1971 (1) TMI 123 - SC - Indian Laws

Summary

Issues Involved:
1. Preferential right under Section 11 of the Mines and Minerals (Regulation and Development) Act, 1957.
2. Non-speaking order by the Central Government.
3. Failure to provide reasons for rejection.
4. Consideration of relative merits of applicants.
5. Non-application of mind by the authority.

Issue-Wise Detailed Analysis:

1. Preferential Right under Section 11:
The appellant claimed a preferential right to a mining lease under Section 11 of the Mines and Minerals (Regulation and Development) Act, 1957, because it previously held a prospecting license for the area in question. The appellant argued that the State of Mysore did not properly consider its preferential right when granting the lease to another party, Suthankar. According to Section 11, a licensee has a preferential right for obtaining a mining lease over any other person, provided there is no breach of the terms and conditions of the prospecting license and the licensee is otherwise a fit person for being granted the lease.

2. Non-Speaking Order by the Central Government:
The appellant contended that the Central Government's order rejecting its revision application was not a speaking order. The order merely stated that "there is no valid ground for interfering with the decision of the Government of Mysore to reject your application for grant of mining lease." The Supreme Court emphasized the necessity of a speaking order, particularly in decisions under Rule 55 of the Mineral Concession Rules, as such decisions affect important rights of parties. The Court cited the precedent set in Bhagat Raja v. Union, where it was held that a speaking order is required to ensure that parties understand the reasons behind a decision.

3. Failure to Provide Reasons for Rejection:
The appellant argued that the Central Government's order failed to provide any reasons for the rejection of its revision application. The Supreme Court noted that the order did not address the appellant's claim to preferential rights under Section 11 or provide any rationale for the decision. The Court highlighted that the absence of reasons in the order deprived the appellant of the right to know why the decision was made against it.

4. Consideration of Relative Merits of Applicants:
The appellant asserted that the State Government did not consider the relative merits of the claims to the lease put forward by the appellant and Suthankar. The Supreme Court pointed out that the State Government should have evaluated the special knowledge, experience in prospecting operations, financial resources, and technical staff of both applicants. The Directorate of Mines of the State of Mysore preferred Suthankar's claim solely because he had invested money in developing the mines under a lease that was later canceled by the Central Government.

5. Non-Application of Mind by the Authority:
The appellant argued that the Central Government's order showed a complete non-application of mind. The Supreme Court observed that the order referred to a "decision of the Government of Mysore to reject" the appellant's application, whereas no such decision was made by the State Government. The application was deemed to be rejected due to the lapse of nine months without any order. The Court found a striking similarity between the impugned order and the one quashed in Bhagat Raja's case, indicating a perfunctory approach by the authorities.

Conclusion:
The Supreme Court allowed the appeal, quashed the Central Government's order of April 4, 1967, and directed the Central Government to decide the revision application afresh in light of the observations made. The Court emphasized the importance of providing reasons for decisions affecting valuable rights and ensuring a thorough and reasoned consideration of all relevant factors. No order as to costs was made.