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Case Number

Civil Writ No. 697-D of 1963

Advocates

D.K. Aggarwal and Madan Lal Gupta
S.N. Shanker
R.S. Narula and S.S. Chadha

Judges

Shamsher Bahadur
J.

Acts

Section 11 of the Mines and Minerals (Regulation and Development) Act, 1957, and Clause 18 of the Mineral Concession Rules of 1949,
Development) Act, 1957, and the Mineral Concession Rules, 1949.
provisions of the Mineral Concession Rules, 1960
Clause 13 of the Mineral Concession Rules, 1949,
Clause 54 of the Mineral Concession Rules, 1960,
Clause 9 of the Mineral Concession Rules, 1960,
ARTICLE 226 CONSTITUTION OF INDIA
sub-rule (4) of Clause 54 of the Rules
Sub-Section (2) of Section 11,
Sub-Section (4) of Section 11
Development) Act, 1957,
Development) Act, 1948.
sub-rule (2)

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This petition was filed by M. Dastgir Saheb under Article 226 of the Constitution of India challenging the validity of a prospecting licence granted by the first respondent (Union of India) by an order dated 22nd August 1963 (Annexure-B) in favour of N.K. Ramamoorthi (the third respondent). The impugned order reversed an earlier grant of a mining lease made by the Government of Andhra Pradesh (the second respondent) on 1st December 1960 (Annexure-A) in favour of the petitioner for an area of 29-47 acres in Jaladurgam village, Taluk Dhone, Kurnool district.

Chronology as set out in the opinion:

The petitioner applied on 12th October 1959 for a mining lease and agreed to take 29-47 acres; that application initially contained formal defects which were corrected on 21st October 1959.
The third respondent filed an application for a prospecting licence in late September 1959 (the opinion records both 26th September 1959 and 28th September 1959 in different paragraphs) but did not furnish an income-tax clearance certificate until 26th October 1960.
The State Government of Andhra Pradesh granted a mining lease to the petitioner on 1st December 1960 on the basis of priority.
The third respondent challenged that grant by invoking revisional jurisdiction under Clause 54 of the Mineral Concession Rules, 1960; the revisional authority (the Union) took the view that under the earlier Mineral Concession Rules, 1949 an income-tax clearance certificate was not a condition precedent to the entertainment of an application and consequently reversed the State Government's order, granting the prospecting licence to the third respondent.
The petitioner sought certiorari relief in this Court challenging the Union's revisional order; the petition was dismissed with costs.

Legal Issues Presented

Whether, under the Mineral Concession Rules, 1949, the production of an income-tax clearance certificate was a condition precedent to the entertainment (i.e., the acceptance as a valid application in law) of an application for a prospecting licence or mining lease.
How the Mineral Concession Rules, 1960 (which came into force on 26th November 1960) applied to applications pending at the commencement of those rules (Clause 17) and whether Clause 9 of the 1960 Rules (requiring an income-tax clearance certificate to accompany an application) could invalidate earlier applications made when the 1949 Rules applied.
Whether the rule of priority (Section 11 of the Mines and Minerals (Regulation and Development) Act, 1957 and Clause 18 of the 1949 Rules) required the State Government's grant to the petitioner to be upheld notwithstanding subsequent compliance by a competing applicant.
Whether the revisional authority's decision-making process breached principles of natural justice by failing to afford the petitioner an opportunity of being heard (including whether an oral hearing was required under Clause 54 of the 1960 Rules).

Arguments of the Parties

Petitioner's Arguments (Mr. Aggarwal)

The income-tax clearance certificate is a statutory prerequisite such that an application cannot be regarded as complete until the certificate is produced; therefore the third respondent's application was not an application in law until 26th October 1960.
Because the petitioner had completed his application on 21st October 1959 and the third respondent's application only became complete much later, the State Government was bound by the rule of priority to grant the lease to the petitioner and its grant on 1st December 1960 was correct.
The first respondent (Union) in reversing the State Government's grant breached statutory requirements and made an invalid order; the Court should interfere to recall that order.
The petitioner further contended that he was not given an adequate opportunity to be heard before the revisional authority.

Respondent (Union of India) Arguments (Mr. Shanker)

Under the Mineral Concession Rules, 1949 the income-tax clearance certificate was necessary before a prospecting licence could be granted but it was not a condition precedent for the entertainment of an application; hence the third respondent's application, though lacking the certificate when filed in 1959, was an application in law.
Clause 9 of the 1960 Rules requires an income-tax clearance certificate to accompany an application, but Clause 17 provides that applications pending at commencement of the 1960 Rules are to be disposed of in accordance with the 1960 Rules; when the State Government made its order on 1st December 1960 the third respondent's application complied with Clause 9 and therefore priority could not operate to the petitioner's disadvantage.
The revisional authority complied with procedural requirements in Clause 54; representations were invited and made, and the rule does not mandate an oral hearing in every case.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
A.K. Gopalan v. State of Madras, 1950 SCR 88 : (AIR 1950 Mad 27)	Support for the proposition that an oral hearing is not invariably required; endorses the utility of Lord Haldane's speech in Local Government Board v. Arlidge on the necessity of oral hearings.	The Court relied on A.K. Gopalan to show that the absence of an oral hearing in revisional proceedings is not necessarily a breach of natural justice and thus did not invalidate the revisional order.
Local Government Board v. Arlidge, 1915 AC 120	Authority rejecting an absolute requirement of oral hearing in administrative procedure (as referenced in A.K. Gopalan).	The opinion cites the Arlidge principle (via A.K. Gopalan) to support the view that the revisional authority need not always hold an oral hearing; therefore the petitioner's complaint about lack of oral hearing was not decisive.
Nagendra Nath Bora v. Commissioner of Hills Division, AIR 1958 SC 398	Principle that formal or technical errors, even if of law, will not necessarily suffice to attract extraordinary jurisdiction in writ proceedings.	The Court invoked this precedent to observe that even if an erroneous view about priority had been taken, such an error was not so patent as to warrant interference by writ jurisdiction; in short, technical infirmities alone did not justify quashing the revisional order.

Court's Reasoning and Analysis

The Court undertook a textual and contextual analysis of the relevant statute and rules and applied those provisions to the facts before it:

The Court first distinguished between a "mining lease" and a "prospecting licence" as defined under the Mines and Minerals (Regulation and Development) Act, 1957, and noted the durations and preferential rights associated with each (Sections 4, 7, 8 and 11 were discussed). In particular Section 11 and its sub-sections set out the rule of priority: earlier received applications normally have preferential right, subject to provisos and exceptional recorded reasons.
The Court then set out the relevant provisions of the Mineral Concession Rules, 1949 and 1960. Clause 13 and Clause 18 of the 1949 Rules were identified as imposing restrictions on grant and providing for priority: Clause 13 required production of an income-tax clearance certificate before a prospecting licence is granted; Clause 18 established the priority rule. The 1960 Rules (Clause 9 and Clause 17) require an income-tax clearance certificate to accompany an application and provide that applications pending at commencement of the 1960 Rules shall be disposed of in accordance with those rules.
The critical legal analysis concerned whether the 1949 Rules made the income-tax clearance certificate a condition precedent to the entertainment of an application or only a condition precedent to the grant of a licence. The Court concluded, on the text of the 1949 Rules, that the certificate was necessary before a licence could be granted, but it was not a condition precedent for the entertainment of the application itself. Thus an application filed under the 1949 regime could still be an effective application even if the certificate was produced later, prior to grant.
Applying that legal conclusion to the facts, the Court observed that although the third respondent's application initially lacked the income-tax certificate, at the time the State Government made its order on 1st December 1960 the third respondent had furnished the certificate (26th October 1960). Both competing applications were said to be in compliance when disposed of on 1st December 1960. Consequently the revisional authority's decision to reverse the State Government's grant and award the prospecting licence to the third respondent was consistent with the statutory scheme and the applicable rules.
On procedural fairness, the Court examined Clause 54 of the 1960 Rules (the revisional provision) and its sub-rule (4), which requires that copies of the revision application be sent to parties and specifies dates for representations. The Court found that the petitioner had made representations and that at one stage an oral hearing was afforded. The Court further relied on precedent (A.K. Gopalan, and Local Government Board v. Arlidge) to the effect that an oral hearing is not invariably required and that a representation in writing can suffice. The Court also cited Nagendra Nath Bora to emphasize that not every legal or formal error warrants invocation of extraordinary writ jurisdiction.
The Court concluded that the revisional authority had jurisdiction, that its exercise of jurisdiction was in harmony with statutory requirements and principles of natural justice, and that any asserted error regarding priority or procedure was not of such a patent character as to require quashing in writ proceedings.

Holding and Implications

Holding:

DISMISSED — The petition under Article 226 was dismissed with costs; the revisional order of the Union of India granting the prospecting licence to the third respondent was upheld.

Immediate implications for the parties:

The petitioner's challenge to the Union's revisional order fails and the prospecting licence granted to N.K. Ramamoorthi stands.
The State Government's earlier grant in favour of the petitioner was set aside by the revisional authority and that revisional decision is validated by this Court's dismissal of the petition.

Broader implications:

The opinion does not purport to lay down a new, sweeping precedent beyond its application to the facts. It affirms the interpretation that under the 1949 Rules an income-tax clearance certificate was required for grant but not a precondition to the entertainment of an application, and it confirms that revisional proceedings under Clause 54 of the 1960 Rules may be validly conducted on written representations without an oral hearing in every instance. The Court explicitly relied on established authorities for those propositions rather than announcing novel legal principles.

Disposition

The petition is dismissed with costs. (Final line of the opinion: "Petition dismissed.")

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M. Dastgir Saheb v. Union Of India And Others

Judgement

This is a petition of M. Dastgir Saheb under Article 226 of the Constitution of India to challenge the validity of the prospecting licence granted by the first respondent (Union of India) by its order of 22nd of August, 1963 (Annexure-B) to N.K. Ramamoorthi, the third respondent, in respect of an area of 29-47 acres in Jaladurgam village, Taluk Dhone in Kurnool district of Andhra Pradesh. The first respondent in the impugned order reversed the earlier grant of mining lease made by the Government of Andhra Pradesh respondent 2 on 1st of December, 1960, in favour of the petitioner in respect of the same area.

2. The petitioner applied on 12th of October, 1959, for the grant of mining lease in respect of certain specified numbers in Jaladurgam village and eventually agreed to take an area of 29-47 acres. The application, however, did not contain the requisite particulars and these formal defects were removed on 21st of October, 1959. The third respondent N.K. Ramamoorthy also had applied for a prospecting licence a little earlier on 26th of September, 1959, but the application did not contain the income-tax clearance certificate. This certificate was furnished by the third respondent on 26th of October, 1960. The State Government of Andhra Pradesh, which is the second respondent, following the rule of priority granted the mining lease to the petitioner being of the view that his application had been completed before that of the third respondent. The order of the second respondent in favour of the petitioner was passed on 1st of December, 1960, (Annexure-A), when the Mineral Concession Rules, 1960, under the Mines and Minerals (Regulation and Development) Act, 1957, had come into force. Before the enforcement of the Rules of 1960 on 26th of November, 1960, grant of licences was governed by the Mineral Concession Rules, 1949, made under the Mines and Minerals (Regulation and Development) Act, 1948.

3. The grant of mining lease in favour of the petitioner was challenged by the third respondent in revisional proceedings under Clause 54 of the Mineral Concession Rules, 1960, which had come into force at that time. From the affidavit filed on behalf of the first respondent, it appears that the view was taken by the revisional authority that the Rules of 1949 did not lay down any condition for the submission of an income-tax clearance certificate with the application and did not, therefore, consider the view of the second respondent to be correct that the application of the third respondent was completed on 26th of October, 1960, when this certificate was produced. The first respondent accordingly reversed the order of the Andhra Pradesh Government and granted the prospecting licence to the third respondent. Feeling aggrieved, the petitioner has sought the intervention of this Court in certiorari proceedings.

4. The submission of Mr. Aggarwal, the learned counsel for the petitioner, is that the statutory requirement of the submission of an income-tax clearance certificate being an essential pre-requisite for the entertainment of an application for a mining lease or a prospecting licence the application cannot be regarded as complete till this condition is complied with. The application of the third respondent, in his submission was not an application in the eye of law till the requisite certificate had been furnished on 26th of October, 1960, and this was long after the petitioners application had been completed on 21st of October, 1959. On 21st October, 1959, the only application which could be entertained by the appropriate authorities was that of the petitioner and on the principle of priority, to which I would make a reference shortly it was mandatory for the authority to grant the licence to the petitioner as was rightly done by the second respondent. In his ensuing contention, the counsel submits that the first respondent has caused a breach of the statutory requirement in making order in favour of the third respondent whose application was not complete before that of the petitioner and it is claimed that in such a situation this Court can interfere and recall the invalid order which has been passed by the Government of India, the first respondent.

5. We may first deal with the relevant provisions in the Mines and Minerals (Regulation and Development) Act, 1957, and the Mineral Concession Rules, 1949. In the definition clauses, there is a distinction between a "mining lease" and a "prospecting licence". The former means "a lease granted for the purpose of undertaking mining operations" while the "prospecting licence" is granted for the purpose of undertaking operations. A mining lease or a "prospecting licence" under Section 4 can be granted only in accordance with the provisions of the Act. A prospecting licence is granted in the case of mica for one year and for any other mineral for a period of two years under Section 7. The mining lease, under Section 8, can be granted for longer periods extending from 20 to 30 years. Section 11 deals with the rule of priority and under Sub-Section (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."

Sub-Section (2) says that :-

"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."

Under the proviso to Sub-Section (2) of Section 11, where applications are received on the same day the State Government may grant the prospecting licence or the mining lease to such one of the applicants as it may deem fit keeping into consideration certain factors like special knowledge, financial resources, nature and quality of the technical staff employed and such other matters as may be prescribed. Sub-Section (4) of Section 11 further authorises the State Government for any special reasons to be recorded to grant a prospecting licence or a mining lease to an applicant whose application was received later in preference to an applicant whose application was received earlier.

6. Clause 13 of the Mineral Concession Rules, 1949, contains restrictions on grant of prospecting licence, and Sub-Section (1) says that :-

"No prospecting licence shall be granted to any person unless he holds a certificate of approval from the State Government concerned"

and further that :-

"No prospecting licence shall be granted to any person unless he produces before the State Government an income-tax clearance certificate from the Income-tax Officer of the District where he resides and carries on business."

Clause 18 of the Rules again lays down the rule of priority that

"if more than one application regarding the same land is received, preference shall be given to the application received first, unless the State Government, for any special reason, and with the prior approval of the Central Government decides to the contrary."

7. The relevant provisions of the Mineral Concession Rules, 1960 of 11th of November, 1960, and enforced with effect from 26th of November, 1960, may now be set out. An application, under Clause 9, for a prospecting licence or its renewal has to be made to the State Government in Form B and shall be accompanied by a fee calculated in accordance with the provisions of Schedule II and an income-tax clearance certificate in Form C from the Income-tax Officer concerned. Clause 17 says that

"an application for a prospecting licence pending at the commencement of these rules shall be disposed of in accordance with the provisions of these rules"

8. It would be observed that under the Mineral Concession Rules of 1949, the income-tax clearance certificate has to be produced before any person can be granted a prospecting licence. This is in contrast with the requirement under Clause 9 of the Mineral Concession Rules, 1960, for an application for a prospecting licence has to be accompanied by an income-tax clearance certificate. Such a certificate, though necessary for the grant of a prospecting licence, is not a condition precedent for the entertainment of an application for a prospecting licence under the Mineral Concession Rules, 1949. The application of the third respondent for the grant of a prospecting licence was made on 28th of September, 1959, though the income-tax clearance certificate was not made available till 26th of October, 1960.

In the submission of Mr. Shanker, the learned counsel for the respondent Union of India, the attachment of the income-tax clearance certificate with the application was not essential at the time when the application was submitted. Clause 17 of the new rules cannot invalidate an application when at the time when it was made the rules did not require it to be accompanied by an income-tax clearance certificate. The application of the third respondent made on 28th of September, 1959, did have an income-tax clearance certificate when the order was made in favour of the petitioner on 1st of December, 1960. It is true that an application which was pending at the time of the enforcement of the Mineral Concession Rules of 1960 has to be disposed of according to these rules as provided in Clause 17, but at time when the order of State Government was made the application of the third respondent fully compiled with the requirements of Clause 9 and therefore the rule of priority could not operate to the disadvantage of the third respondent who in point of time had made his application before that of the petitioner.

9. It seems to me that the order passed favour of the third respondent far from being breach of the statutory rules is in conformity with them. When the application of the third respondent was made, it was not essential for it to have been accompanied by an income-tax clearance certificate. The application of the petitioner suffered from some formal defects which were removed by him on 21st of October, 1959. If the application of the petitioner had been disposed of after the 21st of October, 1960, when the income-tax clearance certificate was furnished by the third respondent, there might have been something to be said for the contention which has been raised by Mr. Aggarwal. The applications of the petitioner and the third respondent were disposed of on 1st December, 1960, when both of them were in full compliance of the rules, both of 1949, and 1960. The position adopted by the Government of India in the order of revision passed under Clause 54 of the Mineral Concession Rules, 1960, is in harmony not only with the requirements of statutory rules but with principles of natural justice.

10. A point has been made by the learned counsel for the petitioner that he was not given any opportunity to be heard by the authority which decided the petition for revision. It is not denied that Mr. Mukherjee, the Deputy Secretary before his transfer to another Ministry did give a hearing to the petitioner, but there is no support for his contention that the submissions which were made on his behalf found favour with this officer, and that his successor who did not have the advantage of the arguments addressed to Mr. Mukherjee did not appreciate the position correctly. From the file which has been made available by Mr. Shanker, the learned counsel for the Union of India, it appears that the Secretary of the Ministry approached the Ministry of law for advice on this matter and took a decision after full deliberation. Clause 54 of the 1960 rules under which the petition for revision was decided by the first respondent, does not say that the parties have to be heard orally. Reference may be made to sub-rule (4) of Clause 54 of the Rules which says that the Central Government

"shall send a copy of the application to each of the parties impleaded under sub-rule (2) specifying a date on or before which he may make his representations, if any, against the revision application."

A representation was made by the petitioner and at one stage even was given an oral hearing according to his own showing. In the case of A.K Gopalan v. State Of Madras., 1950 SCR 88 : (AIR 1950 Mad 27), Chief Justice Kania fully agreed with the speech of Lord Haldane in the House of Lords decision of the Local Government Board v. Arlidge, 1915 AC 120, which rejected the contention about the necessity of an oral hearing. Moreover, it is now well settled that it is not every error assuming in favour of the petitioner that there was an error that calls for correction in writ proceedings. The observations of their Lordships of the Supreme Court in Nagendra Nath Bora v. Commr. of Hills Division, AIR 1958 SC 398, that the formal or technical errors, even though of law, will not be sufficient to attract this extraordinary jurisdiction, may be usefully adopted in the present instance. The government of India undoubtedly had jurisdiction to decide this matter and if an erroneous view was taken of the principles of "first come, first serve" embodied in Section 11 of the Mines and Minerals (Regulation and Development) Act, 1957, and Clause 18 of the Mineral Concession Rules of 1949, it is not such a patent error which would call for interference of this Court. The petitioners objections to the impugned order on the ground of absence of opportunity afforded to him to make good his case and the breach of the statutory rules have no substance.

11. This petition, therefore, must fail and is accordingly dismissed with costs.

Petition dismissed.

M. Dastgir Saheb v. Union Of India And Others

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments (Mr. Aggarwal)

Respondent (Union of India) Arguments (Mr. Shanker)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Disposition

M. Dastgir Saheb v. Union Of India And Others

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