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TMI Blog2013 (5) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment decides to invoke the provisions of Section 11(5) of the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as the "MM(D&R) Act") , "special reasons" for the same in terms of guidelines dated 24th June, 2009 issued by the Ministry of Mines, Government of India be recorded in writing. The State Government was directed to complete the entire exercise within specified period. 3. The factual matrix of the case is as follows: The availability of two sets of land for fresh grant of lease was notified by the State of Orissa vide Notification dated 20th August, 1991 issued under Rule 59(1) of the Mineral Concession Rules, 1960. The first set comprised of 85.60 acres plus 94.47 acres of land in Village Kansar and Village Gokhurang of Balangir District which had earlier been granted on lease in favour of Shri S.K. Padhi and Shri B.K. Agarwal. These leases were subsequently surrendered to the State Government and were, therefore, available for re-grant. The State Government vide notification dated 20th August, 1991 notified the availability w.e.f. 24th October,1991. The second set of land comprised of 283.06 square miles in Horomoto Guali Block, Malan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was challenged by one 'Dhananjay Kumar Dagara' before the Orissa High Court in a Writ Petition being W.P(C) No. 15315 of 2007. It was challenged on the ground that the directions for simultaneous consideration of all applications affects the preferential rights of the first day applicants under Section 11(2) of the MM(D&R) Act. In the said Writ Petition No. 15315 of 2007, Geomin Minerals & Marketing (P) Ltd. filed an application for intervention. The intervention application was dismissed by the Orissa High Court on 22nd February, 2008 with the observation that Geomin Minerals & Marketing (P) Ltd. may take independent steps in respect of its grievance. On 2nd May, 2008 the Orissa High Court by judgment in W.P(C) No.15315 of 2007 held that there was no preferential right for the applicant. The High Court thus dismissed the writ petition and upheld the order of the Revisional Authority dated 27th September, 2007. 6. Geomin Minerals & Marketing (P) Ltd. filed another Writ Petition being W.P(C) No.6484 of 2008 praying expeditious disposal of all pending applications for mineral concessions filed by it, based on its right arising from Rule 63-A of the MC Rules. The said writ petition w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd. under Rule 12(1) of the MC Rules giving them opportunity of being heard. The officials of the Geomin Minerals & Marketing (P) Ltd. attended the hearing. Thereafter, by a minutes of the meeting, inter se merits of all applicants was prepared by the State of Orissa on 17th October, 2008, but no recommendation was made. Therefore, Geomin Minerals & Marketing (P) Ltd. filed a Writ Petition being W.P(C) No.23 of 2009 inter alia with the following prayer: "Order the opposite parties to dispose of all pending applications for Mineral Concessions filed by the petitioner and set out in the petition in accordance with its vested right to preferential consideration in view of the fact that the petitioner's applications have been filed on the first date of availability and eligibility. Issue a writ of prohibition or any other appropriate writ, order or direction restraining the opposite parties from considering applications for Mineral Concessions of later applicants to the petitioner until the applications of the petitioner are first considered and disposed of by according priority or preferential right based on the petitioner being a first day applicant having applied for the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our of POSCO. Both the issues were determined by the High Court in favour of Geomin Minerals & Marketing (P) Ltd., and against the POSCO. Referring to Section 11(2), (3) and (4) the High Court held that the Geomin Minerals & Marketing (P) Ltd. has preferential right for grant of licence and lease and that the recommendation made by the State Government under Section 11 (5) in favour of POSCO is invalid. 11. The judgment aforesaid has been challenged by Geomin Minerals & Marketing (P) Ltd. by filing an appeal as no specific direction has been given for issuance of licence in its favour. The POSCO and the Government of Orissa have also challenged the judgment by filing their respective appeals. No separate appeal has been preferred by Kudremukh Company or Jindal Steel and Power Ltd. or any other, but some of them have filed intervention applications and petitions for impleadment. Accordingly, at the time of hearing of the appeals, respondents and interveners were heard and, therefore, we allow the applications for intervention and impleadment. 12. The learned counsel for the parties argued in detail for few days but in view of the nature of order we intend to pass it is not necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11(5) as well. In any event, in this case, there is one factor which beyond doubt attracts Section 11(5), and that is the sophisticated and advanced finex technology, which not only reduces pollution but is also able to utilize low grade ore to make steel. Section 11(5) would clearly be attracted on this ground alone, and, in whatever manner one approaches the issue, POSCO has rightly been recommended by the State Government for grant of the Prospecting Licence. 13.5 The recommendation dated 9.1.2009 made in favour of POSCO falls within the parameters of Sections 11(3) and 11(5) of the MM(D&R) Act. The State Government followed the direction of the Revisional Authority (Central Government ) dated 27.9.2007, which was upheld by the High Court and had become final, and simultaneously considered the inter se merits of all the applicants whose PL applications were pending disposal before the State Government. It was after a rigorous exercise of calling all the applicants for personal hearing and to make a presentation that the State Government took the considered view to hold that POSCO was the most meritorious applicant. 13.6 Once there was a direction of the Revisional Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icense/mining lease would have to be judged as on the date of the application itself, as otherwise the process of selection would be rendered arbitrary if an applicant is permitted to add to its qualifications after knowing the relative qualifications of other applicants. If this is permitted, such a process of adding to one's qualifications would become never-ending. In any event, if in substance and in effect a totally new entity has been permitted to be brought into existence, by transfer of substantial shares to another company, the original applicant can no more claim priority o its application as its character has undergone a substantial transformation. 13.9 The reliance by Kudremukh Company on Section 11(1) of the Act is wholly erroneous, as (admittedly) no reconnaissance permit was ever granted in its favour. Under Section 11(1) of the MM(D&R) Act, preference can be claimed if an applicant for the grant of a PL has already been granted a reconnaissance permit qua the said area; and the conditions prescribed in the first proviso to Section 11(1) are met. The reconnaissance work stated to have been carried out by the Department of Geology of the State Government, at Kudremu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or benefit of the aforesaid judgment. 14.4 Memorandum of Understanding or the arrangements outside the provisions of the MM(D&R) Act cannot be used to trample on the rights of prior or same day applicants. This principle is to be followed irrespective of whether the unamended or amended Section 11 is applied. 14.5 First Day Applicant enjoys and is entitled to priority over all subsequent days applications including the POSCO application which was made on 27th September, 2005 i.e. after about 14 years from the date of the Geomin applications. Stand of the State of Orissa: 15. Mr. Rakesh Dwivedi, learned senior counsel for the State of Orissa to the facts as noticed above contended as follows: 15.1 Initially a recommendation was made to the Central Government in favour of POSCO for an area of 6204.352 hectares by the State Government on 19th December, 2006. Pursuant to which the Revisional Authority after hearing the matter set aside the recommendation made in favour of POSCO and the State Government was directed vide order dated 27th September, 2007 to consider all pending applications simultaneously and to decide inter se merit and then pass an order as per law after afford ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 dated 27/9/2005 for 6828.54 hectares filed by POSCO India was considered and they were considered to be a front runner and possessing outstanding merit in comparison to all other applicants. They proposed to set up a World's first steel plant project using FINEX technology which was a next generation eco-friendly process which allows direct use of cheap iron ores fines and non-coking coal as feed stock and has consequently lower emissions as compared to blast furnace. They had assured captive consumption of the mineral at their plant at Paradip which was to be a port based steel plant. It was likely to create huge employment and generate huge revenue. 15.4 In Part-F, Summary, it has been noted that only two companies i.e. POSCO India Ltd. and Jindal Stripes have achieved the miles stones or the eligibility criteria laid down in the MOU for recommendation of raw- material linkage to their proposed steel plant. It mentions "as far as relevant merits are concerned in terms of proposed investment, financial resources capability for scientific mining and exploration of ore, it could be safely concluded that M/s. POSCO India (P) Ltd. stands out as the most meritorious among ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Orissa is that: Geomin's application PL No.1334 dated 29/10/1991 cannot be considered to be a prior application in view of the following facts: Geomin had made 7 PL applications for different areas to the State Government of Orissa. An area of 186 hectares in Village Rantha, District Sundergarh applied vide application No.1334 dated 29.10.1991 is overlapping. Thus, the area recommended for POSCO includes about 186 hectares of area applied for by Geomin. 15.7 The order of the High Court dated 14th July, 2008 had been passed in the context of PL Application No.1338 in Malantoli Block. This has nothing to do with the area recommended for POSCO. After the above High Court order, Geomin made a representation with respect to PL Application No.1337. 15.8 Geomin's applications, in particular PL No.1334, all dated 29th October, 1991 were made on an individual basis as a Private Ltd. Company. The nature of business indicated was mining, processing and sale of minerals and mineral products. The affidavit mentions that it is a new company and therefore there are no income tax/sales tax returns or clearance certificates. As regards financial resources the application si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cies were partially removed which were provided after the notice issued. Moreover, Geomin first placed reliance on 0.5 MTPA steel plant being set up by its group company AXL Industries then offered to set up the said project by itself. Thereafter relied upon 12 MTPA steel plant being set up by Navyuga Group which acquired 50% equity stake was later increased to 70% of the equity share. Application was sought to be considered on this basis. Therefore, Geomin's application is effectively and substantively of October/December, 2007. 15.10 Section 11 as amended by Act 38 of 1999 w.e.f. 18th December, 1999, would apply. The contention of Geomin that the old provisions would apply is incorrect. This matter is not res integra. In the case of State of Tamil Nadu vs. Hind Stone, (1981) 2 SCC 205, this Court has decided that the provisions of the Act and Rules as operating at the time of consideration would be applicable. Stand taken by Kudremukh Company: 16. Learned senior counsel appearing on behalf the Kudremukh Company submitted as follows: 16.1 That the State Government vide letter dated 25.04.2009 has communicated the rejection of the applications of the Company, to the exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(3) but may be over and above the reasons mentioned in Section 11(3). Section 11(5) will have no application where applications are considered simultaneously for areas which are notified, which is the present case. The recommendation dated 9.01.2009 made by the State Government is not sustainable. 17. As far as the contentions raised by Geomin Mienrals claiming priority by virtue of being an earlier applicant, it was submitted that the said contention no longer holds force after the amendment of Section 11(2) of the Act. As per the amended Section 11(2), all applications which were made during the period of notification and all applications received prior to the publication and had not been disposed of shall be deemed to have been received on the same day for the purpose of assigning priority. Therefore, a prior applicant has no preferential right to be considered over a later applicant. It is submitted that the right, if any, under the pre-amended provisions stands obliterated after the amendment came into force and cannot be construed as a 'vested' right. 18. It was further contended that the Court, if it so deems fit may direct the Central Government to consider all a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the said case, this Court held that the authority of the State Government to make reservation of a particular mining area within its territory for its own use is the offspring of ownership, and it is inseparable therefrom unless denied to it expressly by an appropriate law. By MM(D&R) Act that has not been done by Parliament. Setting aside by a State of land owned by it for its exclusive use and under its dominance control, is an incident of sovereignty and ownership. In the light of aforesaid observation made by this Court in Monnet Ispat Energy v. Union of India & Ors. (2012) 11 SCC 1 and in view of the relevant facts of the present case, it is to be determined as to whether the writ petition preferred by Geomin was pre-mature. 22. Under Section 5 of the MM(D&R) Act, the State Government cannot grant a reconnaissance permit, prospective licence or mining lease to any person unless previous approval of the Central Government has been obtained. The proviso to Section 5(1) expressly prohibits grant of PL except with previous approval of Central Government as quoted hereunder: Further, where Section 11(5) is invoked, there also prior approval of the Central Government is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rits of the recommendation. 24. Until the Central Government has passed an order either granting or refusing approval under Section 5(1) and Section 11(5) of the Act, it would not be permissible for any person to file a writ petition under Article 226 of the Constitution of India and any such petition if filed would be premature. In the instant case, the High Court committed a grave error of law in proceeding to observe that 'special reasons' did not exist on invoking Section 11(5) and that there was no comparison of merits in the record. The record has been shown to this Court and it is apparent that the State Government has tabulated and evaluated the inter se merits and has concluded that POSCO is more meritorious. All applications were given a hearing. In the circumstances, the High Court's observations are not justified and in fact the High Court appears to have usurped the jurisdiction of the Central Government in proceeding to make these remarks. The scrutiny of the merits was premature and the High Court should have refrained from entering into the merits. 25. The second proviso to Rule 63A also provides that the disposal of the applications by the State Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in preference to an applicant whose application was received earlier. Post amended provisions of Section 11(2), (3), (4) and (5) are as follows: 11(2). Subject to the provisions of sub-section(1), where the State Government has not notified in the Official Gazette the area for grant of reconnaissance permit or prospecting licence or mining lease, as the case may be, and two or more persons have applied for a reconnaissance permit, prospecting licence or a mining lease in respect of any land in such area, the applicant whose application was received earlier, shall have the preferential right to be considered for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, over the applicant whose application was received later: Provided that where an area is available for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, and the State Government has invited applications by notification in the Official Gazette for grant of such permit, licence or lease, all the applications received during the period specified in such notification and the applications which had been received prior to the publication of such not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11, as amended by Act 38 of 1999 w.e.f. 20th December, 1999, would apply. 28. According to the State of Orissa the preferential right envisaged in Section 11(1) is considerably distinct from the preference envisaged by Section 11(2). It is only in the case of Section 11(1) where a person has already held a reconnaissance permit or a prospective licence that he gets a preferential right for obtaining a prospecting licence or mining lease. It may be seen that Section 11(5) is subject to the provisions of sub- section (1) and, therefore, the State Government has no authority to give special reasons for overriding the preference. Further, Section 11(5) is notwithstanding Section 11(2), thus the preference under Section 11(2) can be overridden by special reasons. 29. Another distinction is that while Section 11(1) uses the expression "shall have a preferential right for obtaining", Section 11(2) uses the expression "shall have the preferential right to be considered for grant". Thus, under Section 11(2), the preferential right is only in relation to consideration. The preference envisaged under Section 11(2) does not mean that the other applicants are not to be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or amended Section 11(2) shall be applicable and thereby priority should be assigned under pre-amended or amended Section 11(2) as the matter has already been considered by the State Government and recommendation is required to be considered by the Central Government under Section 5(1) of the Act. The Central Government is required to go through the relevant facts of each case to determine whether the recommendation is to be approved or not. While deciding the question the Central Government will keep in mind the order which was passed by the Revisional Authority(Central Government) in the case of Dagara on 2nd May, 2008. 34. It is well settled that no applicant has statutory or fundamental right to obtain prospecting licence or a mining lease. In this connection one may refer to this Court decision in Monnet Ispat (supra). Therefore, the High Court before interfering with the recommendation, ought to have looked into the nature of recommendation. 35. In view of the finding as recorded above, we are of the view that the High Court committed a grave error of law in deciding the case on merits and deciding the question of legality of the recommendation made 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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