MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA AND ORS.

A on December 21, 1962 when the Notification was issued by the State of Bihar reserving the lands in dispute for exploitation by public sector, it had no power to do so. Learned senior counsel submitted that Amritla/ Nathubhai Shahd dealt with situation post 1963 amendment in Rule 59 and not pre- s amendment.

24Copy pinpoint24. Learned senior counsel submitted that the "reservation of mineral bearing areas for exploitation by public sector" is covered under the declaration made by Parliament under C Section 2 of the 1957 Act in view of List I, Entry 54 of Seventh Schedule to the Constitution of India. The topic relating to "reservation" is covered within the field of "regulating the grant of mining lease" and that would include the power to grant or not to grant mining lease to a particular person. The "reservation" would come within the scope of. "regulating the grant of mining lease" for which the Central Government is given the power to make rules. The Central Government, as a delegate of the Parliament, can frame rules with respect to "regulating the grant of mining lease". By placing reliance upon Baijnath Kadioc and Bharat Coking Coa/i, it was submitted that whether the rules are made or not, the topic is covered by Parliamentary Legislation and to that extent the power of State Legislature ceased to exist. With reference to Rule 58, it was submitted that by amendment brought in 1960 Rules in 1980, the State Governments became competent to reserve areas for exploitation by Government or a Corporation established by any Central, State or Provincial Act or a government company within the meaning of Section 617 of the Companies Act. The Central Government could frame the above rule under its rule- making power in Section 13 of 1957 Act only because the topic of reservation was covered within the declaration under Section 2 of the 1957 Act and was well within the scope of "to the extent hereinafter provided".

25Copy pinpoint25. In respect of validity of Notification dated October 27, H 2006 issued by the State Government, it was submitted ~hat

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 701 AND ORS. [R.M. LODHA, J.] 2006 Notification seeks to reserve the area for "joint venture" A but that is not permissible under Section 17A of the 1957 Act. Section 17A(2) mandates that the area should be reserved "with the approval of the Central Government" and there was no approval granted to the 2006 Notification. Moreover, 2006 Notification by its own words, is nothing but merely an informatory Notification having no legal significance or consequence.

26Copy pinpoint26. Dr. Rajiv Dhavan, learned senior counsel made his submissions on behalf of Jharkhand lspat. He vehemently contended that the 1962 Notification was wholly illegal and invalid as it was totally contrary to Rule 59 of 1960 Rules as it then stood which specifically allowed reservation for any purpose other than prospecting or mining for minerals. In this connection, he relied upon a decision of this Court in Janak Lal v. State of Maharashtra and Othersi. D

27Copy pinpoint27. Learned senior counsel referred to changes that occurred in 1957 Act and 1960 Rules with effect from February 10, 1987. He submitted that by virtue of Section 17A(3) which was brought in 1987 the State Governments acquired power E of reservation for specific areas with the approval of the Central Government. From April 13, 1988 under Rule 59(2) of the 1960 Rules, the Central Government could relax the provisions of sub- rule (1) in any special case. According to learned senior counsel, reservation under 1969 Notification was technically F · permissible because Rule 59 was amended in 1963 by removing 'no mining restriction' but reservations after 1980 and especially 1988 could be made only under a new statutory regime.

28Copy pinpoint28. Dr. Rajeev Dhavan also based his argument on the G doctrine of federalism and submitted that the State of Bihar had no legal power to reserve the area de hors the 1957 Act. He submitted that 1957 Act was wholly occupied field on the

j. 1989 (4) sec 121 H

p. 702 Copy page pinpoint

A subject of mines and minerals and that ousts the state legislative and congruent executive power wholly and squarely. In support of his submissions, he referred to the decisions of this Court in Hingir-Rampur Coal Co. a, Baijnath Kadioc , State of Assam and others v. Om Prakash Mehta and othersk, State of WB. B v. Kesoram Industries Ltd. and others 1 and Sandur Manganese and Iron Ores Limited v. State of Karnataka and Others"'.

29Copy pinpoint29. Dr. Rajeev Dhavan submitted that merely because C State happens to be the owner of the land including mines, it does not give it power to mine or reserve outside the regime of 1957 Act and 1960 Rules. He submitted that Amritlal Nathubhai Shah's cased must be confined to its own facts. The decision in Amritlal Nathlibhai Shahd was founded on the specific finding that the State's action was consistent with Rule D 59; it does not test the proposition of a conflict between the State's power over land and the Union's take over of the field of mines and minerals. Moreover, learned senior counsel would submit that Amritlal Nathubhai Shahd failed to take note of earlier Constitution Bench decisions of this Court. Learned E senior counsel also submitted that the decision of this Court in Kesoraml has no application as the said decision deals with the State's power to tax.

30Copy pinpoint30. Mr. Dhruv Mehta, learned senior counsel for Prakash F submitted that prior to November 16, 1980, there was no power with the State Governments to reserve any area for exploitation by the Government or a Corporation established by Central or State Act or a government company. It was only by way of amendment to Rule 58 on November 16, 1980 that for the first G time the State Governments were conferred power to reserve any area for exploitation by the Government or a Corporation established by the Central, State or Provincial Act or a

k. 1973 c1 l sec 584.

1. 2004 (10) sec 201. H m. 2010 (13) sec 1.

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 703 AND ORS. [R.M. LODHA, J.] government company. According to him, the question for A consideration in the present context should be whether prior to 1980, the State had power either to 'prohibit mining' or to 'reserve mining for public sector undertaking'. In this regard, he referred to decisions of this Court in Baijnath Kadioc, D.K. Trivedi and Sons and Others v. State of Gujarat and Others", B State of Tamil Nadu v. Mis. Hind Stone and Others0 and Indian Metals and Ferro Alloys Ltd. v. Union of India & OrsP. He submitted that in view of the above, 1962 Notification reserving iron ore area in the State of Bihar for exploitation of mineral in public sector was clearly beyond the power of the c State. He submitted that the State did not have any inherent power to reserve any area for mining in view of the declaration made by Parliament under Section 2 of the 1957 Act and in any case Rule 59 of the 1960 Rules, as it originally stood, specifically excluded reservation with regard to prospecting or D mining of mineral prior to June 9, 1963.

31Copy pinpoint31. As regards 2006 Notification, Mr. Mehta submitted that the said Notification firstly, was not a fresh exercise of reservation as it refers to reservation already made by 1962 and 1969 Notifications. Secondly, even if it is assumed that E 2006 Notification is a fresh order for reservation in exercise of the power under Section 17A(2) of the 1957 Act, yet the said Notification suffers from diverse infirmities, namely, (a) there is no approval by the Central Government and (b) being an exercise of subordinate legislation, it cannot be given F retrospective effect. Reliance was placed by the learned senior counsel on Hukam Chand etc. v. Union of India & Ors"-.

Central Government's Stand

32Copy pinpoint32. Mr. Ashok Bhan, learned senior counsel for the Union G

n. 1986 (Suppl.) SCC 20. o. 1981 (2) sec 20s. p. 1992 Supp (1) sec 91. q. 1972 (2) sec 601. H

p. 704 Copy page pinpoint

A of India referred to Entry 54 of the Union List, Entry 23 of the State List, Article 246 of the Constitution, various Sections of 1957 Act and Rules of 1960 Rules and submitted that Central Government having taken power on to itself by enacting 1957 Act, the legislative field relating to 'minerals - regulation and B development' is occupied and the Central Government was the sole regulator. Mr. Ashok Bhan submitted that under the scheme of law, the State Government was denuded of its power other than what flows from the 1957 Act. In matters of regulation of mines and development of minerals, according to Mr. Ashok c Bhan, public interest is paramount.

Reply on behalf of the State Government

33Copy pinpoint33. Mr. Ajit Kumar Sinha, learned senior counsel for the State of Jharkhand, in reply, strongly contested the contentions of learned senior counsel appearing for the appellants. He vehemently contended that the State Government had the inherent power to reserve any area for exploitation as the owner of the land and minerals vested in it. He submitted that the Bihar Legislature enacted 1950 Bihar Act which received the assent of the President and came into force on September 25, 1950. Section 4(a) thereof vested all pre-existing estates or tenures including rights in mines and minerals absolutely in the State free from all encumbrances. 1950 Bihar Act has been held to be constitutionally valid by a decision of this Court in The State F of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga and Ors.'. In any event, Mr. Ajit Kumar Sinha, learned senior counsel submitted that 1950 Bihar Act has been put in the Ninth Schedule of the Constitution and was, therefore, beyond the pale of challenge. Moreover, the sovereign executive G power of the State Government under Article 298 of the Constitution to carry on any trade or business and to acquire, hold and dispose of property for any purpose comprehends and includes the power to reserve land for exploitation of its minerals in the public sector. He heavily relied upon the decisions of this H r. 1952 SCR 889.

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 705 AND ORS. [R.M. LODHA, J.] Court in Amritla/ Nathubhai Shahd, Indian Metals and Ferro A Alloys Ltd. P and Bhupatrai Magan/al Joshi and Others v. Union of India and another6.

34Copy pinpoint34. Mr. Ajit Kumar Sinha, leaned senior counsel submitted that the source of power for issuance of 1962, 1969 and 2006 8 Notifications is clearly traceable to the relevant statutory provisions. Learned senior counsel would submit that source of 1962 and 1969 Notifications issued by the then State of Bihar was traceable to Rule 59 of i 960 Rules as it then stood followed by amendment in that rule on July 9, 1963, while 2006 Notification is traceable to Section 17A(2) of 1957 Act read with Rule 59(1)(e) as inserted with effect from April 13, 1988.

35Copy pinpoint35. Mr. Ajit Kumar Sinha, learned senior counsel submitted that even otherwise there was no conflict or encroachment by the State of any occupied field. The State has neither been divested nor barred nor prohibited by 1957 Act or 1960 Rules. Instead, the unfettered power of reservation vested with the State alone under Rule 59 of 1960 Rules from 1962 to 1987 and thereafter under Section 17A(2). According to him, after 1987 there is a concurrent power of reservation both with State E Governments as well as Central Government as provided in Section 17A of the 1957 Act and Rule 59(1)(e) of the 1960 Rules. He relied upon decisions of this Court in Lord Krishna Textile Mills v. Its Workmen!, Life Insurance Corporation of India v. Escorts Limited and othersu, Municipal Corporation F for City of Pune & Ors. v. Bharat Forge Co. Ltd. & Ors. v and High Court of Judicature for Rajasthan v. P.P. Singh and Another"'.

36Copy pinpoint36. Mr. Ajit Kumar Sinha, learned senior counsel referred G s. 2001 c10) sec 476. t. AIR 1961 SC 860. u. 1986 (1) sec 264. v. 1995 (3) sec 434. w. 2003 (4) sec 239. H

p. 706 Copy page pinpoint

A to the provisions of the 1957 Act, particularly Sections 2, 4(3), 4A, 10(1), 13(2)(e), 16(1)(b), 17(1), 17A(1)(A), 18A(6), 21(5), 28 and 30 to show that Parliament itself contemplated state legislation for vesting of lands containing mineral deposits in the State Government and Parliament did not intend to trench B upon powers of State legislatures under Entry 18 of List II. He relied upon the decisions of this Court in State of Haryana and Another v. Chanan Mal and Othersx, lshwari Khetan Sugar Mills (P) Limited & Ors. v. State of Uttar Pradesh and Othersr and Kesoraml1• He heavily relied upon the expression employed c in Entry 54, 'to the extent to which such regulation and development under the control of Union is declared by Parliament by law' and the expression 'to the extent hereinafter provided' in Section 2 of 1957 Act and submitted that what follows from this is that only when there is a bar or a prohibition 0 in the law declared by the Parliament in the 1957 Act and/or the Rules made thereunder and if the State encroaches on the field covered/occupied then to that extent, the act or action of the State would be ultra vires. Thus, Mr. Ajit Kumar Sinha would submit that the power or competence of the state legislatures to enact laws or of the State Government to issue notification E remains unaffected if the field is neither occupied nor disclosed nor prohibited. In this regard, he referred to few decisions of this Court, namely, Hingir-Rampur Coal Co.•, M.A. Tulloch & Cob., Baijnath Kadioc, India Cement Limitede, Bharat Coking Coal, Orissa Cement Limitedf and Kesoram 1 •

37Copy pinpoint37. Learned senior counsel would submit that the Central Government also upon examination of the applications made by the appellants rejected the proposals on the ground of reservation made by the then State of Bihar under 1962 and G 1969 Notifications and, thus, it can be inferred that these Notifications received post facto approval from the Central Government. In this regard, learned senior counsel relied upon Mis Motilal Padampat Sugar Mills Co. Ltd. V. State of U.P. x. 1977 (1) sec 340. H y. rnao (4) sec 136.

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 707 AND ORS. [R.M. LODHA, J.] & Ors.', Amrit Banaspati Ltd. and Another v. State of Punjab A and Another•, State of Punjab v. Nestle India Ltd. and Anothefib, M.P. Mathur and Others v. OTC and Otherscc and Sandur Manganese and Iron Ores Limitedmm.

38Copy pinpoint38. Mr. Ajit Kumar Sinha, learned senior counsel submitted 8 that 1962 and 1969 Notifications issued by the then State of Bihar have been reiterated by the State Government on its formation by 2006 Notification. He referred to Section 85 of the Bihar Reorganization Act, 2000 that provides that the appropriate government may, before the expiration of two years adapt and/or modify the law and every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent legislature. He, thus, submitted that by virtue of Section 85 of Bihar Reorganization Act, 2000 read with Sections 84 and 86 thereof, it is clear that the existing law shall have effect till it is altered, repealed and/or amended.

lnterveners' view

39Copy pinpoint39. Mr. Vikas Singh, Mr. Krishnan Venugopal and Mr. P.S. E Narasimha, learned senior counsel, appeared for interveners. While adopting the arguments advanced on behalf of State of Jharkhand, Mr. Vikas Singh submitted that reservation of minerals is inherent right vested in the State. Mr. Krishnan Venugopal, learned senior counsel heavily relied upon the F decision of this Court in Amritlal Nathubhai Shahd and submitted that the said decision was binding and not per incuriam as contended on behalf of the appellants. He submitted that many provisions in 1957 Act and 1960 Rules acknowledge that all minerals vest in the State and that power to reservation is contemplated by Rule 59 of 1960 Rules. G

z. 1979 (2) sec 409. aa. 1992 (2) sec 411. bb. 2004 (6) sec 465. cc. 2006 (13) sec 106. H

p. 708 Copy page pinpoint

40Copy pinpoint40. After this group of appeals was fully argued before us and the appeals were reserved for judgment, a Special Leave Petition, Geo-Minerals and Marketing (P) Ltd. v. State of Orissa & Ors., arising out of the judgment of Orissa High Court in W.A. © No. 6288/2006 came up for final disposal wherein one of the issues concerning reservation of mining area by the Government of Orissa for exploitation in public sector was found to be involved. We thought fit that learned senior counsel and counsel appearing in that matter were also heard so that we cal'.l have benefit ·of their view-point as well. Accordingly, we heard Mis. Harish Salve, K.K. Venugopal and R.K. Dwivedi, learned senior counsel, on the common legal aspect.

41Copy pinpoint41. I would have preferred not to burden this judgment with the text of Entry 54 of List I, Entry 23 of List II and the relevant provisions contained in 1957 Act and 1960 Rules but reproduction of some of the provisions is necessary for having the point under consideration in proper perspective.

Relevant Entries

42Copy pinpoint42. Entry 54, List I, is as follows : E "54. Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest." F

43Copy pinpoint43. Entry 23, List II, is as under :

"23. Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union." G Mines and Minerals (Regulation and Development) Act, 1948

44Copy pinpoint44. The Mines and Minerals (Regulation and Development) H Act, 1948 (for short, '1948 Act') was enacted to provide for the

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 709 AND ORS. [R.M. LODHA, J.] regulation of mines and oilfields and for the development of the A minerals under Entry 36 of the Government of India Act, 1935. It received the assent of the Governor General on September 8, 1948 and came into effect from that date. Under 1948 Act, the Central Government framed Mineral Concession Rules, 1W9. B

45Copy pinpoint45. 1948 Act was repealed by 1957 Act. The introduction of 1957 Act reads as follows :

"In the Seventh Schedule of the Constitution in Union List entry 54 provides for regulation of mines and minerals development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest. On account of this provision it became imperative to have a separate legislation. In order to provide for the regulation of mines and the development of minerals, the Mines and Minerals (Regulation and Development) Bill was introduced in the Parliament."

Mines and Minerals (Regulation and Development) Act, E 1957 and the Amendments

46Copy pinpoint46. 1957 Act came into effect on June 1, 1958. It has been amended from time to time.

47Copy pinpoint47. Section 2 of the 1957 Act reads as follows : F

"S. 2. Declaration as to the expediency of Union control.- - It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the G extent hereinafter provided."

48Copy pinpoint48. Section 3(a),(c},(d),(e),(f), (g) and (h) defines 'minerals', 'mining lease', 'mining operations', 'minor minerals', 'prescribed' 'prospecting licence' and 'prospecting operations' in the 1957 Act as under: H

p. 710 Copy page pinpoint

A "3(a) "minerals" includes all minerals except mineral oils;

(c) "mining lease" means a lease granted for the purpose of undertaking mining operations, and includes a sub-lease granted for such purpose; B (d) "mining operations" means any operations undertaken for the purpose of winning any mineral;

(e) "minor minerals" means building stones, gravel, ordinary clay, ordinary sand other than sand used for c prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral;

(f) "prescribed" means prescribed by rules made under this Act; D (g) "prospecting licence" means a licence granted for the purpose of undertaking prospecting operations;

(h} "prospecting operations" means any operations undertaken for the purpose of exploring, locating or proving mineral deposits;"

49Copy pinpoint49. The original Section 4 in 1957 Act read as follows :

"S.4. (1) No person shall undertake any prospecting or mining operations in any area, except under and in accordance with the terms and conditions of a prospecting licence or, as the case may be, a mining lease, granted under this Act and the rules made thereunder:

Provided that nothing in this sub-section shall affect any prospecting or mining operations undertaken in any area in accordance with the terms and conditions of a prospecting licence or mining lease granted before the commencement of this Act which is in force at such commencement. H

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 711 AND ORS. [R.M. LODHA, J.] (2) No prospecting licence or mining lease shalrbe granted A otherwise than in a_ccordance with the provisions of this Act and the rules made thereunder."

50Copy pinpoint50. In 1986, 1987 and 1999, Section 4 of the 1957 Act came to be amended. After these amendments, Section 4 B reads as under :

"5.4.- Prospecting or mining operations to be. under licence or lease.-(1) dd[No person shall undertake any reconnaissance, prospecting or mining operations in any area, except under and in accordance with the terms and c conditions of a reconnaissance permit or of a prospecting licence or, as the case may be, of a mining lease, granted under this Act and the rules made thereunder]:

Provided that nothing in this sub-section shall affect D any prospecting or mining operations undertaken in any area in accordance with the terms and conditions of a prospecting licence or mining lease granted before the commencement of this Act which is in force at such commencement: E ••[Provided further that nothing in this sub-section shall apply to any prospecting operations undertaken by the Geological Survey of India, the Indian Bureau of Mines, '![the Atomic Minerals Directorate for Exploration and Research] of the Department of Atomic Energy of the F Central Government, the Directorates of Mining and Geology of any State Government (by whatever name called), and the Mineral Exploration Corporation Limited, a Government company within the meaning of section 617 of the Companies Act, 1956:] G

dd. Subs. by Act 38 of 1999, sec. 5, for certain words (w.e.f. 18-12-1999). ee. Ins. by Act 37 of 1986, sec. 2 (w.e.f. 10-2-87). ff. Subs. by Act 38 1999, sec. 5, for "the Atomic Minerals Division" (w.e.f. 18- 12-1999) H

p. 712 Copy page pinpoint

A 99[Providedalso that nothing in this sub-section shall apply to any mining lease (whether called mining lease, mining concession or by any other name) in force immediately before the commencement of this Act in the Union Territory of Goa, Daman and Diu.] B hh[(1A) No person shall transport or store or cause to be transported or stored any mineral otherwise than in accordance with the provisions of this Act and the rules made thereunder.] c (2) ;;[No reconnaissance permit, prospecting licence or mining lease] shall be grated otherwise than in accordance with the provisions of this Act and the rules made thereunder.

D H[(3) Any State Government may, after prior consultation with the Central Government and in accordance with the rules made under section 18, kk[undertake reconnaissance, prospecting or mining operations with respect to any mineral specified in the First Schedule in any area within that State which is not already held under any reconnaissance permit, prospecting licence or mining lease]."

51Copy pinpoint51. Section 5 of the 1957 Act, as originally enacted, provided that no prospecting licence or mining lease should be granted by a State Government to any person unless the conditions prescribed therein were satisfied. It mandated previous approval of the Central Government before grant of prospecting licence or mining lease by the State Government.

G gg. Ins. by Act 16 of 1987, sec 14 (w.r.e.f. 1-10-1963). hh. Ins. by Act 38 of 1999, sec. 5 (w.e.f. 18-12-1999). ii. Subs. by Act 38of1999, sec 5, for "No prospecting licence of mining lease'( w.e.f. 18-12-1999). jj. Ins. by Act 37 of 1986, sec. 2 (w.e.f. 10-12-1987) H kk. Subs. by Act 38 of 1999, sec. 5, for certain words (w.e.f. 8-12-1999).

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 713 AND ORS. [R.M. LODHA, J.]

52Copy pinpoint52. The original Section 5 came to be amended in 1_986, A 1994 and 1999. After these amendments, Section 5 now provides that a State Government shall not grant a reconnaissance permit, prospecting licence or mining lease to any person unless he satisfies the requisite conditions. The provision mandates that in respect of any mineral specified in the First Schedule, no reconnaissance permit, prospecting licence or mining lease shall be granted except with the previous approval of the Central Government.

53Copy pinpoint53. Section 6 of 1957 Act provides for maximum area for which a prospecting licence or mining lease may be granted. Section 7 makes provision for the periods for which prospecting licence may be granted or renewed and Section 8 provides for periods for which mining lease may be granted or renewed. D

54Copy pinpoint54. Section 10 of the 1957 Act provides that application for reconnaissance permit, prospecting licence or mining lease in respect of any land in which the minerals vest in the Government shall be made to the State Government concerned. Inter alia, it empowers the concerned State Government to grant E or refuse to grant the permit, licence or lease having regard to the provisions of 1957 Act or 1960 Rules.

55Copy pinpoint55. The original Section 11 of the 1957 Act read as follows: F "S.11.(1) Where a prospecting licence has been granted in respect of any land, the licensee shall have a preferential right for obtaining a mining lease in respect of that land over any other person:

Provided that the State Government is satisfied that G the licensee has not committed any breach of the terms and conditions of the prospecting licence and is otherwise a fit person for being granted the mining lease.

p. 714 Copy page pinpoint

A (2) Subject to the provisions of sub-section (1), where two or more persons have applied for a prospecting licence or a mining lease in respect of the same land, the applicant whose application was received earlier shall have a preferential right for the grant of the licence or B lease, as the case may be, over an applicant whose application was received later:

Provided that where any such applications are received on the same day, the State Government, after taking into consideration the mattes specified in sub- c section (3), may grant the prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit.

(3) The matters referred to in sub-section (2) are the D following :-

(a) any special knowledge of, or experience in, prospecting operations or mining operations, as the case may be, possessed by the applicant; E (b) the financial resources of the applicant;

(c) the nature and quality of the technical staff employed or to be employed by the applicant;

(d) such other matters as may be prescribed. F (4) Notwithstanding anything contained in sub-section (2) but subject to the provisions of sub-section (1), the State Government may for any special reasons to be recorded and with the previous approval of the Central Government, G grant a prospecting licence or a mining lease to an applicant whose application was received later in preference to an applicant whose application was received earlier."

56Copy pinpoint56. The above provision was substituted by Act 38 of 1999 H

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 715 AND ORS. [R.M. LODHA, J.] with effect from December 18, 1999. After substitution, Section A 11 now reads as under :

"S.11. Preferential right of certain persons.-(1) Where a reconnaissance permit or prospecting licence has been granted in respect of any land, the permit holder or the 8 licensee shall have a preferential right for obtaining a prospecting licence or mining lease, as the case may be, in respect of that land over any other person:

Provided that the State Government is satisfied that the permit holder or the licensee, as the case may be,- c {a) has undertaken reconnaissance operations or prospecting operations, as the case may be, to establish mineral resources in such land; D {b) has not committed any breach of the terms and conditions of the reconnaissance permit or the prospecting licence;

(c) has not become ineligible under the provisions of this Act; and E

(d) has not failed to apply for grant of prospecting licence or mining lease, as the case may be, within three months after the expiry of reconnaissance permit or prospecting licenc;:e, as the case may be, or within such further period, as may be extended by the said Government.

(2) Subject to the provisions of sub-section (1), where the State Government has not notified in the Official Gazette the area for grant of reconnaissance permit or prospecting licence or mining lease, as the case may be, and two or more persons have applied for a reconnaissance permit, prospecting licence or a mining lease in respect of any land in such area, the applicant whose application was received earlier, shall have the H

p. 716 Copy page pinpoint

A preferential right to be considered for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, over the applicant whose application was received later:

Provided that where an area is available for grant of B reconnaissance permit, prospecting licence or mining lease, as the case may be, and the State Government has invited applications by notification in the Official Gazette for grant of such permit, licence or lease, all the applications received during the period specified in such c notification and the applications which had been received prior to the publication of such notification in respect of the· lands within such area and had not been disposed of, shall be deemed to have been received on the same day for the purposes of assigning priority under this sub-section: D Provided further that where any such applications are received on the same day, the State Government, after taking into consideration the matter specified in sub- section (3), may grant the reconnaissance permit, E prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit.

(3) The matters referred to in sub-section (2) are the following :-

F (a) any special knowledge of, or experience in, reconnaissance operations, prospecting operations or mining operations, as the case may be, possessed by the applicant.

G (b) the financial resources of the applicant;

(c) the nature and quality of the technical staff employed or to be employed by the applicant;

(d) the investment which the applicant proposes to H make in the mines and in the industry based on the

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 717 AND ORS. [R.M. LODHA, J.] minerals; A

(e) such other matters as may be prescribed.

(4) Subject to the provisions of sub-section (1 ), where the Sate Government notifies in the Official Gazette an area for grant of reconnaissance permit, prospecting license or mining lease, as the case may be, all the applications received during the period as specified in such notification, which shall not be less than thirty days, shall be considered simultaneously as if all such applications have been received on the same day and the State Government, after taking into consideration the matter specified in sub- section (3), may grant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit. D (5) Notwithstanding anything contained in sub-section (2), but subject to the provisions of sub-section (1 ), the State Government may, for any special reasons to be recorded, grant a reconnaissance permit, prospecting licence or mining lease, as the case may be, to an E applicant whose application was received later in preference to an applicant whose application was received earlier:

Provided that in respect of minerals specified in the First Schedule, prior approval of the Central Government F shall be obtained before passing any order under this sub- section."

57Copy pinpoint57. Section 13 of the 1957 Act empowers Central Government to make rules in respect of minerals. By virtue of G the power conferred upon the Central Government under Section 13(2)(e), 1960 Rules have been framed for regulating the grant of, inter alia, mining leases in respect of minerals and for purposes connected therewith.

58Copy pinpoint58. Section 14 states that the provisions of Sections 5 to H

p. 718 Copy page pinpoint

A 13 (both inclusive) shall not apply to quarry leases, mining leases or other mineral concessions in respect of minor minerals. Section 15 empowers State Governments to make rules in respect of minor minerals.

59Copy pinpoint59. Section 16 provides for power to modify mining leases 8 granted before 25th October, 1949. The original sub-section (1) of Section 16 mandated that all mining leases granted before October 25, 1949 shall be brought into conformity with the provisions of 1957 Act and the Rules made under Sections 13 and 18 after the commencement of 1957 Act. Then it provided that if the Central Government was of the opinion that in the interest of mineral development it was expedient so to do, it might permit any person to hold one or more such mining leases covering in any one State a total area in excess of that specified in clause (b) of Section 6 or for a period exceeding that specified in sub-section (1) of Section 8. Sub-section (1) of Section 16 has been amended in 1972 and 1994.

60Copy pinpoint60. By virtue of Section 17, the Central Government has been given special powers to undertake prospecting or mining operations in certain cases. Section 17(1) was amended in

1972. After amendment, Section 17(1) reads as under :

"S. 17.- Special powers of Central Government to undertake prospecting or mining operations in certain lands.-( 1) The provisions of this section shall apply in respect of land in which the minerals vest in the Government of a State or any other person."

61Copy pinpoint61. Section 17A was inserted in the 1957 Act by Act 37 of 1987. Thereafter, sub-section (1A) was added in Section G 17A by Act 25 of 1994. Section 17A, after its amendment in 1994, reads as follows :

"S. 17 A. Reservation of area for purposes of conservation.-(1) The Central Government, with a view to conserving any mineral and after consultation with the H

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 719 AND ORS. [R.M. LODHA, J.] State Government, may reserve any area not already held A under any prospecting licence or mining lease 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. B

(1A) 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 c 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. D (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 E 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. F (3) Where in exercise of the powers conferred by sub-section (1A) or sub-section (2) the Central Government or the State Government, as the case may be, undertakes prospecting or mining operations in any area in which the minerals vest in a private person, it shall be liable, to pay prospecting fee, royalty, surface rent or dead G rent, as the case may be, from time to time at the same rate at which it would have been payable under this Act if such prospecting or mining operations had been undertaken by a private person under prospecting licence H

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A or mining lease."

62Copy pinpoint62. Section 18 states that it shall be the duty of the Central Government to take all such steps as may be necessary for the conservation and systematic development of minerals in India and for the protection of environment by preventing or 8 controlling any pollution which may be caused by prospecting or mining operations and for such purposes the Central Government may make rules. Sub-section (2) of Section 18 empowers the Central Government to make rules and provide for the matters stated in clause (a) to clause (q).

63Copy pinpoint63. Section 18A was inserted in 1957 Act to enable the Central Government to authorize Geological Survey of India to carry out necessary investigation for the purpose of obtaining information with regard to availability of any mineral in or under any land in relation to which any prospecting licence or mining lease has been granted by a State Government or by any other person. Proviso that follows sub-section (1) of Section 18A provides that in cases of prospecting licences or mining leases granted by a State Government, no such authorization shall be made except after consultation with the State Government. To the extent Section 18A is relevant, it is reproduced as under :

"S. 18A. Power to authorize Geological Survey of India, etc., to make investigation.-(1) Where the Central Government is of opinion that for the conservation and development of minerals in India, it is necessary to collect as precise information as possible with regard to any mineral available in or under any land in relation to which any prospecting licence or mining lease has been granted, whether by the State Government or by any other person, the Central Government may authorize the Geological Survey of India, or such other authority or agency as it may specify in this behalf, to carry out such detailed investigation for the purpose of obtaining such information as may be necessary: H

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 721 AND ORS. [R.M. LODHA, J.] Provided that in the cases of prospecting licences A or mining leases granted by a State Government, no such authorization shall be made except after consultation with the State Government.

xxx xxx xxx xxx xxx B (6) The costs of the investigation made under this section shall be borne by the Central Government.

Provided that where the State Government or other person in whom the minerals are vested or the holder of c any prospecting licence or mining lease applies to the Central Government to furnish to it or him a copy of the report submitted under sub-section (5), that State Government or other person or the holder of a prospecting licence or mining lease, as the case may be, shall bear D such reasonable part of the costs of investigation as the Central Government may specify in this behalf and shall, on payment of such part of the costs of investigation, be entitled to receive from the Central Government a true copy of the report submitted to it under sub-section (5}." E

64Copy pinpoint64. Section 19 provides that any prospecting licence or mining lease granted, renewed or acquired in contravention of the provisions of 1957 Act or any rules or orders made thereunder shall be void and of no effect. Section 19 underwent amendments in 1994 and 1999 but these amendments are not of much relevance for the purposes of these matters.

65Copy pinpoint65. By virtue of Section 29, the rules made or purporting to have been made under the 1948 Act insofar as consistent with the matters provided in 1957 Act were made to continue until superseded by the rules made under the 1957 Act. Thus, the rules framed under 1948 Act continued to operate until 1960 Rules were framed.

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A Mineral Concession Rules, 1960 and the Amendments

66Copy pinpoint66. 1960 Rules were framed by the Central Government in exercise of the powers conferred by Section 13 of the 1957 Act. These Rules were published on November 11, 1960. As noticed above, until these Rules came into effect, the Rules 8 framed under 1948 Act remained operative.

67Copy pinpoint67. By virtue of Rule 8, the provisions of Chapters 11, Ill and IV have been made applicable to the grant of reconnaissance permits as well as grant and renewal of prospecting licences C and mining leases in respect of the land in which the minerals vest in the State Government.

68Copy pinpoint68. Rule 9 provides that an application for a prospecting licence and its renewal in respect of land in which the minerals vest in Government shall be made to the State Government in 0 Form B and Form D respectively. The State Government is empowered to relax the provisions of clause (d) of sub-rule (2) of Rule 9.

69Copy pinpoint69. Chapter-IV deals with grant of mining leases in respect of land in which the minerals vest in the Government. Sub-rule E (1) of Rule 22 provides that an application for the grant of a mining lease in respect of land in which the minerals vest in the Government shall be made to the State Government in Form I. Sub-rule (4) of Rule 22 provides that on receipt of the application for the grant of a mining lease, the State F Government shall take decision to grant precise area and communicate such decision to the applicant. The applicant, on receipt of communication from the State Government of the precise areas to be granted, is required to submit a mining plan within a period of six months or such other period as may be G allowed by the State Government, to the Central Government for its approval. The applicant is required to submit the mining plan, duly approved by the Central Government or by an officer duly authorized by the Central Government, to the State Government to grant mining lease over that area. Sub-rule (4A) H of Rule 22 is a non-obstante clause and empowers the State Government to approve mining plan of open cast mines (mines

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 723 AND ORS. [R.M. LODHA, J.] other than the underground mines) in respect of non-metallic A or industrial minerals set out in clauses (i) to (xxix) in their respective territorial jurisdiction. Such power of approval of mining plan has to be exercised by the State Government through officer or officers having qualification, experience and post and pay-scale as set out therein. Under sub-rule (48) of B Rule 22, the Central Government or the State Government has to dispose of the application for approval of mining plan within a period of ninety days from the date of receiving such application.

70Copy pinpoint70. Rule 22D substituted by Notification dated January 17, c 2000 makes provision for a minimum size of the mining lease.

71Copy pinpoint71. Rule 26 that was substituted by Notification dated July 18, 1963 was amended in 1979, 1988, 1991 and 2002. Rule 26 now reads as under: D

"26. Refusal of application for grant and renewal of mining lease.- (1) The State Government may, after giving an opportunity of being heard and for reasons to be recorded in writing and communicated to the applicant, refuse to grant or renew a mining lease over the whole or part of the area applied for.

(2) An application for the grant or renewal of a mining lease made under rule 22 or rule 24A, as the case may be, shall not be refused by the State Government only on the ground that Form I or Form J, as the case may be, is not complete in all material particulars, or is not accompanied by the documents referred to in sub-clauses (d),(e),(f),(g) and (h) of clause (i) of sub-rule 22. G (3) Where it appears that the application is not complete in all material particulars or is not accompanied by the required documents, the State Government shall, by notice, require the applicant to supply the omission or, as the case H

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A may be, furnish the documents, without delay and in any case not later than thirty days from the date of receipt of the said notice by the applicant.

72Copy pinpoint72. Rule 31 provides for the time period within which lease is to be executed. It also provides for the date of 8 commencement of the period.

73Copy pinpoint73. Rule 58, as it originally stood, read as under:

"58. Availability of areas for reg rant to be notified. (1) c No area which was previously held or which is being held under a prospecting licence or a mining lease as the case may be, or in respect of which the order granting licence or lease has been revoked under sub-rule (1) of rule 15 or sub-rule (1) of rule 31, shall be available for grant unless- D (a) an entry to the effect made in the register referred to in sub-rule (2) of rule 21 or sub-rule (2) of rule 40, as the case may be in ink; and

(b) the date from which the area shall be available for grant E is notified in the Official Gazette at least thirty days in advance.

(2) The Central Government may, for reasons to be recorded in writing, relax the provisions of sub-rule (1) in any special case." F Rule 58 was amended on November 16, 1980 and the amended Rule 58 read as under :

"58. Reservation of area for exploitation in the public G sector etc.- The State Government may, by notification in the Official Gazette, reserve any area for the exploitation by the Government, a Corporation established by the Central, State or Provincial Act or a Government company within the meaning of section 617 of the Companies Act, H 1956 (1 of 1956)."

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 725 AND ORS. [R.M. LODHA, J.] Later on, Rule 58 has been omitted. A

74Copy pinpoint74. Rule 59, as originally framed in 1960 Rules, read as under:

"59. Availability of certain areas for grant to be notified.- In the case of any land which is otherwise available for the B grant of a prospecting licence or a mining lease but in respect of which the State Government has refused to grant a prospecting licence or a mining lease on the ground that the land should be reserved for any purpose, other than prospecting or mining for minerals, the State C Government shall, as soon as such land becomes again available for the grant of a prospecting or mining lease, grant the licence or lease after following the procedure laid down in rule 58." D The original Rule 59 was amended vide Notification dated July 9, 1963. After the said amendment, the Rule read as under :

"59. - Availability of certain areas for grant to be notified.- In the case of any land which is otherwise available for the grant of a prospecting licence or a mining E lease but in respect of which the State Government has refused to grant a prospecting licence or a mining lease on the ground that the land should be reserved for any purpose, the State Government shall, as soon as such land becomes again available for the grant of a F prospecting or mining lease, grant the licence or lease after following the procedure laid down in rule 58."

Rule 59 was again amended in 1980. After amendment, the said rule read as under : G "59. Availability of area for regrant to be notified-(1) No area-

(a) which was previously held or which is being held under a prospecting licence or a mining lease; or H

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A (b) in respect of which an order had been made for the grant of a prospecting licence or mining lease, but the applicant has died before the grant of the licence or the execution of lease, as the case may be; or

(c) in respect of which the order granting a licence or lease B has been revoked under sub-rule (1) of rule 15 or sub-rule (1) of rule 31; or

(d) in respect of which a notification has been issued under sub-section (2) or sub-section (4) of section 17; or c (e) which has been reserved by Government under rule 58,

shall be available for grant unless-

(i) an entry to the effect that the area is available for D grant is made in the register referred to in sub-rule (2) of rule 21 or sub-rule (2) of rule 40, as the case may be, in ink; and

(ii) the availability of the area for grant is notified in the E 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:

F Provided that nothing in this rule shall apply to the renewal of a lease in favour of the original lessee or his legal heirs notwithstanding the fact that the lease has already expired:

Provided further that where an area reserved under rule G 58 is proposed to be granted to a Government Company, 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 H

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 727 AND ORS. [R.M. LODHA, J.] any special case. A

Rule 59 was further amended on April 13, 1988. The amended Rule 59 reads as under :

"59. Availability of area for regrant to be notified:- (1) No area- B

(a) which was previously held or which is being held under a prospecting licence or a mining lease; or

(b) in respect of which an order had been made for the C grant of a prospecting licence or mining lease, but the applicant has died before the grant of the licence or the execution of the lease, as the case may be; or

(c) in respect of which the order granting a licence or lease has been revoked, under sub-rule (1) of rule 15 or sub-rule D (1) of rule 31; 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 State Government under E Rule 58, or under section 17-A 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 F 21 or sub-rule (2) of rule 40, as - the case may be, in ink; and

(ii) the availability of the area for grant is notified in the Official Gazette and specifying a date (being a date not G 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 H

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