# M/S. GEOMYSORE SERVICES (I) PVT. LTD. & ANR v. M/S. HUTTI GOLDMINES CO. LTD. & ORS

- **Citation:** [2018] 6 S.C.R. 533
- **Court:** Supreme Court of India
- **Decided:** 2018-05-08
- **Case number:** Civil Appeal No. 2537 of 2017
- **Bench:** Madan B. Lokur, Deepak Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-geomysore-services-i-pvt-ltd-anr-v-m-s-hutti-goldmines-co-ltd-ors-33237
- **Pages:** 28

## Headnote

Mines and Minerals (Development and Regulation) Act, 1957:
ss. 11(1) and 17A(2) - Reservation of mining area u/s. 17A(2)
- Permissibility - Grant of Reconnaissance Permit (RP) in favour
of two private Companies (appellants) - Reconnaissance conducted
by them - On the basis of reconnaissance report, further applied
for grant of Prospecting Licence (PL) u/s. 11(1) - Thereafter,
respondent (a Government Company) sought reservation u/s. 17A(2)
in respect of the areas for which the appellant-Companies were
granted RP - State Government sought approval for reservation -
Central Government rejected the proposal of State Government and
directed the State to consider the PL applications of the appellants
- Writ petition filed by respondent-Company allowed by High Court
- On appeal, held: s. 11(1) and s. 17A(2) operate in different fields
and have no connection with each other - State Government has
power to reserve an area u/s. 17A(2) with the approval of Central
Government - An RP holder is entitled to preference for grant of
PL u/s. 11(1)- But, there is no bar in reserving the land u/s. 17A(2),
if the land is covered under RP - Central Government while
considering the request for reservation u/s. 17A(2), can take into
consideration various factors which are relevant for deciding the
issue of reservation - Grant of RP though cannot be the sole ground
to reject the proposal for reservation, but the same can be one of
the factors along with other factors for deciding the issue of
reservation - Unless reservation takes place, a private company
stand on the same footing as a Government Company - In the present
case, the factors taken into consideration while deciding the issue
of reservation were relevant and germane to the issues - Appellants
were entitled to preference u/s. 11(1) - Central Government was
justified in rejecting the proposal of the State Government for
reservation u/s. 17A(2).
[2018] 6 S.C.R. 533
533
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SUPREME COURT REPORTS
[2018] 6 S.C.R.
Allowing the appeals, the Court
HELD: 1. State is the owner of the land and minerals.
However, the control and regulation of mines and development
of minerals are in the domain of the Union Government. The
State Government is denuded of its legislative power to make
any law in respect of regulation of mines and mineral development
in so far as that field is covered by the provisions of the Mines
and Minerals (Development and Regulation) Act, 1957. It is only
if the field is vacant that the State can exercise its legislative
powers. Otherwise, it has to exercise its power strictly in
accordance with the powers specifically conferred on the State
Government by the Act and the Minerals Concession Rules, 1960.
While exercising the powers of reservation vested in Section
17A(2) of the Act, the State Government has to take approval of
the Central Government. [Para 39] [556-D-F]
2. Section 17A(2) of the Act clearly provides that the State
Government can reserve any area for undertaking prospecting
or mining operations through a Government company or
corporation with the approval of the Central Government. The
Act does not lay down the parameters which the Central
Government is required to follow. Therefore, the Central
Government can take all the factors which are relevant for the
purpose of deciding whether reservation should be made or not.
The National Mineral Policy 2008 (NMP 2008) being a policy of
the country, can definitely be taken into consideration while
considering such a request. [Para 40] [557-B-C]
3. A policy of a Government is an important document. It
cannot be brushed aside. The Central Government, while
considering the request of the State Government, can take into
consideration various factors which may include economic factors,
the factors reflecting the image of the country internationally to
the global world community and also other factors of national
security etc.. Each case has to be decided on its own facts.
Therefore, it cannot be said that o

## Text

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M/S. GEOMYSORE SERVICES (I) PVT. LTD. & ANR.
v.
M/S. HUTTI GOLDMINES CO. LTD. & ORS.
(Civil Appeal No. 2537 of 2017)
MAY 08, 2018
[MADAN B. LOKUR AND DEEPAK GUPTA, JJ.]
Mines and Minerals (Development and Regulation) Act, 1957:
ss. 11(1) and 17A(2) - Reservation of mining area u/s. 17A(2)
- Permissibility - Grant of Reconnaissance Permit (RP) in favour
of two private Companies (appellants) - Reconnaissance conducted
by them - On the basis of reconnaissance report, further applied
for grant of Prospecting Licence (PL) u/s. 11(1) - Thereafter,
respondent (a Government Company) sought reservation u/s. 17A(2)
in respect of the areas for which the appellant-Companies were
granted RP - State Government sought approval for reservation -
Central Government rejected the proposal of State Government and
directed the State to consider the PL applications of the appellants
- Writ petition filed by respondent-Company allowed by High Court
- On appeal, held: s. 11(1) and s. 17A(2) operate in different fields
and have no connection with each other - State Government has
power to reserve an area u/s. 17A(2) with the approval of Central
Government - An RP holder is entitled to preference for grant of
PL u/s. 11(1)- But, there is no bar in reserving the land u/s. 17A(2),
if the land is covered under RP - Central Government while
considering the request for reservation u/s. 17A(2), can take into
consideration various factors which are relevant for deciding the
issue of reservation - Grant of RP though cannot be the sole ground
to reject the proposal for reservation, but the same can be one of
the factors along with other factors for deciding the issue of
reservation - Unless reservation takes place, a private company
stand on the same footing as a Government Company - In the present
case, the factors taken into consideration while deciding the issue
of reservation were relevant and germane to the issues - Appellants
were entitled to preference u/s. 11(1) - Central Government was
justified in rejecting the proposal of the State Government for
reservation u/s. 17A(2).
[2018] 6 S.C.R. 533
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SUPREME COURT REPORTS
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Allowing the appeals, the Court
HELD: 1. State is the owner of the land and minerals.
However, the control and regulation of mines and development
of minerals are in the domain of the Union Government. The
State Government is denuded of its legislative power to make
any law in respect of regulation of mines and mineral development
in so far as that field is covered by the provisions of the Mines
and Minerals (Development and Regulation) Act, 1957. It is only
if the field is vacant that the State can exercise its legislative
powers. Otherwise, it has to exercise its power strictly in
accordance with the powers specifically conferred on the State
Government by the Act and the Minerals Concession Rules, 1960.
While exercising the powers of reservation vested in Section
17A(2) of the Act, the State Government has to take approval of
the Central Government. [Para 39] [556-D-F]
2. Section 17A(2) of the Act clearly provides that the State
Government can reserve any area for undertaking prospecting
or mining operations through a Government company or
corporation with the approval of the Central Government. The
Act does not lay down the parameters which the Central
Government is required to follow. Therefore, the Central
Government can take all the factors which are relevant for the
purpose of deciding whether reservation should be made or not.
The National Mineral Policy 2008 (NMP 2008) being a policy of
the country, can definitely be taken into consideration while
considering such a request. [Para 40] [557-B-C]
3. A policy of a Government is an important document. It
cannot be brushed aside. The Central Government, while
considering the request of the State Government, can take into
consideration various factors which may include economic factors,
the factors reflecting the image of the country internationally to
the global world community and also other factors of national
security etc.. Each case has to be decided on its own facts.
Therefore, it cannot be said that only those factors can be taken
into consideration, which flow from the Act or the Rules.
[Para 41] [557-E]
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4. Section 11(1) and Section 17A(2) of the Act have no
connection with each other. Section 11(1) of the Act deals with
preference to be given to Reconnaissance Permit (RP) holder
and Prospecting Licence (PL) holder while considering their case
for grant of PL and Mining Lease (ML) respectively. This has
nothing to do with reservation of land under Section 17A(2) of
the Act. The only connection, if it can be called that, is that if a
land is held under a PL or ML, then action under Section 17A(2)
of the Act cannot be initiated. Under Section 11(1) of the Act, an
RP holder, who has carried out reconnaissance, is entitled for
preference when his case is being considered for grant of PL.
However, in Section 17A(2) of the Act, the bar to reservation is
only in those cases where the land is held under a PL or ML.
When any land is held under PL or ML, then the said land cannot
even be considered for reservation. If the land sought to be
reserved is not under PL or ML, then the State can make a
proposal to reserve the land. If the land sought to be reserved is
covered by an RP there is no bar to reserve the land for
exploitation by State Government undertakings. This, however,
does not mean that while dealing with the proposal of the State,
the Central Government must make the reservation. The Central
Government while granting approval, has to independently apply
its mind and while doing so, there is nothing which debars the
Central Government from taking into consideration the fact that
some entity was granted RP and the effect thereof. No doubt,
the Central Government cannot reject the proposal only on the
ground that RP was issued since that would run counter to the
provisions of Section 17A(2) of the Act. However, this is a fact
which along with other facts can be taken into consideration while
deciding the issue of reservation of land. [Paras 42 and 46] [557F-H; 558-A-B; 559-F-G]
5. In the present case, the Central Government took into
consideration various factors and noted that PL applications had
already been filed by Appellant Nos. 1 and 2 pursuant to RPs. It
virtually held that the request of the State Government was at a
belated stage and was against the provisions of the NMP, 2008,
the emphasis in which was to provide a regulatory environment
which is conducive to private investment. It may be true that the
M/S. GEOMYSORE SERVICES (I) PVT. LTD. & ANR. v.
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SUPREME COURT REPORTS
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Central Government was influenced by the fact that the appellants,
pursuant to the RPs, had completed the reconnaissance and
submitted their consolidated reports, but there were other
relevant factors also which were taken into consideration such
as that the appellants had already applied for grant of PL and no
security consideration or public interest was involved in making
reservation for respondent No. 1. Therefore, the factors taken
into consideration by the Central Government are relevant and
germane to the issues and cannot be said to be such factors which
are extraneous or could not have been taken into consideration.
[Para 43] [558-C-E]
6. Section 17A(2) of the Act envisages four conditions, viz.
(a) The land is not held under prospecting licence or mining lease;
(b) there is approval by the Central Government; (c) a notification
is issued in the Official Gazette specifying the boundaries of such
area; and (d) such notification should identify the mineral or
minerals in respect of which such areas are sought to be reserved.
In the present case, only the first condition was fulfilled. None of
the other conditions were satisfied. Therefore, the State of
Karnataka could not have issued recommendation in favour of
respondent No. 1 on 27.12.2008. Unless reservation takes place,
a private company stands on the same footing as a Government
company and in that eventuality, Section 11 of the Act would be
applicable and the appellants being the RP holders and also being
earlier PL applicants, had to be given preference. The Central
Government was justified in rejecting the request of the State of
Karnataka in reserving the land in question. [Paras 45 and 46]
[558-G-H; 559-A-C, G-H]
Indian Charge Chrome Ltd. & Anr. v. Union of India &
Ors. (2006) 12 SCC 331 : [2006] 10 Suppl. SCR 640 ;
Monnet Ispat & Energy Ltd. v. Union of India & Ors
(2012) 11 SCC 1: [2012] 7 SCR 644 ; Amritlal
Nathubhai Shah and Others v. Union Government of
India and Another (1976) 4 SCC 108 : [1977] 1 SCR
372 ; State of T.N. v. M/s Hind Stone and Others
(1981) 2 SCC 205 : [1981] 2 SCR 742 ; Indian Metals
and Ferro Alloys Ltd. v. Union of India & Ors. (1992) 1
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Suppl. SCC 91 : [1990] 2 Suppl. SCR 27 ; State of T.N.
v. M.P.P. Kavery Chetty (1995) 2 SCC 402 : [1995] 1
SCR 441 ; Sandur Manganese and Iron Ores Ltd. v.
State of Karnataka & Ors. (2010) 13 SCC 1 : [2010]
11 SCR 240 ; State of Kerala and Ors. v. Kerala Rare
Earth & Minerals Ltd. & Ors. (2016) 6 SCC 323 :
[2016] 5 SCR 515 - referred to.
Case Law Reference
[2006] 10 Suppl. SCR 640
 referred to
Para 8
[2012] 7 SCR 644
 referred to
Para 25
[1977] 1 SCR 372
 referred to
Para 28
[1981] 2 SCR 742
 referred to
Para 29
[1990] 2 Suppl. SCR 27
 referred to
Para 31
[1995] 1 SCR 441
 referred to
Para 32
[2010] 11 SCR 240
 referred to
Para 36
[2016] 5 SCR 515
 referred to
Para 38
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2537
of 2017.
From the Judgment and Order dated 03.04.2012 of the High Court
of Karnataka at Bangalore in Writ Petition No. 25899 of 2011
WITH
Civil Appeal No. 2538 of 2017.
Maninder Singh, ASG, A. K. Panda, Ms. Meenakshi Arora,
C.S. Vaidyanathan, C. U. Singh, Jaideep Gupta, Basava Prabhu S. Patil,
Sr. Advs., S. A. Haseeb, T. A. Khan, Mrs. Manita Verma, Prabhas
Bajaj, Akshay Amritanshu, Raj Bahadur Yadav, Mrs. Anil Katiyar,
G.S. Makker, Arun Mani, Naveen Kumar, Nishi Kant Singh, Abhinav
Raghuvanshi, Naveen R. Nath, MRC Ravi, Darpan K.M.,
V. N. Raghupathy, Chinmay Deshpande, Parikshit Angadi, Ms. Rachita,
Advs. for the appearing parties.
M/S. GEOMYSORE SERVICES (I) PVT. LTD. & ANR. v.
M/S. HUTTI GOLDMINES CO. LTD. & ORS.
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The Judgment of the Court was delivered by
DEEPAK GUPTA J. 1. What is the role and power of the
Central Government while dealing with the request of a State
Government for reservation of lands for government companies or
corporations owned and controlled by the State Government under section
17A (2) of the Mines and Minerals (Development and Regulations) Act,
1957 (hereinafter referred to as "the Act"), is the main issue involved in
this case.
THE FACTUAL BACKGROUND
2. This case has a long and chequered history. There are gold
mines in the State of Karnataka and parties are litigating in respect of
their rights to exploit those mines. We have two appellants before us,
M/s. Geomysore Services (India) Pvt. Ltd., Appellant No.1 (hereinafter
referred to as "Geomysore") and Deccan Gold Exploration Services
Pvt. Ltd., Appellant No. 2 (hereinafter referred to as "Deccan").
3. On 01.04.2000 Geomysore applied for grant of Reconnaissance
Permit (for short 'RP') for 315 sq. kms. of land in Hutti South Belt Gold
Mines area. After approval by the Central Government, the State
Government granted RP on 03.11.2000 for a period of 3 years. Similarly,
Deccan was granted RP in Northern part of Hutti Gold Mines for an
area measuring 501.48 sq. kms. for a period of 3 years on 09.01.2003
after completing all formalities. The respondent no. 1 i.e. M/s Hutti Gold
Mines Co. Ltd. (hereinafter referred to as "HGML") did not file any
application for grant of RP for either of the two areas.
4. Geomysore conducted the reconnaissance and submitted a
consolidated report on 30.11.2003. Deccan submitted its consolidated
report on 21.04.2006. Both the Companies found evidence to suggest
the existence of gold deposits and need to carry out further prospecting
in certain areas. On the basis of the results of the reconnaissance,
Geomysore filed 4 applications for grant of Prospecting Licence (for
short 'PL') under Section 11(1) of the Act. Deccan filed 7 applications
for grant of PL with regard to the area where it had conducted
reconnaissance.
5. On 28.11.2006, HGML sent a letter to the Commissioner,
Geological Resources Development and Director, Department of Mines
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and Geology, Bangalore praying for reservation of area for the purpose
of conservation exclusively for public sector undertakings under Section
17A(2) of the Act. It was stated that HGML was keen to continue
prospecting investigations in the area in question. It was submitted that
grant of Mining Lease (for short 'ML') to different organizations would
create severe problems including safety hazards and as such it was
prayed that the entire area, including the area for which RP had been
granted to Geomysore and Deccan, be reserved under Section 17A(2)
of the Act. It appears that Geomysore came to know about this proposal
and it sent a letter on 28.11.2006 itself to the Government of India and
opposed the contemplated action of the State of Karnataka to forward a
proposal to the Ministry of Mines for reservation of the mining area.
6. In the meantime, two other developments took place. The
Ministry of Mines published the National Mineral Policy, 2008 (for short
'the NMP 2008') and the Government of Karnataka released the
Karnataka Mineral Policy, 2008 (for short 'the KMP, 2008) in consonance
with NMP, 2008 to which we shall advert later.
7. On 27.12.2008, the Government of Karnataka wrote to
Government of India for reservation of area in favour of HGML and
recommended that 161 sq. kms. of land be allocated to HGML for mining.
This covered the areas for which RPs had been granted to Geomysore
and Deccan and, therefore, Geomysore and Deccan filed revision
petitions before the Central Government. The main challenge to the
decision of the State Government was that the appellants were entitled
to preference while considering their application for grant of PL and
also their PL applications have been filed earlier in time. It was also
urged that in terms of the NMP, 2008 and the KMP, 2008 reservation
could not be made. The Central Government allowed the revision petitions
and directed the State of Karnataka to consider the PL applications filed
by Geomysore as well as Deccan.
8. Thereafter, HGML filed a writ petition in the Karnataka High
Court. The High Court held that the reservation of the area had not yet
taken place and since the Central Government was still to take a decision
on the request of the State Government, it was not necessary to determine
whether the preferential right claimed by Geomysore and Deccan under
Section 11 of the Act could defeat the right of the State Government to
M/S. GEOMYSORE SERVICES (I) PVT. LTD. & ANR. v. M/S.
HUTTI GOLDMINES CO. LTD. & ORS. [DEEPAK GUPTA, J.]
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seek reservation of the area under Section 17A(2) of the Act. The High
Court, after considering the judgment of this Court in the case of Indian
Charge Chrome Ltd. & Anr. v. Union of India & Ors.1 held
as follows:
"10. Having held so, the Hon'ble Court has further held that the
power under Section 17A(2) is the statutory power and normally
there could be no estoppel against the exercise of statutory power
and upheld the recommendation of the State Government seeking
for approval of the Central Government. It is clear that, in the
instant case, the undisputed fact is that the contesting respondents
in any event have not been granted the prospecting licence or
mining lease and as such the area in question is not the one which
is already held under a prospecting licence or mining lease.
Therefore, if the above decision is kept in view, the State
Government was well within its powers to seek approval of the
Central Government to reserve the area in question. In any event,
the Central Government before granting its approval would have
to consider all these aspects of the matter and any such
consideration by the Central Government could not have been
stifled by the contesting respondents in the form of revision
application and the revision authority was also not justified in
interfering. The preferential right claimed by the contesting
respondents cannot be accepted at this stage and a direction could
not have been issued to consider the applications of the contesting
respondents by setting aside the communication dated 27.12.2008.
The appropriate procedure would be to allow the Central
Government to take a decision on the approval sought by the State
Government by its communication dated 27.12.2008. Thereafter,
the consideration or otherwise of the applications for prospecting
licence by any other person including the contesting respondents
would arise depending on the result of such consideration by the
Central Government. If for any reason, the Central Government
does not accede to the proposal of the State Government and in
such situation if the applications remain open for consideration,
then and only then the question of preferential right would arise
for consideration."
1 (2006) 12 SCC 331
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9. Consequently, the orders passed by the Central Government
were set aside and the matter was remanded to the Central Government
to take decision on the recommendation made by the State Government
with a direction to dispose of the same in accordance with law. The
Central Government examined the matter and rejected the proposal of
the State Government for reservation of land under Section 17A(2) of
the Act for Government undertakings. The order notes that Geomysore
and Deccan had already filed PL applications after completing
reconnaissance pursuant to the RPs granted to them. Instead of dealing
with the PL applications of Geomysore and Deccan, the State
Government suddenly decided to make a request to the Central
Government to reserve the land. The Central Government held that the
action of the State Government is against the stated purpose of Para 3.3
of the NMP, 2008 which provides that there should a regulatory
environment conducive to private investment; that the procedure for
grant of concession should be transparent and seamless transition shall
be guaranteed to the concessionaires; that the action of the State
Government was not transparent or fair; that land could only be reserved
where private players are not holding the land or have not applied for
exploration or mining unless security considerations or specific public
interests are involved; that since Geomysore and Deccan had completed
their RPs and applied for seamless transition to PL, the proposal of the
State Government to reserve the land in favour of HGML was neither
in public interest nor in terms of the NMP, 2008 and, therefore, proposal
of the State Government to reserve land was rejected and again a
direction was issued that the request of Geomysore and Deccan for
grant of PL be considered expeditiously.
10. HGML then filed another writ petition challenging the order
of the Central Government dated 31.05.2011. Geomysore and Deccan
filed a joint reply in the writ petition and the High Court allowed the writ
petition vide the impugned judgment, which is under challenge before
us.
11. The main factor which weighed with the High Court in allowing
the writ petition was that whereas under Section 11 of the Act, a party
which had carried out reconnaissance pursuant to RP, was entitled to
preference at the time of granting PL, under Section 17A(2) of the Act,
the words "reconnaissance permit" do not find mention. The Court
M/S. GEOMYSORE SERVICES (I) PVT. LTD. & ANR. v. M/S.
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further held that in its earlier judgment dated 18.02.2011, it had been
held that while taking a decision under section 17A(2) of the Act, the
preferential right under Section 11 of the Act had no role to play and,
therefore, the claim of the State Government could not be defeated on
this ground. Since the judgment had attained finality, the matter should
not be reopened. It further held that the NMP, 2008 cannot overrule the
provisions of Section 17A of the Act. The Court further held that the
policy has to give way to the statutory provisions. It was held that the
second order passed by the Central Government contains the same flaws
which were there in the earlier order and hence the writ petition was
allowed and the order of the Central Government refusing to reserve
the land was quashed.
THE LEGAL PROVISIONS
12. At the outset, we may point out that as far as this case is
concerned, we are dealing with the Act prior to its amendment in the
year 2015. Sub-sections (ha) and (hb) of Section 3 of the Act were
introduced w.e.f. 18.12.1999 and define 'reconnaissance operations' and
'reconnaissance permit' respectively. The same read as follows:
"(ha) "reconnaissance operations" means any operations
undertaken for preliminary prospecting of a mineral through
regional, aerial, geophysical or geochemical surveys and geological
mapping, but does not include pitting, trenching, drilling (except
drilling of boreholes on a grid specified from time to time by the
Central Government) or sub-surface excavation;
(hb) "reconnaissance permit" means a permit granted for the
purpose of undertaking reconnaissance operations;"
13. A reconnaissance permit allows the permit holder to carry out
reconnaissance operations. A reconnaissance permit holder carries out
operations to determine whether the area is fit for mining only by way of
non-invasive techniques, except for some minimal drilling. Normally,
reconnaissance permits are granted for huge areas of land.
14. Sub-sections (g) and (h) of Section 3 of the Act define
'prospecting licence' and 'prospecting operations' respectively. The same
read as follows:
"(g) "prospecting licence" means a licence granted for the purpose
of undertaking prospecting operations;
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(h) "prospecting operations" means any operations undertaken
for the purpose of exploring, locating or proving mineral deposits;"
15. Normally, after reconnaissance is done, a party would
determine which is the best part of the huge area fit for prospecting to
determine with greater exactitude the location of mineral deposits. Thus,
PL is granted for an area which is much less than that of the RP area.
During prospecting, invasive methods can be used to the extent allowed
under law for determining the extant mineral deposits and whether they
can be exploited commercially.
16. After prospecting is done, comes the stage of grant of mining
lease. 'Mining lease' and 'mining operations' are defined in subsections (c) and (d) of Section 3 of the Act respectively. The same read
as under:
"(c) "mining lease" means a lease granted for the purpose of
undertaking mining operations, and includes a sub-lease granted
for such purpose;
(d) "mining operations" means any operations undertaken for the
purpose of winning any mineral;"
17. Investments during reconnaissance or prospecting are very
large. These are not small investments. Therefore, a person who had
conducted reconnaissance is given preference for grant of PL and a
person who had conducted prospecting is given preference while being
considered for grant of ML. In this behalf we may refer to Section 11
(1) of the Act which reads as follows:
"11. Preferential right of certain persons.- (1) Where a
reconnaissance permit or prospecting licence has been granted in
respect of any land, the permit holder or the licensee shall have a
preferential right for obtaining a prospecting licence or mining
lease, as the case may be, in respect of that land over any other
person:
Provided that the State Government is satisfied that the permit
holder or the licensee, as the case may be,-
(a) has undertaken reconnaissance operations or prospecting
operations, as the case may be, to establish mineral resources in
such land;
M/S. GEOMYSORE SERVICES (I) PVT. LTD. & ANR. v. M/S.
HUTTI GOLDMINES CO. LTD. & ORS. [DEEPAK GUPTA, J.]
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(b) has not committed any breach of the terms and conditions of
the reconnaissance permit or the prospecting licence;
(c) has not become ineligible under the provisions of this Act; and
(d) has not failed to apply for grant of prospecting licence or
mining lease, as the case may be, within three months after the
expiry of reconnaissance permit or prospecting licence, as the
case may be, or within such further period as may be extended by
the said Government."
18. The purpose of the aforesaid Section is that in view of the
money, effort and time spent in undertaking reconnaissance or prospecting
operations and preparation of detailed reports of the mineral discoverable
or likely to be discovered pursuant to such operations, such RP or PL
holder would get a preferential right for undertaking the next stage of
operations.
19. Section17A of the Act reads as follows:
"17A. Reservation of area for purposes of conservation.-
(1) The Central Government, with a view to conserving any
mineral and after consultation with the State Government, may
reserve any area not already held under any prospecting licence
or mining lease and, where it proposes to do so, it shall, by
notification in the Official Gazette, specify the boundaries of such
area and the mineral or minerals in respect of which such area
will be reserved.
(1A) The Central Government may in consultation with the State
Government, reserve any area not already held under any
prospecting licence or mining lease, for undertaking prospecting
or mining operations through a Government company or
corporation owned or controlled by it, and where it proposes to do
so, it shall, by notification in the Official Gazette, specify the
boundaries of such area and the mineral or minerals in respect of
which such area will be reserved.]
(2) The State Government may, with the approval of the Central
Government, reserve any area not already held under any
prospecting licence or mining lease, for undertaking prospecting
or mining operations through a Government company or
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corporation owned or controlled by it and where it proposes to do
so, it shall, by notification in the Official Gazette, specify the
boundaries of such area and the mineral or minerals in respect of
which such areas will be reserved.
(3) Where in exercise of the powers conferred by sub-section
(1A) or sub-section (2) the Central Government or the State
Government, as the case may be, undertakes prospecting or mining
operations in any area in which the minerals vest in a private
person, it shall be liable, to pay prospecting fee, royalty, surface
rent or dead rent, as the case may be, from time to time at the
same rate at which it would have been payable under this Act if
such prospecting or mining operations had been undertaken by a
private person under prospecting licence or mining lease."
20. Though, in this case we are dealing mainly with Section 17A(2),
we feel that it would be appropriate to analyze the provisions of the
various parts of Section 17A of the Act. Under Section 17A(1), the
Central Government has the power to reserve any area to conserve any
mineral. The Central Government has to exercise this power after
consultation with the State Government. There is, however, one caveat,
which is, that if a PL or ML for the said area is held by any person then
the Central Government cannot reserve the area. Under sub-section
(1A) of Section 17A, the Central Government has similar power to
reserve areas for undertaking prospecting or mining operations through
Government companies, but again, such areas should not have been
held under any PL or ML. As far as Section 17A(2) is concerned, this
provision gives power to the State Government to reserve an area not
held under a PL or ML for prospecting or mining by State Government
owned companies. However, this can be done only with the approval of
the Central Government and the area so reserved should be notified in
the official gazette along with the mineral and minerals for which the
area has been reserved. Though we are not directly concerned with
sub-section (3) of Section 17A of the Act in this case, the said subsection provides that where the Central Government or the State
Government, as the case may be, undertakes prospecting or mining
operations in any area in which mineral vests in the private person, then
the Central Government or the State Government concerned shall be
liable to pay prospecting fee, royalty, surface rent, dead rent etc..
M/S. GEOMYSORE SERVICES (I) PVT. LTD. & ANR. v. M/S.
HUTTI GOLDMINES CO. LTD. & ORS. [DEEPAK GUPTA, J.]
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21. We may also, at this stage, refer to Section 2 of the Act,
which reads as follows:
"2. Declaration as to the expediency of Union control. - 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 hereinafter provided."
CONTENTIONS
22. Mr. Maninder Singh, learned Additional Solicitor General
appearing for the Union of India, submitted that Section 17A(2) of the
Act empowers the State Government to reserve any area not held under
PL or ML for any State Government undertaking. However, this is
subject to the prior approval of the Central Government. It is his
contention that the State Government cannot reserve an area (not held
under a PL or ML) without obtaining the prior approval of the Central
Government. He further submits that the Central Government, while
considering the request of the State Government, has to apply its mind
independently and while dealing with the request, it can take into
consideration the mineral policy. Therefore, according to him, the High
Court erred in holding that the Union could not take into consideration
the parameters set out in the mineral policy. According to him, the absence
of the words 'reconnaissance permit' from Section 17A(2) of the Act
only indicates that whereas for those areas for which PL or ML has
been granted, there is an absolute bar, but where only RP is granted,
there is no bar and the State Government can, with the approval of the
Central Government, reserve that area.
23. Ms. Meenakshi Arora, learned senior counsel appearing for
the appellants adopted the arguments of Mr. Maninder Singh, but she
also urged that in view of the huge investments required to be made by
the RP holder, it is his legitimate expectation under Section 11 of the Act
that he would get the PL. She further submits that HGML had not
submitted any application for grant of RP or PL. Therefore, the
applications of Geomysore and Deccan being prior in time, should have
been considered. She has referred to various provisions of the Act both
prior to and after its amendment in the year 2015 to emphasize that the
intention of the Government is to encourage private investment in the
industry and to ensure that such private investors are not left in lurch
after investing huge amount and there is seamless transition from the
stage of reconnaissance to prospecting and then to mining.
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24. Mr. Basava Prabhu S. Patil, learned senior counsel appearing
for the State of Karnataka, submitted that it is the State which is the
owner of the minerals and keeping in view the federal structure of our
country, the Union cannot override the power of the State. According to
him, Section 2 of the Act does not empower the Union to reject the
claim of the State Government on grounds which are not provided for in
the statute itself. He also submits that the judgment rendered by the
Karnataka High Court in the first Writ Petition No.39969/39970 of 2010
decided the issues between the parties and that will operate as resjudicata. He submits that in the earlier judgment the High Court had
clearly held that the preferential right claimed by Geomysore and Deccan
cannot override the power of the State Government under Section 17A(2)
of the Act. He submits that the grounds taken in both the orders passed
by the Central Government are virtually identical. According to him,
since the words 'reconnaissance permit' have been omitted from Section
17A(2) of the Act, the Central Government could not have rejected the
claim of the State Government on grounds which are directly related to
the fact that Geomysore and Deccan had carried out reconnaissance in
furtherance of such reconnaissance permit. He further submits that the
NMP, 2008 was not binding and has made reference to clause 3.2 of the
NMP, 2008, which indicates that what is set out in the policy are the
goals and that the Act, the Mineral Concessions Rules and the Mineral
Concessions Development Rules will be amended in line with the policy.
He submits that these amendments took place in the year 2015 and,
therefore, the policy could not have been resorted to by the Central
Government to reject the claim of the State.
25. Mr. C.U. Singh and Mr. Jaideep Gupta, learned senior counsel,
appearing on behalf of HGML, submit that before Geomysore and
Deccan were granted RP, HGML had already done a lot of work in the
area. According to them, after the amendment of the Act, now these
mines can only be auctioned. Reliance has been placed on Para 160 of
Monnet Ispat & Energy Ltd. v. Union of India & Ors2. case. It was
urged that the factors taken into consideration by the Central Government
while rejecting the proposal of the State Government were not relevant
factors. According to them, the right of the State to reserve area under
Section 17A(2) flows from the paramount right of the State as owner of
the land and minerals.
2(2012) 11 SCC 1
M/S. GEOMYSORE SERVICES (I) PVT. LTD. & ANR. v. M/S.
HUTTI GOLDMINES CO. LTD. & ORS. [DEEPAK GUPTA, J.]
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THE ISSUES
26. There are four main questions which need to be answered:
(i) Whether the State Government being the owner of land and
minerals can claim that its proposal to reserve such land for
exploitation of minerals by its undertakings is virtually binding on
the Central Government?
(ii) What are the considerations which can weigh with the Central
Government while dealing with a request of the State Government
for reservation of land under Section 17A(2) of the Act?
(iii) Whether Section 11(1) and Section 17A(2) of the Act operate
in totally separate spheres and what is the effect of the right of
preference granted to RP holder in terms of Section 11(1) of the
Act while dealing with a matter under Section 17A(2) of the Act?
(iv) Whether, in the present case, the Central Government is
justified in rejecting the proposal of the State of Karnataka?
27. The Act was initially enacted as the Mines and Minerals
(Regulation and Development) Act (for short 'the MMRD Act'). At
that time, there was no Section 17A in the MMRD Act, which was later
introduced w.e.f. 10.02.1987. Section 17 of the MMRD Act dealt with
those lands in which minerals vested with the State Government. Under
sub-section (2), the Central Government was empowered to carry out
prospecting or mining operations in any area not already held under any
PL or ML. This could, however, be done only after consultation with the
State Government concerned. Therefore, Section 17 of the MMRD
Act empowered the Central Government to undertake prospecting
operations. Vide Act 38 of 1999 the name of the MMRD Act was
changed from 'The Mines and Minerals (Regulation and Development)
Act' to 'The Mines and Minerals (Development and Regulation) Act'
w.e.f. 18.12.1999. By the same Act, in Section 17 of the Act, the words
'reconnaissance' and 'reconnaissance permit' were introduced w.e.f.
18.12.1999. Prior to that, there was no concept of reconnaissance.
Under the provisions of the Act, prior to the introduction of Section 17A,
there was no statutory provision which empowered the State Government
to reserve any land. However, under the Mineral Concession Rules,
1960, (hereinafter referred to as the 'Rules') there was a provision in
Rule 58, empowering the State Government to reserve such lands. After
Section 17A was introduced on 10.02.1987, Rule 58 was omitted on
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13.04.1988. We are pointing out these facts because some of the
judgments cited, being prior to introduction of Section 17A, have to be
read in the context of Rule 58 of the Rules.
 28. In Amritlal Nathubhai Shah and Others v. Union
Government of India and Another 3, this Court held that the State
being the owner of the land, was entitled to reserve the land and, therefore,
was justified in rejecting the applications of the private parties. This
judgment was delivered in the context of Rule 58 of the Rules, as it
existed at that time.
29. In State of T.N. v. M/s Hind Stone and Others 4, the State
of Tamil Nadu formulated the Tamil Nadu Minor Mineral Concession
Rules. Under Rule 8-C, the right to quarry black granite, a minor mineral,
was reserved in favour of the State Government and its Corporations
etc.. The validity of this Rule was challenged on various grounds including
the ground that the MMRD Act, 1957 did not empower the State
Government to make such a reservation. This Court rejected this
submission on the ground that the State was the owner of the land and
minerals and also that minor minerals vest in the State Government.
The Court held as follows:
"6. Rivers, Forests, Minerals and such other resources constitute
a nation's natural wealth. These resources are not to be frittered
away and exhausted by any one generation. Every generation
owes a duty to all succeeding generations to develop and conserve
the natural resources of the nation in the best possible way. It is
in the interest of mankind. It is in the interest of the
nation.................. In the case of minor minerals, the State
Government is similarly empowered, after consultation with the
Central Government. The public interest which induced Parliament
to make the declaration contained in Section 2 of the Mines and
Minerals (Regulation and Development) Act, 1957, has naturally
to be the paramount consideration in all matters concerning the
regulation of mines and the development of minerals. Parliament's
policy is clearly discernible from the provisions of the Act. It is
the conservation and the prudent and discriminating exploitation
of minerals, with a view to secure maximum benefit to the
community. There are clear signposts to lead and guide the
3(1976) 4 SCC 108
4(1981) 2 SCC 205
M/S. GEOMYSORE SERVICES (I) PVT. LTD. & ANR. v. M/S.
HUTTI GOLDMINES CO. LTD. & ORS. [DEEPAK GUPTA, J.]
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subordinate legislating authority in the matter of the making of
rules.