Full Judgment Text
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4561 OF 2013
(ARISING OUT OF SLP(C) NO.31593 OF 2010)
| . … APPELL | |
| OMIN MINERALS & MARKETING (P) LTD. … APPE<br>VERUS<br>ATE OF ORISSA AND ORS. … RESP<br>WITH<br>CIVIL APPEAL NO. 4562 OF 2013<br>(ARISING OUT OF SLP(C) NO.31957 OF 20<br>ATE OF ORISSA … APPE<br>VERUS<br>OMIN MINERALS & MARKETING (P) LTD. … RESP<br>D ORS.<br>WITH<br>CIVIL APPEAL NO. 4563 OF 2013 | . … APPE |
JUDGMENT
POSCO INDIA PVT. LTD. … APPELLANT
VERUS
GEOMIN MINERALS & MARKETING (P) LTD
AND ORS. … RESPONDENTS
J U D G M E N T
SUDHANSU JYOTI MUKHOPADHAYA, J.
Leave granted.
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2. These appeals by special leave have been
preferred against the order of Division Bench of
th
Orissa High Court, Cuttack dated 14 July, 2010 in
W.P. (C) No.23 of 2009 whereby the writ petition
preferred by Geomin Minerals & Marketing (P) Ltd.
was allowed and the recommendation made by the State
th
Government dated 9 January, 2009 in favour of POSCO
India (P) Ltd. was set aside with a direction to the
State Government to take a fresh decision in terms of
th
order dated 27 September, 2007 passed by the
Revisional Authority in Revision Application File
No.22 (41)/2007RC1 by giving the Geomin Minerals &
Marketing (P) Ltd. the preferential right of
consideration. The Division Bench further observed
that in the event the State Government decides to
invoke the provisions of Section 11(5) of the Mines
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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
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dated 24 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.
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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
th
vide Notification dated 20 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 regrant. The State
th
Government vide notification dated 20 August, 1991
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notified the availability w.e.f. 24 October,1991.
The second set of land comprised of 283.06 square
miles in Horomoto Guali Block, Malangtoli Block,
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KhandhdharPahar in Block Keonjhar and Sundargarh
districts, Taldihi Toda Block, Sundargarh District
and Dubna Block I and III which was declared to be
reserved for public sector corporations vide
Notification dated 05.06.1962 and 06.12.1962. The
State Government decided to dereserve the said
mineral bearing areas and the availability of the
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rd
said area was notified vide Notification dated 23
August,1991. The date of availability for regrant
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was on and from 29 October,1991. The dispute in
the case of Geomin’s SLP No. 31593/2010 is regarding
186 hectares of land located in village Rantha
District Sundergarh. Although, the recommendation
made in favour of POSCO covers an area of 2500
hectares, thus Geomin’s interest is limited to a
fraction of the land recommended for POSCO.
4. POSCO had made an application for prospecting
licence for an area of 6828.54 hectares. 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 19.12.2006. The
recommendation was challenged by Kudremukh Iron Ore
Company (hereinafter referred to as the “Kudremukh
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Company”) by means of a writ petition being W.P. No.
1775 of 2007. The High Court refrained from
exercising its discretion since the matter was
pending before the Central Government and directed
that representation of Kudremukh Company may be
treated as revisional application. The
recommendation of the State Government was set aside
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th
vide order dated 27 September,2007 by the
Revisional Authority as all mineral concession
applications were not considered simultaneously and
no orders were passed on those applications. It was
directed that all pending applications be considered
simultaneously and inter se merit be examined and
then order be passed as per law after affording an
opportunity of hearing to all the applicants.
Earlier the Central Government by its letter dated
16.7.2007 had informed the State Government that the
recommendation in favour of POSCO could not be
processed as the process of hearing in respect of 203
applicants was still not complete. It was noted that
the recommendation in favour of POSCO was for an area
which was partially notified and partially non
notified and, hence, the applications should be
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considered accordingly as per law.
5. The order passed by the Revisional Authority
th
dated 27 September, 2007 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
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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
nd
dismissed by the Orissa High Court on 22 February,
2008 with the observation that Geomin Minerals &
Marketing (P) Ltd. may take independent steps in
nd
respect of its grievance. On 2 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
th
Authority dated 27 September, 2007.
6. Geomin Minerals & Marketing (P) Ltd. filed
another Writ Petition being W.P(C) No.6484 of 2008
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praying expeditious disposal of all pending
applications for mineral concessions filed by it,
based on its right arising from Rule 63A of the MC
Rules. The said writ petition was disposed of on
14th July, 2008 by the Orissa High Court with a
direction to the State Government to consider the
pending PL/RP applications of Geomin Minerals &
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Marketing (P) Ltd. preferably within a period of six
months without discrimination and in accordance with
law.
7. In the meantime, during the pendency of the
applications preferred by different persons including
Geomin Minerals & Marketing (P) Ltd. for Preferential
Licence (‘PL’ for short) and Mining Licence (‘ML’ for
th
short), on 20 December, 1999 amendments carried out
in Section 11 of MM(D&R) Act became effective. By
the amending Act, the first proviso to Section 11(2)
of MM(D&R) Act was inserted as under:
“11. Preferential right of certain persons.
(2).....
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 notification in respect of the
lands within such area and had not been
disposed of, shall be deemed to have
been received on the same day for the
purposes of assigning priority under
this subsection.”
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The non obstante clause i.e. Subsection (4) of
Section 11 was renumbered as Subsection (5), and a
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new Subsection (4) was introduced, which reads as
under:
“11. (4) Subject to the provisions of
subsection (1), where the State
Government notifies in the Official
Gazette an area for grant of
reconnaissance permit, prospecting
licence or mining lease, as the case may
be, all the applications received during
the period as specified in such
notification, which shall not be less
than thirty days, shall be considered
simultaneously as if all such
applications have been received on the
same day and the State Government, after
taking into consideration the matters
specified in subsection (3), may grant
the reconnaissance permit, prospecting
licence or mining lease, as the case may
be, to such one of the applicants as it
may deem fit.”
8. Pursuant to the order of the Revisional
th
Authority dated 27 September, 2007 passed in the
case of Kudremukh Company, the State Government
issued a notice to Geomin Minerals & Marketing (P)
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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
th
State of Orissa on 17 October, 2008, but no
recommendation was made. Therefore, Geomin Minerals
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& 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 concerned Mineral Concessions set
out in the petition on the first date of
availability and eligibility.”
th
The Writ Petition was filed on 5 January, 2009
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by Geomin Minerals & Marketing (P) Ltd. and just
th
after few days on 9 January, 2009, the State
Government made impugned recommendation to the
Central Government in favour of POSCO under Section
11(3) and (5) of the MM(D&R) Act. The said
recommendation was challenged by Geomin Minerals &
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Marketing (P) Ltd. by filing a petition for
amendment.
9. On hearing the parties, the High Court framed
the following issues for consideration:
1.Whether the writ petition is
maintainable due to availability of
alternative remedy ?
2. Whether the writ petition is premature
?
3. Whether the writ petition is
maintainable due to delay and laches ?
4. Whether the writ petition is barred by
resjudicata ?
5. Whether the area in question was
earlier reserved or it is a nonreserved
area?
6. Whether the petitioner has any
preferential right under Section11 of
the M.M. (D&R) Act ?
7. Whether recommendation made by the
State Government under section 11 (5) of
the M.M.(D&R) Act in favour of POSCO is
valid ?
JUDGMENT
10. In the present case, the second issue is
important as the respondents to the writ petitions
raised the question of maintainability on one of the
grounds that the application was premature. The
said issue was answered by the High Court in a
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cryptic manner without any reason, as apparent from
its finding which is produced below.
“ Issue no.2,
Whether the writ petition is
premature ?
This issue is answered in favour of the
petitioner as the petitioner has approached
this Court at a time when its right to be
considered along with POSCO has been
threatened to be infringed by the action of
the State, which, according to the
petitioner, is illegal and contrary to the
statutory provision. So the petitioner
prayed for preferential right under Article
226 of the Constitution of India.
Hence the writ petition cannot be said
to be premature as the petitioner could not
have waited till the harm is caused to him
(See Bengal Immunity Co. Ltd., v. State of
Bihar and others, AIR 1955 SC661).”
Issue Nos. 6 and 7 relate to preferential right
of Geomin Minerals & Marketing (P) Ltd. under
Section 11 of the MM (D&R) Act and validity of
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recommendation made by the State Government under
Section 11(5) of the said Act in favour 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
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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
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detail for few days but in view of the nature of
order we intend to pass it is not necessary to
discuss each and every submission except the relevant
one, as recorded hereunder:
Stand of POSCO India Pvt. Ltd.
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13. Learned counsel Mr. K.K.Venugopal appearing on
behalf of POSCO India Pvt. Ltd. made the following
submissions:
13.1 The recommendation in favour of POSCO India has
been made in accordance with the provisions contained
in Section 11 (2), (3) and (5) of MM(D&R) Act and
other relevant provisions of Mineral Concession
Rules, 1960.
13.2 The POSCO was found to be the most meritorious
applicant and “hence the State Government by
exercising its power under Section 11(5) of MM(D&R)
Act, 1957 has decided to recommend an extent of 2500
Hectares to Government of India for prior approval
for grant of PL in their favour.
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13.3 In the present case, there are at least two
reasons as to why there cannot be any claim of
priority on the part of Geomin. When the area in
question was released from reservation and de
notified on 23.8.1991, no outside date before which
applications had to be made had been fixed. The
Government of India (Revisional Authority), in
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exercise of its revisional jurisdiction, vide order
27.9.2007, had directed the State Government to
consider all the pending applications simultaneously.
This order was challenged by one Dhananjay Kumar
Dagara, and the Writ Petition was dismissed by the
High Court. The decision of the Central Government
thus became final. If the applications were to be
considered simultaneously, which means as if they
were received on the same day, the proviso to
Section11(2) of the Act would apply. Indubitably,
in any comparison based on the factors set out in the
tabulated statements, POSCO would be far ahead of
the other applicants, based on its experience,
investment, technology used, integrated project,
captive use of the iron ore, total employment (direct
and indirect) and, above all, public interest.
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Thus, Section 11(3) of the Act wholly applies in
POSCO’s favour.
13.4 Apart from Section 11(3), the State Government
has made the recommendation also under Section 11(5)
for the simple reason that POSCO stood head and
shoulders above the other applicants, in respect of
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public interest. If the gap between POSCO and the
other applicants, even in regard to the very
considerations specified in Section 11(3) is so
vast, then, in such a case, the very same factors,
qualitatively and quantitatively, would attract
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.
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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
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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
Authority, which was affirmed by the Orissa High
Court in the Dagara case (which order attained
finality), that the State Government was required to
consider all pending applications simultaneously and
come to a decision after evaluating the inter se
merits of all the applicants. An inter se comparison
of multiple applicants for grant of a mineral
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concession is envisaged only under Section 11(3) of
the MM(D&R) Act. This being so, in any inter se
comparison (whether pursuant to Section 11(2) or
not), the criteria on the basis of which a decision
must be taken by the State Government is what is
specified in Section 11(3).
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13.7 The High Court has failed to point out as to
what would amount to “special reasons”. The
Impugned Judgment also does not appreciate that the
recommendation in favour of POSCO has been made by
the State Government keeping in mind the larger
interests of the State and its citizens. The basis
of this decision was the economic and environmental
benefit accruing to the State from POSCO’s mining
methods.
13.8 POSCO is a wholly owned subsidiary of M/s
POSCO, which is a Korean compay having more than 25
years experience in developing minerals in various
countries in the world and is the world’s second
largest steel maker by market value and Asia’s most
profitable steel maker. M/s POSCO’s operating profit
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margin is the top in the World Steel Industry, and
it is the most competitive steel maker as per 2010
World Steel Dynamics. According to 2010 World
Economic Forum M/s POSCO is one among the 100
companies to last the next 100 years. Geomin is a
company which was incorporated in September, 1991,
with an authorised share capital of Rs.1,00,000/
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(Rupees one lakh), obviously only with a view to take
advantage of the notification dated 23.8.1991 issued
by the State Government. Geomin did not have any
experience of having undertaken any mining
activities, and, therefore, cannot be said to have
possessed any special knowledge or experience in
mining operations. Further, sometime in the year
2007, control of Geomin, through acquisition of a
majority of the share of the company, was taken over
by one ‘Navayuga Steel Limited’. In the submission
of the appellant, the experience and/or
qualifications of ‘Navayuga Steel Limited’ cannot be
used in support of Geomin’s application made in the
year 1991, since the merit of an applicant for a
prospecting license/mining lease would have to be
judged as on the date of the application itself, as
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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 neverending. In any
event, if in substance and in effect a totally new
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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
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the State Government, at Kudremukh’s expense, also
cannot attract Section 11(1) of the Act in its
favour. Further, in any event, Kudremukh Company is
bound by the aforementioned direction for
simultaneous consideration of all applications given
by the Central Government, as per the decision of
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Revisional Authority, which was upheld by the High
Court.
Stand of Geomin Minerals & Marketing (P) Ltd.
14. Learned counsel for the Geomin Minerals &
Marketing (P) Ltd. made the following submissions:
14.1 A preferential right in the field of mining is
an important right. The preferential right conferred
under unamended Section 11 upto 1999 cannot be
curtailed under amended Section 11. Since Geomin
th
Minerals & Marketing (P) Ltd. applied on 29
October, 1991 the law that was applicable on the said
date of application i.e. an amended Section 11 shall
be applicable for consideration of application filed
by Geomin Minerals & Marketing (P) Ltd.
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14.2 On the other hand if the amended Section 11 is
applied, in that event the judgment of this Court in
Sandur Manganese & Iron Ores Limited v. State of
Karnataka (2010) 13 SCC 1 will apply. The
consequence will be as follows:
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(a) Section 11(4) of the amended Section will
apply.
(b) Section 11(5) will not be available.
(c) If amended Section 11(4) applies, then all
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persons applied on 29 October, 1991 will be
treated as first applicants. The choice
between them will be governed by Section
11(3).
(d) Even if Section 11(5) is applied, special
reasons referred to in Section 11(5) cannot be
same that of the reasons to be recorded for
the purpose of Section 11(3).
In the present case, the exercise which State
Government has done mixes up the matter under Section
11(3) and 11(5) for recommending the name of M/s
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POSCO India Pvt. Ltd., therefore it is contrary to
the provisions of Section 11 and recommendation in
favour of the POSCO India Pvt. Ltd. is not bona fide.
14.3 Amended Section 11 is prospective in nature. It
is the Rule on the date of application that would be
applicable and not the Rule on the date of
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consideration. In view of Rule 8(C) of Mineral
Concession Rules it cannot be said that Section 11
will be applicable from the date of consideration.
As per the ratio of the judgement in Sandur
Manganese & Iron Ores Limited v. State of Karnataka
(2010) 13 SCC 1 if amended Section 11 is applied
then Geomin Minerals & Marketing (P) Ltd. is
entitled for 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.
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14.5 First Day Applicant enjoys and is entitled to
priority over all subsequent days applications
including the POSCO application which was made on
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27 September, 2005 i.e. after about 14 years from
the date of the Geomin applications.
Stand of the State of Orissa:
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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
th
6204.352 hectares by the State Government on 19
December, 2006. Pursuant to which the Revisional
Authority after hearing the matter set aside the
recommendation made in favour of POSCO and the State
th
Government was directed vide order dated 27
September, 2007 to consider all pending applications
simultaneously and to decide inter se merit and then
pass an order as per law after affording an
opportunity to all the applicants. Earlier the
recommendation in favour of POSCO was made for an
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area which was partially notified and partially non
notified and other applications were not considered
and hence the matter was remitted back by the
Revisional Authority to the State Government.
15.2 The State Government had thereafter granted
hearing to all the applicants and had considered the
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inter se merit of the applicants. An overall
holistic consideration and record shows that the
Government had an inter se comparison of the
applicants as directed by the Central Government and
had also made recommendation in favour of POSCO by
invoking Section 11(5) of the MM(DR) Act, 1957.
15.3 The case of Geomin had been considered. During
the hearing, Geomin stated that it is a joint venture
between Navyuga Group and T.P. Minerals Group and it
wanted to set up one ore based steel complex of 12
MTPA capacity but at that time their project was
under consideration by the High level clearance
authority. The case of Kudremukh Company based on PL
No.1991 dated 17/2/2002 was considered. This company
proposed to invest Rs.100 Crores in mines and
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Rs.5,000 Crores in industry and its plant was in
Mangalore, State of Karnataka. It was proposing some
plants in Sundergarh District but there was no
definite proposal received by the State. Jindal
Steel and Power Limited (hereinafter referred to as
the ‘JSPL’) had submitted four PL and one ML
applications. The PL applications are dated
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22/2/2007. They did not submit sufficient documents
as required under Rule 22(3)(i) of MC Rules and
legally accepted Geological Prospecting Report for
their ML application. This company is part of Jindal
Group and was operating a steel plant at Raigarh,
Chhattisgarh. It was considered to be a serious
contender for the applied area. There applied area
was 4930.57 hectares after clubbing the four PL
applications. Out of this only 90 hectares are
overlapping with the PL application of POSCO. Thus,
their PL applications cover an area which is
overwhelmingly distinct from the area recommended for
POSCO. Consequently, JSPL had not filed any Writ
Petition nor had applied for impleadment before the
High Court. It has chosen to move an intervention
application belatedly in the SLP filed by Geomin.
JUDGMENT
This application has not been allowed and it is
liable to be rejected. The PL Application No. 2122
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
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FINEX technology which was a next generation eco
friendly process which allows direct use of cheap
iron ores fines and noncoking 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 PartF, 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 rawmaterial linkage to their
proposed steel plant. It mentions "as far as relevant
merits are concerned in terms of proposed investment,
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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 all the MOU signed applicants and
as well as other applicants as narrated above, it
mentions that application of Jindal Stainless was
being considered for other areas. The "conclusion"
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has been drawn and it has been specifically stated in
subpara (c) that Geomin Minerals and Marketing has
some merit but they cannot be considered at par with
POSCO India. Kudremukh Company was found to be
highly meritorious but its merit was not comparitable
with M/s. POSCO India taking into account the
comprehensive advantage of POSCO in terms of revenue
and employment generation. In subpara (f) it was
concluded that on account of the ability to carry out
scientific exploration and mining, capability to
mobilize adequate financial resources for investment,
setting up of value addition facilities including 12
MTPA steel plant based on ecofriendly and resource
use efficient technology which will generate huge
revenue and employment, the POSCO India deserves
precedence over all other applicants and it stands
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out as the most meritorious.
15.5. While considering the extent of area to be
recommended, it was noted that POSCO had applied for
6828.24 hectares in Kandhar region. Considering all
relevant aspects the State Government decided to
recommend an area of 4050 hectares only in favour of
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28
POSCO to the Government of India for prior approval
for grant of PL. Expressly invoking Section 11(5) of
MMDR Act, 1957 in addition to the inter se comparison
of merits, the comparative statement table prepared
with the parameters under Section 11(3) in view and
with table forms parts of the minutes. The minutes
recorded that applications are to be disposed of in
accordance with Section 11(2) & (3) and relevant
provisions of Mineral Concession Rules. The State
Government has complied with the directions of the
Central Government and has applied its mind to all
relevant factors and material produced by the various
applicants and after making inter se comparison of
minutes arrived at a conclusion that POSCO was more
meritorious from the point of scientific exploration
and mining, mobilization of financial resources, use
JUDGMENT
of ecofriendly and resources – use efficient
technology investments including the steel plant
project and general of employment and revenue. In
addition, the State Government has also invoked the
provisions of Section 11(5) of the Act.
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29
15.6 Further stand of the 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.
th
15.7 The order of the High Court dated 14 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
JUDGMENT
representation with respect to PL Application
No.1337.
15.8 Geomin's applications, in particular PL No.1334,
th
all dated 29 October, 1991 were made on an
individual basis as a Private Ltd. Company. The
nature of business indicated was mining, processing
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30
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 simply says "sound" and
refers to Articles of Association. In the experience
column Geomin shows no experience and refers to
qualified and experienced "people" in the company.
No name or details are given. Geomin does not hold
any PL or ML. There is no claim that any Director has
any such experience. The application is highly
deficient and there is no proposal for setting up any
industry based on minerals. After 14 years from the
notification under Rule 59 a letter dated 7.09.2004
for sympathetic consideration was made and order
dated 15.7.2003 passed by the Central Government
JUDGMENT
(Tribunal) was referred to Geomin, also wrote a
letter dated 27.12.2005 requesting that they should
be allowed to submit fresh proposal. Earlier on
20.12.2004 AXL also submitted a letter. Thereafter
another letter dated 30.12.2006 was written. In this
letter for the first time it was proposed that a 0.5
MTPA capacity steel plant in the State of Orissa
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31
would be set up through our group company AXL
Industries and PLs were required for that purpose.
In the aforesaid letters, there is no claim for any
preference under Section 11(2). The third letter
dated 7.6.2007 refers to the proposal to set up 0.5
MTPA capacity steel plant in Orissa and also offers
to consider setting up of the project through Geomin
itself or to consider amalgamation of the two
companies. Then by letter dated 6.10.2007 it
informed that Geomin has now entered into a
partnership with the Navyuga Group of companies who
are a large conglomerate with interests in
engineering, exports, mining, ports, power, real
estate, I.T., etc. It further informed that Navyuga
Group is planning to set up steel plant in Orissa
with 12 MTPA capacity. By letter it was also
JUDGMENT
informed that Navyuga has already acquired 50% equity
stake in Geomin. Therefore the request was made to
consider its application "keeping the above in mind'.
By the fifth letter dated 13.11.2007 they wished to
know the status of Geomin's applications regarding
the process of evaluation of applications over
Khandhar Block. District Sundargarh.
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32
15.9 If the provisions operating at the time of the
applications are to be considered then Geomin's
application would stand rejected in terms of Rule
24(3) of Mineral Concession Rules, 1960 which was
omitted on 7.01.1993. Secondly, the Geomin's
application was highly deficient and the deficiencies
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
JUDGMENT
application is effectively and substantively of
October/December, 2007.
15.10 Section 11 as amended by Act 38 of 1999
th
w.e.f. 18 December, 1999, would apply. The
contention of Geomin that the old provisions would
apply is incorrect. This matter is not res integra.
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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 extent of an area
of 2130 hectares, which was within the recommended
area of POSCO of 2500 hectares. The applications of
the Company were rejected on the ground that the M/s.
JUDGMENT
POSCO was the most meritorious of all the
applications. The rejection of the Companys’ ML/PL
application had been challenged before the Ld.
Central Mines Tribunal by filing Revision Application
No.22(6)/2009RCI & Revision Application
No.22(7)/2009RCI respectively. The Revisional
Authority vide final orders dated 23.8.2011, has been
pleased to allow the revision applications and set
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34
aside the orders dated 25.4.2009 passed by the State
Government rejecting the ML and PL applications of
the Company.
16.2. The State of Orissa has filed two Writ
Petitions being W.P.(C) No.6429 of 2012 and W.P.(C)
No.6431 of 2012 against the Final Order No.550/2011 &
549/11 dated 23.09.2011 passed by Government of India
in Revision Application No.22(6)/2009RCI & Revision
Application No.22(7)/2009RCI respectively. The
same is pending adjudication before the Orissa High
Court. The Company is not aware if M/s. POSCO has
challenged the said order passed by the Ld.
Revisional Authority.
16.3 The recommendation in favour of POSCO
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purportedly under Section 11(5) is not a valid
recommendation as per the provisions of the Act.
Section 11(5) would have no application in the
present case where the applicants were being
considered simultaneously and the same has to be
granted to the applicant who satisfies the criteria
under Section 11(3) when compared with the others.
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35
The Revisional Authority vide order dated 27.09.2007
had directed to consider all applications
‘simultaneously'. Therefore, all the applications had
to be considered taking into consideration the
parameters of Section 11(3). The State Government
itself in its recommendation dated 9.01.2009 had
stated that the applicants were evaluated and taken
up for disposal in accordance with Section 11(2) and
(3) of the Act. But ultimately made the purported
recommendation in favour of POSCO under Section 11(5)
of the Act, which is not applicable.
16.4 Section 11(5) would be applicable only if the
area is ‘nonnotified’ and the State Government has
for 'special reasons' wants to give preference to a
later applicant to an application which was received
JUDGMENT
earlier. The 'special reasons' need not be other
than what has been mentioned in Section 11(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
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36
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,
JUDGMENT
under the preamended 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 applications while deciding grant of
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37
prior approval under Section 5(1) of the Act, after
giving the parties a right to represent and decide
the same taking all factors into consideration that
Kudremukh Company is a public sector undertaking and
the substantial area of the proposed recommended area
was prospected at the cost of Kudremukh Company. The
same may be decided uninfluenced by any observations
made in the impugned judgment and the recommendation
made under Section 11(5).
19. The contentions of the Kudremukh Company was
summarised as follows:
(i) The Kudremukh Company is a public sector
undertaking which is best suited to protect
national resources of the country.
(ii) The Company may be allotted at least the
portion of the area which was prospected by
the Department of Geology at the cost of
more than 1 crore;
JUDGMENT
(iii) Based on the assurances of the State
Government at the highest level, the
Company has altered its position to its
detriment and the Government ought to have
granted the Pl/ML to the petitioner;
(iv) The Company is more meritorious as compared
to others, as it has special knowledge in
mining operations, the nature and quality
of the technical staff and adequate
financial resources, which are the
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38
prescribed considerations in Section 11(3)
of the Act. As far as the socalled
proposed investment in Industry based on
mines by POSCO is concerned, it is still
illusory and nothing tangible has been
invested on the ground. The Company’s
merit has also been recognised by the State
Government, but it erroneously claimed that
POSCO is more meritorious on the ground of
the socalled proposed steel plant which is
yet to take off and the work on the plant
has not yet commenced.
20. In the aforesaid factual background and rival
contentions made in the appeals, intervention
petitions as well as counter affidavits, the main
issue emerges for consideration is whether the writ
petition was premature and in the case of applicants
whether pre amended Section 11 or amended Section 11
of the MM(D&R) Act is applicable.
JUDGMENT
21. Before deciding the aforesaid issues it is
relevant to note that the issue relating to
competence of the State Government to make
reservation and the 1962 notification issued by the
State Government reserving certain areas fell for
consideration before this Court in Monnet Ispat and
Energy Limited v. Union of India & Ors. (2012) 11
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39
SCC 1. 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
JUDGMENT
premature.
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:
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40
Further, where Section 11(5) is invoked, there
also prior approval of the Central Government is also
required. The proviso to Section 11(5) prescribes
that prior approval of Central Government shall be
obtained "before passing any order under the sub
section". In the present case the State Government
has only made recommendations and has sought
approval of Central Government under proviso to
Section 5(1) and proviso to Section 11(5) but no
final decision has been taken. The State Government
can pass final order granting mining licence only if
approval is granted by the Central Government under
Section 5(1) or Section 11(5) which reads as follows:
“5(1). A State Government shall not grant a
reconnaissance permit, prospecting licence
or mining lease to any person unless such
person—
(a) is an Indian national, or a
company as defined in subsection (1) of
section 3 of the Companies Act, 1956 (1
of 1956); and
JUDGMENT
(b) satisfies such conditions as may
be prescribed:
Provided that in respect of any mineral
specified in the First Schedule, no
reconnaissance permit, prospecting licence
or mining lease shall be granted except
with the previous approval of the Central
Government.
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41
11(5). Notwithstanding anything contained
in subsection (2), but subject to the
provisions of subsection (1), the State
Government may, for any special reasons to
be recorded, grant a reconnaissance permit,
prospecting licence or a mining lease, as
the case may be, to an applicant whose
application was received later in
preference to an applicant whose
application was received earlier:
Provided that in respect of minerals
specified in the First Schedule, prior
approval of the Central Government shall be
obtained before passing any order under
this subsection . ”
23. Iron ore is a major mineral specified in Para C
of the First Schedule. In matters of such major
mineral, even State Government itself cannot
undertake prospective or mining operations without
having prior consultation with the Central Government
as per Section 4(3) of the Act, and if prospecting
licence or mining lease is to be granted to any other
JUDGMENT
person, then previous approval of Central Government
is to be obtained under proviso to Section 5(1). The
consideration of recommendation made by the Central
Government for grant of prior approval is an
exclusive jurisdiction of the Central Government
under the MM(D&R) Act, 1957 and there is no good
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42
reason for preempting the Central Government from
considering the merits 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
JUDGMENT
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.
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43
25. The second proviso to Rule 63A also provides
that the disposal of the applications by the State
Government in case of minerals listed in the First
Schedule to the Act shall mean either recommendation
to the Central Government for grant of mineral
concession, and in all other cases disposal shall
mean refusal to grant the mineral concession. This is
also an indication that the recommendation made by
the State Government does not constitute an order as
envisaged by Section 30 of the Act.
26. The next issue relates to application of Section
11 i.e. whether preamended Section 11 or post
amended Section 11 shall apply.
We have noticed that by amending Act, First
Proviso to Section 11(2) was inserted. Preamended
non obsente clause i.e. sub Section 4 of Section 11
JUDGMENT
was renumbered as sub Section 5 to Section 11 and a
new sub Section 4 to Section 11 was introduced by
amending Act.
The pre amended provisions of Section 11(2), (3)
and (4) and the post amended provisions of Section
11(2), (3), (4) and (5) read as follows:
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44
Preamended provisions of Section 11(2),
(3) and (4) are as follows:
“11(2). Subject to the provisions of sub
section (1), where two or more persons have
applied for a prospecting licence or a
mining lease in respect of the same land,
the applicant whose application was
received earlier shall have a preferential
right for the grant of the licence or
lease, as the case may be, over an
applicant whose application was received
later:
Provided that where any such applications
are received on the same day, the State
Government,after taking into consideration
the matters specified in subsection (3),
may grant the prospecting licence on mining
lease, as the case may be, to such one of
the applicants as it may deem fit.
11(3). The matters referred to in sub
section (2) are the following:
(a) any special knowledge of, or experience
in, prospecting operations or mining
operations, as the case may be, possessed
by the applicant;
(b) the financial resources of the
applicant;
(c) the nature and quality of the technical
staff employed or to be employed by the
applicant;
(d) such other matters as may be
considered.
JUDGMENT
11(4). Notwithstanding anything contained
in subsection (2) but subject to the
provisions of subsection (1), the State
Government may for any special reasons to
be recorded and with the previous approval
of the Central Government, grant a
prospecting licence or a mining lease to an
applicant whose application was received
later in preference to an applicant whose
application was received earlier.
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45
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 notification in respect
of the lands within such area and had not
been disposed of, shall be deemed to have
been received on the same day, for the
purposes of assigning priority under this
sub section.
JUDGMENT
Provided further that where any such
application are received on the same day,
the State Government, after taking into
consideration the matter specified in sub
section(3), may grant the reconnaissance
permit, prospecting licence or mining
lease, as the case may be, to such one of
the applicants as it may deem fit.
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46
11(3). The matters referred to in sub
section (2) are the following:
(a)any special knowledge of, or experience
in, reconnaissance operations, prospecting
operations or mining operations, as the
case may be, possessed by the applicant;
(b) the financial resources of the
applicant;
(c) the nature and quality of the technical
staff employed or to be employed by the
applicant;
(d) the investment which the applicant
proposes to make in the mines and in the
industry based on the minerals;
(e) such other matters as may be
prescribed.
11(4). Subject to the provisions of sub
section (1), where the State Government
notifies in the Official Gazette an area
for grant of reconnaissance permit,
prospecting licence or mining lease, as the
case may be, all the applications received
during the period as specified in such
notification, which shall not be less than
thirty days, shall be considered
simultaneously as if all such applications
have been received on the same day and the
State Government, after taking into
consideration the matters specified in sub
section (3), may grant the reconnaissance
permit, prospecting licence or mining
lease, as the case may be, to such one of
the applicants as it may deem fit.
JUDGMENT
11(5). Notwithstanding anything contained
in subsection (2), but subject to the
provisions of subsection (1), the State
Government may, for any special reasons to
be recorded, grant a reconnaissance permit,
prospecting licence or a mining lease, as
the case may be, to an applicant whose
application was received later in
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47
preference to an applicant whose
application was received earlier:
Provided that in respect of minerals
specified in the First Schedule, prior
approval of the Central Government shall be
obtained before passing any order under
this subsection . ”
27. The State of Orissa and some others have taken
plea that amended Section 11, as amended by Act 38 of
th
1999 w.e.f. 20 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
JUDGMENT
prospecting licence or mining lease. It may be seen
that Section 11(5) is subject to the provisions of
subsection (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.
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48
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 considered. It could only mean that if on an
inter se consideration, the applicants are at par,
then the prior application may be given a preference.
30. On the other hand learned counsel for the Geomin
has submitted that preamended Section 11(2) shall be
applicable.
JUDGMENT
31. In State of Tamil Nadu v. M/s Hind Stone, (1981)
2 SCC 205 similar question fell for consideration
before this Court. That was a case relating to
renewal of lease for mining minerals. The argument
was that Rule 9 itself laid down the criteria for
grant of renewal of lease and therefore, Rule 8C
should be confined, in considering applications for
grant of leases in the first instance. This Court
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49
held that an application for the renewal of a lease
is, in essence an application for the grant of a
lease for a fresh period and, therefore, the
Rule 8C is attracted.
32. Amended Section 11(2) is applicable where the
State Government has not notified in the Official
Gazette the area for grant of reconnaissance permit
or prospective licence or mining lease and two or
more persons have applied for reconnaissance permit,
prospective licence or 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, prospective licence or mining lease, over the
applicant whose application was received later.
However, as per First proviso to Section 11(2)
JUDGMENT
where an area is available for grant of
reconnaissance permit, prospecting licence or mining
licence, 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
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50
received prior to the publication of such
notification in respect of the lands within such area
and had not been disposed of, shall be deemed to have
been received on the same day for the purposes of
assigning priority under said subsection. Thus
under amended Proviso to Section 11(2), even those
applications received prior to the publication but
had not been disposed of, shall be deemed to have
been received on the same day for the purpose of
assigning priority under the said sub Section.
33. According to us, this is not the stage to decide
as to whether in the present case the preamended or
amended Section 11(2) shall be applicable and thereby
priority should be assigned under preamended or
amended Section 11(2) as the matter has already been
JUDGMENT
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
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51
keep in mind the order which was passed by the
Revisional Authority(Central Government) in the case
nd
of Dagara on 2 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 Government. In fact
JUDGMENT
they should have left the matter to the Central
Government to pass an appropriate order in accordance
with law instead of entertaining a premature writ
petition. The State Government by its recommendation
having forwarded the tabulated chart showing inter se
merit of each applicant, it was not for the High
Court to sit in appeal to decide who amongst all is
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more meritorious and is entitled for preferential
right.
36. We, accordingly, set aside the impugned
th
judgment dated 14 July, 2010 passed by the Division
Bench of the Orissa High Court and remit the matter
to the Central Government to consider the question of
approval under Section 5(1) taking into consideration
the recommendations made by the State Government.
While deciding the question it will keep in mind the
objections raised by the parties as noticed in the
preceding paragraphs. It is expected that the
decision will be taken on an early date and shall be
communicated to the State Government. The appeals
are allowed with the aforesaid observation and
direction, but there shall be no order as to costs.
JUDGMENT
……………………………………………….J.
( R.M. LODHA )
……………………………………………….J.
( SUDHANSU JYOTI
MUKHOPADHAYA)
NEW DELHI,
MAY 10, 2013.
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