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TMI Blog1996 (7) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... ys Corporation Limited (hereinafter called FACOR ) and Ispat Alloys Limited. The factual matrix of the case is as follows : The appellant, TISCO,.is a limited company, one of whose primary objects has been to carry on business as a mining industry. It claims that it :was the first to discover Chrome ore in the Sukinda Valley, Orissa, in the year 1949. It applied to the Raja of Sukinda. for a prospecting licence and was granted the' same in 1.952. On October 22, 1952, it was granted a mining lease over an area of 1813 hectares for chromite for a period of 20 years. Subsequently, under the provisions of the Orissa Estates Abolition Act, 1952, on the rights of the Raja having vested in the State Government, the latter recognised the lease of TISCO for a period of 20 years with effect from January 12, 1953. TISCO claims that over the years, it has spent more than ₹ 180 crores for the development of the mine, including ₹ 27 crores spent in setting up a beneficiation plant. It utilises the Chrome ore mined by it for the manufacture of Charge Chrome/Ferro Chrome refractories. it also Supplies are to forty Chrome ore based industries situated in differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uperseded its earlier approval dated June 3, 1993, and renewed TISCO's lease over a reduced area of 651 hectares. On October 19. 1993, TLSCO filed a writ petition in the High Court, being OJC No. 7729/93, under Article 226 of the Constitution challenging the order dated October 5, 1993, inter alia on the ground that the scheme of equitable distribution of mining leases on the basis of need of an industry is extraneous to the concept of mineral development, which alone is relevant under Section 8(3) of the Act. Meanwhile, FACOR, Ispat Alloys, JSL and Jindal Ferro Alloys Ltd. applied for mining leases of the area held by T1SCO, but the State Government refused to entertain them as being premature under Rules 59 and 60 of the Mineral Concession Rules framed under the Act (hereinafter called the Rules ). While TISCO's writ petition was pending, ICCL and JSL filed writ .Petitions, being OJC No. 5422/94 and OJC No. 7054/94,. challenging the renewal of TISCO's lease by the Central Government; both the order dated June 3, 1993 (which had authorised the renewal of the entire lease area of 1261 hectares) and the order dated October 5, 1993 (which subsequently reduced the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .India, under the Chairmanship of one Shri S.D. Sharma for rehearing and 'reconsidering the issue in regard to the renewal of mining lease lo TISCO. The Committee submitted a report dated August 16, 1995, recommending renewal of the lease for a reduced area to TISCO. Acting on that report, on the very next day. August 17. 1995, the Central Government authorised the renewal of TISCO's lease over the reduced area of 406 hectares which, according to the Central Government, would meet TISCO's captive requirements and requested the State Government to issue orders for the same. At the same time, in exercise of powers conferred by Rule 59(2) of the Rules, the Central Government relaxed the provisions of sub-rule (1) with the objective of expediting the process of granting chromite ore and requested the State Government to grant mining leases to four other parties, namely, ICC1. JSL, IMFA and FACOR for the balance area of 855.476 hectares. SLP Nos. 10838/95, 11391/95 and .11392/95 seek to challenge the :order dated April 4, 1995 of the Orissa High Court and SLP Nos. 22710/95, 23131/95 and 23132/95 .seek to challenge the Central Government's, decision dated August 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue of renewal of TISCO's lease, the other parties before the High Court had no locus stand in view of the express bar in Rules 59 and 60 of the Rules. After considering these submissions, the High Court, while directing the constitution of a Committee to look into the matter, made the following observations: As we are of the view that the Central Government should consider afresh and as Mr, B.M Patnaik has submitted that the Central Government has no objection to consider afresh, there is no bar and/or impediment if the Central Government considers the proposal of subsequent renewal of lease of TISCO by giving it opportunity of hearing which may be effected in presence of the other petitioners who have come to this Court, Nevertheless, it is submitted that the Central Government has no obligation to invite other intending parties besides the writ petitioners in the case at the time of disposal of the application for a subsequent renewal of the lease at the instance of TISCO, this Court finds that by the .ultimate result other writ petitioners are consequently to be affected by renewal, part renewal or refusal of the lease in favour of TISCO. They may be heard by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was superseded in many respects by this Court in the Indian Metals case. He contended that the Rao Committee did not endorse the policy of distributing leases on the basis of the captive mining requirement of industries and in the alternative, argued that even if the Rao report were to do so, such a policy was unsustainable under the scheme of the Act and the Rules and, at no point of time had the said principle been applied in determining the question of renewal of lease or in deciding on whom the right should be conferred. The Committee was of the firm opinion that the central Government, was required to take note of the Rao Report as it contains important findings, guidelines and directions regarding the grant of chromite leases .and supply of chromite ore to needy applicants in an equitable manner. The Committee took note of the fact that, in reaching its final decision, this Court, in the Indian Metals case relied upon the findings of the Rao Report. It also noted that the High Court: of Orissa had studied the Rao Report and had required it to rely upon the findings therein. Finally, the Committee took note of the observations of this Court in. para 42 of the judgment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orth to support TISCO's claim that it was entitled to a second renewal of its lease. There was also an argument that, the law as it stood after the 1994 amendment should apply to TISCO's case. However, the Committee look the view that the law applicable would be the law as it stood between 1986 and 1994. Interpreting Section 8(3) of the Act, the Committee was of the view that TISCO could not claim to have any legal right over the renewal of its lease for the second time and, if the Central Government was to renew it. it would have lo record reasons why such a measure would be in the interest of mineral development. Moving on to the issue of whether it was necessary to renew the mining lease of TISCO in the interest on mineral development, the Committee took note of the various arguments put forth by the learned counsel appearing for TISCO. The learned counsel submitted that TISCO had played a pioneering role in the development, of chromite and other minerals in the area; had been doing scientific mining in a manner that ensured optimum recovery; had taken steps for environmental management; had complied with the provisions of all the relevant rules and regulations ;. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n their requirements for Captive mining and for doing so. it relied upon the Rao Report, the Orissa Industrial Policy and the National Mineral Policy. It was, therefore, of the opinion that the best way of benefitting an established Chrome-bused industry with a large ore consumption was to provide a mine-owner status to the different industrial units. Thereupon, the Committee undertook an analysis of the competing interests of the other needy manufacturers. It took note of the observations of the High Court of Orissa that it was not the forum for distributing mining leases in favour of the other parties: however, in order to properly appreciate the issue, the Committee examined the need of the other parlies as well as their problems of obtaining raw materials. While forming an estimate of TISCO's requirement, the Committee relied upon the documents submitted by TISCO as well as other relevant material. It noted the fact that in view of the scarcity of chromite ore, repeated recommendations have been made that under-ground mining must be planned and taken up for harnessing the available chromite ore. However, over the last four decades during which TISCO had held the lease, it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We will deal with them seriatum. 1. Validity of the Orders of the Central Government dated June 3, 1993 and October 5, 1993 The learned counsel for TISCO has contended before us that the Court of Orissa .had erred in holding the order dated June 3, 1993 as well as the order dated October 5, 1993 which renewed TISCO's lease, as unsustainable in law. According to the learned counsel, both these orders have complied with the requirements of Section 8 of the Act. Before we analyse the provision, it must be noted that this provision has undergone several amendments. Changes were wrought into the original provision as it stood in 1957 through amendments in .1986 and 1994. Since TISCO's application for renewal was filed in .1991. both the High Court and the Committee considered the provision as it stood prior to the 1994 amend-ment, which is extracted as under : 8. Periods for which mining leases may be granted or renewed - (1) The period for which a mining lease may be granted shall not exceed twenty years. (2) A mining lease may be renewed for two periods each not exceeding ten years ; Provided that no mining lease granted in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From this, the High Court inferred that the. subsequent renewal of lease as envisaged and contemplated under Section 8(3) refers to 'very rare' circumstances which may require renewals to be made. The Court, therefore, held that the conditions which make for the rare cases and diverse circumstances have to be clearly and pointedly articulated, for which the recording of proper and detailed reasons was necessary. It has been argued before us that the High Court had erred in referring to the speech of the Minister as it was made in a context other than that which is permitted to be accepted as a tool of statutory interpretation. We are of the view, however, that the issue can be decided without locking horns with the controversy over the situations in which utterances in the legislature are relevant for statutory interpretation. To us, the language of Section 8(3) is quite clear in its import. Ordinarily, a lease is not to be granted beyond the time and the number of periods mentioned in clauses (1) and (2). If, however, the Central Government is of the view that to allow a lessee's lease to be renewed further would be in the interest of mineral development, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary for us to consider the views expressed therein. In view of the nature of the issues before it, this Court appointed the Rao Committee to examine the matter. The Court then held that the findings of the Rao Committee would, for the purposes of the Act, be treated as a decision of the Central Government. In paragraph 42 of its decision, the Court expressed its appreciation for the detailed and excellent report submitted by Dr. Rao; it further stated that he had brought together all the relevant data and analysed the various claims put forth before it while also having had a note on chrome deposits in the Stale of Orissa prepared by the Chief Mining Geologist of the Indian Bureau of Mines. We have already extruded-the portion of the decision where the Court had stated that the Rao Report was bound to be of use to the Stale-Government as well as the central Government in deciding grant of mining .leases for chromite. It is clear from a study of the Indian Metals. case that in the opinion of this Court, the Rao Report had made such a comprehensive study of the issue that it merited treatment as a decision of the Central Government. In our view, once this has been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded in writing relax the provisions of sub-rule (1) in any special case, 60, Premature applications, - Applications for the grant of .prospecting licence or mining lease in respect 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 (b) where any such notification has been issued, the period specified in the notification has not expired; be deemed to be premature and shall not be entertained, and the application fee thereon, .if any paid, shall be refunded. The learned counsel for TISCO submitted that since, in respect of the land that fell within TISCO's leasehold area, the State Government had neither made an entry in the concerned register that the area was available For grant, nor had it notified its availability in the official Gazette, the applications of the other parties before this Court should be treated as premature applications under Rule 60 and not be entertained. He, there- fore, submitted that none of the other parties could he regarded as ag- grieved parties and, therefore, could not be said to have any interest in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercise of powers conferred on it by Rule 59(2) relaxed the requirement of Rule 59(1) to enable the other parries to be granted leases. We are of the view that the High Court had taken the correct stop in allowing the prospective applicants to put forth their points of view with regard to the renewal of TISCO's lease. As we have already pointed out, these issues involve considerably high stakes, both in terms .of commercial value and the effect, that such a decision will have on the concept of mineral development and the consequent national interest. To that extent, those likely to be affected and indeed, those who can legitimately have a stake in the proper formulation of such a vital policy, can he heard. No exception Can he taken to the High Court Treating them as proper parties and directing the Committee to hear them. We, therefore, hold that both the high Court and the Committee were justified in hearing live prospective applicants while considering the issue of renewal of TISCO's lease. 4. Relevance of the criterion of captive requirement of mining industries and the principle of equitable distribution of mining leases to the concept of mineral d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ores whose known reserves arc not abundant, preference will be given 10 those who propose lo take up their mining for captive use. The Committee also recorded paragraph 15,2 of the Industrial Policy of Orissa, 1992 where the following .is stated : 15.2. Persons who have firm proposals for setting up industries in the State for processing and value addition of minerals will be given priority in the grant of prospecting licenses and mining leases. The Committee also recorded the submissions of the counsel for JSL that preference for captive mines is a valid national policy, having been. incorporated in certain legislations such as the Coal Mines Nationalisation Act, 1973, and is an important factor lo be considered in the interest of mineral development. Thereafter, the Committee came to the conclusion that the National :Mineral Policy, 1993, which was tabled in both Houses of Parliament, had resulted in amendments being carried out in the Act and the Rules and. being a policy pronouncement., was a guiding factor in the .decision-making process of the Government. K further stated that both the National Mineral Policy and the Industrial Policy of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itable distribution of mining leases. The learned counsel for T1SCO sought to assail this approach of the Committee. He began by pointing out that before the Rao Committee, the State of Orissa had canvassed the view that the concept of an industry linked to captive mining is not envisaged by the scheme of the Act, nor has it been accepted as a mailer of policy. This was for the reason that there are more -industries than mines and. if every industry was entitled to a mine, more industries would be starved rather than served and such a policy would not be feasible. He further submitted that ever, the Rao Report had not given its enthusiastic approval to the concept of captive mining and assuming that it had. its effect would be negative by the fact that this Court had in the Indian Metals case expressly rejected the theory of captive mining. Learned counsel further submitted that the concept of captive mining has been wrongly applied since no mining activity can be carried out only for captive consumption. Different industries require varied grades of ore for their activities and a single mining area cannot produce a. particular type of are required by one industry alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t each of these parties had manufacturing industries which produce value-added products and earn considerable foreign exchange for the country, and it was therefore of the view that an analysis of their total requirement was necessary in the interests of mineral development as also that of the nation. Based on the information supplied to it, the Committee thereafter made an assessment, for a total period of 50 years, of the captive and net requirements of ICCL, IMFA, FACOR and JSL. At page 349 of its report, the Committee has also taken note of the projected captive and net requirements of Ispat Alloys. This being a finding of fact that has been recorded by the Committee, we have to accept that the argument of captive consumption does have a basis in the facts of the present case. On the issue of the application of the principle of equitable distribution, we are of She view that the Committee had, after having taken note of the prevailing situation and the problems faced by needy manufacturers, taken the correct view in recommending its implementation. We are. therefore, of the view that the Committee had correctly interpreted the relevant material available for appreciating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encies who were equipped to deal with the entire range of technical and long-term considerations involved. This Committee, in reaching its decision, consulted a number of policy documents and approached the issue from a holistic perspective. We have sought to give our opinion on the legal issues that arise for our consideration. From the scheme of the Act it is clear that the Central Government is vested with discretion to determine the policy regarding the grant or renewal of leases. On matters affecting policy and those that require technical expertise, we have shown deference to, and followed the recommendations of, the Committee which is more qualified to address these issues. We are. therefore, of the view that the Central Government was justified in issuing its order dated August 17 ,1995. For the foregoing reasons, we are of the view that the High Court and the Committee were justified in the view they took. Consequently the appeals filed by TISCCO stand dismissed. IDCOL has filed the appeals on much the same grounds as TLSCO while additionally claiming that the Committee should have heard its claim too while hearing the other parties. Since we have hear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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