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

A 10. Application for prospecting licences or mining leases-

( 1) An application for [a reconnaissance permit, prospecting licence or mining lease] in respect of any land in which the minerals vest in the Government shall be made to the State Government concerned in the prescribed form B and shall be accompanied by the prescribed fee.

(2) Where an application is received under sub-section (1), there: shall be sent to the applicant an acknowledgment of its receipt within the prescribed time and in the prescribed c form.

(3) On receipt of an application under this section, the State Government may, having regard to the provisions of this Act.and any rules made thereunder, grant or refuse to grant the2[permit, licence or lease].

36. Again, it is the right of the State Government to give preferences in the matters of granting lease, though this right is .regulated by the provisions of Section 11 of the Act. Sub- section 1 of this Section lays down that one who has done the reconnaissance or prospecting work earlier, will have a preferential right for obtaining a prospective licence or a mining lease in respect of that land. Sub-section 2 lays down that where any area is not notified for reconnaissance or prospecting or mining earlier, the application which is received first will be considered preferentially. It is however, further stated that where applications are invited by any particular date, then all of the applications received by that date will be considered together. Sub-section 3 of Section 11 lays down the factors to be considered while granting the licence which are: G (3) The matters referred to in sub-section (2) are the following:-

(a) any special knowledge of, or experience in, reconnaissance operations, prospecting operations H

p. 857

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

or mining operations, as the case may be, A possessed by the applicant;

(b) the financial resources of the applicant;

(c) the nature and quality of the technical staff employed or to be employed by the applicant; B

(d) the investment which the applicant proposes to make in the mines and in the industry based on the minerals; c (e) such other matters as may be prescribed."

Sub-section 5 lays down that if there are any special reasons, the State can grant the licence to a party whose application might have been received later in time, but after recording the special reasons. This sub-section again makes it clear that where any such out of turn allotment is to be done with respect to a mineral specified in First Schedule, prior approval of the Central Government will be required. Thus, although the Central Government is given the authority to approve the applications with respect to the specified minerals, that does not take away the ownership and control of the State Government over the mines and minerals within its territory.

37. Senior Counsel Shri Sundaram had contended that 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 protect the environment and to prevent pollution that may be caused by mining operations. These powers were not with the State Government. Therefore, the reservations in the notifications of 1962 and 1969 were outside the powers of the State Government. Thus, Sections 17 and 17(A) of the Act were pressed into service to canvass the reduction in the authority of the State Government. Section 17 (1) gives the power to the Central Government to undertake prospecting and mining operations in certain lands. However, H

p. 858

A such operations have also to be done only after consultation with the State Government as stated in sub-section (2) thereof. Besides, sub-section (3) requires the Central Government also to pay the reconnaissance permit fee or prospecting fee, royalty, surface rent or dead rent as the case may be. Section B 17A gives the power to the Central Government to reserve any area not held under any prospecting licence or mining lease with a view to conserving any minerals. However that power is also to be exercised in consultation with the State Government. Similarly, under Sub-section (2) of Section 17 A, State c Government may also reserve any such area, though with the approval of the Central Government. Thus, these sections and the duty cast on the Central Government under Section 18 do not affect the ownership of the State Government over the mines and minerals within its territory, or to deal with them as provided in the statute. 0

38. The provisions of the MMDR Act contain certain regulations. However, to say that there are certain provisions regulating the exercise of power is one thing, and to say that there is no power is another. The provisions of the Act do not E in anyway take away or curtail the right of the State Government to reserve the area of mines in public interest, which right flows from vesting of the mines in the State Government. It is inherent in its ownership of the mines. In the present case we are concerned with the challenge to the letter of the State F Government dated 13.9.2005, and that of the Central Government dated 6.3.2006, and the challenge to the notification dated 27.10.2006 issued by the State Government. There is no difficulty in accepting that the Central Government does have the power to issue a direction as contained in the G letter dated 6.3.2006. As far as the notification of 27 .10.2006 is concerned, the same is also clearly traceable to Section 17A (2) of the Act. This Section 17A (2) reads as follows:-

"(2) The State Government may, with the approval of the Central Government, reserve any area not already held H

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 859 AND ORS. [H.L. GOKHALE, J.]

under any prospecting licence or mining lease, for undertaking prospecting or mining operations through a Government company or corporation owned or controlled by it and where it proposes to do so, it shall, by notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such areas will be reserved."

As can be seen, this sub-section requires the approval of the Central Government for reserving any new area which is not already held through a Government Company or C Corporation, and where the proposal is to do so. The notification of 27 .10 .2006 refers to the previous notifications of 1962 and 1969 whereunder the mining areas in the Ghatkuri forest were already reserved, and reiterates the decision of the State Government that the D minerals which were already reserved in the Ghatkuri area under the two notifications will continue to be utilised for exploitation by public sector undertakings or joint venture projects of the State Government. Therefore this notification of 27.10.2006 did not require the approval of the Central Government. E

39. When it comes to the challenge to the letter dated 13.9.2005, it is seen that the State Government states therein that nine out of the ten proposals overlap the areas meant for public undertakings and two other companies, and therefore the proposals were called back. The power to take such a decision rests in the State Government in view of its ownership of the mines, though there may not be a reference to the source of power. Absence of reference to any particular section or rule which contains the source of p_ower will not invalidate the decision of the State Government, since there is no requirement to state the source of power as has already been held by this Court in the case of Dr. Ram Manohar Lohia (supra).

40. The appellants have referred to Rules 58 and 59 to H

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p. 860

A contend that there rules do not give the power to the State Government to reserve the mines for public sector. We may therefore, refer to the Rules 58 and 59 of M.C. Rules as amended from time to time.

Rule 58 and 59 of M.C. Rules as framed in 1960 read as 8 follows:-

"58. Availability of areas for re-grant to be notified- (I) No area which was previously held or which is being held under a prospecting licence or a mining lease C or in respect of which an order had been made for the grant thereof but the applicant has died before the execution of licence or lease, as the case many be, or in respect of which the order, granting licence or lease has been revoked under sub-rule (1) of rule 15 or sub-rule (1) D of rule 31, shall be available for grant unless-

(a) an entry to the effect is made in the register referred to in sub-rule (2) of rule 21 or sub-rule (2) of rule 40, as the case may be, in ink; and E (b) the date from which the area shall be available for grant is notified in the official Gazette at least 30 days in advance.

(2) The Central Government may, for reasons to be recorded in writing, relax the provisions of sub-rule (1) in any special case.)

"Rule 59. Availability of certain areas for grant to be notified- In the case of any land which is otherwise available for the grant of a prospecting licence or a mining lease but in respect of which the State Governm_ent has refused to grant a prospecting licence or a mining lease on the ground that the land should be reserved for any purpose other than prospecting or mining the minerals, the State Government shall, as soon as such land becomes

p. 861

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

~ain available for the grant of a prospecting or mining A lease, grant the license or lease after following the procedure laid down in rule 58.

41. (i) Rule 58 was amended on 16.11.1980 and the amended Rule 58 reads as under:- B .. "58. Reservation of area for exploitation in the public sector etc.- The State Government may, by notification in the Official Gazette, reserve any area for the exploitation by the Government, a Corporation established by the Central, State or Provincial Act or a Government C company within the meaning of section 617 of the Companies Act, 1956 (1 of 1956)

(ii) Rule 59 was amended first on 9.7.1963 and later in 1980 along with Rule 58. The amended Rule 59 as amended on D 9.7.1963 reads as follows:-

"Rule 59. Availability of certain areas for grant to be notified- In the case of any land which is otherwise available for the grant of a prospecting licence or a mining lease but in respect of which the State Government has refused to grant a prospecting licence or a mining lease on the ground that the land should be reserved for any purpose, the State Government shall, as soon as such land becomes again available for the grant of a prospecting or mining lease, grant the license or lease after following the procedure laid down in Rule 58."

(iii) Rule 59 when amended in 1980 reads as follows:-

"59. Availability of area for regrant to be notified- (1) G No area-

(a) which was previously held or which is being held under a prospecting licence or a mining lease; or

(b) in respect of which an order had beeD made for the H

p. 862

A grant of a prospecting licence or mining lease, but the applicant has died before the grant of the licence or the execution of the lease, as the case may be; or

(c) in respect of which the order granting a licence or lease has been revoked under sub-rule (1) of rule 15 or sub-rule B (1) of rule 31; or

(d) in respect of which a notification has been issued under sub section (2) or sub-section (4) of section 17; or

c (e) which has been reserved by Government under rule 58, shall be available for grant unless-

(i) an entry to be effect that the area is available for grant is made in the register referred to in sub-rule (2) of rule 21 or sub-rule (2) of rule D 40, as the case may be, in ink; and

(ii) the availability of the area for grant is notified in the Official Gazette and specifying a date (being a date not earlier than thirty days from the date of the publication of such notification in the Official Gazette) from which such area shall be available for grant:

Provided that nothing in this rule shall apply to the renewal of a lease in favour of the original lessee or his legal heirs notwithstanding the fact that the lease has already expired: Provided further that where an area reserved under rule 58 is proposed to be granted to a Government Company, no notification under clause (i) shall be required to be issued. G (2) The Central Government may, for reasons to be recorded in writing relax the provisions of sub-rule (1) in any special case.)"

H 42. Rule 58 has been subsequently deleted, whereas Rule

p. 863

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

59 was amended on 13.4.1988. It now reads as follows:- A

59. Availability of area for reg rant to be notified- (1) No area-

(a) which was previously held or which is being held under a reconnaissance permit or a prospecting B licence or a mining lease; or

(b) which has been reserved by the Government or any local authority for any purpose rther than mining; or

(c) in respect of which th0 order granting a permit or c licence or lease har be.3n revoked under sub-rule (1) of rule 7A or sub-rule (1) of rule 15 or sub-rule (1) of rule 31, as the case may be; or

(d) in respect of which a notification has been issued D under sub-section (2) or sub-section (4) of section 17; or

(e) which has been reserved by the State Government or under section 17A ojf the Act, E shall be available for grant u_nless-

(i) an entry to the effect that the area is available for grant is made in the register referred to insub-rule (2) of rule 7D or sub-rule (2) of rule 21 or sub-rule F (2) of rule 40, as the case may be; and

(ii) the availability of the area for grant is notified in the Official Gazette and specifying a date (being a date not earlier than thirty days from the date of the G publication of such notification in the Official Gazette) from which such area shall be available for grant:

Provided that nothing in this rule shall apply to the renewal of a lease in favour of the original lessee or his H

p. 864

A legal heirs notwithstanding the fact that the lease has already expired.

Provided further that where an area reserved under rule 58 or under section 17A of the Act is proposed to be granted to a Government company, no notification under 8 clause (ii) shall be required to be issued:

Provided also that where an area held under a reconnaissance permit or a prospecting licence, as the case may be, is granted interms of sub-section (1) of C section 11, no notification under clause (ii) shall be required to be issued.

(2) The Central Government may, for reasons to be recorded in writing, relax the provisions of sub-rule (1) in o any special case."

43. (i) The notification of 1969 is clearly protected under Rule 59 as amended on 9.7.1963, in as much as the rule clearly states that the State Government can refuse to grant a mining lease, should the land be reserved for any purpose. As far as the notification of 1962 is concerned, it is submitted by the appellants that the Rules 58 and 59 as they stood prior thereto did not contain a specific power to reserve the land for any purpose, in the manner it was incorporated in Rule 59 by the amendment of 9.7.1963. As can be seen, these rules provide as to when the reserved area can be notified for re-grant. The Rules lay down the requirement of making an entry in the register maintained in that behalf, and issuance of a notification in the official gazette about the availability of the area for grant. These provisions are made to ensure transparency. The G reference to the judgment in Janak Lal (supra) does not take forward the case of the appellants, since as stated in that judgment the liesult of the amendment in the rule is only to extend the rule, and not to curtail the area of its operation. The judgment in terms states that the purpose of these rules is H obviously to enable the general public to apply for the proposed

p. 865

AND ORS. [H.L. GOKHALE, J.] lease. A (ii) Rule 58 as it originally stood, provided for two contingencies. One contingency is where the applicant has died before the execution of licence or lease, and the other is where the order granting licence or lease has been revoked. Rule 59 B as originally drafted provided for the third contingency, namely, where the State Government had earlier refused to grant a prospecting licence or mining lease in respect of certain land on the ground that it was reserved for some other purpose, (e.g. environmental), and such land becomes available for grant. For all these three contingencies, the procedure laid down in Rule C 58 was required to be followed, namely making of an entry in the specified register, and notifying in the official gazette the date from which the area will be available for grant.

44. The appellants then contended by referring to the D amended Rule 59 that because the power to reserve the land 'for any purpose' was specifically provided thereunder from 9.7.1963, such power did not exist in the Rules 58 and 59 as they stood prior thereto. It is not possible to accept this construction, for the reason as stated above that the Rules 58 E and 59 as they originally stood, merely dealt with three contingencies where the prescribed procedure was required to be followed. This cannot mean that when it comes to reservation of mining areas for public undertakings, such power was not there with the State Government prior to the amendment of 1963. The over-view of various sections of the act done by us clearly shows that the power to grant the mining leases is specifically retained with the State Government even with respect to the major minerals, though with the approval of the Central Government. The power to effect such reservations for public undertakings, or for any purpose flows from the ownership of the mines and minerals which vests with the State Government. The amendment of Rule 59 in 1963 made it clear that the State can reserve land 'for any purpose', and the amendment of Rules 58 and 59 in 1980 clarified that State can reserve it for a public corporation or a Government company. H

866 SUPREME COURT REPORTS {2012] 7 S.C.R.

A These amendments have been effected only to make explicit what was implicit. These amendments can not be read lo nullify the powers which the State Government otherwise had under the statute. In the present matter we are concerned with the challenge to the power of the State Government lo is.>ue the letter of withdrawal dated 13.9.2005 Which is issued in view of the two notifications of 1962 and 1969. The challenge to the validity of the said letter will therefore have to be repelled.

45. Learned Senior Counsel Shrl Mehta had relied upon Indian Metals and Ferro Alloys Ltd (supra) to contend that an area which is reseived can be made available for re-grant to private sector. However, that situation can arise when the area becomes de-reserved, and thereafter the specified procedure is followed. The following statement in para 45 of the very judgment cannot be ignored in this behalf:- 0 " ..... Under Rule 59(1), once a notification under Rule 58 is made, the area so reseived shall not be avanable for grant unless the two requirements of sub-rule (e) are satisfied: viz. an entry in a register and a gazette E notification that the area is available for grant...... • '

Thus, When such a decision to de-reseive the area for re-grant is taken, the above two requirements are expected to be followed. In the instant case there was no such occasion since no such decision had been taken by the State Government F Once the State Government realised that the concerned areas were reserved for the exploitation in public sector, ii withdrew the proposals forwarding the applications of the appellants to the Central Government, and it was fully entitled lo do the same.

G 46. It was then contended by Shri Mehta that the State Govemmenfs power is only to regulate the minor minerals under Section 15 of the Act, since, that section gives power to the State Government to make rules in respect of minor minerals, and since Section 14 states that Sections 5 to 13 do not apply lo minor minerals. On the other hand the over view of the

MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA 867

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

provisions i;om sections 4 to 17A as done above clearly shows the power of the State Government either to grant or not to grant the mining leases, prospecting licenses and reconnaissance permits and to regulate their operations even with respect to the major minerals specified in First Schedule to the act though with the previous approval of the Centre Government. This B would include the power to effect reservations of mining areas for the public sector. The reliance on Bharat Coking Coal (supra) is also untenable for the reason that the judgment lays down that the executive power of the State is subject to the law made by the Parliament. There is no conflict with the proposition c in the facts of this case. The power of the State flows from its ownership of the mines, and it is not in any way taken away by the law made by the Parliament viz. the MMDR Act or the MC rules. It is therefore not possible to accept the submission of Shri Ranjit Kumar that because a regulatory regime is created D under the Act giving certain role to the Central Government, the power to effect reservations is taken away from the State Government. The reference to the judgment of this Court in 0. K. Trivedi & Sons (supra) in this behalf was also misconceived. In that matter a bench of two Judges, of this Court, held section E 15 (1) of MMDR Act to be constitutional and valid. The court also held that the rule making power of the State Government, thereunder, did not amount to excessive delegation of legislative power to the executive. In that matter no such submission that the powers of the State Government were restricted only to section 15 was under consideration F

47. Similarly, the reliance on Hukam Chand (supra) was also misconceived in as much as in the present case there is no such issue of exercising rule making power retrospectively. Nor has the proposition in Air India (supra) any relevance in G the present case since this is not a case of saving any provision after the repeal of a statute. The action of the State cannot as well be faulted for being unreasonable to be hit by Article 19(1) (g) of the Constitution of India since all that the State has done is to follow the Statute as per its letter and its true spirit. H

pp. 866–867 — page break not located

p. 868

A 48. Learned Senior Counsel Shri Ranjit Kumar had contended that once the State Government had recommended the proposal to the Central Government for grant of mineral concession it becomes functus-officio in view of the provision of Rule 63 A of the MC Rules, 1960, and it cannot withdraw B the same. As far as this submission is concerned, firstly it is seen from the impunged judgment that this plea was not canvassed before the High Court. Besides, in any case, 'recommendation' will mean a complete and valid recommendation after an application for grant of mining lease c ·is made under Rule 22 with all full particulars in accordance with law. In the instant case the State Government found that its own proposal was a defective one, since it was over-lapping a reserved area. In such a case, the withdrawal thereof by the State Government cannot be said to be hit by Rule 63A. In any 0 case, the Central Government subsequently rejected the proposal, and hence not much advantage can be drawn from the initial forwarding of the appellants' proposal by the State Government.

49. It is also contended that Monnet was not afforded hearing. The submission of denial of hearing under Rule 26 by. the State Government is not raised in the Writ Petition. It is material to note that another plea is raised in Para 2 (XVI) of their Writ Petition, namely, that central government ought to have given a hearing before issuing the rejection order, though no specific provision from the rules was pointed out in that behalf. The plea that the appellants could not resort to their remedy of revision under Rule 54 against the letter of State Government dated 13.9.2005 cannot be accepted for the reason that it is the appellants who chose to file their writ petition directly to the G High Court to challenge the same (along with Central Government letter dated 6.3.2006) without exhausting that remedy. The Central Government cannot be faulted for the same. Incidentally, the Petition nowhere states as to how Monnet came to know about these internal communications H between the state and the central government. The other

p. 869

- AND ORS. [H.L. GOKHALE, J.] petitioners claim to have learnt about the same through a A newspaper report, and Adhunik claims to have got the copies thereof through an application under the Right to Information Act, 2005.

50. The appellants had relied upon three judgments of the B Constitution Benches of this Court in Hingir-Rampur Coal Co., M.A. Tulloch & Co. and Baijnath Kadio (supra). In Hingir- Rampur Coal Co. (supra), the Constitution Bench was concerned with the question of legality of the cess under the Orissa Mining Ares Development Fund Act, 1952. One of the grounds canvassed was that the said legislation was bad in law for being in conflict with the previous Mines and Minerals (Regulation and Development) Act, 1948, which was also a Central Act. It was contended that the central legislation was referable to Entry No.54 of the Union List from the Seventh Schedule. It occupied the field and therefore the state legislation which was referable to Entry No.53 was beyond the competence . of the state legislature. The Court found that the areas covered by the two acts were substantially the same. However, the 1948 Act was a pre-constitution act and the relevant provisions of the constitution were held to be prospective. The Court therefore, held that unless the declaration under Section 2 of the 1948 Act was made after the Constitution came into force, it will not· satisfy the requirement of Entry No.54. The cess and the Orissa Act were therefore not held to be bad in law. What this Court observed in Para 23 in this behalf is relevant for our purpose ................ .

"23. The next question which arises is, even if the cess is a fee and as such may be relatable to Entries 23 and 66 in List II its validity is still open to challenge because the legislative competence of the State Legislature under Entry 23 is subject to the provisions of List I with respect to regulation and development under the control of the Union; and that takes us to Entry 54 in List I. This Entry reads thus: "Regulation of mines and mineral development to the H

p. 870

A extent to which such regulation and development under the - control of the Union is declared by Parliament by law to be expedient in the public interest". The effect of reading the two Entries together is clear. The jurisdiction of the State Legislature under Entry 23 is subject to the limitation B imposed by the latter part of the said Entry. If Parliament by its law has declared that regulation and development of mines should in public interest be under the control of the Union to the extent of such declaration the jurisdiction of the State Legislature is excluded. In other words, if a c Central Act has been passed which contains a declaration by Parliament as required by Entry 54, and if the said declaration covers the field occupied by the impugned Act the impugned Act would be ultra vires, not because of any repugnance between the two statutes but because the State Legislature had no jurisdiction to pass the law. The D limitation imposed by the latter part of Entry 23 is a limitation on the legislative competence of the State Legislature itself. The position is not in dispute."

(emphasis supplied) E

51. In M.A. Tulloch & Co. (supra), the Constitution Bench was concerned with legality of certain demands of fee under the Orissa Mining Areas Development Fund Act, 1952, and the same question arose as to whether the provisions of the Orissa F Act were hit by the MMDR Act, 1957 in view of Entry No.54 of the Union List. The validity of the state. act was canvassed under Entry No.23 of the State List and was accepted as not hit by the provisions of the MMDR Act, 1957. The Court held the Orissa Act and the demand of fee to be valid. What this Court G observed in Para 5 is relevant for our purpose .......... .

"5 .............. It does not need much argument to realise that to the extent to which the Union Government had taken under "its control" "the regulation and development of minerals" so much was withdrawn from the H ambit of the power of the State Legislature under Entry 23

p. 871

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

and legislation of the State which had rested on the existence of power under that entry would to the extent of that "control" be superseded or be rendered ineffective, for here we have a case not of mere repugnancy between the provisions of the two enactments but of a denudation or deprivation of State legislative power by the declaration which Parliament is empowered to make and has made."

52. In Baijnath Kadio (supra), this Court was concerned with the validity of second proviso of Section 10 of the Bihar Land Reforms Act, 1964 for being in conflict with the provisions concerning miner minerals under the MMDR Act, 1957. The C Court followed the propositions in Hingir-Rampur Coal Co. and M.A. Tulloch Co. and found that the field was not open to the State Legislature, since it was covered under the Central Act.

53. As can be seen from these three judgments, if there D is a declaration by the Parliament, to the extent of that declaration, the regulation of mines and minerals development will be outside the scope of the State Legislation as provided under Entry No.54 of the Centre List. Presently, we are not concerned with the conflict of any of the provisions under the E MMDR Act, either with any State Legislation or with any Executive Order under a State Legislation issued by the State Government. The submission of the appellant is that the Jharkhand Government was not competent at all to issue the notifications of 1962 and 1969 reserving the mine areas for public undertaking. The answer of the State Government is that it is acting under the very MMDR Act, and the notifications are within the four corners of its powers as permitted by the Central Legislation.

54. All these issues raised by the appellants have already been decided by a bench of three Judges of this Court in Amritlal Nathubhai Shah Vs. Union of India reported in 1976 (4) SCC 108. In that matter also the Government of Gujarat had issued similar notifications dated 31.12.1963 and 26.2.1964 reserving the lands in certain talukas for exploitation of bauxite H

p. 872

A in public sector. The applications filed by the appellant for grant of mining lease for bauxite were rejected by the State Government. The revision application filed by the appellant to the Central Government was also rejected by its order which stated that the State Government was the owner of the minerals B within its territory and the minerals vest in it, and also that the State Government had the inherent right to reserve any particular area for exploitation in the public sector. The Gujarat High Court had accepted this view.

55. While affirming this view, this Court in Amritlal C Nathubhai (supra) held in clear terms that the power of the State Government arose from its ownership of the minerals, and that it had the inherent right to deal with them. In para 3 of its judgment the Court observed as follows:-

D "3. It may be mentioned that in pursuance of its exclusive power to make laws with respect to the matters enumerated in entry 54 of List I in the Seventh Schedule, Parliament specifically declared in Section 2 of the Act that it was expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent provided in the Act. The State Legislature's power under entry 23 of List II was thus taken away, and it is not disputed before us that regulation of mines and mineral development had therefore to be in accordance with the Act and the Rules. The mines and the minerals in question (bauxite) were however in the territory of the State of Gujarat and, as was stated in the orders which were passed by the Central Government on the revision applications of the appellants, the State Government is the "owner of minerals" within its territory, and the minerals "vest" in it. There is nothing in the Act or the Rules to detract from this basic fact. That was why the Central Government stated further in its revisional orders that the State Government had the "inherent right to reserve any particular area for exploitation in the public sector". It H

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 873 AND ORS. [H.L. GOKHALE, J.]

is therefore quite clear that, in the absence of any law or contract etc. to the contrary, bauxite, as a mineral, and the mines thereof, vest in the State of Gujarat and no person _, has any right to exploit it otherwise than in accordance with the provisions of the Act and the Rules. Section 1O of the Act and Chapters 11, Ill and IV of the Rules, deal with the grant of prospecting licences and mining leases in the land in which the minerals vest in the Government of a State. That was why the appellants made their applications to the State Government."

56. The Court traced the power of the State Government c to refuse to grant lease, to Section 10 of the MMDR Act. It held that this section clearly included the power either to grant or refuse to grant the lease on the ground that the land in question was not available having been reserved by the State Government for any purpose. In para 5 of its judgment this Court D has held as follows:-

"5. Section 10 of the Act in fact provides that in respect of minerals which vest in the State, it is exclusively for the State Government to entertain applications far the grant of prospecting licences or mining leases and to grant or refuse the same. The section is therefore indicative of the power of the State Government to take a decision, one way or the other, in such matters, and it does not require much argument to hold that that power included the power to refuse the grant of a licence or a lease on the ground that the land in question was not available for such grant by reason of its having been reserved by the State Government for any purpose."

57. In para 6 of the judgment, this Court rejected the argument that since Section 17 of the Act provides for the powers of the Central Government to undertake prospecting or mining operations, the State Government could not be said to have the power for reservations. The first part of this para reads as follows:- H

p. 873 — page break not located

p. 874

A "6. We have gone through Sub-sections (2) and (4) of Section 17 of the Act to which our attention has been invited by Mr. Sen on behalf of the appellants for the argument that they are the only provisions for specifying the boundaries of the reserved areas, and as they relate B to prospecting or mining operations to be undertaken by the Central Government, they are enough to show that the Act does not contemplate or provide for reservation by any other authority or for any other purpose. The argument is however untenable because the aforesaid sub-sections of c Section 17 do not cover the entire field of the authority of refusing to grant a prospecting licence or a mining lease to anyone else, and do not deal with the State Government's authority to reserve any area for itself. As has been stated, the authority to order reservation flows from the fact that the State is the owner of the mines and the minerals within its territory, which vest in it. ..............."

58. The Judgment referred to Rule 59 of the M.C. Rules also, and held that it clearly contemplates such reservation by the order of the State Government In para 7 this Court held in this behalf as follows:-

"7 ....... A reading of Rules 58, 59 and 60 makes it quite clear that it is not permissible for any person to apply for a licence or lease in respect of a reserved area until after it becomes available for such grant, and the availability is notified by the State Government in the Official Gazette. Rule 60 provides that an application for the grant of a prospecting licence or a mining lease in respect of an area for which no such notification has been issued, inter alia, under Rule 59, for making the area available for grant of a licence or a lease, would be premature, and "shall not be entertained and the fee, if any, paid in respect o.f any such application shall be refunded." It would therefore follow that as the areas which are the subject matter of the present appeals had been reserved H

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

by the State Government for the purpose stated in its A notifications, and as those lands did not become available for the grant of a prospecting licence or a mining lease, the State Government was well within its rights in rejecting the applications of the appellants under Rule 60 as II premature ...... B

59. In view of the discussion as above, the judgment in Amritlal (supra) cannot be said to be stating anything contrary to the propositions in Hingir-Rampur Coal Co., M.A. Tulloch & Co. and Baijnath Kadio (supra), but is a binding precedent. The notifications impugned by the appellants in the present c group of appeals were fully protected under the provisions of MMDR Act, and also as explained in Amritlal (supra).

Desueutde D

60. The submissions with respect to the two notifications suffering on account of Desuetude has also no merit, as the law requires that there must be a considerable period of neglect, and it is necessary to show that there is a contrary practice of a considerable time. The appellants have not been able to E show anything to that effect. The authorities of the State of Jharkhand have acted the moment the notifications were brought to their notice, and they have acted in accordance therewith. This certainly cannot amount to deusteude.

Promissory Estoppel and Legitimate Expectations F

61. As we have seen earlier, for invoking the principle of promissory estoppel there has to be a promise, and on that basis the party concerned must have acted to its prejudice. In the instant case it was only a proposal, and it was very much G made clear that it was to be approved by the Central

- Government, prior whereto it could not be construed as containing a promise. Besides, equity cannot be used against a statutory provision or notification. H

62. What the appellants are seeking is in a way some kind

p. 876

A of a specific performance when there is no concluded contract between the parties. An MOU is not a contract, and not in any case within the meaning of Article 299 of the Constitution of India. Barring one party (Adhunik) other parties do not appear to have taken further steps. In any case, in the absence of any B promise, the appellants including Aadhunik cannot claim promissory estoppel in the teeth of the notifications issued under the relevant statutory powers. Alternatively, the appellants are trying to make a case under the doctrine of legitimate expectations. The basis of this doctrine is in reasonableness c and fairness. However, it can also not be invoked where the decision of the public authority is founded in a provision of law, and is in consonance with public interest. As recently reiterated by this Court in the context of MMDR Act, in Para 83 of Sandur Manganese (supra) 'it is a well settled principle that equity stands excluded when a matter if governed by statute'. We 0 cannot entertain the submission of unjustified discrimination in favour of Bihar Sponge and Iron Ltd. as well for the reason that it was not pressed before the High Court nor was any material placed,before this Court to point out as to how the grant in its favour was unjustified.

Epilogue

63. Before we conclude, we may refer to the judgment of this Court in State of Tamil Nadu Vs. M/s Hind Stone reported in AIR 1981 SC 711 wherein the approach towards this statute came up for consideration. In that matter this Court was concerned with Rule 8-C of the Tamil Nadu Minor Mineral Concessions Rule, 1959 framed by the Government of Tamil Nadu under Section 15 of the MMDR Act. This rule provided as follows:-

"8-C. Lease of quarries in respect of black granite to Government Corporation, etc. -

(1) Notwithstanding anything to the contrary contained in these rules, on and from 7th December 1977 no lease

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

for quarrying black granite shall be granted to private A persons.

(2) The State Government themselves may engage in quarrying black granite or grant leases for quarrying black granite in favour of any corporation wholly owned by 8 the State Government.

Provided that in respect of any land belonging to any private person, the consent of such person shall be obtained for such quarrying or lease" c 64". Although in Hind Stone the Court was concerned with the provision of this rule which was concerning a minor mineral, while examining the validity thereof this Court (per 0. Chinnappa Reddy J.) has made certain observations towards the approach and the scope of MMDR Act which are relevant for our purpose. Thus in para 6, it was observed as follows:-

"6 ................ The public interest which induced Parliament to make the declaration contained in Section 2 of the Mines and Minerals (Regulation and Development) Act, 1957, has naturally to be the paramount consideration in all matters concerning the regulation of mines and the development of minerals, Parliament's policy is clearly discernible from the provisions of the Act. It is the conservation and the prudent and discriminating exploitation of minerals, with a view to secure maximum benefit to the community ................. "

65. Again in para 9, this Court observed:-

"9 .......... Whenever there is a switch over from G 'private sector' to 'public sector' it does not necessarily follow that a change of policy requiring express legislative sanction is involved. It depends on the subject and the statute. For example, if a decision is taken to impose a general and complete ban on private mining of all minor H

p. 878

A minerals, such a ban may involve the reversal of a major policy and so it may require legislative sanction. But if a decision is taken to ban private mining of a single minor mineral for the purpose of conserving it, such a ban, if it is otherwise within the bounds of the authority given to the B Government by the Statute, cannot be said to involve any change of policy. The policy of the Act remains the same and it is, as we said, the conservation and the prudent and discriminating exploitation of minerals, with a view to secure maximum benefit to the community. Exploitation of c minerals by the private and/or the public sector is contemplated. If in the pursuit of the avowed policy of the Act, it is thought exploitation by the public sector is best and wisest in the case of a particular mineral and, in consequence the authority competent to make the subordinate legislation makes a rule banning private exploitation of such mineral, which was hitherto permitted we are unable to see any change of policy merely because what was previously permitted is no longer permitted."

Last but not least, in para 13 this Court observed as follows:-

"13 ...... No one has a vested right to the grant or renewal of a lease and none can claim a vested right to have an application for the grant or renewal of a lease dealt with in a particular way, by applying particular provisions ....... "

66. Mines and minerals are a part of the wealth of a nation. They constitute the material resources of the community. Article 39(b) of the Directive Prrnciples mandates that the State shall, in particular, direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good. Thereafter, Article 39(c) mandates that state should see to it that operation of the economic system does not result in the concentration of wealth and means of production to the

p. 879

AND ORS. [H.L. GOKHALE, J.] common detriment. The public interest is very much writ large A in the provisions of MMDR Act and in the declaration under Section 2 thereof. The ownership of the mines vests in the State of Jharkhand in view of the declaration under the provisions of Bihar Land Reforms Act, 1950 which act is protected by placing it in the Ninth Schedule added by the First Amendment to the B Constitution. While speaking for the Constitution Bench in Waman Rao (supra) Chandrachud, C.J. had following to state on the co-relationship between Articles 39 (b) and (c) and the First Amendment:-

"26. Article 39 of the Constitution directs by clauses (b) and c (c) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. These twin D principles of State Policy were a part of the Constitution as originally enacted and it is in order to effectuate the purpose of these Directive Principles that the 1st and the 4th Amendments were passed ..... " E

67. What is being submitted by the appellants is that the State Government cannot issue such notifications for the reasons which the appellats have canvassed. We, however, do not find any error in the letter of withdrawal dated 13.9.2005 issued by the State of Jharkhand, and the letter of rejection F dated 6.3.2006 issued by the Union of India for the reasons stated therein. In our view, the State of Jharkhand was fully justified in declining the grant of leases to the private sector operators, and in reserving the areas for the public sector undertakings on the basis of notifications of 1962, 1969 and G

2006. All that the State Government has done is to act in furtherance of the policy of the statute and it cannot be faulted for the same.

68. For the reasons stated above we do not find any merit H

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A in these appeals and they are all dismissed. The interim orders passed therein will stand vacated.

69. The Contempt Petition (C) No.14/2009 is filed by Abhijeet is for the alleged breach of an earlier order dated 15.12.2008. The order dated 28.01.2009 makes it clear that 8 no notice was issued on the Contempt Petition. Since the appeal is being disposed of and dismissed, the Contempt Petition is also dismissed.

70. Iron is a mineral necessary for industrial development. C In view of the pendency of these appeals, and the stay orders sought by the appellants therein, grant of lease of iron-ore mines to the public sector undertakings could not be m?de for over six years. The State of Jbarkhand and the people at large have thereby suffered. In view thereof we would have been justified D in imposing costs on the appellants. However, considering that important questions of law were raised in these appeals, we refrain from doing the same. The parties will therefore, bear their own costs.

R.P. Appeals dismissed.