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

p. 802

A inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. B (ii) The doctrine of promissory estoppel may be applied against the Government where the interest of justice, morality and common fairness dictate such a course. The doctrine is applicable against the State even in its governmental, public or c sovereign capacity where it is necessary to prevent fraud or manifest injustice. However, the Government or even a private party under the doctrine of promissory estoppel cannot be asked to do an act prohibited in law. The nature and function which the Government discharges is not very relevant. The Government is subject to the rule of promissory estoppel and if the essential ingredients of this doctrine are satisfied, the Government can be compelled to carry out the promise made by it.

(iii) The doctrine of promissory estoppel is not limited in its application only to defence but it can also furnish a cause of action. In other words, the doctrine of promissory estoppel can by itself be the basis of action.

(iv) For invocation of the doctrine of promissory estoppel, it is necessary for the promisee to show that by acting on promise made by the other party, he altered his position. The alteration of position by the promisee is a sine qua non for the applicability of the doctrine. However, it is not necessary for him to prove any damage, detriment or prejudice because of alteration of such promise. H

p. 803

AND ORS. [R.M. LODHA, J.] (v) In no case, the doctrine of promissory estoppel can A be pressed into aid to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. No B promise can be enforced which is statutorily prohibited or is against public policy.

(vi) It is necessary for invocation of the doctrine of promissory estoppel that a clear, sound and positive foundation is laid in the petition. Bald assertions, averments or allegations without any supporting material are not sufficient to press into aid the doctrine of promissory estoppel.

(vii) The doctrine of promissory estoppel cannot be invoked in abstract. When it is sought to be invoked, the Court must consider all aspects including the result sought to be achieved and the public good at large. The fundamental principle of equity must forever be present to the mind of the court. Absence E of it must not hold the Government or the public authority to its promise, assurance or representation.

Principles of legitimate expectation F

147. As ther.e are parallels between the doctrines of promissory estoppel and legitimate expectation because both these doctrines are founded on the concept of fairness and arise out of natural justice, it is appropriate that the principles of legitimate expectation are also noticed here only to G appreciate the case of the appellants founded on the basis of doctrines of promissory estoppel and legitimate expectation.

148. In Union of India and Others v. Hindustan H

p. 804

A Development Corporation and Others'", this Court had an occasion to consider nature, scope and applicability of the doctrine of legitimate expectation. The matter related to a government contract. This Court in paragraph 35 (Pgs. 548- 549) observed as follows : B "35. Legitimate expectations may come in various forms and owe their existence to different kind of circumstances and it is not possible to give an exhaustive list in the context of vast and fast expansion of the governmental activities. They shift and change so fast that the start of our list would c be obsolete before we reached the middle. By and large they arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largess by the Government and in somewhat similar situations. For D instance discretionary grant of licences, permits or the like, carry with it a reasonable expectation, though not a legal right to renewal or non-revocation, but to summarily - disappoint that expectation may be seen as unfair without the expectant person being heard. But there again the court has to see whether it was done as a policy or in the public interest either by way of G.O., rule or by way of a legislation. If that be so, a decision denying a legitimate expectation based on such grounds does not qualify for interference unless in a given case, the decision or action taken amounts to an abuse of power. Therefore the limitation is extremely confined and if the according of natural justice does not condition the exercise of the power, the concept of legitimate expectation can have no role to play and the court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the court is expected to apply an objective standard which leaves to the deciding authority the full range of choice which the legislature is presumed

H rrr. (1993) 3 sec 499.

p. 805

AND ORS. [R.M. LODHA, J.] to have intended. Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is taken fairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected. For instance if an authority who has full discretion to grant a licence prefers an existing licence holder to a new applicant, the decision cannot be interfered with on the ground of legitimate expectation entertained by the new applicant applying the principles of natural justice. It can therefore c be seen that legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. It would thus appear that there are stronger reasons as to why the legitimate expectation should not be substantively protected than the reasons as to why it should be protected. In other words such a legal obligation exists whenever the case supporting the same in terms of legal principles of different sorts, is stronger than the case against it. As observed in Attorney General for New South Wales case: [(1990) 64 Aust LJR 327]: "To strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism. Moreover, the notion of a legitimate expectation (falling short of a legal right) is too nebulous to form a basis for invalidating the exercise of a power when its exercise otherwise accords with law." If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or violation of principles of natural justice, the same can be questioned on the weir-known grounds attracting Article 14 but a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. It can be one of the grounds to consider but the H

p. 806

A court must lift the veil and see whether the decision is violative of these principles warranting interference. It depends very much on the facts and the recognised general principles of administrative law applicable to such facts and the concept of legitimate expectation which is B the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action, must be restricted to the general legal limitations applicable and binding the manner of the future exercise of administrative power in a particular case. It follows that the concept of c legitimate expectation is "not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits", particularly when the element of speculation and uncertainty is inherent in that very concept. As cautioned in Attorney General for New South Wales case the courts should restrain themselves and restrict such claims duly to the legal limitations. It is a well-meant caution. Otherwise a resourceful litigant having vested interests in contracts, licences etc. can successfully indulge in getting welfare activities mandated by directive principles thwarted to further his own interests. The caution, particularly in the changing scenario, becomes all the more important."

While observing as above, the Court observed that legitimacy of an expectation could be inferred only if it was founded on the sanction of law or custom or an established procedure followed in regular and natural sequence. Every such legitimate expectation does not by itself fructify into a right and, therefore, it does not amount to a right in the conventional sense.

149. A three-Judge Bench of this Court in P. T.R. Exports (Madras) Pvt. Ltd. & Ors. v. Union of India & Ors. sss while dealing with the doctrine of legitimate expectation in paras 3, 4 and 5 (Pages. 272-273) stated as follows :

H sss. (1996) s sec 268.

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AND ORS. [R.M. LODHA, J.] "3 ......... The doctrine of legitimate expectation plays no role when the appropriate authority is empowered to take a decision by an executive policy or under law. The court leaves the authority to decide its full range of choice within the executive or legislative power. In matters of economic policy, it is a settled law that the court gives a large leeway to the executive and the legislature. Granting licences for import or export is by executive or legislative policy. Government would take diverse factors for formulating the policy for import or export of the goods granting relatively greater priorities to various items in the overall larger c interest of the economy of the country. It is, therefore, by exercise of the power given to the executive or as the case may be, the legislature is at liberty to evolve such policies.

4. An applicant has no vested right to have export or import licences in terms of the policies in force at the date of his making application. For obvious reasons, granting of licences depends upon the policy prevailing on the date of the grant of the licence or permit. The authority concerned may be in a better position to have the overall picture of diverse factors to grant permit or refuse to grant permission to import or export goods. The decision, therefore, would be taken from diverse economic perspectives which the executive is in a better informed position unless, as we have stated earlier, the refusal is mala fide or is an abuse of the power in which event it is for the applicant to plead and prove to the satisfaction of the court that the refusal was vitiated by the above factors.

5. It would, therefore, be clear that grant of licence depends upon the policy prevailing as on the date of the grant of the licence. The court, therefore, would not bind the Government with a policy which was existing on the date of application as per previous policy. A prior decision would not bind the Government for all times to come. When the Government is satisfied that change in the policy was H

p. 808

A necessary in the public interest, it would be entitled to revise the policy and lay down new policy. The court, therefore, would prefer to allow free play to the Government to evolve fiscal policy in the public interest and to act upon the same. Equally, the Government is left free to determine 8 priorities in the matters of allocations or allotments or utilisation of its finances in the public interest. It is equally entitled, therefore, to issue or withdraw or modify the export or import policy in accordance with the scheme evolved. We, therefore, hold that the petitioners have no vested or c accrued right for the issuance of permits on the MEE or NOE, nor is the Government bound by its previous policy. It would be open to the Government to evolve the new schemes and the petitioners would get their legitimate expectations accomplished in accordance with either of the two schemes subject to their satisfying the conditions D required in the scheme. The High Court, therefore, was right in its conclusion that the Government is not barred by the promises or legitimate expectations from evolving new policy in the impugned notification."

150. In the case of M.P. Oil Extraction and Another v. State of M.P. and Ors. 111, this Court considered an earlier decision in Hindustan Development Corporation'" and in paragraph 44 (pg. 612) of the Report held that the doctrine of legitimate expectation had been judicially recognized. It F operates in the domain of public law and in an appropriate case, constitutes a substantive and enforceable right.

151. In J.P. Bansal v. State of Rajasthan and Anr.""", it was stated that both doctrines - promissory estoppel and G legitimate expectation - require satisfaction of the same criteria and arise out of the principle of reasonableness.

152. A note of caution sounded in Bannari Amman

ttt. (1997) 7 sec 592. H uuu. (2003) s sec 134.

p. 809

AND ORS. [R.M. LODHA, J.] Sugars Ltd.qqq is worth noticing. The Court observed that A legitimate expectation was different from anticipation; granting relief on mere disappointment of expectation would be too nebulous a ground for setting aside a public exercise by law and it would be necessary that a ground recognized under Article 14 of the Constitution was made out by a litigant. B

153. It is not necessary to multiply the decisions of this Court . Suffice it to observe that the following principles in relation to the doctrine of legitimate expectation are now well established: c (i) The doctrine of legitimate expectation can be invoked as a substantive and enforceable right.

(ii) The doctrine of legitimate expectation is founded on the principle of reasonableness and fairness. D The doctrine arises out of principles of natural justice and there are parallels between the doctrine of legitimate expectation and promissory estoppel.

(iii) Where the decision of an authority is founded in public interest as per executive policy or law, the court would be reluctant to interfere with such decision by invoking doctrine of legitimate expectation. The legitimate expectation doctrine cannot be invoked to fetter changes in administrative policy if it is in the public interest to do so.

(iv) The legitimate expectation is different from anticipation and an anticipation cannot amount to an assertible expectation. Such expectation should be justifiable, legitimate and protectable.

(v) The protection of legitimate expectation does not require the fulfillment of the expectation where an overriding public interest requires otherwise. In other words, personal benefit must give way to H

p. 810

A public interest and the doctrine of legitimate expectation would not be invoked which could block public interest for private benefit.

Whether doctrines of promissory estoppel and legitimate expectation attracted 8

154. I may now examine whether the doctrines of promissory estoppel and the legitimate expectation help the appellants in obtaining the reliefs claimed by them and whether the actions of the State Government and the Central C Government are liable to be set aside by applying these doctrines.

155. Each of the appellants has raised the pleas of promissory estoppel and legitimate expectation based on its 0 own facts. It is not necessary to narrate facts in each appeal with regard to these pleas as stipulations in the MOUs entered into between the respective appellants and the State Government are broadly similar. For the sake of convenience, the broad features in the matter of Adhunik may be considered. E The MOU was made between the State Government and Adhunik on February 26, 2004. Adhunik is involved in diversified activities such as production of sponge iron and steel, generating power etc. The preamble to the MOU states that the Government of Jharkhand is desirous of utilization of its natural resources and rapid industrialization of the State and has been making efforts to facilitate setting up of new industries in different locations in the State. It is stated in paragraph 2 of the MOU, "in this context the Government of Jharkhand is willing to extend assistance to suitable promoters to set up new industries" (emphasis supplied). Adhunik expressed desire of setting up manufacturing/generating facilities in the State of Jharkhand. Proposed Phase-I comprised of setting up Sponge Iron Plant and Pelletaisation Plant while Phase-II comprised of Sponge Iron Plant, Power Plant, Coal Washery, Mini Blast Furnace, Steel Melting/LO/IF and Iron Ore Mining and Phase- H

p. 811

AND ORS. [R.M. LODHA, J.] Ill comprised of establishment of Power Plant. Para 4 of MOU A states that Adhunik requires help and cooperation of the State Government in several areas to enable them to construct, commission and operate the project. The State Government's willingness to extend all possible help and cooperation is stated in the above MOU. Para 4.3 of MOU records that the State B Government shall assist in selecting the area for Adhunik for iron ore and other minerals as per requirement of the company depending upon quality and quantity. The State Government also agreed to grant mineral concession as per existing Acts and Rules. c

156. In pursuance of the above MOU, the State Government through its Deputy Secretary, Mining and Geology Department recommended to the Government of India through its Joint Director, Mining Ministry on August 4, 2004 to grant prior approval under Section 11 (5) and Section 5(1) of the 1957 D Act for grant of mining lease to Adhunik for a period of 30 years in the area of 426.875 hectares. The reasons for such recommendation were stated by the State Government in the above communication. In the above communication, it was stated that Adhunik had signed MOU with the State Government E for making a capital investment of Rs. 790 crores in establishment of an industry based on iron ore mineral in the State. The steps taken by Adhunik were also highlighted.

157. Adhunik's case is that on the basis of definite commitment and firm promise made by the State Government for grant of captive mines as stipulated in the MOU and the State's Industrial Policy, it acted immediately on the MOU and has invested more than Rs. 100 crores to construct and commission the plant and facilities in Phase-I of the MOU and it has employed about 3500 people directly and indirectly for construction and operation of plant in Phase-I. According to Adhunik, it has ordered equipments and machinery for Phase- 11 and Phase-Ill at a cost of Rs. 25 crores and has also made further financial commitments for more than Rs. 1000 crore to H

p. 812

A set up the expansion. Adhunik claims to have also borrowed a sum of Rs. 60 crores from banks and financial institutions and invested that sum in the proposed project.

158. According to Adhunik, no integrated steel plant can be viable in the State of Jharkhand without captive iron ore 8 mines and without the definite promise of the State Government to grant the captive mines and it would not have acted on the MOU to make such a huge investment if the State Government were not to make available captive iron ore mines. Adhunik has also stated that in the absence of grant of captive iron ore C mines, it has been suffering huge and irreparable losses due to (a) shortage in supply of iron ore due to poor availability, (b) it has to purchase from the market poor quality of iron ore and (c) extra cost due to abnormal market prices compared to the actual cost of captive iron ore. D

159. What the State Government had expressed in MOU is its willingness to extend all possible help and cooperation in setting up the manufacturing/generating facilities by Adhunik. The clause in MOU states that the State Government shall assist in selecting the area for iron ore and other minerals as per requirement of the company depending upon quality and quantity. The State Government agreed to grant mineral concession as per existing Act and Rules. As a matter of fact, when the MOU was entered into, the State Government was not even aware about the reservation of the subject mining area · for exploitation in the public sector. It was on November 17, 2004 that the District Mining Officer, Chaibasa informed the Secretary, Department of Mines and Geology, Government of Jharkhand that certain portions of Mauza Ghatkuri and the adjoining areas were reserved for public sector under 1962 and 1969 Notifications issued by the erstwhile State of Bihar. The District Mining Officer suggested to the State Government that approval of the Central Government should be obtained for grant of leases to the concerned applicants. In his communication, he stated that the fact of reservation of the subject area in public H

p. 813

AND ORS. [R.M. LODHA, J.) sector vide 1962 and 1969 Notifications was brought to the A knowledge of the Director of Mines, Jharkhand but he did not take any timely or adequate action in the matter. In view of the fact that the subject mining area had been reserved for exploitation in pubic sector under 1962 and 1969 Notifications, in my opinion, the stipulation in the MOU that the State s Government shall assist in selecting the area for iron ore and other minerals as per requirement of the company and the commitment to grant mineral concession cannot be enforced. For one, the stipulation in the MOU is not unconditional. The above commitment is dependent on availability and as per c existing law. Two, if the State Government is asked to do what it represented to do under the MOU then that would amount to asking the State Government to do something in breach of these two Notifications which continue to hold the field. The doctrine of promissory estoppel is not attracted in the present facts, particularly when promise was made - assuming that some of the clauses in the MOU amount to promise - in a mistaken belief and in ignorance of the position that the subject land was not avaiiable for iron ore mining in the private sector. I do not think that the State Government can be compelled to carry out what it cannot do in the existing state of affairs in view of 1962 and 1969 Notifications. In my opinion, the State Government cannot be held to be bound by its commitments or assurances or representations made in the MOU because by enforcement of such commitments or assurances or representations, the object sought to be achieved by reservation of the subject area is likely to be defeated and thereby affecting the public interest. The overriding public interest also persuades me in not invoking the doctrines of promissory estoppel and legitimate expectation. For the self- same reasons none of the appellants is entitled to any relief based on these doctrines; their case is no better.

160. As a matter of fact, on coming to know of 1962 and 1969 Notifications, the State Government withdrew the proposals which it made to the appellants and reiterated the H

p. 814

A reservation by its Notification dated October 27, 2006 expressly "in public interest and in the larger interest of the State".

161. The act of the State Government in withdrawing the recommendations made by it to the Central Government in the above factual and legal backdrop cannot be said to be bad in 8 law on the touchstone of doctrine of promissory estoppel as well as legitimate expectation. The act of the State Government is neither unfair nor arbitrary nor it suffers from the principles of natural justice. The Government of India upon examination of the proposals rejected them on the ground that subject area was under reservation and not available for exploitation by private parties. In these circumstances, if the clauses in the MOU are allowed to be carried out, it would tantamount to enforcement of promise, assurance or representation which is against law, public interest and public policy which ·I am afraid cannot be permitted.

162. On behalf of the appellants, it was also argued that the 1962 and 1969 Notifications had remained in disuse for about 40 years and it is reasonable to infer that these two E Notifications no longer operated. In this regard, the doctrine of quasi repeal by desuetude was sought to be invoked.

Doctrine of desuetude

163. The doctrine of desuetude and its applicability in F Indian Jurisprudence have been considered by this Court on more than one occasion. In the case of State of Maharashtra v. Narayan Shamrao Puranik & Ors. wv, the Court noted the decision of Scrutton, L.J. in R. v. London County Councif'W'W and the view of renowned author Allen in "Law in the Making" G and observed that the rule concerning desuetude has always met with general disfavour. It was also held that a statute can be abrogated only by express or implied repeal; it cannot fall

WI. (1982) 3 sec 519. H WWW. LR (1931) 2 KB 215 (CA).

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AND ORS. [R.M. LODHA, J.] into desuetude or become inoperative through obsolescence A or by lapse of time.

164. In Bharat Forge Co. Ltd!, inter alia, the argument was raised that the Notifications of June 17, 1918 have not been implemented till date and therefore these Notifications were 8 dead letter and stood repealed "quasily". A three-Judge Bench of this Court entered into consideration of the doctrine of desuetude elaborately. After noticing the English law and Scots law in regard to the doctrine of desuetude, the Court noted the doctrine of desuetude explained in Francis Bennion's Statutory C Interpretation; Craies Statute Law (7th Edn.) and Lord Mackay's view in Brown v. Magistrate of Edinburghxxx.

165. The Court also referred to "Repeal and Desuetude of Statutes", by Aubrey L. Diamond wherein a reference has been made to the view of Lord Denning, M.R. in Buckoke v. D Greater London Councif'!YY. Having noticed as above, the Court in paragraph 34 (pages 446-447) of the Report stated :

"34. Though in India the doctrine of desuetude does not appear to have been used so far to hold that any statute has stood repealed because of this process, we find no objection in principle to apply this doctrine to our statutes as well. This is for the reason that a citizen should know whether, despite a statute having been in disuse for long duration and instead a contrary practice being in use, he is still required to act as per the "dead letter". We would think it would advance the cause of justice to accept the application of doctrine of desuetude in our country also. Our soil is ready to accept this principle; indeed, there is need for its implantation, because persons residing in free India, who have assured fundamental rights including what has been stated in Article 21, must be protected from their being, say, prosecuted and punished for violation of a law

xxx. 1931 SLT (Scots Law limes Reports) 456, 458. YY'f· (1970) 2 All ER 193. H

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A which has become "dead letter". A new path is, therefore, required to be laid and trodden."

166. In Cantonment Board, MHOW and Anr. v. M.P. State Road Transport Coroporationzzz, this Court had an 8 occasion to consider the doctrine of desuetude while considering the submission that the provisions of Madhya Pradesh Motor Vehicles Taxation Act, 1947 stood repealed having been in disuse. The Court considered the earlier decision in Bharat Forge Co. Ltd! and held that to apply C principle of desuetude it was necessary to establish that the statute in question had been in disuse for long and the contrary practice of some duration has evolved. It was also held that neither of these two facts has been satisfied in the case and therefore the doctrine of desuetude had no application.

167. From the above, the essentials of doctrine of desuetude may be summarized as follows :

(i) The doctrine of desuetude denotes principle of quasi repeal but this doctrine is ordinarily seen with disfavour. E (ii) Although doctrine of desuetude has been made applicable in India on few occasions but for its applicability, two factors, namely, (i) that the statute or legislation has not been in operation for very considerable period and (ii) the contrary practice has been followed over a period of time must be clearly satisfied. Both ingredients are essential and want of anyone of them would not attract the doctrine of desuetude. In other words, a mere neglect of a statute or legislation over a period of time is not sufficient but it must be firmly established that not only the statute or legislation was completely neglected but also the practice

H zzz.. (1997) 9 sec 450.

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 817 AND ORS. [R.M. LODHA, J.] contrary to such statute or legislation has been followed for a considerable long period.

Whether doctrine of desuetude attracted in respect of 1962 and 1969 Notifications

168. Insofar as 1962 and 1969 Notifications are concerned, I am of the view that doctrine of desuetude is not attracted for more than one reason. In the first place, the Notifications are of 1962 and 1969 and non-implementation of such Notifications for 30-35 years is not that long a period which may satisfy the first requirement of the doctrine of desuetude, namely, that the statute or legislation has not been in operation for a very considerable period. Moreover, State of Jharkhand came into existence on November 15, 2000 and it can hardly be said that 1962 and 1969 Notifications remained neglected by the State Government for a very considerable period. As a D matter of fact, in 2006, the State Government issued a Notification mentioning therein about the reservation made by 1962 and 1969 Notifications. Thus, the first ingredient necessary for invocation of doctrine of desuetude is not satisfied. Secondly, and more importantly, even if it is assumed in favour of the appellants that 1962 and 1969 Notifications remained in disuse for a considerable period having not been implemented for more than 30-35 years, the second necessary ingredient that a practice contrary to the above Notifications has been followed for a considerable long period and such contrary practlce has been firmly established is totally absent. As a matter of fact, except stray grant of mining lease for a very small portion of the reserved area to one or two parties there is nothing to suggest much less establish the contrary usage or contrary practice that the reservation made in the two G Notifications has been given a complete go by.

Additional submissions on behalf of Monnet

169. The main submissions raised on behalf of the appellants having been dealt with, I may now consider certain H

p. 817 — page break not located

p. 818

A additional submissions made on behalf of Monnet. It was argued by Mr. Ranjit Kumar, learned senior counsel for Monnet that the State Government in its letter to recall the recommendation made in favour of the appellant set up the ground of overlapping with the lease of Rungta but it mala fide suppressed the fact of expiry of lease of Rungta in 1995 and also that the said area had been notified for regrant in the Official Gazette on July 3, 1996. He would contend that Rule 24A of the 1960 Rules provides for an application for renewal of lease to be made one year prior to the expiry of lease but no application for renewal was made by Rungta within this time and, therefore, Rungta had no legal right over the overlapping area.

170. It was submitted by Mr. Ranjit Kumar that the appellant - Monnet had produced two maps before the High Court and this Court (one was prepared by the District Mining Officer in 2004) that depicted that the area recommended for grant to the appellant was not covered by 1962 or 1969 Notifications.

171. It was submitted on behalf of Monnet that the case of E Monnet was identical to the case of M/s. Bihar Sponge Iron Ltd. and the State Government had discriminated against the appellant vis-a-vis the case of Mis. Bihar Sponge Iron Ltd.

172. Mr. Ranjit Kumar also submitted that there has been violation of the statutory right of hearing in terms of Rule 26 of the 1960 Rules. He submitted that order was not communicated to Monnet by the State Government and thereby its remedy under Rule 54 of 1960 Rules was taken away. The violation of principles of natural justice goes to the root of the matter and on that ground alone the decision of the State Government to recall the recommendation and the decision of the Central Government in summarily rejecting and returning application are bad in law. Reliance in this regard was placed on a decision of Privy Council in Nazir Ahmad v. King-Emperor"""" and also

H aaaa. AIR 1936 PC 253.

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 819 AND ORS. [R.M. LODHA, J.] a decision of this Court in Nagarjuna Construction Company A Ltd. v. Government of Andhra Pradesh & Ors.bbb

173. Mr. Ranjit Kumar also argued that once recommendation was made by it to the Central Government, in view of proviso to Rule 63A of the 1960 Rules, the State B Government had become functus officio and ceased to have any power to recall the recommendation already made on any ground whatsoever. In this regard he relied upon Jayalakshmi Coelho v. Oswald Joseph Coelhocccc.

174. Relying upon the decision of this Court in Mohinder C Singh Gill and Anr. v. The Chief Election Commissioner, New Delhi, & Ors., dddd it was submitted that the reasons originally given in an administrative order cannot be supplanted by other reasons in the affidavits or pleadings before the Court. He submitted that as regards Monnet, the initial reason by the D State Government was not founded on reservation but later on it tried to bring the ground of reservation in fore by supplanting reasons.

175. Mr. Ranjit Kumar vehemently contended that as per E the State Government's own case initially, the land that was recommended for mining lease to Monnet was not under the reserved area and, therefore, Monnet's writ petition ought not to have been heard and decided with the group matters. He also referred to interim order passed by this Court on August F 18, 2008, the meeting that took place between the Central Government and the State Government pursuant thereto and the subsequent interim order of this Court dated December 15, 2008.

176. I have carefully considered the submissions of Mr. G Ranjit Kumar. Most of the above submissions were not argued

bbbb. c2008) 16 sec 276. cccc. c2001 > 4 sec 181. dddd. (1978) 1 sec 405. H

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p. 820

A on behalf of Monnet before the High Court. The submissions were confined to the issue of reservation, the legality and validity of 1962, 1969 and 2006 Notifications, consequent illegal action of the State Government in recalling the recommendation and of the Central Government in summarily rejecting the appellant's B application.

177. In paragraph 17 of the impugned judgment, the arguments of the learned senior counsel for Monnet have been noticed. It transpires therefrom that many of the above arguments were not advanced including the issue of C overlapping with the area of Rungta. In the list of dates/synopsis of the special leave petition, Monnet has not raised any grievance that arguments made on its behalf before the High Court were not correctly recorded or the High Court failed to consider any or some of its arguments. Criticism of the High D Court judgment is thus not justified and I am not inclined to go into above submissions of Mr. Ranjit Kumar for the first time.

178. It is too late in the day for Monnet to contend that its case could not have been decided with group matters and in E any case the matter should be remanded to the High Court for reconsideration on the issues, namely, (a) whether the area recommended for the appellant was overlapping with Rungta only to the extent of 102.25 hectares out of total 705 hectares recommended for appellant; (b) whether after expiry of lease F Rungta's area was renotified for grant in 1996; (c) what was the reason for the State Government to withdraw the recommendation made in favour of the appellant when the alleged overlapping with Rungta was only to the extent of 102.25 hectares and (d) is withdrawal of appellant's G recommendation arbitrary when reservation vide 1962 Notification did not apply to the area recommended in favour of the appellants. Monnet's writ petition was decided by the High Court with group matters as the arguments advanced on its behalf were identical to the arguments which were canvassed H on behalf of other writ petitioners. The State Government

p. 821

AND ORS. [R.M. LODHA, J.]

recalled its recommendations by a common communication and the Central Government returned the recommendations and rejected applications for mining lease made by the writ petitioners by a common order.

179. The State Government had full power to recall the recommendation made to the Central Government for some good reason. Once 1962 and 1969 Notifications issued by the erstwhile State of Bihar and 2006 Notification issued by the State of Jharkhand have been found by me to be valid and legal, the submissions of Mr. Ranjit Kumar noted above pale in insignificance and are not enough to invalidate the action of the State Government in recalling the recommendation made in favour of Monnet. The valid reservation of subject mining area for exploitation in public sector disentitles Monnet - as well as other appellants - to any relief. D

180. It is well settled that no one has legal or vested right to the grant or renewal of a mining lease. Monnet cannot claim a legal or vested right for grant of the mining lease. It is true that by the MOU entered into between the State Government and Monnet certain commitments were made by the State E Government but firstly, such MOU is not a contract as contemplated under Article 299(1) of the Constitution of India and secondly, in grant of mining lease of a property of the State, the State Government has a discretion to grant or refuse to grant any mining lease. Obviously, the State Government is F required to exercise its discretion, subject to the requirement of law. In view of the fact that area is reserved for exploitation of mineral in public sector, it cannot be said that the discretion exercised by the State Government suffers from any legal flaw. G

181. The case of discrimination vis-a-vis M/s Bihar Sponge Iron Limited argued on behalf of Monnet was not pressed before High Court and is not at all established. The argument with regard to violation of principles of natural justice is also H

p. 822

A devoid of any substance. The recommendation in favour of Monnet to the Central Government was simply a proposal with certain pre-conditions. For withdrawal of such proposal by the State Government, in my view, no notice was legally required to be given. Moreover, no prejudice has been caused to it by B not giving any notice before recalling the recommendation as it had no legal or vested right to the grant of mining lease. The area is not available for grant of mining lease in the private sector. For all these reasons, I do not find that the case of Monnet stands differently from the other appellants.

C Conclusion

182. In view of the foregoing reasons, there is no merit in these appeals and they are dismissed. There shall be no order as to costs. D ORDER

I find from the proceedings that no notice has been issued in the contempt petition. The proceeding of January 28, 2009 reveals that the Court only ordered copy of the contempt E petition to be supplied to learned counsel appearing for the State of Jharkhand to enable it to file its response. In the order passed on January 28, 2009, the Court made it very clear that it was not inclined to issue any notice in the contempt petition. Now, since the appeal preferred by Abhijeet Infrastructure Ltd., F has been dismissed, the contempt petition is also liable to be dismissed and is dismissed.

H.L. GOKHALE J. 1. All these appellants claim to be companies interested in developing iron and steel projects, and G therefore sought grant of leases of iron-ore mines situated in the state of Jharkhand. Applications of ten such companies including the appellants were forwarded by the Government of Jharkhand sometime around August 2004 to the Union of India, for its consideration for grant of lease in certain areas. H

p. 823

AND ORS. [H.L. GOKHALE, J.] that those areas were reserved for exploitation in the public A sector, the State Government by its letter dated 13.09.2005, sought to withdraw nine of these proposals including those of all the appellants. The Central Government however, did not merely return the nine proposals, but rejected the same by its letter dated 6.3.2006 addressed to the Government of B Jharkhand. All these appellants therefore, along with some others filed writ petitions to challenge these two letters dated 13.9.2005 and 6.3.2006, and sought a direction to grant the mining leases to them in the proposed areas, and to seek appropriate reliefs. The Writ Petitions filed by the six appellants c herein were respectively bearing following nos. (1) W.P. (C) No. 4151 of 2006, (2) W.P. (C) No. 1769 of 2006, (3) W.P. (C) No. 2629 of 2006, (4) W.P. (C) No. 5527 of 2006, (5) W.P. (C) No. 7636 of 2006 and (6) W.P. (C) No. 7363 of 2006. All those writ petitions were dismissed by a Division Bench of the Jharkhand D High Court by a common judgment and order dated 4.4.2007. Being aggrieved by the same, six of them have filed these appeals to this Court.

2. An interim order came to be passed in these appeals on 7.5.2007, that until further orders no fresh leases shall be granted in respect of the disputed mining area. We may note that at one stage same workable arrangements were considered by this Court but they did not materialise. These appeals have been admitted thereafter on 30.4.2009. The Union of India and the State of Jharkhand are the main contestants in all these appeals, though a few other entities like the National Mineral Development Corporation (NMDC), Tata Iron Steel Company (TISCO) and Arclor Mittal (India) Ltd. have intervened to oppose them. Learned Senior Counsels Sarvashri C.A. Sunderam, Dr. Rajeev Dhawan, Ranjit Kumar, Dhruv G Mehta, Dr. Abhishek Manu Singhvi, L. Nageswara Rao, and G.C. Bharuka have appeared in support of these appeals. Senior Counsel Shri A.K. Sinha, and Shri Ashok Bhan have appeared for the State of Jharkhand, and Union of India respectively. Shri P.S. Narasimha, Senior counsel for NMDC, H

p. 824

A Shri Vikas Singh, Senior Counsel for TISCO, Shri Krishnan Venugopal, Senior counsel for Arclor Mittal (India) Ltd. and Shri J.K. Das, learned counsel for M/s Rungta Sons Pvt. Ltd., have appeared to oppose these appeals.

Facts leading to these appeals:- 8

3. The facts in all these appeals are by and large similar. We may refer to the facts of the first Civil Appeal in the case of M/s Monnet lspat and Energy Ltd. (for short 'Monnet') as somewhat representative. It is the case of Monnet that it wanted to set-up an iron and steel plant in the State of Jharkhand. It was ready to invest an amount of Rs.1400 crores on this project, and for that purpose it was interested in the allotment of iron and manganese ore mines situated in the Ghatkhuri Forest area of West Singhbhum District (which has its headquarters at Chaibasa). A high level meeting was held in Ranchi for that purpose on 7.7.2002 between the officers of Monnet and Jharkhand Government, subsequent to which, minutes of the meeting were drawn recording the discussion between the two parties. Thereafter, a memorandum of understanding (MOU) was arrived at between the Government of Jharkhand and Monnet on 5.2.2003, for the establishment of an integrated steel plant. The MOU reaffirmed the commitment of Monnet to establish the integrated steel plant, and that of the Government of Jharkhand to provide therefor the land containing iron and manganese ore mines, a coal block and other facilities. The MOU recorded that the plant will produce sponge iron of the capacity of 4 lac tonnes per annum, and mild steel of 2 lac tonnes and alloy steel of 2 lac tonnes. It was expected to provide employment to 10,000 persons. The G MOU recorded that the State Government agrees to recommend the proposal of Monnet to Government of India, for the allotment of areas containing iron ore and manganese ore deposits and coal blocks situated in Ghatkhuri Forest area of West Singhbhum District. This clause reads as follows:-

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 825 AND ORS. [H.L. GOKHALE, J.]

Ill. MINES: A

COAL: ....... .

IRON ORE AND MANGANESE ORE: The State Government agrees to recommend to Government of India for the allotment of iron ore and manganese ore deposits expected to contain sufficient reserves to cater the needs of the project. The iron ore reserves suitable for sponge iron making as identified are Ghatkhuri area in Chaibasa District. The State Government also agrees to recommend to Government of India for allotment of additional mines able deposits in West Singhbhum area to cater the project need."

We may as well note that paragraph VII (d) of the MOU stated as follows:- D

In the event of non-implementation of the project, support/ commitment of the State Government in the MOU shall be deemed to be withdrawn.

4. Accordingly, the Jharkhand Government vide its letter dated 6.8.2004 recommended the proposal of Monnet to Union of India under Section 5 (1) and 11 (5) of the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to "MMDR Act"). The letter stated that some 58 applications were received, seeking grant of the mining leases over an area of 3566.54 hectares in Ghatkhuri reserved forest. All applicants were given sufficient opportunity of hearing. As far as Monnet is concerned, State Government had recommended the amended area of 705 hectares for the consent of the Central Government for grant of lease under G Section 5 (1) of the Act. The letter also stated that priority was being given to Monnet in terms of Section 11 (3) of the Act on the basis of its technical mineral based industry and financial capacity. H

p. 825 — page break not located

p. 826

6. It so happened that at that stage the District Mining D Officer of Chaibasa brought it to the notice of the concerned authorities of State Government, by his letter dated 17.11.2004, that the undivided state of Bihar (when Jharkhand was a part of it) had reserved certain areas for the exploitation of minerals in the public sector, by its notification dated 21.12.1962, and it included the recommended area of Singhbhum District. This notification had been followed by another notification of the undivided State of Bihar dated 28.2.1969 which reiterated that an area of 168.349 hectares in Ghatkhuri reserved forest block no.10 in district of Singhbhum was reserved for exploitation of minerals in public sector. A copy of the said notification had been marked to the District Mining Officer, Chhaibasa.

7. The two notifications read as follows:- (1) Government of Bihar G Department of Industries & Mines (Mines) NOTIFICATION: Patna, the 21 December, 1962 30th Agrahand, 1884-S

p. 827

AND ORS. [H.L. GOKHALE, J.] Memo No. A/MM-40510/6209/M. It is hereby notified for the information of public that the following iron ore bearing areas in this State are reserved for exploitation of the mineral in the public sector. Name of the Description of the areas reserved the District

Singhbhum 1. Sasangda Main E\lock:- Boundary

South The southern boundary is the same as the northern boundary. It starts from the Bihar, Orissa c Bound Opposite the George of southern tributary of Meghahatu nala and runs west-north-west along with the gorge till the foot of the hill. D

East The boundary between the States of Bihar and Orissa. North and The south western boundary of North-West the property of Shri M.L. Jain E (M.L. 20) which starts from Bihar- Orissa boundary south. South-West of 3039 and runs in a north-west direction upto 8 miles north west of 2939. From here the boundary reaches the sadly south of 2069. West From saddle south of 2069, southwards along the foot of the main hill, meeting the north-west corner of Kiriburu Block. Sasangda North-East Block South Bihar, Orissa boundary H

p. 828

A East Property of Shri W.V. North Upto northern corner of M.L. No. 20 West

B 6. Bhalata Block Boundary A line running west-north-west- South-West east-south each passing the ugh 2200 feet contour at the south- western and of the Bhanalata ridge c south-east-From 21 furlongs east of 2181 north-east wards upto north- west pochanalu village (22016'850 20') and from here north-north-east upto 3 furlongs east-sough-east of D 2567 (Painsira Buru) North From the above end in west north west direction across the hill for five furlongs to reach the north west sloped the hill E West From above and in general south- south-west direction along the flank of the hill to reach the south-west boundary at three furlongs north- west 2187. F By the order of the Governor of Bihar Sd/- ~.N. Sinha G Secretary to Government ,..._ Memo No. 6209/M Patna, the 21st Dec., 1962 30 Agrah Copy forwarded to the Superintendent, Secretariat Press, H Gulzarbagh, Patna for publication of the notification in the next

p. 829

AND ORS. [H.L. GOKHALE, J.] issue of the Bihar Gazette. A

2. He is also requested to kindly supply two hundred copies of the Gazette notification to this Department. Sd/- B.N. Sinha B Secretary to Government Memo No. 6209/M Patna, the 21st Dec., 1962 30 Agrahan, 1884-S Copy forwarded to the Commissioner of Chhotanagpur C Division, Ranchi/All District Officers/All District Mining Officers for information. Sd/- B.N. Sinha Secretary to Government D (2) GOVERNMENT OF BIHAR DEPARTMENT OF MINES AND GEOLOGY NOTiFICATION Patna, the 28th February, 1969 Phalgun, 1890-S E No. B/M6-1019/68-1564/M. It is hereby notified for information of public that Iron Ore bearing areas of 416 acres (168.348 hectares) situated in Ghatkuri Reserved Forest Block No. 10 in the district of Singhbhum are reserved for exploitation of F mineral in the public sector. For full details in this regard District Mining Officer, Chaibasa should be contacted. By the order of Governor of Bihar Sd/- C.P. Singh G Dy. Secretary to Government Memo No. 1564/M Patna, the 28th February, 1969.

Copy forwarded to the Superintendent, Secretariat Press, Gulzarbagh, for favour of public of the Notification in the Extra- H

830 SUPREME COURT REPORTS [2012J 7 S.C.R.

A ordinary issue of the Bihar Gazette at any early date.

2. 100 spare copies of the notification may also be sent to this Department immediately. Sd/- B Dy. Secretary to Government Memo No. 1564/M Patna, the 28th February, 1969

Copy forwarded to the Dy. Commissioner, Singhbhum/Dy. Director of Mines, 2, College Road, Circuit House Area, c Jamshedpur 7/ District Mining Officer, Singhbhum, Chaibasa/ Director, Mines, Bihar/Dy. Director of Geology, Bihar/Advisor in Geology, Bihar for information. Sd/- C.P. Singh D Dy. Secretary to Government

8. Thereafter, in continuation with the correspondence with the State Government, the Central Ministry of Mines by its letter dated 15.6.2005, wrote to the Secretary to the State Government, Department of Mines, seeking a meeting of the concerned officers of the State Government and the Ministry of Mines of the Central Government for the clarification on the following issues:-

(i) The State Government had rejected even those applicants who were prior applicants but were not willing to set up the mineral based industry in the State. This stipulated condition of State Government is not as per the National Mineral Policy. G (ii) As against the applicants at SI. Nos.18, 20, 23, 29, 33, 41, 44 and 58, the State Government had stated that they had not submitted any solid proposals. The Central Government wanted to know what the State Government meant by 'solid proposals'. H

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 831

AND ORS. [H.L. GOKHALE, J.] (iii) There was wide variation between the area A recommended and the proposed plant capacity.

(iv) The total area of the ten proposals came to 3693.05 hectares whereas the total area reported to be available in Ghatkhuri was 3566.54 hectares. It was 8 also stated that in the case of the proposal of M/s Bihar Sponge Iron Ltd., the total area in Ghatkhuri reserve forest was shown as 4692.46 hectares.

9. It was in this background that the Government of Jharkhand called back nine out of the ten proposals (excluding C the one in favour of Bihar Sponge Iron Ltd.), by its letter dated 13.9.2005. The letter specifically stated that the proposals overlapped the areas reserved for the public undertakings and the areas already held by two other companies. This was one of the two letters impugned in the writ petitions to the High D Court. This letter reads as follows:- "Government of Jharkhand Mines and geological department No.Khni (Chaya)-78/03 (Part)-501/M-C Ranchi E Dated 13.09.2005 From: Arun Kumar Singh Secretary to the Government To, Sh. Anil Subramaniam F Under Secretary Ministry of Mines Government of India Shastri Bhawan, New Delhi - 110 001. G Sub: In connection with return of recommendations sent for mining lease of Iron ore in the reserved Forest Land in Mauza Ghat Khuri, under the West Singhbhum District. H

pp. 830–831 — page break not located

p. 832

A Sir,

Kindly refer to your letter No.5/40/2004/MIV dated 30.08.2005 on the above mentioned subject. Proposal was sent by the mines and mineral department Jharkhand, for sanction of mining lease to 10 companies for mining of iron B ore and Manganese Mineral, in the reserved Forest Land in Mauza Ghat Kuri (West Singhbhu District), in the light of Section 5(1) and 11 (5) of the Mines and Mineral (Regulation and Development) Act, 1957.

c Name of the company SI. No.

1. S/Shri Bihar Sponge Iron Ltd.

2. S/Shri lspat lndustriest Ltd.

D 3. S/Shri Vimal Deep Steel Pvt. Ltd.

4. S/Shri Abhijeet Infrastructure Pvt. Ltd.

5. S/Shri Ujjwal Minerals Pvt. Ltd.

6. S/Shri Adhunik Alloy and Power ltd.

7. S/Shri Prakash lspat ltd.

8. S/Shri Monnet lspat ltd.

9. S/Shri Steeko Power ltd. F

10. S/Shri Jharkhand lspat Pvt. Ltd.

On analysis in the department, it has become clear that out of the 10 proposals above said sent in the past, leaving G apart Bihar Sponge and Iron ltd. at SI. No.1, the rest of the nine proposals over-lap the public undertaking/ S/Shri General Produce Company Madhu Bazar Chhaibasa and S/Shri Rungta Sons Ltd. Chhaibasa.

After complete consideration, the Government has taken H

p. 833

AND ORS. [H.L. GOKHALE, J.] this decision that out of the ten proposals sent in the past, A leaving apart the proposal of S/Shri Bihar Sponge Iron Ltd., in connection with the rest of the nine proposals, for consideration as per law, they may be called back from the ministry of mines Government of India. B In the light of the above said it is requested that kindly return the above said mines proposals to the mines and minerals department Jharkhand Ranchi, so that by reconsidering on them, further action could be taken at the level of the State Government. c Yours faithfully Sd/- (Arun Kumar Singh) Secretary to the Government"

10. The Government of India, however, did not merely return those nine proposals, but summarily rejected the same on the vP.ry grounds stated in the letter of Government of Jharkhand. It sent a letter accordingly to the Government of Jharkhand on 6.3.2006. This is the other letter which was under challenge in the writ petitions to the High Court. The letter reads as follows:-

"REGISTERED GOVERNMENT OF INDIA MINISTRY OF MINES F No. 5/55/2004-M.IV New Delhi, the 6th March, 2006

To The Secretary to the Government of Jharkhand, Deptt. of Mines and Geology G Ranchi (Jharkhand) Sub: Request made by State Government to return various proposals for grant of mining lease for iron and manganese ore in Mauza Bokna, District West H

p. 834

A Singhbhum, Jharkhad.

Sit,

I am directed to refer to the request made by the State Government vide its letter no. 501/M dated B 13.9.2005 on the subject mentioned above and to summarily reject and return (in original) the following nine proposals which had been earlier sent to this Ministry for grant of prior approval under section 5( 1) of the Mines and Minerals (Development and Regulation) Act, 1957 on the c ground that the recommended areas in said the nine proposals either fall in areas or overlap areas which are either reserved for exploitation by Public Sector Undertaking (PSU) or held by the other applicants namely M/s Rungta Sons Pvt. Ltd. and M/s General Produce D Company:-

S. Name of applicant State Government Area (in Details of No Company Ref/ date heels.) overlapping in Mauja areas Ghatkuri E Dist. West Singhbhum

1. M/s lspat Industries i) Kh. Ni. (Pa. 470.06 Held by M/s Ltd. Singhbhum)-78/03- General 115/D.S.M./M Produce F dated 5.8.2004 Company ii) 1516/M dt. 24.11.2004

2. Mis Bimal Deep i) Kh. Ni. (Pa. 112.072 Reserved for Steel Pvt. Ltd. Singhbhum)- PSU 78/03-131/D.S.M./ G M dated 4.8.2005 ii) 519/M dated 24.11.2004

3. M/s Abhijeet i) Kh. Ni. (Pa. 429.00 Reserved for Infrastructure Pvt. Singhbhum)- PSU Ltd. 78/03-117/D.S.M. H /M dated

p. 835

AND ORS. [H.L. GOKHALE, J.] 4.8.2004 A ii) 5191M dated 24.11.2004

4. Mis Ujjawal Mineral i) Kh. Ni. (Pa. 103.00 Reserved for Pvt. ltd. Singhbhum )-781 PSU 03-11410.S.M./M dated 4.8.2004 B ii) 15201M dated 24.11.2004

5. Mis Adunik Alloya i) Kh. Ni. (Pa. 426.875 Reserved for & Power ltd. Singhbhum)- PSU 78103-11110.S.M./M dated 4.8.2004 c ii) 15181M dated 24.11.2004

6. Mis Prakash i) Kh. Ni. (Pa. 294.06 Reserved for lspat ltd. Singhbhum)- PSU 78103-11010.S.M./M D dated 4.8.2005 ii) 15151M dated 24.11.2004

7. Mis Monnet lspat i) Kh. Ni. (Pa. 705.00 Held by Mis Singhbhum)- Rungta Sons 78103-11810.S.M./M Pvt. ltd. E dated 6.8.2005 ii) 14971M dated 17.11.2004

13. Mis Steco Power i) Kh. Ni. (Pa. 400.00 Held by Mis ltd. Singhbhum)-781 Rungta Sons 03-101103-1341M Pvt. ltd. F dated 16.10.2004 ii) 15151M dated 22.1.2005

9. Mis Jharkhand i) Kh. Ni. (Pa. 346.647 Held by Mis lspat Pvt. ltd. Singhbhum)-78103- General 1210.S./M Produce G dated 4.8.2004 company

Yours faithfully Sd/- (Anil Subramaniam) H

p. 836

A Under Secretary to the Government of India"

11. In these appeals we are basically concerned with the legality of the decision of the State Government seeking to withdraw its recommendations for mining leases, and the subsequent decision of the Central Government to reject those very recommendations. We may record that the Government of Jharkhand had issued one more notification subsequently, dated 27.10.2006, by which it was decided that the areas described in the 1962 and 1969 notifications will not be given to anyone, except to the public sector undertakings or joint venture projects of the State. The appellants amended their Writ Petitions in the High Court and challenged the subsequent notification also. This notification reads as follows:- THE JHARKHAND GAZETIE EXTRA ORDINARY D PUBLISHED BY AUTHORITY No. 581 8 Kartik 1928 (S) Ranchi, Monday the 30th October, 2006 DEPARTMENT OF MINES & GEOLOGY, RANCHI E NOTIFICATION The 27th October, 2006 No. 3277 It is hereby notified for the information of the general public that for optimum utilization and exploitation of the mineral resources in the State and for establishment of mineral F based industry with value addition thereon, it has been decided by the State Government that the iron ore deposits at Ghatkuri would not be thrown open for grant of prospecting licence, mining lease or otherwise for the private parties. The deposit was at all material times kept reserved vide gazette notification G No. A/MM-40510/62-6209/M dated the 21st December, 1962 and no. B/M-6-1019/68-1564/M dated the 28th February, 1969 of the State of Bihar. The mineral reserved in the said area has now been decided to be utilized for exploitation by Public Sector undertaking or Joint Venture Project of the State Government H which will usher-in maximum benefit to the State and which

p. 837

AND ORS. [H.L. GOKHALE, J.] generate substantial amount of employment in the State. A

The aforesaid notification is being issued in public interest and in the larger interest of the State.

The defining co-ordinates of the reserved area enclosed here with for reference. B By order of the Governor. S.K. Satapathy. Secretary to Government Submissions on behalf of the appellants:- c

12. (i) There is not much difference between the facts of the other appellants and Monnet, except that as far as the appellant in Civil Appeal No.3286/2009 i.e. Adhunik Alloy and Power Ltd. ('Adhunik' for short) is concerned, it contends that D based on the forwarding of its proposal by the State Government to the Central Government, it had made some substantial investment. It had already invested some 82 crores of rupees out of its proposed investment of Rs. 790 crores, and therefore it had a better case on the basis of promissory estoppel. Additional material is placed on the record of its Civil E Appeal in justification the investment made by the appellant.

(ii) Since the facts of all these appeals are by and large similar, though various submissions have been raised on behalf of the appellants, they are also by and large similar, and complimentary to each other. The learned senior counsels appearing for the respective parties have, however, emphasised various facets of facts and law with good research put in.

13. (i) Shri C.A. Sunderam, learned senior counsel appearing for lspat Industries Ltd. ('lspat' for short) firstly submitted that after the MMDR Act was passed in exercise of the power of the Union Government under List I Entry 54 of the Seventh Schedule of the Constitution of India, the State Government had no longer any power to issue the notifications H

p. 838

A making any reservations in favour of public sector undertakings and the notifications of the 1962 and 1969 were bad in law. These notifications which were defended as being issued under Section 4(a) of the Bihar Land Reforms Act, 1950, could not be valid after the passing of the MMDR Act. This is because B Entry No. 23 List II (State List) of the Seventh Schedule giving power to the State Government specifically stated that it was subject to the provisions of the entries in List I (Union List) in this behalf. Entry No. 54 of List I states that Regulation of Mines and Mineral development is within the power of the Union c Government, to the extent a declaration is made by Parliament in that behalf in public interest, and such a declaration has been made and is to be found in Section 2 of the MMDR Act. This being the position, the provisions of Bihar Land Reforms Act 1950 (Act No. XXX of 1950) (Bihar Act, for short) cannot be pressed into service by the respondents.

(ii) Shri Sundaram contended that the field was already occupied by the MMDR Act when these notifications were issued, since the Parliament had already legislated on the field. Section 17 and 17A of the MMDR Act give special power to the Central Government to undertake the mining operations and effect reservations. Section 18 of the Act casts a duty on the Central Government to take steps for the conservation and systematic development of minerals and for the protection of environment by preventing or controlling any pollution which may be caused by the prospecting or mining operations. These powers were not with the State Government. The reservations in the notifications of 1962 and 1969 will therefore have to be held as outside the powers of the State Government

G (iii) This will be the position even when read with Rule 59 (1) (e) of the Mineral Concession Rules, 1960 (M.C. Rules 1960 in short) which speaks about reservation of areas by the State Government and re-grant thereof. Even the subsequent notification of 27.10.2006, providing for a joint venture is contrary to 17A of MMDR Act, and therefore bad in law. H

p. 839

AND ORS. [H.L. GOKHALE, J.]

(iv) Shri Sundaram submitted that the High Court's view A that the State Government had the inherent power over the mining areas was equally erroneous.

14. (i) Learned senior counsel Dr. Rajeev Dhawan appearing for the appellant in C.A. No. 3289/2009 i.e. 8 Jharkhand lspat Pvt. ltd. ('Jharkhand lspat' for short) mainly canvassed two submissions. Firstly, in view of the federal structure of Indian Constitution, and the provisions of MMDR Act, any mining can be done only under the MMDR Act with Central permission, though mining is included is in the State C List. In this behalf, Dr. Dhawan took us through the Constitution Bench judgments of this Court in Hingir-Rampur Coal Co. Ltd. & Ors. Vs. State of Orissa & Ors. reported in AIR 1961 SC 459, State of Orissa & Anr. Vs. Mis M.A. Tulloch & Co. reported in AIR 1964 SC 1284 and Baijnath Kadio Vs. State of Bihar and Others reported in 1969 (3) sec 838, and submitted that the subsequent judgment of this Court in Amritlal Nathubhai Shah Vs. Union of India reported in 1976 (4) SCC 108 which has been relied upon by the State of Jharkhand and accepted by the High Court to repel the challenge, did not conl>ider these three judgments and the true import of the propositions laid down therein.

(ii) Secondly, the Learned Counsel submitted that the State Government's decision was ultra-vires to Section 17A (2) of the MMDR Act. He relied upon Para 6 of the judgment of this Court F in Janak Lal Vs. State of Maharashtra reported in 1989 (4) SCC 121 to draw the distinction between Un-amended Rule 59 and new Rule 59. In his view, the 2006 notification was also invalid since it was only a revival of 1962 and 1969 notifications.

(iii) It was then submitted that the appellant has also set G up a factory and reliance was placed on the doctrine of promissory estoppel and legitimate expectations. It was also contended that the two notifications were not acted upon and suffered from Desuetude. Lastly, it was submitted that the State Government cannot act unreasonably in view of the provision H

p. 840

A of Article 19 (1) (g) of the Constitution.

15. Learned Senior Counsel Shri Ranjit Kumar, appearing for Monnet raised the following additional submissions.

(i) The State Government did not have the power to B issue the two notifications in 1962 and 1969 under the rules as they then existed, particularly the notification of 1962, since the Rule 58 of the concerned rules as then existing did not give any such power to the State Government. c (ii) Rule 58 has been deleted without any saving clause by the amendment Act No. 36 of 1986.

(iii) The two notifications of 1962 and 1969 providing for reservation in favour of the public sector D undertakings suffered on account of 'Desuetude', since they were never acted upon.

(iv) In view of the proviso Rule 63A, once a recommendation is made, the State Government E becomes functus officio, and it has no power to recall the recommendation.

(v) The right of hearing of Monnet was affected in as much as the decision of the State Government to reject its application was taken behind its back. It F was not provided with any opportunity of being heard under Rule 26, of the M.C. Rules 1960 before refusing to grant the mining lease. Besides, their remedy to file a revision to the Central Government under Rule 54 thereof was affected. G (vi) The appellants disputed the fact that at the time of rejection of their applications, M/s Rungta Sons were having any subsisting allotment in their favour. It was submitted that the grant in favour of M/s H Rungta Sons had already expired, and in fact they

MONNET ISPAT & ENERGY L"fD. v. UNION OF INDIA 841 AND ORS. [H.L. GOKHALE, J.] had applied for renewal in 2006. The area A recommended to Monnet was not under any previous reservation of any public sector undertaking or otherwise.

(vii) There was unjustified discrimination in favour of 8 Bihar Sponge Iron Ltd. since their case was supposed to be similar to that of Monnet.

(viii) The decision of the State Government was hit by the doctrine of promissory estoppel, since in the meanwhile Monnet had deposited Rs.50 lacs with C the State Government for allotment of land, and it was taking further steps expecting the allotment.

(ix) The provisions of the MMDR Act and the MC Rules will have to be read to mean that the regulatory 0 regime has been taken over by the Central Government, and the State Government will have to be held as without any power to impose re::ervations.

16. Learned senior counsel Shri Dhruv Mehta, appearing E for Prakash lspat Ltd. in C.A. No.3290/2009 submitted that as stated in Section 14 of MMDR Act, Sections 5 to 13 of the act do not apply to minor minerals, and the State Govt's. power is only to regulate the minor minerals under Section 15 of the Act. In this behalf he referred to the judgment of this Court in D.K. F Trivedi and Sons Vs. State of Gujarat reported in 1986 Supp (1) sec 20. He submitted that the rule making power with respect to major minerals was only with the Central Government. The State Government had no power until Rule 59 was amended in 1980 to provide reservation for public G sector concerning the major minerals. He further submitted that rule making power cannot be exercised retrospectively and relied upon Hukam Chand Vs. Union of India reported in 1972 (2) SCC 601. He contended that in view of the provision in Rule 59 of the MC Rules 1~60, an area which has been reserved H

p. 841 — page break not located

p. 842

A can be made available for re-grant to private sector, and in support of this proposition he referred to the judgment of this Court in Indian Metals and Ferro Alloys Ltd. VS. Union of India reported in 1992 Supp (1) SCC 91.

17. Learned senior counsel Shri Abhishek Manu Singhvi 8 and L. Nageswara Rao, appearing for Adhunik submitted that the High Court had committed an error in relying upon the above referred amended Rule 59. The 1962 notification was issued when prospecting and mining was not within the jurisdiction of the State Government The judgment of this Court in Air India C Vs. Union of India reported in 1995 (4) SCC 734 (para 4 to 8) was relied upon to submit that subordinate legislation can survive the repeal of a statute only when it is saved. It was further submitted that the impugned notifications were issued without prior approval of the Central Government and were therefore bad in law.

18. (i) Learned senior counsel Shri G.C. Bharuka, appearing for Abhijeet Infrastructure Pvt. Ltd. ('Abhijeet' for short) submitted that Central Government had opened up the minerals for private participants. In 1962, the Government had no power to issue the notification in the absence of any legislation conferring any executive power. He relied upon the judgment of this Court in Bharat Coking Coal Ltd. Vs. State of Bihar reported in 1990 (4) SCC 557 (para 19), and submitted that the State can act only under a legislation or under Article 162 by way of an executive order and not otherwise. He submitted that the 1962 notification was issued under the un- amended Rule 59, and that time there was no power to issue such notification. In his view the subsequent notification dated 27.10.2006 which is issued under Section 17A (2) was also bad in law because it was issued without the prior approval of the Central Government

(ii) It was then submitted by Shri Bharuka, that Abhijeet's proposal was sent to the Central Government on 06.08.2004. H State Government withdrew it on 13.09.2005, and Central

p. 843

AND ORS. [H.L. GOKHALE, J.] Government rejected it on 06.03.2006. In the meanwhile the A petitioner took steps for investment. He relied upon two judgments to explain the import of the doctrine of promissory estoppel, namely Mis Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh reported in 1979 (2) SCC 409 and State of Punjab Vs. Nestle India Ltd. reported in 2004 (6) SCC B

465. He canvassed the Contempt Petition moved by Abhijeet by contending that Abhijeet ought to have been granted lease in pursuance of this Court's earlier order dated 15.12.2008.

Reply on behalf of the State of Jharkhand c

19. Learned Senior Counsel Shri Ajit Kumar Sinha, appearing for the State of Jharkhand, traced the power of the State Government to reserve the mines situated within its territory for Public Sector Undertakings, to begin with, to the State's ownership of the Mines. He submitted that these mines D and minerals vested absolutely in it, and this position was fortified in view of the declaration of the consequences of vesting to be found in Section 4(a) of the Bihar Act. The validity of this provision had been upheld by a Constitution Bench of this Court way back in State of Bihar Vs. Kameshwar Singh E reported in AIR 1952 SC 252. In any case, the Act had been placed at Entry No. 1 in Ninth Schedule which was added by Constitution (First Amendment) Act, 1951 and was protected by Article 31-B. As held by this Court in Waman Rao Vs. Union of India reported in 1981 (2) sec 362, the Act was clearly beyond the pale of challenge. The State had the inherent power to reserve any area for exploitation in its capacity as the owner of the land and the minerals vested therein. The Sovereign executive power of the State under Article 298 of the Constitution to carry on any trade or business and to acquire, hold and dispose of the property and make contracts, certainly included the power to reserve the land for exploitation of its ... minerals by the public sector.

20. It was further submitted by Shri Sinha, that there was no conflict between the right of the State Government to deal H

p. 844

A with the mines as the owner thereof, and the provisions of the MMDR Act. The MMDR Act does not disturb the ownership of the mines and minerals of the State in the land situated within its territory. The power to issue appropriate notifications concerning the mines and minerals situated within the State is B not taken away by any of the provisions of the MMDR Act. In the instant case the Central Government, in its counter affidavit at para 5 (a) and para 10 filed before the High Court, had given deemed/de-jure approval to the reservation upon examination of the 1962 & 1969 notifications. This was apart from the c impugned order, dated 6.3.2006, rejecting the proposals of the appellants on the ground that the recommended areas in the said nine proposals were either reserved for public sector undertakings, or overlapped the areas held by M/s. Rungta Sons Pvt. Ltd. and M/s. General Produce Company. In the counter affidavit filed in this appeal by the Central Government, 0 it has been specifically stated in paragraph 5 that the State Government is the 'owner of the minerals.'

21. It was submitted by Shri Sinha that the notifications of 1962 and 1969 continued to be applicable and protected even after the creation of state of Jharkhand by virtue of Section 85 of the Bihar Reorganisation Act, 2000, which provides that the existing laws prior to reorganization shall have effect till they are altered, repealed or amended. Shri Sinha, pointed out that the notifications of 1962 and 1969 had, in fact, been reiterated by the State of Jharkhand vide its notification dated 27.10.2006.

22. He submitted that the power to issue the impugned notifications was very much available under the MMDR Act and the Rules 58 and 59 of the M.C. Rules as they stood at the relevant time. The notification dated 27.10.2006 was clearly traceable to Section 17A (2) of the MMDR Act. The mere absence of mentioning of the source of power in the concerned notifications did not make them ineffective. Shri Sinha relied upon paragraph 13 of the judgment of this Court in Dr. Ram

p. 845

AND ORS. [H.L. GOKHALE, J.] Manohar Lohia Vs. State of Bihar reported in AIR 1966 SC A 740 in support of this proposition.

23. With respect to doctrine of Desuetude, Shri Sinha submitted that for this doctrine to apply, two conditions have to be satisfied, viz. (i) there must be a considerable period of B neglect, and (ii) there must be a contrary practice for a considerable time. In the instant case no such neglect or contrary practice had been shown. The area of mines has been kept reserved, and no mining lease in the reserved area has been granted to anyone contrary to the notifications. He relied in this behalf upon paragraph 15 of the judgment of this Court C in State of Maharashtra vs. Narayan Shamrao Puranik reported in 1982 (3) sec 519, and paragraphs 30 to 36 of Municipal Corporation for City of Pune vs. Bharat Forge Co. Ltd. reported in 1995 (3) sec 434, as well as paragraph 16 of Cantonment Board Mhow vs. M.P. State Road Transport D Corpn. reported in 1997 (9) SCC 450.

24. With respect to the submissions on promissory estoppel and legitimate expectations, Shri Sinha submitted that these principles were based on equity, and when a matter was E governed by a statute, equity will give way. Besides, the promises as claimed were against the public policy and could not be enforced. He relied upon paragraph 10 of Amrit Vanaspati Co. Ltd. vs. State of Punjab reported in 1992 (2) SCC 411, paragraph of 12 MP.Mathur vs. OTC reported in F 2006 (13) sec 706, and paragraph 83 of Sandur Manganese & Iron Ores Ltd. vs. State of Kamataka reported in 2010 (13) sec 1.

25. Shri Sinha submitted that MOU between the Appellants and the State Government could not be treated as a contract G under Article 299 (1) of the Constitution of India. It was neither enforceable nor binding. Based on the MOU, the State Government had made a recommendation which was only a proposal. Besides, no one had any legal or vested right for the H

p. 846

A grant or renewal of a mining lease. In this behalf, he relied upon paragraph 13 of State of Tamil Nadu vs. Mis Hind Stone reported in 1981 (2) SCC 205, paragraph 4 of Dharambir Singh vs. Union of India reported in 1996 (6) SCC 702, paragraph 13 of MP. Ram Mohan Raja vs. State of Tamil B Nadu reported in 2007 (9) SCC 78, paragraphs 19 to 22 and 28 of State of Kera/a vs. B. Six Holiday Resorts (P) Ltd. reported in 201 O (5) SCC 186, and paragraph 4 of Sandur Manganese & Iron Ores Ltd. vs. State of Karnataka reported in 2010 (13) sec 1.

C 26. last but not the least, Shri Sinha pointed out that the controversy in the present matter was fully covered by the judgment of a bench of three Judges of this Court in Amritlal (supra) wherein the facts were by and large similar. This Court has clearly held in that judgment that the mines and minerals D within its territory did vest in the State Government, and it had the full authority to reserve the exploitation thereof for the benefit of public undertakings. There was no conflict between this judgment, and the three judgments in the cases of Hingir- Rampur Coal Co., M.A. Tulloch & Co. and Baijnath Kadio E (supra).

Reply on behalf of Union of India

27. The Learned Senior Counsel Shri Ashok Bhan, appearing for Union of India supported the submissions of Shri F Sinha. He submitted that the mines and minerals in the State of Jharkhand were owned by the State of Jharkhand, and it had the right to deal with the same appropriately within the scheme of the MMDR Act. It had every right to reserve certain areas for the exclusive utilisation of the Public Sector Undertakings, G or to give a direction to avoid overlapping. He pointed out that the proposals forwarded by the State Government were examined by the Central Government . It had accepted the reasons contained in the State Government's letter dated 13.9.2005, and therefore rejected nine out of the ten proposals. H He drew our attention to the following paragraphs from the

p. 847

AND ORS. [H.L. GOKHALE, J.] affidavit filed by the Central Government in the High Court. In A para 5 (a) of its Counter Affidavit in reply to the Writ Petition filed by Monnet in the High Court, the Under Secretary, in the Ministry of Mines stated that 'the request of the State Government has been examined by the Central Government, and all nine proposals including the proposal recommended in favour of the petitioner have been rejected and returned to the State Government on 06.03.2006.' In para 10, it was further stated as follows:-

Submissions on behalf of the intervenors

28. (i) Shri Das Learned Counsel appearing for M/s Rungta Sons pointed out that Rungta had a mining lease in their favour and were entitled to seek the renewal thereof. Therefore, G the appellants could not have been granted any lease, in any way overlapping with the mining area allotted to Rungta Sons.

(ii) Learned Senior Counsels Sarvashri Narasinha, Vikas Singh & Krishnan Venugopal have appeared for the interveners H

p. 848

A to oppose these appeals. Their submissions have been similar to that of Shri Sinha.

29. After the hearing of these appeals was concluded, another SLP arising out of the judgment of Orissa High Court B in W.A. No.6288 of 2006 (Geo Minerals and Marketing (P) Ltd. V. State of Orrisa & ors.) came up for consideration wherein one of the issues involved was regarding reservation of mining areas for public sector. The counsel appearing in that matter for the respective parties viz. Senior counsel Sarvashri Harish C Salve, KK Venugopal and RK Dwivedi were therefore heard on this issue. Their submissions were similar to those of the respective parties appearing in the present appeals.

Consideration of the submissions of the rival parties:

D Authority of the State of Jharkhand to deal with the mines and minerals within its territory

30. It was submitted on behalf of the State of Jharkhand as well as by Union of India that the mines and minerals within the territory of the State are owned by the State of Jharkhand, E and it has full authority to deal with the same. This authority flows from Section 4 (a) of the Bihar Land Reforms Act, 1950. As against that, the counsel for the appellants have challenged the authority of the State of Jharkhand to deal with the mines and minerals on the ground that after the passing of the MMDR Act, F the authority of the State Government has come to be curtailed. To examine this issue we may look into some of the salient provisions of the Bihar Act. To begin with the Preamble of the Act declares its objective in following terms:

G 'An Act to provide for the transference to the State of the interests of proprietors and tenure holders in land of the mortgagees and lessees of such interests including interests in trees, forests , fisheries , jalkars, ferries, hats, bazaars, mines and minerals and to provide for the H constitution of a Land Commission for the State of Bihar

p. 849

AND ORS. [H.L. GOKHALE, J.] with powers to advise the State Government on the A agrarian policy to be pursued by the State Government consequent upon such transference and for other matters connected therewith.'

Section 3 of the Act provides for issuance of notifications of 8 vesting of estates and tenures in the state. Section 4 provides for the consequences of the vesting namely that t~ey shall vest absolutely in the state free from all encumbrances. Section 4(a) of the Bihar Act reads as follows:

4. Consequences of the vesting of an estate or tenure in the State-

[Notwithstanding anything contained in any other law for the time being in force or any contract and notwithstanding any non- compliance or irregular compliance of the provisions of sections 3, 3A and 38 except the provisions of sub- section (1) of section 3 and sub-section (1) of section 3A, on the publication of the notification under sub-section (1 }, of section 3 or sub-section (1) or sub-section (2) of section 3A, the following consequences shall ensue and shall be deemed always to have ensued, namely:]

(a) 2[xxx] Such estate or tenure including the interests of the proprietor or tenure-holder in any building or part of a building comprised in such estate or tenure and used primarily as office or cutchery for the collection of rent of such estate or tenure, and his interests in trees, forests, fisheries, jalkars, hats, bazars, 3[mela] and ferries and all other sairati interests, as also his interest in all subsoil including any rights in mines and minerals whether discovered or undiscovered, or whether been worked or not, inclusive of such rights of a lessee of mines and minerals, comprised in such estate or tenure (other than the interests of raiyats or under - raiyats) shall, with effect from the date of vesting, vest absolutely in the State free from all incumbrances and such proprietor or tenure- holder H

p. 850

A shall cease to have any interest in such estate or other than the interests expresslly saved by or under the provisions of this Act.

Besides, we must also note that the Constitutional validity of B this provision has already been upheld by a Constitution Bench of this Court in State of Bihar Vs. Kameshwar Singh reported in AIR 1952 SC 252 by a detailed judgment where at the end of it in Para 237 the Court has declared the Bihar Act to be valid except as regards S. 4(b) and S.23 (f), which were declared to be unconstitutional and void. c

31. Ownership denotes a complex of rights as the celebrated author Salmond states in his treatise on Jurisprudence (see page 246 of the Twelfth Edition):

D '44. The idea of ownership

Ownership denotes the relation between a person and an object forming the subject-matter of his ownership. It consists in a complex of rights, all of which are rights in rem, being good against all the world and not merely E against specific persons. Though in certain situations some of these rights may be absent, the normal case of ownership can be expected to exhibit the following incidents.

F First, the owner will have a right to possess the thing which he owns ......... .

Secondly, the owner normally has the right to use and enjoy the thing owned: the right to manage it, i.e., the right to decide how it shall be used; and the right to the income G from it. Whereas the right to possess is a right in the strict sense, these rights are in fact liberties: the owner has a liberty to use the thing, i.e. he is under no duty not to use it, in contrast with others who are under a duty not to use or interfere with it.' H

p. 851

AND ORS. [H.L. GOKHALE, J.] The right of the State of Jharkhand to deal with the mines and minerals within its territory including reserving the same for Public Sector Undertakings, or to direct avoidance of overlapping while granting leases of mines, obviously flows from its ownership of those mines and minerals.

32. (i) It was submitted by the appellants that the power of the State Government under Entry 23, List II of the Seventh Schedule was subject to the provision of Entry No. 54 of List I. Entry 54 of List I states that regulation of Mines and Minerals Development is within the power of the Union Government to the extent a declaration is made by the Parliament in that behalf, and such a declaration has been made in Section 2 of the MMDR Act. Having stated so, it becomes necessary to understand the extent of this control of the Union Government, and for that we must see the scheme of the Act with respect to the powers of the Central Government and the State D Government to deal with the mines and minerals. This was also the approach adopted by a Constitution Bench of this Court in /shwari Khetan Sugar Mills (P) Ltd. Vs. State of UP. reported in 1980 (4) sec 136 and later by a bench of three Judges in Orissa Cement Ltd. Vs. State of Orissa reported in 1991 E supp.(1) sec 430.

(ii) In lshwari Khetan (supra) the Constitution Bench was concerned with the validity of the provisions of U.P. Sugar Undertakings (Acquisition) Act, 1971 enacted by the State of F U.P. It was canvassed that the State's power to legislate in respect of industries under Entry 24 of List II is taken away to the extent of the declaration in that respect made by Parliament under Entry 52 of List I. After examining the relevant provisions, the Constitution Bench held in para 24 as follows:- G "24. It can, therefore, be said with a measure of confidence that legislative power of the States under Entry 24, List II is eroded only to the extent control is assumed by the Union pursuant to a declaration made by the Parliament in respect of declared industry as spelt out by H

p. 852

A legislative enactment and the field occupied by such enactment is the measure of erosion. Subject to such erosion, on the remainder the State legislature will have power to legislate in respect of declared industry without in any way trenching upon the occupied field ....... " B (iii) In Orissa Cement Ltd. (supra) a bench of three Judges of this Court was concerned with the validity of the levy of a cess on mining imposed by State of Orissa, and the competence of the State Legislation was challenged on the backdrop of MMDR C Act and Entry 54 of the Union List. After referring to the judgment in /shwari Khetan (supra) the Court stated as follows in paragraph 49:-

" ..... As pointed out in lshwari Khetan, the mere declaration of a law of Parliament that it is expedient for an industry or the regulation and development of mines and minerals to be under the control of the Union under Entry 52 or Entry 54 does not denude the State Legislatures of their legislative powers with respect to the fields covered by the several entries in List II or List Ill. Particularly, in the case of declaration under Entry 54, this legislative power is eroded only to the extent control is assumed by the Union pursuant to such declaration as spelt out by the legislative enactment which makes the declaration. The measure of erosion turns upon the field of the enactment framed in pursuance of the declaration ...... "

33. On this background we may look to the relevant provisions of the MMDR Act. Section 4 (1) of the MMDR Act lays down that prospecting or mining operations are to be done as per the provisions of the license or lease. Section 4(3) does not restrain the State Government from undertaking these operations in the area within the State though, when it comes to the minerals in the First Schedule, it has to be done after prior consultation with the Central Government. This Section 4 reads as follows: H

p. 853

AND ORS. [H.L. GOKHALE, J.]

4. Prospecting or mining operations to be A under licence or lease:-

No person shall undertake any reconnaissance, prospecting or mining operations in any area, except under and in accordance with the terms and conditions of B a reconnaissance permit or of a prospecting licence or, as the case may be, of a mining lease, granted under this Act and the rules made thereunder]:

Provided that nothing in this sub-section shall affect any prospecting or mining operations undertaken in any area C in accordance with the terms and conditions of a prospecting licence or mining lease granted before the commencement of this Act which is in force at such commencement: D [Provided further that nothing in this sub-section shall apply to any prospecting operations undertaken by the Geological Survey of India, the Indian Bureau of Mines, [the Atomic Minerals Directorate for Exploration and Research] of the Department of Atomic Energy of the Central E Government, the Directorates of Mining and Geology of any State Government (by whatever name called), and the Mineral Exploration Corporation Limited, a Government company within the meaning of section 617 of the Companies Act, 1956: F

Provided also that nothing in this sub-section shall apply to any mining lease (whether called mining lease, mining concession or by any other name) in force immediately before the commencement of this Act in the Union Territory of Goa, Daman and Diu. G

(1A) No person shall transport or store or cause to be transported or stored any mineral otherwise than in accordance with the provisions of this Act and the rules made thereunder. H

p. 854

A (2) [No reconnaissance permit, prospecting licence or mining lease] shall be granted otherwise than in accordance with the provisions of this Act and the rules made thereunder.

B [(3) Any State Government may, after prior consultation with the Central Government and in accordance with the rules made under section 18, 1[undertake reconnaissance, prospecting or mining operations with respect to any mineral specified in the First Schedule in any area within that State which is not already held under any c reconnaissance permit, prospecting licence or mining lease.

34. The authority to grant the reconnaissance permit, prospecting license or mining lease on the conditions which are D mentioned in Section 5 of the Act is specifically retained with the State Government. However, with respect to the minerals specified in First Schedule, it is added that previous approval of the Central Government is required. Thus, with respect to the minerals which are specified in the First Schedule to the Act, E this has to be done only after prior consultation with and approval of the Central Government. The provision does not in any way detract from the ownership and the authority of the State Government to deal with the mines situated within its territory. The only restriction is with respect to the minerals in F the First Schedule which are specified minerals. Part-C of this schedule includes iron-ore and manganese ore at Entries No. 6 and 9. This Section 5 reads as follows:-

"5. Restrictions on the grant of prospecting licences or mining leases G (1) A State Government shall not grant a [reconnaissance permit, prospecting licence or mining lease] to any person unless such person-

H a) is an Indian national, or company as defined in sub-

p. 855

AND ORS. [H.L. GOKHALE, J.]

section (1) of section 3 of the Companies Act, 1956 (1 of A 1956); and

(b) satisfies such conditions as may be prescribed:

Provided that in respect of any mineral specified in the First Schedule, no [reconnaissance permit, prospecting B licence or mining lease] shall be granted except with the previous approval of the Central Government.

Explanation.-For the purposes of this sub-section, a person shall be deemed to be an Indian national,- c (a) in the case of a firm or other association of individuals, only if all the members of the firm or members of the association are citizens of India; and

(b) in the case of an individual, only if he is a citizen of India. D

(2) No mining lease shall be granted by the State Government unless it is satisfied that-

(a) there is evidence to show that the area for which the lease is applied for has been prospected earlier or the existence of mineral contents therein has been established otherwise than by means of prospecting such area; and

(b) there is mining plan duly approved by the Central Government, or by the State Government, in respect of such category of mines as may be specified by the Central Government, for the development of mineral deposits in the area concerned."

35. Section 10 of the Act deals with the procedure for obtaining the necessary licences. It makes it very clear the application is to be made to the State Government, and it is the right of the State Government either to grant or refuse to grant the permit, licence or lease. This section reads as follows:- H

p. 856