M/S B. Kumaragowda & Sons vs Union Of India & Ors.
2010 Latest Caselaw 4966 Del

        IN THE HIGH COURT OF DELHI AT NEW DELHI


                  W.P.(C) 13697/2009 & CM APPL No. 7545/2010,
                      CM No. 4029/2010 & CM No. 15417/2009

        M/S B.KUMARAGOWDA & SONS                  ..... Petitioner
                     Through : Mr. Dhruv Mehta, Senior Advocate with
                     Mr. Yashraj Singh Deora and
                     Mr. Rajesh Kumar, Advocates.

                         versus

        UNION OF INDIA & ORS                          ..... Respondents
                      Through : Ms. Kimmi Brara Marwaha, Advocate
                      for R-1 and 5.
                      Mr. Swapnil Verma, Advocate for
                      Mr. Nikhil Nayyar, Advocate for R-2.
                      Mr. C.S. Vaidyanathan, Senior Advocate with
                      Ms. Kirti Mishra and Mr. Rishi Jain, Advocates
                      for R-4.


     CORAM: JUSTICE S. MURALIDHAR

        1. Whether Reporters of local papers may be
             allowed to see the judgment?                         No
        2. To be referred to the Reporter or not?                Yes
        3. Whether the judgment should be reported in Digest?    Yes

                                  JUDGMENT

28.10.2010

1. By this petition under Article 226 of the Constitution, the Petitioner M/s.

B. Kumaragowda & Sons, a partnership firm having its registered office at

Sandur, District Bellary in Karnataka challenges the final order No.

107/2009 dated 15th September 2009 passed by the Central Government

acting as the Mines Tribunal in Revision Application No. 13/ (10) 2007-RC-

I.

2. The Petitioner submitted an application to the State of Karnataka,

Respondent No. 2 herein, on 19th February 2004 for grant of a mining lease

(„ML‟) application in respect of iron and manganese ore over an extent of

315.66 hectares of land in Bhavihalli Village, NEB Range, Sandur Taluk,

Bellary District. Subsequently, the Petitioner reduced its claim to an extent

of 169.52 hectares. Admittedly, the area for which the Petitioner had applied

was previously held under an ML by M/s Chowgule & Company. The said

ML had been surrendered by M/s Chowgule & Company. However, there

was no Notification issued under Rule 59(1) of the Mineral Concession

Rules, 1960 („MCR‟) enabling others to apply for an ML for the said land.

On this ground, Respondent No. 2 issued a notice dated 26th April 2007 to

the Petitioner asking it to show cause why its application dated 19th February

2004 should not be rejected. In its reply to the said show cause notice, on

26th May 2007, the Petitioner requested the Respondent No.2 to obtain

relaxation of Rule 59(1) MCR from the Central Government (Respondent

No. 1 herein) in exercise of the latter‟s powers under Rule 59(2) MCR. The

Petitioner made a further representation on 19th July 2007.

3. It is stated that on 21st January 2007, Respondent No. 4 M/s.

Vishveshwaraiah Iron & Steel Plan („VISL‟) filed an application for grant of

ML in respect of iron and manganese ore over an extent of land measuring

140 hectares in NEB Range, Sandur Taluk, Bellary District. According to

the Petitioner, the area applied for by it and VISL overlapped completely.

4. On 30th July 2007, Respondent No. 2 wrote to Respondent No.1 referring

to VISL‟s application for grant of ML and requested for approval under Rule

59(2) MCR to grant exemption from notifying the area and also to reserve an

extent of 140 hectares of land in favour of VISL for a period of 30 years

under Section 17-A (2) of the Mines and Minerals (Development and

Regulation) Act, 1957 („MMDR‟ Act). According to the Petitioner, this

decision of the Respondent No. 2 to seek concurrence of Respondent No.1

was an implied rejection of the Petitioner‟s application for ML over the

same area. Accordingly, the Petitioner filed a revision application before the

Mines Tribunal under Rule 54 MCR to challenge the said decision dated 30th

July 2007.

5. By an order dated 29th August 2007, the Mines Tribunal stayed the

operation of the letter dated 30th July 2007 of Respondent No. 2. It is stated

that the said revision application was taken up for final hearing on 25th

September 2007 before a Bench of two members of the Mines Tribunal

comprising the then Director (Mines) Shri A.K. Mehta and the Additional

Legal Advisor, Department of Legal Affairs, Shri T.N. Tiwari. At the

conclusion of the hearing, orders were reserved by the said Bench on 25th

September 2007.

6. While the order was awaited, the Respondent No. 2 wrote to Respondent

No.1 on 15th March 2008 referring to its letter dated 30th July 2007.

Respondent No.2 stated that it had wrongly mentioned Section 17-A(2)

MMDR Act instead of 17-A(1A) MMDR Act in the letter dated 30th July

2007.

7. When the Petitioner received a copy of the final order dated 15th

September 2009 passed by the Mines Tribunal dismissing its revision

application, it noted that although the revision application had been heard by

a Bench of Shri Mehta and Shri Tiwari, the final order had been passed by

the Joint Secretary (Mines), Shri V.K. Thakral. It transpired that there had

been a divergence of opinion between Shri Mehta and Shri Tiwari. While

Shri Mehta had allowed the revision application filed by the Petitioner, Shri

Tiwari had disagreed and passed a separate order dated 24th August 2009

dismissing the revision application with the direction to the Respondent No.

2 to modify in the letter dated 30th July 2007 and change the reference of

Section 17-A (2) MMDR Act to that of Section 17-A(1A) MMDR Act.

8. Mr. Dhruv Mehta, learned Senior Counsel appearing for the Petitioner

first submits that one of the main grievances of the Petitioner is that the third

member Shri Thakral did not give any hearing to either of the parties and

proceeded to pass an order concurring with the view of Shri Tiwari and

dismissed the Petitioner‟s revision application. It was submitted that this

happened behind the back of the Petitioner and, therefore, was violative of

the principles of natural justice. It is submitted that on this short ground the

impugned final order dated 15th September 2009 of the Mines Tribunal

should be set aside and the Petitioner‟s revision application restored before

the third member for a hearing followed by a reasoned order.

9. Secondly, it is submitted by Mr. Mehta that Section 17-A (1A) MMDR

Act is inapplicable in the present case and was wrongly invoked by

Respondent no.2 in its letter dated 30th July 2007 addressed to Respondent

No. 1. It is pointed out that for Section 17-A (1A) MMDR Act can be

invoked by Respondent No.1 when it proposes to seek the concurrence of

the state government for reserving an area for a public sector undertaking

provided such area was not already held under any prospecting licence

(„PL‟) or ML. The letter dated 30th July 2007, according to the Petitioner,

was not a case where Respondent No.1 was making any proposal to reserve

an area in consultation with Respondent No.2. On the other hand, it was

Respondent No.2 was seeking approval of Respondent No.1 to reserve the

area in question in favour of VISL. It is pointed out that the position is no

better if Section 17-A (2) MMDR Act was invoked since VISL was a central

government undertaking and in any event since the land was earlier held

under an ML, even this provision would not apply.

10. Thirdly, Mr. Mehta drew the attention of this Court to an order passed by

the Respondent No. 2 on 6th January 2010 where a hearing was given to all

the applicants who applied for the area in question and a recommendation

was made to Respondent No.1 for grant of ML in favour of VISL over the

area of 140 hectares for iron and manganese ore for a period of 20 years

subject to Respondent No.1 exercising its powers under Rule 59(2) MCR

and exempting the area from being notified under Rule 59 (1) MCR. It is

submitted that the said order dated 6th January 2010 was in the teeth of the

order passed by this Court on 21st December 2009 staying the operation of

the letter dated 30th July 2007. It is submitted that all the points urged by the

Petitioner in this petition could be urged when its revision petition is revived

for hearing before the third Member of the Mines Tribunal.

11. Appearing for VISL, Mr. C.S. Vaidyanathan, learned Senior counsel

points out that remanding the case back to a third member would be a futile

exercise since, in any event, the application made by the Petitioner for grant

of ML over the area in question was premature since the area for which an

ML had been applied for by the Petitioner was admittedly earlier held under

an ML by M/s Chowgule & Company, a notification under Rule 59(1) MCR

had to necessarily be issued before an application of the Petitioner or any

other person for grant of an ML over the area in question could be

considered. In this case, in fact, Respondent No.2 had written to Respondent

No.1 for invoking the latter‟s powers under Rule 59(2) MCR to dispense

with the issuance of the notification under Rule 59(1) MCR and to reserve

the area for VISL. No decision had yet been taken as yet by Respondent

No.1 on the said request. Till such time no decision was taken by

Respondent No.1, there would be no cause of action for the Petitioner to

challenge the mere recommendation made by Respondent No.2 to

Respondent No.1 for exercising the powers under Rule 59 (2) MCR.

12. Referring to the judgment of the Supreme Court in Sandur Manganese

& Iron Ores Ltd. v. State of Karnataka 2010(9) SCALE 492, Mr.

Vaidyanathan points out that it is settled law that in respect of an area

already held under the ML, unless there is a notification under Rule 59(1) or

59(2) of the MCR, there was no question of considering the application for

grant of an ML in respect of such area. Mr. Vaidyanathan submits that since

the third member agreed with the other member Shri Mehta on this aspect

the majority view of the Mines Tribunal was that the Petitioner‟s revision

application should be dismissed. This was the only conclusion possible in

law and therefore remanding the Petitioner‟s revision application for a fresh

hearing by the third Member of the Mines Tribunal would be an empty

formality.

13. As regards the order dated 6th January 2010, Mr.Vaidyanathan did not

dispute that the applications of VISL and others ought not to have been

taken up for consideration by Respondent No. 2 since it was contrary to the

law explained by the Supreme Court in Sandur Manganese. However,

since the order dated 6th January 2010 itself stated that it was subject to

Respondent No.1 granting its approval under Rule 59(2) MCR nothing really

turned on the said order.

The Petitioner's application for ML is premature

14. This Court would like to first take up for consideration the point

concerning the Petitioner‟s application for grant of an ML over the area in

question. Rules 59 MCR reads as under:

"59. Availability of area for re-grant to be notified (1) No area--

(a) which was previously held or which is being held under a reconnaissance permit or a prospecting lience 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) in respect of which the order granting a permit or licence or lease has been revoked under sub-rule (1) or rule 7A or sub-rule (1) of rule 15 or sub-rule (1) of rule 31, as the case may be; or

(d) in respect of which a notification has been issued under sub-section (2) or sub-section (4) of section 17; or

(e) which has been reserved by the State Government or under section 17A of the Act, shall be available for grant unless--

(i) an entry to the effect that the area is available for grant is made in the register referred to in sub-rule (2) of rule 7D or 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 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 nothwithstanding 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.:

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 issued.

(2) The Central Government may, for reasons to be recorded in writing, relax the provisions of sub-rule (1) in any special case."

15. After analysing the above provisions as well as Section 11 of the MMDR

Act, the Supreme Court in Sandur Manganese observed as under (SCALE

@ pp. 516-17):

"38. We have already extracted Rules 59 and 60 and analysis of those rules confirms the interpretation of Section 11 above and the conclusion that it is Section 11(4) which would apply to a Notification issued under Rule 59(1). Rule 59(1) provides that the categories of areas listed in it including, inter alia, areas that were

previously held or being under a mining lease or which has been reserved 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 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 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 inconsistent with Rules 59 and 60. In such circumstances, a harmonious reading of Section 11 with Rules 59 and 60, therefore, mandates an interpretation under which Notifications would be issued under Section 11(4) in the case of categories of areas covered by Rule 59(1). In those circumstances, we are unable to accept the argument of learned senior counsel for Jindal and Kalyani with reference to those provisions." (emphasis supplied)

16. Thereafter, the Supreme Court observed that the Division Bench of the

High Court of Karnataka had erred "in concluding that applications made

prior to the notification under Rule 59(1) which are premature and cannot be

entertained under Rule 60 would revive upon issuance of the Notification."

It was thereafter observed as under (SCALE @ p. 517):

"39. ...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 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 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 Legislature itself would have inserted such a proviso at the end of Rule 60 if that were its intention."

17. In view of the above clear explanation of the law declared by the

Supreme Court in Sandur Manganese it is clear that as far as the present

case is concerned, the Petitioner‟s application for grant of ML cannot simply

be considered till such time no notification is issued either under Rule 59(1)

MCR or an exemption granted by Respondent No.1 under Rule 59(2) MCR.

Letter dated 30th July 2007 of Respondent No.2 not amenable to challenge

18. It was earnestly pleaded by Mr. Mehta that the decision dated 30 th July

2007 of Respondent No.2 recommending to Respondent No.1 that the area

should be reserved for VISL and that an exemption should be granted under

Rule 59(2) MCR, was a decision which can be challenged by the Petitioner.

This Court is unable to accept this submission. The very scope of Rules

59(1) and 59(2) shows that the recommendation by the State Government to

the Central Government does not have any meaning till there is concurrence

of the Central Government. In this context, reference may be made to the

relevant portions of Section 17-A MMDR Act which read as under:

"17-A. Reservation of area for purposes of conservation

(1) *** (1-A) The Central Government may in consultation with the State Government, reserve any area not already held under any prospecting licence or mining lease, for undertaking prospecting or mining operations through a Government company or corporation owned or controlled by it, and where it proposes to do so, it shall, by notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such area will be reserved.

(2) The State Government may, with the approval of the Central Government, reserve any area not already held under any prospecting licence or mining lease, for undertaking prospecting or mining operations through a Government company or corporation owned or controlled by it and where it proposes to do so, it shall, by notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such areas will be reserved. *** "

19. Although according to the Respondent No. 2, an error was made in

mentioning Section 17-A(2) MMDR Act instead of 17-A(1A) of MMDR

Act, the fact remains that as of date no decision has been taken on the

question whether the Central Government should invoke its powers under

Rule 59(2) MCR. It is only when the Central Government decides not to

invoke its powers under Rule 59(2) MCR that the question of issuing a

notification under Rule 59(1) would arise. Without such notification, there is

no question of entertaining any application filed by the Petitioner or by any

one for grant of ML in respect of the area in question. There is indeed no

cause of action as yet for the Petitioner to challenge the letter dated 30 th July

2007 addressed by Respondent No.2 to Respondent No.1.

Remand to Third Member an empty formality

20. Since this is the position on a pure question of law, and the third Member

has correctly concurred with Shri Tiwari one of the Members of the Mines

Tribunal, this Court does not consider it necessary to remand the Petitioner‟s

revision petition to the third Member of the Mines Tribunal for a fresh

hearing. It would indeed be an empty formality not serving any purpose.

21. Having held as such, this Court would like to observe that it does not

approve the procedure adopted by the Mines Tribunal in the instant case

where none of the parties was informed of the difference of opinion among

the two members who heard the revision petition finally. Further, without

informing either of the parties, the matter was placed before the third

member for his view. The third member chose not to issue notice of the

application to either of the parties or to give any opportunity of being heard

to either of the parties, and proceeded to pass an order in chambers on the

basis of which the final order of the Mines Tribunal was issued. This

procedure is not consistent with the requirements of the principles of natural

justice that the parties should be heard before any order is passed finally

determining the proceedings. This is particularly since the revision

application was in fact heard by a Bench of two members. The next logical

step in the event of a difference of opinion among the two members who

heard it would be to refer the revision petition to a third member with due

notice to the parties. Such third member must give each of the parties an

opportunity of being heard before passing a final order.

22. Although the above procedure was not followed in the instant case, for

the reasons already explained, this Court does not consider it necessary to set

aside the impugned final order of the Mines Tribunal only on this ground

and to remand the case again to the third member for a fresh hearing.

State Government's decision dated 6th January 2010

23. There can be no doubt that Respondent No. 2 erred in passing the order

dated 6th January 2010 after hearing all the applicants for the grant of ML for

the area in question and making a recommendation to respondent No.1 from

grant of ML in favour of VISL. This was contrary to the law explained by

the Supreme Court in Sandur Manganese with reference to Rules 59(1) and

59(2) MCR. There was no occasion for Respondent No. 2 to undertake such

an exercise of examining comparative merits of the applications of the

Petitioner and VISL and the others and make a recommendation for grant of

ML to VISL on that basis. Fortunately, the concluding portion of the order

dated 6th January 2010 makes it subject to the Central Government

exercising its powers under Rule 59(2) MCR. To that extent, therefore, the

order dated 6th January 2010 does not create any equity in favour of any

party, much less VISL. This should allay the apprehension of the Petitioner.

Conclusion

24. In the considered view of this Court, since the Petitioner‟s revision

petition has been decided correctly on a pure question of law by a majority

of the Members of the Mines Tribunal, remanding the matter to the third

member would indeed be an empty formality.

25. For the aforementioned reasons, this Court is not inclined to interfere

with the impugned final order dated 15th September 2009 of the Mines

Tribunal. Accordingly, the writ petition is dismissed but, in the

circumstances, with no order as to costs. The interim order stands vacated

and the pending applications are disposed of.

S. MURALIDHAR, J OCTOBER 28, 2010 ak