INDIAN METALS AND FERRO ALLOYS LTD. v. UNION OF INDIA AND ORS.

The Judgment of the Court was delivered by

RANGANATIIAN,J. THE "DRAMATIS PERSONAE"

All these matters are in the nature of off shoots of a basic con- troversy raised in W.P. No. 14116/84 which was "disposed of" by the C orders of this Court dated 30..4.87 and 6.10.87. The parties are now seeking certain clarifications and directions in relation to the orders passed by this Court in the above writ petition. There have been several subsequent developments having an impact on the issue origi- nally brought to this Court in the Writ Petition (W.P.) and, at present, the matter has become very complicated and involves the interests of a 0 large number of parties. To give a cogent narration of the necessary facts, it is best to start with an enumeration of the various parties with whom we are concerned in the matters which are being disposed of by this judgment.

The writ petition as well as the connected matters arise out of applications for grant of rights for the mining of chrome ore or Chro- mite in the State of Orissa. Chrome ore is one of the minerals specified in the First and Second Schedules to, and not a "minor mineral" within the meaning of s. 3(f) of, the Mines and Minerals (Development and Regulation) Act, 1957. The right to grant mining rights in respect of this mineral is vested in the State Government, subject, as we shall see later, on control by the Union oflndia. The State of Orissa (S.G.) and the Union of India (C.G .) are, therefore, the primary respondents in this litigation. On the other side are ranged a number of applicants for the mining rights we have referred to above. These are:

(1) Indian Metals and Ferro-Alloys Limited (IMFA); G (2) Ferro Alloys Corporation Limited (FACOR);

(3) Orissa Cements Limited (OCL);

H (4) Orissa Industries Limited (ORIND); ·-

INDIAN METALS v. U.0.1. IRANGANATHAN, J.] 37

(5) Orissa Mining Corporation (OMC); A

(6) Industrial Development Corporation of Orissa Ltd. (IDCOL); and

(7) Shri Mantosh Aikath; B Of the above, the first four are companies in the private sector, the next two are public sector corporations owned substantially by the State of Orissa and the last, a private individual.

THE PRESENT CONTROVERSY

The principal question for decision before us is as to whether all or c any of the various parties referred to above are entitled to obtain leases for the mining of chrome ore (hereinafter referred to as MLs) and, if so, to what extent. In particular, we are concerned with an area consisting of five blocks referred to in para 8 of the W.P. to which reference will be made later. The controversy primarily turns round applications made in respect of these blocks by IMFA, FACOR, AIKAT and OCL. ORIND also lays claim to mining rights in respect of a portion of these blocks. It has filed a special leave petition which is separately numbered as S.L.P. No. 8574 of 1989 and is directed against an order dated 7.4.89 passed by the Orissa Government rejecting an application made by the company on 5th July, 1971. FACOR has also preferred S.L.P. No. 5163 of 1988 from an order of the High Court of Orissa dated 11. 11.1987 dismissing a writ petition filed against an order of rejection by the S.G. of an application made by it on 18.7.1977 for grant of a ML which was confirmed by the C.G.

As already mentioned, this Court 'disposed' of W.P. No. 14116/ F 1984 by its order of 30.4.87. We shall have to consider this and several other orders passed by this Court in the course cf the hearing more closely but a brief reference may be made here to the resultant effect thereof. When this Court found that there were a large number of applications for MLs over varying extents of land in the areas in ques- tion, this Court decided that the respective merits of the applications G could not be gone into by this Court but that they should be considered by a responsible officer of the C. G. Accordingly, by the orders above referred to, this Court referred the entire controversy to the Secretary to the Government of India in the Ministry of Mines (Shri B.K. Rao, "Rao", for short) for a detailed consideration of the claims of the various parties. When the matter went to Rao, OMC and IDCOL also

38 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

put forward claims that the public sector units in the State of Orissa A were entitled to the grant of mining rights in the State to the exclusion of all private parties inasmuch as there was a reservation in their favour by an appropriate notification issued by the State Government. The other parties objected to the intervention of the OMC and IDCOL at, what they alleged was, a belated stage of the proceedings. B However, on applications made by OMC and IDCOL, this Court directed that the claims of these two public sector undertakings would also be examined by Rao. Eventually Rao, after considering the claims of all parties, reduced his conclusions in the form of a report dated !st February, 1988. In his report, Rao accepted the claim of reservation made on behalf of the OMC and the IDCOL. Nevertheless it appears that, bearing in mind certain interim orders passed by this Court in the various applications made to it during the pendency of the writ peti- tions, Rao came to the conclusion that only three of the parties other than the two public sector undertakings should be granted leases to the extent .mentioned by him. Broadly speaking, Rao accepted partially the claims of !MFA, FACOR and AIKATH. He rejected the claims made by ORIND and OCL. He accepted the claim of the public sector undertakings but he recommended for them leases in respect of only the balance of the lands left, after fulfilling the claims of the others which he had accepted.

Applications have now been filed before us which, inter a/ia, seek directions on Rao's report. There has been a good deal of contest before us as to the precise legal character. of the report submitted by Rao. One suggestion is that Rao was nothiµg more than a comm is· sioner appointed by the Court to examine the claims of the various parties and to submit a detailed report thereon. It is submitted that this report having been received we should pass such orders thereon as we may consider appropriate. A second approach suggested is that the Rao report should be taken to be the decision of the Central Govern- ment, which it is now for the State Government to implement, leaving it open to any aggrieved party to take such appropriate proceedings as may be ·available to them in law for successfully challenging the find- ings reached by Rao. A third line of argument which has been addres- G sed before us, particularly by the State of Orissa, the OMC and the IDCOL, is that Dr. Rao's report suffers from a fundamental defect in that he has completely ignored the reservation made by the State Government in favour of the public sector. According to them, Rao was not right in suggesting the grant of leases to any of the other parties and should have simply left it to the State to exploit the mines H in public sector, including inter alia, the OMC and IDCOL. A fourth

INDIAN METALS v. U.0.1. {RANGANATHAN, J.l 39

stance taken up by the State Government may also be mentioned here. A The learned Advocate General for the State made a statement before us that, without prejudice to a contention that the Rao report suffered from the fundamental defect referred to above, the State Government was prepared to abide by the findings of Rao provided this Court decides to accept the same in toto without any modifications. He clarified that this is not because they think the Rao report is correct. B On the other hand they have got several objections to the validity and correctness of Dr. Rao's report. ,However, having regard to the interim orders passed by this Court and having regard to the fact that what Rao has done is virtually to implement various orders passed by this Court during the pendency of the writ petition, the State Govern- ment, without prejudice to its contentions in relation to the Rao report, is prepared to abide by it. However, the learned Advocate- c General said, the State Government wish to make it clear that if, for some reason, this Court does not accept the Rao Report in toto, then the State Government would like to put forward their contentions against the report of Dr. Rao. In that event the State Government should be given the liberty to attack Dr. Rao's report and urge all contentions that are open to it in respect of the grant of mining leases relating to chrome ore in the State of Orissa. The above stance under- standably, is not acceptable to OCL and ORIND or, indeed, even to OMC and IDCOL who have got nothing at the hands of Rao. !MFA and FACOR are substantially satisfied with the report given by Dr. Rao (except for certain minor contentions which they are prepared to give up for the present, with liberty to make representations to the State Government) but they also wish to make it clear that, in case the Rao report is not to be accepted by this Court, they would also like to put forward all their contentions so that their case may not go by default. In that event, in particular, they would like to attack the reservation plea urged by the S.G., OMC and IDCOL both as belated F ) as well as on merits. AIKA TH's submission is that he is a small operator who discovered the mines and that Rao's recommendation for the grant of a ML in his favour in respect of a small extent of land should not be disturbed by us. We have only broadly set out here the attitudes of the various parties to the Rao report and shall discuss their contentions later in detail. In the light of these various contentions, we G have to determine the legal character of the Rao report and decide whether the findings of Rao are to be given effect to in toto or are to be modified and, if so, in what respects.

-~ Before dealing with these questions and even setting out the de.tails of the claims of the various parties and the material they placed H

40 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

before Rao to substantiate their claims, it will be useful to survey the A relevant statutory provisions relating to the grant of mineral conces- sions of the nature we are concerned with here. This we shall at once proceed to do.

THE RELEVANT STATUTORY PROVISIONS B (a) Constitution: Article 297 of the Constitution of India unequi- vocally declares that 'all lands, minerals and other things of value underiying the ocean ..... shall vest in the Union and be held for the purposes of the Union'. Article 298 defines the extent of the executive power of the Union and of each State thus: c "298. Power to carry on trade, etc.-The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose: D Provided that-

(a) the said executive power of the Union shall, in so far as such trade or business or such purpose is not one with .,,-- respect to which Parliament may make laws, be subject in E each State to legislation by the State; and

(b) the said executive power of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws, be subject to legislation by Parliament." F The Union and the States have both been vested with powers to legislate in respect of mining rights under the Seventh Schedule to the Constitution. The respective rights of the Union and the States in this regard are contained in the following entries in the said Schedule:

G List I, Entry 54

Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in public interest. H

INDIAN METALS v. U.0.1. [RANGANATHAN, J.] . 41

List II, Entry 23 A Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and de- velopment under the control of the Union.

(b) Act: In exercise of the above powers, the Union legislature has B enacted the Mines and Minerals (Development & Regulation) Act, 1957 (hereinafter referred to as 'the Act'). The Act has been substan- tially amended and several drastic changes introduced in 1986 with a view, inter alia, to prevent unscientific mining, remove bottle-necks and promote speedy development of mineral based industries. We are concerned only with the provisions relating to the grant of mining leases and we may proceed to consider the same. c

S. 2 of the Act contains the declaration referred to in Entry 54 referred to above. It reads:

"2. Declaration as to expediency of Union control-it is hereby declared that it is 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 hereinafter provided." ·

With this declaration, the Act proceeds to circumscribe the extent to which the regulation of mining rights in the States should be subject to the control of the Union. We may now proceed to refer to the relevant provisions of the Act in relation to mi.nerals like "chrome ore", which may be described, for convenience, as "major minerals".

S. 4 of the Act provides as follows:- F

:'No person shall undertake any prospecting or mmmg operation in any area except under and in accordance with the terms and conditions of a prospecting licence or as the case may be, a mining lease granted under this Act and the rules made thereunder. G

(2) No prospecting licence or mining lease shall be granted otherwise than in accordance with the provisions of this Act and the rules made thereunder."

Sections 10 and 11 outline the procedure for obtaining a prospecting H

42 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

licence (PL) or a mining lease (ML). They read thus: A "10. Application for prospecting licences or mining leases: (I) An application for a prospecting licence or a mining lease in respect of any land in which the minerals vest in the Government shall be made to the State Government con- B cerned in the prescribed form and shall be accompanied by the prescribed fee.

(2) Where an application is received under sub-section there shall be sent to applicant an acknowledgement of its receipt within the prescribed time and in the prescribed form. c (3) On receipt of an application under this section, the State Government may, havhJg regard to the provisions of this Act and any rules made thereunder, grant or refuse to grant the licence or lease." D

11. Preferential right of certain person: (I) Where a prospecting licence has been granted in respect of any land, the licensee shall have a preferential right for obtaining the mining lease in respect of the said land over any other person: xxx xxx xxx

(2) Subject to the provisions of sub-section (I), where two or more persons have applied for a prospecting licence or a mining lease in respect of the same land, the applicant whpse application was received earlier shall have a prefe- rential right for the grant of the lieence or lease as the case may be over an applicant whose application was received later:

Provided that where any such applications are received on the same day, the State Government, after taking into consideration the matters specified in sub- section (3), may grant the prospecting licence or mining lease. as the case may be, to such one of the applicants as it may deem fit.

H (3) The matters referred to in sub-section (2) are the following:

INDIAN METALS v. U.0.1. lRANGANATHAN, J.I 43

(a) any special knowledge of, on experience in, prospect- ing operations or mining operations as the case may be 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;

- (d) such other matters as may be prescribed.

(4) Notwithstanding anything contained in sub-section (2) but subject to the provisions of sub-section ( 1), the State Government may for any special reasons to be recorded c and with the previous approval of the Central Government. grant a prospecting licence or a mining lease to an applicant whose application was received later in preference to an applicant whose application was received earlier." D We may next to refer to S. 17A which has been inserted in the Act by the 1986 amendment. It reads thus:

S. 17-A: Reservation of area for purposes of conservation -(1) The Central Government, with a view to conservmg any mineral and after consultation with the State Govern· E ment may reserve any area not already held under any prospecting licence or mining lease 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 area will be reserved . -' F (2) The State Government may, with the approval of the Central Government, reserve any area not already held under any prospecting licence or mining -lease, for under- taking prospecting or mining operations through a Govern- ment company or corporation owned or controlled by it or by the Central Go'vernment and where it proposes to do so, G 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. ,.....-"\ (3) Where in exer.:ise of the powers conferred by sub- section (2) the State Government undertakes prospecting H·

,,_.....

44 SUPREME COURT REPORTS [1990] Supp. 2 S.C.R.

or mining operations in any area in which the minerals vest in a private person, it shall be liable .to pay prospecting fee, royalty, surface rent or dead rent, as the case may be, from time to time at the same rate at which it would have been payable under this Act if such prospecting or mining opera· tions had been undertaken by a private person under prospecting licence or mining lease.

S. 19 of the Act decla,res that any prospecting licence or mining lease granted, renewed or aiquired in contravention of the provisions of this I ~ Act or any rules or orders made 'th.ifeunder shall be void and of no effect. S. 30 confers revisional powers on the C.G. It reads: c "The Central Government may, of its own motion or on I ' application made within the prescribed time by an aggr1e· ved party, revise any order made by the State Government or other authority in exercise of the powers conferred on it by or under this Act." · D These are the provisions of the Act relevant for our purposes.

( c) Rules: Turning now to the rules framed under the Act which also have a material bearing on the present issues, they are contained in Chapter IV of the Mineral Concessions Rules, 1960 which deals with the grant of mining leases in respect of land the minerals in which vest the Government. Rule 22 outlines the procedure in respect of applica· lions for MLs. It requires the application to be made in a prescribed form and accompanied by a fee of Rs.500 and certain documents and particulars. Rules 24 and 26 prescribe the procedure for disposal of such applications. Sub-rules (1) and (3) of rule 24 are relevant for our present purposes and are extracted below:

"24. Disposal of application for mznzng lease:-(!) An application for the grant of a mining lease shall be disposed of within twelve months from the date of its receipt.

G xxx xxx xxx

(3) If any application is not disposed of within the period specified in sub-rule (1), it shall be deemed to have been refused. · '-

H xxx xxx xxx

INDIAN METALS v. U.0.1. {RANGANATHAN, J.] 45

Under rule 26, the S.G. may, after giving an opportunity of being heard and for reasons to be recorded in writing and communicated to the applicant, refuse to grant or renew a mining lease over the whole or part of the area applied for.

Rule 31 prescribes that where an order for grant of a lease is made, a lease deed has to be executed within a. period of six months of the order or such further period as the S.G. may allow in this behalf. Failure to do this, if attributable to any default on the part of the appellant, could entail the revocation of the lease. The lease shall commence from the· date of the lease deed.

We next turn to rule 54 which deals with applications for revision to the C.G. It reads, in so far as is relevant for our purposes: c "54. Application for revision:-(!) Any person aggrieved by any order made by the State Government or other authority in exercise of the powers conferred on it by the Act or these rules may, within three months of the date of D communication of the order to him, apply to the Central Government in triplicate in Form N, for revision of the order. The application should be accompanied by a trea- -~ sury receipt showing that a fee of Rs.500 has been paid into a Government treasury or in any branch of the State Bank of India doing the treasury business to the credit of Central E Government under the head of account '128-Mines and Minerals-Mines Department-Minerals Concession Fees and Royalty': .. Provided that any such application may be entertained after tlje said period of three months, if the applicant satis- F fies the Central Government that he had sufficient cause for not making the application within time.

xxx xxx xxx

(4) On receipt of the application and the copies thereof, G the Central Government shall send a copy of the applica- tion to each of the parties impleaded under sub-rule (2), specifying a date on or before which he may make his re- presentations, if any, against the revision application.

Explanation:-For the purposes of this rule, where a State

46 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

Government has failed to dispose of an application for the A grant of renewal of a prospecting licence or a mining lease within the period specified in respect thereof in these rules, the State Government shall be deemed to have made an order refusing the grant or renewal of such licence or lease on the date on which such period expires. B Rule 55 provides that the C.G., after getting the comments of the S.G. and other parties on the application and after giving each of them an opportunity to put forward their comments on the stand taken by the ( others, "may confirm, modify or set aside the order (of the S.G.) or pass such other order in relation thereto" as it "may deem just and proper". Three more rules'need to be set out which deal with the topic c of reservation. Rules 58, 59 and 60, before 1980, were in the following terms:

"58. Availability of areas for regrant to be notified-( 1) No area which was previously held or which is being held under prospecting licence or a mining lease so the case may be or in respect of which the order granting licence or lease has been revoked under sub-rule ( 1) of the rule 15 or sub-rule ( l) 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

(b) the date from which the area shall be available for grant is notified in the Official Gazette at least thirty days in advance.

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

59. Availability of certain a regs for grant to be notified-in the case of any land which is otherwise available for the G grant of a prospecting licencor 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 Govern- ment, shall, as soon as such land becomes again available for the grant of prospecting licence or mining lease, grant ......... H the licence or lease after following the procedure laid down in rule 58.

INDIAN METALS v. U.O.I. (RANGANATHAN, J.l 47

60. Premature applications-Applications for the grant of A a prospecting licence or a mining lease in respect of the areas in which-

(a) no notification has been issued under rule 58 or rule 59; or B (b) if any such notification has been issued the period specified in the notification has not expired. ·Shall be deemed to be premature and shall not be entertained and the fee, if any, paid in respect of any such application shall be refunded."

G.S.R. 146 ·dated 16th January, 1980 substantially amended these c rules. After this amendment, Rule 58 reads:

"58. Reservation of areas for exploitation in the public sector, etc.: The State Government may, by notification in the Official Gazette, reserve any area for exploitation D by the Government, a Corporation established by any Central, State or Provincial Act or a Government company within the meaning of Section 617 of the Companies Act, 1956 (!of 1956)".

Rule 59 is relevant only in part. It reads: E

"59. Availability of area for regrant to be notified:(!) No area-

xxx xxx xxx F (e) which has been [reserved by the State Government] Substituted for the words "reserved by the Government" by G.S.R. 86(E) w.e.f. 10.2.87 under Rule 58, [or u/s 17A) These words were inserted by G.S.R: 146(E) dated 16.1.80 w.e.f. 2.2.80 shall be available for grant unless- G (i) an entry to the 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 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 H

48 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A 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:

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

Rule 60 deals with "premature applications". It reads: ,. c I 60. Premature applications: Applications for the grant of a prospecting licence or mining lease in resl'ect of areas whose availability for grant is required to be notified under Rule 59 shall if,-

(a) no notification has been issued under that rule: or D '. (b) where any such notification has been issued, the period specified in the notification has not expired, shall be deemed to be premature and shall not be entertained, and the application fee thereon, if any paid, shall be refunded. E The above are the relevant rules governing application for, and grant of, leases, revision petitions and reservation of areas in the light of which the issues in the present case have to be considered. We shall now proceed to give the details of the various applications for MLs preferred by the parties before us. F ML APPLICATIONS OF THE PARTIES

Though it was the IMFA which came to this Court with a writ petition, there were a number of other applications for grant of MLs pending before the State Government. The broad details of these applications are set out below: G I. IMFA

(a) Previous History: JMFA made five applications for grant of mining lease in respect of five blocks of la.nd as per the following details (which are hereinafter referred to as items 1to5 respectively): H

. INDIAN METALS v. U.0.1. [RANGANATHAN, J.I 49

Area Date of Area Village & District No. A App Iica- applied for ti on I. 1.7.1981 634.359 Ghotarangia and other villages 8.7.1981 beets. (Dhankanal Dist!.)

2Copy pinpoint2. 23.6.1981 142.000 Ostapal Village, Sukhinda Tehsil B beets. (Cuttack Dist!.)

3Copy pinpoint3. 6.7.1981 108.860 Kamarada and padar villages beets. (Cu~tack Dist!.)

4Copy pinpoint4. 9.9.1981 37.008 Ostapal and Gurjang villages, Sukhinda • 10.9.1981 beets . Tehsil (Cuttack Dist!.) c

5Copy pinpoint5. 24.11.1981 147.693 Ostapal and Gurjang villages, Sukhinda beets. Tehsil (Cuttack Distt.) The s'.G. did not dispose of these applications within the pre- scribed period of twelve months. They were, therefore, deemed to have been rejected under rule 24(3). IMFA applied to the C. G. for the revision of these deemed rejection orders of the S.G. The C.G. set aside the deemed rejection orders and directed the S.G. to dispose of the matter on merits within a period of 200 days. However, the r S.G. did not take any action on the applications of the !MFA within the period of 200 days. !MFA made a representation to the Central Government but the Central Government gave no relief on the ground that it had become functus officio and had no jurisdiction to issue further directions to the State Government. Thereupon !MFA filed Writ Petition No. 14116 of 1984 in this Court. !MFA alleged, that while its applications were kept pending, the S.G. had granted leases in favour of FACOR and thus discriminated against !MFA. It prayed for the·issue of a writ of mandamus to the S.G. to grant leases to !MFA F :. also. (b) Subsequent developments: This Court, on 27.9.84 passed an order (extracted later) directing the S.G. to consider IMFA's applica- tions by 23.10.84 and restraining it from granting MLS to any one else in the meanwhile. FACOR moved for a recall of this order. The Court passed an interim order on 18. 10.84 holding over the implementation G of the earlier order in regard to grant of lease to IMFA and calling for the records. However, it appears, on 21.11.84, the S.G. had agreed to grant a ML in favour of AIKATH in respect of 140 acres out of 147.69 hectares covered by item No. 5 above. On 26.12.84, the S.G. filed a counter affidavit pointing out: (a) that there was a reservation of the H

50 SUPREME COURT REPORTS ( 1990] Supp. 2 S.C.R.

A areas for the public sector and (b) that except item 1, the areas covered b' the other applications overlapped areas covered by earlier applica- tions of OMC, IDCOL and others. Nevertheless, it was stated, on due consideration in the light of the observations of this Court, the S.G. had tentatively decided to grant a ML to !MFA in respect of 634.359 hectares in item 1. On 27. 11.84, IMFA stated that it was not interested B in item 1 which. according to it, contained only low grade ore and was not commercially viable unless !MFA was given, at the same time, areas bearing high quality ore which could be blended with the low grade ore. It stated that it was willing to accept M.L. in respect of items 2, 3 and either item 4 or half of item 5. On 2. l.85. the S.G. passed formal orders rejecting IMFA's application in respect of items 2 c to 5 of the list. This was on the ground, so far as item 2 was concerned, that the area fell within the reserved areas, that there were prior applications of OMC & FACOR in respect of the areas and that the S.G. had already agreed to lease out item l to !MFA. On 15.2.85, the S.G. informed !MFA that, on reconsideration it had recommended grant ofMLs to it in respect of 139.37 hectares (out of 142 hectares of D item 2) and the entire area of item 3. On 18.2.85, the S.G. submitted in court that it had already agreed to grant 140 acres in item 5 to AIKA TH and the rest to FACOR as per compromises in the writ proceedings pending in the Orissa High Court. The compromise with AIKATH had been placed before, and accepted by the Orissa High • Court on 4. 12.84 but the final terms and conditions were proposed on E 18.2.85 and, accepted on 19.2.85. In respect of FACOR also, the compromise agreeing to lease to it 596 acres (out of which 180 acres were covered by item 5 of IMFA's application) had been filed in the Or.issa High Court only on 18.2.85. The validity of these allotments was challenged by !MFA before this Court. Without going into the merits of this controversy, this Court on 28.2.85, passed an order directing the S. G. to grant a lease to IMF A in respect of item 3 in full and 26.62 hectares in item 4. (This order was objected to by FACOR and on 8.5.85 the Court passed an order directing the grant of a lease to FACOR over 180 acres in item 5). !MFA says that it has not been given physical possession of the areas granted to it except to an extent of a small area of 2 hectares. The net result is that out of the five items applied for by !MFA: (i) item 1 has been given but surrendered, (ii) the S.G. is agreeable to give 139.37 acres out of 142 acres of item 2; (iii) this Court has directed the grant to !MFA of item 3; (iv) in item 4, this Court has directed the grant to !MFA of 26.62 out of 37.008 hectares of item 4: and (v) In item 5, the S.G. has agreed to lease ou, H 140 acres to AIKATH and 180 acres to FACOR.

. INDIAN METALS v. U.0.1. [RANGANATHAN, J.J 51

2. FACOR A

(a) Earlier History: FACOR'S applications for mining leases for chrome ore were made on various dates between 1974 and 1978. Relevant particulars in respect of the said applications are set out in the following table: B

SJ. Village Extent Date of Date of final order Particulars of No. applica- of disposal of revi- the proceedings ti on sion applications in High Court

!. Ostapal 142.000 8.7.74 29:76- 12.3.76 OJC67of79 c Distt. hects. or 315/78- 3.7.78 12. 1. 79 Cuttack 359 acres

2. Chingudi- 749.32 8.7.74 21/76-21.4.76 OJC 66of79 pal Dist!. beets. or 278/78-30.5.78 12.1. 79 1888 acres D

3. Samofe 248.447 6.8.74 182;77-29.8.77 OJC 72of79 Distt. beets. 15.1.79 Dhankanal( 618 acres)

r 4. Bangur 40.47 Distt. hects. 22.6.77 432 78- 17.8.78 OJC 1309 of 80

21. 1.80 E Keonjhar ( 100 acres)

5. Ostapal & 312.42 7.6.78 528,79-21.9.79 OJC 2036 of 81 Gurjang hects. 579;80-26.9.80 31.8.81 Distt. Cuttack F

6Copy pinpoint6. Kamarda 108 6.10.78 17;80- I. 1.80 OJC 1028 of 83 ~- Dist!. hects. 5131Kl - 29.10.82 11.5.83 Cuttack

All the six applications made by FACOR were rejected by the S.G. Against the revision orders of the C.G. affirming the orders of the G S.G .. FACOR filed writ petitions in the High Court of Orissa and these writ petitions are pending disposal there [except the one re: item 4 which was dismissed by the High Court on 11...11.87 and is the subject matter of S.L. P. (C) 5163 of 1988 before us]. In this sense, the applica- . ' tions of F ACOR were alive and awaiting disposal when !MFA filed W.P. 14116of 1984inthisCourt. H

52 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A (bi Subsequent developmenrs: As we shall mention later. FACOR had obtained leases over 486 acres at Barna in Keonjhar district and 280 acres at Kathpal over Dhankanal district in 1971-72. The above applications were rejected and the writ petitions filed against the rejections were pending in the Orissa High Court when the writ petition Was filed. It has been stated that the S.G. had entered B into a compromise with FACOR on 18.2.85 agreeing to grant a mining lease in its favour in respect of 596 acres out of 772 acres applied under item no. 5 above on condition that FACOR gave up its claim in respect of the balance of the area of 702 acres as well as the claim made in the other five applications. It may be added that on 18.5.85 this Court passed an interim order directing that FACOR be given a lease in c respect of 180 acres out of the 596 acres covered by the compromise dated 18.2.85. A lease was accordingly executed by the S.G. in favour of FACOR on 16.8.85 after obtaining the approval of the C.G. to the lease under s. 5(2) of the Act (before its amendment in 1986) as well as to the relaxation under rule 59(1) of the Rules. The net result, there- fore, is that, though FACOR made six applications, it had agreed to D give up all of them in lieu of a ML for 596 acres out of item 5 out of which a lease in respect of 180 acres has already been obtained and is being exploited by FACOR.

3. MANTOSHAIKATH E (a) Previous Hisrory: This gentleman had obtained a lease from 1 the Raja Sri Pitamber Bhupati Harichandan Mahapatra, the pro- prietor of Sukhinda Estate on 17.10.52 (registered on 28.10.52) for a period of 20 years in respect of 640 acres situated in village Gurjang in Cuttack District. On 12.1.53 the State Government (in whom the estate of the former Zamindar had come to vest w.e.f. 27.11.52 under F the Orissa Estates Abolition Act) issued a notice terminating the lease. Mr. AIKATH made representations against the termination. It .. is said that, ultimately, a compromise was reached between him and the S. G. whereunder it was agreed that a lease in respect of half of the area covered by the original lease deed on the southern side could be retained by him. Thereupon, it is said, he filed a formal application on G 25.5.54 for a mining lease in respect of 320 acres. But this was rejected on the ground that the S.G. preferred to exploit the area in public sector. A revision petition to the C.G. was rejected on 9.2.72. Mr. AIKATH filed a Writ petition in the High Court of Orissa impleading the C. G. and the S.G. as parties. The Orissa High Court on 18.4.1984 set aside the order of the C.G. and directed the C.G. to dispose of Mr. H

INDIAN METALS v. U.0.l. [RANGANATHAN, J.] 53

AIKATH'S application afresh. The C.G., in turn, set aside the order of the S.G. on 3.8. 78 and directed the S.G. to decide the application of the party afresh, after taking into account the plea of the party that the area could not be reserved for exploitation in. the public sector. How· ever, no orders were passed by the S.G. The petitioner, therefore. again filed a revision application before the C.G. which passed orders on 12.12.79 directing the State Government to pass a speaking order and dispose ·of the. application on merits. The S.G. by an order dated 17.1.80, rejected the application. Mr. AIKATH filed a writ petition in the High Court and this was pending when W.P. 14116/84 was filed here by !MFA.

(b) Subsequent aevelopment: On 21.11.84, AIKATH and the c S. G. entered into a compromise under which the former was to be granted a lease in respect of 140 acres situated on the eastern side of the 320 acres referred to earlier. This compromise was accepted by the High Court of Orissa on 4.12.84. Thereafter the S.G. offered a lease of 140 acres on certain terms and conditions and these were D accepted by AIKATH on 19.2.85. This was reported by the S.G. to this Court but no orders were passed by this Court, and no ML has been executed, in favour of AIKATH. It may be mentioned that one

r of the areas applied for by !MFA on 24. I J.81 covered the area which. according to AIKATH, had been in his possession all along. E

4. ORISSA INDUSTRIES LIMITED (ORIND)

(a) Previous History: ORIND made an application for mining lease on 5.7.71. It applied for mining leases over an area of 1129.'.'5 hectares in the villages of Telangi, Patna, Ostapal, and Gurjang in · District Cuttack. This application was rejected by the S.G. on 23.10.73 F on the ground that the area was reserved for exploitation in the public sector. It is stated that subsequently on a representation made bv ORIND on 15.12.73, the S.G. recommended to the C.G. that a lease in favour of ORIND may be granted in respect of 749.82 out of 1129.25 hectares applied for'. However, this recommendation was withdrawn (as will be discussed later). The C.G., by an order dated G

23. 2. 77. directed the S. G. to pass a speaking order on the application but the S.G. did not comply with this direction. The company, there- fore, filed writ petition. 0.J .C. 1585/1981 in the High Court of Orissa. This writ petition was pending when W.P. 14116/84 was filed here.

It may be here mentioned that one ot'the contentions of OR!ND H

54 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

hefore us is that it hadalso applied on 5.1.71 tor a lease of minini; rights in respect of 446.38 hectares in village Sukrangi in Distt. Cuttack. That had been rejected but a revision petition had been filed before the C.G. against the said rejection. The S.G .. it is said. \\hile sending its comments on 26.2,74 to the C.G. on the ORli'iD's revision petition. had reiterated that their revision petition may be rejected&~ the S.G. had already decided to grant ORii'iD a lease of 744.82 out of the area of 1129.25 hectares applied for hy it.

(b) Subsequent developments: It is stated that the S.G. has suh· sequently withdrawn its recommendations for the area of 7-19.Xc C hectares. The S.G. rejected ORIND's application fer 1129.25 hectare' b,y an order dated 7.4.89. The contents of the ord<r are discussed later. It concludes:

'"In view of the above facts ·and pendency of Writ Petition D No. 14116 of 198.J before the Hon"ble Supreme Court of India, it is not possible for the S.G. at this stage to pass any order on the mining lease application dated 5.7.1971 of ORIND and. accordingly the said application is disposed of.'"

E ORIND has preferred S.L.P. No. 8574189 from this order of the S.G . . So far as the other application of ORIND is concerned, no information has been given to us as to what orders. if any. the C.G. has passed on ORIND"S revision or as to what steps the applicant has taken subse- quently. F

5. ORISSACEMENT .. - - Ll!\llTED (OCLJ . ---- (a) Pre.-ious Histo~:

G The company's grievance is that it has been filing applications for mining rights in respect of chrome ore right from the year 1961 but none of the applications have been considered by the State Govern- ment on the plea that the areas applied for had been reserved for exploitation in the public sector. Further applications were made hy OCL in respect of following areas:- · H

INDIAN METALS v. U.0.1. (RANGANATHAN, J.J. 55

<\I. Date Area Date of Orders Orders Remarks A No.of and Revis- passed passed Appeal Village sion of by the by the appli- State Central cation, Govt. Govt., ifany. if any; B I. 2. 3. 4. 5.. 6. 7. I. 1 L5)0 354,505 3.5.71 5.2.71 3.6.72 This area was Hectare, The area free, previously Gurjang is reser· held by Aikath &Tel- vedby for 320 Acrs. angi, P.S. the State The State Govt. c Sukinda Govt. for · has now granted Dist!. exploita- i.e. in the year Cuttack tion in 1985 as per com- public promise petition sector. filed before High Court D Orissa. Mis Aikath-J40Acs. Factor-180Acs. Same application fil~d again E

2. 8.5. 74 . 354:505 Deemed 23.277 Rejected Although M/s Hectares Rejec- Facor's applica- Gurjang ti on ti on on 7 .6. 78 & was much after Ostopal our application, Distt. they were gran- .. '-~-"'·-- F Cuttack ---= -- '"-- tedM/LbyS.G . vide No. 6844 dated 24.5.85. In fairness SJG should have given us this G· area. As per de-· ·· · cision taken by them earlier, . 50% of the area should be re lea- sed to us keep- H

56 SUPREME COURT REPORTS [1990] Supp. 2 S.C.R. .. ing in view the principles of natural justice, as recommen- ded by State Govt. vide in their letter No. 17410 dated 26.2.74, to centre for 142 Acrs. to Orissa Cement. c 3. 15.5.70 226.22 1.5.72 10.2.71 1.6.72 Although Ferro Hectares on the same Alloys Corpora- Boula& plea, reserved tion have no unit Soso for State in Orissa but Distt. exploitation have a manufac- D Keonjher turing unit in Andhra, the Central Govt. passed orders as under in 1971-72 1 over an area of E 187.03 hects. against strong opposition by State Govt.: "Whereas the Central Govt. in ~

f • exercise of the powers confer· red by Rule 58(2) of the N.C. Rules, 1960 relaxed the G provision of rule 58( I) as a special case for the reason that the applicants '· having establis- H

INDIAN METALS v. u.o.r. IRANGANATHAN, J.] 57-

hed a big factory for manufactur- ing Ferro Chrome ore. provision has to bemade for procurement of raw materials

I for the proper running of the factory ... __, Based on the said decision a c fresh revision petition was filed on 6.4. 7J but the C.G. it rejected on D 30.11. 74. although the S.G. recomnien- ded: vi de letter No. 17410-NG dated E 26.2.1974 for approval for grant of 142 Acrs. to O.C.L.

Same application .flied again -> F

4. 10.4. 74 221>.22 No 6.6.75 29.8.75 The Please see re- Hectares Orders Central Govt. marks in SI. (3 ). Bou la were set aside the 142 Ac. could Keonjhar passed deemed rejec-have been gran- as requi- tion and ted. This appli- red by remanded the cation was filed G statute. matter back pursuant to the to the S.G. - Notification for considera- issued hy the ,.,.. tion. S.G. throwing open for regrant H

A 58 SUPREME COURT REPORTS

The State [ 1990] Supp. 2 S.C.R.

-vide No. 38173 ... Govt. on dated 5.3.74. 25.9.1975 rejec- The State Govt. ted the appl n. latter changed on the plea their decision for that the area working in pub- B over-laps lie sector, cont- other lease rary to the deci- area. Our earlier appln. sion pronounced by Supreme dt. 15.3.70 was Court as refer- rejected but red to in AIR. I c was granted to 1976 Delhi. ·- some other party i.e. Keeping in view Ferro-Alloys principle of jus- Corporation tice, 50% of this for a reduced area should be D area. released to Orissa Cement.

5. l l.5.70 388.498 22.10.70 23.10.70 7.4.72 CG.rejected '. · Hectares as above the application .Shrhranqi on the plea they E •& ·did not like to Tailangi, interfere with P.S. the decision Sukinda. taken by the ' District S.G. for keeping Cuttack. the area reser- F ved for exploi- .~ tation in public sector.

Same application filed again I

G 6. 8.5.74 388.498 Deemed23.2.77 3.6.77The Mis Sira judin Hectares rejection delay was ex- was holding the Sukrangi plained but area of JOO Ac. & rejected under M.L. for Tailangi because of 20 years from Distt. delay 8.8.85 which ex- '", H Cuttack pired in 1975.

ii\DIAi\ METALS'· L.0.1. [RANGANATHAN. J.] 59

Renewal has been refused, A Sira judin being a trader (However M/s Sirajudin & Co., has gone in B writ to Orissa High Court, I which is still pending) OMC has been granted lease c ----~

over 382. 709 Heels.

7Copy pinpoint7. 8.5. 74 7 Sq. Deemed 6.6. 75 8.6. 76 The This could have miles rejection Central Govt. been granted to kalaran- set aside the us but M/s. D

I gista & Kaliapani deemed rejec-OMC is working tion and which can be Distt. remanded to taken out from Cuttack. S.G. The S.G.them to grant rejected our the property to appln. but us. OMC was granted a free just permitted area of 3 sq. to work on ad Km. to OMC,hoc basis. who are holding a lease from more than 70 sq. Kms. approx. and hardly working 15/20sq. Kms. in different ML areas granted .to'M/s. OMC.

8Copy pinpoint8. 23.10.82 20.072 Deemed 14.11.83 The.C.G. set hectares rejection aside the area order of

60 SUPREME COURT REPORTS [ 1990) Supp. 2 S.C.R. "'-.- Bangura deemed re- A etc. jection on Distt. 23.12.83. Keonjhar No final order has been passed B by the S.G.

9Copy pinpoint9. 23. IO.S::' 549.1098 Deemed 14.11.83 29.12.83 as Hectares rejecrion Kaliapani above This has been granted to M/sOMC. I & Gm- ,_ Jang, etc. c IO. 23.10.82 365.467 Deemed 14. 11.82 19.12.83 This area per- Hectares rejection as above tains to SL 1 & 2 Ostopal therefore the & Gur- remarks stated D jang, etc. therein stand. Distt. Cuttack.

11Copy pinpoint11. 23.10.82 16.087 Deemed 14.11.83 19.12.83 As Hectares rejec- above. The S.G. re- E Bangura, tion. jected it on P.S. Soso· 27-6-1985 on Distt. the ground Keonjhar that the area overlaps in full with the F area previous- r ly held by Sirajudin& Co. Renewal was refused by State Govt. G

12Copy pinpoint12. 21.1.83 29.477 Deemed 28.3.84 Against tl\is Hectares rejection TheC.G. rejection we of72.64 reman- filed revision Acs. ded the on 2.9.85 Sajana- matter before C.G. H garb P.S. back to

____,.., ll'DIA~ ~IETAI.S '. L'.0.1. /RAMiANATHAN, J.J 61

Nilgiri S.G. Therefore it is A Distt. free. It should Balascre. No be granted to orders us. On similar have grounds the been S.G. has passed. granted. B

I 13. 28.6.85 558.74 acres or

226. 14 No orders passed by S.G. despite ----", hectares- C.G.'sorders Asur- on bandha, revision c Distt. Ohan- kanal

14Copy pinpoint14. 27. 1.86 356.70 No orders 0 hecattes passed by in Namla- S.G. Revision bhanga petition filed in Kar- before C.G. makhya- on 18.3.87 nagar E Distt. Ohan- kanal

The previous history as well as the latter developments are indi- ...~ cated in the above columns. It will be seen. therefrom that the first F seven and the eleventh applications of OCL were duly disposed of before the present litigation started and the party's grievance is that, in respect of some of them, leases have been granted to others like !MFA, FACOR, AIKATH & OMC. The others are pending before the S.G. after a remand by the C.G. or, in revision, before the C.G. The thir- teenth and fourteenth applications are pending before the S.G. and G C.G. respectively.

6. ORISSA MINING CORPORATION LIMITED (OMC)

OMC is a State Government undertaking. It submitted an appli- cation for an area of 725.21 hectares in village Chingripal on 30.6.82. H

62 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A Though this area was within the area of 1460 sq. kms. reserved for exploitation of chromium ore in public sector as per the State Govern- ment notification dated 3.8. 77, its application remained un-disposed of and was deemed to be rejected on the expiry of the statutory period of one year. The C.G., by an order dated 10.10.83, on a revision filed by OMC, directed the S.G. to dispose of the application within 200 days. B The S.G., however, did not grant OMC any lease but, instead, granted ML to IMFA on 14.3.85 in respect of 26.62 hectares which was well 1 within the area applied for by OMC. OMC has also made an applica- tion for mining rights regarding 108.86 hectares in Kamrarda-Balipada . villages and 220. 15 hectare·s in Gurjang village which has not been granted. In the result, th•e OMC has not been granted by mining lease ,_,_ C despite its claim that the area in question has been reserved for exploi- tation in public sector though !MFA has been given ML in respect of 26.62 acres out of the area covered 'by these applications. However. from the details given earlier pertaining to OCL, it will be seen that OMC has been permitted to exploit about 382.709 Hectares in one area on an ad hoc basis and has leases over about 70 sq. Kms. and 3 sq. j D Kms. in other areas. · , ~

7. INDUSTRIAL DEVELOPMENT CORPORATION OF ORISSA LIMITED (IDCOL)

.This company submitted two applications on I 1. 1.83 before the E S.G. for grant of mining leases for chromium ore over an area of 740.67 hectares in village Patna-Chingiripal and 171.73 hectares in village Gurjang. The applications were not disposed of by the S.G. within the specified time. The C.G. set aside the deemed refusal and directed the application to be disposed of·but no decision has been taken by the S.G., apparently on the ground that the entire dispute regarding grant of mining rights for chromium ore is pending in this Court in W.P. 14116/84.

ORDERS PASSED BY THIS COURT

It is now necessary to refer to the various interim orders passed by this Court in this matter because some of the parties have made a grievance that, though their claims for leases were pending at various levels, !MFA and FACOR have been able to obtain from this Court orders directing the grant of leases to them and that this procedure was wholly unjustified. To start with, it must be mentioned, the C.G., the ~ S.G. and certain officers of the C.G. and S.G. were impleaded as respondents 1to6 in the Writ Petition with FACOR as the 7th respon-

63 J 11'-DIA!\ METALS'· L.0.1. [RANGANATHAN. J.l

dent. In the writ petition IMFA referred to its applications in respect of five blocks of land detailed in para 8 of the writ petition and alleged that, while the petitioner's application for a lease in respect of the five blocks referred to earlier remained pending for more than a year for consideration in pursuance of the C.G.'s directions for its disposal, the S.G. had granted mining leases for chrome ore in favour of FACOR which, according to the petitioner, was similarly placed. In view of this allegation, this Court passed a detailed and stiff interim order on 27.9.84 in the following words after hearing the counsel for the peti- tioners and the standing-counsel to the S.G. :

"Mr. R.K. Mehta, learned counsel appears on behalf of Respondents Nos. 4 to 6 pursuant to the notice served upon him as Standing Counsel for those respon- c dents, and he asks for time in order to enable him to obtain instructions from those respondents and to file a counter affidavit for these respondents. We would, therefore, ad- journ the Writ Petition to 30. 10.84. But in the meanwhile we would direct respondents Nos. 4 to 6 not to grant to anyone else other than the petitioners mining lease for chro- mite ore in respect of the areas applied for by the petitioners and forming the subject matter of applications made by them as set out in paragraph 8 of the Writ Petition. Since the project which is being set up by the petitioners is a very important export-oriented project for which the necessary permission has already been granted by the Govt. of India and the Consortium of Foreign Banks has already agreed to finance the Project and it is a project which will earn con- siderable foreign exchange for the country and provide em- ployment to a large number of workmen, we would direct the 4th respondent to consider and decide the application of the petitioners set out in paragraph 8 of the Writ Petition on or before 23.10.84 after giving an opportunity to the peti- tioners of being heard in the matter. We have no doubt that the 4th respondent will keep in view the nature and im- portance of the project and its foreign exchange earning capacity, as also its potential for providing job employment to a large number of workmen in the State of Orissa while considering and deciding the applications of the peti- tioners. The 4th respondent will also take into account the fact that similar mining leases have been given to the 7th respondent and prima facie there does not appear to be any reason for denying the same facility to the petitioners, for H

A 64 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

otherwise the action of the 4th respondent may be liable to be condemned as discriminatory and arbitrary and more- J '

over the 4th respondent cannot over-look the fact that if mining lease as applied for are not granted, the petitioners will have to import chromite and that will be a drain on the foreign exchange resources, of the country. There are B matters where national interest alone must count. It is in-

I deed surprising that though the Central Govt. directed the 4th respondent to dispose of the application of the peti- tioners more than a year ago, the 4th respondent has not yet chosen to dispose of the applications. We would direct the 4th respondent to carry out the direction given by us and dispose of the applications of the-,petitioners in the c light of the observations contained "ln this order on or before 23.10.84. The decision taken by the State Govt. on the application shall contain the reasonf and will be communicated to the petitioners and also placed before this Court along with the Counter affidavit. The previous order D made by us in regard to the production of files will stand and the files shall be produced at the next hearing of the Writ Petition.

The Writ Petition stands adjourned to 30/ 10/84.

E On coming to know of this order, FACOR had the matter mentioned and, after hearing the arguments of its counsel, the Court passed an order on 18.10.84, the material portion of which reads as under:

"On the application of Mr. Kapil Sibbal, learned counsel appearing on behalf of the 7th respondent, we direct that no decision shall be taken on the applications of the petitioner until 30. 10.84 unless a decision has already been taken. In the event the decision has already been taken it shall not be implemented until then. The files relat- ing to the applications of the petitioner and the 7th respon- dent for mining leases in respect of chromite ore shall be sent to the Registry of this Court forthwith in a sealed ' cover along with a responsible officer of the State Govern- ment so as to reach the Registry of this Court by 2 p.m. on Saturday, 20th October, 1984."

A little later, Mr. Aikath was impleaded as respondent no. 8 and, pending the filing of a counter affidavit by him, the Court passed the following order on 28.2.1985:

11'DIA1' METALS r. u.Q.1. iRAl'GANATHAN. J.I 65

" ..... We would direct the State Government to give to the petitioners within 15 days from today the leases in respect of the areas of item No. 3 and 26.62 hectares area out of item no. 4 set ol,ll in para 8 of the writ petition ...... so far as the remaining controversy is concerned, we shall dispose it of on 2.4.85 after hearing the parties." B ..... The State Government will make an application to the Union of India within 5 days from today for the approval of the leases and the Union of India shall grant approval to them within 10 days".

By the next date of hearing viz. 8/5/85, ORIND entered into the fray and was ordered to be made respondent no. 9 in the writ petition. Pending further affidavits by the parties, the. Court gave another direc- tion in the following terms:

" ... , .... the State Government will give to respondent no. 7 within 3 weeks from today /ease in respect of 180 acres in item no. 5 set out in paragraph 8 of the writ petition exclud- ing the area which the State Government propose to give to respondent no. 8. This order ... is without prejudice to the rights and contentions of the parties . . . . . . . . . . . . The State will make an application to the Union of India within a week from today for the approval of the lease ·and the E Union of India will grant its approval within a period of 2 weeks from that date".

Then comes the order dated 30.4.87 by which the writ petition was disposed of. It needs to be set out in full: F "After hearing counsel appearing for the parties we consider that the proper order to be passed is to direct the parties who have applied for grant of mining leases to file representations before the Secretary, Ministry of Mine' and Steel, Department of Mines, Government of India within ten days from today setting out their cl.aims in G respect of the areas covered by their respective; applica- tions. We direct that the Secretary, Department of Mines shall consider the claims of the various parties in respect of the areas covered by their application in the light of the observations contained in the orders already passed by the Court, namely, the Order dated 27th September, 1984 and H

A 66 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

8th May, 1985 after duly taking into consideration the re- quirements of tile manufacturing industries concerned and decide about. the question of grant of mining leases after giving an opportunity of being heard to the parties con- • cerned. Final orders in the matters should be passed by the Secretary within a period of six weeks from today: It is B made clear that the memoranda of compromise said to have been filed in the High-Court of Orissa will be treated as not binding either on the parties or on the State Govern- ' i. ment and the whole question will be treated as being fully open for fresh consideration and determination by the Sec- retary Department of Mines, Government of India. The c status quo as obtaining at present with regard to the earring out of the mining operations over the areas will continue ·- until the representations are disposed of by the Secretary pursuant to this order within six weeks from today. As already indicated the entire matter will be fully open for consideration by the Secretary and the orders passed by D this Court should not be treated as final in regard to the allocation of the areas to the different claimants. The fact that certain writ petitions are pending before the High Court of Orissa will not in any way hamper the effective carrying out of this order. It is needless to add that the disposal of the matter by the Secretary should be by a E reasoned order. The writ petition is disposed of on the above terms."

Sometime later, IMFA moved an application for clarification of the Court's order dated 30.4.87. On this the following order was passed on

6. 10.1987: F •• I:."' "There are several claimants for the grant of mining leases in different parts of Orissa. This question has come up from time to time before this Court. The first relevant order was the one dated the 28th February, 1985. Therein a bench consisting of P.N. Bhagwati, J. (as he then was) and G V. Balakrishna Eradi, J. directed the State Government to give to the petitioners M/S Indian Metal & Ferro Alloys Ltd. within 15 days from today the leases in respect of the

1. full areas of Item No. 3 and 26.62 hectares area out of Item No. 4 as set out in paragraph 8 of the Writ Petition. This Court further directed so far as the remaining controversy ,.. ""' H was concerned that the same shall be disposed of later on

INDIAN METALS 1·. U.0.1. [RANGANATHAN. J.l (-,7

by giving certain other conseque.ntial directions as the petitioners might seek, which jt is not necessary to refer A here. It was directed that the State Government was to make an application to the Union of India within 5 days from the date of the order for the approval of the leases by the Union of India arid which should grant approval within ten days therefrom. B

Thereafter it appears that on 8.5.85 another order was passed by·the same bench of this Court wherein it was directed that the Orissa Industries Ltd. should be joined as respondent No. 9 in the Writ Petition and respondent No. 9 would file counter affidavit and directions were also given for filing rejoinder, if any. It was directed that ·'pending c hearing and final disposal of the writ petition the State Government would give to the respondent No. 7 within three weeks from today, lease in respect of 180 acres in Item No. 5, set out in paragraph 8 of the writ petition the State excluding the area which the State Government pro- D posed to give to respondent No. 8." It was stated that this order was made without prejudice to the rights and conten- tions of the parties directions were given for hearing of the writ petitions.

Finally the order with which we are directly concer- E ned with is the order dated the 30th April, 1987 which was passed by a bench consisting of Hon'ble V. Balakrishna Eradi, J. and one of us G.L. Oza, J. The said order is set out in paragraph 2 of the C.M.P. Nos. 16435-37/87. It is not necessary to set out in detail the order. It may be noted that the Court directed that the proper order to be passed was F to direct the parties who had applied for grant of mining leases to file representations before the Secretary, Ministry of Mines and Steel, Department of Mines, Government of India within ten days from that date setting out their claims in respect of the areas covered by their respective applica- tions. This Court directed the Secretary Department of G Mines to consider the claim of the various parties in respect of the areas covered by their applications in the light of the observations contained in the orders already passed by this Court, namely, the orders dated the 22nd September, 1984 and the 8th May, 1985 after duly faking into consideration the requirements of the manufacturing Industries cancer- H

68 Sl}_PREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

ned and decide about the question of grant of Mining A Leases after gi~ing an opportunity of being heard io the parties concerned. Thereafter. the present applications have been made by different claimants seeking for direc- tions for being added for consideration by the Secretary subject to their existing rights under the existing leases and B grant of future leases. Mr. Kapil Sibbal, counsel appearing for the respondent No. 7 and Dr. Gauri Shankar counsel appearing for tht! applicant submitted that there are exist- ing leases in their favour which cannot be entertained (sic) by any order passed by the Secretary and they are entitled \ - ' to wdrk out their full rights. On the other hand the Orissa Mining Corporation as well as Industrial Development c Corporation Orissa are also claiming for grant of Mining leases including respondent No. 8 who is alleged to have found out the mines. In our opinion the proper order would be to pass order in tenns of the order passed by this Court on 30.4.87. The claims of the.different claimants including D Mr. Sibal's clients as well as.Or. Gauri Shankar's should be considered in accordance with law by the Secretary in mak- ing his considerations. The Secretary should bear in mind the previous orders made in their favour and the previous leases and the rights, if any, granted therefrom and their consequences. Similarly the public benefit and public in- E terest involved and proper exploitation of the mines should be borne in mind. Bearing these facts it is directed that the Secretary should arrive at a just, equitable and objective decision and send a report to this Court within three months on receipt of the copy of the order within a fort- night from today. The Secretary should only consider the F applications of those who had existing leases applications at the time when the order of 30.4.87 was made and not of those who had no existing leases applications on 30.4.87. The copy of the report to be made shall be supplied to the parties.·· ·

G It is in pursuance of this order Rao has heard the parties and submitted the report which has now been placed before us for further directions.

OTHER PENDING APPLICATIONS

It is necessary, to clear the groi.nd, to refer to a number of applica- H · tions made by the various parties subsequent to the order of this Court dated 30.5.87: .

INDIAN METALS 1. U.0.1. [RANGANATHAN. J.) 69

(i) .By C.M.P. No. 13347/87, FACOR pointed out that.a lease in respect of 180 acres (being part of item 5) had been granted to it by the S.G. on 13.8.85 in pursuance of this Court's order dated 8/5/85. It claimed that it had made substantial investments, engaged a· huge labour force and started mining in this area. It was disturbed by the fact that OMC and IDCOL had suddenly entered into the picture and claimed before Rao that they were entitled to leases on the basis of reservations. According to the applicant, only the parties to the writ petition could be heard by Rao and OMC and IDCOL should not be permitted to join the proceedings before Rao and allowed to disturb the leases directed to the._given to it and IMFA by the orders dated 28.2.85 and 8.5.85. A second point taken in the application was this:

"13. Thal it.is submitted that the order dated 30.4.87 does c 'no(make it clear as to under what statutory authority the Secre!ary·to the.Government of India shall dispose of the representations made by the various parties to the writ peti- tion. This matter requires to be clarified by this Hon'ble Court". D

This application was opposed by the OMC and the IDCOL. The ,,,j; Court, by its order ·dated 6.10.87, rejected the first request and allowed OMC and IDCOL to participate in the proceedings before Rao; it was directed that the claims of all parties whose applications for lease were subsisting on 30.4.87 should be heard by Rao. It was, E however, clarified that in arriving at his conclusions, the Secretary should bear in mind the previous orders made in favour of !MFA and FACOR, the previous leases and rights granted to them and their consequences. The second aspect to which the application referred was, however, not clarifkd. F (ii) A second application of FACOR (C.M.P. 22588/77) was directe.d primarily at the !MFA. It was submitted here that the order dated 28/2/85 needed to be recalled and FACOR allowed to pui for- ward claims in respect of the areas directed to be leased out to IMFA as IMFA had not at all been operating its export-oriented unit (EOU) since 1984 and was attempting to divert the ore to its domestic onits G whereas FACOR was the one that was operating an EOU and needed all the ore it could get. No notice was issued on this application appa- rently as all the claims had already been referred to Rao.

(iii) In August 1987, IMFA moved C.M.P. 21578/1987. This was 'in the nature of a counter to C.M.P. 13347/87 moved by FACOR. This H

70 SUPREME COURT REPORTS I 1990] Supp. 2 S.C.R. application also prayed that the consideration before the Rao Commi- A ttee should be confined to the parties to the writ petition. !MFA also took this occasion to request that the area of 180 hectares leased out to FACOR by the order dated 3;5;85 should be treated as provisional and taken into account in the allotment to be de.cided on by Rao. FACOR filed a reply. No orJers have, however. been passed on the petition, B again. apparently since all the claims were before Rao.

(iv) C.MP. 9284/88 was filed by OCL to quash the "order" of 1.c.88 passed by Rao which has totally rejected the claims of OCL. No orders on this petition have been passed so far but this will now have to be disposed of in the light of the conclusions we may reach in regard to C OCL's claims on the merits and no separate orders need to be passed thereon ..

. (v) ··I.A. 1/89 was filed by ORIND challenging the correctness of Rao's findings and praying that, pending disposal of W.P. 14116/84- which according to it stands undisposed of despite the orders dated D 30/4/87 and 6/ 10/87-the S.G., OMC. Tisco, Sirajuddin & Co. and Mysore Minerals (the respondents to the application) should be di- rected to supply to ORIND 3000 MIT of crome ore per month. No· orders have been passed on this application so far but, since the writ petition itself is now being disposed of, no interim orders as prayed for in this application are at all called for. E STATUTORY INADEQUACIES

( l) Delay and Ineffectiveness: Now the first thing that strikes one on perusing the course of the proceedings in the case is the extremely unsatisfactory and impractical procedure followed under the Act in regard to the grant of mining leases for important minerals like chrome ore. The statute envisages that the application should be made to the S. G. and disposed of by it within a prescribed period. But the course of events in the case and other reported cases show that this time limit is observed more in breach than in observance. Anticipating this possi- bility, the rules provide that, if an application is n@t disposed of within the statutory period, it shall be deemed to have been refused. So far so good, as at least, the applicant can, on the expiry of the period, have recourse to a higher authority. The remedy provided to the aggrieved applicant is to file a revision application before the C.G. under S. 30 of the Act for revision of the order within three months thereafter. Rule 55 enables the C. G., after hearing all necessary parties, to "confirm, modify or set aside the order or pass such other order in relation to ·'

li\DIAN METALS'· L.0.1. iRANGANATHAN. j_) 71

thereto as the Central Government m.ay deem just and proper". A A note under rule 55 also says that "during the pendency of a revision application the State Governmeni should not take any action in respect of the area, which is the subject matter of the revision petition as the matter becomes sub judice". Having regard to the wide powers thus conferred. one would except the C.G. to dispose of the applica- tion on merits, either granting the lease in whole or in part or rejecting B it. But, curiously, in most of the cases which come up before Courts as also in this case, the C.G. seems reluctant to pass any order except to set aside the "deemed refusal" and direct the S.G. to dispose of the application afresh within a specified period. That was the order passed, for example, in IMFA's case the time given being 200 days. But the S.G. does not seem to pay any heed to this direction and no order is passed within a reasonable period. Well, one would think a c second approach to the C.G. may be helpful. IMFA tried it but got back a reply to say that the C.G. was helpless in the matter. The original order in revision has stated: "should the State Government fail to pass order on the petitioner's application he may seek redress in an appropriate Court of Law, if so advised" and the subsequent appli- D cation was rejected by the C.G. on the ground that the C.G. becomes functus officio when it passes the order in revision and has no jurisdic- tion to revise it. So all that the applicant can do is to wait for some time and then file a writ petition. Even if the writ petition were to be heard quickly all that the Court can do is to direct the S.G. to dispose of the application expeditiously. This is an extremely cumbrous and ineffec- E tive procedure in which several years pass but the application stands still. Thus, for e.g., ORIND made an application in 1971 and is yet to know what the fate of its application would be. It puzzles us why the C.S., even in the first instance, could not dispose of the application on merits in the light of the report rec_eived from the S.G. and after hearing concerned parties. F

(2) Proliferation of applications: Another problem created by the passage of time is the entry of new parties in the fray. We shall later point out that; though S. 11 tries to enunciate a simple general princi- ple of "first come; first served"; _in practice; priority of an application in point of time does not conclude the issue. In this case itself for G instance; during the period ORIND's application of 1971 bas been under consideration before various authorities and in the writ petition filed in Orissa High Court; several other competitors ha.ve come into the picture. The statutory provision is not clear as to which. of the applications in respect of any particular area; are to be considered together. If ORIN'D's application of 1971; for example; were to be H

72 SUPREME COURT REPORTS [ 1990) Supp. 2 S.C.R.

considered only on the basis of the persons who had made applications A at that time or a short time before or after, one result would follow; if, on the other hand. if all the applications pending for disposal at the time ORIND's application is to be granted or rejected are to be consi- dered. the result would be totally different. Since the interests of the nation require that no lease for mining rights should be granted with- B out all applications therefor at any point of time being considered and the best "among them chosen or the areas distributed among such of then) as are most efficient and capable, the latter is the only reasonable and practical procedure. That is why this Court, in its order dated 30.4.87, laid down-we think rightly-that all applications pending for consideration as on 30.4.87 should be considered by Rao.

C ( 3) Procedure for consideration of applications: A further confusion created iii this case is due to the fact that leases of different areas in different villages and districts have been applied for. No attempt has been made to locate, with reference to any compact block of land, who exactly are the competitors and whether there are areas in respect of D which there is no competition at all. It will be seen later how this has caused difficulty in the present case. But what we wish to point out here is that the statute must lay down clearer guidelines and proce- ,; durc. Having regard to the new avenues for vast industrial develop- ment in the country, the more workable procedure would be for the S. G. to call for applications in respect of specified blocks by a particu- E lar date and deal with them together, other later entrants not being permitted in the field. Otherwise only confusion will resYlt. as here . .There was a time when the S.G. looked to private enterprises for mineral development in its territory. Even now, it has been stated that 87% of the State territory containing chromite is under lease to one industrial house. Of late, however, competition has crept in. The S.G. F has its own public sector corporations and various entrepreneurs. are interested in having mining leases for their purposes. It is, therefore, vital that there should be a better and detailed analysis, district-wise -· and area-wise and that a schedule for consideration of applications in respect of definite areas should be drawn up with a strict time frame so that the State is no longer constrained to deal with sporadic applica- G tions or make a routine grant of leases in order of priority of applica- tions. These are aspects which call for careful consideration and ap- . propriate statutory amendments.