# MONNET ISPAT & ENERGY LTD v. UNION OF INDIA AND ORS

- **Citation:** [2012] 7 S.C.R. 644
- **Court:** Supreme Court of India
- **Decided:** 2012-07-26
- **Case number:** Civil Appeal No. 3285 of 2009
- **Bench:** R.M. Lodha, H.L. Gokhale
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/monnet-ispat-energy-ltd-v-union-of-india-and-ors-28367
- **Pages:** 237

## Headnote

Constitution of India, 1950:
c
Art.294, First Schedule - State Government's ownership
in mines and minerals within its territory - Held: Erstwhile
State of Bihar being a part-A State specified in First Schedule
and prior thereto the Province of Bihar, by virtue of Art. 294
all properties and assets which were vested in His Majesty for
0
the purpose of the Government of Province of Bihar stood
vested in corresponding State of Bihar - By the Bihar Act,
1950, all other lands, i.e. estates and tenures of whatever kind
including the mines and minerals therein stood vested in the
State of Bihar - Pursuant to Bihar Re-Organisation Act, 2000,
E
all land, inter alia, belonging to the then State of Bihar and
situated in the transferred territories passed to the newly
created State of Jharkhand which is the owner of the subject
area -
Mines and minerals within its territory vest in it
absolutely - Bihar Land Reforms Act, 1950 - Bihar Reorganization Act, 2000 - Jurisprudence-' Ownership'.
F
Seventh Schedule - List I, Entry 54, List II, Entry 23 read
with Entry 18 -
Minerals -
Iron ore -
Right of State
Government to reserve mining area for public sector
exploitation - Held: The authority of State Government flows
G from the fact that it is the owner of the mines and the minerals
within its territory -
Rule 59 of 1960 Rules clearly
contemplates reservation by an order of State Government -
Provisions that follow s.2 of 1957 Act have left untouched the
State's ownership of mines and minerals within its territory
H
644
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 645
AND ORS.
although regulation of mines and the development of minerals
A
have been taken under control of the Union -
Therefore,
reservation made by State Government under Notifications
dated 21.12.1962, 28.02.1969 and 27.10.2006 is not at all
contrary to or inconsistent with 1957 Act- These notifications
do not impinge upon the legislative power of the Central
B
Government -
Mines and Minerals (Regulation and
Development) Act, 1957 - ss. 2 to 17-A - Mineral Concession
Rules 1960 - rr. 58, 59 and 63A.
Arts. 19(1)(g), 39, and 299 - Right to carry on any trade
or business - Government contracts - State Government of C
Jharkhand recommending to Union Government to grant
mining lease to certain companies - Subsequently, realizing
that the subject area had already been reserved for public
sector exploitation, it withdrew the proposal and issued a
further notification declaring that iron ore deposits in the
D
subject area would not be thrown to private sector - Held: No
person has any fundamental right or any right to claim that
he should be granted mining lease or prospecting licence or
permitted reconnaissance operation in any land belonging to
Government except under 1957 Act and the 1960 Rules - It
E
is true that by the MOU entered into between State
Government and appellants, certain commitments were made
by State Government but firstly, such MOU is not a contract
as contemplated under Art. 299(1) and secondly, in grant of
mining lease of a property of the State, the State Government
F
has discretion to grant or refuse to grant any mining lease -
Obviously, State Government is required to exercise its
discretion, subject to the requirement of law - In view of the
fact that the area is reserved for exploitation of mineral in
public sector, it cannot be said that the discretion exercised
G
by State Government suffers from any legal flaw.
Mines and Minerals (Regulation and Development) Act,
1957:
s. 17-A read with rr. 58 and 59 of 1960 Rules - Approval
H
646
SUPREME COURT REPORTS
[2012] 7 S.C.R.
A of Central Government for grant of mining lease - Held: Rule
58 as amended in 1980 expressly provided that the State
Government by Notification in the official gazette can reserve
any area for exploitation in public sector - The amendments
have been effected only to make explicit what was implicit and
B they cannot be read to nullify the powers which the State
Government otherwise had under

## Text

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A
B
[2012] 7 S.C.R. 644
MONNET ISPAT & ENERGY LTD.
v.
UNION OF INDIA AND ORS.
(Civil Appeal No. 3285 of 2009 etc.)
JULY 26, 2012
[R.M. LODHA, AND H.L. GOKHALE, JJ.]
Constitution of India, 1950:
c
Art.294, First Schedule - State Government's ownership
in mines and minerals within its territory - Held: Erstwhile
State of Bihar being a part-A State specified in First Schedule
and prior thereto the Province of Bihar, by virtue of Art. 294
all properties and assets which were vested in His Majesty for
0
the purpose of the Government of Province of Bihar stood
vested in corresponding State of Bihar - By the Bihar Act,
1950, all other lands, i.e. estates and tenures of whatever kind
including the mines and minerals therein stood vested in the
State of Bihar - Pursuant to Bihar Re-Organisation Act, 2000,
E
all land, inter alia, belonging to the then State of Bihar and
situated in the transferred territories passed to the newly
created State of Jharkhand which is the owner of the subject
area -
Mines and minerals within its territory vest in it
absolutely - Bihar Land Reforms Act, 1950 - Bihar Reorganization Act, 2000 - Jurisprudence-' Ownership'.
F
Seventh Schedule - List I, Entry 54, List II, Entry 23 read
with Entry 18 -
Minerals -
Iron ore -
Right of State
Government to reserve mining area for public sector
exploitation - Held: The authority of State Government flows
G from the fact that it is the owner of the mines and the minerals
within its territory -
Rule 59 of 1960 Rules clearly
contemplates reservation by an order of State Government -
Provisions that follow s.2 of 1957 Act have left untouched the
State's ownership of mines and minerals within its territory
H
644
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 645
AND ORS.
although regulation of mines and the development of minerals
A
have been taken under control of the Union -
Therefore,
reservation made by State Government under Notifications
dated 21.12.1962, 28.02.1969 and 27.10.2006 is not at all
contrary to or inconsistent with 1957 Act- These notifications
do not impinge upon the legislative power of the Central
B
Government -
Mines and Minerals (Regulation and
Development) Act, 1957 - ss. 2 to 17-A - Mineral Concession
Rules 1960 - rr. 58, 59 and 63A.
Arts. 19(1)(g), 39, and 299 - Right to carry on any trade
or business - Government contracts - State Government of C
Jharkhand recommending to Union Government to grant
mining lease to certain companies - Subsequently, realizing
that the subject area had already been reserved for public
sector exploitation, it withdrew the proposal and issued a
further notification declaring that iron ore deposits in the
D
subject area would not be thrown to private sector - Held: No
person has any fundamental right or any right to claim that
he should be granted mining lease or prospecting licence or
permitted reconnaissance operation in any land belonging to
Government except under 1957 Act and the 1960 Rules - It
E
is true that by the MOU entered into between State
Government and appellants, certain commitments were made
by State Government but firstly, such MOU is not a contract
as contemplated under Art. 299(1) and secondly, in grant of
mining lease of a property of the State, the State Government
F
has discretion to grant or refuse to grant any mining lease -
Obviously, State Government is required to exercise its
discretion, subject to the requirement of law - In view of the
fact that the area is reserved for exploitation of mineral in
public sector, it cannot be said that the discretion exercised
G
by State Government suffers from any legal flaw.
Mines and Minerals (Regulation and Development) Act,
1957:
s. 17-A read with rr. 58 and 59 of 1960 Rules - Approval
H
646
SUPREME COURT REPORTS
[2012] 7 S.C.R.
A of Central Government for grant of mining lease - Held: Rule
58 as amended in 1980 expressly provided that the State
Government by Notification in the official gazette can reserve
any area for exploitation in public sector - The amendments
have been effected only to make explicit what was implicit and
B they cannot be read to nullify the powers which the State
Government otherwise had under the statute - On coming into
force of s.17-A, r.58 has been omitted - According to s.17A(2). the State Government with the approval of Central
Government may reserve any area not already held under any
C mining lease, to undertake mining operations in public sector
-
Section 17-A is prospective in nature -
The reservations
made prior to insertion of s.17-A continue to be in force -
Besides, approval contemplated by s.17-A may be obtained
by State Government before exercise of power of reservation
0
or after exercise of such power - It may be express or implied
- Interpretation of Statutes - Prospective operation.
Interpretation of Statutes:
Prospective operation of a statutory provision - Held:
E Presumption of prospectivity operates unless shown to the
contrary by express provision or is discernible by necessary
implication -
Maxim -
'Nova constitution futuris formam
imponere debet non praete ritis.'
F
Administrative Law:
Doctrines of promissory estoppel and legitimate
expectation - Explained - Held: Doctrine of promissory
estoppel is not attracted when promise was made in a
mistaken belief -
State Government had agreed to grant
G mineral concession as per existing Act and Rules - As a
matter of fact, when the MOU was entered into, State
Government was not even aware about the reservation of the
subject mining area for exploitation in public sector - In view
of the fact that the subject mining area had been reserved for
H exploitation in pubic sector under 1962 and 1969 Notifications,
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 647
AND ORS.
the stipulation in the MOU that the State Government shall
A
assist in selecting the area for iron ore and other minerals as
per requirement of the company and the commitment to grant
mineral concession, cannot be enforced because firstly, the
stipulation in the MOU is not unconditional - Secondly, if the
State Government is asked to do what it represented to do
B
under the MOU then that would amount to asking the State
Government to do something in breach of the Notifications
which continue to hold the field -
Thus, the doctrines of
promissory estoppel and legitimate expectation are not
attracted in the instant case - There is no error in the letter of c
withdrawal dated 13.9.2005 issued by State of Jharkhand and
the letter of rejection dated 6.3.2006 issued by Union of India.
' Doctrine of desuetude - Explained - Held: Insofar as
1962 and i 1969 Notifications are concerned, the doctrine of
des.uetude is not attracted for the reasons: Firstly, nonD
implementation of such Notifications for 30-35 years is not
that 'long a period which may satisfy the requirement of the
doctrine of desuetude - Secondly, as a matter of fact, except
stray grant of mining lease for a very small portion of the
reserved area to one or two parties there is nothing to suggest
E
much less to establish the contrary usage or contrary practice
that the reservation made in the two Notifications has been
given a complete go by- Further, since the State of Jharkhnd
has not altered, repealed and/or amended the 1962 and the
1969 Notifications, the same cannot be said to have lapsed
F
- Bihar Reorganization Act, 2000 - ss. 84, 85 and 86.
The appellants, engaged in the business of
production of iron and steel etc. were stated to have
entered into Memorandums of Understanding with the
G
State Government of Jharkhand whereunder the latter
was stated to have agreed to assist them in selecting the
area for iron ore and other minerals as per requirement.
In August 2004, the State Government forwarded
applications of ten companies, including the six
appellants, with its recommendation to the Government
H
648
SUPREME COURT REPORTS
[2012] 7 S.C.R.
A of India for grant of mining lease of iron ore in the subject
area. However, on 17 .11.2004 the District Mining Officer
informed the Secretary, Department of Mines and
Geology, Government of Jharkhand that the subject area
was reserved for public sector exploitation under
B Notifications dated 21.12.1962 and 28.2.1969 issued by
the Government of Bihar. Consequently, the Government
of Jharkhand by its letter dated 13.9.2005 sought to
withdraw nine of the said proposals including those of
all the appellants. On 6.3.2006, the .Central Government
c passed an order accepting the request of the State
Government. Subsequently, by Notification dated
27.10.2006, the State Government also declared that the
iron ore deposits in the subject area (where the
appellants were proposed the mining leases and was at
0 all material times kept reserved by the 1962 and 1969
Notifications issued by State of Bihar) would not be
thrown open for grant of prospecting licence, mining
licence or otherwise for private parties. The appellants
filed writ petitions before the High Court challenging the
letters dated 13.9.2005 and 6.3.2006 as also the
E Notification dated 21.12.1962, 28.2.1969 and 27 .10.2006,
and prayed for a direction to grant them mining leases
as proposed. The writ petitions were dismissed by the
High Court.
F
In the instant appeals filed by the companies, the
main issue for consideration of the Court was: whether
the Notifications dated 21.12.1962 and 28.2.1969 issued
by the State of Bihar and the Notification dated
27.10.2006 issued by the State of Jharkhand were legal
G and valid.
Dismissing the appeals, the Court
HELD: (Per R.M. Lodha. J.)
H
1.1. In the Constitution of India, 1950, management
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 649
AND ORS.
of mineral resources has been left with both the Central
A
Government and State Governments in terms of Entry 54
in List I and Entry 23 in List II of the Seventh Schedule.
In the scheme of the Constitution, the State Legislatures
enjoy power to enact legislation on the topics of 'mines
and mineral development'. The only fetter imposed on the
State Legislatures under Entry 23 is by the latter part of
the said entry which says 'subject to the provisions of
List I with respect to regulation and development under
the control of the Union'. If Parliament by its law has
declared that regulation of mines and development of c
minerals should in public interest be under the control of
the Union, which it did by making declaration in s.2 of the
Mines and Minerals (Regulation and Development) Act,
1957, to the extent of such legislation incorporating the
declaration, the power of the state legislature is excluded.
D
The declaration made by Parliament in s.2 of 1957 Act
states that it is expedient in the public interest that the
Union should take under its control the regulation of
mines and the development of minerals to the extent
provided in the Act itself. The requisite declaration has
the effect of taking out regulation of mines and
development of minerals from Entry 23, List II to that
extent. As the declaration made in s. 2 trenches upon the
State Legislative power, it has to be construed strictly.
B
E
F
By the presence of keynote expression 'to the extent
hereinafter provided' in s.2, the Union has assumed
control to the extent provided in 1957 Act. The 1957 Act
prescribes the extent of control and specifies it. The
declaration made in s.2 is, thus, not all comprehensive.
Legal regime relating to regulation of mines and
development of minerals is thus guided by the 1957 Act G
and the Mineral Concession Rules 1960 Rules. However,
in order that the declaration made by Parliament should
be effective, the making of rules or enforcement of rules
so made is not decisive.[para 101-102, 108 and 109]
[765-G-H· 766-A-H· 767-A-B· 771-E-F]
'
'
'
H
650
SUPREME COURT REPORTS
[2012) 7 S.C.R.
A
Hingir-Rampur Coal Co. Ltd. & Ors. v. State of Orissa &
Ors. 1961 SCR 537 =AIR 1961 SC 459; State of Orissa &
Anr. v. Mis M.A. Tulloch & Co. 1964 SCR 461 =AIR 1964
SC 1284; Baijnath Kadio v. State of Bihar and Others 1970
(2) SCR 100 =1969 (3) SCC 838; Bharat Coking Coal Ltd. v.
B State of Bihar & Ors. 1990 (3) SCR 744 = 1990 (4) SCC 557;
D.K. Trivedi and Sons and Others v. State of Gujarat and
Others 1986 SCR 479 = 1986 Suppl. SCC 20; HRS Murthy
v. Collector of Chittoor 1964 SCR 666=AIR (1965) SC 177,
M. Karunanidhi v. Union of India and Anr. 1979 (3) SCR 254 =
c 1979 (3) SCC 431 , Dharambir Singh vs. Union of India 1996
(6) Suppl. SCR 566 = 1996 (6) SCC 702 13; Bhupatrai
Magan/a/ Joshi and Others v. Union of India and another 2001
(10) SCC 476; M.P. Ram Mohan Raja vs. State of T.N.& Ors.
2007 (5) SCR 576 = 2007 (9) SCC 78; Sandur Manganese
0 & Iron Ores Ltd. vs. State of Karnataka 2010 (11) SCR 240 =
2010 (13) sec 1 - referred to.
1.2. Iron-ore is a mineral included in the First
Schedule to the 1957 Act in respect of which no mining
lease for it can be granted without the prior approval of
E the Central Government. No person has any fundamental
right or for that matter any right to claim that he should
be granted mining lease or prospecting licence or
permitted reconnaissance operation in any land
belonging to Govern!llent, except under 1957 Act and the
F Mineral Concession Rules1960. [para 104] [767-H; 768-AC]
State of Tamil Nadu v. Mis. Hind Stone and Others 1981
(2) SCR 742 = 1981 (2) sec 205 - relied on
G
2.1. Minerals constitute the national wealth and are
vital raw-material for infrastructure, capital goods and
basic industries. For proper development of economy
and industry, the exploitation of natural resources cannot
be permitted indiscriminately; rather nation's natural
H wealth has to be used judiciously. Surely, in the case of
,
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 651
AND ORS.
a scarce mineral, to permit exploitation by the State or its
A
agency and to prohibit exploitation by private agencies
is the most effective method of conservation and prudent
exploitation. [para 103-104] [767-D-F; 768-D-E]
State Government's ownership in Mines and
Minerals and the power of reservation:
B
2.2. It is not in dispute that all rights and interests,
including rights in mines and minerals in the subject area,
had, vested absolutely in the erstwhile State of Bihar free
C
from all encumbrances. At the time of commencement of
the Constitution, the erstwhile State of Bihar was a PartA State specified in the First Schedule to the Constitution
and prior thereto the Province of Bihar. By virtue of Art.
294 all properties and assets which were vested in His
D
Majesty for the purpose of the Government of Province
of Bihar, stood vested in the corresponding State of
Bihar. By the Bihar Land Reforms Act, 1950, all other
lands, i.e. estates and tenures of whatever kind, including
the mines and minerals therein, stood vested in the State
of Bihar. Pursuant to the Bihar Re-Organization Act, 2000,
all lands, inter alia, belonging to the then State of Bihar
situated in the transferred territories, including the
subject area of the instant appeals, passed to the newly
created State of Jharkhand. The admitted position is that
the State Government (erstwhile Bihar and now Jharkhand)
is the owner of the subject area. Mines and minerals within
E
F
its territory vest in it absolutely. As a matter of fact it is
because of this position that the appellants made their
application for grant of mining lease to the State
Government. [para 105] [768-F-H; 769-A-C]
G
2.3. Since the State Government's paramount right
over the iron ore being the owner of the mines did not
get affected by 1957 Act, the power existed with the State
Government to reserve subject areas of mining for exploitation
H
652
SUPREME COURT REPORTS
[2012] 7 S.C.R.
A in public sector undertaking. [para 107] [770-8-C]
2.4. It cannot be said that by 1957 Act, State
Government's ownership rights
in so far as
'development of minerals' was concerned, stood frozen.
8 In the first place, the declaration made by Parliament in
s.2 and the provisions that follow s.2 of 1957 Act, have
left untouched the State's ownership of mines and
minerals within its territory although the regulation of
mines and the development of minerals have been taken
under the control of the Union. Section 4 deals with
c activities in relation to land and does not extend to
extinguish the State's right of ownership in such land.
Section 4 regulates the right to transfer but does not
divest ownership of minerals in a State and does not
preclude the State Government from exploiting its
D minerals. Section 4(1) can have no application where the
State Government wants to undertake itself mining
operations in the area owned by it. Further, s.5 or, for that
matter, ss. 6, 9, 10, 11 and 13(2)(a) also do not take away
the State's ownership rights in the mines and minerals
E within its territory. The power to legislate for regulation
of mines and development of minerals under the control
of the Union may definitely imply power to acquire mines
and minerals in the larger public interest by appropriate
legislation, but by 1957 Act that has not been done. There
F is nothing in 1957 Act to suggest even remotely - and
there is no express provision at all - that the mines and
minerals that vested in the States have been acquired.
Rather, the scheme and provisions of 1957 Act
themselves show that Parliament itself contemplated
G State legislation for vesting of lands containing mineral
deposits in the State Government and did not intend to
trench upon powers of State Legislatures under Entry 18,
List II. The declaration made in s.2 of the 1957 Act is not
all comprehensive. It does not contemplate acquisition of
H mines and minerals. Although the word 'regulation' must
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 653
AND ORS.
in the context receive wide interpretation, but the extent
A
of control by the Union as specified in the 1957 Act has
to be construed strictly. This Court in Orissa Cement
Limited has emphatically asserted that in the case of a
declaration under Entry 54, the legislative power of the
State Legislatures is eroded only to the extent control is
B
assumed by the Union pursuant to such declaration as
spelt out by the legislative enactment which makes the
declaration. [para 107,108, 109 and 110] [770-C-E-H; 771A-D-E-F; 772-F-G]
Orissa Cement Ltd. v. State of Orissa & Others 1991 (2)
C
SCR 105 = 1991 (1) Suppl. SCC 430; State of Haryana
and Another v Chanan Mal and Others 1976 (3) SCR 688 =
1977 (1) SCC 340;, lshwari Khetan Sugar Mills (P) Limited
& Ors. v. State of Uttar Pradesh and Others 1980
(3) SCR 331 = 1980 (4) SCC 136; Western Coalfields Limited
D
v. Special Area Development Authority Korba & Anr. 1982
(2) SCR 1 = 1982 (1) SCC 125 - relied on
2.5. Secondly, after enactment of 1957 Act and 1960
Rules, the Central Government has all throughout
E
understood that the State Governments, as owners of
mines and minerals within their territory, have inherent
right to reserve any particular area for exploitation in the
public sector. [para 111] [773-B]
Amritlal Nathubhai Shah and Ors. v. Union Government
F
of India and Another 1977 (1) SCR 372 = 1976 (4) SCC 108;
and Indian Metals and Ferro Alloys Ltd. v. Union of India &
Ors 1990 (2) Suppl. SCR 27 = 1992 (1) Suppl. SCC 91relied on
2.6. The judgment of this Court in Amritlal Nathubhai
Shah establishes the distinction between the power (of
State Government) of reservation to exploit a mineral as
G
its own property on the one hand and the regulation of
mines and mineral development under the 1957 Act and
H
654
SUPREME COURT REPORTS
[2012] 7 S.C.R.
A the 1960 Rules on the other. The authority of the State
Government to make reservation of a particular mining
area within its territory for its own use is the offspring of
ownership; and it is inseparable therefrom unless denied
to it expressly by an appropriate law. By 1957 Act that has
B not been done by Parliament. Setting aside by a State of
land owned by it for its exclusive use and under its
dominance and control is an incident of sovereignty and
ownership. It cannot be said that Amritlal Nathubhai Shah
is not a binding precedent being per incuriam inasmuch
c as earlier judgments of this Court have not been
considered and applied. There is no incongruity or
inconsistency in the decisions of this Court in HingirRampur Coal Co., M.A. Tulloch & Co., Baijnath Kadio and
Amritlal Nathubhai Shah. The Bench in Amritlal Nathubhai
0
Shah was alive to the legal position highlighted by this
Court in Hingir-Rampur Coal Co., M.A. Tulloch & Co. and
Baijnath Kadio although it did not expressly refer to these
decisions. The legal position exposited in Amritla/
Nathubhai Shah is that even though the field of
E legislation with regard to regulation of mines and
development of minerals has been covered by the
declaration of Parliament in s. 2 of the 1957 Act, but that
can not justify the inference that the State Government
has lost its right to the minerals which vest in it as a
property within its territory and hence no person has a
F right to exploit the mines other than in accordance with
the provisions of the 1957 Act and the 1960 Rules. The
authority of the State Government to order reservation
flows from the fact that it is the owner of the mines and
the minerals within its territory. Such authority is also
G traceable to Rule 59 of 1960 Rules. [para 113-114] [774E-H; 775-A-E]
2.7. Thus, the reservation made by 1962 and 1969
Notifications is not at all contrary or inconsistent with
H 1957 Act. The impugned Notifications do not impinge
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 655
AND ORS.
upon the legislative power of the Central Government. The A
Government of erstwhile State of Bihar had the power to
make reservation which it did by 1962 and 1969
Notifications. There was no lack of power in the State in
making such reservation.[para 102] [767-8-C]
2.8. It can also not be said that in view of ss. 17 and B
18 of the 1957 Act, the 1962 and the 1969 Notifications are
not relatable to statutory provisions contained in 1957 Act
and 1960 Rules. Section 17 is not all-comprehensive on
the subject of refusal to grant prospecting licence or C
mining lease and it has nothing to do with public or
private sector. It does not deal directly or indirectly with
the State Government's right for reservation of its own
mines and minerals. Its application is not general but it
is confined to a specific situation where the Central
Government proposes to undertake prospecting or D
mining operations in any area not already held under any
prospecting licence or mining lease. Insofar as s. 18 is
concerned, it basically confers additional rule making
power upon the Central Government for achieving the
objectives, namely, conservation and systematic E
development of minerals articulated therein. If the State
Government makes reservation in public interest with
respect to minerals which vest in it for exploitation in
public sector, such reservation cannot be seen as
impairing the obligation cast upon the Central F
Government u/s 18. [para 115-116] [775-F-H; 776-A-D]
2.9. Rule 59 continued to recognize the State
Government's right to reserve any area for mining within
its territory for any purpose including exploitation in G
public sector. [para 118] [777-E]
Amritlal Nathubhai Shah and Ors. v. Union Government
of India and Another 1977 (1) SCR 372 = 1976 (4) SCC 108 -
relied on
H
656
SUPREME COURT REPORTS
[2012] 7 S.C.R.
A
Janak Lal v. State of Maharashtra and Others 1989 (3)
SCR 830 = 1989 (4) sec 121 - cited
2.10. Rule 58 was amended in 1980 whereby it
expressly provided that the State Government may, by
8
Notification in the official gazette, reserve any area for
exploitation by the Government, a corporation
established by the Central, State or Provincial Act or a
Government company within the meaning of s.617 of the
Companies Act. Rule 58 has been omitted from 1960
Rules as the provision for reservation has now been
C expressly made by insertion of s.17 A in 1957 Act.
According to s.17 A(2), the State Government with the
approval of the Central Government may reserve any area
not already held under any prospecting licence or mining
lease to undertake prospecting or mining operations
D through a Government company or a corporation owned
or controlled by it. In terms of s. 17 A(2), any reservation
made by the State Government after coming into force of
that Section must bear approval of the Central
Government. Thus, what was implied by the provisions
E originally contained in 1957 Act and 1960 Rules insofar
as authority of the State Government to reserve any area
within its territory for mining in public sector, has been
made explicit first by amendment in Rule 58 in 1980 and
later on by introduction of s.17A in 1957 Act by virtue of
F amendment effective from 1987. [para 119 and 120] [777G-H; 778-A-D]
2.11. With regard to the impact of omission of r. 58
in 1988 from 1960 Rules and the introduction of s. 17A in
1957 Act in the context of reservation of the mining area
G by the State Government for public sector exploitation,
this Court in Indian Metal and Ferro Alloys Ltd. has
categorically held that reservations made prior to
insertion of s. 17A continue to be in force even after the
introduction of s. 17 A. This Court holds that s.17 A is
H prospective. There is no indication in s.17A or in terms
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 657
AND ORS.
of the Amending Act that by insertion of s.17 A Parliament A
intended to alter the pre-existing state of affairs.
Parliament does not seem to have intended by bringing
in s.17 A to undo the reservation of any mining area made
by the State Government earlier thereto for exploitation
in public sector. Where an issue arises before the court B
whether a statute is prospective or retrospective, the
court has to keep in mind presumption of prospectivity
articulated in legal maxim nova constitutio futuris formam
imponere debet non praeteritis, i.e., 'a new law ought to
regulate what is to follow, not the past'. The presumption c
of prospectivity operates unless shown to th"e contrary
by express provision in the statute or is otherwise
discernible by necessary implication. [para 122-124] [778G-H; 779-A-B; 780-C-D]
Keshavan Madhava Menon v. State of Bombay 1951
D
SCR 228 =AIR 1951 SC 128 - referred to.
Colonial Sugar Refining Co. v. Irving (1905) AC 369;
Pu/borough Parish School Board Election, Bourke v. Nutt
(1894) 1 QB 725, p. 737 - referred to.
E
Principles of Statutory Interpretation (Seventh Edition,
1999) by Justice G.P. Singh - referred to.
2.12. If a state government has power to reserve
mineral bearing area for exploitation in public sector -
F
and the then Government of Bihar had such power - the
act of reservation by 1962 and 1969 Notifications is not
rendered illegal or invalid. The aspects, namely, (i) 1993
mineral policy framed by the Central Government
envisaged permission of captive consumption of G
minerals across the country; (ii) in 1994 Central
Government asked all the state governments to dereserve 13 minerals including iron ore and directed them
to take steps accordingly; (iii) confirmation by the
Government of Bihar to the Central Government in 1994 H
658
SUPREME COURT REPORTS
[2012] 7 S.C.R.
A that no mining areas were reserved for public sector
undertaking in the then State of Bihar; (iv) confirmation
by the State Government in 2001 to Central Government
that there are no reserved areas in the State and (v) in
2004, the recommendation by the State Government in
B favour of the appellants to the Central Government for
grant of prior approval and reminder in 2005, have no
impact and effect on the validity of 1962 and 1969
Notifications. The above acts of the Government of Bihar
and the Government of Jharkhand in ignorance of 1962
C and 1969 Notifications cannot be used as a sufficient
ground for invalidating these Notifications. Lack of
knowledge on the part of the State Government about the
reservation of areas for exploitation in public sector by
1962 and 1969 Notifications does not affect in any manner
0
the legality and validity of these Notifications once it has
been found that these Notifications have been issued by
the erstwhile State of Bihar in valid exercise of power
which it had. [para 125] [780-E-H; 781-A-C]
3.1. As regards the Notification dated 27 .10.2006, it
E states that it has been issued in the public interest and
in the larger interest of the State for optimum utilization
and exploitation of the mineral resources in the State and
for establishment of mineral based industry with value
addition thereon. It mentions the factum of reservation
F
made by 1962 and 1969 Notifications. It is founded on the
policy of the State Government that such reservation will
usher in maximum benefits to the State and would also
generate substantial amount of employment in the State.
The public interest is, thus, paramount. The State
G Government had authority to do that u/s 17 A(2) of 1957
Act read with Rule 59(1)(e) of 1960 Rules. The mineral
reserved in the said area by 2006 Notification has been
decided to be utilized for exploitation by public sector
undertaking or 'joint venture project' of the State
H Government. 2006 Notification does mention reservation
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 659
AND ORS.
for joint venture project of the State Government but, the
A
said expression must be understood to be confined to
an instrumentality having the trappings and character of
a government company or corporation owned or
controlled by the State Government and not outside of
such instrumentality. [para 126 and 128] [781-E-H; 782B
A-D-E]
Indian Metals and Ferro Alloys Ltd. v. Union of India &
Ors 1990 (2) Suppl. SCR 27 = 1992 (1) Suppl. SCC 91relied on
3.2. The approval by the Central Government
contemplated in s.17A may be obtained by the State
Government before the exercise of power of reservation
c
or after exercise of such power. It may be express or
implied. In a case such as the present one where the
D
Central Government has relied upon 2006 Notification
while rejecting appellants' application for grant of mining
lease, it necessarily implies that the Central Government
has approved reservation made by the State Government
in 2006 Notification otherwise it would not have acted on
E
the same. In any case, the Central Government has not
disapproved reservation made by the State Government
in 2006 Notification.Further, the 2006 Notification has not
been given retrospective operation; it is prospective.
Mere reference to 1962 and 1969 Notifications in the 2006
F
Notification does not make it retrospective. [para 129130] [783-A-C, E-F]
4.1. The doctrine of promissory estoppal is firmly
established and is well accepted in India. The following
principles must guide a court where an issue of G
applicability of promissory estoppel arises:
(i)
Where one party has by his words or conduct
made to the other clear and unequivocal
promise which is intended to create legal
H
A
B
c
D
E
F
G
H
660
SUPREME COURT REPORTS
[2012] 7 S.C.R.
relations or affect a legal relationship to arise
in the future, knowing or intending that it
would be acted upon by the other party to
whom the promise is made and it is, in fact, so
acted upon by the other party, the promise
would be binding on the party making it and
he would not be entitled to go back upon it, if
it would be inequitable to allow him to do so
having regard to the dealings which have
taken place between the parties, and this
would be so irrespective of whether there is
any pre-existing relationship between the
parties or not.
(ii)
The doctrine of promissory estoppel may be
applied against the Government where the
interest of justice, morality and common
fairness dictate such a course. The doctrine is
applicable against the State even in its
governmental, public or sovereign capacity
where it is necessary to prevent fraud or
manifest injustice. However, the Government
or even a private party under the doctrine of
promissory estoppel cannot be asked to do an
act prohibited in law. The nature and function
which the Government discharges is not very
relevant. The Government is subject to the rule
of promissory estoppel and if the essential
ingredients of this doctrine are satisfied, the
Government can be compelled to carry out the
promise made by it.
(iii)
The doctrine of promissory estoppel is not
limited in its application only to defence but it
can also furnish a cause of action. In other
words, the doctrine of promissory estoppel
can by itself be the basis of action.
MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 661
AND ORS.
(iv)
For invocation of the doctrine of promissory
A
estoppel, it is necessary for the promisee to
show that by acting on promise made by the
other party, he altered his position. The
alteration of position by the promisee is a sine
qua non for the applicability of the doctrine.
B
However, it is not necessary for him to prove
any damage, detriment or prejudice because
of alteration of such promise.
(v)
In no case, the doctrine of promissory
estoppel can be pressed into aid to compel the c
Government or a public authority to carry out
a representation or promise which is contrary
to law or which was outside the authority or
power of the officer of the Government or of
the public authority to make. No promise can
D
be enforced which is statutorily prohibited or
is against public policy.
(vi)
It is necessary for invocation of the doctrine of
promissory estoppel that a clear, sound and
E
positive foundation is laid in the petition. Bald
assertions, averments or allegations without
any supporting material are not sufficient to
press into aid the doctrine of promissory
estoppel.
(vii) The doctrine of promissory estoppel cannot
F
be invoked in abstract. When it is sought to be
invoked, the court must consider all aspects
including the result sought to be achieved and
the public good at large. The fundamental
G
principle of equity must forever be present to
the mind of the court. Absence of it must not
hold the Government or the public authority to
its promise, assurance or representation. [para
132 and 146) [784-E; 801-F-H; 802-A-H; 803-AH
E]
662
SUPREME COURT REPORTS
[2012] 7 S.C.R.
A
Mis Motilal Padampat Sugar Mills Co. Ltd. V. State of
UP. & Ors. 1979 (2) SCR 641 = 1979 (2) SCC 409; Union
of India and Others v. Godffey Philips India Limited 1985
(3) Suppl. SCR 123 = 1985 (4) SCC 369; and Delhi Cloth
and General Mills Limited v. Union of India 1988 (1) SCR
B 383 = 1988 (1) SCC 86; Amrit Vanaspati Co. Ltd. vs. State
of Punjab 1992 (2) SCR 13 = 1992 (2) SCC 411; State of
Orissa and Ors. v. Mangalam Timber Products Limited 2003
Suppl. SCR 476 = 2004 (1) SCC 139; State of Punjab v.
Nestle India Ltd. and Another 2004 (2) Suppl. SCR = 2004
C (6) SCC 465; Union of India v. lndo-Afghan Agencies [1968)
2 SCR 366; Collector of Bombay v. Municipal Corporation
of the City of Bombay (1952) SCR 43, Century Spinning and
Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council 1970
(2) SCR 854 = 1970 (1) SCC 582, M. Ramanatha Pillai v.
0
State of Kera/a (1974) 1 SCR 515, Assistant Custodian v. Brij
Kishore Agarwala 1975 (2) SCR 359 = 1975 (1) SCC 21,
State of Kera/av. Gwalior Rayon Silk Manufacturing Co. Ltd.
1974 (1) SCR 671 = 1973 (2) sec 713 I Excise
Commissioner, UP., Allahabad v. Ram Kumar 1976 Suppl.
SCR 535 = 1976 (3) SCC 540, Bihar Eastern Gangetic
E
Fishermen Co-operative Society Ltd. v. Sipahi Singh 1978 (1)
SCR 375 = 1977 (4) SCC 145 and Radhakrishna Agarwal
v. State of Bihar 1977 ( 3) SCR 249 = 1977 (3) SCC 457;
Kasinka Trading & Anr. v. Union of India and Anr. 1994 (4)
Suppl. SCR 448 = 1995 (1) SCC 274; Bannari Amman
F
Sugars Ltd. v. Commercial Tax Officer & Ors. (2005) 1 SCC
625 - referred to
Central London Property Trust Ltd. v. High Trees House
Ltd. (1956) 1 All ER 256; Jorden v. Money (1854) 5 HLC 185;
G Hughes v. Metropolitan Railway Company (1877) 2 AC 439,
Birmingham and District Land Co., v. London and North
Western Rail Co. (1889) 40 Ch D 268; Durham Fancy Goods
Ltd. v. Michael Jackson (Fancy Goods) Ltd. (1968) 2 All ER
987, Evenden v. Guildford City Association Football Club Ltd.
H (1975) 3 All ER 269 and Crabb v. Arun District Council (1975)
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 663
AND ORS.
3 All ER 865; Allengheny College v. National Chautauque
A
County Bank 57 ALR 980 and Grennan v. Star Paving
Company (1958) 31 Cal 2d 409- referred to
4.2. The following principles in relation to the doctrine
of legitimate expectation are well established:
B
(i)
(ii)
(iii)
The doctrine of legitimate expectation can be
invoked as a substantive and enforceable
right.
The doctrine of legitimate expectation is c
founded on the principle of reasonableness
and fairness. The doctrine arises out of
principles of natural justice and there are
parallels between the doctrine of legitimate
expectation and promissory estoppel.
D
Where the decision of an authority is founded
in public interest as per executive policy or
law, the court would be reluctant to interfere
with such decision by invoking doctrine of
legitimate expectation. The legitimate
E
expectation doctrine cannot be invoked to
fetter changes in administrative policy if it is in
the public interest to do so.
(iv)
The legitimate expectation is different from
F
anticipation and an anticipation cannot
amount to an assertible expectation. Such
expectation should be justifiable, legitimate
and protectable.
(v)
The protection of legitimate expectation does
G
not require the fulfillment of the expectation
where an overriding public interest requires
otherwise. In other words, personal benefit
must give way to public interest and the
H
A
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SUPREME COURT REPORTS
[2012] 7 S.C.R.
doctrine of legitimate expectation would not be
invoked which could block public interest for
private benefit. [para 153] [809-C-H; 810-A]
MP. Oil Extraction and Another v. State of MP. and Ors.
1997 ( 1 ) Suppl. SCR 671 = (1997) 7 SCC 592; J.P. Bansal
B v. State of Rajasthan and Anr. (2003) 5 SCC 134; Union of
India and Others v. Hindustan Development Corporation and
Others 1993 (3) SCR 128 = (1993) 3 sec 499; P. T. R.
Exports (Madras) Pvt. Ltd. & Ors. v. Union of India & Ors. 1996
(2) Suppl. SCR 662 = (1996) 5 SCC 268 - referred to.
c
4.3. The State Government had agreed to grant
mineral concession as per existing Act and Rules. As a
matter of fact, when the MOU was entered into, the State
Government was not even aware about the reservation
o of the subject mining area for exploitation in the public
sector. It was on November 17, 2004 that the District
Mining Officer informed the Secretary, Department of
Mines and Geology, Government of Jharkhand that the
subject area was reserved for public sector under 1962
E and 1969 Notifications issued by the erstwhile State of
Bihar. In view of the fact that the subject mining area had
been reserved for exploitation in pubic sector under 1962
and 1969 Notifications, the stipulation in the MOU that the
State Government shall assist in selecting the area for
F iron ore and other minerals as per requirement of the
company and the commitment to grant mineral
concession cannot be enforced. For one, the stipulation
in the MOU is not unconditional. The commitment is
dependent on availability and as per existing law. Two, if
the State Government is asked to do what it represented
G to do under the MOU then that would amount to asking
the State Government to do something in breach of these
two Notifications which continue to hold the field. [para
159] [812-E-G; 813-A-D]
H
4.4. The doctrine of promissory estoppel is not
MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 665
AND ORS.
attracted in the facts, particularly, when promise was A
made - assuming that some of the clauses in the MOU
amount to promise -
in a mistaken belief and in
ignorance of the position that the subject land was not
available for iron ore mining in the private sector.