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Case Number

O.J.C No. 486 of 1969

Advocates

Y.S.N.Murty
S.K.Dholakia
R.Mohanty
G.Rath
G.L.Sanghi
D.P.Rath
B.K.Behar

Judges

G.K Misra, C.J
S.K Ray, J.

Acts

Rule 54 of the Mineral Concession Rules, 1960 (hereinafter
Development) Act, 1957 (Central Act 67 of 1957) (hereinafter
Section 30 and Rr. 55 and 58(2) Within jurisdiction.42.
Rule 60 of the Mineral Concession Rules, 1960
sub-rule (2) of R. 21 or sub-rule (2) of R. 40,
Section 30 of the Mines and Minerals Act
Rule 58(2) the provisions of Rule 58(1)(a)
provisions of R. 58(1)(b) under Rule 58(2).
Rule 58(1)(a) and (b) under Rule 58(2),
sub-rule (1) of R. 15 or sub-rule (1)
Central Government in Rule 58(2)
S. 30 and R. 55.34. Section 30
Section 30 and Rule 55.35.
provisions of sub-rule (1)
provision of Rule 58(1),
Section 30 and Rule 55.
Indian Companies Act
refunded.28. Rule 58
Rule 26 or R. 24(3).
Rule 58.60.
sub-rule (1)

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The State of Orissa (petitioner) owned 462.16 acres in village Boula, Keonjhar district, containing chromite ore. The mining lease for the area had been held by Sri M.A. Tulloch; that lease expired on 1-6-1965. Tulloch applied for renewal on 27-11-1964. The State rejected the renewal application by order dated 27-5-1965 because the State had decided not to grant leases for that area to private parties, intending to exploit the ores in the public sector for State-run industries (Annexure I).

Tulloch filed a revision petition to the Union of India under Rule 54 of the Mineral Concession Rules, 1960. The Union (opposite party No. 1) invited comments from the State; the State reiterated its public-sector reservation. By Annexure III dated 19-6-1967 the Union affirmed the State's rejection of Tulloch's renewal application.

Opposite party No. 2 applied for a mining lease of 187.03 acres out of the total 462.16 acres. The State did not dispose of that application within nine months, so it was treated as deemed refused under Rule 24(3). Opposite party No. 2 filed a revision petition under Rule 54; the Central Government (opposite party No. 1), exercising revisional powers under Rule 55, by Annexure V dated 18-2-1969 directed the State to grant the mining lease to opposite party No. 2 after relaxing the requirements of Rule 58(1)(a) and (b) under Rule 58(2).

The State challenged Annexure V by a writ application seeking: (1) a declaration that the Mines and Minerals (Regulation and Development) Act, 1957 and the Rules are ultra vires the Constitution; and (2) quashing of Annexure V directing grant of lease to opposite party No. 2. The writ was contested by opposite parties; the High Court considered multiple legal issues, including constitutionality, revisional powers, Rule 58(2) relaxations, Article 14, and jurisdictional questions under Articles 131, 226 and 227 of the Constitution.

Legal Issues Presented

Whether the Mines and Minerals (Regulation and Development) Act, 1957 (Central Act 67 of 1957) and the Mineral Concession Rules, 1960 are unconstitutional or ultra vires the Constitution.
Whether the Central Government had jurisdiction and power to relax the requirements of Rule 58(1)(a) and (b) under Rule 58(2) and, in exercise of revisional power (Section 30 and Rule 55), direct the State to grant a lease to opposite party No. 2.
Whether an application that was initially premature (under Rule 60) could nonetheless be the subject of revisional action by the Central Government.
Whether the impugned revisional order (Annexure V) was discriminatory or violative of Article 14 of the Constitution, or mala fide due to Central Government's indirect interests in opposite party No. 2.
Whether Article 131 ousted the High Court's jurisdiction because the dispute involved the Union and a State, and whether the State of Orissa could maintain a writ under Articles 226 and 227 to challenge the revisional order of the Central Government.

Arguments of the Parties

Petitioner (State of Orissa) / Learned Advocate-General's Arguments

The Act is beyond Parliament's legislative competence and the Rules are ultra vires the Act and the Constitution.
The Central Government had no jurisdiction to relax Rule 58(1)(a) and (b) under Rule 58(2) because the area was not available for grant (it was reserved by the State), and the application was premature under Rule 60.
The impugned order is inconsistent with the Central Government's earlier order (Annexure III) rejecting Tulloch's renewal and is discriminatory in violation of Article 14.
The impugned order showed undue favour to opposite party No. 2 and was mala fide because Central Government had indirect interest in opposite party No. 2 (through LIC and UTI investments).
The State argued it could challenge the action in its capacity as proprietor of the mines and minerals.

Opposite Parties (Union of India and Opposite Party No. 2)

The area applied for by opposite party No. 2 contained good deposits exploitable immediately and opposite party No. 2 had obtained industrial licence and established a ferro chrome plant; preference is given to applicants who will use the mineral for production rather than mere sale.
The State had reserved large areas for public-sector exploitation but had no immediate scheme or prospecting activity; thus keeping areas idle was not in the interest of mineral development.
The Act and Rules are constitutional, and under Article 131 the High Court lacks jurisdiction to entertain disputes between the State and Union (a preliminary objection raised by the Union).
Opposite party No. 2 argued the State could not maintain the writ under Articles 226 and 227.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Baijnath Kedia v. State of Bihar ((1969) 3 SCC 838 : AIR 1970 SC 1436)	Principle that Parliament may declare control in Union to be expedient in the public interest (Entry 54, List I) and that such declaration can render the subject exclusive to Parliament.	Used to conclude that Section 2's declaration placed regulation of mines and mineral development within Union competence; thus the Act falls within Entry 54 and the central control is plenary despite State proprietary rights.
Nagendra Nath Dey v. Suresh Chandra Dey (AIR 1932 PC 165)	Principle that an appeal or application presented irregularly or out of time remains an appeal/application and is not rendered non-existent by irregularity; an appeal presented late is still an appeal.	Applied to treat a premature application as still an application on which an order (including refusal) may be passed and which is revisable under Section 30 and Rule 55; supported the view that revisional powers could be exercised over orders on premature applications.
Mela Ram and Sons v. Commr of Income-tax, Punjab (AIR 1956 SC 367)	Followed the above principle concerning the nature of appeals filed out of time.	Followed to reinforce that an application, even if premature, is an orderable matter and thus subject to revision by the Central Government.
Adi Pherozshah Gandhi v. H.M. Seervai ((1970) 2 SCC 484 : AIR 1971 SC 385)	Authority on parties who must be before the Supreme Court under Article 131; considerations on the scope of Article 131 jurisdiction.	Relied on to support the conclusion that the present writ was not barred by Article 131 because opposite party No. 2 (a non-State company) was a necessary party and Article 131's prescription as to parties prevents initiating the matter in the Supreme Court under Article 131 in the chosen form.
Praga Tools Corporation v. C.V. Imanual ((1969) 1 SCC 585 : AIR 1969 SC 1306)	Established that a company under the Indian Companies Act does not fall within the definition of "State" for Article 131 purposes.	Applied to hold that opposite party No. 2, being a company, is not a 'State' and therefore matters involving such a company cannot be brought solely under Article 131 as a dispute between Union and State.
O.J.C No. 58 of 1965 (Orissa) — State of Orissa v. Workers Employed in Hirakud Dam Project	Decision cited by the Advocate-General in support of the State's right to challenge; concerned State authorities as parties before an Industrial Tribunal.	The court found this decision distinguishable: the facts and parties were different and the point in issue was not directly raised; thus it did not support the Advocate-General's contention.
Union of India v. The Manager, Dhori Colliery (1969 Lab IC 325 (Patna))	Bench decision of Patna High Court cited by the Advocate-General; raised issues touched upon but not decided.	Found not to be of assistance: the point was not decided on the merits in that case, and therefore it did not support the proposition that a subordinate statutory authority may always challenge higher authority by writ.

Court's Reasoning and Analysis

The court proceeded in a stepwise analysis addressing constitutionality, the scope of revisional power, the interplay of the Rules (58–60) and the statute (Section 30), discrimination and mala fides, and jurisdictional objections.

1. Constitutionality of the Act and the Rules

Examined Entries: Entry 54 (List I), Entry 18 and Entry 23 (List II).
Noted Section 2 of the Act contains a declaration that it is expedient in the public interest for the Union to take control of regulation of mines and mineral development "to the extent herein provided."
Relying on the reasoning in Baijnath Kedia, the court held that Parliament may declare the extent of Union control and that once declared the field becomes exclusive to Parliament; Entry 23 (List II) is subordinate to Entry 54.
Concluded the Act falls within Entry 54 and the control is plenary; though State retains proprietary rights (e.g., royalties), the legislative and executive field is within the Union where Parliament so declared. No submission showed the Rules to be ultra vires; therefore both Act and Rules held constitutional.

2. Power to relax Rule 58(1) and revisional jurisdiction (Rules 58(2), 55; Section 30)

Set out Rules 58–60: Rule 58(1) prescribes entries and Gazette notification before previously held areas become available; Rule 58(2) permits the Central Government, for reasons recorded in writing, to relax sub-rule (1) in any special case; Rule 59 deals with State reservations; Rule 60 declares premature applications not to be entertained.
Considered Advocate-General’s contention that opposite party No. 2’s application was premature when filed (26-9-1966) and therefore could not give rise to a revisable order.
Applied authorities (Nagendra Nath Dey; Mela Ram) to hold that an application, although irregular or premature, remains an application; an order on it (including rejection or any other order) is an order subject to revision under Section 30 and Rule 55.
Found that inaction by the State (deemed refusal under Rule 24(3)) amounted to an order; the Central Government, exercising revisional powers under Section 30, could consider and in that revisional order relax Rule 58(1)(a) and (b) under Rule 58(2). The Central Government thus acted within jurisdiction.

3. Article 14 / discrimination & mala fides

The court acknowledged the contention that relaxation of Rule 58(1) for a premature application might be discriminatory because rival applicants might be unaware the area was available.
Responded that Rule 58(2) imposes statutory limits: reasons must be recorded in writing and it may be exercised only in a special case. In the present matter the Central Government recorded reasons and identified a special case (opposite party No. 2 had an industrial licence, foreign collaboration, and an established factory; State had kept large areas idle without prospecting or factories).
Concluded no illegality or discrimination under Article 14 where statutory safeguards in Rule 58(2) are respected.
Rejected mala fides allegation: the court held that indirect or institutional interests of the Central Government (e.g., financing through public corporations) do not, by themselves, establish mala fides in administrative action.

4. Rule 59 and State reservation for public-sector exploitation

Interpreted Rule 59's phrase “refused ... on the ground that the land should be reserved for any purpose” to apply to purposes consistent with the Act and Rules (e.g., geological survey) but not to an open-ended reservation to be exploited in the public sector without following the Act's procedures.
Held that State proprietary title does not permit the State to exercise residual power to work mines without observing the Act; if State desires to reserve areas for public-sector exploitation it must follow the statutory application process under the Act and Rules. The Central Government can set aside the State's decision in revisional exercise and direct grant to others.

5. Jurisdictional objections (Article 131, Articles 226/227)

The Solicitor General's submission that Article 131 barred High Court jurisdiction was considered. The court observed that the impugned order affected the State and created rights in favour of opposite party No. 2; the State could not attack the order without impleading opposite party No. 2, who is a necessary party.
Relying on precedent (Adi Pherozshah Gandhi) and the principle that a company is not 'State' for Article 131 (Praga Tools), the court held Article 131 did not bar the present writ in the manner contended.
However, the court held more fundamentally that a subordinate statutory authority (the State Government acting under the Act and Rules) cannot, as such, question an order of a higher authority (the Central Government) by maintaining a writ under Articles 226/227 unless statute expressly permits; the order of the Central Government was not a nullity and was exercised within jurisdiction. Accordingly, a writ at the instance of the State Government functioning as a subordinate statutory authority was not maintainable.

6. Conclusion of analysis

All contentions advanced by the State (as enumerated) were rejected on their merits or as untenable in law, and the court dismissed the writ application.
Justice Ray agreed with dismissal but recorded doubts about the correctness of treating a premature application as deemed refused under Rule 24(3) so as to attract revisional power under Section 30 and Rule 55 — indicating a reservation on that technical point.

Holding and Implications

Holding: The writ application is dismissed (the petition dismissed) and the impugned order (Annexure V) of the Central Government directing the State to grant a mining lease to opposite party No. 2 stands. The dismissal was ordered without costs.

Implications / Consequences:

The court held the Mines and Minerals (Regulation and Development) Act, 1957 and the Mineral Concession Rules, 1960 to be constitutional and within Parliament's competence under Entry 54, List I; the Union's control over regulation of mines and mineral development is plenary to the extent declared by Parliament (per Section 2 of the Act).
The Central Government, in exercise of its revisional power under Section 30 and Rule 55, may, in a revisional order, relax the procedural requirements of Rule 58(1)(a) and (b) under Rule 58(2), provided the relaxation is for reasons recorded in writing and in a special case; such exercise, when within statutory limits, is not arbitrary or discriminatory.
The State cannot, merely in its capacity as a subordinate statutory authority under the Act and Rules, maintain a writ under Articles 226/227 to challenge a validly exercised revisional order of the Central Government; procedural statutory remedies and the hierarchy of powers under the Act limit such recourse.
The direct practical effect is that the Central Government's order directing grant of the mining lease to opposite party No. 2 remains operative; the State's challenge failed. The court did not award costs in favour of the opposite parties.
Note: Justice Ray recorded a judicial reservation/doubt concerning the propriety of treating a premature application as deemed refused under Rule 24(3) so as to attract revisional power — a point left on record but not sufficient to alter the outcome in the case.

This summary is prepared exclusively from the provided opinion text and does not add or infer facts beyond those expressly stated in that opinion.

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State Of Orissa, Through The Secretary, Department Of Mining And Geology v. Union Of India And Others Opposite Parties.

G.K Misra, C.J:— The State of Orissa through the Secretary, Department of Mining and Geology, is the petitioner. Its case may be stated in short. It is the owner in possession of an area of 462.16 acres of land in village Boula in the district of Keonjhar. The said area contains chromite minerals ores. This area had been held under a mining lease by Sri M.A Tulloch (hereinafter to be referred to as Tulloch). The term of that lease expired on 1-6-1965. On 27-11-1964 Tulloch applied, for renewal of the lease. By an order (Annexure I) dated 27-5-1965 the application was rejected by the petitioner on the ground inter alia that the State Government had decided not to grant lease of the area to private parties and the same was required for exploitation by the State itself. There was an overall shortage of chromite in the State and it was intended that the ores raised from the area would feed the industries run by the State in the public sector.;

2. On 10-6-1965 Tulloch filed a revision petition before the Union of India (opposite party No. 1) under Rule 54 of the Mineral Concession Rules, 1960 (hereinafter to be referred to as the Rules) against the order (Annexure I). Comments were invited from the petitioner by opposite party No. 1 under Rule 55. The petitioner in reply pointed out by the letter (Annexure II) dated 16-7-1966 that the State had a limited deposit of hard and lumpy chromite in the districts of Keonjhar, Cuttack and Dhenkanal and that the State Government had decided not to grant any mineral concession for chromite ore to private parties considering the importance of that ore for future industrial use and over-all shortage of chromite. The petitioner also pointed out that it had already set up a public undertaking in the name of Orissa Industrial Development Corporation which was going ahead with a ferro chrome plant and for that purpose both industrial and import licence had been obtained from the Government of India as it had been decided by the petitioner that the Orissa Mining Corporation, an undertaking of the Government itself, would work out the chromite ores held by the State. For utilisation of the ores in the ferro chrome plant and other industrial undertakings of the State the petitioner had recommended to opposite party No. 1 that the revision petition filed by Tulloch should be rejected. In Annexure III dated 19-6-1967 opposite party No. 1 rejected the revision petition with the following observation:—

“Since the State Government has decided not to grant mineral concession for chromite to private parties over the area as they want to exploit the mineral in the public sector, the State Government's order of rejection of the renewal application does not appear to be illegal and there are no grounds for interfering with the decision of the Government of Orissa……………”

3. Opposite party No. 2 applied for mining lease of 187.03 acres in respect of chromite mineral ores out of the total area of 462.16 acres. The application was not taken into consideration by the State Government as it did not want to lease out that area. As the application was not disposed of within nine months from the date of its receipt it was deemed to have been refused under Rule 24(3) Opposite party No. 2 filed a revision petition before opposite party No. 1 under Rule 54. In Annexure IV dated 6-11-1968 the petitioner furnished its comments on the revision petition. Therein the petitioner stated that Tulloch's renewal application had been rejected on the ground that the State Government would not grant mineral concession over the area to any private party and the said decision had been affirmed by opposite party No. 1 in the public sector. In exercise of its revisional powers under Rule 55 opposite party No. 1 directed the petitioner by an order (Annexure V) dated 18-2-1969 to grant mining lease for chromite over the area in favour of opposite party No. 2 after relaxing the provisions of R. 58(1)(b) under Rule 58(2). The petitioner's point was that the ferro chrome plant set up by it in the public sector was expected to go into production shortly and would be up to 12,00,000 tonnes. Taking the future expansion of the plant into account it was estimated that the total requirement of chrome for the plant would go up to two million tonnes in future. The proved reserves of chromite ores in the State including the deposits in mines held by private parties being less than the requirements estimated above and the present known deposit of hard and lumpy chromite ore in the mines vested in the State being very much inadequate, uncertainty hinged around the ferro chrome plant set up by the petitioner at a huge cost.

4. The petitioner's stand is that R. 58(2) could be invoked only when any area was available for grant and not when the area in question was not open to be leased out at all. The impugned order (Annexure V) on the face of it is discriminatory as the ground on which Tulloch's renewal application was rejected was not kept in mind when allowing the application of opposite party No. 2. The direction for grant of mining lease in favour of opposite party No. 2 was not in consonance with the Industrial Policy Resolution of 1956 wherein opposite party No. 1 declared that mining of ore was in the exclusive ownership of the State.

5. It was alleged that opposite party No. 1 did not disclose its interest in opposite party No. 2 which in fact it had through the Life Insurance Corporation of India and the Unit Trust of India, both of whom are stated to have invested in shares in opposite party No. 2, and there was no justification for exercising preference in favour of opposite party No. 2 adversely to the interest of the Orissa Industrial Development Corporation and the Orissa Mining Corporation.

6. The petitioner averred that Mines and Minerals (Regulation and Development) Act, 1957 (Central Act 67 of 1957) (hereinafter to be referred to as the Act) is ultra vires the Constitution. It was further asserted that the rules are also ultra vires the Constitution and the Act.

7. The two main prayers in the writ application are to declare the Act and the Rules ultra vires the Constitution, and quash the impugned order (Annexure V) whereby opposite party No. 1 directed the petitioner to grant lease of the disouted area for mining to opposite party No. 2.

8. Opposite Parties Nos. 1 and 2 filed two separate counter-affidavits, Essentially, however, their stand is the same. In paragraph 3 of the counter-affidavit of opposite party No. 1 it was admitted that the area in question was reserved by the State Government for exploitation in the public sector. The Case of the opposite parties is that the area applied for by opposite party No. 2 which had been previously exploited by Tulloch contained good deposit of minerals and could be exploited immediately without further prospecting. Opposite party No. 2 had been granted an industrial licence for setting up a ferro chrome plant with foreign collaboration and had established the factory. The rules recognise the principle that parties who are in a position to make use of mineral for further production as opposed to parties who conduct mining operation only for the purpose of sale of minerals should be preferred. It is not in the interest of mineral development that the State Government should keep large area in the State idle. It was considered to be in the interest of mineral development of the State in case opposite party No. 2 was allowed to exploit immediately areas containing good deposit of chrome which is a very important item in the manufacture of high grade steel and other alloys greatly needed by the country. Considering all these factors the Central Government directed the State Government to grant mining lease in respect of this area.

9. Opposite party No. 1 took into consideration the fact that the State Government although it had reserved very large areas of more than 35 sq miles for working mines in the public sector since long, it had not yet installed any factory based on the minerals in the area and prospecting in those areas had not been done by it. The State Government had no immediate scheme of prospecting or undertaking the mining operation in those areas. Besides, the Life Insurance Corporation and Unit Trust of India and the Andhra Pradesh Industrial Development Corporation had made investment in opposite party No. 2 which is also a kind of public limited company. In the best interest of the industrial development of the country there should be proper distribution of the area between the State and individual or between the public sector and private sector undertakings. There was a denial of the averment that opposite party No. 1 bypassed the Industrial Policy Resolution of 1956. The State Government had been keeping vast areas reserved for a long time without having any immediate scheme for mining them and the area in question was simply lying idle. The Act and the Rules are constitutional and the High Court of Orissa has no jurisdiction as under Article 131 of the Constitution any dispute between the State and the Union is entertain able only in the Supreme Court.

10. Opposite party No. 2 traversed almost the same grounds and took a further plea that the State Government cannot maintain the writ application under Articles 226 and 227 of the Constitution.

11. The learned Advocate-General for the State of Orissa raises the following contentions:—

(i) The Act is beyond the legislative competence of Parliament and the rules are ultra vires the Act and the Constitution.

(ii) Opposite party No. 1 had no Jurisdiction to relax the requirement of Rule 58(1)(a) and (b) under Rule 58(2), the area being not available for grant as the same had been reserved by the State for its own exploitation and the impugned order interferes with the proprietary rights of the State and discharge of its executive functions in respect of subjects enumerated in List II of the Seventh Schedule of the Constitution.

(iii) The impugned order is contrary to, and inconsistent with the earlier order (Annexure III) dated 19-6-1967 rejecting Tulloch's application for renewal and is hit by Article 14 of the Constitution.

(iv) The impugned order shows undue, favour to opposite party No. 2 to the prejudice of the public sector undertakings set up by the petitioner and is mala fide inasmuch as opposite party No. 1 has interest in opposite party No. 2 through the Life Insurance Corporation of India and the Unit Trust of India.

12. Besides combating the aforesaid contentions it is urged on behalf of the opposite parties that (i) the dispute Detween the State of Orissa and the Union of India is entertainable only by the Supreme Court and Article 131 of the Constitution is a bar to the present writ application; and (ii) at the instance of the State Government a writ application under Articles 226 and 227 of the Constitution is not maintainable.

13. All the aforesaid contentions require careful examination.

14. We would first examine the contention whether the Act is unconstitutional and the rules are ultra vires the Act and the Constitution. Entry 54 in List I and Entries 18 and 23 in List II which have been pressed into service in this regard may be noticed.

15. List I

16. Entry 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.

17. List II

18. Entry 18. Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land; land improvement and agricultural loans; colonization.

19. Entry 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.

20. It is open to Parliament to declare that it is expedient in the public interest that the control should rest in Central Government. To what extent such a declaration can go is for parliament to determine and this must be commensurate with public interest. Once declaration is made and the extent laid down, the subject of legislation to the extent laid down becomes an exclusive subject for legislation by Parliament. Any legislation by the State after such declaration and trenching upon the field disclosed in the declaration must necessarily be unconstitutional because that field is abstracted from the legislative competence of the State Legislature. The aforesaid view is concluded by (1969) 3 SCC 838 : AIR 1970 SC 1436, Baijnath Kedia v. The State of Bihar (see para 14).

21. In consonance with Entry 54 the following declaration as to the expediency of Union control was made in Section 2 of the Act.

“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 extent herein provided.”

22. The legal position after this declaration was observed by the Supreme Court thus:—

“We have thus not to look outside Act 67 of 1957 to determine what is left within the competence of the State Legislature but have to work it out from the terms of that Act.” (para 15)

23. It would thus be seen that Entry 23 in List II is wholly subordinate to Entry 54 in List I even though the State has the proprietary right in the mines and minerals.

24. Entry 18 has been held not to cover the topic relating to mines, although it touches land. (See para 19).

25. It is not necessary to refer to copious authorities and the matter is fully concluded by the aforesaid decision that the entire field of the exercise of control is indicated in the Act and the Act falls fairly and squarely within the ambit of Entry 54 in List I. The control is plenary even though the State has proprietary interest in mines and minerals. On account of the existence of this proprietary interest, the royalties are payable to the State. The Act is constitutional. Nothing has been brought to our notice as to how the rules are ultra vires the Act or the Constitution. We accordingly hold that the Act and the Rules are constitutional.

26. It is next contended by the learned Advocate General that the disputed area which was previously held by Tulloch was not available for grant inasmuch as there was no entry to the effect made in the Register of Mining Leases maintained by the State Government in Form M as required under Rule 40(2) and the impugned order directing grant of such a lease was in contravention of Rule 58(1)(a) and (b) and the Central Government had no power to relax the provision of Rule 58(1), the application being premature under Rule 60. He also contends that at the time of refusal of the renewal application of Tulloch the State Government reserved the disputed area to work out in the public sector and the land was not available for grant under Rule 59.

27. To appreciate the aforesaid contention, Rules 58, 59 and 60 may be noticed:—

“58. Availability of areas for regrant to be notified:—(1) No area which was previously held or which is being held under a prospecting licence or a mining lease or in respect of which an order had been made for the grant thereof but the applicant has died before the execution of a licence or 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 R. 15 or sub-rule (1) of R. 31, shall be available for grant unless—

(a) an entry to the effect is made in the register referred to in sub-rule (2) of R. 21 or sub-rule (2) of R. 40, as the case may be, in ink; and

(b) the date from which the area shall be available for grant 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.

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 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 prospecting or mining lease, grant the licence or lease after following the procedure laid down in Rule 58.

60. Premature applications:— Applications for the grant of a prospecting licence or a mining lease in respect of the areas in which—

(a) no notification has been issued under R. 58 or R. 59; or

(b) if any such notification has been Issued the period specified in the notification has not expired;

shall be deemed to be premature and shall not be entertained and the fee if any paid in respect of any such application shall be refunded.”

28. Rule 58 prescribes that the area covered by the four cases referred to in sub-rule (1) shall not be available for grant unless there is an entry in the register of prospecting licences maintained under Rule 21(2) in Form H and the register of mining leases maintained in Form M: Further, the date from which the area shall be available for grant is notified in the Official Gazette at least thirty days in advance. This procedure is followed so that every one will get a fair opportunity of making an application for grant of lease. It is brought to the notice of everybody interested in getting a prospecting licence or grant of a mining lease.

29. The Central Government has however, got power under Rule 58(2), for reasons to be recorded in writing, to relax the provisions of sub-rule (1) in any, special case.

30. Ordinarily, however, an application for grant of a prospecting licence or a mining lease which is premature shall not be entertained and the fee, if any, paid in respect of any such application shall be refunded unless the, conditions prescribed in R. 60(a) and (b) are fulfilled.

31. The learned advocate General's argument in terms of these rules may now be examined. His contention is that the Central Government by Annexure V dated 18-2-1969 relaxed in exercise of its power under Rule 58(2) the provisions of Rule 58(1)(a) and (b). This relaxation was subsequent to the filing of the application by opposite party No. 2 on 26-9-1966. At the time the application was filed by opposite party No. 2 it was premature and therefore there was no valid application and the impugned order passed on such application is void.

32. Though the argument prima facie appears to be attractive, it is untenable. In AIR 1932 PC 165, Nagendra Nath Dey v. Suresh Chandra Dey their Lordships had to consider the nature of an appeal filed after the period of limitation. They observed that there is no doubt that any application by a party to an appellate Court, asking it to set aside or revise a decision of a subordinate Court, is an appeal within the ordinary acceptation of the term, and that it is no less an appeal because it is irregular or incompetent. This was followed in AIR 1956 SC 367, Mela Ram and Sons v. Commr of Income-tax, Punjab. On the principles so laid down their Lordships held that an appeal presented out of time is an appeal and an order dismissing it as time barred is one passed in appeal.

33. Doubtless, the application filed by opposite party No. 2 was initially premature. Even on such a premature application the competent authority has to pass an order that the application is rejected because it was premature. It is also open to the competent authority to pass an order recommending relaxation of the ban imposed under R. 58(1)(a)(b). In either case it is an order passed on the application. Such an order is revisable under S. 30 and R. 55.

34. Section 30 lays down that the Central Government may, of its own motion or on application made within the prescribed time by an aggrieved party, revise any order made by a State Government or other authority in exercise of the powers conferred on it by or under this Act. Thus the section vests in the Central Government plenary powers of revision. The amplitude of the power is very wide. Even an order passed by the State Government suo motu is revisable by the Central Government. As the application was premature the State Government did not take it into consideration. Under Rule 24(3) if any application is not disposed of within the period specified it shall be deemed to have been refused. Thus, inaction on the part of the State Government on the premature application amounted to an order passed by the State Government refusing the application. Such an order is revisable Under Section 30 and Rule 55.

35. It is in exercise of the revisional power that the Central Government relaxed the prohibitions in Rule 58(1)(a) and (b) in the revisional order itself. It exercised the power under R. 58(2) within jurisdiction which cannot be questioned.

36. It was contended that if the power under Rule 58(2) is exercised in respect of a premature application at the stage of exercise of the revisional power, it would cause injustice inasmuch as rival applicants would have no knowledge that a particular area is available for grant and the same would be discriminatory under Article 14 of the Constitution. This contention has no force in view of the restrictions imposed on the power of the Central Government in Rule 58(2) whereby the discretion would be exercised within prescribed limitations. The conditions to be fulfilled are that the order of relaxation must record the reasons in Writing and the power would be exercised only in any special case. Here, the impugned order gave the reasons in writing and was alive to the fact that there was a special case for relaxing the conditions. A special case was noticed in favour of opposite party No. 2 as it had been granted an industrial licence for setting up a ferro chrome plant with foreign collaboration and it had already established a factory. The Central Government was also of opinion that in the interest of mineral development the State Government should not keep large areas in the State idle. The granting of mineral lease in respect of the disputed area in favour of opposite party No. 2 was considered to be in the interest of mineral development. The Central Government also took note of the fact that the State had reserved large areas of chromite ore and it had not by then set up any factory to operate in the public sector. Where the conditions prescribed in Rule 58(2) are adhered to the discretion is exercised in accordance with law and there is no question of any discrimination.

37. It was also contended by the learned Advocate General that the impugned order directing grant of mining lease was in contravention of Rule 59 inasmuch as the State Government had not declared that the land was available for grant and, on the contrary, with the concurrence of the Central Government the land had been reserved for being exploited in the public sector by the State of Orissa when Tulloch's application for renewal was rejected.

38. The expression in Rule 59 “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” would include a purpose consistent with the provisions of the Act and the rules. For instance, a particular area may be reserved for geological survey and on that ground the area might not be granted for mining lease. Reservation of a particular area for being exploited in the public sector by the State cannot be said to be a purpose for which it is to be reserved under R. 59.

39. Even though the State has a proprietary title in the mines, by the passing of the Act the subject of the legislation becomes an exclusive subject for legislation by Parliament as has already been stated in paragraph 6 of this judgment Under the Act the State has no residuary power of working out mines and minerals without observing the conditions prescribed in the Act and the rules. In other) words, even if the State desires to reserve a particular area for being exploited in the public sector, it must make the necessary application under the Act and the rules and in exercise of its revisional power it is open to the Central Government to set aside the decision of the State Government and direct grant of the same to other applicants to the exclusion of the State Government.

40. In this case, by the date of the application on 26-9-1966 the land was not available for grant on account of the ban under Rule 58(1)(a) and (b) not having been lifted. The refusal of Tulloch's application for renewal by the Central Government does not amount to an order directing grant of lease in favour of the State Government in refusing that application the reason given was that the State Government wanted to exploit the area in the public sector. It is open to the Central Government to subsequently change its mind when other applications come to consider the need of the State. Before the Central Government, only the premature application of opposite party No. 2 was for consideration. It had to consider the rival claim of the State for reserving the area for exploitation in the public sector. In exercise of its revisional power it is open to the Central Government to say that the same would not be reserved for the State and a mining lease is to be granted in favour of opposite party No. 2. The moment such a decision is taken, the ban prescribed in Rule 58(1)(a) and (b) is to be lifted and the same has been relaxed in exercise of the power under Rule 58(2).

41. We, therefore, close up this part of the discussion by saying that the Central Government exercised its power under Section 30 and Rr. 55 and 58(2) Within jurisdiction.

42. In passing the impugned order the Central Government cannot be said to have passed an order inconsistent with its earlier order in Annexure III. While examining Tulloch's renewal application the Central Government took into consideration the fact that Tulloch would exploit the mineral ores for sale and not to use in its factory. It accordingly gave preference to the decision of the State Government to work out the mines in the public sector. By the time the application of opposite party No. 2 was taken up, different considerations arose. Opposite party No. 2 had already set up a factory and chromite ores were essential for use in it. The State of Orissa had not started any factory in the public sector by then and it had still some areas which could be exploited. The impugned order cannot therefore be said to be inconsistent with the earlier order when they were passed in altogether different circumstances.

43. The learned Advocate General further contended that the impugned order was actuated by mala fide; inasmuch as the Central Government had interest in opposite party No. 2 through the Life Insurance Corporation of India and the Unit Trust of India which were financing the undertaking set up by opposite party No. 2. We find no substance in this contention. Mala fides in the action of the Central Government are not to be judged from the fact that it is indirectly interested in many of the undertakings. The Central Government has to play the main rule in the economic development and social regeneration of the country. Various industries and undertakings are to be financed and supported through many of the Corporations set up by the Central Government. This feature by itself would not establish mala fides on the part of the Central Government in passing the impugned order. We find no difficulty in rejecting the contention as being somewhat frivolous.

44. On the aforesaid analysis, we reject all the contentions advanced by the learned Advocate General as enumerated in paragraph 3 of this judgment we would now take up the contentions urged by the opposite parties.

45. The learned Solicitor General contends that this Court has no jurisdiction to entertain the writ application under Article 131 of the Constitution. Article 131, so far as relevant, runs thus:

“131. Subject to the provisions of this Constitution the Supreme Court shall to the exclusion of any other Court, have original jurisdiction in any dispute:—

(a) between the Government of India and one or more States; or

(b) between the Government of India and any State or States on one side and one or more other States on the other; or

(c) between two or more States; i.e and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends.”

46. The learned Solicitor General contends that the writ application essentially involves a dispute between the Union of India and the State of Orissa on the main question of law whether the Central Government has any power to direct grant of lease in a case where the State of Orissa decides to exploit the same in the public sector. We are not much impressed by this argument.

47. The impugned order (Annexure V) directing the grant of lease in favour of opposite party No. 2 vitally affects the State of Orissa in its decision which has therefore a cause of action both against the Union of India and opposite party No. 2 and unless the impugned order is assailed, the rights created by the order in favour of opposite party No. 2 cannot be touched. The State of Orissa cannot question the validity of the impugned order without impleading opposite party No. 2 who is a necessary party. If the impugned order is to be attacked in presence of opposite party No. 2, the same cannot be done in a proceeding in exercise of the original jurisdiction of the Supreme Court under Article 131. If the State of Orissa had filed an application under Article 131 and would have made opposite party No. 2 a party thereto the application would have been dismissed in limine being in violation of the mandatory prescription as to who would be parties in such a case before the Supreme Court. The matter is concluded by (1970) 2 SCC 484 : AIR 1971 SC 385, Adi Pherozshah Gandhi v. H.M Seervai.

48. Law is now well settled that opposite party No. 2 which is a company under the Indian Companies Act does not come within the definition of ‘State’ (see (1969) 1 SCC 585 : AIR 1969 SC 1306, Praga Tools Corporation v. C.V Imanual) for Article 131.

49. On the aforesaid analysis, we find no substance in the preliminary objection raised by the learned Solicitor General.

50. It is next contended that the impugned order cannot be questioned by a writ application under Articles 226 and 227 of the Constitution by the State of Orissa. No authority directly in support has been brought to our notice.

51. It has, however, been contended by the learned Solicitor General that the State Government is a statutory authority exercising its power of refusal of application for grant and renewal of mining lease either under Rule 26 or R. 24(3). In this case there is a deemed refusal under R. 24(3). The order of the State Government was set aside in exercise of the revisional power of the Central Government under Section 30 and Rule 55. The State Government being a subordinate statutory authority cannot question the legality and correctness of the impugned order by maintaining a writ application. Though the contention is not supported by any authority, we are inclined to give full effect to it. A subordinate statutory authority, unless the statute so expressly prescribes, cannot question the correctness and legality of the higher judicial or quasi-judicial authority if exercised within jurisdiction. The order passed by the Central Government is not a nullity and cannot be ignored. It has full binding force as having been exercised within jurisdiction. A writ application at the instance of the State Government which functioned as a subordinate authority under the statute is not maintainable.

52. The learned Advocate General cited two decisions (i) a Bench decision of this Court in O.J.C No. 58 of 1965 (Orissa) State of Orissa v. Workers Employed in Hirakud Dam Project and (ii) 1969 Lab IC 325 (Pat), Union of India v. The Manager, Dhori Colliery. Both these decisions are distinguishable. In the first case, before the Industrial Tribunal the authorities of the Hirakud Dam Project representing the State of Orissa were parties. The order of the Industrial Tribunal was adverse to the interest of the State of Orissa. It accordingly filed an application against the adverse order. Moreover, the point was not directly raised or decided in that case. It is therefore no authority for the point in issue.

53. Under Rules 54 and 55 the State Government is not a party. Rules 54 and 55 show that the applicants and their rivals are parties to the application for revision. The State Government is not a party. It cannot accordingly challenge the impugned order by maintaining a writ application.

54. The second case is a Bench decision of the Patna High Court in which this point was also not decided. The award of the Industrial Tribunal in that case was not challenged by the Mazdoor Sangh and as on the merits the Union of India was not aggrieved, the abstract question of law raised therein was not examined and the writ application was dismissed.

55. Both these decisions are therefore of no assistance in answering the real issue whether the State Government can question the impugned order of the Central Government through a writ application.

56. The learned Advocate General however contends that the challenge in the writ application made by the State Government is not in the capacity of a subordinate statutory authority but in its independent rule as the proprietor of the mines and minerals over which the Central Government has exercised arbitrary power.

57. We have already said that after the passing of the Act the exercise of the Control by the Central Government is plenary and the field in which legislation has been passed by Parliament has been removed from the power of the State Legislature to make any legislation in respect thereof and correspondingly to pass any order in exercise of its executive power. We find no substance in this contention.

58. On the aforesaid analysis, the writ application has no merit. It is accordingly dismissed; but in the circumstances without costs.

59. Ray, J.:— I agree that this application shall be dismissed. I would, however, like to record that I have my doubts about the correctness of the contention that even though a premature application envisaged in Rule 60 of the Mineral Concession Rules, 1960 is prohibited from being entertained and thus is not disposable on merits, or at all, nevertheless, it may still be deemed to have been refused under Rule 24(3) because it has not been disposed of within the period specified for the purpose in sub-rule (1) thereof, so as to attract the revisional power of the Central Government either under Section 30 of the Mines and Minerals Act or under R. 55 of the Mineral Concession Rules.

60. Petition dismissed.

State Of Orissa, Thr... v. Union Of India And O...