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Case Number

C.W.J.C No. 969 of 1972

Attorney(S)

Shok Haran Singh
Raghubansh Prasad Singh
N.N.Roy
L.S.Sinha
Balbhadra Prasad Singh
B.C.Ghosh
A.K.Sinha

Judges

N.L Untwalia, C.J
S.K Jha, J.

Acts

Section 13 of the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter called the Act).
Section 151 of the Code of Civil Procedure
Sub-sections (1) and (2) of Section 18
Rule 54 of the Rules. Copies
Section 18, Sub-section (3),
Rule 58 and or Rule 59
Rule 55 of the Rules
Rule 59 of the Rules.
Rule 24 of the Rules.
Rule 58 or Rule 59

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Smart Summary

Structured Summary of the Opinion (Untwalia, C.J.)

Factual and Procedural Background

The petitioner is a limited company engaged in mining, holding a certificate of approval under Rules 4 and 4A of the Mineral Concession Rules, 1960 pursuant to Section 13 of the Mines and Minerals (Regulation and Development) Act, 1957 (the Act). The State of Bihar issued a notification (effective 15 February 1968) under Rules 58 and 59 declaring lands in villages Byanbil and Kanyaluka (district Singhbhum) available for grant of phosphate mining leases. The petitioner applied for a mining lease on 15 February 1968. The applications were not disposed of within one year as prescribed by Rule 24 and were therefore deemed rejected; the petitioner filed revision applications under Rule 54 on 1 March 1969. A writ petition (C.W.J.C 1121 of 1969) was filed in this Court on 16 September 1969 asking the Union of India to dispose of the revision applications. While proceedings were pending the Central Government, by communication dated 7 December 1970 (Annexure 3), exercised revisional power under Rule 55 and directed the State Government to grant a mining lease for apatite over 106.38 acres in village Kanyaluka in favour of the petitioner.

The petitioner confined its present writ to village Kanyaluka (withdrawing claims for Byanbil). An attempt by a third party (Dr. Satyanarain Sinha) to be added as a party was not pressed and was dismissed. The writ now before the Court was filed on 28 July 1972 and admitted on 12 September 1972. The State of Bihar filed a counter-affidavit (16 March 1973), asserting that the State could withdraw prior notifications and that, by a notification published in the Bihar Gazette on 3 October 1972 (dated 28 September 1972), the area had been reserved for exploration in the public sector; on that basis the State said it could not grant the lease.

Legal Issues Presented

Whether the State Government can resist the petitioner's writ application for grant of lease in village Kanyaluka on the ground of a subsequent notification (dated 28.9.1972) reserving the area for public sector exploitation.
Whether the State Government can, after a revisional order of the Central Government under Rule 55 directing grant of lease (Annexure 3), withdraw an earlier notification issued under Rule 58 or Rule 59 or otherwise reserve the area for the public sector.
Whether a revisional order of the Central Government under Rule 55 is, in practice and law, enforceable against the State (including whether the absence of a specific execution/enforcement mechanism in the Act or Rules prevents a writ of mandamus compelling compliance).

Arguments of the Parties

State (represented by the Advocate General)

The State can withdraw a notification issued under Rules 58 and 59 and consequently reserve or keep the area for exploration in the public sector (citing a recent notification reserving apatite areas for the public sector).
Even if the State Legislature's power in the field of mines and minerals is limited, the State has executive power under Article 298 of the Constitution to reserve areas for public-sector exploitation (relying on a Gujarat High Court decision).
The absence of an express provision in the Act or the Rules for execution or enforcement of a revisional order under Rule 55 means the State is not prevented from withdrawing notifications or from reserving the area despite the revisional order.

Petitioner (represented by Mr. B.C. Ghose)

Relied upon a decision of the Orissa High Court (State of Orissa v. Union of India, AIR 1970 Orissa 68) which held that after the Act the State has no residuary power to work out mines and minerals except by following the Act and Rules; if State wishes to reserve, it must do so under the Act and Rules and is subject to the revisional power of the Central Government.
The petitioner relied on the Central Government's revisional order (Annexure 3) directing grant of lease to the petitioner and sought a writ of mandamus compelling the State to obey that order.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Baijnath v. State of Bihar (A.I.R. 1970 Supreme Court 1436)	Establishes that Parliament's declaration under Section 2 of the Act makes regulation of mines and development of minerals an exclusive field for Parliament; the State Legislature's power to legislate on the subject is extinguished.	The Court relied on this authority to support the proposition that the field of mines and minerals is occupied by Parliament and the State cannot legislate in that field.
State of Orrissa v. M.A. Tulloch (A.I.R. 1964 Supreme Court 1284)	Reinforces that Parliament has exclusive legislative competence in the field of mines and minerals once Parliament has declared control under the Act.	The Court cited this precedent as part of the settled position that State legislative power on this subject is excluded by the Act.
Amritlal Nathubhai Shah v. Union Government of India (A.I.R. 1973 Gujarat 117)	Holds that the State's executive power under Article 298 exists but is subject to statutory rules made by the Central Government; the Central Government can override State reservations by making rules under Section 18 which bind the State under Section 18(3).	The Court expressed respectful agreement with the Gujarat High Court's view on Article 298 and the Central Government's ability to set aside State reservations by rule-making and revisional action; used this to support the conclusion that the Central revisional order must be obeyed.
State of Orissa v. Union of India (A.I.R. 1970 Orissa 68)	Holds that although the State may have proprietary title in mines, the Act takes the subject into exclusive Parliamentary domain; the State has no residuary power to exploit mines outside the Act and the Rules, and reservations must be made under the Act and are subject to Central revision.	The petitioner relied on this decision; the Court considered it in the debate over State reservation power and noted that it supports the view that State reservation must conform to the Act and Rules and can be set aside by the Central Government in revision.

Court's Reasoning and Analysis

The Court's analysis proceeds from the statutory and constitutional framework established by the Act and the Constitution:

Parliamentary primacy in the subject: The Court observed that Section 2 of the Act declares the expediency of central control over mines and minerals; consistent precedent holds that Parliament occupies the whole field and State legislative power is excluded. The Court invoked Baijnath and M.A. Tulloch to support that point.
Effect of the Central revisional order (Annexure 3): After the petitioner filed revision under Rule 54 and the Central Government, following comments from necessary parties including the State, exercised revisional power under Rule 55 to direct the grant of lease in favour of the petitioner, that order became binding on the State Government unless the order is null or set aside by a competent court. The Court regarded the revisional order as legally operative and not a mere recommendation.
Limits on State executive power: The Advocate General's reliance on Article 298 to justify State reservation was considered. The Court accepted that Article 298 grants executive power to the State (and Union) but emphasized that proviso (b) to Article 298 subjects that power to any Parliamentary legislation where the State Legislature cannot lawfully legislate. Because the Act and the Rules occupy the field, the State's executive reservation is subject to the Act and the Central Government's rules and revisional powers.
Central control through rules and revision: The Court relied on the reasoning in Amritlal's case and a quotation from Bhagwati, C.J., that the Central Government can make rules under Section 18 whose binding force under Section 18(3) can set aside any State reservation. Thus the State's purported reservation or withdrawal of notifications cannot lawfully override a revisional order made by the Central Government under the statutory scheme.
Withdrawal of notifications and timing: The Court found that withdrawing a notification or reserving the area after the Central revisional order (Annexure 3) was invalid. The Court rejected the Advocate General's contention that absence of an express execution machinery for Rule 55 meant the State could ignore the revisional order. The Court held that even if no specific execution provision exists, the High Court's writ jurisdiction (mandamus) is available to compel obedience of a revisional order.
Mala fides in timing: The Central revisional order was in December 1970; the petitioner waited and then filed the writ in July 1972 (admitted 12 September 1972). The State's notification reserving the area was published on 3 October 1972 but dated 28 September 1972 — i.e., after the writ had been admitted. On those facts the Court held that the notification, insofar as it related to the petitioner's claimed 106.38 acres in Kanyaluka, was vitiated by mala fides in law (malice in law) because of the timing and context. The Court emphasized that this was not a finding of actual malice in fact, but that the action could be struck down as malice in law.
Conclusion from analysis: Because the revisional order was binding and the later State reservation/withdrawal could not override it, the writ of mandamus compelling respondents 2 and 3 to obey Annexure 3 and grant the lease was appropriate relief.

Holding and Implications

Holding:

The writ application is allowed; respondents 2 and 3 are directed, by issuance of a writ of mandamus, to obey the order of the Central Government contained in Annexure 3 and to grant the mining lease to the petitioner for apatite in village Kanyaluka (an area of 106.38 acres).

Implications:

Direct effect: The State (respondents 2 and 3) is legally compelled to implement the Central Government's revisional order and grant the lease to the petitioner for the specified area in Kanyaluka. The Court made no order as to costs.
On broader law: The judgment affirms that Central legislative and rule-making competence under the Act (and the Central Government's revisional powers under the Rules) can prevail over State executive reservations made under Article 298 when such reservations conflict with the Act and the Rules; a State notification purporting to reserve an area after a binding Central revisional order directed grant of lease cannot be allowed to stand. The Court relied upon existing High Court and Supreme Court authorities and did not assert the creation of a novel precedent beyond application of those authorities to the facts.

Final court endorsement: S.K. Jha, J. agreed and the application was allowed.

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M/S. S. Lal & Company Limited v. The Union Of India & Others

Untwalia, C.J:— The petitioner in this case is a limited company incorporated under the Companies Act, having its registered office in Calcutta. It carries on business of mining and has various mining leases to exploit various minerals in the State, of Bihar and other States. It holds a valid certificate of approval granted by the State of Bihar under Rules 4 and 4A of the Mineral Concession Rules, 1960 (hereinafter called the Rules) made under Section 13 of the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter called the Act). The petitioner's case is that in or about January 1968 the Government of Bihar issued a notification under Rules 58 and 59 of the Rules stating therein that the lands in villages Byanbil and Kanyaluka situated in the district of Singhbhum were available for grant of mining lease for phosphate with effect from 15th February 1968. A copy of this notification is Annexure 1 to this writ application. The petitioner applied for grant of mining lease over the said villages on 15.2.1968 Copies of the applications are Annexures 2 and 2-A. The applications were not disposed of within the period of one year, as prescribed under Rule 24 of the Rules. Therefore, deeming them to have been rejected, the petitioner—Company filed applications in revision before the Central Government under Rule 54 of the Rules. Copies of the revisions applications filed on 1.3.1969 are Annexures 2-B and 2-C, C.W.J.C 1121 of 1969 was filed in this Court by the petitioner on 16.9.1969 for a direction to the Union of India (respondent no. 1) to dispose of the revision applications. The writ application was admitted on 18.9.1969 During its pendency the petitioner-Company received a communication from the Government of India dated 7.12.1970 (Annexure 3), whereby the Central Government, in exercise of their revisional powers under Rule 55, directed the State Government to grant mining lease for apatite over an area of 106.38 acres in village Kanyaluka.

2. In paragraph 9 of the petition the statement was that the Company had been informed that the Central Government had recommended the grant of lease to the petitioner in respect of village Byanbil also. The area in that village for mining apatite was 187.38 acres. In spite of the revisional order of the Central Government contained in Annexure 3, the Government of Bihar has not granted mining lease to the petitioner even in respect of the land in village Kanyaluka. The petitioner, therefore, approached the Government of Bihar in the Department of Mining and Geology for immediate implementation of the order passed by the Central Government, and the copy of this application dated 9.5.1972 is Annexure 4. C.W.J.C 1121 of 1969 proceeded to disposal in regard to other two villages with which we are not concerned in this writ application. But the grievance of the petitioner in this writ application is that the State Government should be directed to grant mining lease to the petitioner in respect of villages Kanyaluka and Byanbil. Realising the difficulty, however, in respect of the sufficiency of materials for village Byanbil, this application was confined to the prayer for village Kanyaluka only, and whatever has been stated in this writ application in relation to the grant of mining lease for village Byanbil has been withdrawn.

3. An application under Section 151 of the Code of Civil Procedure had been filed by one Dr. Satyanarain Sinha for being added as a party-respondent. An order in that connection was passed on 9.1.1973 by a Bench of this Court of which I was a member. But when the hearing of this case was commenced on 23.7.1973 learned counsel for Dr. Satyanarain Sinha did not press that application for adding him as a party. Accordingly, that petition was dismissed.

4. The present writ application was filed on 28.7.1972 and admitted on 12.9.1972 Notice of this application seems to have been served on the respondents long before 7.3.1973, when this case was included as a ready case in the Monthly List. A counter-affidavit on behalf of the State of Bihar was filed on 16.3.1973 Although, according to the rules of the High Court, the cause for late filing of the counter-affidavit ought to have been explained and without there being any explanation for the delay it could be rejected, we thought it proper not to reject this counter-affidavit on a technical ground and considered it for whatever it is worth.

5. The stand taken in the counter-affidavit is that a notification issued under Rules 58 and 59 of the Rules can be withdrawn by the State Government and consequently, it is stated in paragraph 3:—

“That under notification no. B/M-6-1013/70-6599M published in Bihar Gazette dated 3.10.72, the area have been reserved for exploration in the public sector and in this view of the matter the State Government in the aforesaid circumstances is unable to grant any lease to the petitioner.”

6. A copy of the notification spoken of in paragraph 3 of the counter-affidavit published in the Bihar Gazette (Extraordinary) dated 3.10.1972 was produced before us at the time of the hearing by the learned Advocate General. This notification states that in supersession of all previous notifications issued in connection with the unreserved area of apatite mines in the district of Singhbhum it was notified for information of the general public that all such mineral areas, except those in respect of which leases had already been granted, had been reserved for mining operations in public sector. The question for consideration in this case is whether the State Government can resist this writ application on the basis of the notification dated 28.9.1972 published in the Bihar Gazette dated 3.10.1972

7. Under Section 2 of the Act the Parliament has 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 provided in the Act. It is well-settled by now that on the making of such a declaration the power to legislate in respect of such mines and minerals is exclusively in the Central Parliament, and the State Legislature's power to make any legislation in that regard is extinct. It has been held that the whole of the field is occupied in regard to the subject-matter of mines and development of minerals by this Act, and the State Legislature is now powerless to pass any legislation-vide (1) Baijnath v. State of Bihar (A.I.R 1970 Supreme Court 1436) and (2) State of Orrissa v. M.A Tulloch (A.I.R 1964 Supreme Court 1284) noticed in paragraph 2 of the judgment of Bhagwati, C.J, in (3) Amritlal Nathubhai Shah v. Union Government of India. (A.I.R 1973 Gujrat 117).

8. On the application in revision filed by the petitioner under Rule 54 after following the procedure of calling for comments of the necessary party, including the Government of Bihar, a final revisional order communicated by Annexure 3 was passed. In its comment the State Government had taken the stand that they wanted to keep the area in question reserved for a private party who might apply for it in future. In the order of the Central Government it is stated that such reservations are not contemplated in the Act or the Rules. If the State Government wanted to reserve, it should be for a public purpose. Finally, in exercise of their revisional powers under Rule 55 of the Rules and all other powers enabling in this behalf, the Central Government directed the State Government to grant mining lease for apatite over an area of 106.38 acres in village Kanyaluka, district Singhbhum, in favour of the petitioner Company. It is plain that the State Government is bound to obey this order unless it can justifiably resist it in law.

9. The argument put forward by the learned Advocate General on the basis of the decision of the Gujarat High Court referred to above that even though the executive power of the State to reserve the area for exploitation in public sector could not be exercised under Article 162 of the Constitution, as the power of the Bihar Legislature to make laws in regard to mines and minerals had been taken away, it had the executive power under Article 298 to reserve the area, as held by the Gujarat High Court. As against this submission, Mr. B.C Ghose, learned counsel for the petitioner, relied upon a Bench decision of the Orissa High Court in (4) State of Orissa v. Union of India (A.I.R 1970 Orissa 68). The Orissa High Court has expressed the following view in paragraph 15 at page 73 of the judgment:

“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 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 application to the exclusion of the State Government.”

10. There is no reference, as perhaps the point was not argued, to Article 298 in the judgment of the Orissa High Court. I find myself in respectful agreement with the view expressed by the Gujarat High Court in (3) Amritlal's case (A.I.R 1973 Gujarat 117). The executive power of the Union granted under Article 298 is apart from their executive power mentioned in Article 73. Similarly, the executive power granted to the State by Article 298 is dehorse and over and above its power under Article 162. But then the quality of the executive power granted either to the Union or to the State is subject to proviso (a) in the case of former and proviso (b) in the case of latter. The State Government, therefore, has power to reserve certain area for exploitation by itself or by a statutory corporation or for a company in public sector. But then, as observed by Bhagwati, C.J, at the end of paragraph 15 at Page 129—

“This of course does not mean that the Central Government is powerless to override the reservation made by the State Government. The Central Government can always make Rules under Sub-sections (1) and (2) of Section 18 and such rules having binding force on the State Government by virtue of Section 18, Sub-section (3), they can set at naught any reservation made by the State Government.”

11. I may respectfully add that the argument advanced on behalf of the petitioner with reference to Section 4 of the Act was also rejected by the Gujarat High Court in (3) Amritlal's case (A.I.R 1973 Gujarat 117) on the ground that the State Government could not grant lease to itself and, therefore, Section 4 did not come in the way of exercise of such power. As was pointed out by Mr. Ghose, this reason of rejection of such argument may not hold good in case of a company incorporated under the Companies Act, even though the company may be owned and controlled by a Government. Therefore, there would be a necessity of the grant of mining leases by the State Government to such a company. But even so, I have no doubt in my mind that the State Government will have the power under Article 298 of the Constitution to reserve an area for exploitation in public sector whether the undertaking in public sector is a statutory corporation or a corporation incorporated under the Companies Act.

12. I shall resume the discussion of the point argued by the learned Advocate General after stating his another argument that the State Government had the power to withdraw its notifications issued either under Rule 58 or under Rule 59 of the Rules. Granting it to be so, as, there does not seem to be any flaw in this argument, the question for consideration is whether the State Government could without the notification issued under Rule 58 or Rule 59 reserve the area for exploitation in public sector, after the order of the Central Government contained is Annexure “3”.

13. Proviso (b) to Article 298 says that the executive power of the State granted under the main provision of the said Article shall be subject to legislation by Parliament if the purpose of the executive power is one with respect to which the State Legislature cannot make laws. It is plain, therefore, that the executive power of the Bihar State exercised in this case by reserving an area for exploitation in public sector was subject to legislation by Parliament. Legislation by Parliament was the Act; the rules framed by the Central Government were statutory rules. The order passed by the Central Government on the revisional application of the petitioner Company was in exercise of the power granted to the Central Government under the statutory rules. It, therefore, must follow legitimately and as a matter of construction that the executive power of the State to reserve is the revisional order passed by the Central Government. The State Government had taken the stand before the Central Government when it was invited to give its comments in answer to the petitioner's application in revision that it had reserved the area for exploitation by the private party, but the Central Government, in spite of that, made the revisional order. Thereafter it was not open to the State Government to say that it would not obey the order of the Central Government directing it to grant lease to the petitioner and reserve the area for exploitation in public sector. In my opinion, the exercise of such power is hit by proviso (b) to Article 298.

14. Similarly, the exercisc of the State Government to withdraw the notification issued under Rule 58 and or Rule 59 is also invalid because it had no power to withdraw after a final order of the kind incorporated in Annexure 3 had been passed by the Central Government under Rule 55 of the Rules. The learned Advocate General faintly argued at one stage that no provision has been made either in the Act or in the Rules for execution and enforcement of a revisional order passed by the Central Government under Rule 55 of the Rules and, therefore, the State Government was free at large either to withdraw the notification issued under Rule 58 or Rule 59 or to reserve the area for exploitation in public sector. This argument has been stated merely to be rejected. In the very context of the scheme of the Act and the Rules it is difficult to imagine that the State Government will have the liberty of disobeying or ignoring the order of the Central Government passed under Rule 55. It is bound to obey it unless the order can be held to be a nullity or is set aside by an appropriate Court on any other ground. Even if there is no machinery provided for execution of such an order, undoubtedly the writ jurisdiction of this Court for issuing a rule of mandamus to obey that order is available. On the particular facts of this case, it may also be added that the order of the Central Government was passed in December, 1970. After waiting for sufficient time, and, on finding the State Government not amenable to its request to grant lease to the petitioner in accordance with order of the Central Government contained in Annexure 3, this writ application was filed on 28.7.1972 The notification under which the State Government now wants to take shelter was made on 28.9.1972 after this writ application was admitted on 12.9.1972 which, as is the practice of the Court, must have been admitted after hearing the State counsel on notice to the Advocate General. In the circumstances, therefore, the notification dated 28th September, 1972 in so far as it relates to the area of 106.38 acres in village Kanyaluka in the district of Singhbhum for extraction of apatite must be held to be hit on the ground of mala fides also, not because there can be any finding of malice in fact, no such case has been made out, but because the action of issuing the notification in so far as it relates to the claim of the petitioner can be struck down as being vitiated by malice in law. In any view of the matter, I do not see any justification to refuse the prayer of the petitioner for issuance of a writ of mandamus to compel respondents 2 and 3 for the grant of lease in village Kanyaluka.

15. In the result, this writ application is allowed and respondents 2 and 3 are directed, by issuance of a writ of mandamus, to obey the order of the Central Government contained in Annexure 3 and grant lease to the petitioner-Company in respect of apatite mine in village Kanyaluka, district Singhbhum, in respect of an area of 106-38 acres. I shall make no order as to costs.

16. S.K Jha, J. I agree.

Application allowed.

M/S. S. Lal & Company Limited v. The Union Of India & Others

Structured Summary of the Opinion (Untwalia, C.J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

State (represented by the Advocate General)

Petitioner (represented by Mr. B.C. Ghose)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

M/S. S. Lal & Company Limited v. The Union Of India & Others

Comments