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TMI Blog1994 (9) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the obligations and the duties cast upon the authorities in such contingencies and many other questions which may relevantly arise for consideration by the Court are of considerable significance to the public at large and they require adjudication and resolution by a larger Bench. Accordingly these appeals are posted before us. 2. To appreciate the contentions raised before us, which we shall refer to presently, it would be necessary to notice the factual background which gave rise to these appeals. There are large extents of lands bearing gray varieties of barytes in Anantarajupet village and Mangampet village-erstwhile Inam village of Cuddapah District. The Government of Andhra Pradesh issued orders in' G.O.Ms. No. 27, Industries and Commerce (Mines. III) Department dated January 7, 1974 declaring that the Barytes Ore bearing areas in the villages of Mangampet and Anantarajupet of Cuddapah District except those already leased out were reserved with immediate effect for exploitation in the public sector. In pursuance of the said orders, the Government of Andhra Pradesh (hereinafter referred to as the 'lessor-State') sanctioned the mining lease of Barytes over an ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation and ordered cancellation of the sub-leases granted by the lessee-Corporation in favour of the pattedars-sub-lessees for mining operations of Barytes which is reflected in G.O.Ms.No. 402, Industries & Com-merce (Mines I) Department dated December 1, 1993. Further to the orders issued in the said G.O.Ms.No. 402, the Government of Andhra Pradesh withdrew, with immediate effect, the consent granted to the lessee-Corporation to enter into sub-leases of lands bearing Barytes Ore in Anantarajupet and Mangampet of Cuddapah District with the pattedars sub-lessees in G. O.Ms.No. 4^7, Industries and Commerce (Mines. I) Department dated December 7, 1993. In compliance with the said orders, the lessee-Corporation cancelled the sub-leases. The legality of the said G.O.Ms.Nos. 402 and 417 and the consequent cancellation of the sub-leases were assailed by the pattedars-sub-lessees in the above said writ petitions. 4. The learned single Judge who dealt with these writ petitions came to the conclusion that before passing the impugned orders directing cancellation of the sub-leases and withdrawal of the consent, the Government have not given an opportunity of being heard to the sub-lessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Advocate General, assuming the Court has rightly come to the conclusion that the impugned orders are bad for want of notice or for non-compliance of S. 4A of the Act, the writ petitions ought not to have been allowed as it resulted in reviving void orders and perpetuating the illegality. 6. The learned Additional Solicitor General appearing for the Union of India and the 2nd respondent in these appeals, brought to our notice the contents of para 3 of the counter-affidavit to the effect that the matter relating to sub-leases does not fall within the purview of the Central Government, but is within the purview of the State Government. However, he submits that the State Government was not competent to grant consent under R. 37 of the rules, which is not attracted where the area has been reserved for exploitation by a Public sector undertaking. He elaborated his submission with reference to R. 59 which provides, inter alia, that an area which has been reserved for exploitation by a public sector undertaking is not available for grant of leases; if a sub-lease is granted in respect of such area by the lessee-Corporation, it would be contrary to the orders of reservation fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Act and the Rules, the learned Senior Counsel submits that the impugned orders themselves are not based on those grounds and that the impugned orders cannot now be improved or supported on grounds other than those mentioned in the orders. Referring to the clauses in the sub-lease deeds where under the sub-lessees have agreed not to claim any damages in the event of termination of subleases due to withdrawal of consent or taking of policy decision to determine sub-leases, the learned counsel argued that the clauses themselves being void cannot be given effect to and that having regard to the cases put forth by the parties before the learned single Judge no new plea can be allowed to be raised at the stage of appeal. On the question of the absence of prior consent of the Central Government in W.P.Nos. 18499 and 19537 of 1993, the learned counsel puts his case on two grounds viz., that it was not the case of the lessor-State in the impugned order and there was no plea that for want of the consent of the Central Government, the sub-leases would be void. 8. Shri J. V. Suryanarayaria Rao the learned counsel appearing for the respondents in W.A Nos. 132 and 133 of 1993, ado ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litigation pending in the courts. The lands thus acquired may be handed over to the Andhra Pradesh Mineral Development Corporation Limited, a Public sector undertaking, to exploit the mines fully. The committee has further recommended that in view of the acquisition of the entire mineral bearing areas and entrusting them to the Corporation with powers to exploit the minerals fully, the need for tripartite agreement disappears and, therefore, the tripartite agreement which become a source of many irregularities may be cancelled immediately and that all mineral lands be entrusted to the Corporation for its exclusive exploitation. 3. Government have decided to accept the recommendations made by the House Committee and accordingly order cancellation of all existing subleases to mine barytes entered into between the Andhra Pradesh Mineral Development Corporation Limited and the sub-lessees. A.P. Mineral Development Corporation Limited is directed to take action accordingly in accordance with law and report compliance to Government. 4. All such mineral lands shall stand reverted to or shall be acquired by A.P. 'Mineral Development Corporation Limited for its exclusive exploitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice in this regard-would defeat, the very purpose, assuming without admitting that the situation demands issue of notice! It may be reiterated that the sub-leases are purely contractual, without any statutory flavour and giving of notice is not only not contemplated but is also not at all necessary." It is seen that even the counter-affidavit does not refer to any specific power in the contract of sub-lease. However, the learned Advocate General has invited our attention to CIs. 15 and 16 of the deed of sub-lease executed by the'lessee-Corporation'in favour of Mr. Y.S. Raja Reddy, the petitioner in W.P. No. 18538 of 1993. It may be appropriate to read the said clauses here: "15. The lessee reserves the right to terminate this sub-lease in the event of any violation of the terms and conditions/ default/breach of contract and the sub-lessee shall be responsible for all damages that accrue. 16. The sub-lessee shall not claim any damage from the lessee in the event of the State Government withdrawing the permission under R. 37(i) to sub-lease during the tenure of this lease or on account of any other Governmental action having a direct bearing on this contract. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to the merits of the case. Therefore, we shall consider whether the impugned order directing premature determination of the sub-leases without complying with sub-sec. (3) of S. 4A of the Act and the order withdrawing the consent without issuing notice to the pattedars-respondents are valid in law. 16. At the outset, we would point out that the impugned order directing termination of sub-leases does not purport to be issued under Section 4A of the Act. But the fact is not determinative of source of power if such an order can be passed under that section in law. As the learned single Judge has tested the validity of the impugned order on the touchstone of S. 4A of the Act and that finding is assailed before us, we shall examine this aspect in the first instance. It will be useful to refer to S. 4A of the Act in so far as it is relevant for our purposes:-- "4A. Termination of prospecting licences or mining leases :-- (1) Where the Central Government, after consultation with the State Government, is of opinion that it is expedient in the interest of regulation of mines and mineral development, preservation of natural environment, control of floods, prevention of poll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n; or (e) to avoid danger to public health; or (f) communications, or (g) to ensure safety of buildings, monuments or other structures, or (h) for conservation of mineral resources, or (i) for maintaining safety in the mines, or (j) for such other purposes as the Central Government may deem fit; (4) On formation of such an opinion, the Central Government has to request the State Government to make a premature determination; (5) It is only then the State Government has to pass an order making premature termination of such prospecting licence or mining lease with respect to any area, pursuant to such a request, under sub-sec. (2) of Section 4A of the Act which deals with premature determination of prospecting licence or mining lease in respect of any minor mineral, it is for the State Government to form an opinion on the basis of the criteria mentioned therein, after consultation with the Central Government, and make an order of premature determination of the lease of any minor mineral. After such determination, the State Government has power to grant prospecting licence or mining lease in favour of a Government Company or Corporation as it may deem fit. Sub-section (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act is wholly illegal. 19. These contentions lead us to the inquiry into the question -- Was the grant of sub-leases valid in law ? 20. Here it will be useful to refer to paragraph 3 of the impugned order of the Government dated 1-12-1993, extracted above, which shows that the Government (Lessor State) has taken a policy decision to accept the recommendations of the House-Committee and ordered cancellation of all existing sub-leases entered into by the Lessee-Corporation and the sub-lessees, but not for the reasons that the sub-leases were invalid or illegal. 21. It has already been noticed that the power under Section 4A of the Act regarding premature termination of leases is available to the Central Government in case of any, mineral other than minor mineral and in the event of the Central Government forming the opinion that it.is expedient in the interest of the regulation of mines and mineral development, among other reasons specified therein, so to do, it can request the State Government to make premature determination of the leases. This power is available to the State Government only in respect of minor mineral. Barytes is admittedly a major mineral. Therefore, the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant case, the source of power to issue the impugned G. O. Ms. No. 402 is not, and in our view, rightly sought to be derived from this sub-rule obviously because the proviso to sub-rule (3) enjoins that no order of termination of lease shall be made without giving the lessee a reasonable opportunity of stating his case and admittedly no notice was given to the sub-lessees. 25. We shall now proceed to consider whether the impugned order could have been validly passed by the State in exercise of its Executive power. 26. Shri Kapil Sibal contends that in view of the declaration in Section 2 of the Act, the regulation of mines and development of the minerals has come under the control of the Union and the State has no residuary power to deal with this in view of the well-recognised concept of 'occupied field' except to the extent the power is reserved to the State Government under the Act or the Rules. 27. The extent of the Executive Power of the State under Article 162 of the Constitution extends to the matters with respect to which the Legislature of the State has power to make laws. This power is subject to the provisions of the Constitution and in any matter in the List I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that being the 'extent' to which Parliament had declared by law that it was expedient that the Union should assume control the field of mineral development was taken over, that would include the provision of amenities to workmen employed in the mines which was necessary in order to stimulate or maintain the working of mines, as such the Orissa Act was repugnant and no fee could be levied by the State Legislature. Upholding that contention the Supreme Court observed that the Act covered the entire field of mineral development and that being the 'extent' to which the Parliament had declared by law that it was expedient that the Union should assume control and that the terms of Section 18(1) of that Act laid a duty upon the Central Government to take all steps as might be necessary for the conservation and development of minerals in India and that purpose the Central Government has, by notification, to make such rules as it deemed fit so that it would include the provision of amenities to workmen employed in the mines, the Orissa Act levying fees was beyond the legislative competence of the State. It was held as follows at Page 1291 :-- "Repugnancy arises wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at under Article 162, the executive power is co-extensive with the power of the legislature to legislate and that executive power cannot be exercised in derogation of the law made by the competent legislature. It was so held in Chitralekha v. State of Mysore, [1964] 6 SCR 368 . We have already held that the State legislature is denuded of the legislative power o12:59 AM 5/25/2013n the topic of regulation of mines and mineral development. In view of this, the irresistiable conclusion is that premature termination of the sub-leases by the State Government by the impugned G. O. Ms. No. 402 cannot be upheld even under the executive power of the State Government under Article 162 of the Constitution. 33. Next the validity of the other impugned order issued by the Government in G.O.Ms. No. 417, Industries & Commerce (Mines-I) Department, dated December 7, 1993 remains to be considered. After referring to the policy decision and the orders issued in G.O.Ms. No. 402 dated December 1, 1993 to cancel all the sub-leases entered into between the Lessee-Corporation and the sub-lessees, and to entrust the area to the Lessee-Corporation for its exclusive exploitation, the Government by orders is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh 1991 (11) ALT 32 which was decided by one of us (Syed Shah Mohammed Quadri, J.) 36. In that case, the consent given by the State Government to the Andhra Pradesh Mineral Development Corporation Limited to grant sub-leases in favour of the Writ Petitioner therein was ordered to be kept in abeyance after the execution of the lease deed and after he has started mining operations pursuant to the sub-leases granted in his favour. On behalf of the Government it was urged that the rights of the petitioners, if any, which were alleged to be interfered with, were contractual rights and therefore, Article 226 of the Constitution was not available and that the authority which gave its consent had power to suspend the order granting the consent. Insofar as the first contention is concerned, it was pointed out that the State Government was not a party to the sub-lease and there was no privity of contract between the State and the sub-lessee and that Rule 37 does not create any statutory relationship of lessor and the lessee between the State and the sub-lessee, therefore, the impugned action of the State could not be said to be one of the rights and obligations arising out of or under a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nction and conditions, if any. 38. In our view the power to withdraw the consent earlier given by the State Government under Rule 37 of the Rules to the lessee to enter into, sub-teases, can be exercised so long as it is capable of being rescinded or withdrawn as this exercise should be subject to the like conditions. When on the strength of the consent to enter into sub-leases for mining, the lessee has executed sub-lease deed and thus the consent culminated into contract and the sub-lessee has already comnlenced the mining operations, the consent has worked out itself and cannot be withdrawn at that stage as the conditions existing at the time of giving consent have changed. A close reading of the Rule 37 of the Rules, shows that having regard to the scheme of the Rule, the concept of withdrawal of the consent given to the Lessee for entering into sub-leases is inconsistent with the power conferred thereunder so by invoking Section 21 of the General Clauses Act, the State Government cannot purport to withdraw the consent. 39. In State of Bihar v. D. N. Ganguly, (1958)IILLJ 634 SC the question before the Apex Court was whether a reference made under Section 10(1) of the Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for grant of a sub-lease of such an area in view of provisions of Rule 59 as such no valid consent could have been given under Rule 37. As the impugned order of the Government in G.O.Ms. 41,7 is not passed on the ground that the consent granted by it was invalid in law, we do not wish to express any opinion on this aspect. We shall deal with this further when we deal with contentions based on Rules 58 and 59 of the Rules. 43. Even assuming that the State Government is competent to order premature termination of lease as well as withdraw the consent given under Rule 37 of the Rules, the impugned orders cannot be sustained as they were passed without giving an opportunity of being heard to the affected parties and in violation of the principles of natural justice as admittedly the sub-lessees h.ave been carrying on the mining operations after they entered into sub-leases which were pursuant to consent, granted under Rule 37 of the Rules. 44. For all the above reasons, the order of the learned single Judge holding that G.O.Ms. No. 402 and G.O.Ms. No. 417 dated 1-12-1993 and 7-12-1993 respectively and consequential termination of sub-leases by the Lessee-Corporation, as illegal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Government from granting prospecting licence or mining lease in respect of any mineral specified in First Schedule except with the previous approval of the Central Government. After amendment S. 5 reads thus:-- "5. Restrictions on the grant of prospecting or mining leases:-- (1) No prospecting licence or mining lease shall be granted by a State Government to any person unless he - (a) is an Indian National; and (b) satisfies such conditions as may be prescribed; Provided that in respect of any mineral specified in the First Schedule, no prospecting licence or mining lease shall be granted except with the previous approval of the Central Government. Explanation;-- x x x (2) x x x By the same amended Central Act, the First Schedule was substituted including 'Barytes' at Sl. No. 3 in the list of specified minerals. However, after about five years, on February 20, 1991, Rule 37 was amended in G.S.R. No. 129(E), to bring it in line with amended S.5 of the Act. Sub-rule(l) of Rule37 after amendment in so far as it is relevant for our purposes reads thus: "37. Transfer of lease: (1) The lessee shall not, without the previous consent in writi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase at all in respect of those areas because it was open to the Central Government to relax the reservation for recorded reasons and also because the State Government can always denotify the reservation and make the area available for grant to the private parties. The Supreme Court held that it was not open to the public sector corporations to object to the grant to any private parties on the ground that the reservation has been notified in favour of the public sector undertaking and that it was open to the State Government to grant lease to the private parties even in respect of the areas covered by the notification of the State • Government and that cannot be challenged by any public sector undertaking. It may be pointed out that in the instant case, there has been neither any relaxation by the Central Government nor was any notification issued dereserving the area in question. 51. Be that as it may, the contentions now urged to sustain the impugned orders of cancellation of the sub-leases and withdrawal of the consents given by the State-Lessor for entering into sub-leases, are : firstly, the ground that no consent under Rule 37 could have been granted by the State Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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