INDIAN METALS AND FERRO ALLOYS LTD. v. UNION OF INDIA AND ORS.

IS S. 11(2) CONCLUSIVE? ~· .. H No~, to tum to tire contentions urged before us: Dr. Singhvi, who

INDIA!\ METALS v. U.0.L [RANGANATHAN. J.) 73

appeared for ORIND, vehemently contended that the rejection of the application of ORIND for a mining lease was contrary to the statutory mandate in S. 11 (2); that, subject only to the provision contained in S. 11( 1) which had no application here, the earliest applicant was entitled to have a preferential right for the grant of a lease; and that a consid- eration of the comparitive merits of other applicants can arise only in a case where applications have been received on the same day. It is no doubt true that S. 11(2) of the Act read in isolation gives such an impression which, in reality, is a misleading one. We think that the sooner such an impression is corrected by a statutory amendment the better it would be for all concerned. On a reading of S. 11 as a whole one will realise that the provisions of sub-section(4) completely over- ride those of sub-section (2). This sub-section preserves to the S.G. a right to grant a lease to an applicant out of turn subject to two c conditions: (aJ recording of special reasons and (b) previous approval of the C.G. It is manifest, therefore, that the S.G. is not bound to dispose of applications only on a "first come, first served" basis. It will be easily appreciated that this should indeed be so for the interests of national mineral development clearly require in the case of major minerals. that the mining lease should be given to that applicant who can exploit it most efficiently. Agrant of ML in order of time. will not achieve this result.

In the context of his submission pleading for priority on the basis of the time sequence, Dr. Singhvi referred to certain observations in the decisions reported as Ferro Alloys Corporation of India v. Union. I.LR. 1977 Delhi 189 at p. 196 and as Mysore Cements Ltd. v. Union, A.LR. 1972 Mysore 149 at p. 151. we do not think these decisions help him. In the former case, an application by FACOR for a lease was rejected on the ground that an earlier application was being accepted. '-~ FACOR contended this was wrong. that the S.G. could not have re- F fused to look into its application merely because another applicant had a preferential right under S. 11(2) and that its application as well as that of the earlier applicant should have been considered together. It is .... in the situation that the Court observed that rule 11 primarily em- bodies the general principle of "fist come, first served" and an out-of- turn consideration under S. 11(4) was an exception for which a strong G case had to be made out. The petitioner could not have a grievance if the general principle was followed. So also, in the latter case. an earlier application having been accepted and a lease granted, the con- sideration of a later application was held to be uncalled for. These decisions cannot be treated as authorities for the proposition that the S. G. is bound to grant an earlier application as soon as it is received H

74 SUPREME COURT REPORTS [ 1990) Supp. 2 S.C.R.

and cannot wait for other applications and consider them all together A and grant a later one if the circumstances set out in rule 11(4) are fulfilled. That apart it has to be remembered that the S.G. did reject ORIN D's application by an order dated 23. 10.1973. This order was set aside in the C.G. on 20.2.1977 and the S.G. directed to consider it afresh. The S.G. did not comply with this order and so a writ petition B · was filed by ORIND which was pending when this writ petition was' filed. Subsequently the High Court on 9.2.89 directed the S.G. to consider.and dispose of ORIN D's application on merits. The S.G. on 7.4.89 dismissed ORIND's application on the ground that the issue is before us and hence the S.L.P. against the order of rejection of the S.G. Even assuming that we accept the S.L.P. filed by ORIND that will only entitle OR!ND to have its application reconsidered for grant c along with such other applications as may be pending as on the date of 'uch reconsideration. In the context of the scheme of the Act and the importance of a lease being granted to one or more of the better qualified candidates where there are a number of them it would not be correct· to say that as the S.G.'s order of 29.10.1973 has been set o aside ORIND's application should be restored for reconsideration on the basis of the situation that prevailed as on 29. IO. 1973 and that therefore it has to be straightaway granted as there was no other application pending on that elate before the S.G. In matters like this subsequent applications cannot be ignored and a rule of thumb applied. We are unable to accept" the submission of Dr. Singhvi that E the application of ORIND being the earliest in point of time should have been accepted and that we should direct accordingly. As to how far the.requirements of S. 11(4) are fulfilled in the present case that is an aspect which will be considered later.

F PROMISSORY ESTOPPEL -' It will be convenient here also to deal with another argument raised by Dr. Singhvi based on grounds of promissory estoppel. Dr. Singhvi points out that when ORIND applied to the C.G. for revision of the order of rejection of its application on 23.10.73 the S.G. on 26.2. 74 wrote to the C.G. as follows: G "2. M/s Orissa Industries .Limited made-representation to the State Government on 15. 12. 1973 for reconsidering grant of lease to serve the captive requirements of their refractory plant. They also brought to the notice of the State Government an export order of refractories of size- H able value ·of about Rs.2 crores received from National

INDIAN METALS v. U.0.1. [RANGANATHAN, J.l 75

Iranian Steel Mills, Teheran. Chromite, being essential raw A material for manufacture of refractories, they pressed for grant of Mining Lease. After careful consideration of the representation, the State Government have revised the policy of reserving the chromite area only for exploitation in public sector and have decided for grant of chromite to serve the captive requirements of industry within the State B should be given first priority. Accordingly, it is proposed to grant the mining lease for chromite over the available areas subject to revision of the previous order of the State Gov- ernment by Government of India u/s 30 of the Mines & Minerals (Regulation & Development) Act, 1957 and u/s 5(2) of the said Act. Steps are being separately taken to. exclude this area from the operation of reservation notifi- C cation for exploitation of chromite in the public sector.

3. In the interest of the local industries, the State Govt. do not intend to throw open the area after releasing from reservation. Approval of Government of India would also be necessary for not throwing open the area in the relaxation of the rule 58 of. the Mineral Concession Rules 1960.

4. Out of 1129.25 hectares applied for, an area of 379.93 hectares is covered by overlapping of applied leases or applications including an area of 142 hectares, which is being separately recommended to Government of India for grant of Mining lease in favour of M/s Orissa ·cement Limited. As such the net area available for grant of mining lease is therefore, 749.32 hectares. F

5. The State Government having rejected the appli- cation of the party in Government Proceeding No. !CB I dated 23. 10. 1973 are got obtain to revise their own order by granting Mineral Concession as instructed in your department letter No. MV-1(445)/61 dated 5.1.72. The case is therefore recommended to Government of India G for grant of Mining Lease over an area of 749.32 hccts. in favour of M/s Orissa Industries Limited revising the above order of the State Government u/s 30 of the Mines and Minerals (Regulation and Development) Act, 1957. As chromite ore is spe·cified mineral under the first scljedule of the Act, approval of Government of India is also requested H u/s 5(2) of the Act.

76 SUPREME COURT REPQR'C\ [ 1990] Supp. 2 S.C.R. • 6. I would therefore, request you to kindly obtain A and communicate orders of Government of India on revi- sion u/s 30 of Mines & Minerals (Regulation & Develop- ment) Act, 1957 and approval u/s 5(2) of the said Act and .in relaxation of Rule 58 of the Mineral Concession Rules, 1960 for grant of Mining Lease for chromite over an area of B .749.32 hectares in Cuttack District in favour of Orissa Industries Limited."

Simultaneously, it is pointed out, the S.G., while sending its comments to the C.G. on the contents of another revision application filed by ORIND against the rejection of its application (also dated 5.7.71) for a lease of 446.38 hectares in village Sukrangi of Cuttack District, had c this to say:

"Recently in State Government letter No. 1747MG dated 26.2. 74 chromite bearing area to the extent of 749.32 hectares in Cuttack district has been recommended to D Government of India for grant in favour of M/s Ori~sa Industries Ltd. The need of M/s Orissa Industries Ltd. will be met from this. It is the responsibility of the party to obtain raw materials for its factory and the State Govern- ment cannot take such responsibility as contended by the petitioner. The party is at liberty to purchase the chrome E ore from Orissa Mining Corporation.

xxx xxx xxx

The State Government have already recommended an area in favour of M/s Orissa Industries Ltd. to the Govt. of F India to meet the requirements of their industry. The State Government have already decided to grant the area applied for by M/s Orissa Industries Ltd. in their M.L. application under revision to M/s Orissa Mining Corporation Ltd. who are now working the area as an agent of the State Govern- ment. Hence the question of granting this area to M;s G Orissa Industries Ltd. does not arise."

Also, on 5.3.74 the S.G. published a notification dereserving the said 749.32 hectares (said to have been earlier reserved for exploitation in the public sector by a notification of 3. 7. 1962). Dr. Singh vi submitted on the strength of this correspondence and notification that the S.G. H having sought to justify its rejection of ORIND's application for /

JNDIAN METALS "· L.0.1. [RANGANATHAN. J.l 77

446.38 acres on the ground that the company's application for 749.32 A hectares was being recommended after dereservation, it was not open to the S.G. now to take up a different .stand and that ORIND's appli- cation for 1129.25 hectares now under consideration should have been granted at least to the extent of 744.32 hectares the dereservation, and lease in favour of ORIND, of which had been recommended by the S.G. itself as early as 1974. In support of this contention, learned B counsel relied on the observations made in a series of decisions of this Court: Kanai Lal Sur v. Paramnidhi Sadhukhan, [1958] 2 SCR 366; MJs Moti/al Padampat Sugar Mills Co. (P) Ltd. v. State of Uttar Pradesh and Ors .. [1979] 2 SCR 641; Gujarat State Financial Corpora- tion v. M/s'Lotus Hotels Pvt. Ltd., [1983] 3 SCC 379; Surya Narain Yadav & Ors. v. Bihar State Electricity Board & Ors., [1985] Suppl. I S.C.R. 605; Union of India & Ors. v. Godfrey Philips India Ltd.; c [ 1985] Suppl. 3 SCR 123 and Mahabir Auto Stores & Ors. v. Indian Oil Corporation & Ors., [1990] J.T. 1S.C. 363.

This argument is interesting but overlooks certain very important relevant circumstances. As mentioned earlier, ORIND's revision peti- D ti on was disposed of by the C.G. on 23.2. 1977. This order contains no reference to the S.G.'s letter of 26.2.74; on the contrary. it proceeds on the footing that no comments had been received from the S.G. Possibly this is because the letter of 26.2.74 was not in the form of comments on the ORIND's revision application but was in the form of the S.G.'s recommendations on ORlND's representation to it dated E 15.12.73, although it does suggest that the C.G. could set aside the order of 23. IO. 73 and direct the grant of a lease to ORIND in respect of 749.32 hectares. Be that as it may, the C.G. did not accept the recommendation of the S.G. Indeed. we find on record that, having regard to a letter of the C.G. dated 15.5.74, the S.G. sent a letter dated 17. 7. 74 withdrawing the earlier recommendation made by it on F 26.2.74 for the allotment of 749.32 acres to ORIND. In view of this letter, the C.G. simply set aside the order of 23.10.73 on the ground that it was not a speaking order and directed the S.G. to dispose of ORIND's application within 100 days in the light of the letter of the C.G. dated 15.5.74. Interestingly, this letter had been written in reply to a proposal from the S.G. that the exploitation of chromite had to be G entrusted to the public sector. Accepting this suggestion, the letter proceeded to lay down certain broad priorities on the basis of which leases could be granted and certain other directions in respect of research and development. The position, therefore, is that the C.G. did not accept the S.G. 's recommendations regarding the grant of a leas to ORIND in respect of 749.32 hectares out of the '1129.25 H

78 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A hectares applie.d for. There was, however, delay in the dsposal of the application by the S.G. When the S.G. took up consideration of the matter once again it took note of three circumstances to reject the application of ORIND. These were: ., (i) One of the directions in the C.G.'s letter of 15.5.74 was ihat B "no lease of lumpy ore for metallurgical and refractory grade be granted to private sector unless mining undertakings of the State or Central Government are not interested in the exploitation of ore in these leaseholds" and the requirement of OR IND was for lumpy chromite ore;

(ii) Two notifications had been issued on 28.4.77 and 3.8.77 re- c serving certain areas for exploitation by the public sector. The former dealt specifically with the 749.32 hectares which had been proposed for allocation to ORIND in the letter of the S.G. dated 26.2. 74. The latter covered a huge area of 1460 sq. km. in various districts of the State; D (iii). The claims of all applicants had been considered by Rao and Rao had come to the conclusion that no \nining leases need be given to ORIND.

We shall consider later the claim of ORIND on merits. But, for the E present, we only wish to point out that no grounds have been made out which could support a plea of promissory estoppel. The grant of a lease to ORIND had to be approved by the C.G. The C.G. never approved of it. The mere fact that the S.G., at one s.tage, recommended the grant cannot stand in the way of their disposing of the application of ORIND in the light of the C.G.'s directives. Perhaps, the highest that F ORIND can claim is that, since this lease of 749.32 acres has not come through, the SG's order rejecting its application in respect of 446.38 "' hectares deserves to be considered. But that area is not the subject matter of the present S.L.P. by ORIND. Moreover, OR!ND has not placed before us any information as to what happened to the revision petition filed by it against the rejection of the application in respect of G 446.38 hectares of the further proceedings, if any, in relation thereto. We express no opinion as to ORIND's entitlement to a lease on that application in case it does not succeed in its claim here in resprct of 749 ..32 hectares. It will be open to ORIND to pursue such remedies in respect thereof as it may be advised and as may be available to it in law. H

INDIAN METALS v. U.0.I. [RANGANATHAN, J.l 79

THE RESERVATION POLICY A The principal obstacle in the way of ORI ND as well as the other private parties getting any leases was put up by the S.G., OMC and IDCOL. They claimed that' none of the private applications could at all be considered because the entire area in all the districts under consi- deration is reserved for exploitation in the public sector by the notifi- B cation dated 3.8.77 earlier referred to. All the private parties have therefore joined hands to fight the case of reservation claimed by the S.G., OMC and IDCOL. We have indicated earlier that the S.G. expressed its preparedness to accept the Rao report and to this extent waive the claim of reservation. Interestingly, the OMC and IDCOL have entered caveat here and claimed that as public sector corpora- tions they could claim, independently of the S.G.'s stand, that the c leases should be given only to them and that the Rao report recom- mending leases to !MFA, FACOR and AIKATH should not be accepted by us.

The relevant provisions of the Act and the rules have been ex- D tracted by us earlier. Pre·viously, rule 58 did not enable the S.G. to reserve any area in the State for exploitation in the public sector. The existence and validity of such a power of reservation was upheld in Kotiah Naidu v. State of A.P., A.LR. 1959 A.P. 185 and Amritlal Nathubhai Shah v. Union, A.LR. 1973 Guj. 117, the latter of which was approved by this Court in [1977] 1 S.C.R. 372. (As pointed out E earlier, rule 58 bas been amended in 1980 to confer such a power on the S.G.). It is also not in dispute that a notification of reservation was made on 3.8.77. The S.G., OMC and IDCOL are, therefore, right in contending that, ex facie, the areas in question are not available for grant to any person other than the S.G. or a public sector corporation [rule 59(1), proviso] unless the availability for grant is renotified in F ·~ .. accordance with law [rule 59(l)(e) I or the C.G. decides to relax the provisions of rule 59( 1) [rule 59(2) ] . None of those contingencies have occurred since except as is indicated later in this judgment. There is, therefore, no answer to the plea of reservation put forward by the S.G.; OMCandIDCOL. G The private applicants seek to get over this difficulty in several ways. In the first place, they all vociferously urge that this plea has been taken· by the S.G. belatedly, that the OMC and IDCOL have come into the picture very late and that this plea should not be allowed to be raised at this stage. The learned Advocate General for the State of Orissa has pointed out, we think rightly, that there is no substance H

80 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

m this grievance. The ob1ection regarding reservation was raised by the S.G. at the very first opportunity it had, in a preliminary counter affidavit filed by it in the writ petition dated 29.10.1984. The counter- affidavit mentioned about the reservation in no uncertain terms and a copy of the relevant page of the Orissa Gazette dated 12.8. 77 which contained the reservation notification dated 3.8.77 was also annexed to the counter affidavit. Reference was also made to the statutory provisions and judicial decisions. The claim was reiterated, when ORIND joined the proceedings, in a reply filed by the State to the counter affidavit filed by ORlND on 22.8.85; this reply affidavit refers to the letter of the C.G. dated 15.5.74 and the notification of reserva- tion dated 28.4. 77 pertaining to the 749.32 acres in respect of which ORIND had made an application. In a furher counter-affidavit dated c 24. I J.89 filed "in reply to the additional submissions dated 17. 10.89 filed on behalf of ORIND", the notification of 3.8. 1977 has also been referred to. OMC and IDCOL had submitted their applications for lease but no orders had been passed thereon. When they came to know that the applications of !MFA and FACOR were considered by this D Court and certain interim orders passed, they approached Rao to con- sider their applications as well. This request was opposed by the other parties whereon OMC and !DCOL sought and obtained the directions of this Court that their applications should also be considered by Rao. Before Rao, they supported the S.G. plea. of reservation. In the circumstances set out above, it is difficult to accept the contention of the various private applicants that the plea as to reservation should not be entertained at all on the ground of delay and !aches.

It is then argued that though the S.G. may have formally notified a reservation, it has not been very serious about this and has always been willing to consider private applications for leases. In support of this contention, reliance is placed on the following circumstances:

(a) On 26.2. 74, the S.G. has clearly expressed its willing- ness to dereserve the area of 749.32 acres and, indeed, followed it up o.n 5.3. 74 with a notification of dereservation.

G (b) Though the S.G. claims that reservation is necessary to meet the S.G.'s requirements because 81% of chromite ore rich lands already stand leased out to a private party (TISCO). the S. G. proceeded to renew the grant in favour of that party.

(c) The S.G. has been willing enough to lease out lands to H private parties: (i) The S.G. has granted leases to FACOR on

INDIAN METALS >. U.0.1. [RANGANATHAN, J.I 81

9.2.72, 7.10.72 and 12.11.76 in respect of 157.05 hects .. 133.:11 A hects. and 72.84 heels. respectively in Bokhla, Kathpal and Ostapal villages. (ii) it has entered into an agreement with .AIKA TH to grant a lease in respect of a part of the land applied for by him in item 8; (iii) it has agreed to lease out item 3 and 26.62 hectares out of item 4 in favour of !MFA; (iv) it agreed to lease out 180 acres in item 5 in favour of FACOR. B

(d) Even at thidinal stage of hearing of the writ petition. the Advocate General of the State has conceded that the S.G. is prepared to abide by the Rao report i.e. the S.G. is willing to grant leases to !MFA, FACOR and AIKATH but not to OCC or ORIND. This is patently discriminatory. c We do not, however. think that these circumstances estahlish that the State is not serious about its plea of reservation. So far as item (a) is concerned. we have already pointed out that this was the initial attitude of the Government but this policy was changed in pursuance of the C.G .'s letter dated 15.5. 74 and its order on ORIND's D revision application. The S.G. itself had, in fact, withdrawn the recom- mendations made on 26.2.74 by its letter of 17.7.74. The thought of dereservation had therefore been given up by the S.G. in July'74 itself though the notification of dereservation was superseded only in 1977. In regard to items (b) & (c), the position is that the lease of 1976 was after the dereservation of 5.3.74. The leases to FACOR in 1972 (the details of which are not available before us) are stated to have been granted after obtaining C.G. ·s order for relaxation. The full circumst- ances in which the lease in favour of TISCO was renewed are not before us but perhaps such ren~wal was dictated by the nature of the industry run by TISCO and its importance for the economy of the State and the country. These apart, the Court approved of the grant of leases to !MFA and FACOR. So far as (d) is concerned, the learned Advocate General of Orissa has made it clear that the S.G. does not accept the Rao report in so far as it ignores its claim of reservation. The concession made only is that since the Rao Committee, in recom- mending grant of leases to IMFA and FACOR is only giving effect to a fail l'Ccompli in pursuance of the interim directions of this Court, they are willing to abide by it. It will therefore be clear that, except for two or three instances, where leases have been granted by the S.G. on its own, the S.G. has generally and consistently adhered to its stand that the chromite bearing lands are reserved for exploitation in the public sector. The rules permit the C.G. to relax the rigid requirements of reservation in individual cases after recording special reasons. We are H

82 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A not here c&J1ed upon to decide whether the relaxations made in the 1 above cases were in accordance with the rules or not. It is sufficient to say here that these exceptional and isolated instances of lease are not sufficient to sustain the plea of the parties before us that the policy of reservation is merely being raised as a formal defence and has never been seriously implemented by the S.G. B Dr. Singhvi also raised a plea of arbitrariness and ma/a fide to challenge the reservation policy. He urges on the first count that it was not open to the S,G. to go on shifting its reservation policy from time to time without adequate reasons. Suen conduct was also vitiated, he said, as amountinwto malice in law and referred in this context to the observations of this Court in Venkawrarnan v. Union, [ 1979] 2 SCR c 202. We do not think this contention has any substance. Ch:omite ore is an important major mineral and the importance of its conservation and proper utilisation for our country's development cannot be gainsaid. The S.G. rightly decided upon a policy of reservation in 1967 and this was kept up till 1974. In February 1974 the S.G. was in D favour of freer issue of mining leases but gave up this policy in pursuance of the C.G.'s letter of 15.5.74. Reservation was, therefore. clamped in 1977 again. Applications could still be considerd to see how far a rlaxation was pe.rmissible having regard to the nature of the applicant's needs, the purpose for which the lease was asked for, the riature of the ore sought to be exploited, the relative needs of the E State, the availability of a public sector undert.akings to carry out the mining more efficiently and other relevant considerations. There is no material on record to substantiate a plea that the S.G. has been acting .' rbitrarily or rnalafide in its policy f~rmulations in this regard.

Our conclusion that the areas in question before us were all dulv F reserved for public sector exploitation does not, however, mean that private parties cannot be granted any lease at all in respect of these areas for, as pointed out earlier, it is open to the C. G, to relax the ·reservation for recorded reasons. Nor does this mean, a?C:Ontended for by OMC and IDCOL, that they should get the leases asked for by them. This is so for two reasons. In the first place, the reservation is of G a general nature and does not directly confer any rights on OMC or IDCOL. This reservation is of two types. Under S. 17A(l), inserted in , 1986, the C.G. may after consulting the S.G. just reserve any area- not covered by a PL or a ML-with a view to conserving any mineral. Apparently, the idea of such reservation is that the minerals in this area will not be exploited at all, neither by private parties nor in the H public sector. It is not necessary to consider whether any area so

, INDIAN METALS v. U.0.1. !RANGANATHAN, J.]

reserved can be exploited in the public sector as we are not here concerned with the scope of such reservation, there having been no 83

A notification under S. !7A(l) after 1986 and after consultation with the S.G. The second type of reservation was provided for in rule 58 of the . rules which have already been extracted earlier in this judgment. This reservation could have been made by the S.G. (without any necessity for approval by the C. G.) and was intended to reserve areas for exploi- B tation, broadly speaking, in the public sector. The notification itself might specify the Government, Corporation or Company that was to exploit the areas or may be just general, on the lines of the rule itself. Under rule 59(1), once a notification under rule 58 is made, the area so reserved shall not be available for grant unless the two requirements of sub-rule ( e) are satisfied: viz. an entry in a register and a Gazette notification that the area is available for grant. It is not quite clear c whether the notification of 5.3.74 complied with these requirements but it is perhaps unnecessary to go into this question because the reservation of the areas was again notified in 1977. These notifications are general. They only say that the areas are reserved for exploitation in the public sector. Whether such areas are to be leased out to OMC D or IDCOL or some other public sector corporation or a Government Company or are to be exploited by the Government itself is for the Government to determine de hors the statute and the rules. There is nothing in either of them which gives a right to OMC or IDCOL to insist that the leases should be given only to them and to no one else in the public sector. If, therefore the claim of reservation in 1977 in favour of the public sector is upheld absolutely, and if we do not agree with the findings of Rao that neither OMC nor IDCOL deserve any grant, all that we can do is to leave it to the S.G. to consider whether any portiom of the land thus reserved should be given by it to these two _corporations. Here, of course, there are no competitive applications from organisations in the public sector controlled either by the S.G. or the C.G., but even if there were, ·it would be open to the S.G. to decide how far the lands or any portion of them should be exploited by each of such Corporations or by the C.G. or S.G. Both the Corpora- tions are admittedly instrumentalities of the' S.G. and the decision of the S.G. is binding on them. We are of the view that, if the S.G. decides not to grant a lease in respect of the reserved area to an instrumentality of the S.G., that instrumentality has no right to insist that a ML should be granted to it. It is open to the S.G. to exercise at any time, a choice of the State or any ·one of the instrumentalities specified in the rule. It is true that if, eventually, the S.G. decides.to grant a lease to one or other of them in respect of such land, the instrumentality whose application is rejected may be aggrieved .by the H

SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A choice of another for the lease. In particular, where there is competition 1 between an instrumentality of the C.G. and one of the S.G. or bet- ween instrumentalities of the C.G. inter se or between the instru- mentalities of the S.G. inter se, a question may well arise how far an unsuccessful instrumentality can challenge the choice made by the S.G. But we need not enter into these controversies here. The ques- B tion we are concerned with here is whether OMC or IDCOL car. object to the grant to any of the private parties on the· ground that a reserva- tion has been made in favour of the public sector. We think the answer must be in the negative in view of the statutory provisions. For the S.G. could always denotify the reservation and make the area avail- able for grant to private parties. Or, short of actually derescrving a notified area, persuade the C.G. to relax the restrictions of rule 59( I J c in any particular case. It is. therefore. open to the S.G. to graPt private leases even m respect of areas covered bv a notification of the S.G. and this cannot be challenged by am instrumentality in the public sector.

D Before leaving this point, we may onlv refer to the position after

1986. Central Act 37 of 1986 inserted sub-section (2) which empowers the State Government to reserve areas for exploitation in the public sector. This provision differ~ trom that in rule 51'1 in some important respects-

E (i) the reservation requires the apprO\ al of the C.G.:

(ii) the reservation can only be of areas not actually held under a PL or ML;

(iii) the reservation can only be for exploitation by a Govern- F ment company or a public sector corporation (owned or control- led by the S.G. or C.G.J but not for exploitation by the Govern- n1ent as such.

Obviously, S. 17A(2) and rules 58 could not stand together as S. 17A empowers the S.G. to reserve only with the approval of the C.G. while G rule 58 contained no such restriction. There was also a slight difference in their wording. Perhaps because of this rule 58 has been omitted by an amendment of 1988 (G.S.R. 449E of 1988) made effective from 13.4.88. Rule 59, however, contemplates a relaxation of the reserva- tion only by the C.G. By an amendment of 1987 effective on 10.2.1987, (G.S.R. 86-E of 87) the words "reserved by the State H Government" were substituted for the words "reserved by the

··INDIAN METALS v. U.O.l. [RANGANATHAN, J.I . - 85 ---~---...--~ --. Governmen't" in rule 59( I)( e). Later. rule 59( I) has been amencle:d by A the insertion of the words '.'or under section 17-A of the Act''. after the· words "under rule 58" in clause (e) as well as in th'e second proviso. \ - The result appears to be this: ! . (i) After 13.4.88, certainly, the S.G. cannot notify any re- B .servations without the approval of the C.G., as rule 58 has been deleted. Presumably, the position ·i, the same even· before this date and as soon as Act 37 of 1986 came into force.

(ii) However, it is open to the S.G. to denotify a reserva- tion made by it under rule 58 or S. 17A. Presumably, dereserva- tion of an area reserved by the S.G. after the 1986 amendment c can be done only with the approval of the C.G. for it would be anomalous to bold that a reservation by the S.G. ·needs the C.G.'s approval but not.the dereservation. Anyhow, it is clear that relaxation in respect of reserved areas can be permitted only bytheC.G. ' D

(iii) It is only the C.G. that can make a reservation with a view to conserve minerals generally but this has io be done with the concurrence of the S.G.

We are concerned in this case with reservations made by the S.G. E under rule 58 before 1986 which, there is no'reason to doubt, continue in force even after the introduction of S. 17A. These, as pointed out above, can be dereserved by th S.G. but a relaxation can be done by the C.G. only. We shall consider later whether this power of the C.G. can be or has been or should be exercised in this case. It is sufficient to observe here that the reservations notified in 1977 do.noi necessarily F vitiate the grant of leases to private parties. ·

STATUS OF RAO REPORT

We now come to the question regarding the status of, and the weight to be attached to, the Rao report. The writ petition and oth~r . G proceedings before us were directed against the S.G.'s failure to pass favourable orders on the applications of various parties. Normally, in such a case,' this Court would either have directed the S.G. to consider the applications afresh and pass appropriate orders or left it to the parties to file revision petitions before the C.G. against the S.G.'s ' orders. Here, as described e.arlier, the various parties came up before H ·

A 86 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

this Court one after the other and some of them. had their writ petitions , I

pending in the Orissa High Court. This Court, therefore, decided that the best course would be to consolidate all the applications that were pending on 30.4.87 for the consideration of the C.G. so that a satisfactory decision .could be arrived at after an examination of the relative merits of the various applicants. This Court did not specify the B statutory provision under which this was to be done bul it is apparent that it was intended to be an exercise of the power of the C.G. under S. 30, though this aspect was not clarified when FACOR draw atten- tion to it in C.M.P. 13347/87. We have no difficulty in construing the Rao report as a decision on the claims of the various parties before it, though, having regard to the terms of the order of this Court dated C 6.10.87, it has been styled as a report. The objections to this conclu- sion are three-fold and they are dealt with below:

First, it is pointed out that revisions to the C.G. under S. 30 can be validly dealt with only by a "tribunal" and not by a single officer. We find that the procedure indicated is not dictated by the statute or D the rules. It is only a forum cmtlined in an office order more as a matter of internal regulation than as a rigid rule of procedure. We have seen one ·of these orders-dated 10.7. 1987. It constitutes three Single Bench Tribunals each consisting of a designated Joint Secretary in the Department of Mines and three Divisional Bench Tribunals each com- prising of a designated Joint Secretary in the Department of Mines and E a designated Joint Secretary in the Department of Legal Affairs in the Ministry of Law and Justice. The instructions are:

"To the extent possible, cases in which parties have not asked for personal hearing should be disposed of by Single Bench Tribunals unless the member feels that some complicated legal issue is involved requiring advice of the member from the Law Ministry.

The cases where personal hearing has been requested by parties, the Single Member Tribunals will decide whether to dispose of the cases after grant of hearing by himself or whether the hearing should be held by Division Bench Tribunal."

It will thus be seen that even regular revision petitions under S. 30 can be validly disposed of solely by a Joint Secretary in the Department of I Mines unless he considers it necessary, either because a personal hear- H ing is asked for or because some complicated legal issue is involved, to

, INDIAN METALS v. U.0.1. [RANGANATHAN. J.[

invoke the aid of a Joint Secretary in the Law Ministry. Here, there is 87

A no regular revision petition except perhaps in one case; the disposal is by the Secretary to the Department of Mines; he 'has been specially authorised to deal with the matter by this Court; a~d~~ legal iss~ed at all are mvolved. We, therefore, see no megulanty .or\·defect m !ht procedure forged by this Court for a speedy and effecti~e disposal of the claims before the Court. B

Secondly, it is said that though the order of 30.4.1987 directs the secretary to dispose of the representations by a reaooned final order, the subsequent order of 6. 10.87 asks him to sent a report io this Court. We do not think there is any inconsistency between ·the two orders. Even the order of 6.10.87 requires the Secretary to arrive at a just, ·c equitable and objective decision. He has been asked to send a report of his decision to the Court, with copies to the parties, only in order that, if any of the parties are aggrieved by his decision, their grievances may be considered by this Court in this W.P. itself, instead of driving the parties to a fresh course of litigation. D Thirdly, is is submitted that Rao's hands were more or less tied by the various observations and directions of this Court thus preventing him from coming to independant conclusions of his own. This criticism is unfounded and also belied by the contents of the report. This Court had made it clear that Rao should not consider himself bound by the memoranda of compromise filed in the High Court of· Orissa..(with E AIKA TH and FACOR) or the orders passed by this Court in regard to the allocation of areas (to IMFA and FACOR) though necessarily he had to "bear in mind the previous orders made in their [!MFA and FACOR] favour and the previous leases and the rights, if any, granted therefrom and their consequences''. He was also asked to bear in mind the public benefit and public interest involved and also the need for the proper exploitation of the m_ines. In fact also we find that although Rao has approved the grants made in favour of !MFA and FACORby the S.G. (which, he remarks, were perhaps based on the observations made by this Court), he has clearly reached his conclusions on these independantly. In fact, he has set out a basis for justifying the grants to IMFA and FACOR. It is also clear that there were no Court orders that could have influenced his decisions on the claims of the other parties. This objection is, therefore, not at all tenable.

OMC, IDCOL, OCL and ORIND complain, indeed, that Rao has been completely overwhelme<! by the weight of the observations and the leases· granted by the S.G. pursuant to interim orders of this H

88 SUPREME COURT REPORTS I 1990] Supp. 2 S.C.R.

Court. They have gone to the length of criticising, and, indeed, chal- A lenging, the validity of these interim orders which had been passed without notice to any of them. They have invoked, in support, several passages from the decision of this Court in Antulay v. Nayak, [1988] 2 SCC 602. We think these criticisms are unfounded. This Court had only directed the grant of two leases pending disposal of the writ B petition. At the time these directions were made, only IMFA, FACOR and AIKATH were before the Court. IMFA had pointed out that FACOR had been given certain leases although its earlier applications were pending before the C.G. The S.G. submitted to the Court that a lease in respect of item 1 had been granted to FACOR, that item 5 had already been agreed to be leased in favour of Al KATH and FACOR and that it was willing to grant a ML in respect of item 3 c and 26.62 acres out of item 4 to !MFA. It was in view of this that the Court passed the order. Similarly, the ML directed to be granted to FACOR was also in consequence of the S.G.'s acquiescence therein. It is, therefore, incorrect to characterise these orders as erroneous or unjustified. They were fully within the scope of the writ petition and were passed after hearing the parties before the Court. No doubt, OCC, ORIND, OMC and IDCOL were not there then. After they put in their appearance, this Court made it clear that while the earlier orders, the observations therein and the leases granted in pursuance thereof should be kept in mind, Rao would not be bound by them but would be free to arrive at his conclusion. We, therefore, do not see any grounds for the criticisms put forward by these parties in regard to the interim orders passed by the Court.

For the above reasons, we are of opinion that, though styled a report, the findings given by Rao are in the nature of a decision of the C.G. on the claims of the various parties. We, therefore, proceed to consider the Rao report on its merits.

MERITS. OF THE RAO REPORT

This takes us then to the merits of the various claims put forward before Rao and his decision thereon. For our present purposes, we think we can consider the Rao report in two parts:

(a) his endorsement of the S.G.'s decision to ·grant ML to !MFA, FACOR andAIKATH:

(b) the rejection by him of the claims put forward by the above three parties for leases in respect or areas over the above what

r INDIAN METALS v. U.O.L [RANGANATHAN, J.] 89

has been allotted to them as well as the rejection of the claims of the other parties. A

So far as the first aspect is concerned, we think that Rao's deci- sion, th'llt the leases that have been granted already in favour of !MFA, FACOR be confirmed, should be upheld. In our view, these should be B treated as leases legitimately granted to them in exercise of the po~ers of relaxation under rul<! 59(2). It is true that the orders granting tlie leases do not elaborately record the reasons but they were passed in the context of this litigation and have to be considered in the light of the affidavits and counter affidavits filed herein. We are also of opinion that the Rao 's decision regarding the grant of a lease to · AIKATH (not yet implemented) should also be upheld. In these three c cases, we think, the records disclose sufficiently the reasons on the .basis of which the leases have been decided upon and are adequate to justify the MLs actually granted. We shall just summarise these reasons which have also been taken note of by Rao. D (a) ML to AIKATH, !MFA, FACOR

1. AIKATH is admittedly an individual who discovered chro- mite ore in the State. He had secured a lease as early as in 1952 though that lease was annulled by the State when it took over. Again, as against a lease of 640 acres which he had once obtained and started operating upon, the S.G .. has finally approved of a lease in respect of only 140 acres. AIKATH had been actually working some mines from 1.5.53. His original grant had been approved before "the area was reserved on 3.7.62. If the S.G. considers these to be weighty con- siderations and entered into a compromise with him for a lease of 140 acres and this has also been recorded by the Orissa High Court, there are no grounds to interfere with the decision of the S.G . •

2. So far as FACOR is concerned, the requirements for theif plant in Andhra Pradesh were met by the ML granted to them in 1971-72 at Kathpal and Boula, thus recognising their claim for a ML to meet part of their requirements of ore. Their present needs were in connection with their plant at Randia in Balasore District which required about 1;20,000 tons per annum of ore. The compromise entered into with FACOR agreeing to grant a ML for an area 72.84 hectares having a potential of about 2.4 million tons would cater to 50% of its needs on a 20 year time-frame making allowances for wastage in recovery. H

90 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A 3. !MFA needs 50,000 tons per annum for their plant at Therbauli and 1,20,000 tons in respect of a plant at Chandwar run by a subsidiary. While the reserve potential of 26.62 hectares allotted to I MFA out of item 4 is roughly 0.8 million tons the reserve potentials of 108.86 acres given out of area 3 and of another 17.02 hectares in Balasor District given for the plant of the subsidiary were yet to be B assessed. Nevertheless. it was expected that they would cater to the needs of !MFA more or less to the same extent that the ML in favour ' of F ACOR catered to its needs.

It is true that a relaxation under rule 59(2) has to be made by the C.G. The orders of grant do recite the approval of the C.G. in this regard. An objection has been taken that the C.G. granted the c approval not after applying its mind to the matter bur merely because this Court had directed it to do so. We do not think this contention can be accepted. Apparently, when the S.G. agreed to lease out the areas to IMFA and FACOR it was pointed out that this could not be given e.ffect to without the C.G.'s approval. This Court thereupon directed that the S.G. should seek such approval. The direction to the C.G. is only that its approval should be given within the particular time limit set out therein. It cannot be construed, reasonably, as a direction compelling the C.G. to grant approval whether it agreed with the S.G.'s decision or not. We would. therefore, reject this contention and treat the grants to !MFA and FACOR as made in exercise of the power of relaxation uis 59(2).

Once again, we would like to observe that, though there is no specific recording of reasons by the S.G. or C.G. inasmuch as these leases came to be granted by way of compromise, it is a fair inference that the compromise proposals were prompted by the, at least partial, acceptance of the claims put forward by these parties. Since the grant of leases to these three parties can be attributed to the relaxation of the reservation rule in particular cases, the finding of Rao that these leases mav be confirmed deserves acceptance.

We have to add a few words in respect of AIKATH. Though the G S.G. and AIKATH had entered into a compromise as early as 4; 12. 1984, no lease has yet been granted in his favour perhaps as the C.G. has had no occasion to consider the matter earlier. We do not think that any useful purpose will be served by remitting the matter and asking the S .G. to seek the formal approval of the C.G. therefore. The decision of Rao itself can be taken as containing the approval of H the C.G. in this regard. We would, therefore, uphold Rao's decision

, INDIAN METALS v. U.0.1. IRANGANATHAN. J.I

and direct the S.G. to execute, at as early a date as possible, a ML in favour of AIKA TH in respect of the 140 acs. agreed to be leased to 91

A him under the compromise dated 4.12.84.

(b) OTHER CLATMS

It is asserted on behalf of OCL and ORIND that, if there are B factors justifying the relaxation of reservation in favour of !MFA and FACOR, there are equally valid factors justifying a like relaxation in favour of these two companies as well. The operative part of the Rao reportin regard to the claims of these two parties reads thus:

"For the requirement of the other parties viz. M/s Orissa Industries Ltd., Mis Orissa Cements Ltd .. manu- c factuirng refractories, their requirements of chrome ore are relatively less and that too, consisting mostly of hard lumpy ore. The potential for hard lumpy ore in the areas under consideration is relatively less, since most of it is located in the areas which have already been leased out to TISCO D who are also one of the larger producers of hard lumpy ore and are capable of meeting the .needs of other industries also.

The occurrence of chrome ore is such, that hard lumpy ore, lumpy friable ore and fine ore occur together and in varying proportion. The refractory manufacturers requirements ar such that if they want to get hard lumpy ore from the areas under consideration, they will' have to necessarily become traders of the other grades which will be in higher proportion. They have been carrying on their business for the past several years without any captive mines. Hence, it is felt that their requirements can be adequately met by the other producers of chrome ore, including hard lumpy ore. Hard lumpy ore will be available from other producers of chrome ore to meet their require- ments, including the Orissa Mining Corporation and no captive mining leases need be given to them, in the areas G · under consideration."

xxx xxx xxx '-'. The Refractory industries viz. the Orissa Industries Ltd. and· M/s Orissa Cements Ltd. for their level of production H

A 92 SUPREME COURT REPORTS I 1990] Supp. 2 S.C.R. and their need for hard lumpy ore, captive mines in the areas under consideration do not optimally meet their , requirements and there is enough lumpy ore in the State from other sources." ' Rao's line of reasoning is criticised by OCL and ORIND. Sri B Bhandare, on behalf of OCL, urges, inter alia: ·

(a) The company's refractory plant is in need of at least 35,000 to 40,000 MT of ore per annum (not 15000 MT aswerked out by Rao) and for securing a regular uninterrupted supply, it needs a captive mine badly; instead it is thrown at the mercy of traders like TISCO or Sirajuddin & .Co. or the OMC who are c unable to supply the quantities of ore needed by OCL.

(b) The company which has a vital mineral-based industry has not been granted even a single ML fur which it had bee.n applying from 1961 to 1986 whereas traders like Mohanty and D Sirajuddin have been granted leases.

(c) Besides supply of refractories for dome~ti~ consump- tion OCL has also a vast export market and has earned huge foreign exchange by exports to countries like _Pakistan, Bang- ladesh, Korea, Kenya, etc. - .E (d) The company has also employed about 3000 workers who are adivasis or who belong to the Scheduled Castes and Scheduled Tribes.

(e) The industrial licence granted to OCL by the C,G. F envisages that the OCL should secure PL and ML from the S:G. for its needs of ore.

(f) The S.G. had made on 25.1.72 a grant of a ML toQCL over an area of 187.02 hectares with the approval of the C.G. The S.G. had indeed recommended the grant of ML to OCL. G· (g) It is also stated that in certain informal meetings held recently, the S.G. has expressed itself in favour of granting ML in favourof the OCL.

Likewise, on behalf of ORIND, it has been urged that Rao has H erred. in thinking that the need of the company was of lumpy ore which

r INDIAN METALS v. U.0.I. IRANGANATHAN, .I.)

could be adequately met by procuring the ore from private parties and that it would not be necessary to grant a mining lease for meeting its rquirements. It is submitted, in particular, that- 93

(i) ORIND's requirements are not small as suggested by the SG but come to a minimum of 25,000 MT per annum and would indeed go up to 65,000 MT with the setting up of a ferro- B alloys plant for which steps are being taken;

(ii) the reasoning that ORIND has been functioning with- out a captive source all along and hence could continue to do so is bad logic and also a misleading argument which overlooks that ORIND has been put to great difficulty in obtaining even 8,000 to 10,000 MT (about one half of its needs) in driblets from c various sources being at their mercy in regard to quantity, price and other vagaries. Even OMC has been capricious in its supplies of ore in that it has agreed to supply 25,000 MT to OCL against their needs of 15 ,000 MT only 'whereas it is willing to supply only 9,000 MT only to ORIND ~gains! its present requirements of D 20,000MT.

(iii) the assumption that ORIND needs only lumpy ore is not correct. Actually more than 60 to 65% of the ore u·sed by ORIND is friable ore. I' E (iv) ORIND also/deserves grant of ML on other grounds of national and public significance. It supplies basic refractories not only to core and strategic domestic industries but also exports them outside India and the exports made by it, being value added and involving poportionately less consumption of ore, earn much more foreign exchange than the exports of!MFA F & FACOR. The want of a captive source of supply has gravely prejudiced the commissioning of ORIND's first benefaction plant for refractories. It also employs a strong labour force and thus provides opportunities for large scale employment.

(v) if MLs can be granted to AlKATH, IMFA, FACOR, G ORIND also deserves one. OMC has been allotted huge areas which remain idle and unexploited and a predominant portion of its ore is supplied to the metallurgical industry not leaving much .. for the refractory industry .

(vi) atleast the area marked as Area No. 7 in the plan filed H

94 SUPREME COURT REPORTS I 1990] Supp. 2 S.C.R.

INDIAI' METALS v. U.0.1. [RANGANATHAI'. J.] 95

consider it necessary to go into this issue. The S.G. bas, by the A impugned order, rejected ORIND's application, inter a!ia, on the ground that, in view of the pendency of. W.P. 14116/84 before this Court, it could not at that stage pass any order on the application. It would, therefore, be open to ORIND to ask the S.G. to reconsider the applic&tion in the light of our present order. We ·see no necessity for insisting on such a formal request and would, therefore, direct the B S.G. to consider ORIND's application afresh in the light of this judgment.

So far as OMC & !DCOL are concerned, Rao has "recom- mended" that the areas of items I & 2, left after the grants to !MFA and FACOR. be given on lease to OMC. We have seen.that there are huge areas of mineral bearing lands which have been reserved for the c public sector. Its interests do not clash or come into conflict with those of private applicants which can only claim a right to the extent the SG is willing to relax the rule of reservation. We do not think the OMC or IDCOL have any voice in requiring that the SG should keep certain extents of land reserved and should not grant any ML at all in favour of D any private party. The interests of these corporations are safe in the hands of the S.G. and the allocation of MLs to these organisations is a matter of discretion with .the S.G. Strictly speaking, therefore. no question of any application by them for ML need arise at all. But. when made, their applications arc considered hy the S.G. and, on revision by the C.G. as a matter of form. To this extent, they have a E statutory remedy but, beyond this. we think they cannot go. We arc of opinion that their interests are safe \\'ith the S.G. and need no direc- tions from us.

Ewn IMFA and FACOR urge that their claims to further leases deserve consideration. Rao has alreaJv ad.iudicated upon their claims F and "recommended" leases to them to the extent indicated. If they apply to the S.G. for more leases. it is open to the S.G. to consider \.vhether they deserve any further lL'.ascs anci. if so, to \.vhat extent. more reserved areas could be released in their favour.

The learned Advocate General for the State emphasised that the G State is also interested in its industrial development and the national economy and that, while reserving substantial areas for public sector exploitation, the State has a well-formulated policy in respect of grant of private leases which has been placed before Rao. He also submits that, even if grant of a ML in favour of a particular party is not found feasible, the State will do its best to ensure that the ore mined in the H

96 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A State is equitably distributed so as to meet the legitimate needs of all industries operating in the State. We have no doubt that the S.G. will keep all relevant aspects urged by the parties in reaching their decision. on the matters remanded to it by us.

In the circumstances, we accept and confirm Rae's recommenda- B tion for grant of MLs to !MFA, FACOR and A!KATH, to the extent indicated by him. We set aside his rejection of the claims of OCL and ORIND. We leave it open to all the parties to place their claims, or ·· further claims, as the case may be, in regard to the areas applied for by them on or before 30.4.1987, backed by supporting reasons, before the S. G. in the form of representations within four weeks from the date of c this order. The S. G., we hope, will dispose of these applications within the statutory period failing which the parties will have their remedy under the statute by way of revision to the C.G. In arriving at its decisions, it will be open to the S.G. to take into account the discus- sions and findings of the Rao report in the light of this judgment. The D S.G. should also keep in mind that no leases to any of the parties (other than OMC & IDCOL) can be granted unless either the areas so proposed to be leased out are dereserved and thrown open to applica- tions from the public or unless the C.G., after considering the recom- mendations of the S.G., for reasons to be recorded in writing, con- siders a relaxation in· favour of any of the parties necessary and ·justified. E Before we conclude, we should like to place on record our appreciation of the detailed and excellent report given by Dr. Rao. He has brought together all the relevant data and analysed the various claims put forward before him; a detailed note on chromite deposits in the State of Orissa prepared by the Chief Mining Geologist of the F Indian Bureau of Mines has also been made an Annexure to the report. The report and its annexures are bound to be of immense help and value to the S.G. and C.G. in arriving at their decisionsnot only on the various applications but also in ,regard to their future policy. in .the matter of grant of chromite leases and of the supply of chromite to ·the needy applicants in an equitable manner. G W.P. No. 14116/87 and the other applications are disposed of in the above terms. There will be no order as to costs.

G.N. Petitions disposed of.