of the assets of the company. The Government proposed that it would
consider the internal assessment of the value of the assets of the
company and the value arrived at by way of the global tender and then
offer a first right of refusal to the employee organisations on the basis of
the market value arrived at through the global tender or the internal
valuation of the company, whichever is higher.
20. This process was sought to be stopped by M/s. Bharat Earth
Movers Limited, which was a sub-lessee of the company, over a part of
the land over which the company had rights. This attempt was rejected by
the learned Company Judge as well as the Hon'ble Supreme Court of India
by way of the orders mentioned above.
21. It is clear from the above that what is sought to be done is
not the revival of the company but only sale of assets of the company.
Any alienation of the assets of the company, pending the above process,
would definitely amount to violation of the directions given by the Hon'ble
High Court of Karnataka and the Hon'ble Supreme Court of India.
22. The question that would now arise is whether the leasehold
rights, which are sought to be auctioned, by way of the tender floated by
the 1st respondent State, are a part of the assets of the company or not.
23. The leasehold rights, over the said area, were granted to the
company earlier. However, these leasehold rights have expired and it is
admitted on all sides that the State of Andhra Pradesh has taken over the
physical possession of these lands from the company. In such
circumstances, it cannot be said that the leasehold rights over this land
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would continue to remain with the company. Consequently, the leasehold
rights which are sought to be auctioned are not part of the assets of the
company and consequently, the State of A.P. would be entitled to auction
the leasehold rights.
24. The further contention of the petitioners is that such
leasehold rights, can be given only by the Government of India under the
MMDR Act, and cannot be auctioned by the 1st Respondent. The
petitioners contend that the amendment to the MMDR Act, granting such
authority to the State Governments, can only be prospective and is not
retrospective. This argument has to be rejected on the short ground that
the amendment to the MMDR Act was carried out in 2015 and the tender
process was initiated by the State Government only in the year 2018. The
question whether the amendment would be prospective or retrospective is
redundant as the process had been initiated after the amendment had
come into force. The further contention, of the petitioners, that the term
of the lease given to the company had been extended by the introduction
of section 8A of the MMDR Act, by way of an amendment, in 2015, has to
be rejected on account of section 8A(9) excluding such a benefit to leases
which had expired before the said amendment had come into force in
2015.
25. For all the aforesaid reasons, there are no merits in these
writ petitions and they are accordingly dismissed. There shall be no order
as to costs. As a sequel, pending miscellaneous petitions, if any, shall
stand closed.
_________________________
R. RAGHUNANDAN RAO, J.
5th August, 2022
Js.
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HON'BLE SRI JUSTICE R. RAGHUNANDAN RAO
W.P.Nos.15965 & 21750 of 2018
5th August, 2022
Js.
