# MIS INDIAN CHARGE CHROME LTD. AND ANR v. UNION OF INDIA AND ORS

- **Citation:** [2002] Supp. 5 S.C.R. 295
- **Court:** Supreme Court of India
- **Decided:** 2002-12-17
- **Case number:** Civil Appeal No. 8501 of 2002
- **Bench:** G.B. Pattanaik, K.G. Balakrishnan, S.B. Sinha
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mis-indian-charge-chrome-ltd-and-anr-v-union-of-india-and-ors-18852
- **Pages:** 37

## Headnote

Mines and Minerals (Regulation and Development) Act, 1957/Mineral
Concession Rules, 1960-Sections (J) and 11(4)/ Rule 59(1) and(2)-Mining
lease-Grant of-Previously lease-hold area held by TJSCO-~enewal of lease C
only in respect of some fraction of the area-Direction by Central Government
to consider other four applicants for grant of lease in respect of the balance
area-Rule 59(1) relaxed by Central Government in view of urgent need of
the four applicants-State Government assessed the need of the four applicants·
and recommended allotment only in respect of 50% of the balance areaFurther remaining area thrown open for consideration of other claimants D
including the four claimants-Decision of the State Government approved by
Court-Expert Committee appointed to consider grant of further remaining
area-During pendency of consideration by Expert Committee, State
Government recommended one fraction of further remaining area in favour of
an applicant 'N'-Recommendation apprpved by Central Government by
relaxing provision under Rule 59(1)-Recommendation assailed which was E
dismissed by High Court-Appeal to Supreme Court-Case challenging
approval by Central Government before High Court, transferred to Supreme
Court-During pendency of appeal grant of lease in favour of 'N' withdrawn
by State Governmen! and the lease decided to be granted iJtf avour of its own
public sector undertaking-However the grant not approved by Central F
Government-Propriety of recommendation and its approval in favour of 'N'-
Held, the recommendation and its approval is legal-There has been no
infraction of Rule 59(2)-For grant of preferential right in favour of 'N'
reasons in accordance with the requirements of Section I I (4) were recorded-
// was permissible for the State Government to pick up any single applicant's
application-Subsequent event is of no consequence since the issue before the G
Court is to examine the legality of the recommendation and its approval and
not the right of 'N' to the lease-hold area-The subsequent event also does
not exist in the eye of law as the decision of the State Government to grant
the lease-hold area in favour of public sector undertaking was not accepted
295
H
296
SUPREME COURT REPORTS [2002] SUPP. 5 S.C.R.
A by the Central government.
Practice and Procedure-Subsequent event-Effect of-Held, in view of
the facts of the case and the issue for consideration before the Court, subsequent
event is of no consequence.
B
Tata Iron and Steel Company (TISCO) which originally held mining
lease for 1261.476 Hectares land, applied for renewal of the lease. Central
Government granted approval for renewal in respect of only 650 Hectares
and directed the balance area to be made available to other industries.
On challenge of the order of the Central Government, High Court decided
C that entire matter required reconsideration by the Central Gover.nment.
The challenge to the High Court order was ultimately disposed of by
Supreme Court. Central Government pursuant to the observation of High
Court appointed an Expert Committee, which recommended grant of lease
to TISCO only in respect of 406 Hectares. Committee also took into
consideration claims of other claimants. Central Government by order
D dated 17.8.1995 on the basis of Report of the Committee asked State
Government to take steps for grant of 406 Hectares to TISCO and to
consider the applications of other 4 claimants namely, Jindal, Ferro, IMFA
and lspat Alloys in respect of balance area of 855.476 Hectares. It relaxed
the provisions of Rules 59(1) of Mineral Concession Rules, 1960 in respect
of the four claimants in view of their urgent need. State Government by ·
E order dated 29.6.1997 recommended for grant of lease to the four
claimants in respect of the balance area of 855.476 hectares on the basis
of 50% of their basic requirements i.e. 419 hectares. The recommendation
of the State Government was confirmed by High Court and consequently
by Supreme Court in Ferro Alloys Corpn.

## Text

_Characters 0–39,404 of 91,706. This is a partial read: ask again with offset=39404 for what follows._

MIS INDIAN CHARGE CHROME LTD. AND ANR.
A
v.
UNION OF INDIA AND ORS.
DECEMBER 17, 2002
B
[G.B. PATTANAIK, CJ., K.G. BALAKRISHNAN AND S.B. SINHA,JJ.]
Mines and Minerals (Regulation and Development) Act, 1957/Mineral
Concession Rules, 1960-Sections (J) and 11(4)/ Rule 59(1) and(2)-Mining
lease-Grant of-Previously lease-hold area held by TJSCO-~enewal of lease C
only in respect of some fraction of the area-Direction by Central Government
to consider other four applicants for grant of lease in respect of the balance
area-Rule 59(1) relaxed by Central Government in view of urgent need of
the four applicants-State Government assessed the need of the four applicants·
and recommended allotment only in respect of 50% of the balance areaFurther remaining area thrown open for consideration of other claimants D
including the four claimants-Decision of the State Government approved by
Court-Expert Committee appointed to consider grant of further remaining
area-During pendency of consideration by Expert Committee, State
Government recommended one fraction of further remaining area in favour of
an applicant 'N'-Recommendation apprpved by Central Government by
relaxing provision under Rule 59(1)-Recommendation assailed which was E
dismissed by High Court-Appeal to Supreme Court-Case challenging
approval by Central Government before High Court, transferred to Supreme
Court-During pendency of appeal grant of lease in favour of 'N' withdrawn
by State Governmen! and the lease decided to be granted iJtf avour of its own
public sector undertaking-However the grant not approved by Central F
Government-Propriety of recommendation and its approval in favour of 'N'-
Held, the recommendation and its approval is legal-There has been no
infraction of Rule 59(2)-For grant of preferential right in favour of 'N'
reasons in accordance with the requirements of Section I I (4) were recorded-
// was permissible for the State Government to pick up any single applicant's
application-Subsequent event is of no consequence since the issue before the G
Court is to examine the legality of the recommendation and its approval and
not the right of 'N' to the lease-hold area-The subsequent event also does
not exist in the eye of law as the decision of the State Government to grant
the lease-hold area in favour of public sector undertaking was not accepted
295
H
296
SUPREME COURT REPORTS [2002] SUPP. 5 S.C.R.
A by the Central government.
Practice and Procedure-Subsequent event-Effect of-Held, in view of
the facts of the case and the issue for consideration before the Court, subsequent
event is of no consequence.
B
Tata Iron and Steel Company (TISCO) which originally held mining
lease for 1261.476 Hectares land, applied for renewal of the lease. Central
Government granted approval for renewal in respect of only 650 Hectares
and directed the balance area to be made available to other industries.
On challenge of the order of the Central Government, High Court decided
C that entire matter required reconsideration by the Central Gover.nment.
The challenge to the High Court order was ultimately disposed of by
Supreme Court. Central Government pursuant to the observation of High
Court appointed an Expert Committee, which recommended grant of lease
to TISCO only in respect of 406 Hectares. Committee also took into
consideration claims of other claimants. Central Government by order
D dated 17.8.1995 on the basis of Report of the Committee asked State
Government to take steps for grant of 406 Hectares to TISCO and to
consider the applications of other 4 claimants namely, Jindal, Ferro, IMFA
and lspat Alloys in respect of balance area of 855.476 Hectares. It relaxed
the provisions of Rules 59(1) of Mineral Concession Rules, 1960 in respect
of the four claimants in view of their urgent need. State Government by ·
E order dated 29.6.1997 recommended for grant of lease to the four
claimants in respect of the balance area of 855.476 hectares on the basis
of 50% of their basic requirements i.e. 419 hectares. The recommendation
of the State Government was confirmed by High Court and consequently
by Supreme Court in Ferro Alloys Corpn. ltd. and Anr. v. Union of India
F and Ors., 119991 4 sec 149. State Government in the meantime had
appointed an Expert Committee to examine grant of the remaining 436.295
hectares. The Court in para 50 of the judgment in Ferro Alloys case
observed that the balance area will have to be taken into consideration
by the Expert Committee as well as State Government for grant of lease
to other claimants, and while doing so the Government will have to take
G into consideration the remaining 50% assessed needs of the four
applicants. While the matter was being considered by the Expert
Committee, State Government considered the case of 'N' and the Chief
Minister, recommended grant of mining lease for 84.881 hectares in its
favour, taking into account the fact that they have already established a
H ferro chrome plant in the State, but they did not have any mining lease
'
_)
INDIAN CHARGE CHROME LTD. v. U.0.1.
297
for chromium in their favour. Order of the Chief Minister was reiterated A
again by order dated 14.1.1999 and finally on 28.1.1999, the
recommendations were sent to the Central Government for approval.
Central Government by its letter dated 27.6.2001 pointed out some
deficiencies in the recommendation. Therefore State Government, by its
letter dated 30.6.2001, asked Central Government to exercise its power B
under Rule 59(2) and consider grant of approval had approved by
invoking provisions under Section 11(4). Thereafter, State Government
wrote a letter to Central Government stating that the recommendation
by letter dated 30.6.2001 was not a valid recommendation. Central
Government approved the recommendation after relaxing the provision
under Rule 59(1) in exercise of its power under Rule 59(2).
C
The allotment to 'N' was challenged by the appellant herein, before_
Orissa High Court. 'N' and State Government filed interlocutory
application seeking clarification of judgment in Ferro Alloys case wherein
the Court observed that the observations in para 50 of the Judgment, will
not in any way be construed to be pre-empting writ petition filed before D
High Court by the appellant herein.
The writ petition filed by the appellant herein was dismissed by
Orissa High Court. Hence the present appeal. Appellant filed Writ petition
before Delhi High .Court challenging the order of Central Government
approving the recommendation, which was subsequently transferred to
this Court.
During pendency of the SLP, State Government took a decision to
E
withdraw its earlier recommendation in favour of respondent 'N' and
decided that the entire balance area of 436.295 hectares could be granted F
to its own public sector undertakings i.e. Orissa Mining Corporation but
approval was not granted by the Central Government for the grant.
The questions for consideration before this Court were:
I.
Whether the so-called reservation of the entire area for being G
exploited by the Orissa Mining Corporation puts an end to the
right of.the respondents and the appeal as well as the writ
petition could be disposed of on that ground?
2.
Whethe.r in fact there has been any relaxation of the provisions
of Rule 59(1) by the Central Government under Rule 59(2) in H
A
B
c
D
298
SUPREME COURT REPORTS (2002] SUPP. 5 S.C.R.
respect of the area in question and if so, once the relaxation
having been granted, further any relaxati"n when the question
of grant in favour of 'N' cropped up?
3.
Whether State Government recorded special reasons in terms
of Section 11(4) of the Act for treating the application of 'N'
in preferential manner? and
4.
Whether the Judgment in Ferro Alloys case prevented the State
Government to take the case of any individual applicant and
· consider the same on its own merits, before receipt of the
recommendation of the Committee, which had been set up to
find out th"e requirements of the respective claimants and
submit the recommendation thereto?
Disposing of the appeals and transfer case, the Court
HELD: Per Pattanaik, CJ (For himself and K.G. Balakrishnan, J.)
I. Instant appeal is the appeal of a rival claimant against the
Judgment of Orissa High Court, holding the recommendation made by
the State Government in favour of the respondent 'N' to be legal and the
original petition which was filed in the Delhi High Court and which stood
E transferred to this Court, is against the order of approval passed by the
Central Government. To consider the legality of the same, the so-called
subsequent event of reservation is of no consequence. This Court is not
called upon to answer the question whether respondent 'N' has any right
to the lease-hold area in which case possibly, it could have examined as to
whether that right still subsists or not, but on the other hand is merely
F examining the legality of the recommendation made by the State
Government as well as the legality of the approval thereto made by the
Central Government. That apart, even the so-called subsequent decision
of the State Government to reserve the entire area for being exploited
through the public sector undertaking namely the Orissa Mining
G Corporation was not accepted by the Central Government. In this view
of the matter, the so-called subsequent event also does not exist in the eye
of law. (310-E-H; 311-A-C]
2. The underlying principle engrafted under Rule 59 of the Mineral
Concession Rules, 1960 is a transparency when the area is made available
H for re-grant, so that all persons interested can make their application and
INDIAN CHARGE CHROME LTD. v. U.0.1.
299
those applications can be dealt with, in accordance with the provisions or A
the Mines and Minerals (Regulation and Development) Act, 1957 and the
Rules. Sub-rule (2) of Rule 59 however empowers the Central Government
for reasons to be recorded in writing to relax the provisions of sub-rule
(I). The relaxation is in respect of an area, which was previously held
under a mining lease or a prospecting licence. When the entire area had B
been held by TISCO under a mining lease and when TISCO was granted
renewal only in respect of 406 hectares and the balance area became
available and the Central Government directed that the application for
niining lease by four other applicants could be considered, finding _the
urgent need of those four applicants, including the present appellant, the
·Central Government relaxed the provisions of sub-rule (I) of Rule 59. The C
balance area from out of the previously held area of TISCO, thus being
made available for grant of mining leases in favour of intended applicants
and the Central Government having relaxed the provisions of sub-rule (I),
it was not necessary to again exercise that power under sub-rule (2) out
I of the balance area, excluding the area granted in favou of the four
applicants, the present respondent could be granted an area of 84.881 D
hectares. That apart, the question of consideration of other applicants,
including the case of the appellant for grant of mining lease was being
done pursuant to the Judgment of this Court. Then again when the
impugned order of approval was granted by the Central Government, the
Central Government did exercise the power under sub-rule (2) of Rule E
59 and approved the recommendation made in favour of respondent 'N'.
Therefore, it cannot be said that there has been an infraction of Rule 59(2)
inasmuch as no special case has been made out for grant in favour of 'N'.
[311-E-H; 312-A-C]
3. It is no doubt true that Section 11 provides for a preferential right F
of certain persons and sub-section (4) thereof postulates that the State
Government may, for any special reasons to be recorded, grant or permit
mining lease to an applicant, whose application was received later in
preference to an applicant whose application was received earlier. A
Committee of Expert Body was considering the respective need of all the G
applicants, after the Judgment of this Court in TISCO's appeal, in the
light of the order of the Central Government dated 17.8.1995. The State
Government had already granted after assessing the needs of the four
claimants namely !MFA, the present appellant, FACOR, !CCL, !SPAT
and recommended on the basis of their need at 50% and thus 419.18
hectares had been allotted out of 855.476 hectares, which was the balance H
300
SUPREME COURT REPORTS [2002] SUPP. 5 S.C.R.
A area that was available for grant after the renewal in favour of TISCO.
That being the position and while the matter was being considered by the
Expert Committee, the Government ofOrissa did consider the case of'N'
and the Chief Minister on I4.8.I998, recommended grant of mining lease
in its favour, taking into account the fact that they have already established
B a ferro chrome plant in the State, but they du not have any mining lease
for chromium in their favour. The aforesaid order of the Chief Minister
was reiterated again by order dated I4.I.1999 and finally on 28.1.1999,
the recommendations were sent to the Central Government for approval.
On the aforesaid premises, it cannot be said that there were no special
reasons in terms of the provisions contained in sub-section (4) of Section
C II for grant.of a preferential right in favour of 'N'.State Government
did record the reasons in accordance with the requirements of Section
I 1(4), while recommending in favour of 'N'. 13I2-D-H; 313-A]
/
4. It cannot be said that it was not permissible for the State
Government to pick up any single appellant's application, as has been done
D in the case of 'N' and consequently the so-called recommendation in its
favour as well as the approval of the Central Government, is in
contravention of the direction of this Court in Ferro Alloys' case. The State
as the owner of the property is entitled to exercise its powers in respect
of mineral wealth in accordance with the provisions of the Act and the
E Rules and the observations of this Court in the aforesaid case, merely
indicated that while considering the cases of all other applicants in respect
of the remaining area, the cases of the four applicants, who had been
granted mining lease on the basis of their 50% need should also be
considered. The Judgment of thi;i Court does not put any fetter on the
power of the State Government in exercising the preferential right under
F Section I I and in considering the case of 'N' for the special reasons in
terms of Section I I (4) of the Act. This is more apparent from the order
that was passed on an interlocutory application filed by 'N' as well as the
State Government wherein the Court observed that the so-called
observations in the Judgment in Ferro Alloys case in paragraph 50, will
G not in any way be construed to be pre-empting writ petition filed before
High Court by the appellant herein. There is· nothing in the judgment
which can be construed to mean that the State Government was injuncted
to consider the case of any individual applicant in accordance with law,
as has been done in the case of respondent 'N'.It also cannot be said that
an individual applicant could not have been considered before the
H recommendation of the Committee, which had been set up to find out the
INDIAN CHARGE CHROME LTD. v. U.0.1.
301
requirements of the respective claimants. To hold that way would A
tantamount to denuding the State Government of its power as the owner
of the minerals to deal with the mineral resources of the State in
.accordance with the provisions of the Act and the Rules framed
thereunder. There is no infirmity with the approval of the Central
Government made, which is subject matter of the writ petition that had
been filed in the Delhi High Court and which stands transferred to this B
Court. (313-F-H; 314-A-GJ
Ferro Alloys Corporation Ltd. And Anr. v. Union of India and Ors.,
(1994) 4 SCC 149 and Tata Iron and Steel Co. ltd. v. Union of India, (1996)
9 sec 709, referred to
Per S.B. Sinha, J (Dissenting)
c
I. So far as the subsequent events are concerned, State Government
was entitled to change its policy decision. Cabinet had taken a decision to
withdraw the recommendations made for grant of mining lease in favour D
of 'N' as also reserve the area for Orissa Mining Corporation, a public
sector undertaking. Once the recommendations stand withdrawn, the
order of Central Government granting approval became non-est. By
reason of such withdrawal the writ petition filed by the applicant became
infructuous. (331-A-BJ
E
2.1. The approval of the Central Government for grant of mining
lease in favour of 'N' was made, having regard to (i) by invoking the
provisions of Section I I ( 4) of the Act, (ii) by relaxation of Rule 59(1) of
the Rules; and (iii) by grant of approval on the recommendations made
by the State Government. The earlier order of the relaxation passed by
the Central Government was made when before the State Government F
four applications were pending. The Central Government itself keeping
in view the fact that at that point of time the private respondent was not
an applicant, in its letter dated 27th June, 2001 held that non-compliance
of Rule 59(2) constituted a deficiency. )330-A-Bf
2.2. In terms of Rule 59(2) the power of relaxation is conferred upon
the Central Government in a special case. Such a special case was made
out by the State Government only having regard to the applications filed
by the four other applicants. It was a one time relaxation which could not
remain valid for all times to come. (330-C-Df
G
H
302
SUPREME COURT REPORTS (2002] SUPP. 5 S.C.R.
A
2.3. It is true that relaxation is given in relation to an area hut
therefor a special case has to be made out. At the earlier occasion
relaxation was sought for having regard to the cases of TISCO and four
applicants only. Thus, in relation to other applicants a separate order of
relaxation afresh was required to be passed. Having regard to sub-rule
(2) of Rule 59 of the Rules, in this case a fre~h order of relaxation was
B required to be passed by the Central Government upon assigning sufficient
reasons therefor. The impugned order does not contain reason. In any
event, the same does not sub-serve the statutory requirement as the
Central Government had no jurisdiction to direct approval of grant of
mining upon invoking Section 11(4) as also upon relaxing the requirement
C of Rule 59(2) stands complied with and not prior thereto. Purported
simultaneous compliance of the provision of the law would not satisfy the
statutory requirements. If the order of the Central Government is accepted
the same would amount to grant of relaxation with retrospective effect
which is impermissible in law. [330-D-G]
D
Tata Iron and Steel Co. Ltd. v. Union of India. [1996] 9 SCC 709,
E
referred to.
2.4. Central Government, therefore, before granting approval was
required to pass an order of relaxation afresh having regard to the
provisions of Section 14 of the General Clauses Act, 1897; whereafter only
the State Government could have initiated a proceeding for grant of
mining lease. [330-G-H]
3. Considerations of the State Government in terms of Section 11( 4)
of .the Act are separate and distinct from considerations of the matter
F relating to grant of mining lease. It was, therefore, obligatory on the part
of the State Government to assign sufficient and cogent reasons upon
taking into consideration the cases of all applicants for grant of mining
lease and communicate the same to the Central Government so as to enable
it to apply its mind thereupon with a view to consider as to whether it is
a fit case where approval for grant of mining lease should be granted upon
G invoking section 11(4) of the Act. Such reasons had not been communicated
to the Central Government and evidently in that view of the matter the
Central Government had issued letter dated 27th June, 2001 wherein the
deficiencies have been pointed out. [328-E-F; 329-D[
Rupan Deol Bajaj v. K.P.S. Gill, AIR (1996) SC 309 and Union of India,
H v. Mohan Lal Capoor and Ors., [1973] 2 SCC 836, referred to.
INDIAN CHARGE CHROME LTD. v. U.0.1.
303
4.1. State Government had been appointing committees in terms of A
a purported industrial policy decision so as to enable it to consider the
applications filed by the contesting parties for the purpose of grant of
mining lease. It, therefore, could not have deviated or departed from said
policy decision by hand picking the case of private respondent in isolation
and proceed to recommend for grant of mining lease in its favour without
taking into consideration the cases of others particularly in view of the B
fact that it itself had proclaimed that the cases of all applicants which were
pending before it shall be taken into consideration along with the four
applicants. This Court, in Ferro Alloys case, in no uncertain terms directed
the State Government to consider to exercise its jurisdiction pursuant to
the recommendations of the Expert Committee in .respect of remaining C
area of 436.295 hectares. If a policy decision had been taken, any deviation
or departure therefrom would attract the wrath of Article 14 of the
Constitution of India. (324-B-El
4.2. It is true that on the clarificatory applications filed by 'N' and
State Government, this Court did not pass any positive order but made D
certain observations. By reason of the said observations this Court never
meant that its directions having regard to the factual backdrop, need not
be taken into consideration by the High Court at all or that the High Court
was at liberty to proceed in the matter despite the said directions. While
disposing of an application for clarification this Court could not have E
reviewed its judgment. This Court, furthermore, was not in a position to
express its views on the subject matter of a pending Writ Petition. The
observations of this Court must, therefore, be understood in the
aforementioned context. The direction of this Court was binding on the
State Government as also the Central Government. As a matter of fact,
Central Government itself took the stand before High Court that the F
recommendations of the State Government was premature as it did not
receive the report from the Expert Committee. This Court's directions in
Ferro Alloys case had the binding effect on the parties to the tis. Thereby
the State was denuded of its power to grant a mining lease in favour of
any party, as the judgment was to be given effect to in relation to the entire G
area in question. This Court in a given situation may also exercise its
jurisdiction under Article 142 of the Constitution to do complete justice
between the parties. A judgment cannot be read as a statute. It has to be
understood and applied having in mind the factual matrix involved therein.
Therefore, State Government or the Central Government could not have
taken any decision in violation thereof. (324-F-H; 325-A-D)
H
304
SUPREME COURT REPORTS (2002) SUPP. 5 S.C.R.
A
4.3. A binding judgment cannot be refused to be considered only
because this Court refused to express its opinion one way or the other on
a clarificatory application. The Central Government also could not have
changed its own stand taken in its counter affidavit and act on the basis
of purported recommendations which for all intent and purport was nonest in the eye of law. Even otherwise, there does not appear to be any
B reason as to why the State Government acted arbitrarily in so far as it
failed to await the report of the Expert Committee. (325-D-EJ
c
Ferro Alloys Corporation ltd. and Anr. v. Union of India and Ors.,
(19941 4 sec 149, referred to
5. Central Government and the State Government are statutory
aut~orities. They must, thus, act within the four corners of the statute.
When an order is meant to be passed by the State Government or the
Central Government the same must be passed by an authority competent
therefor. An order which has been passed by an officer without an
D authority would be non-est. The Central Government, therefore, could not
have acted thereupon particularly when the State itself took such a stand.
It failed to take into consideration that the recommendation dated 30th
June, 2001 being withdrawn was no longer operative. It is the positive case
of State Government that the Secretary of the Department of Mines had
E
F
G
no authority to issue the letter dated 30.6. 2001. The private respondent
has not brought any material on record to show that he had the requisite
authority. (322-G-H; 323-A-BI
Punjab Beverages Pvt. ltd. v. Suresh Chand, (1978) II LLJ, referred
to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8501 of
2002.
From the Judgment and Order dated 18.5.2001 of the Orissa High
Court in O.J.C. No. 1830 of 1999.
WITH
C.A. No. 8502 of 2002 and T.C. (C) No. 9 of 2002.
P. Chidambaram, Ashok H. Desai, D.A. Dave, V.A. Bobde and G.L.
Sanghi, Ms. Anuradha Dutt, Ekta Kapil, Ms. B. Vijaya Lakshmi Menon,
H K.K. Lahiri, Ashok Parija, Ejaz Maqbool, Ujjwal Kr. Jha, Asiam Ahmed,
INDIANCHARGECHROMELTD. v. U.0.1.[PATTANAIK,CJ.]
305
Ranjan Kr. Jha, Gourav Kejriwal, Jana Kalyan Das, A. Subba Rao, Ms. A
Sunita Sharma, D.S. Mahra, Raj Kumar Mehta, Ms. M. Sarada Ajay Choudhary
and S.B. Upadhyay for the appearing parties.
The Judgments of the Court were delivered by
PATTANAIK, CJ. Leave granted.
This appeal by grant of special leave is directed against the decision of
the Orissa High Court dated 18th of May, 200 I, dismissing the appellant's
writ petition which had been filed against the recommendation of the State
B
of Orissa dated 28.1.1999, seeking approval of the Government of India
under Section 5(1) of the Mines and Minerals (Regulation and Development) C
Act, 1957 (hereinafter referred to as the Act,) in respect of 84.881 Hectares
ofland, bearing chromite in Village Kalarangiata, Kaliapani in Sukinda Tahsil
of Jaipur District, Orissa, in favour of M/s Nava Bharat Ferro Alloys Limited.
The writ petition which had been tiled in Delhi High Court and since
transferred to this Court is directed against the order of approval of the D
Government of India dated 9.7.2001, in respect of the self-same area on the
basis of the recommendation made by the State Government.
A large chunk of land had been grante~ for mining operation in favour .
of TISCO in the year 1952. A lease deed had. been executed in respect of
1813 Hectares for chromite ·extraction in favour of TISCO for a period of 20 E
years on 12.1.1953. In 1973, the State ofOrissa, renewed the grant in respect
of 1261.476 Hectares in favour ofTISCO. The aforesaid lease was to expire
on 3.10.1991. Before its expiry, TISCO applied for a second renewal for 20
more years under Section 8(3) of the Act and the State of Orissa had
recommended the Central Government for a second renewal in respect of the F
entire area, but for a reduced period of I 0 years. The Central Government
however granted approval for renewal in respect of half of the area namely
650 Hectares in favour of TISCO and further directed that the balance area
would be made available to other industries in accordance with the provisions
of the Act and the Rules. This order of the Central Government was challenged
by TISCO in the Orissa High Court in O.G.C. No. 7729of1993. In that writ G
petition, the rival claimants appeared and made their claims. The High Court,
therefore, by its Judgment dated 4.4.95 decided that the entire matter requires
reconsideration by the Central Government. This order of the High Court was
assailed in this Court by TISCO in SLP No. 10830/1995. The Central
Government, pursuant to the observations made by the Orissa High Court in H
306
SUPREME COURT REPORTS (2002] SUPP. 5 S.C.R.
A its Judgment, appointed an Expert Committee under the Chairmanship of
Shri S.D. Sharma, to examine the matter and assess the requirements of
several aspirants. The said Sharma Committee gave a Report on 16.8.1995,
by which TISCO was recommended for an area of 406 Hectares. The Sharma
Committee also took into consideration the claims of other claimants and
B assessed their respective need, but did not undertake the task of recommending
any area for being granted as lease in favour of any of those claimants. The
Central Government, on the basis of the Report of the Sharma Committee,
passed an order on 17.8.1995, requesting the State Government to take
necessary steps for grant of 406 Hectares in favour of TISCO for a period of
20 years. The Central Government also further directed that the application
C for mining lease by 4 other applicants namely, Jindal, Ferro, !MFA and Ispat
Alloys could be considered in respect of balance area of 855.476 hectares.
The Central Government rel.axed the provisions of sub-rule ( 1) of Rule 59 of
the Mineral Concession Rules, on account of urgent need of the four applicants
referred to earlier. The special leave petition filed by TISCO stood disposed
D of by Judgment of this Court since reported in [1996) 9 sec 709. On 29th
of June, 1997, the State Government recommended to the Central Government
for grant of lease to 4 claimants in respect of the balance area of 855.476
hectares on the basis of 50 per cent of their respective requirements, which
had been assessed by the Sharma Committee and further directed that the rest
of the area should be thrown open for consideration of the claims of all other
E claimants along with the 4 claimants. This order of the State Government
dated 29.6.1997 was assailed in Orissa High Court in O.G.C. No. 12302 of
1997 and the High Court dismissed the same. The aforesaid Judgment of the
Orissa High Court was assailed in this Court by one of the four claimants and
this Court also dismissed the same since reported in [1999] 4 SCC 149. The
p State of Orissa in ihe meantime had appointed a Committee under the
Chainnanship ofShri Jagdish Prasad Dass to examine as to how the remaining
area of 436.295 hectares will be granted and if so, in whose favour. On
28.1.1999, the State Government recommended the grant of 84.88 l hectares
in favour of respondent Nava Bharat, which was assailed by the present
appellant in the Orissa High Court. The High Court having dismissed the writ
G petition filed by the appellant, the present appeal has been preferred in this
Court.
While 'the special leave petition filed by the appellant was pending in
this Court, the State Government took a decision to withdraw its earlier
H recommendation in favour of Nava Bharat and decided that the entire balance
INDIANCHARGECHROMELTD. v. U.0.1.[PATTANAIK,CJ.]
307
area of 436.295 hectares could be granted to its own public sector undertaking, A
the Orissa Mining Corporation.
Mr. P. Chidanibaram, the learned senior counsel contends that in view
of the changed policy of the State Government which fact can be taken note
of by this court as a subsequent event, the so-called recommendation in
favour of Nava Bharat, which is the subject matter of challenge in the Civil B
Appeal, no longer remains valid and implementable and, therefore, the matter
can be disposed of on that basis on taking cognizance of the subsequent
events that have happended. In support of this contention, reliance had been
placed on the decisions of this Court in case of [1984] SCC 369 and (1996]
5 sec 268. The learned counsel further urged that no legal right has accrued C
in favour of Nava Bharat, on the basis of the so-called recommendation of
the State Government as well as the approval of the same by the State
Government until and unless a formal lease deed is executed. According to
him, the aforesaid recommendation of the State Government as well as the
order of approval of the Central Government at the most can be said to have
created an inchoate right in favour of Nava Bharat, but-no vested right exists D
in favour of Nava Bharat. It is then urged that in view of the observations
made by this Court in the case reported in [1994) 4 SCC 149, it was obligatory
on the part of the State Government to consider the question of grant of the
balance 436.295 hectares only on receipt of the recommendation of Dass
Committee and the State Government was not entitled to pick up any one E
application and grant any area in favour of any applicant and such pick up
and grant in favour of Nava Bharat constitutes an infraction of the direction
given by this Court in its Judgment reported in [1999] 4 SCC 149. It was
further contended that assuming the State could, as owner exercise its power
in favour of any applicant, the recommendation made for giving priority to
a later applicant must be supported by special reasons to be recorded, as F
provided under Section 11 ( 4) as well as under Section 5( 1) of the Act. In the
absence of any such special reasons in the case in hand for giving priority to
Nava Bharat in terms of Section 11(4), the recommendation itself is vitiated
and the High Court committed error in rejecting the sa!d contention. According
to him, the so-called reasons contained in the Note dated 5.8.88 could be the G
reasons satisfying the requirements of Section 5(1) of the Act and cannot be
the reasons for giving priority under Section 1 I ( 4 ). The learned counsel
further urged that the Central Government having indicated the deficiency in
the recommendation of the State Government by letter dated 27th June, 2001,
the so-called reply of the State Government on 30th of June, 200 I was in fact
not on the authority of the State Government and on the otMr hand was a H
308
SUPREME COURT REPORTS (2002) SUPP. 5 S.C.R.
A reply by an officer of the Government. That being so, in the eye of law the
deficiency pointed out by the Central Government had not been cured and
the Central Government could not have accorded the approval on that basis.
Coming to the mistake committed by the Central Government in its approval
dated 9th of July, 2001, which is the subject matter of challenge in the
B transferred writ petition, Mr. Chidambaram contends that the same is vitiated
due to non-application of mind and the Central Government also has not
recorded any reasons in terms of Rule 59(2) of the Minerals Concessions
Rules and no special case has been made out in favour of Nava Bharat.
According to the counsel, the earlier relaxation made on 17.8.1995 was only
for 4 of the applicants, whose cases were treated as special case and that
C relaxation made under Section 59(2) will not enure to the grant in favour of
Nava Bharat in the case in hand. The learned counsel also contended that the
State Government having indicated that the subsequent reply of 30th of June,
2001 was not under the authority of the Government, the approval of the
Central Government, on the basis of an unauthorised clarification, is vitiated
and that approval cannot be sustained.
D
Mr. Ashok Desai, the learned senio·r counsel appearing for the
respondents Nava Bharat, contended that the alleged subsequent decision of
the State Government to exploit the entire balance area through a public
sector undertaking namely, Orissa Mining Corporation, was not approved by
E ·the Central Government and the Central Government in its letter dated July
19, 2002, has already communicated the same and, therefore, the so-called
subsequent decision of the Government, keeping the areas reserved for
exploitation through its own public sector undertaking, cannot be held to be
a subsequent event, on which the cases in hand can be disposed of: He
further contended that it is the appellant, who assails the legality of the
F decision of the High Court, upholding the recommendation made by the State
Government a{ well as the legality of the approval made by the Central
Government to the said recommendation. That being so, the so-called
subsequent event would be of no consequence. Mr. Desai also contended that
Rule 59 of the Mineral Concession Rules deals with availability of areas for
G re-grant to be notified when such area was previously held or which is being
held under a prospecting licence or a mining lease. Sub-rule (2) of Rule 59
empowers the Central Government to relax the provisions of sub-rule ( 1) for
reasons to be recorded in writing. Such relaxation is made in respect oft.he
area and in the case in hand, this has been made on 17 .8.1995, when the
question of consideration for grant in respect of the four other applicants
H cropped up. That being the position, no further relaxation was required. He
INDIAN CHARGE CHROME LTD. v. U.0.1. [PA TT ANAIK, CJ.)
309
then contended that even if such relaxation can be held to be required, the A
same has been done in the case in hand by the Central Government. With
regard to the contention of Mr. Chidambaram that the State Government did
not indicate any special reasons for picking up the case of Nava Bharat, as
required under Section 11(4) of the Act, Mr. Desai contends that the State
Government did indicate in its Order dated 5th of August, 1998, the special
reasons for recommending the grant in favour of Nava Bharat Ferro Alloys,
the same being under the Industrial Policy of 1996, preference has to be
accorded in the matter of grant of PL/ML to local industrial units in the State
and Nava Bharat is one such industry and also Nava Bharat Ferro Alloys is
B
the only chrome based industry which does not have any captive area. The
order further indicates that the State Government decided to give preference C
to Nava Bharat which was really starving and was in dire need ofraw materials.
This being the position, the contention of Mr. Chidambaram that there was
no special reasons, is wholly unsustainable. According to Mr. Desai, when
pursuant to the letter of the Union Government, the Secretary intimated the
reason on 30th of June, 2001, it was not necessary for him to submit the file
to the Minister concerned inasmuch as the reasons had been recorded by the D
Chief Minister himself. According to Mr. Desai, it is the existence of reasons,
that is the requirement and those reasons being there, which was duly looked
into by the High Court, the contention of Mr. Chidambaram that the intimation
of reasons was unauthorised, cannot be sustained. On the question that by
Judgment of this Court, t!Je State Government was not entitled to pick and E
choose any applicant before the receipt of the Expert Committee's Report,
Mr. Desai contends that neither there is any such observation in the Judgment
of this Court in (1999] 4 SCC 149, which has been made clear in the order
dated I 0th of August, 2000, when an application for clarification was filed,
which was registered as 1.A.No.2 of 2000. Mr. Desai also further urged that
the Central Government having accorded the approval to the recommendation F
of the State Government, proposing to grant of 84.881 hectares to Nava
Bharat, the contention of the petitioner in the transferred writ petition that the
said order of approval is contrary to the relevant provisions of the Act and
the Rules, is wholly unsustainable. Mr. Desai lastly contended that the State
Government having produced the relevant file, which was seen by the Orissa G
High Court, while disposing of the Judgment and the same having been
produced in this Court, the Court may examine the file and if it is satisfied
that all the formalities had been duly complied with, then the jurisdiction of
this Court need not be invoked, even if there is some error in communicating
the decision by an officer of the State.
H
310
SUPREME COURT REPORTS [2002) SUPP.