SAN DUR MANGANESE & IRON ORES LTD. v. STATE OF KARNATAKA & ORS.

A a right to grant a lease to an applicant out of turn subject to two conditions: (a) recording of special reasons and (b) previous approval of the C.G. It is manifest, therefore, that the S.G. is not bound to dispose of applications only on a "first come, first served" basis. It will be easily appreciated B that this should indeed be so for the interests of national mineral development clearly require in the case of major minerals, that the mining lease should be given to that applicant who can exploit it most efficiently. A grant of ML, in order of time, will not achieve this result."

C Even under ordinary principles of statutory interpretation, the first proviso to Section 11 (2)1embraces the field that is covered by the main provision. [Vide Abdul Jabarvs. State of J&K., AIR 1957 SC 281 (para 8) and Ram Narain Sons vs. Asst. CST, 1955 (2) SCR 483 at 493]. D Accordingly, we are of the view that the notification calling for applications referred to in the first proviso to Section 11 (2) applies only to virgin areas.

34Copy pinpoint34. It is the claim of Jindal and Kalyani that the proviso to Section 11 (2) of the Act sets out a plenary rule for consideration of applications for mining leases where the State Government has invited applications for mineral concessions by notification in the official gazette and the applications pending on the date of notification must be considered simultaneously with F applications filed in response to the notification and within the notification period. It is also their claim that since there is no provision in the rules empowering the State Government to issue notification inviting applications for mineral concessions apart from Rule 59(1 }, it is asserted by Jindal and Kalyani that a G notification inviting applications for mineral concessions in the proviso to Section 11 (2) must necessarily relate only to a notification under Rule 59(1) inviting applications for mineral concessions in previously held or reserved lands. Therefore, according to them, the proviso's stipulation that applications for mineral concessions pending on the date of the said notification

SAN DUR MANGANESE & IRON ORES LTD. v. 293 STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.] inviting applications must be considered, must necessarily apply to applications pending in receipt of previously held lands. It is also contended that the proviso to Section 11 (2) and Rule 59(1) use identical phraseology when referring to areas (available for grant). It was pointed out that since this language is not present in Section 11 (4), this suggests strongly that Rule 59(1 ), the s proviso to Section 11 (2), Section 11 (3) and Rule 35 form a composite code dealing with the consideration of applications for mineral concessions over lands thrown open for grant by way of notification under Rule 59(1) and that Section 11 (4) does not apply to such applications. c

35Copy pinpoint35. We have already held that Section 11 (3) specifies the matter relevant for purposes of second proviso to Section 11 (2). We also referred to the Committee's Report. In accordance with the recommendation in the said Report, Section 11 (3)(d) was added as part of the substitution of Section 11 in the year 1999. D Sub-section (d) provides that "the investment which the applicant proposes to make in the mines and in the industry based on minerals" and it speaks about investment proposed to be made and not past investments. Thus it confines the concept of"captive consumption of minerals to proposed,investment and not past E investments". Even the residuary clauses in Section 11 (3)(e) are limited to "matters as may be prescribed", which would necessarily mean matters prescribed by rules. This is fortified by decision of this Court in BSNL Ltd. & Anr. vs. BPL Mobile Cellular Ltd. & Ors., (2008) 13 SCC 597, para 45. F

36Copy pinpoint36. We have already quoted sub-section (4) of Section 11 which contemplates a situation where a notification is issued inviting applications for an area for grant. In contrast to the first proviso to Section 11 (2), it provides that all applications received G pursuant to a notification shall be considered simultaneously without assigning any priority in point of time, and after taking into account the matters specified in Section 11 (3). Section 11 (4 ), in effect, covers exactly the same field as the first and second proviso to Section 11 (2) read along with Section 11 (3) H

294 SUPREME COURT REPORTS [201 OJ 11 S.C.R.

A with one difference, i.e., unlike the first proviso to Section 11 (2), it provides for consideration of only those applications that are made pursuant to the notification and not those made prior to the notification. Notification under Section 11 (4) is consistent with Rule 59(1) read with Rule 60 insofar as applications received B prior to the notification would not be entertained. The first proviso to Section 11 (2) was being added to cover virgin areas, then provided for the addition of Section 11 (4), in order to ensure that the notification referred to in Rule 59(1) together with Rule 60 would not render ultra viresthe MMDR Act. In view of the same, c the contention on behalf of Jindal and Kalyani that the first proviso of Section 11 (2) would cover notifications under Rule 59(1) is unacceptable because this would render Section 11 (4) otiose and redundant. In J.K. Cotton Spinning & Weaving Mills co. Ltd. vs. State of UP., AIR 1961 SC 1170 and O.P. Sing/a & Anr. vs. D Union of India & Ors. (1984) 4 SCC 450, this Court held that a provision in a statute must not be so interpreted as to reduce another provision to a "useless lumber" or a "dead letter". lfwe accept the said position, it would result in anomalous consequences of rendering Rule 60 ultr;; vires the first proviso E to Section 11 (2). In fact, this has been highlighted by the Central Government in their affidavit filed before the High Court.

37Copy pinpoint37. In addition to what we have stated, it is relevant to note that Section 11 (5) again carves out an exception to the preference in favour of prior applicants in the main provision of F Section 11 (2). It permits the State Government, with the prior approval of the Central Government, to disregard the priority in point of time in the main provision of Section 11 (2) and to make a grant in favour of a latter applicant as compared to an earlier applicant for special reasons to be recorded in writing. It also gives an indication that it can have no application to cases in which a notification is issued because, in such a case, both the first proviso to Section 11 (2) and Section 11 (4) make it clear that all applications will be considered together as having been received on the same date. In view of our interpretation, the proceedings of the Chief Minister and the recommendation

SAN DUR MANGANESE & IRON ORES LTD. v. 295 STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.] dated 06.12.2004 are contrary to the Scheme of the MMDR Act A as they were based on Section 11 (5) which had no application at all to applications made pursuant to the notification dated 15.03.2003.

38Copy pinpoint38. We have already extracted Rules 59 and 60 and analysis of those rules confirms the interpretation of Section 11 above and the conclusion that it is Section 11 (4) which would apply to a Notification issued under Rule 59(1 ). Ru!e 59(1) provides that the categories of areas listed in it including, inter alia, areas that were previously held or being under a mining lease or which has been reserJed for exploitation by the State Government or under Section 17A of the Act, shall not be available for grant unless (i) an entry is made in the register and (ii) its availability for grant is notified in the Official Gazette specifying a date not earlier than 30 days from the date of notification. Sub-rule (2) of Rule 59 empowers the Central Government to relax the conditions set out in Rule 59(1) in respect of an area whose availability is required to be notified under Rule 59 if no application is issued or where notification is issued, the 30-days black-out period specified in the notification pursuant to Rule 59(1 )(i)(ii) has not expired, shall be deemed to be premature and shall not be entertained. As discussed earlier, Section 11 (4) is consistent with Rules 59 and 60 when it provides for consideration only of applications made pursuant to a Notification. On the other hand, the consideration of applications made prior to the Notification, as required by the first proviso to Section 11 (2), is clearly inconsistent with Rules 59 & 60. In such circumstances, a harmonious reading of Section 11 with Rules 59 and 60, therefore, mandates an interpretation under which Notifications would be issued under Section 11(4) in the case of categories of areas covered by Rule 59(1 ). In those circumstances, we are unable to accept the argument of lec:Hned senior counsel for Jindal and Kalyani with reference to those provisions.

39Copy pinpoint39. The Division Bench has clearly erred in concluding that applications made prior to the notification under Rule 59(1) which H

296 SUPREME COURT REPORTS [2010] 11 S.C.R.

A are premature and cannot be entertained under Rule 60 would revive upon issuance of the Notification. This conclusion goes against basic principles of statutory interpretation. We have already pointed out the effect of Rule 60 which is couched in negative language that is mandatory in nature. Further, if that was B the intention of the Legislature, there was no reason for the ,. Legislature to take pains to state in Rule 60(b) that an application made during the black-out period of 30 days specified in the Notification also would be premature and could not be entertained. Accordingly, the interpretation placed by the c Division Bench on Rule 60 would result in reading in a proviso at the end of Rule 60 to the effect that once the 30-days black·· out period specified in the Notification contemplated by Rule 59(1 )(ii) is over, premature applications would revive. After taking such pains to make it clear that the applications would not be entertained until the end of the 30-days,period, surely the 0 Legislature itself would have inserted such a proviso at the end of Rule 60 if that were its intention.

40Copy pinpoint40. In Amritla/ Nathubhai Shah & Ors. vs. Union Government of India & Anr., (1976) 4 SCC 108 (para 7), this E Court observed as follows:

"..... Rule 60 provides that an application for the grant of a prospecting licence or a mining lease in respect of an area for which no such notification has been issued, inter alia, under Rule 59, for making the area available for grant of a licence or a lease, would be premature, and "shall not be entertained and the fee, if any, paid in respect of any such application shall be refunded." It would therefore follow that as the areas which are the subject-matter of the present appeals had been reserved by the State Government for the purpose stated in its notification, and as those lands did not become available for the grant of a prospecting licence or a mining lease, the State Government was well within its rights in rejecting the applications of the appellants under Rule 60 as premature. The Central Government was thus H

SANDUR MANGANESE & IRON ORES LTD. v. 297 STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]

justified in rejecting the revision applications which were filed against the orders of rejection passed by the State Government."

41Copy pinpoint41. Even thereafter, this Court has consistently taken the position that applications made prior to a Notification cannot be entertained. In our view, the purpose of Rule 59(1), which is to ensure that mining lease areas are not given by State Governments to favour persons of their choice without notice to the general public would.be defeated. In fact, the learned single Judge correctly interpreted Section 11 read with Rules 59 and

60. The said conclusion also finds support in the decision of this C Court in State of Tamil Nadu vs. M.S. Hindstone & Ors., (1981) 2 sec 205 at page 218, where it has been held in the context of the rules framed under the MMDR Act itself that a statutory rule, while subordinate to the parent statute, is otherwise to be treated as part of the statute and is effective. The same position D has been reiterated in State of UP. vs. Babu Ram Upadhya, (1961) 2 SCR 679 at 701 and Gujara·t Pradesh Panchayat Parishad & Ors. vs. State of Gujarat & Ors., (2007) 7 SCC 718. The Division Bench did not advert to these aspects as analyzed by the learned single Judge. On the other hand, the Division E Bench accepted Jindal's contention that if Rule 60 is interpreted to render applications made prior to Rule 59(1) Notification non est, it would make Rule 59(2) unworkable because persons normally apply for mining lease areas along with an application for relaxation under Rule 59(2). This conclusion is clearly misplaced. It is only the request under Rule 59(2) of any person for relaxation in respect of an area that is considered and not the application for grant. Only after the relaxation under Rule 59(2) by the Central Government of the requirement of Notification under Rule 59(1) that applications could be considered for grant of mining lease. The decision relied on by the learned senior counsel for Jindal in TISCO (supra), (paras 42, 44 and 47), that applications made by certain parties were considered after a relaxation under Rule 59(2) cannot be taken as laying down any law. It is also seen that consideration of the applications made H

298 SUPREME COURT REPORTS [2010] 11 S.C.R.

A by various parties in the TISCO's case was pursuant to the directions issued by this Court and not independently by the State Government under Section 11 of the Act. As a matter of fact, the issue whether premature applications revived for consideration after the relaxation under Rule 59(2) was neither expressly raised B nor decided in the TISCO's case. In the light of the above discussion about Section 11 (2) alongwith Rules 59 and 60, it should be interpreted that Section 11 (2) is to cover virgin areas alone. In view of the same, the Jindal's application made prior to the Notification cannot be entertained along with the c applications made pursuant to the Notification dated 15.03.2003 because it is Section 11 (4) which covers the said Notification along with Rule 59(1) and not the first proviso to Section 1 ·1 (2) as contended by the respondents.

Issue (c) D Whether the order of the High Court of Karnataka in Ziaul/a Sharieff's (supra) permit the consideration of the Jindal's application dated 24.10.2002 which was made prior to the notification dated 15.03.2003. E

42Copy pinpoint42. We have already discussed this issue. In addition to the same, perusal of the order of the High Court in Writ Petition No. 35915 of 2001 shows that the State Government was directed to consider only the application of the MSPL and the applications filed by the impleading applicants and others pursuant to the F Notification dated 15.03.2003 in accordance with law and in terms of the provisions of the MMDR Act and MC Rules. In other words, the High Court did not issue any direction to consider all applications made prior to the notification. To put it clear, there was no mandamus from the High Court to consider prior applications. The word "others" qualify the phrase "pursuant to" and not the class of applicants who had applied even prior to the "Held Area Notification" dated 15.03.2003. As a matter of fact, the High Court had merely directed the State Government to consider the applications in accordance with the provisions of the MMDR Act and MC Rules. Even otherwise, the said order

SAN DUR MANGANESE & IRON ORES LTD. v. 299 STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.] was passed without going into the specific provisions in the Act A or Rules. Further, the order does not deal with the interpretation of Section 11 or Rules 59 and 60. Hence, the order of the High Court of Karnataka in Ziaul/a Sharieff's case does not permit the consideration of Jindal's application dated 24.10.2002 which was made prior to the notification dated 15.03.2003. B

Issue (d):

Whether Rule 35 of the MC Rules justify the recommendation of the State Government and the proceedings of the Chief Minister in favour of the C Respondents - Jindal & Kalyani?

"Rule 35. Preferential rights of certain persons - Where two or more persons have applied for a reconnaissance permit or a prospecting licence or a mining lease in respect 0 of the same land, the State Government shall, for the purpose of sub-section (2) of section 11, consider besides the matters mentioned in clauses (a) to (d) of sub-section (3) of section 11, the end use of the mineral by the applicant. " E We have already adverted to the proceedings of the Chief Minister which heavily relied on Rule 35 to justify the recommendation in favour of the respondents - Jindal and Kalyani on the premise that it is intended to give preference to those who have made existing investments in industries based on iron ore and both of them qualify on this consideration. From a plain reading of Rule 35, it is clear that the rule permits the State Government to differentiate between the "end use" of the minerals for the purpose of sub-section (2) of Section 11 in addition to the matters in Section 11 (3). In the case on hand, all the parties, namely, MSPL, Sandur, Jindal and Kalyani expressed their intention to use iron ore from the mines for producing steel and, therefore, the same "erid use" requirement is satisfied. H

300 SUPREME COURT REPORTS [201 O] 11 S.C.R.

43Copy pinpoint43. Rule 35, at best, permits the State Government to differentiate between different "end uses", for example, the use of iron ore to produce sponge iron instead of steel, or the use of gold in jewellery as compared to medicines. Further, Rule 35 does not differentiate between "proposed" and "existing" end B use. Therefore, it could have enabled the State Government to take into account the claim of the respondents - Jindal and Kalyani, whose past investments would not have qualified on the "proposed" investment criterion under Section 11 (3)(d), in addition to MSPL and Sandur. This could have been a basis to c exclude those with proposed investments in steel plants from consideration.

44Copy pinpoint44. It is also relevant to point out that Rule 35 specifies one additional factor apart from the factors set out in Section 11 (3). The plain language of Rule 35 requires its application only in .· D cases covered by Section 11 (2) and not by Section 11 (4). Therefore, to the extent that it is Section 11 (4) that covers Notification. under Rule 59(1) and not Section 11 (2), in this way also, the State Government committed an error in relying on Rule 35 to exclude the appellants, i.e., MSPL and Sandur. To justify E the recommendation in favour of the respondents-Jindal and Kalyani, in the proceedings of the Chief Minister, State heavily relied on Rule 35 on the premise that it is intended to give preference to those who have made existing investments in industries based on iron ore and that the respondents - Jindal F and Kalyani, qualify on this consideration. However, as discussed above, Rule 35 only permits the State Government to take additional factor of the "end use" of the minerals and not the existing investments made by the applicants. Moreover, relying on the existing investments made, the respondents also does G not satisfy the requireme~ under Section 11 (3)(d) which talks solely about proposed investments to be made and not the existing ones.

Issue (e):

H Whether the criterion of captive consumption referred to

SANDUR MANGANESE & IRON ORES LTD. v. 301 STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]

in the TISCO's case has no application to the present case because it is not one of the factors referred to in Section 11 (3) or even in Rule 35.

45Copy pinpoint45. The criterion of captive consumption referred to in T/SCO's case (supra) does not have any application in this case, which we will refer in the later part of this paragraph. Section 11 (4) and even the second proviso to Section 11 (2) provide that the State Government may grant, inter alia, a mining lease after taking into consideration the matters specified in Section 11 (3). Section 11 (3){d) specifies "the investment which the applicant proposes to make in the mines and in the industry based on t_he minerals" as one of such matters and on a plain interpretation, it is clear that only the proposed investment is a relevant factor. If the Legislature had intended that it should include past investments also, the use of the word "proposed" is superfluous, which could never be the case. Learned senior counsel appearing for the respondents have not pointed out any other provision in the MMDR Act or the MC Rules permitting grant of mining lease based on past commitments or for captive purposes in existing industries. E

46Copy pinpoint46. As observed in the earlier paragraphs, the strong reliance placed by the respondent-Jindal on the decision of this Court in TISCO's case (supra) (Paras 9, 15,20,25,27,34,54,56 & 57) is misplaced. This case concerned solely on the interpretation of Section 8(3) of the MMDR Act in the context of F a second renewal of a mining lease in favour of TISCO, and not a fresh grant. It is, in this context the phrase "interest on mineral development" in Section 8(3) was interpreted to include captive requirements. On the other hand, the case of fresh grant is covered by Section 11 of the MMDR Act. Paragraph 54 of the G T/SCO's case (supra) makes it clear that the case concerned is chromite whose known reserves were not abundant, whereas iron ore is in abundance. Even otherwise,. this judgment is of no assistance even on Rule 59(1) of the MC Rules since it was a case of relaxation by the Central Government under Rule 59(2), H

302 SUPREME COURT REPORTS [2010] 11 S.C.R.

A as is clear from paragraph 15 of the judgment.

4 7) It is useful to mention that subsequent to the decision in TISCO (supra), this Court in Indian Charge Chrome Ltd. & Anr. vs. Union of India & Ors., (2006) 12 SCC 331 (Paras 20 & 26) held that considerations of captive mining cannot be the 8 controlling factor for grant of lease.

Issue (f}:

Whether factors such as past commitments made by the c State Government to applicants who have already set up steel plants is not a relevant matter for consideration for grant of lease.

48Copy pinpoint48. As discussed earlier, the State Government is denuded of all legislative and executive power under Entry 23 of List-II read 0 with Article 162 after passing of the MMDR Act which are as under:-

"Entry 23, List II: Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union."

"Article 162. Extent of executive power of State.- Subject to the provisions of this Constitution, the executive power of a State shall extend to the matters with respect to which the Legislature of the State has power to make laws.

Provided that in any matter with respect to which the Legislature of a State and Parliament have power to make laws, the executive power of the State shall be subject to, and limited by, the executive power expressly conferred by this Constitution or by any law made by Parliament upon the Union or authorities thereof."

It is clear that the State Government is purely a delegate of H Parliament and a statutory functionary, for the purposes of

SANDUR MANGANESE & IRON ORES LTD. v. 303 STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]

Section 11 (3) of the Act, hence it cannot act in a manner that is A inconsistent with the provisions of Section 11 (1) of the MMDR Act in the grant of mining leases. Furthermore, Section 2 of the Act clearly states that the regulation of mines and mineral development comes within the purview of the Union Government and not the State Government. As a matter of fact, the s respondents have not been able to point out any other provision in the MMDR Act or MC Rules permitting grant of mining lease based on past commitments. As rightly pointed out, the State Government has no authority under the MMDR Act to make commitments to any person that it will, in future, grant a mining c lease in the event that the person makes investment in any project. Assuming that the State Government had made any such commitment, it could not be possible for it to take an inconsistent position ·and proceed to notify a particular area. Further, having notified the area, the State Government certainly 0 could not thereafter to honour an alleged commitment by ousting other applicants even if they are more deserving on the merit criteria as provided in Section 11 (3).

49Copy pinpoint49. In the case of State of Assam & Ors. vs. Om Prakash Mehta & Ors., AIR 1973 SC 678, this Court observed that the E MMDR Act and MC Rules contain the complete code in respect of the grant and renewal of prospecting licences as well as mining leases in lands belonging to Government. In Quarry Owners Association (supra), this Court again reaffirmed the notion that both the Central as well as the State Government act as a mere delegates of Parliament while exercising the powers under the Act and Rules. [Vide M.A. Tulloch (supra), Baijnath Kedio (supra), Kesoram's case (supra), and Bharat Cooking Coal Ltd. (supra)]. From this, it becomes amply clear that the State Government has divested of legislative and executive powers with respect to mines and minerals development. In addition to the same, Anjum M.H. Gaswala (supra), Captain Sube Singh (supra), Singhara Singh's case (supra), this Court repeatedly held that the field of granting mining leases is covered by express statute and rules and the grants must be made in H

304 SUPREME COURT REPORTS [2010] 11 S.C.R.

A accordance with the provisions of the Act and Rules and no other consideration. From a perusal of the above settled legal position, it becomes clear that the State Government cannot grant mining leases keeping in mind any considerations apart from the ones mentioned in the MMDR Act and MC Rules. In those B circumstances, no extraneous considerations such as past commitments made by the State Government to Jindal and Kalyani who have already set up steel plants can be entertained by the State Government while granting mining leases and must abide by the Act and Rules.

C Issue (g):

Whether the recommendation in favour of Jindal and Kalyani saved by operation of law of equity?

0 50. The Law of Equity cannot save the recommendation in favour of Jindal and Kalyani because it is a well settled principle that equity stands excluded when a matter is governed by statute. This principle was clearly stated by this Court in the cases of Kedar Lal vs. Hari Lal Sea, (1952) SCR 179 at 186 and Raja E Ram vs. Aba Maruti Mali (1962) Supp. 1 SCR 739 at 745. It is clear that where the field is covered expressly by Section 11 of the MMDR Act, equitable considerations cannot be taken into account to assess Jindal and Kalyani, when the recommendation in their favour is in violation of statute. It was pointed out that Kalyani does not have a commitment from the F State Government regarding its iron ore needs. In the proceedings of the State Government, there is only a statement that it may apply for a lease. No doubt, Jindal has emphasized that it has already set up its steel plant based on the commitments made by the State Government to grant a mining lease and it is in need of iron ore for these steel plants. As observed earlier, commitments made by the State Government cannot be a relevant factor for grant of lease in the teeth of the consideration set out in Section 11 (3). If that was to be the sole criterion, the State Government ought not to have notified the area vide 'Held Area Notification' dated 15.03.2003.

. SANDUR MANGANESE & IRON ORES LTD. v. 305 STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]

51Copy pinpoint51. It was also pointed out that Jindal has been mining a A lease area of 85.50 hectares of Mysore Minerals Limited, a Public Sector Undertaking through a joint venture in terms of the commitment made by the State Government. In addition, the State Government has made a recommendation for grant of mining lease in favour of Jindal and its sister concerns in the B following areas:

(i) 188.128 hectares in favour of M/s JSW Steel Limited in Donimalai Range, Sandur Taluk, Bellary District.

(ii) 181.70 hectares in favour of M/s. Vijaynagara C Minerals Pvt. Ltd. In Donimalai Range, SandurTaluk, Bellary District.

(iii) 184.14 hectares in favour of M/s. South We!$t Mining Ltd. In Donimalai Range, Sandur Taluk, Bellary D District.

(iv) 200.73 hectares in favour of Mis JVSL in Kumaraswamy range of Sandur Taluk, Bellary District, which si the subject matter of the present SLP. E

As a matter of fact, MSPL had filed an affidavit in this regard before the Division Bench. It is not clear whether Jindal has specifically denied the specific grants. By drawing our attention to certain factual details, it was contended that Jindal has so much iron ore and it actually exported iron ore for which reliance was made to its annual reports during the years 2002-03 to 2005-

06. On the other hand, it is the claim of the MSPL that in accordance with Section 11 (3)(d) it had proposed to set up a steel plant for which it required iron ore. It was also brought to our notice that it had received permission from the State Government in this regard. With reference to the allegation that MSPL has a mining lease over an area of 722.94 hectares, it was pointed out that in actua! it has a lease over an area of 347 .22 hectares only. On 05.00.2009, MSPL filed an affidavit before the H

306 SUPREME COURT REPORTS [2010] 11 S.C.R.

A Division Bench stating that it holds only a single mining lease granted over five decades ago and the major proportion of which has been afforestated. It is also their grievance that the iron ore reserves in this lease have almost been exhausted over a period of 58 years, since 1952. The remaining iron ore cannot support s a steel plant of the size that is being set up by MSPL. Sinct:! the entire field of granting mining lease is covered by MMDR Act and MC Rules, the State Government cannot use any consideration apart from the ones mentioned in the Act and Rules.

C Issue (h):

About the impugned judgments of the single Judge and Division Bench:

52Copy pinpoint52. In view of our conclusion, the Division Bench has erred D in concluding that the Jindal's application made prior to the Notification can be entertained along with the applications made pursuant to the said Notification because it is not Section 11 (4) which covers the said Notification under Rule 59(1) but the first proviso to Section 11 (2). As a matter of fact, the Division Bench E did not even mention Section 11 (4) in its reasoning apart from stray references even though the conclusion of the learned single Judge hinged on how Section 11 (4) would be rendered otiose and redundant if the first proviso to Section 11 (2) was taken as governing the consideration of applications under a Notification pursuant to Rule 59(1 ). F

53Copy pinpoint53. The Division Bench has also faulted in arriving at the conclusion that the applications made prior to Notification under Rule 59(1) which are premature and cannot be entertained under Rule 60 would revive upon issuance of the Notification which is clearly not the case. As pointed out earlier, had that been the intention of the Legislature, there was no reason for the Legislature to take pains under Rule 60(b) that an application made during the period of 30 days specified in the Notification also would be premature and could not be entertained. If the decision of the Division Bench is taken to its logical conclusion,

SANDUR MANGANESE & IRON ORES LTD. v. 307 STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.] then it would result in reading in a proviso at the end of Rule 60 A to the effect that once the 30 days' period specified in the Notification contemplated by Rule 59(1) sub-clause (ii) is over, premature applications would revive. After taking such pains to make it clear that the application would not be entertained until the end of 30 days' period, surely the Legislature itself would not B have inserted such proviso in Rule6Qifthatwere its intention. If such premature applications are allowed to be entertained, it would result in the State Government giving out mining leases to favoured persons without notice to the general public.

54Copy pinpoint54. The Division Bench has also accepted Jindal's C contention that if Rule 60 is interpreted to render applications made prior to Rule 59(1) Notification non est, in that event, it would make Rule 59(2) unworkable because persons will normally apply mining lease areas along with an application for relaxation under Rule 59(2). In view of our earlier reasons, this conclusion is clearly misplaced. It is ~mly the request under Rule 59(2) for relaxation in respect of an area that is considered and not the application for grant. It is only after the relaxation under Rule 59(2) by the Central Government of the requirement of the Notification under Rule 59(1) that the applications could be considered for grant of mining lease.

55Copy pinpoint55. Though the learned single Judge in his order dated 07.08.2008 quashed the communication/recommendation of the State Government dated 06.12.2004 proposing to grant mining lease to Jindal and Kalyani, however, the learned single Judge traveled much beyond the reliefs sought for in the writ petition and quashed the entire Notification No. Cl.16:MMM.2003 dated 15.03.2003. In our view, while approving earlier part of his order and quashing the communication/recommendation of the State G Government dated 06.12.2004, the other observations/ directions are not warranted in the light of the provisions of the Act and the Rules. The said observations/directions are deleted.

308 SUPREME COURT REPORTS (2010] 11 S.C.R.

A Issue (i):

Whether it is advisable to remit it to the Central Government:

56Copy pinpoint56. Learned senior counsel appearing for Jindal and Kalyani B requested that inasmuch as the Central Government has already given its approval under Section 5 of the MMDR Act in their favour during the pendency of the writ petition, if this Court feels that fresh decision is to be arrived, the same may be remitted to the Central Government. In the earlier part of our judgment, we C have pointed out that the Central Government considers only the materials forwarded by the State Government along with its recommendation. As rightly pointed out, ifthe recommendation of the State Government cannot be upheld in law, all consequential orders including the subsequent approval by the D Central Government are also liable to be quashed. It is useful to refer Barnard vs. National Dock Labour Board (1953) 1 All E.R. 1113 at 1120 para 1, McFoy vs. United Africa Co. (1961) All E.R. 1169, Pavani Sridhara Rao vs. Govt. of A.P & Ors. (1996) 8 SCC 298 {para 5) and State of Kera/a vs. Puthenkavu N. S.S. E Karayogam & Anr., (2001) 10 SCC 191 (para 9). If the very same recommendation of the State Government is sent back to the Central Government on the administrative side in its role as an approving authority under Section 5( 1) without setting aside the impugned judgment, it is more likely that the Central F Government would simply follow its previous order. In that event, the Central Government would be influenced by the judgment passed by the Division Bench upholding the grant made in favour of Jindal and Kalyani. Such an exercise would be in the nature of post-decisional hearing which would be impermissible. [Vide G H.L. Trehan & Ors. vs. Union of India & Ors., (1989) 1SCC764 (paras 12 & 13) K. /. Shephard & Ors. vs. Union of India & Ors., (1987) 4 SCC 431 (para 16) and Shekhar Ghosh vs. Union of India & Anr., (2007) 1 SCC 331]. It is also brought to our notice that as on date the Central Government hears revision petitions through an Executive Officer and without participation of a

SAN DUR MANGANESE & IRON ORES LTD. v. 309 STATE OF KARNATAKA & ORS. [P. SATHASIVAM, J.]

Judicial Member. It is also pointed out that the exact procedure of the revisional Tribunal has kept changing over the last few months. It is clear that it would not be an independent and efficacious alternative forum in terms of the guidelines laid down by the Constitution Bench in Union of India vs. R. Gandhi, President, Madras Bar Association, JT 2010 (5) SC 553. As B observed by three Judge Bench of this Court in Indian Charge Chrome Ltd. (supra), when there was no valid recommendation by the State Government for the grant of lease, there cannot be any valid approval of the Central Government relying on the defective recommendation. We have already concluded that the c recommendation of the State Government dated 06.12.2004 is not valid with reference to the provisions of MMDR Act and the Rules, hence the invalid recommendation cannot be looked into by the Central Government. Further, proviso to Section 5(1) itself provides only for the Central Government either to grant or reject its approval to the State Government's recommendation in the case of mining lease for a mineral such as iron ore in the First Schedule. In our view, such consideration on the administrative side does not involve consideration of all the applicants based on their mining lease applications and after giving an opportunity of hearing. Inasmuch as the Central Government does not have all relevant materials before it, it may not be in a position to substitute itself for the State GovE' ··nment and, if not, it would be proper, in fact, it would be inconsistent with the provisions of the MMDR Act and the Rules to frame the issue on the administrative side of the Central Government. Even otherwise, inasmuch as we have heard the matter at length and we satisfy that there is a flaw in the recommendation of the State Government which requires reconsideration, we reject the request for remitting the matter to the Central Government for its decision. G Conclusion:

57Copy pinpoint57. In the light of the above discussion, the impugned order of the Division Bench of the High Court dated 05.06.2009 in Writ Appeal No. 5084 of 2008 and allied matters as well as the H

310 SUPREME COURT REPORTS [2010] 11 S.C.R.

A decision of the State Government dated 26/27.02.2002 and the subsequent decision of the Central Government dated 29.07.2003 are quashed. We direct the State Government to consider all applications afresh in light of our interpretation of Section 11 of the Act and Rules 35, 59 and 60 of MC Rules and B make a recommendation to the Central Government within a period of four months from the date of receipt of the copy of this judgment. It is made clear that we have not expressed anything on the eligibility or merits of any of the parties before us and our conclusion as to the decision of the State Government is based c on the interpretation of the statutory provisions mentioned above for which we adverted to certain factual details of the parties. The State Government is free to consider the applications and take a decision one way or other in accordance with law, as-discussed above, within the time scheduled.

58Copy pinpoint58. All the appeals are allowed to the extent mentioned above. No costs.

N.J. Appeals partly allowed.