M/S. Ispat Industries Ltd. vs Union Of India & Others
2009 Latest Caselaw 4456 Del

REPORTABLE
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+           Writ Petition (Civil) No. 17320 of 2006

                               Reserved on: 17th September, 2009
                            Date of decision: 4th November, 2009.

      M/S ISPAT INDUSTRIES LTD               ..... Petitioner
                    Through Mr. Amit Sibal, Mr. Gautam Mitra
                             and Gaurav Mitra, Advocates.

                                versus

      UNION OF INDIA & OTHERS             ..... Respondents
                    Through Ms. Maneesha Dhir, Advocate for
                            UOI.
                            Mr. A.S. Chandhiok, ASG, Mr.
                            C.A. Sundaram, Sr. Advocate, Mr.
                            R.K. Sanghi, Ms. Babli and Ms.
                            Shivani Sanghi, Advocates for the
                            respondent No.4.

      CORAM:
      HON'BLE MR. JUSTICE SANJIV KHANNA

      1. Whether Reporters of local papers may be
      allowed to see the judgment?
      2. To be referred to the Reporter or not ?  YES
      3. Whether the judgment should be reported
      in the Digest ?                             YES

                           ORDER

1. The petitioner, Ispat Ltd., Industries is the manufacturer of steel

having integrated steel plant at Talabi, Raigarh District, Maharastra.

The petitioner has filed the present writ petition, which was allowed to

be amended vide order dated 28th July, 2008, praying for following

reliefs against Union of India, State of Maharastra, Maharashtra State

Mining Corporation Ltd. and M/s. Lloyds Metal and Engineering Ltd.,

respondent Nos.1 to 4, respectively:-

      W.P.(C) 17320/2006                                           Page 1
                "(a)      Call for the records pertaining to

the revision application 17(9)2004-RCII, and quash the order dated 6.10.2006 passed by the 1st respondent;

(b) Direct the 2nd Respondent to consider the matter afresh and grant mining lease to the petitioner in accordance with the MMDR act and MCR 1960; and

(c) Quash all the action taken consequent thereto including all approvals and clearance granted in pursuance thereof under the Mines and Minerals (Development and Regulation Act, 1957 and the rules made thereunder and under the Forest Conservation Act, 1980 and the lease executed on 3rd May, 2007 pursuant thereto;

(d) Pass such other order or orders which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case."

2. The predecessor of the petitioner on 3rd March, 1993, had

applied for grant of prospecting licence for iron ore for 400 hectares in

Taluk Etapalli, Tehsil Surajgarh, District Gadchiroli. On the other

hand, the fourth respondent had applied for grant of mining lease for

449.42 hectares overlapping the same area vide application dated

30th March, 1993. The State Government i.e. the Government of

Maharastra by their letter dated 10th November, 1994, sought

approval of the Central Government for grant of mining lease for

449.42 hectares to the fourth respondent under Section 11(4) of the

Mines and Minerals Development Act, 1957 (hereinafter referred to

as the MMDR Act, for short). On 30th December, 1994, the Central

Government granted permission and approval under Section 5(1) of MMDR Act.

W.P.(C) 17320/2006 Page 2 Thereafter, the letter dated 11th January, 1995, was issued in favour

of the fourth respondent. This area was subsequently reduced to

348.09 hectares vide letter dated 11th September, 2003 in view of the

objections raised by the Ministry of Environment and Forests.

3. It is admitted case of the parties that letter of intent dated 11th

January, 1995 issued to the fourth respondent was not challenged by

the petitioner by filing a revision petition under the MMDR Act or by

filing a writ petition. The petitioner accepted the said

decision/allotment.

4. On 8th November, 2001, the petitioner was formally informed

that their application for prospecting license stood rejected. This order

was not challenged by the petitioner by filing a revision petition or by

way of writ petition. The said order has attained finality.

5. The petitioner in September/October, 2003 applied for grant of

mining lease for 449.42 hectares in Surajgarh, Taluka Bande, Distt.

Gadchiroli, Maharastra. The said application was considered after

excluding the area of 348.09 hectares for which already a letter of

Intent had been granted to the fourth respondent. The application for

balance area was rejected vide order dated 27th December, 2005.

The Government of Maharastra while rejecting the application had

observed that they had granted mining lease/letter of intent in respect

of 153.9 hectares to M/s. Gopani Iron Ore (I) Pvt. Ltd. As noticed

above, M/s. Gopani Iron Ore (I) Pvt. Ltd. is not a party to the present

writ petition and we are not concerned in the present writ petition with

W.P.(C) 17320/2006 Page 3 grant of mining lease/letter of intent in respect of 153.9 hectares to

M/s. Gopani Iron Ore (I) Pvt. Ltd. It may, however, be noted that the

petitioner had filed a revision petition before the Central Government

under Section 30 of the MMDR Act read with Rule 54 of the Mineral

Concession Rules, 1960 (hereinafter referred to as MC Rules, for

short). The fourth respondent, however, was not impleaded as a

party to the revision petition and the letter of intent in their favour was

not questioned. The said revision petition was disposed of vide order

dated 5th Jan.,2006 passed by the revisionary authority. This order

was challenged by the petitioner by way of a writ petition being

W.P.(C) 16512/2006. This writ petition was dismissed as withdrawn

after some arguments on 6th November, 2006.

6. On 28th June, 2004, the fourth respondent made an application

with the State of Maharastra for permission of change of name in the

letter of intent or transfer in favour of its subsidiary M/s Gadchiroli

Minerals and Metals Ltd. (hereinafter referred to as GMML, for short).

By their letter dated 19th August, 2004, the State Government

accepted the fourth respondent's request to transfer the letter of

intent in favour of GMML, subject to terms and conditions mentioned

in the said letter, which included the conditions mentioned in the letter

dated 11th September, 2003; and stipulated that all assets raised by

the fourth respondent in respect of the mineral belt and the liabilities

would be transferred to GMML.

W.P.(C) 17320/2006 Page 4

7. The petitioner did not challenge and question this transfer dated

19th August, 2004, in favour of GMML. A third company, namely,

M/s. Jayswal Neco Ltd. questioned the said transfer under Section 30

of the MMDR Act and Rules 54/55 of MC Rules before the revisionary

authority. The said revision petition was disposed of vide order dated

6th October, 2006, accepting the contention of M/s. Jayswal Neco Ltd.

that the letter of intent cannot be transferred by the State

Government. It was held that as per the MC Rules, only mining lease

can be transferred, therefore, the order dated 19th August, 2004,

transferring letter of intent in favour of GMML, was illegal and set

aside. It may be relevant to quote operative portion of the order

passed by the revisionary authority, which reads as under:-

"11. We have heard the parties and have also gone through the material on record. The main point for consideration is about the correctness or otherwise of the issuance of the revised LOI in favour of the impleaded party vide the State Government's communication dated 19.8.2004, which initially was granted in favour of LMEL. The impleaded party is stated to be 100% subsidiary of LMEL and the same was created for looking after the mining activates (sic) of company. From the material on record it is clear that the LMEL and the impleaded party are two different and distinct companies and cannot validly be treated as one company for the purpose of the Act. The words "letter of intent"(LOI) have not been defined either under the Act or the rules. During the course of hearing it was submitted by all the parties that a communication to an application for ML conveying the decision of the State

W.P.(C) 17320/2006 Page 5 Government to grant ML subject to requisite conditions is understood to be a LOPI for the purposes of the Act and the rules. We do not find and provisions in the Act or the rules which may permit the transfer of LOI issued in the name of one company to another company. Nor do we find any provision in the Act or the rules which may justify such transfer by implication. Under the scheme of the Act and the rules only the transfer of mining lease is permitted (see rule 37) which is not the case before us. Therefore, we find absolutely no merit or legal justification in the decision of the State Government to transfer the LOI (issued to LMEL) in the name of the impleaded party. Hence the impugned order dated 19.8.2004 being illegal and unjust is hereby set aside.

12. Ordinarily, we would not have proceeded further after declaring as illegal and setting aside the transfer of LOI in the name of the impleaded party. However, we note that subsequent to issuance of the revised LOI, the impleaded party has obtained clearance under the Forest Conservation Act, 1980 and that it has also made substantial investment for diversion of forest land for non-forest purpose. A period of 11 years has already passed after the decision of grant ML in the area was taken and the area is still lying idle. In view of the above, and keeping in mind the mineral development in the area, we are of the opinion that no useful purpose would be served if the entire exercise i.e. obtaining clearance under the Forest Conservation Act. etc done till date, is put to naught.

Moreover, during the course of hearing the impleaded party offered to withdraw their claim for the transfer of LOI and the State Govt. also offered to withdraw the impugned order. Since the transfer of the LOI in the name of the impleaded party has been set aside we are of the view

W.P.(C) 17320/2006 Page 6 that the LOI issued on 1.1.1995 in favour of LMEL after obtaining approval under Section 5(1) of the Act should revert to it.

The approval/clearance obtained by the impleaded party from the Central Government under the Forest Conservation Act may be considered to have been obtained by LMEL subject to clear argument (sic) of the Ministry of Environment and Forests."

(emphasis supplied)

(Note:- LMEL in the above quote is the fourth respondent herein).

8. The petitioner is aggrieved by the findings recorded by the

revisionary authority in paragraph 12 of the order dated 6th October,

2006 holding that the letter of intent in favour of the fourth respondent

continues to subsist and stands reverted. It is a contention of the

petitioner that the revisionary authority should not have issued the

said direction, which has resulted in revival of the letter of intent

issued by the State Government in favour of the fourth respondent,

dated 11th January, 1995 as modified on 11th September, 2003. It is

submitted that once the transfer was affected by the State

Government in favour of GMML by their letter dated 19th August,

2004, the earlier letters of intent in favour of the fourth respondent

were cancelled/terminated.

9. It is not possible to accept the contention of the petitioner. The

fourth respondent wanted to transfer or assign rights under the said

letter of intent to it's subsidiary GMML. Subsequently, when it was

found that it is not possible to assign and transfer the said rights, the

W.P.(C) 17320/2006 Page 7 parties i.e. the fourth respondent, GMML and the State Government

agreed that the original position as it exists, shall continue. The

revisionary authority in their order dated 6th October, 2006 has held

that under the MMDR Act and MC Rules, a letter of intent cannot be

transferred. The fourth respondent had made an application for

transfer of the letter of intent in favour of GMML, to the State

Government. They did not want to surrender the letter of intent or

give up their rights thereunder. GMML was/is a subsidiary of the

fourth respondent.

10. It was not the intention of the fourth respondent to surrender

their rights under the letter of intent to the State Government in case

transfer was not possible. The request made by the fourth respondent

was for transfer of or assignment of the letter of intent to their

subsidiary GMML. The State Government initially accepted the said

request but later on both GMML as well as the State Government

decided to withdraw their request and order. Therefore, the status

quo as it existed continues as the request for transfer stands rejected.

The State Government accepted the request for transfer of name

without even referring the matter to the Central Government. The

parties including the State Government did not intend to obliterate or

cancel the aforesaid letters of intent when the transfer request was

made to the GMML, a subsidiary of the petitioner. The letter of

transfer dated 19th August, 2004, states that all conditions mentioned

in the letter of intent would be applicable and all assets raised by the

W.P.(C) 17320/2006 Page 8 fourth respondent in respect of the said mineral belt and the liabilities

would be transferred to GMML. These pre conditions were to be

satisfied for the said assignment/transfer. To hold that the rights of

the fourth respondent in the letter of intent dated 11th January, 1995

as modified by letter dated 11th September, 2003, had come to an

end and became dead, would be unjust and inequitable to the fourth

respondent. It may be noted that the petitioner, the Central

Government and the State Government are supporting the stand of

the fourth respondent in this regard. The order dated 6th October,

2006, passed by the revisionary authority did not quash or set aside

the letter of intent. The revisionary authority has rightly held that all

the conditions under the letter of intent will continue to apply and will

be binding. The said finding of the revisionary authority does not merit

any interference by this Court.

12. The fourth respondent and GMML during the course of

hearing before the revisionary authority had made statements that the

request for transfer of the letter of intent stands withdrawn and the

Government of Maharastra had offered to withdraw the impugned

order. This is specifically recorded in paragraph 12 of the order dated

6th October, 2006, passed by the revisionary authority. The petitioner

herein has not challenged and questioned the said statements. The

petitioner cannot factually dispute or challenge the said statements

on the basis of personal knowledge of their officers as they were not

W.P.(C) 17320/2006 Page 9 party to the said revision petition and had not objected to the transfer

of the letter of intent in the name of the fourth respondent to GMML.

13. It is, therefore, clear that the intention of the parties i.e. the

fourth respondent and the State Government was never to novate or

cancel the original letter of intent. GMML was to be substituted and

assigned the rights under the original letter of intent. The original

letter of intent was not extinguished or rescinded. It was not the

intention of the parties that in case transfer application is not

accepted or assignment in favour of GMML is not possible or

permissible, still the letter of intent issued in favour of the fourth

respondents, would be treated as cancelled and void. Whether there

was complete novation and substitution by letter of intent dated 19th

August, 2004, annulling the earlier letter of intent dated 11th January,

1995/11th September, 2005, is an issue, which requires

ascertainment of intention of the parties. The intention of parties in

the present case was not to cancel and terminated the original letter

of intent. Keeping in view the facts stated above, the stand of the

fourth respondent and the State Government, it has to be held that

there was no novation or cancellation of the original letter of intent

dated 11th January, 1995 read with modification dated 11th

September, 2003.

14. In view of the aforesaid discussion, I do not find any error or

mistake in the order dated 6th October, 2006 passed by the

revisionary authority. Counsel for the fourth respondent had relied

W.P.(C) 17320/2006 Page 10 upon the decisions of the Supreme Court in Jasbhai Motibhai Desai

Vs. Roshan Kumar, Haji Bashir Ahmed & Others, (1976) 3 SCR

58 and Suvarna Cements Ltd. Vs. The Government of A.P. and

Others, AIR 2002 Andhra Pradesh 401 and submitted that the

petitioner herein is not an aggrieved person and, therefore, writ of

certiorari as prayed for is not maintainable. I am not deciding the said

contention in view of the reasoning given above. The other

contentions raised by the fourth respondent relying upon doctrine of

waiver are also not examined. However, it is noticed that the

petitioner has secured a letter of intent dated 6th October, 2006,

issued by the State Government covering an area of 2050 hectares.

This fact, however, is not mentioned in the writ petition, which was

filed on 1st November, 2006.

15. The writ petition has no merit and the same is accordingly

dismissed. In the facts and circumstances of the present case, there

will be no order as to cost.

SANJIV KHANNA (JUDGE) NOVEMBER 4th , 2009.

NA/P




      W.P.(C) 17320/2006                                         Page 11