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Mysore Cements Ltd. And Anr. v. The Union Of India (Uoi) And Ors.

Karnataka High Court

Aug 9, 1971

Judgment

Subsequent
References

CaseIQ

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Judgment Summary — Venkataswami, J.

Factual and Procedural Background

The petitioners are Mysore Cements Ltd. (a public limited company) and the Secretary of that company. The company, which manufactures cement at Ammasandra (Tumkur District), required sand as a raw material and had obtained permits from the local Tahsildar previously. At the relevant time sand was classified as a major mineral governed by the Mineral Concession Rules, 1960.

The third respondent applied for a mining lease on 4-11-1968 for an area of 82.13 acres to win sand; the State Government granted that lease on 25-2-1969 and notified the grant in the Mysore Gazette on 3-4-1969. The first petitioner applied for a mining lease on 18-3-1969 that included the area already granted to the third respondent. After being informed that the area had already been sanctioned for the third respondent, the first petitioner filed a revision application under Rule 54 of the Mineral Concession Rules, 1960 before the Central Government. By letter No. MV-1 (172)/69 dated 5-1-1970 the Central Government rejected the revision application. The petitioners challenged that rejection in this Court.

Legal Issues Presented

Whether the Central Government failed to exercise the jurisdiction vested in it under Section 11(4) of the Mines and Mineral (Regulation and Development) Act, 1957.
Whether the impugned order by the Central Government was a 'speaking order' (i.e., whether it gave adequate reasons) and thus whether it was liable to be set aside for lack of adequate reasons.

Arguments of the Parties

Petitioners' Arguments

The Central Government did not properly exercise its jurisdiction under Section 11(4) of the Mines and Mineral (Regulation and Development) Act, 1957 (the Act).
The impugned order rejecting their revision application was not a 'speaking order' and therefore ought to be set aside.

Central Government's Position (as reflected in its order)

The Central Government noted the chronology: the third respondent's application preceded the petitioners' application. The third respondent had thus acquired a legal right by virtue of the earlier sanction.
The Central Government observed that the petitioners' permit "seems to have no legal validity" because the Mysore Minor Mineral Rules came into force only on 25-4-1969, as admitted by the petitioners.
On that basis the Central Government declined to interfere with the State Government's order sanctioning the lease in favour of the third respondent and rejected the revision application.

Third Respondent's Point (noted in the opinion)

It was pointed out by the third respondent's counsel that the third respondent had not been made a party to the revision proceedings before the Central Government.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bhagat Raja v. Union Of India & Others (Supreme Court)	Principle that if the State Government's reasons are scrappy or nebulous and the Central Government does not clarify them, a court on appeal may have to examine the matter de novo.	The court considered the passage relied upon by petitioners' counsel but distinguished the present case: the Central Government had itself given a clear reason (that the third respondent had acquired a legal right prior to the petitioners' application). Therefore the Bhagat Raja principle (calling for a de novo re-examination where reasons are inadequate) did not apply here.

Court's Reasoning and Analysis

The court's analysis proceeded in these principal steps (based only on material in the opinion):

Examination of timing and vested rights: The court found (from the established chronology) that the third respondent's application and the State Government's sanction preceded the first petitioner's application. Consequently the third respondent had acquired a vested legal right in respect of the grant.
Scope and purpose of Section 11 of the Act: The court reviewed Section 11 (which the opinion reproduces). It observed that Section 11 deals with preference between rival applicants whose applications are pending at the same time and that a prior applicant ordinarily enjoys preferential treatment. Section 11(4) provides an exception allowing the State Government, for special reasons recorded and with prior approval of the Central Government, to grant preference to a later applicant.
Application of Section 11 to the facts: The court concluded the petitioners were not rival applicants in the sense contemplated by Section 11 because they did not apply before the third respondent's application was granted. The statutory scheme addresses competing applications pending disposal simultaneously; it does not cover a situation where a mineral concession has already been granted and later an application is filed by another party.
Jurisdictional consequence: Given that the third respondent's grant had already been sanctioned, the court held that Section 11(4) could not be invoked to revoke or set aside a grant that had been validly made before the later application was presented. The court further noted the textual distinction between the mandatory language of subsection (1) and the discretionary character of subsection (4).
On the 'speaking order' contention: The court examined the Central Government's order and found it did provide an adequate reason for rejecting the petitioners' revision application — primarily that the third respondent had acquired a legal right by virtue of the earlier sanction and that the petitioners' permit appeared to lack legal validity because the relevant minor-mineral rules came into force only later. The court held that this reason "goes to the root of the controversy."
Distinguishing the precedent relied upon: Although petitioners' counsel relied on Bhagat Raja v. Union of India & Others (concerning inadequate reasons by state authorities and lack of clarification by the Central Government), the court distinguished that case on the facts: here the Central Government itself gave a clear and sufficient reason, so the Bhagat Raja concern (necessitating de novo consideration) did not arise.
Additional factual point supporting Central Government's rejection: The court noted the point made by third respondent's counsel that the third respondent had not been made a party to the revision proceedings, and observed this as further justification for the Central Government's rejection.

Holding and Implications

Holding:

DISMISSED — The petition challenging the Central Government's rejection of the revision application was dismissed.

Direct consequence for the parties:

The petitioners' challenge to the Central Government's order was unsuccessful and the original grant to the third respondent stands.
The court awarded costs to the third respondent and fixed the Advocate's fee at Rs. 100/-. (This is the only express order as to costs and fees recorded in the opinion.)

Broader implications:

The opinion does not purport to lay down a new rule of general application beyond its interpretation of Section 11 in the factual context: it confines itself to the proposition that Section 11 governs preference between rival, contemporaneous applicants and does not authorize the revocation of an already-sanctioned grant in favour of a later applicant. The court treated the Central Government's reasons as adequate on the facts and did not call for de novo re-examination as contemplated by the precedent relied upon by petitioners.

Show all summary ...

JUDGMENT Venkataswami, J.

1. The petitioners herein are a public limited company and the Secretary of that Company. The company i. e., Mysore Cements Ltd., is aggrieved by an Order of rejection made by the Central Government and communicated by its letter No. MV-1 (172)/69, dated 5-1-1970 on a revision application preferred by the first petitioner under Rule 54 of the Mineral Concession Rules. 1960.

2. It is necessary to set out a few facts in order to appreciate the contention urged on behalf of the petitioners. The first petitioner is engaged in the manufacture of cement and has its factory at a place called Ammasandra in the District of Tumkur. For that purpose it is in need of sand as a raw material. From its inception it had the benefit of permits issued off-and-on in regard to sand, from the Tahsildar having jurisdiction over the area. The sand, it is not disputed, at the relevant point of time was classified as a major mineral governed by the provisions of Mineral Concession Rules, 1960. The third respondent herein applied for the grant of a mining lease on 4-11-1968 in respect of an area of 82.13 acres, ostensibly for the purpose of winning the sand available therein. The lease was granted as prayed for by him. on 25-2-1969, by the State Government. Sometime subsequent to the grant in his favour, i. e., on 18-3-1969 the first petitioner herein applied for a lease in respect of a certain area, including the area which was granted in favour of the third respondent.

By a letter dated 20-3-1969, the State Government, informed him that an area of 82.13 acres had already been sanctioned in favour of the third respondent. Aggrieved by this order, the first petitioner approached the Deputy Minister for Industries, Government of Mysore by a petition dated 23-4-1969. On 6-6-1969, he was informed, ostensibly in response to his application dated 18-3-1969 for the grajit of a lease in his favour, that he was at liberty to apply for the grant of a lease in respect of 74 acres of land in Turuvekere Taluk as against 156 acres of land asked lor by him. In the meanwhile, the grant in favour of the third respondent was notified in the Mysore Gazette on 3-4-1969. Aggrieved by this Notification, the first petitioner presented a revision application under Rule 54 of the Mineral Concession Rules. 1960. The Central Government disposed of the said revision application and made an order as follows:--

"Sub: Revision Application under Rule 54 of the Mineral Concession Rules. 1960.

I am directed to refer to your revision application dated 31-5-1969 and your letter dated 11-10-1969, on the above subject, and to say that you have filed this revision application against the order of the State Government of Mysore contained in their letter No. S. O. 556 dated 25-2-1969 sanctioning to Sri A. Chikkana-rasiah a mining lease for moulding sand over 33.25 hectares in Turuvekere village of Tumkur District against his application dated 4-11-1968.

The Central Government have considered the grounds of revision, the comments of the State Government and your counter comments thereon. It has been observed that you applied for grant of mining lease on 18-3-1969. Thus before you applied for the area, Sri A. Chikka-narasiah had already acquired the legal right over the area in question. He cannot now be thrown out to accommodate you. The permit obtained by you seems to have no legal validity as the Mysore Minor Mineral Rules came into force only on 25-4-1969 as admited by you. In these circumstances, the Central Government do not see any valid reason to interfere with the orders issued by the State Government on 25-2-1969.

Your application for revision is, therefore, rejected."

The petitioners have approached this court challenging the above order of the Central Government.

3. Sri W. K. Sundara Murthy, the learned counsel appearing on behalf of the petitioners, urged two grounds in support of the petition. They are (i) that the Central Government has failed to exercise the jurisdiction vested in it under Section 11(4) of the Mines and Mineral (Regulation and Development) Act, 1957 (hereinafter referred to as the Act), and (ii) that the impugned order was not a 'speaking order' and was. therefore, liable to be set aside.

4. We are unable to accept any of the above contentions as well founded.

5. Section 11 of the Act reads as follows:--

"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 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.

(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 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 matters specified in Sub-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 following:--

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

(b) the financial resources of the applicant;

(d) such other matters as may be prescribed.

(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, grant a prospecting license or a mining lease to an applicant whose application was received later in preference to an applicant whose application was received earlier."

6. It is clear from the narration of facts set out earlier that the third respondent was granted the lease sometime prior to the application for the grant, made by the first petitioner herein. The third respondent, therefore, had acquired a vested right in respect of the said grant. It is further to be seen that the petitioners herein had not at all applied for the grant of a lease during the pendency of the application for grant made by the third respondent or at any time before the sanction of the lease in favour of the third respondent. The petitioners, therefore, cannot at all be considered as rival applicants for the grant so as to invoke the provisions of Section 11(4) of the Act in their aid. The whole of Section 11 of the Act deals with preference as between two or more rival applicants for the grant of a lease, whose applications are pending disposal before the Government at the same time. It enjoins that a prior applicant should ordinarily be considered for the grant of the lease in preference to a later applicant.

Section 11(4) of the Act provides for an exception whereby jurisdiction is conferred on the authority to overlook the claim of a prior applicant for exceptional or for special reasons to be recorded in writing, with the previous approval of the Central Government. Section 11 of the Act does not apply to a case like the present one where mineral concession is already granted on an application even before the next application is presented to the Government. It is also to be seen from the provisions of Section 11 of the Act that Sub-section (1) thereof is couched in a mandatory language, whereas Sub-section (4) seems to vest a discretion in the authority concerned. It is therefore, clear that no right as such can be spelled out in favour of the petitioners for consideration of their case, assuming that they were in the position of rival applicants, from the provisions of Section 11(4) of the Act. Even if such a right were to be there, Government has no jurisdiction to revoke orders made on applications for mining lease before another application is filed. In this view of the matter, we are unable to accept the contention of Shri Sundara Murthy.

7. In regard to the contention relating to the character of the impugned order as not being a 'speaking order', we are of the view that the order in question has given adequate reasons for the rejection of the revision application. The reason in fact is that the third respondent had already acquired a legal right by virtue of the fact that the grant in his favour had been sanctioned earlier to the application made by the petitioners for a similar grant. This, in our opinion, is a sufficient ground to reject the revision application preferred by the petitioners. But it is the contention of Sri Sundara Murthy that it was the duty of the revising authority to consider all the grounds urged by the petitioners. In support of this contention he relied on a decision of the Supreme Court in Bhagat Raja v. Union Of India & Others. . The passage relied on by the learned counsel occurs in paragraph 9 of that report which runs thus:--

"Ordinarily, in a case like this, if the State Government gives sufficient reasons for accepting the application of one party and rejecting that of the others, as it must, and the Central Government adopts the reasoning of the State Government, this court may proceed to examine whether the reasons given are sufficient for the purpose of upholding the decision. But, when the reasons given in the order of the State Government are scrappy or nebulous and the Central Government makes no attempt to clarify the same, this court, in appeal may have to examine the case de novo without anybody being the wiser for the review by the Central Government."

In the case on hand we are not confronted with any such situation. It is seen from the impugned order extracted above that the Central Government itself has given a reason, which, in our opinion, goes to the root of the controversy raised by the petitioner before it. Once the Central Government came to the conclusion that the third respondent had acquired a legal right, that itself was sufficient ground to reject the revision application of the petitioners. We are also of the opinion that on the facts of the instant case, the Central Government 'was justified in coming to the conclusion that the third respondent had acquired a legal right in regard to the lease in his favour. It is also pointed out by Sri B. G. Sridharan, the learned counsel for the third respondent, that in the revision application preferred before the Central Government, the third respondent had not at all been made a party to the said proceedings. For all these reasons, we feel that there was considerable justification for the Central Government to have relected the revision petition preferred before it.

8. For the above reasons, the petition fails and is dismissed. In the circumstances of the case, we feel it lust and proper to award costs to the third respondent. We fix the Advocate's fee at Rs. 100/-.