# TATA IRON AND STEEL CO. LTD. ETC v. UNION OF INDIA AND ANR

- **Citation:** [1996] Supp. 3 S.C.R. 808
- **Court:** Supreme Court of India
- **Decided:** 1996-07-23
- **Case number:** Civil Appeal No. 9454 of 1996
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tata-iron-and-steel-co-ltd-etc-v-union-of-india-and-anr-14477
- **Pages:** 29

## Headnote

A
B
TATA IRON AND STEEL CO. LTD. ETC.
v.
UNION OF INDIA AND ANR.
JULY 23, 1996
!A.M. AHMADI, CJ.AND B.L. HANSARIA, J.]
Mines and Minerals (Regulation & Development) Act, 1957-Secrion
8-Pen·ads for ivhiciz niining leases n1ay be granted or renelred-Renewal of
C lease in interest of niineral developn1ent-Order nzust rc.:ord
reason.s-Relevance of c1iterion of captive requircn1e11t of n1i11ing industries
and principle of equitable distribution of 111ining lease-Pro.~q1cctivc a11plicants-Held, proper pwties.
The appellant, TISCO, a limited company claiming that it was the
D first to discover Chrome Ore in Orissa, in the year 1949, applied for a
prospecting licence and \\·as granted a inining lease over an area of 1813
hectares for chromite for a period of 20 years w.e.f. 12.1.1953. Since the
lease was to expire on 12.1.1973, TISCO sought its renewal which was duly
granted u/S 8(2) of the Mines and Minerals (Regulation & Development)
Act, 1957, for a further period of 20 years, till 11-1 1993. In 1991, a year
E prior to the date of expiry of the lease, TISCO applied for a second renewal
u/s 8(3) of the Act for a further period of 20 years. The Central Government rene'\\'ed TISCO's lease over a reduced urea of 651 hectares and it
was decided to distribute the balance area in an equitable manner taking
into consideration the need of genuine consumers for captive ronsu1nption.
F TISCO filed a \\Tit petition in the High Court challenging the order on the
ground that the scheme of equitable distribution of mining leases on the
basis of need of an industry is extraneous to the concept of' mineral
development, which alone is relevant u/s 8(3) of the Act. The High Court
struck down the renewal of TISCO's lease granted by the Central Government inter alia on the ground that the Central Government had not kept
G in view the recommendations made by the Rao committee and thereafter
directed the Central Government to reconsider TISCO's application for
renewal of the lease in accordance with Jaw. In 1995, the Ministry of Mines,
Government of India constituted a co1nmittee for rehearing and recon~
sidering the issue in regard to the rene'\\'al of nlining lease to TISCO. The
H Co1nn1ittce sulJmittcd a report recornmending renewal of the lease for a
808
I AT,, !RON /\N ll STEEL CO. LTD.''· lJ.O.l.
809
reduced areido TISCO. stating that Articles 39(h) & 14 orthe Constitution A
n1ust be taktn into consideration for deciding the issue of equitabJc
distribution of resources and that ~rlSCO "'01Jld not claiin to have any
legal right over tht rene\ral of its lease for the second tirne and, if the
Central (;ovcrnn1cnt "'as to rcnC\\' it, it n·ould havr to record reasons \rhy
such a 1neasure \\'Ould he in the interest of n1ineral devcloprucnt. Tht
Cou11nittee \.ras of the opinion that it \\ould be necessary in the interest of
n1ineral devclop1ncnt to authorise the rtne\ral of chron1ite lease to TISC()
B
11/s 8(3) of the Act >trictly in terms of TISC!)'s requirement and keeping
in vie\V the require111ents of needy 111a1111facturing industries. The Com1nittcc approved the principle of allotting leases to different industries by
taking into consideration tht:ir re£1uire1nents for captive mining holding C
an opinion that tht• best \\-'ay of benefitting an established chro1ne based
industry with a large ore consu1nption \\'as tn provide a n1inc owner status
to the different industrial units and that TISCO should make efforts to
initiate underground 1nining on a large scale "'hich would allo"' it to better
exploit the ore within its lease hold area. In its view, the appropriate area D
catering to TISCO's requirement would total 461 hectares. The Committee
also formed an estimate of requirements of the other parties appearing
before it.
In these appeals liled against the judgn1ent of the High Court, the
issues raised for consideration were :
(i) Whether the High Court of Orissa was justiticd in striking down
the decisions of the Central Government dated 3.6.1993 a

## Text

_Characters 0–39,699 of 70,461. This is a partial read: ask again with offset=39699 for what follows._

A
B
TATA IRON AND STEEL CO. LTD. ETC.
v.
UNION OF INDIA AND ANR.
JULY 23, 1996
!A.M. AHMADI, CJ.AND B.L. HANSARIA, J.]
Mines and Minerals (Regulation & Development) Act, 1957-Secrion
8-Pen·ads for ivhiciz niining leases n1ay be granted or renelred-Renewal of
C lease in interest of niineral developn1ent-Order nzust rc.:ord
reason.s-Relevance of c1iterion of captive requircn1e11t of n1i11ing industries
and principle of equitable distribution of 111ining lease-Pro.~q1cctivc a11plicants-Held, proper pwties.
The appellant, TISCO, a limited company claiming that it was the
D first to discover Chrome Ore in Orissa, in the year 1949, applied for a
prospecting licence and \\·as granted a inining lease over an area of 1813
hectares for chromite for a period of 20 years w.e.f. 12.1.1953. Since the
lease was to expire on 12.1.1973, TISCO sought its renewal which was duly
granted u/S 8(2) of the Mines and Minerals (Regulation & Development)
Act, 1957, for a further period of 20 years, till 11-1 1993. In 1991, a year
E prior to the date of expiry of the lease, TISCO applied for a second renewal
u/s 8(3) of the Act for a further period of 20 years. The Central Government rene'\\'ed TISCO's lease over a reduced urea of 651 hectares and it
was decided to distribute the balance area in an equitable manner taking
into consideration the need of genuine consumers for captive ronsu1nption.
F TISCO filed a \\Tit petition in the High Court challenging the order on the
ground that the scheme of equitable distribution of mining leases on the
basis of need of an industry is extraneous to the concept of' mineral
development, which alone is relevant u/s 8(3) of the Act. The High Court
struck down the renewal of TISCO's lease granted by the Central Government inter alia on the ground that the Central Government had not kept
G in view the recommendations made by the Rao committee and thereafter
directed the Central Government to reconsider TISCO's application for
renewal of the lease in accordance with Jaw. In 1995, the Ministry of Mines,
Government of India constituted a co1nmittee for rehearing and recon~
sidering the issue in regard to the rene'\\'al of nlining lease to TISCO. The
H Co1nn1ittce sulJmittcd a report recornmending renewal of the lease for a
808
I AT,, !RON /\N ll STEEL CO. LTD.''· lJ.O.l.
809
reduced areido TISCO. stating that Articles 39(h) & 14 orthe Constitution A
n1ust be taktn into consideration for deciding the issue of equitabJc
distribution of resources and that ~rlSCO "'01Jld not claiin to have any
legal right over tht rene\ral of its lease for the second tirne and, if the
Central (;ovcrnn1cnt "'as to rcnC\\' it, it n·ould havr to record reasons \rhy
such a 1neasure \\'Ould he in the interest of n1ineral devcloprucnt. Tht
Cou11nittee \.ras of the opinion that it \\ould be necessary in the interest of
n1ineral devclop1ncnt to authorise the rtne\ral of chron1ite lease to TISC()
B
11/s 8(3) of the Act >trictly in terms of TISC!)'s requirement and keeping
in vie\V the require111ents of needy 111a1111facturing industries. The Com1nittcc approved the principle of allotting leases to different industries by
taking into consideration tht:ir re£1uire1nents for captive mining holding C
an opinion that tht• best \\-'ay of benefitting an established chro1ne based
industry with a large ore consu1nption \\'as tn provide a n1inc owner status
to the different industrial units and that TISCO should make efforts to
initiate underground 1nining on a large scale "'hich would allo"' it to better
exploit the ore within its lease hold area. In its view, the appropriate area D
catering to TISCO's requirement would total 461 hectares. The Committee
also formed an estimate of requirements of the other parties appearing
before it.
In these appeals liled against the judgn1ent of the High Court, the
issues raised for consideration were :
(i) Whether the High Court of Orissa was justiticd in striking down
the decisions of the Central Government dated 3.6.1993 and 5.10.1993 on
E
the ground that the requirement of Section 8(3) of the Act had not been
met; (ii) Whether the reJJOrt of the Rao Committee and the decision of this F
Court in Indian Afetals case are relevant for the consideration of renewal
of leases under Section 8(3) of the Act; (iii) Whether the High Court and
the Comn1ittee \\'ere justified in hearing prospective applicants while con~
sidering the issue of renewal ofTISCO's lease; (iv) whether the Committee
\Vas justified in interpreting the concept of "mineral development
11 under
Section 8(3) of the Act as re£1uiring the assessn1ent of the captive mining G
requirement of different industries and the application of the principle of
equitable distribution of mining leases; (v) Whether the Central Govern·
ment in its order dated August 17, 1995, had correctly analysed the needs
and ret111irements of TISCO in recommending that its lease be renewed
o\'er land measuring 406.00 hectares;
H
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810
SUPREME COURT REPORTS (1996] SUPP. 3 S.C.R.
The appellant contended that the orders renewing TISCO's lease
had complied with the requirements of Section 8 of the Act; that the Rao
Couuuittee had provided incorrect i11for1nation about TISCO's 111ining
lease and the concept of captive mining was not really part of the National
Mineral Policy and, though propagated by the Rao Report, this concept
did not find support from the National Mineral Policy; that the other
petitioners did not have locus standi as none of the other parties could be.
regarded as aggrieved parties having any interest in these proceedings
since the State Government had neither made an entry in the concerned
register that the area was available for grant, nor had it notified its
availability in the oflicial Gazette; that none of the other parties who were
C before this Court to stake their claim for mining leases, had any industry
of their own wliere the chromite ore could be used for manufacturing
purposes and, therefore, they \\'ere not in a position to use it for captive
consumption and therefore the Committee had erred in applying the
principle of equitable distribution of mining leases as the correct principle
D is that of equitable distribution of minerals and not of mining leases.
The respondent submitted that any decision on the second renewal
of TISCO's lease was bound to affect the rights of the other parties and
that the State Government, which was duty bound to make the relevant
entry in the register and notify the area as being available for grant, had
E neglected to do so and that the applications of the petitioners would not
have been deemed to be premature under Rule 60 of the Minerals Concession Rules.
F
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Dismissing the appeals, this Court
HELD : 1.1. The language of Section 8(3) of the Mines & Minerals
(Regulation & Development) Act, 1957 is quite clear in its import. Ordinarily, a lease is not to be granted beyond the time and the number of periods
mentioned in clauses (1) and (2). If, however, the Central Government is of
the view that to allow a lessee's lease to be renewed further would be in the
interest of mineral development, then, it is empo\.\'ered to do so, provided
there exist on record sound reasons for such an action and those reasons
are recorded. Since such a measure has been incorporated in the legislative
scheme as a safeguard against arbitrariness, the letter and spirit of the law
must be adhered to in a strict manner. The order orthe Central Government
H dated 3.6.1993 is a statement which declares the grant of a second renewal
TATA IRON AND STEEL CO. LTD. v. U.0.1.
811
to 'flSCO. It did not profess to give any reasons for such a decision and, for A
that reason, falls foul of the re<Juirement of Section 8(3). The order dated
5-10-1993 is rriore generous in terrns of the re<:&sons it offers; however, the
High Court was of the view that, since it did not take into account the
tinciings of the Rao Report, the decision of this Court ii! Indian Afetals case
and the National !'viineral Policy, it could not have justified its decision as
having been made after a proper analysis of the interest of mineral developn1ent. The Rao Report had 1nade such a comprehensive study of the issue
that it merited treatment as a decision of the central Government. The
Central (iovern1nent, though not hound to follow the recommendations of
the Rao Report, was at the very least under an obligation to record reasons
B
why it sought to depart from the recommendations of the Report; especially C
in matters such as these where leases of considerable com1nercial value are
granted for long periods of time. Since the order dated 5·10·1993 did not
make any reference to the Rao Report or the decision of this Court the High
Court was justified in striking down for not having taken into account all
the factors relating to a proper appreciation of the concept of mineral D
development. The High Court had taken the correct step in allowing the
prospective applicants to put forth their points of view "ith regard to the
renewal of TISCO's lease. These issues involved considerably high stakes,
both in terms of commercial value and the effect that such a decision will
have on the concept of mineral development and the consequent national
interest. To that extent, those likely to be affected and indeed, those who can E
legitimately have a stake in the proper formulation of such a vital policy,
can be heard. No exception can be taken to the High Court treating them as
proper parties and directing the Committee to hear them. The captive
requirement of an industry is a factor that has to be kept in mind while
granting leases but, it is to be done on a con1parative scale. While the F
Central Government exercises its discretion in granting or rene\ol'ing a lease,
the capacity of an industry to effectively exploit the ore, will be a
predominant consideration. In order to properly appreciate the issue of
captive consumption, the Committee examined the needs of the other parties before it. It stated that each of these parties had manufacturing in·
dustries which produce value-added products and earn considerable G
foreign exchange for the country, and it was therefore, of the view that an
analysis of their total requirement was necessary in the interest of mineral
development as also that of the nation. Based on the information supplied
to it, the Committee thereafter made an assessment, for a total period of SO
H
812
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
;-\
iears, of the ca1ltive and net require1ncnts of ICCL, IMFA, FAC(JR and
.ISL. The Committee has also taken note of the projected captive and net
rel)uirements of lspat alloys. This being a finding of fact that has been
recorded by the Cornn1ittec, the argument of captive consu1nption did have
a basis in the facts of the present case. On the issue of the application of the
B
principlt! o!· et1uitable distribution, the Com1nittee had, after.having taken
note of the prcrailing situation and the prohlen1s faced by needy n1anufac- .
turers, taken the correct rie\v in rcconuucncing its implcrnentation. [825-FH; 826-A-B; 827-B-U; 830-A-B; 834-B-HJ
l.2. This is a case of the type where legal issues are intertwined with
C those involving deter1nination of policy and a plethora of technical issues.
D
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F
In such a situation, courts of latt' have to be vt!ry wary and n1ust exercise
their jurisdiction \\'ith circumspection for they ntust not transgress into
the realm of policy making, unless the 11olicy is inconsistent with the
Constitution and the laws. In the present n1atter, in its in1pugned judgment, the High Court had directed the Central Government to set up a
Comn1ittee to analyse the entire gan1ut of issues thrown up by the present
contrnver;y. The Central Government had consequently constituted a
Comn1ittee con1prising high level functionaries drawn from various
Ciovernrnental/institutional ngencies \\'ho \\'ere etjuipped to deal with the
entire range of technical and long-term considerations involved. This
Committee, in reaching its decision, consulted a number of policy docun1ents and approached the issue from a holistic perspective. From the
scheme of the Act it is clear that the Central Government is vested with
desecration to detern1ine the policy regarding the grant or renewal of
leases. On matters ,11Tecting policy and those that require technical expertise, the recomn1endations of the Committee which is more tiualitied to
address these issues is to lie followed. [835-F-H; 836-A·B]
Indian Metals & FcmJ Alloys Ltd. v. Union of India, AIR (1991) SC
818, referred to.
G
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 9454 of
1996 Etc. Etc.
From the Judgment and Order dated 4.4.95 of the Orissa High Court
in 0 .. 1.C. No. 7729 of 1993.
H
D.P. Gupta. Solicitor Ciencral, F.S. Nariman, Kapil Sihal, Gopal
<
TATA IRON AND STEELCO.J:m.v. U.0.1.[AHMADI.CJ.]
813
Subramaniam, Ms. Indira .laising, Shanti Bhushan, R.K. Anand, H.N. Salve, A
AK. Ganguli, G.L. Sanghi, Y.S.N. Murty, Sr. Advs., Sunil Gupta, Ravinder
Narain, Ashok Sagar, S. Kachwah, Ms. Punita Singh, Ashok Parija, Rajan
Narain, Ms. Vijay Lakshmi Menon, Jayant Bhushan, Ms. Ritu Gupta, Y.P.
Mahajan, W.A Qadri, AK. Sharma, Gautam Mitra Rajiv La., Indira
Sawhney, K.K. Lahiri, Ejaz Maqbool, B.K. Mishra, D.A. Dave, Praveen B
Kumar, Virender Kaushal, R.K. Mehta, Indrajeet Roy, P.N. Misra, Ashok
K. Gupta and Bharat Sangal for the appearing parties.
The Judgment of the Court was delivered by
AHMADI, CJ! Special Leave granted.
These appeals seek to challenge: (i) the common judgment and order
of the Orissa High Court dated April 4, 1995, arising out of OJC No. 7729
of 1993 and allied matters and (2) the decision of the Central Government
dated August 17, 1995 made pursuant to the said judgment of the High
Court.
The appellants in these appeals are the Tata.Iron and Steel Company, Limited, (hereinafter called "TISCO") and the Industrial Development Corporation of Orissa Limited (hereinafter called "IDCOL"). The
principal respondents are the Union of India, the State of Orissa, M/s.
Indian Charge Chrome Limited, (hereinafter called ''JCCL''), Indian Metal
& Ferro Alloys Limited (hereinafter called ''!MFA"), M/s. Jindal Strips
Limited, ( hereinafter called "JSL"), Ferro Alloys Corporation Limited
(hereinafter called "FACOR") and !spat Alloys Limited .
•
The factual matrix of the c3'6 is as follows :
The appellant, TISCO;.is a limited company, one of whose primary
~objects has been, to carry on business as a mining industry. It claims that it
c
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F
was the first to cli,covcr Chrome ore in the Sukinda Valley, Orissa, in the
year 1949. It applied to the Raja of Sukinda for a prospecting licence and G
was granted th~ sa~c in 1952. On October 22, 1952, it was granted a mining
lease over an area of 1813 hectares for chromite for a period of 20 years.
Subsequently, under the provisions of the Orissa Estates Abolition Act,
1952, on the rights of the Raja having vested in the State Government, the
latter recognised the lease of TISCO for a period of 20 years with effect
from January 12, 1953.
H
814
SUPREME COURT REPORTS 11996) SUPP. 3 S.C.R.
A
TISCO claims that over the years, it has spent more than Rs. 180
crores for the developn1ent of the mine, including Rs. 27 crores spent in
setting up a beneficiation plant. It utilises the Chrome ore mined by it for
the manufacture of Charge Chrome/Ferro Chrome refractories. lt also
supplies ore to forty Chrome ore based industries situated in different parts
B of the country.
In the year 1957, Parliament enacted the Mines &.Minerals (Regulation & Development) Act, 1957, (hereinafter called "the Act"). Section 8
of the Act deals with the renewal of mining leases which are lo be granted
by the Central Government. Applications under this Section are to be
C made through the State Government which is to furnish all relevant information and material to the Central Government. On October 10, 1980, the
Central Government issued a circular which laid down guidelines in this
behalf. Under the provisions of the Mineral) Conservation & Development
Rules, 1988, framed under Section 18 of the Act, the Indian Bureau of
Mines is also required lo furnish relevant information to the Central
D Government.
Since the lease was to expire on January 12, 1973, TJSCO sought its
renewal which was duly granted under Section 8(2) in respect of 1261.476
hectares for a period of 20 ye·ars i.e. till .January 11., 1.993, Subject to the
E condition that it would set up a beneliciation plant.
On October 3, 1991, more than a year prior to the date of expiry of
the lease, TJSCO applied for a second renewal under Section 8(3) of the
Act for a further period of 20 years. On NoYember 28, 1992, the Stale
Government, acting on the basis of a favourable report dated March 31,
F
1.992 submitted by the Director of Mines & Geology Orissa, recommended
to the Central Government that the entire lease of TJSCO be renewed for
a period of 10 years under Section 8(3) of the Act. On April 27, 1993, the
Indian Bureau of Mines, after analysing the mining plan submitted by
TISCO, recommended to the Central Government that TISCO's lease be
G renewed in its entirety.
On June, 3, 1993, the Central Government authorised the renewal of
the lease over the entire area of 1261.476 hectares. However, before the
formal lease could be executed, the Union Minister of State for Steel &
Mines, acting on a complaint filed by Shri G.C. Munda, Member of
H Parliament, directed that the matter be kept in abeyance. On September
•
TATA IRON AND STEEL CO. LTD. v. U.0.1. [AllMADI, CJ.]
815
27, 1993, the said Union Minister wrote a letter to the Chief Minister of A
Orissa staling that the lease area of TISCO should be reduced by half and
the balance should be distributed in an equitable manner taking into
consideration the need of genuine consumers for captive consumption.
On October 5, 1993, the Central Government superseded its earlier
approval dated June 3, 1993, and renewed TlSCO'; lease over a reduced
area of 651 hectares. On October 19, 1993, TrSCO filed a writ petition in
the High Court, being O.TC No. 7729/93, under Article 226 of the Constitution challenging the order dated October 5, 1993, inter alia on the ground
that the scheme of equitable distribution of mining leases on the basis of
need of an industry is c>-1raneous to the concept of mineral development,
which alone is relevant under Section 8(3) of the Act. Meanwhile, FACOR,
Ispat Alloys, JSL and Jindal Ferro Alloys Ltd. applied for mining leases of
the area held by TJSCO, but the State Government refused to entertain
them as being premature under Rules 59 and 60 of the Mineral Concession
Rules framed under the Act (hereinafter called "the Rules").
While TISCO's writ petition was pending, !CCL and .TSL filed writ
Petitions, being OJC No. 5422/94 and OJC No. 7054/94, challenging the
renewal of TISCO's lease by the Central Government; both the order dated
June 3, 1993 (which had authorised the renewal of the entire lease area of
1261 hectares) and the order dated October 5, 1993 (which subsequently
reduced the authorisation lo 651 hectares) were challenged.
By its impugned order dated April 4, 1995 the High Court of Orissa
struck down the renewal of TISCO's lease granted by the Central Government through its decisions dated June 3, 1993 and October 5, 1993.
Thereafter, it directed the Central Government to reconsider TISCO's
application for renc\val of the lease in accordance \Vith la\v; the Central
Government was also directed to give a personal hearing to, and consiJer
the applications of, the other parties before the Court.
B
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The High Court of Orissa after hearing lengthy arguments of counsel G
appearing for different interests including the central and the State
Governments concluded in paragraph 57 of its judgment that two courses
were open to it, namely, (i) to accept the submission of the counsel for the
State Government that all the writ petitions should be dismissed and the
parties may be asked to exhaust the alternative remedy of permitting the
State Government to take a decision as authorised by the Central GovernH
816
SUPREME COURT REPORTS I 19%J SUPP. 3 S.C.R.
A
n1ent and if any party i~ aggrieved it n1ay n1ove t.he l'.entral GovcrnnH~nL
under the Act and the Rules, or (ii) the Court may dispose of the writ
petitions giving certain specific directions in the shape of guideline~ to the
Governments as well as other authorities under Act to consider in the light
thereof if there is any necessity lo renew the lease for the whole or part of
B the area covered under the lease. The High C0urt took the second course,
in that, it accepted the submission of counsel for the State Government
that the Central Government should hear the matter de nol'o nn TISCO's
application for renewal of the lease after hearing all parties including !CCL
and JSL. lt set aside the orders <lated June 3, 1993 and October 5, 1993,
inter alia on the ground that the Central G0Yern1ncnt had not kepi. in vie\v
C the recommendation made by the Rao Committee which was accepted by
this Court in the case of Indian Matoia/s & Fc1ro Alloys Ltd. v. Union of
India, AIR 1991SC818 = 11992] Supp. 1SCC91, and directed the Central
Government to hear the application for renewal of the lease, keeping in
view the report submitted by the Rao Committee and the decisinn or this
D Court in the aforesaid case.
After the judgment of the High Court was delivered on April 4, 1995,
a Con1mittee \Vas constituted by the Ministry of Mines, (Jovcrnmcnt of
India, under the Chairmanship of one Shri S.D. Shann<.1 for rehearing ;_ind
reconsidering the issue in regard to the renewal or mining lease tu TJSCO.
E The Committee submitted a report <lated August 16, 1995, recommending
renewal of the lease for a reduced area to TISCO. Acting on that report,
on the very next <lay, August 17, 1995, the Central Government authorised
the renewal of TISCO's lease over the reduced area of 406 hectares which,
accortling to the Central Govern1ncnt, \Vould n1cct TlSC()'s captive rcF quirement.s and requested the State Govcrn1nent to issue orders for the
same. At the same time, in exercise of powers conferred by Rule 59(2) of
the Rules, the· Central Government relaxed the provisions of sub-rule (J)
\Vith the objective of expediting the process uf granting chromiti.: ore and
requested the St.ate Ciovcrnn1ent to grant 1nining leases to four other
parties. namely, !CCI, JSL, !MFA and FACOR for the balance area of
G 855.476 hectares.
SLP Nos. 10838/95, 11391/95 and 11392/95 seek to challenge the
01dcr dated April 4, 1995 of the Orissa High Court and SLP Nos. 22710/95,
23131/95 and 23132/95 seek to challenge the Central Government's
H decision dated August 17, 1995, made pursuant to the High Court's order
,.
•
TATA IRON AND STEEL CO. LTD. i·. U.0.1. [AHMADI.CJ.]
817
dated April 4, 1995. While the lirst four special leave petitions have been
filed by TISCO, the last two have been filed by IDCOL.
Before we proceed to deal with the arguments of counsd appearing
for the different parties, \Ve must deal \vith the impugned judgn1cnt of the
Orissa High Cnurt and the report of the Committee that was set up
pursuant to its directions, in son1e detail.
In its impugned judgment, ihc High Court has taken the view that
Section 8(3) of the Act is applicable lo the dispute in the present case; it
further held that this provision mandatorily requires the Central Governinent to giYe reasons as to \vhy it \Vas in the interest of 1nincral development
to renew T!SCO's lease. The High Court look nt>le of the decision of this
Court in Indian A1etals case \Vhere, faced \Vi th a dispute involving the grant
of rights for the mining of chron1ite ore in the State of Orissa, this Court
had appointed a Commillee headed by the Secretary to the Government
A
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C
of India in the Ministry of Mines, Mr. B.K. Rao (hereinafter called "The 0
Rao (~on1rnittee") to consider the c\ain1s of the various parties. The Rao
Committee submitted its report \Vhcrcin it studied the i.".suc of n1ining of
chromite ore in the State of ()rissa at great length and gave its specific
findings. This Court, in rendering its final decision in the Indian Afetals
case, relied on the Rao Co111mittee report and also opined that the report
was bound to be of use to the Central Government as well as the State
E
Govcrnn1cnt of Orissa in regard to their future policy in the matter of grant
of chromite leases.
The High Court of ()rissa \Vas, therefore, of the vie\v that in deciding
to rcne\v TISCCJ's lease, thl: Central Government should have considered
F
the Rao Committee report as well as the decision of this Court in Indian
flletals case and for its failure to de .so, the High Court struck <lo\vn the
orders of the Central Govcrnn1cnt rene\ving TISC()'s lease. The l-ligh
Court directed the Committee that \Vas to be set up, to consider the issue
keeping in mind the Rao Con1n1ittee report, this Court's decision in Indian
G
Afetals case, the National Mineral Policy and all other factors relevant
under the Act. Before the High Court, the learned counsel for T!SCO put
forth a preliminary objection; he argued that since the n1attcr concerned
the issue of renc,val of TISC()'s lease, the other parties before the High
Court had no locus stancU in vie\v of the express bar in Rules 59 and 60 of
the Rules. After considering these subn1issionsi the High Court, while 1-I
818
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A directing the constitution of a Committee lo look into the matter, made the
following observations:
B
c
D
"As we arc of the view that the Central Government should
consider afresh and as Mr. B.M. Patnaik has submitted that the
Central Government has no objection to consider afresh, there is
no bar and/or impediment if the Central Government considers
the proposal of subsequent renewal of lease of TISCO by giving it
opportunity of hearing which may be effected in presence of the
other petitioners who have come to this Court. Nevertheless, it is
submitted that the Central Government has no obligation to invite
other intending parties besides the \VTit petitioners in the case at
the time of disposal of the application for a subsequent renewal
of the lease at the instance of TISCO, this Court finds that by the
ultimate result other writ petitioners are consequently to be affected by renewal, part renewal or refusal of the lease in favour of
TISCO. They may be heard by way of fair play and in compliance
with the principles of natural justice, and to enable them to place
on record such necessary facts for essential consideration by the
Central Government. It is made very much clear that only in the
event of availability of the area occupied by TISCO, State Government \Vill consider their prospectiv~ applications in accordance
E
with law."
The Committee which was appointed by the Central Government
pursuant to the directions of the High Court of Orissa, consisted of senior
officers from the Ministry of Mines, the Indian Bureau of Mines and the
F Geological Survey of India. Tt.e Chairman of the Committee on Sukinda
Valley Chromite Lease of Tata Iron & Steel Corporation Ltd. (hereinafter
called
11The Comrnittec'') \Vas Shri S.D. Sharma, Joint Secretary, Ministry
of mines. The Committee \Vas required to submit its report \Vithin two
weeks. In view of the express directions of the High Court, the Committee
gave a personal hearing to the advocates appearing for TISCO, FACOR,
G !CCI, !MFA, JSL and !spat Alloys and thereafter, submitted its report
which extends lo four hundred and fifty-one pages.
In its voluminous report, complete with elaborate anncxures, the
Committee has dealt with many of the legal issues that have been canvassed
H before us and also with other technical considerations involved in the
•
TATA IRON AND STEEL CO. LTD."· U.O.l. [AHMADI, CJ.]
819
mining of chrome ore in the Sukinda Valley. ll would,thercforc, be appropriate for us to cxan1ine the rcco1nmcndaLions of the Committee an<l
their basis for putting them forth.
In its <.inctlysis of lhc sub1nissions of the variou.s parties before it, the
Connnittec first dealt \Vith the issue of the relevance of the Rao Con1n1ittee
and the decision of this Court in Indian Metals case lo the present dispute.
A
B
The learned counsel appearing for TISCO before the Committee
attacked the Rao Report on several grounds. He pointed out that the High
Court had required the Central Government only to consider the Rao
Report and not necessarily to adopt its recommendations; he submitted C
that it would be open to the Committee to examine the correctness of the
legal and Factual premises of the Rao Report. He contended that since
TlSCO was not a party before the Rao Committee, its report was not
binding for the purposes of considering TJSCO's lease. He further urged
that the Rao Report does not, in essence, uphold a principle of policy and
was superseded in many respects by this Court in the Indian Metals case. D
He contended that the Rao Committee did nol endorse the policy of
distributing leases on the basis of the captive 1nining requirc1nent of
industries and in the alternative argued that even if the Rao report \Vere
to do so, such a policy was unsustainable under the scheme of the Act and
the Rules and, at no point of time had the said principle been applied in
E
determining the question of rene\va1 of lease or in <lcc;iding on whom the
right should be conferred.
The Commillce was of the firm opinion that the central Government
was required to take note of the Rao Report as it contains in1portant
findings~ guidelines and directions regarding the grant of chron1ite leases
and supply of chromite ore to needy applicants in an equitable n1anncr.
The Con1mittec took note of the fact that, in reaching its final decision, this
Court, in the Indian /\feta/.\· case relied upon the findiQg~ of the Rao Report.
It also noted that Lhe High Court of Orissa had studied the Rao Report
F
and had required it to rely upon the findings therein. Finally, the CommitG
tee took note of the observations of this Court in para 42 of the judgn1ent
of the Indian Metals case :
·· ..... the (Rao) report and its annexures arc bound to be of immense
help and value to the S.G. and C.G. in arriving at their decisions
not only on the various applications but also in regard to their H
A
B
c
820
SUPREME COURT REPORTS f1996] SUPP. 3 S.C.R.
future policy in the matter of grant of chromite leases and of the
supply of chromite to the needy applicants in an equitable manner."
The Committee rejected the cont en lion of TlSCO that the Rao Report had
proviJed incorrect inforn1ation about TiSCO's 1nining lease. The Corn1nittee relied upon the report of the Gopalachari Committee. which was
constituted subsequent to the Rao Report to look into the issue of mining
leases in the entire country, to refute TISCO's contentions in this regard.
This being so, the Committee rejected the arguments put forth by TISCO
to dilute the significance of the Rao Report for the consideration of the
present dispute.
Thereafter, the Committee analysed the National Mineral Policy,
1993 and the Industrial Policy of Orissa, 1992 lo obtain an understanding
of the concept of mineral development as envisaged by Section 8(3) of the
Act. Learned counsel for TISCO submitted that the concept of captive
mining was not really part of the National Mineral Policy and, though
D
propagated by the Rao Report, this concept docs not find support from
the National Mineral Policy. The Con1111ittce ca1ne to the conclusion that
the National Mineral Policy, having been tabled before both Houses of
Parlian1ent, is a guiding factor in the decision making process of the
Government and, both in the National Mineral. Policy as well as the
E Industrial Policy of the State of Orissa, captive mining has been recognised
as a fundamental guideline in ·determining the criteria for granting mining
leases.
On the issue of equitable distribution of resources, in view of the fact
that TISCO held 55% of the total chromite resource of the country, the
F
Committee was of the opinion that Article 39(b) and Article 14 of the
Constitution 1nust be taken into consideration for deciding the issue under
Section 8(3) of the Act.
Thereafter the Comn1ittec examined the requirements of Section
8(3) of the Act. The provision as it originally stood was amended in 1986
G and again in 1994. The application for renewal ofleasc was filed by TIS CO·
in the year 1991. On behalf of TISCO, a series of alternative arguments
was put forth to support TISCO's claim that it was entitled to a second
rene\val of its lease. There \Vas also an argu1nent that the la\V as it stood
after the 1994 amendment should apply to TISCO's case. However, the
H Committee took the view that the law applicable would be the law as it
..
TATA IRON AND STEEL CO. LTD. v. U.0.1.[AHMADI. CJ.]
821
stood between 1986 and 1994. Interpreting Section 8(3) of the Act, the A
Committee was of the view that TISCO could not claim to have any legal
right over the renewal of its lease for the second time and, if the Central
Government \Vas to rcne\V it~ it \Vould have to record reasons \vhy such a
measure \\'ould be in the interest of 111incral devclop1nent.
Moving on to the issue of \Vhether it \Vas necessary to rene\v the
mining lease of TISCO in the interest of mineral development, the Committee took note of the various arguments put forth by the learned counsel
appearing for TJSCO. The learned counsel submitted that TISCO had
played a pioneering role in the development of chromite and other
minerals in the area; had been doing scientific tnining in a manner that
ensured optimum recovery; had taken steps for environmental management; had complied with the provisions of all the relevant rules and
regulations; had n1ade massive investn1cnt in the leasehold area including
research and development efforts etc. and, are therefore, entitled lo the
rene\val of the cnti~e area in the interest of n1ineral develop111cnt. The D
learned counsel submitted technical reports to show that the technique of
mining adopted by TISCO \Vas in consonance \Vith prescribed practices.
B
c
He stressed on the fact that the Indian Bureau of Mines had sanctioned
the mining plan of TISCO and its operations had also met with the
requirements of the Gopalachari Con1mittee, set up by the Government of
India to rc\~ew mining practices across the country. To appreciate the E
technical arguments put forth by TISCO and the other parties before it,
the Committee undertook a vast examination of the technical details of the
mining of chromite ore including discussions on : mineablc reserve,
recoverable reserve and conditional reserves in the Sukinda Valley; the
status of geo-tcchnical and geo-hydrological studies; the existing status of
F
1nining in the valley; infrastructural facilities; research and development
expenditure relating to mining in the valley; the relative merits and
demerits of shallow mining, open cast mining and underground mining; the
prices of chromite ore, etc.
After considering all these issues, the Con1mittee made its recon1G
mendations. It prefaced the recommendations by stating that it was of the
firm opinion that it \vould be necessary in the interest. of mineral develop~
ment to authorise the renewal of chromite lease to TISCO under Section
8(3) of the Act strictly in terms of TISCO's requirement and keeping in
view the requirements of needy manufacturing industries. The Co1nmittee H
822
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A was of the view that if renewal was granted to TISCO for the entire area
when they would, in effect, be needing and using only a small fraction of
the entire area, it could not be said that such a grant would be serving the
interest of mineral development or that of the national interest, particularly
when there were other needy manufacturers who had been facing serious
B problems for want of adequate raw material. The Committee felt that it
could not ignore the fact that the other parties had made huge capital
investments in establishing their industries and did not have adequate raw
materials. The Committee approved the principle of allotting leases to
different industries by laking into consideration their requirements for
captive mining and for doing so, it relied upon the Rao Report, the Ori"a
C fndustrial Policy and the National Mineral Policy. It was, therefore, of the
opinion that the best way of benefitting an established Chrome-based
industry \Vith a large ore consun1ptjon \Vas to provide a mine·o\vncr status
to the different industrial units. Thereupon, the Committee undertook an
analysis of the competing interests of the other needy manufacturers. It
D took note of the observations of the High Court of Orissa that it was not
the forum for distributing mining leases in favour of the other parties;
however, in order lo properly appreciate the issue, the Committee examined the need of the other parties as well as their problems of obtaining
raw matcria1s. While forming an cstin1ate of TISCO's requiren1ent, the
E Committee relied upon the documents submitted by TlSCO as well as
other relevant material. It noted the fact that in view of the scarcity of
chromite ore, repeated recommendations have been made that underground mining must be planned and taken up for harnessing the available
chromite ore. However, over the last four decades during which TISCO
had held the lease, it had not relied upon the method of underground
F
mining lo the required level. The Committee came to the conclusion that
open cast mining, which was being primarily employed by TISCO, has an
adverse effect upon the environment and the most effective way of lapping
the ore was the method of underground mining. It was, therefore, of the
view that TISCO should make efforts to initiate underground mining on a
G .large scale which would allow it to better exploit the ore within its leasehold area. The learned counsel for TISCO had put forth a number of
arguments expressing the difficulty of dividing or splitting its lease-hold
area. The Committee took into account these sub1nissions \vhile assessing
what it deemed should be the extent of TISCO's lease. In its view, which
H was formed after taking into account a host of technical factors, the
••
TATA IRON AND STEEL CO. J;fD. v. U.0.1. [AllMADl, Cl.J
823
appropriate area catering to TISCO's requirement would total 461 hecA
tares. The Committee also formed an estimate of requirements of the other
parties appearing before it. In addition, it rt!commen<le<l the i111position of
special conditions which could be kept in mind while granting renewals or
fresh leases in future.
We may now set out the issut:s that we consider are central to the
adjudication of the t!ispute before us :
i. Whether the High Court of Orissa was justified in striking down
the decisions of the Central Government dated June 3, 1993 and
October 5, 1993 on the ground that the requirement of Section
8(3) of the Act had not been met;
ii. Whether the report of the Rao Committee and· that decision of
the Court in Indian Metals case are relevant for the consideration
of renewal of leases under Section 8(3) of the Act;
iii. Whether the High Court and the Committee were justifiet! in
hearing prospective applicants \vhile considering the issue of
renewal of TISCO's lease;
iv. Whether the Committee was justified in interpreting the concept
of "mineral t!evelopment" unt!er Section 8(3) of the Act as requir"
ing the assessment of the captive mining requirement of different
industries and the application of the principle of equitable distribution of mining leases;
v.