2006 (12) TMI 515 - SC - Indian Laws

Summary

Issues Involved:
1. Challenge to the grant of lease to Nava Bharat Ferro Alloys Ltd.
2. Denial of lease to GMR Technologies & Industries Limited.
3. Recommendation of the State Government to grant lease to Orissa Mining Corporation Limited (OMC).
4. Interpretation of Sections 11 and 17A of the Mines and Minerals (Regulation and Development) Act, 1957.
5. Compliance with Rule 59 of the Mineral Concession Rules, 1960.

Detailed Analysis:

1. Challenge to the Grant of Lease to Nava Bharat Ferro Alloys Ltd.
The primary contention revolves around the legality of the State Government's recommendation to grant a lease of 84.881 hectares to Nava Bharat Ferro Alloys Ltd. (Nava Bharat). The Orissa High Court had dismissed the challenge by ICCL against this recommendation. The Supreme Court found that the decision to grant the lease to Nava Bharat was not justified, legal, or proper because the State Government did not exercise its power under sub-section (5) of Section 11 of the Mines and Minerals (Regulation and Development) Act, 1957. The Court noted that Nava Bharat was a subsequent entrant and that no special reasons were recorded justifying such an out-of-turn grant. The Central Government had also pointed out the violation of Rule 59 of the Mineral Concession Rules, 1960. Consequently, the Supreme Court set aside the proposed grant to Nava Bharat.

2. Denial of Lease to GMR Technologies & Industries Limited
GMR Technologies & Industries Limited (GMR) had challenged the decision of the State Government to grant a lease to OMC instead of to GMR. The Supreme Court observed that the decision to grant the lease to OMC was based on the State Government's exercise of power under Section 17A(2) of the Mines and Minerals (Regulation and Development) Act, 1957. The Court held that the State Government's decision to recommend the lease to OMC was within its statutory power and could not be invalidated by prior proceedings or directions of the Court.

3. Recommendation of the State Government to Grant Lease to OMC
The State Government's recommendation to grant a lease of the remaining 436.295 hectares to OMC was challenged on the grounds that it was contrary to the prior directions of the Court and the recommendations of the Dash Committee (later Chahar Committee). The Supreme Court held that the power under Section 17A(2) is an independent power and not related to the power under Section 11. The Court found that the State Government's decision to seek the approval of the Central Government for leasing the area to OMC was valid and within its statutory power. The Court directed the State Government to make a fresh request to the Central Government with all relevant details for consideration under Section 17A(2).

4. Interpretation of Sections 11 and 17A of the Mines and Minerals (Regulation and Development) Act, 1957
The Supreme Court provided an in-depth interpretation of Sections 11 and 17A of the Mines and Minerals (Regulation and Development) Act, 1957. Section 11 deals with the preferential right of applicants for mining leases, while Section 17A pertains to the reservation of areas for conservation and exploitation by government entities. The Court emphasized that the power under Section 17A(2) is independent and can be exercised by the State Government with the Central Government's approval, irrespective of the preferences under Section 11.

5. Compliance with Rule 59 of the Mineral Concession Rules, 1960
The Supreme Court noted that the State Government's recommendation for the grant of a lease to Nava Bharat was vitiated by non-compliance with Rule 59 of the Mineral Concession Rules, 1960. The Central Government had pointed out this violation, and the subsequent actions by the State Government's Steel and Mines Department were not consistent with the Rules of Business framed under Article 166 of the Constitution of India.

Conclusion:
The Supreme Court set aside the decisions of the Orissa High Court, upheld the State Government's power to seek approval under Section 17A(2) of the Act, and invalidated the proposed grant to Nava Bharat. The Court directed the State Government to make a fresh request to the Central Government for approval under Section 17A(2) and for the Central Government to take a decision based on all relevant details. The appeals of the State of Orissa and OMC were allowed, while those of ICCL and GMR were allowed to the extent of setting aside the grant to Nava Bharat. The parties were directed to bear their own costs.