# VRAJLAL MANILAL & CO v. UNION OF INDIA AND ANR

- **Citation:** [1964] 7 S.C.R. 97
- **Court:** Supreme Court of India
- **Decided:** 1964-03-10
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/vrajlal-manilal-co-v-union-of-india-and-anr-3151
- **Pages:** 6

## Headnote

1 s.c.n.
SUPREME COURT REPORTS
97
VRAJLAL MANILAL & CO.
v.
UNION OF INDIA AND ANR.
IP. B. GAJENDRAGADKAR, C.J .• K. N. WANCHOO, J. c. SHAH,
N. RAJAGOPALA AYYANGAR ANDS. M. SIKRI, JJ.]
Mines and Minerals-State Government refuses to renew
certificate of approval-Review ;petition to Central Government
-Central Government receives report and information from the
State Government behind the back of the appellants-Central
Government acting quasi-iudiciaUy-Violation of natural justice
-Mines and Minerals (Regulation and Development) Act, 1948
(No. XLIII of 1948)-Mines Concession Rules, 1949 rr. 57, 59.
The appellants constitute a partnership engaged in mining
and they held a prospecting license as well as a certificate of
approval from the State Government under the Mineral Concessions Rules, 1949 framed under the Mines and Minerals (Regula·
tion and Development) Act, 1948. The approval certificate was
granted for one year and ,until December 1955 it had been renewed from year to year when the State Government refused to
renew it on the ground that the partners composing the firm had
changed. Thereupcn the appellants applied under r. 57 of the
-Minerals Concession Rules to the Union Government for the
review of the order of the State Government refusing to renew
the certificate of approval. While this application was pending
the Union Government corresponded with the State Government
and gathered information and received the latter's remarks
regarding the merits of the matter behind the appellants' back.
The request made by the appellants for copies of the correspondence and for an opportunity to be heard was refused by the
Union Government. Ultimately the Union Government refused
the review application on the ground that there was no valid
ground to interfere with the decision of the State Government.
The present appeal was filed on special leave granted by this
Court. On behalf of the appellants it was contended that the
Union Government while disposing of an application under
r. 57(2) in terms of r. 59 acts as a quasi-judicial authority and the
order which was passed taking into consideration the report of
the State Government behind the appellants' back and without
affording a reasonable opportunity for presenting their case was
contrary to natural justice and was therefore void.
·
Held: (i) The Union Government when disposing of an application for review under r. 59 is functiolling as a quasi-judicial
authority.
Shivji Nathubh~i v. Union of India, [1960)' S.C.R. 775, relied
on.
(ii) Though Shivji Nathubhai's case was concerned with a
case where an order had been passed prejudicial to the respondents before the Central Government without affording them
LIP(D)ISCI-4 ..
1964
March 10
98
SUPRE!VIE COURT REPORTS
[1964]
1964
an opportunity to meet the case of an applicant for review the
. -.
same principle would apply even where a petition for review is
VraJlal .Manila! 4' rejected based on materials which were not made available to
Co.
the applicant for review.
T,
Union J1 1t~dia an.;
(iii) Applying the above principle to the present case the
no "
order of the Central Government is vitiated as being contrary to
the principles of natural justice in that the decision wa" rendered without affording to the appellants a reasonable opportunity
of being heard which is a sine qua non of a fair hearing.
.Ayyangar, J.

## Text

1 s.c.n.
SUPREME COURT REPORTS
97
VRAJLAL MANILAL & CO.
v.
UNION OF INDIA AND ANR.
IP. B. GAJENDRAGADKAR, C.J .• K. N. WANCHOO, J. c. SHAH,
N. RAJAGOPALA AYYANGAR ANDS. M. SIKRI, JJ.]
Mines and Minerals-State Government refuses to renew
certificate of approval-Review ;petition to Central Government
-Central Government receives report and information from the
State Government behind the back of the appellants-Central
Government acting quasi-iudiciaUy-Violation of natural justice
-Mines and Minerals (Regulation and Development) Act, 1948
(No. XLIII of 1948)-Mines Concession Rules, 1949 rr. 57, 59.
The appellants constitute a partnership engaged in mining
and they held a prospecting license as well as a certificate of
approval from the State Government under the Mineral Concessions Rules, 1949 framed under the Mines and Minerals (Regula·
tion and Development) Act, 1948. The approval certificate was
granted for one year and ,until December 1955 it had been renewed from year to year when the State Government refused to
renew it on the ground that the partners composing the firm had
changed. Thereupcn the appellants applied under r. 57 of the
-Minerals Concession Rules to the Union Government for the
review of the order of the State Government refusing to renew
the certificate of approval. While this application was pending
the Union Government corresponded with the State Government
and gathered information and received the latter's remarks
regarding the merits of the matter behind the appellants' back.
The request made by the appellants for copies of the correspondence and for an opportunity to be heard was refused by the
Union Government. Ultimately the Union Government refused
the review application on the ground that there was no valid
ground to interfere with the decision of the State Government.
The present appeal was filed on special leave granted by this
Court. On behalf of the appellants it was contended that the
Union Government while disposing of an application under
r. 57(2) in terms of r. 59 acts as a quasi-judicial authority and the
order which was passed taking into consideration the report of
the State Government behind the appellants' back and without
affording a reasonable opportunity for presenting their case was
contrary to natural justice and was therefore void.
·
Held: (i) The Union Government when disposing of an application for review under r. 59 is functiolling as a quasi-judicial
authority.
Shivji Nathubh~i v. Union of India, [1960)' S.C.R. 775, relied
on.
(ii) Though Shivji Nathubhai's case was concerned with a
case where an order had been passed prejudicial to the respondents before the Central Government without affording them
LIP(D)ISCI-4 ..
1964
March 10
98
SUPRE!VIE COURT REPORTS
[1964]
1964
an opportunity to meet the case of an applicant for review the
. -.
same principle would apply even where a petition for review is
VraJlal .Manila! 4' rejected based on materials which were not made available to
Co.
the applicant for review.
T,
Union J1 1t~dia an.;
(iii) Applying the above principle to the present case the
no "
order of the Central Government is vitiated as being contrary to
the principles of natural justice in that the decision wa" rendered without affording to the appellants a reasonable opportunity
of being heard which is a sine qua non of a fair hearing.
.Ayyangar, J.
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 115
& 1I6 of I 963. Appeals by special leave from the .iudgment
and orders dated July 9, 1958, September 24, 1958 of the Union
of India (Ministry of Steel, Mines and Fuel, New Delhi) and
the Punjab High Court (Circuit Bench) at Delhi respectively.
G. S. Pathak, Rameshwar Nath and S. N. Andie)', for the
appellant (in both the appeals).
S. G. Patwardhan and B. R. K. G. Achar, for respondent
No. 1 (in both the appi;als).
by
I. N. Shroff, for respondent No. 2 (in C.A. No. 116/1963).
March 10, 1964. The Judgment of the Court was delivered
AYYANGAR, J.-Civil Appeal No. 115 is by special leave
granted by, this Court under Art. 136 of the Constitution and
is against an order of the Union of India (Ministry of Steel,
Mines and Fuel) dated July 9, 1958 rejecting an application
filed by the appellants under rule 57 of the Mineral Concession
Rules, 1949 to review an order passed by the Government of
Madhya Pradesh rejecting their application for the renewal of
the Certificate of Approval granted to them. The appellants
filed a petition to the High Court Punjab under Art. 226 <if the
Constitution praying for a writ of certiorari to quash the above
order of the Unieln of India. This petition was dismissed by
the High Court in /imine and Civil Appeal No. 116 of 1963 is
by special leave of this Court against this order of the High
Court, Punjab. It would thus be seen that both the appeals are
directed to challenge the validity of the same order and we
shall therefore deal with them together.
The appellants, who constitute a partnership, are engaged
inter alia in the business of mining and they held a prospecting
licence in the State of Madhya Pradesh. They hold concessions
in regard to prospecting and working minerals in sevi~raJ areas
of the State to the details of which it is not necessary to refer.
Under the scheme of the Mines and Minerals (Regulation and
Development) Act, 1948 (Act No. XLIII of 1948) and the
Mineral Concession Rules, 1949 framed thereunder, in order
that a prospecting licence may be granted to a person he has
•
7,S.C.R.
SUPREME COURT REPORTS
99
to hold a certificate of approval from the State Government
1964
concerned and similarly the rules provide that no mining lease vrajlal Manila! "'
shall be granted to any person unless he held a similar certifiOo.
cate of approval. To enable them to do the prospecting in lands u . if] d'
1111
in which they had obtained mineral concessions, the appellants nion ~no7h,';' •
applied for and obtained from the Government of Madhya
Pradesh a certificate of approval under the Mineral Concession
Ayyangar, J.
Rules from 1952 onwards. The duration of the certificate is
one calendar year and the same has to be renewed every year,
if it is to be in force. The original certificate granted to the
appellants for the year 1952 was being renewed from year to
year and as a result they held a valid certificate of approval up
to the period ending on December 31, 1955. Being desirous of
having the same renewed for the following calendar year 1956
they made an application to the Government of Madhya Pradesh on November 22, 1955. The information required by the
form of application prescribed by the rules was furnished and
the necessary documents were filed and this application was
recommended by the District Officer, Bhandara. The State
Government. however, by an order dated September 21, 1956
rejected the application, the reason given being that the partners composing the firm had changed. This order was communicated to the appellants on October 6, 1956 and thereupon
the appellants made an application on November 15, 1956 to
the Union Government for a review of the order of the State
Government under rule 57 of the Mineral Concession Rules ..
Rule 57(2) which was invoked by the appellants provides:
"Where a State Government has failed to dispose of an
application for grant of renewal of a certificate of ·
approval or prospecting licence or a mining lease
within the period prescribed therefor in these
Rules, such failure shall, for the purpose of these
rules, be deemed to be a refusal to grant or renew
such certificate, licence or lease, as the case may
be, and any person aggrieved by such failure ma.y,
within two months of the expiry of the period
aforesaid, apply to the Central Govermnent for
reviewing the case."
The procedure for review is laid down by rule 59 which
reads:
"Review-Upon receipt of such application, the Central Govermnent may, if it thinks fit, call for the
relevant records and other information from the
Sta.te Govermnent, and after considering any explanation that may be offered by the State Government cancel or revise the order of the State
GOIVermnent, or pass such order as the Central
Government may deem just and proper."
L/P(D)ISCI--41•)
1964
Vrajlal Manilal Ja
Co.
v.
Union of India an!l
A:notker
Ayyangor, J.
100
SUPREME COURT REPORTS
[1964]
Thereafter correspondence seems to have ensued between the
Central Government and the Government of Madhya Pradesh
in regard to the propriety of granting the application for
review. The appellants having come to know from a letter
addressed to them by the Government of India that the State
Government had been required to send a report of their
remarks in connection with their application for review made
enquiries as to what had happened and also requested that
they might be informed as to the progress of their application
and that they might be given an opportunity of a personal
hearing at which they would be able to satisfy the Government
about the genuineness of their case. Some portions of this
correspondence between the Government of India. and the
Government of the State as to the merits of the appellants'
application are now on record but it is common ground that
the appellants were not informed of these documents prior to
the O'fder now impugned rejecting the applica.tion for review
was passed. On July 9, 1958 the application of the appellants
was rejected by the Union Government, the order stating:
"The Central Government have come to the conclusion
that there is no valid ground for interfering with
the decision of the Government of Madhya Pra-
,.
desh rejecting your application for renewal of a
certificate of approval for the year 1956."
The appellants thereafter applied to the Government of India
requesting for a copy of the report of the State Government on
the basis of which the application was rejected. The reply that
the appellants received was that the Government of India
regretted their inability to accede to their request. It is the
validity of this order dated July 9, 1958 that is challenged in
appeal No. 115 of 1963.
Mr. Pathak, learned Counsel for the appellants, submitted
that the Union Government when disposing of an application
under s .. 57(2) in terms of rule 59 is acting.as a quasi-judicial
a.uthority and the order which was passed taking into consideration the report of the State Government and without their
knowing the contents of the report and without affording them
a reasonable opportunity of presenting their case was contrary
to natural justice and was therefore void. In this connection
learned Counsel relied on the decision of this Court: Shivji
Nathubhai v. The Union of India('). Mr. Pa.thak is well-founded in his submission as to the nature of the jurisdiction exercised by the Union Government when disposing of an.application for review under Rule 59 and the decision referred to does
(') [1960] 2 S.C.R 775.
-
'
7 S.C.R.
SUPREME COURT REPORTS
101
support him that the Central Government acting under the rule
1964
referred to is functioning as a quasi-judicial authority. It does v 'lal 11!1 1.,,.
follow therefore that they could not act on the basis of material rai
i.~· • ·
as regards which the appellants had no opportunity to make
.
v.
.
their representation. No doubt, the decision in Shivji Nathu- Union ';{;,~f;: and
bhai v. The Union of India and Ors.(') was concerned with a
case where an order had been passed prejudicial to the responAyyangar, J.
dents before the Central Government without affording them
an opportunity to meet the case of an applicant for review but
the same principle would, in our opinion, apply even where
a petition for review is rejected based on materials which were
not made available to the applicant for review.
As we have already indicated, the State Government had
refused renewal of the certificate of approval because they
considered that there had been a change in the composition
of the firm which destroyed its identity. On the other hand, the
case of the appellants was that the terms of the partnership
deed made express provisions for the continuance of the
identity of the firm. notwithstanding changes in the persons
composing the firm by death, retirement or because of the
accession of new members to replace deceased or retiring
partners or even otherwise. If the report of the State Government made any points against the representations made by the
appellants, and these were being taken into consideration by
the Union Government, in common fairness, the appellants
were entitled to be informed as to what these were and an
opportunity to point out how far they militated against the
contentions raised by them.
Learned Counsel for the respondent-Union of India, did
not seek to support the position taken by the Central Government that they were justified in refusing to disclose the contents of the report they obtained from the Sta.te Government
. which afforded them the factual basis on which they rejected
the application for review. We have therefore no hesitation in
holding that the order of the Central Government now under
~pp~al i~ vitiated as be!1Jg contrary to the principles of natural
1usttce, m that the dectsion was rendered without affording to
the appellants a reasonable opportunity of being heard which
is a sine qua non of a fair hearing.
The learned Judges of the Punjab High Court dismissed
the petition filed before them under Art. 226, apparently because they proceeded on the view that the exercise of jurisdiction of the Central Government under rules 57 and 59 of the
Mineral Concession Rules was really administrative in
character so that the reasonable opportunity that is an essential
requisite of quasi-judicial procedure was not attracted to the
(') [1960] 2 S.C.R. 775.
102
SUPREME COURT REPORTS
[1964]
1964
case. That was the view taken by that Court in the Shivji
Nathubhai v. The Union of India and Ors.(') which decision
Vrajl<ll '1t~'.'
1"
1
"' was reversed by this Court. It might be mentioned that the
v.
decision of this Court was rendered subsequent to their judgUaim• 01 Ii. T;a ani ment now under appeal and therefore the learned Judges had
A11nfhtr
·
not the advantage of the pronouncement of this Court.
Ayyang((r, J.
The result is that the appeals are allowed and order of the
Central Government dated July 9, 1958 and of the High Court
dated September 24, 1958 are set aside. The Central Government will consider the review application afresh and dispose
of the same in accordance with law and in the light of the
observations contained in this judgment. The appellants are
entitled to their costs in this Court (Hearing fee one set).
Appeals allowed.
(') [1960] 2 S.C.R. 775.
1