Full Judgment Text
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PETITIONER:
INDUSTRIAL DEVELOPMENT CORPORATION OF ORISSA LTD.
Vs.
RESPONDENT:
UNION OF INDIA & OTHERS
DATE OF JUDGMENT: 23/07/1996
BENCH:
CJI, B.L. HANSARIA
ACT:
HEADNOTE:
JUDGMENT:
J U D G M E N T
Ahmadi, CJI
Special leave granted.
These appeals seek to challenge: (1) the common
judgment and order of the Orissa High Court dated April 4,
1995, arising out of OJC No.7729 of 1993 and allied matters
and (2) the decision of the Central Government dated August
17, 1995 made pursuant to the said judgment of the High
Court.
The appellants in these appeals are the Tata Iron and
Steel Company, Limited, (hereinafter called "TISCO") and the
Industrial Development Corporation of Orissa Limited
(hereinafter called "IDCOL"). The principal respondents are
the Union of India, the State of Orissa, M/s. Indian Charge
Chrome Limited, (hereinafter called "ICCL"), Indian Metal &
Ferro Alloys Limited (hereinafter called "IMFA"), M/s.
Jindal Strips Limited, (hereinafter called "JSL"), Ferro
Alloys Corporation Limited (hereinafter called "FACOR") and
Ispat Alloys Limited.
The factual matrix of the case is as follows:
The appellant, TISCO, is a limited company, one of
whose primary objects has been to carry on business as a
mining industry. It claims that it was the first to discover
Chrome ore in the Sukinda Valley, Orissa, in the year 1949.
It applied to the Raja of Sukinda for a prospecting licence
and was granted the same in 1952. On October 22, 1952, it
was granted a mining lease over an area of 1813 hectares for
chromite for a period of 20 years. Subsequently, under the
provisions of the Orissa Estates Abolition Act, 1952, on the
rights of the Raja having vested in the State Government,
the latter recognised the lease of TISCO for a period of 20
years with effect from January 12, 1953.
TISCO claims that over the years, it has spent more
than Rs.180 crores for the development of the mine,
including Rs.27 crores spent in setting up a beneficiation
plant. It utilises the Chrome ore mined by it for the
manufacture of Charge Chrome/Ferro Chrome refractories. It
also supplies ore to forty Chrome ore based industries
situated in different parts of the country.
In the year 1957, Parliament enected the Mines &
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Minerals (Regulation & Development) Act, 1957, (hereinafter
called "the Act"). Section 8 of the Act deals with the
renewal of mining leases which are to be granted by the
Central Government, Applications under this Section are to
be made through the State Government which is to furnish all
relevant information and material to the Central Government.
On October 10, 1980, the Central Government issued a
circular which laid down guidelines in this behalf. Under
the provisions of the Mineral Conservation & Development
Rules, 1988, framed under Section 18 of the Act, the Indian
Bureau of Mines is also required to furnish relevant
information to the Central Government.
Since the lease was to expire on January 12, 1973
TISCO sought its renewal which was duly granted under
Section 8(2) in respect of 1261.476 hectares for a period of
20 years i.e. till January 11, 1993, subject to the
condition that lt would set up a beneficiation plant.
On October 3, 1991, more than a year prior to the date
of expiry of the lease, TISCO applied for a second renewal
under Section 8 (3) of the Act for a further period of 20
years, On November 28, 1992, the State Government, acting on
the basis of a favourable report dated March 31. 1992
submitted by the Director of Mines & Geology, Orissa
Recommended to the Central government that the entire lease
of TISCO be renewed for a period of 10 years under Section
8(3) of the Act. On April 27, 1993, the Indian Bureau of
Mines, after analysing the mining plan submitted by TISCO,
recommended to the Central Government that TISCO’S lease be
renewed in its entirety.
On June 3, 1993, the Central Government authorised the
renewal of the lease over the entire area of 1261.476
hectares. However, before the formal lease could be
executed, the Union Minister of State for Steel & Mines,
acting on a complaint filed by Shri G.C. Munda, Member of
Parliament, directed that the matter be kept in abeyance. On
September 27, 1993, the said Union Minister wrote a letter
to the Chief Minister of Orissa stating that the lease area
of TISCO should be reduced by half and the balance should be
distributed in an equitable manner taking into consideration
the need of genuine consumers for captive consumption.
On October 5, 1993, the Central Government superseded
its earlier approval dated June 3, 1993, and renewed TISCO’s
lease over a reduced area of 651 hectares. On October 19,
1993, TISCO filed a writ petition in the High Court, being
OJC No.7729/93, under Article 226 of the Constitution
challenging the order dated October 5, 1993, inter alia on
the ground that the scheme of equitable distribution on
mining leases on the basis of need of an industry is
extrancous to the concept of mineral development, which
alone is relevant under Section 8(3). of the Act.
Meanwhile, FACOR, Ispat Alloys, JSL and Jindal Ferro Alloys
Ltd. applied for mining leases of the area held by TISCO,
but the State Government refused to entertain them as being
premature under Rules 59 and 60 of the Mineral Concession
Rules framed under the Act (hereinafter called "the Rules").
While TISCO’s writ petition was pending, ICCL and JSL
filed writ petitions, being OJC No.5422/94 and OJC
No.7054/94, challenging the renewal of TISCO’s lease by ’the
Central Government, both the order dated June 3, 1993 (which
had authorised the renewal of the entire lease area of 1261
hectares) and the order dated October 5, 1993 (which
subsequently reduced the authorisation to 651 hectares) were
challenged.
By its impugned order dated April 4, 1995 the High
Court of Orissa struck down the renewal of TISCO’s lease
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granted by the Central Government through its decisions
dated June 3, 1993 and October 5, 1993. Thereafter, it
directed the Central Government to reconsider TISCO’s
application for renewal of the lease in accordance with
law; the Central Government was also directed to give a
personal hearing to, and consider the applications of, the
other parties before the Court.
The High Court of Orissa after hearing lengthy
arguments of counsel appearing for different interests
including the Central and the State Governments concluded in
paragraph 57 of its judgment that two courses were open to
it, namely, (i) to accept the submission of the counsel for
the State Government that all the writ petitions should be
dismissed and the parties may be asked to exhaust the
alternative remedy of permitting the State Government to
take a decision as authorised by the Central Government and
if any party is aggrieved it may move the Central Government
under the Act and the Rules, or (ii) the Court may dispose
of the writ petitions giving certain specific directions in
the shape of guidelines to the Governments as well as other
authorities under the Act to consider in the light thereof
if there is any necessity to renew the lease for the whole
or part of the area covered under the lease. The High Court
took the second course, in that, it accepted the submission
of counsel for the State Government that the Central
Government should hear the matter de novo on TISCO’s
application for renewal of the lease after hearing all
parties including ICCL and JSL. It set aside the orders
dated June 3, 1993 and October 5, 1993, inter alia on the
ground that the Central Government had not kept in view the
recommendation made by the Rao Committee which was accepted
by this Court in the case of Indian Metals & Ferro Alloys
Ltd. v. Union of India [AIR 1991 SC 818, = 1992 Supp.(1) SCC
91], and directed the Central Government to hear the
application for renewal of the lease, keeping in view the
report submitted by the Rao Committee and the decision of
this Court in the aforesaid case.
After the judgment of the High Court was delivered on
April 4, 1995, a Committee was constituted by the Ministry
of Mines, Government- of India, under the Chairmanship of
one Shri S.D. Sharma for rehearing and reconsidering the
issue in regard to the renewal of mining lease to TISCO. The
Committee submitted a report dated August 16, 1995,
recommending renewal of the lease for a reduced area to
TISCO. Acting on that report, on the very next day, August
17, 1995, the Central Government authorised the renewal of
TISCO’s lease over the reduced area of 406 hectares which,
according to the Central Government, would meet TISCO’s
captive requirements and requested the State Government to
issue orders for the same. At the same time, in exercise of
powers conferred" by Rule 59(2) of the Rules, the Central
Government relaxed the provisions of sub-rule (1) with the
objective of expediting the process of granting chromite ore
and requested the State Government to grant mining leases to
four other parties, namely, ICCL, JSL, IMFA and FACOR for
the balance area of 855.476 hectares.
SLP Nos.10838/95, 11391/95 and 11392/95 seek to
challenge the order dated April 4, 1995 of the Orissa High
Court and SLP Nos.22710/95, 23131/95 and 23132/95 seek to
challenge the Central Government’s decision dated August 17,
1995, made pursuant to the High Court’s order dated April 4,
1995. While the first four special leave petitions have been
filed by TISCO, the last two have been filed by IDCOL.
Before we proceed to deal with the arguments of counsel
appearing for the different parties, we must deal with the
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impugned judgment of the Orissa High Court and the report of
the Committee that was set up pursuant to its directions, in
some detail.
In its impugned judgment, the High Court has taken the
view that Section 8(3) of the Act is applicable to the
dispute in the present case; it further held that this
provision mandatorily requires the Central Government to
give reasons as to why it was in the interest of mineral
development to renew TISCO’s lease The High Court took note
of the decision of this Court in Indian Metals case where,
faced with a dispute involving the grant of rights for the
mining of chromite ore in the State of Orissa, this Court
had appointed a Committee headed by the Secretary to the
Government of India in the Ministry of Mines, Mr. B.K. Rao
thereinafter called the Rao Committee") to consider the
claims of the various parties. The Rao Committee submitted
its report wherein it studied the issue of mining of
chromite ore in the State of Orissa at great length and gave
its specific findings. This Court, in rendering its final
decision in the Indian Metals case, relied on the Rao
Committee report and also opined that the report was bound
to be of use. to the Central Government as well as the State
Government of Orissa in regard to their future policy in the
matter of grant of chromite leases.
The. High Court of Orissa was, therefore, of the view
that in deciding to renew TISCO’s lease, the Central
Government should have considered the Rao Committee report
as well as the decision of this Court in Indian Metals case
and for its failure to do so, the High Court struck down the
orders of the. Central gvernment renewing TISCO’s lease. The
High Court directed the Committee that was to be set up, to
consider the issue keeping in mind the Rao Committee report,
this Court’s decision in Indian Metals case, the National
Mineral Policy and all other factors relevant under the Act.
Before the High Court, the learned counsel for TISCO put
forth a preliminary objection; he argued that since the
matter concerned the issue of renewal of TISCO’s lease, the
other parties before the High Court had no locus standi in
view of the express bar in Rules 59 and 60 of the Rules .
After considering these submissions, the High Court while
directing the constitution of Committee to look into the
matter, made following observations:
"As we are of the view that the
Central Government should consider
afresh and as Mr. B.M. Patnaik has
submitted that the Central
Government has no objection to
consider afresh, there is no bar
and/or impediment if the Central
Government considers the proposal
of subsequent renewal of lease of
TISCO by giving it opportunity of
hearing which. may be effected in
presence of the other petitioners
who have come to this Court.
Nevertheless, it is submitted that
the Central Government has no
obligation to invite other
intending parties besides the writ
petitioners in the case at the time
of disposal of the application for
a subsequent renewal of the lease
at the instance of TISCO, this
Court finds that by the ultimate
result other writ petitioners are
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consequently to be affected by
renewal, part renewal or refusal of
the lease in favour of TISCO They
may be heard by way of fair play
and in compliance with the
principles of natural justice, and
to enable them to place on record
such necessary facts for essential
consideration by the Central
Government. It is made very much
clear that only in the event of
availability of the area occupied
by TISCO, State Government will
consider their prospective
applications in accordance with
law."
The Committee which was appointed by the Central
Government pursuant to the directions of the High Court of
Orissa, consisted of senior officers from the Ministry of
Mines, the Indian Bureau of Mines and the Geological Survey
of India. The Chairman of the Committee on Sukinda Valley
Chromite Lease of Tata Iron & Steel Corporation Ltd.
(hereinafter called "The Committee") was Shri S.D. Sharma,
Joint Secretary, Ministry of Mines. The Committee was
required to submit its report within two weeks. In view of
the express directions of the High Court, the Committee gave
a personal hearing to the advocates appearing for TISCO,
FACOR, ICCI, IMFA, JSL and Ispat Alloys and thereafter,
submitted its report which extends to four hundred and
fifty-one pages.
In its voluminous report, complete with elaborate
annexures, the Committee has, dealt with many of the legal
issues that have been canvassed before us and also with
other technical considerations lnvolved in the mining of
chrome ore in the Sukinda Valley. It would, therefore, be
appropriate for us to examine the recommendations of the
Committee and their basis for putting them forth.
In its analysis of the submissions of the various
parties before it, the Committee first dealt with the issue
of the relevance of the Rao Committee and the decision of
this Court in Indian Metals case to the present dispute.
The learned counsel appearing for TISCO before the
Committee attacked the Rao Report on several. grounds. He
pointed out that the High Court had required the Central
Government only to consider the Rao Report and not
necessarily to adopt its recommendations; he submitted that
it would be open to the Committee to examine the correctness
of the legal and factual premises of the Rao Report. He
contended that since TISCO was not a party before the Rao
Committee, its report wag not binding for the purposes of
considering TISCO’s lease. He further urged that the Rao
Report does not, in essence, uphold a principle of policy
and was superseded in many respects by this Court in the
Indian Metals case. He contended that the Rao Committee did
not endorse the policy of distributing leases on the basis
of the captive mining requirement of industries and, in the
alternative, argued that even if the Rao Report were to do
80, such a policy was unsustainable under the scheme of the
Act and the Rules and, at no point of time had the said
principle been applied in determining the question of
renewal of lease or in deciding on whom the right should be
conferred.
The Committee was of the firm opinion that the Central
Government was required to take note of the Rao Report as it
contains important findings, guidelines and directions
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regarding the grant of chromite leases and supply of
chromite ore to needy applicants in an equitable manner. The
Committee took note of the fact that, in reaching its final
decision, this Court, in the Indian Metals case relied upon
the findings of the Rao Report. It also noted that the High
Court of Orissa had studied the Rao Report and had required
it to rely upon the findings therein. Finally, the Committee
took note of the observations of this Court in para 42 of
the judgement in the Indian Metal case:
"...the [Rao] report and its
annexures are bound to be of
immense help and value to the S.G.
and C.G. in arriving at their
decisions not only on the various
applications but also in regard to
their future policy in the matter
of grant of chromite leases and of
the supply of chromite to the needy
applicants in an equitable manner."
The committee rejected the contention of TISCO that
the Rao Report had provided incorrect information about
TISCO’s mining lease. The Committee relied upon the report
of the Gopalachari Committee, which was constituted
subsequent to the Rao Report to look into the issue of
mining leases in the entire country, to refute TISCO’s
contentions in this regard. This being so, the Committee
rejected the arguments put forth by TISCO to dilute the
significance of the Rao Report for the consideration of the
present dispute.
Thereafter, the Committee analysed the National Mineral
Policy, 1993 and the Industrial Policy of Orissa, 1992 to
obtain an understanding of the concept of mineral
development as envisaged by Section 8(3) of the Act. Learned
counsel for TISCO submitted that the concept of captive
mining was not really part of the National Mineral Policy
and, though propagated by the Rao Report, this concept does
not find support from the National Mineral Policy. The
Committee came to the conclusion that the National Mineral
Policy, having been factor in the decision making process of
the Government and, both in the National Mineral Policy as
well as the Industrial Policy of the State of Orissa,
captive mining has been recognised as a fundamental
guideline in determining the criteria for granting mining
leases.
On the issue of equitable distribution of resources, in
view of the fact that TISCO held 55% of the total chromite
resource of the country, the Committee was of the opinion
that Article 39(b) and Article 14 of the Constitution must
be taken into consideration for deciding the issue under
Section 8(3) of the Act.
Thereafter the Committee examined the requirements of
Section 8(3) of the Act. The provision as it originally
stood was amended in 1986 and again in 1994. The
application for renewal of lease was filed by TISCO in the
year 1991. On behalf of TISCO, a series of alternative
arguments was put forth to support TISCO’s claim that it
was entitled to a second renewal of its lease. There was
also an argument that the law as it stood after the 1994
amendment should apply to TISCO’s case. However, the
Committee took the view that the law applicable would be
the law as it stood between 1986 and 1994. Interpreting
Section 8(3) of the Act, the Committee was of the view that
TISCO could not claim to have any legal right over the
renewal of its lease for the second time and, if the Central
Government was to renew it, it would have to record reasons
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why such a measure would be in the interest of mineral
development.
Moving on to the issue of whether it was necessary to
renew the mining lease of TISCO in the interest of mineral
development, the Committee took note of the various
arguments put forth by the learned counsel appearing for
TISCO. The learned counsel submitted that TISCO had played
a pioneering role in the development of chromite and other
minerals in the area; had been doing scientific mining in a
manner that ensured optimum recovery; had taken steps for
environmental management; had complied with the provisions
of all the relevant rules and regulations ; had made
massive investment in the leasehold area including research
and development efforts etc. and, are therefore entitled to
the renewal of the entire area in the interest of mineral
development. The learned counsel submitted technical
reports to show that the technique of mining adopted by
TISCO was in consonance with prescribed practices. He
stressed on the fact that the Indian Bureau of Mines had
sanctioned the mining plan of TISCO and its operations had
also met with the requirements of the Gopalachari
Committee, set up by the Government of India to review
mining practices across the country. To appreciate the
technical arguments put forth by TISCO and the other parties
before it, the Committee undertook a vast examination of
the technical details of the mining of chromite ore
including discussions on mineable reserve, recoverable
reserve and conditional reserves in the Sukinda Valley; the
status of geo-technical and geo-hydrological studies; the
existing status of mining in the valley; infrastructural
facilities; research and development expenditure relating to
mining in the valley; the relative merits and underground
mining; the prices of chromite ore, etc.
After considering all these issues, the Committee made
its recommendations. It prefaced the recommendations by
stating that it was of the firm pinion that it would be
necessary in the interest of mineral development to
authorise the renewal of chromite lease to TISCO’s under
Section 8(3) of the Act strictly in terms of TISCO’s
requirement and keeping in view the requirements of needy
manufacturing industries. The Committee was of the view
that if renewai was granted to TISCO for the entire area
when they would, in effect, be needing and using only a
small fraction of the entire area, it could not be said that
such a grant would be said serving the interest of mineral
development or that of the national interest, particularly
when there were other needy manufacturers who had been
facing serious problems for want of adequate raw-material.
The Committee felt that it could not ignore the fact that
the other parties had made huge capital investments in
establishing their industries and did not have adequate raw
materials. The Committee approved the principle of allotting
leases to different industries by taking into consideration
their requirements for captive mining and for doing so, it
relied upon the Rao Report, the Orissa Industrial Policy and
the National Mineral Policy. It was, therefore, of the
opinion that the best way of benefitting an established
chrome-based industry with a large ore consumption was to
provide a mine-owner status to the different industrial
units. Thereupon, the Committee undertook an analysis of the
competing interests of the other needy manufacturers. It
took note of the observations of the High Court of Orissa
that it was not the forum for distributing mining leases in
favour of the other parties; however, in order to properly
appreciate the iesue, the Committee examined the need of the
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other parties as well as. their problems of obtaining raw
materials. While forming an estimate of TISCO’s requirement,
the Committee reIied upon the documents submitted by TISCO
as well as other relevant material. It noted the fact that
in view of the scarcity of chromite ore, repeated
recommendations have been made that underground mining must
be planned and taken up for harnessing the available
chromite ore. However, over the last four decades during
which TISCO had held the lease, it had not relied upon the
method of underground mining to the required level. The
committee came to the conclusion that open cast mining,
which was being primarily employed by TISCO, has an adverse
effect upon the environment and the most effective way of
tapping the ore was the method of underground mining. It
was, therefore, of the view that TISCO should make- efforts
to initiate underground mining on a large scale which would
allow it to better exploit the ore within its lease-hold
area. The learned counsel for TISCO had put forth a number
of arguments expressing the difficulty of dividing or
splitting its lease-hold area. The Committee took into
account these submissions while assessing what it deemed
should be the extent of TISCO’s lease. In its view, which
was formed after taking into account a host of technical
factors, the appropriate area catering to TISCO’s
requirement would total 461 hectares. The Committee also,
formed an estimate of requirements of the other parties
appearing before it. In addition, it recommended the
imposition of special conditions which could be kept in mind
while granting renewals or fresh leases in future.
We may now set out the issues that we consider are central
to the adjudication of the dispute before us:
1. Whether the High Court of Orissa
was justified in striking down the
decisions of the Central Government
dated June 3, 1993 and October 5,
1993 on the ground that the
requirement of Section 8(3) of the
Act had not been met;
ii. Whether the report of the Rao
Committee and the decision of this
Court in Indian Metals case are
relevant for the consideration of
renewal of leases under Section
8(3) of the Act;
iii. Whether the High Court and the
Committee were justified in
hearing prospective applicants
while considering the issue of
renewal of TISCO’s lease;
iv. Whether the Committee was
justified in interpreting the
concept of "mineral development"
under Section 8(3) of the Act as
requiring the assessment of the
captive mining requirement of
different industries and the
application of the principle of
equitable distribution of mining
leases;
v. Whether the Central Government
in its order dated August 17,
1995, had correctly analysed the
needs and requirements of TISCO in
recommending that it’s lease be
renewed over land measuring 406.00
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hectares;
We will deal with them seriatum.
l. Validity of the Orders of the Central Government dated
June 3, 1993
The learned counsel for TISCO has contended before us
that the High Court of Orissa had erred in holding the order
dated June 3, 1993 as well as the order dated October 5,
1993 which renewed TISCO’s lease, as unsustainable in law.
According to the learned counsel, both these orders have
complied with the requirements of Section 8 of the Act.
Before we analyse the provision, it must be noted that this
provision has undergone several amendments. Changes were
wrought into the original provision as it stood in 1957
through amendments in 1986 and 1994. Since TISCO’s
application for renewal was filed in 1991, both the High
Court and the Committee considered the provision as it stood
prior to the 1994 amendment, which is extracted as under :
"8. Periods for which mining leases
may be granted or renewed -
(1) The period for which a mining
lease may he granted shall not
exceed twenty years.
(2) A mining lease may be renewed
for two periods each not exceeding
ten years :
Provided that no mining lease
granted in respect of a mineral
specified in the First Schedule
shall be renewed except with the
previous approval of the Central
Government.
(3) Notwithstanding anything
contained in sub-section (2), if
the Central Government is of
opinion that in the interests of
mineral development it is necessary
so to do, it may, for reasons to be
recorded, authorise the renewal of
a mining lease for a further period
or periods not exceeding in each
case the period for which the
mining lease was originally
granted."
Applying the provision to the facts of the present
case, it becomes clear that sub-section (1) would be
applicable to the first application for lease. Since TISCO
already had a lease in existence when the Act came, the
first clause stood exhausted. When TISCO applied for the
renewal of its lease for the first time in 1973, sub-section
(2); as it stood prior to its amendment in 1986, envisaged
the grant of a first renewal for a single period of 20
years, which is why TISCO was granted a renewal till-1993.
When, in 1991, TISCO applied for the second renewal, the
period of time envisaged by sub-section (2) - which has
always been of a total of twenty years- had lapsed, and,
clearly, that application would have had to be treated as
one to which sub-section (3) applied. TISCO’s second
renewal was granted by the Central Government’s order dated
June 3, 1993 which was limited by its subsequent order dated
October 5, 1993. These orders conveying the acceptance of
TISCO’s lease have been analysed in the impugned judgment.
The High Court was f the opinion that they were
unsustainable since they did not meet with the requirement
of Section 8(3), which required reasons to be stated for
reaching the decision that it would be in the interest of
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mineral development to renew TISCO’s lease. The High Court
noted that the Central Government had not taken into account
the National Mineral Policy and the report of the Rao
Committee in reaching its final decision. While interpreting
the language of Section 8(3), it took note of the speech
delivered by the concerned Minister in Parliament who had,
in defence of a motion to drop Clause 8(3), stated as under
:
"...we should and must envisage
conditions, though very rare, in
which because of diverse
circumstances some renewals may
have to be made beyond those
specified in Clause 8."
From this, the High Court inferred that the subsequent
renewal of lease as envisaged and contemplated under Section
8(3) refers to ’very rare’ circumstances which may require
renewals to be made. The Court, therefore, held that the
conditions which make for the rare cases and diverse
circumstances have to be clearly and pointedly articulated,
for which the recording of proper and detailed reasons was
necessary.
It has been argued before us that the High Court had
erred in referring to the speech of the Minister as it was
made in a context other than that which is permitted to be
accepted as a tool of statutory interpretation. We are of
the view, however, that the issue can be decided without
locking horns with the controversy over the situations in
which utterances in the legislature are relevant for
statutory interpretation. To us, the language of Section
8(3) is quite clear in its import. Ordinarily, a lease is
not to be granted beyond the time and the number of periods
mentioned in cIauses (1) and (2). If, however, the Central
Government is of the view that to allow a lessee’s lease to
be renewed further would be in the interest of mineral
development, then, it is empowered to do so, provided there
exist on record sound reasons for such an action and those
reasons are recorded. Since such a measure has been
incorporated in the legislative scheme as a safeguard
against arbitrariness, the letter and spirit of the law
must be adhered to in a strict manner.
We have studied the orders of the Central Government
dated June 3, 1993 and October 5, 1993. The order dated
June 3, 1993 is a statement which declares the grant of a
second renewal to TISCO. It does not profess to give any
reasons for such a decision and, for that reason, falls
foul of the requirement of Section 8(3), as has rightly
been pointed out by the High Court. The order dated October
5, 1993 is more generous in terms of the reasons it offers;
however, the High Court was of the view that, since it did
not take into account the findings of the Rao Report, the
decision of this court in the Indian Metals case and the
National Mineral Policy, it could not have justified its
decision as having been made after a proper analysis of the
interest of mineral development. This brings us to
consideration of the second issue before us.
2. ReIevance of the Rao Report and the decision of to this
Court in the Indian Metals case to the renewal of TISCO’s
lease.
The submissions made before us by the learned counsel
for TISCO on this issue are a replication of those put forth
before the Committee, and need not be repeated. We may,
therefore, proceed to analyse the decision in the Indian
Metals case. In that case, this Court was faced with a
situation where, through a series of Writ Petitions, the
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grant of rights for the mining of chromite ore in the State
of Orissa was challenged. The central issue that arose for
adjudication was whether, and to what extent, the parties
before the Court were entitled to obtain leases for the
mining of chromite ore in the State of Orissa. Though the
learned counsel for TISCO sought to indicate that case is
distinguishable from the one on hand on account of the fact
that, while the former dealt with the grant of fresh
licences, the present deals with renewal of lease, which
involves a fundamentally different assessment. We must,
however, point out that, in essence, both cases deal with
the larger issue of mining of chromite ore in the State of
Orissa and, in view of this relation, it becomes necessary
for us to consider the views expressed therein.
In view of the nature of the issues before it, this
Court appointed the Rao Committee to examine the matter. The
court then held that the findings of the Rao Committee
would, for the purposes of the Act, be treated as a decision
of the Central Government. In paragraph 42 of its decision,
the Court expressed its appreciation for the detailed and
excellent report submitted by Dr. Rao; it further stated
that he had brought together all the relevant data and
analysed the various claims put forth before it while also
having had a note on chrome deposits in the State of Orissa
prepared by the Chief Mining Geologist of the Indian Bureau
of Mines. We have already extracted the portion of the
decision where the Court had stated that the Rao Report was
bound to be of use to the State Government as well as the
Cenlral Government in deciding grant of mining leases for
chromite.
It is clear from a study of the Indian Metals case that
in the opinion of this Court, the Rao Report had made such a
comprehensive study of the issue that it merited treatment
as a decision of the Central Government. In our view, once
this has been clearly stated by the Court, the central
Government, though not bound to follow the recommendations
of the Rao Report, was at the very least under an obligation
to record reasons why it sought to depart from the
recommendations of the Report, especially in matters- such
as these where leases of considerable commercial value are
granted for long periods of time.
We are, therefore, of the view that the High Court and
the Committee were justified in taking note of the findings
of the Rao Report as well as the observations of this Court
in the Indian Metals case in considering he issue of renewal
of TISCO’s lease.
Since the Order dated October 5, 1993 did not make any
reference to the Rao Report or the decision of this Court,
we feel that the High Court was justified in striking it
down for not having taken into account all the factors
relating to a proper appreciation of the concept of mineral
development.
3. Locus standi of prospactive applicants in proceedings
considering the renewal of TISCO’s lease.
Before the High Court, the learned counsel for TISCO
raised a preliminary objection as to the locus standi of the
other petitioners, basing his claim on Rules 59 and 60 of
the Rules, the relevant portions of which are extracted as
under :
"59. Availability of area for re-
grant to be notified -- (1) No
area
(a) which was previously held or
which is being held under a
prospecting licence or a mining
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lease; or
(b) ...... ...
....
(c) ...... .....
....
(d) ....... .......
....
(e) Shall be available for grant
unless --
(i) an entry to the effect that the
area is available for grant is made in
the register referred to in sub-rule (2)
of rule 21 or sub-rule (2) of rule 40,
as the case may be, in ink; and
(ii) the availability of the area
for grant is notified in the official
Gazette and specifying a date (being a
date not earlier than 30 days from the
date of the publication of such
notification in the official Gazette)
from which such area shall be available
for grant :
Provided that ... ...
...
Provided further ... ...
...
(2, The Central Government may, for
reasons to be recorded in writing
relax the provisions of sub-rule
(1) in any special case.
60. Premature applications.
Applications for the grant of
prospecting licence or mining lease
in respect of area. Whose
availability for grant is required
so be notified under rule 59 shall,
if,
(a) no notification has been issued
under that rule; or
(b) where any such notification has
been issued, the period specified
in the notification has not
expired;
be deemed to be premature and shall
not be entertained, and the
application fee thereon, if any
paid, shall be refunded."
The learned counsel for TISCO submitted that since, in
respect of the land that fell within TISCO’s leasehold area,
the State Government had neither made an entry in the
concerned register that the area was available for grant,
nor had it notified its availability in the official
Gazette, the applications of the other parties before this
Court should be treated as premature applications under Rule
60 and not be entertained. He, therefore, submitted that
none of the other parties could be regarded as aggrieved
parties and therefore, could not be said to have any
interest in these proceedings.
The learned counsel for JSL countered by stating that
any decision on the second renewal of TISCO’s lease as bound
to affect the rights of the other parties. He argued that if
the entire lease was renewed in TISCO’s favour, no part of
it would be available for grant to them. He also pointed out
that TISCO’s lease had expired on January 11, 1993 whereas
the first order renewing TISCO’s lease was issued only on
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June 3, 1993. Will we contended that the State Government,
which was dutybound to make the relevant entry in the
register and notify the area as being available for grant,
had neglected to do so. He then stated that, had the State
Government been mindful of its obligation, the applications
of the petitioners would not have been deemed to be
premature under Rule 60 of the Rules and could not have been
rejected.
In its impugned judgment, the High Court adopted the
view that the other parties before it did have an interest
in the proceedings regarding renewal of TISCO’s lease.
Describing their interest as being of a contingent nature,
the High Court stated that if the Central Government did not
think it fit to renew TISCO’s lease, it would have to
declare the area as available for grant and would have to
invite prospective applicants. In that situation, the other
parties would have a claim. The Court pointed out that,
though none of the other parties could, as a matter of
right, claim to be heard while the Central Government was
considering the issue of renewal of TISCO,s lease, since its
two Orders in this regard had, in fact, adversely effected
their rights, the other parties would be entitled to
challenge them. In other words, according to the High Court,
they were proper parties even if not necessary parties.
While issuing directions to the Committee that was to
be constituted to examine the issue at length, the High
Court directed that the views of the other parties also be
taken into consideration. The other details regarding this
direction are mentioned in the portion of the impugned
judgment that we have already extracted. The Committee, in
compliance with this direction of the High Court, heard
TISCO as well as the other parties at length on a host of
legal and technical issues.
It must also be noted that in its order dated August
17, 1995, the Central Government had, in exercise of powers
conferred on it by Rule 59(2) relaxed the requirement of
Rule 59(1) to enable the other parties to be granted leases.
We are of the view that the High Court had taken the
correct step in allowing the prospective applicants to put
forth their points of view with regard to the renewal of
TISCO’s lease. As we have already pointed out, these issues
involve considerably high stakes, both in terms of
commercial value and the effect that such a decision will
have on the concept of mineral development and the
consequent national lnterest. To that extent, those likely
to be affected and indeed, those who can legitimately have a
stake in the proper formulation of such a vital policy, can
be heard. No exception can be taken to the High Court
treating them as proper parties and directing the Committee
to hear them.
We, therefore, hold that both the High Court and the
Committee were justified in hearing the prospective
applicants while considering the issue of renewal of TISCO’s
lease.
4. Relevance the criterion of captive requirement of
mining industries and the principle of equitable
distribution of mining leases to the concept of mineral
development under Section of the Act.
The Committee undertook a comprehensive analysis of
the submissions made by the counsel appearing for the
various parties before it and also studied the relevant
material in order to gain an understanding of the concept of
mineral development under Section 8(3) of the Act.
To this end, it analysed the entire scheme of the Act
and studied various Sections, viz., Section 3(c), Section 6,
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Section 8 and also the Rules with the benefit of the
submissions of the learned counsel appearing for the various
parties. It also analysed the Rao Report, the National
Mineral Policy, 1993 and the Industrial Policy of the State
of Orissa, 1992 to reach its conclusions on this issue.
The Committee noted the following observation of the
Rao Committee :
"The two laudable aspects of the
State Government’s policy in this
regard of reservation of the
chromite areas for exploitation in
the public sector and provision of
certain captive mining capacities
to the chromite based industries
need to be reconciled."
It then noticed the observations of the Rao Report
wherein, while- analysing the Industrial Policy Resolution,
1956, it had stated that the Policy envisages a predominant
role for the public sector in (establishing chrome ore
industries, though the option of private enterprise being
involved in establishing new units was not closed. The Rao
Report had, in fact, observed that once an industry is
established with the cooperation of the private sector, it
would only be I fair and reasonable to make available to it
a certain captive resource of chrome ore. To this end, the
Rao Report had specifically recommended that the captive
mining requirement be provided for in the grant of the
lease in question.
The Committee further noted the observations of the Rao
Committee that the cost of production of the chromite ore in
the case of captive mines is much lower than the cost of
procurement from other suppliers and, therefore, dependence
on others for chromite ore has an adverse impact on the end
user industry and this can be eliminated if captive mining
is promoted.
Thereafter, the Committee took note of paragraph 7.11
of the National Mineral Policy, 1993 where, while dealing
with the strategy to be employed for mineral development,
it was clearly stated as follows :
"In case of ores whose known
reserves are not abundant,
preference will be given to those
who propose to take up their mining
for captive use."
The Committee also recorded paragraph 15.2 of the
Industrial Policy of Orissa, 1992 where the following is
stated.
"15.2 Persons who have firm
proposals for setting up industries
in the State for processing and
value addition of minerals will be
given priority in the grant of
prospecting licences and mining
leases."
The Committee also recorded the submissions of the
counsel for JSL that preference for captive mines is a
valid national policy, having been incorporated in, certain
legislations such as the Coal Mines Nationalisation Act,
1973, and is an important factor to be considered in the
interest of mineral development.
Thereafter, the Committee came to the conclusion that
the National Mineral Policy, 1993, which was tabled in both
Houses of Parliament, had resulted in amendments being
carried out in the Act and the Rules and, being a policy
pronouncement, was a guiding factor in the decision-making
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process of the Government. It further stated that both the
National Mineral Policy and the Industrial Policy of the
State of Orissa had recognised the fact that the captive
mining requirement merited preferential treatment.
While dealing with applicabilty of the principle of
equitable distribution, the Committee took note of the
observations, in paragraphs 88 and 89 of the impugned
judgment, made while analysing the Rao Committee Report. The
High Court had noted that it had been the policy of the
State of Orissa to provide raw materials to those chromite
based industries which were owned by the private sector and
also to cater to the requirement of manufacturing industry
within the State. The Rao Report had further recommended
that in doing so, the State Government should act justly and
equitably.
After making a technical evaluation based on satisfied
information, the Committee observed that leasehold area of
TISCO which was sought to be renewed has chromite deposits
of the order of atleast 102.44 million tonnes. Of this, the
reserves upto a depth of 100 metres were estimated at 39.49
million tonnes and the reserves below the depth of 100
metres were estimated at 62.95 million tonnes. The total
reported chromite reserves in the country were estimated at
186 million tonnes. Thus, the Committee came to the
conclusion that the area in question (1261.476 hectares)
held by TISCO possessed about 55% of the chromite reserves
of the entire country. The Committee therefore, posed the
question whether it would be in national interest to permit
a single party to perpetuate its hold on such large reserves
of this strategic mineral?
Thereupon, the Committee analysed the provisions of
Article 14 and Article 39(b) of the Constitution which, in
its view, were relevant for the purpose of appreciating the
issue under Section 8(3) of the Act. It then came to the
conclusion that, to grant the renewal of mining lease over
an area as large as that held by TISCO, in favour of a
single applicant whose own needs are limited, while several
needy manufacturers were deprived of adequate sources of raw
material, would be to promote monopolistice tendencies which
cannot be allowed.
For the foregoing reason, the Committee was the view
that the concept of ’mineral development" under Section 8(3)
of the Act requires the assessment of the captive mining
requirement of different industries as also the application
of the principle of equitable distribution of mining leases.
The learned counsel for TISCO sought to assail this
approach of the Committee. He began by pointing out that
before the Rao Committee, the State of Orissa had canvassed
the view that the concept of an industry linked to captive
mining is not envisaged by the scheme of the Act, nor has
it been accepted as a matter of policy. This was for the
reason that there are more industries than mines and, if
every industry was entitled to a mine, more industries would
be starved rather than served and such a policy would not
be feasible. He further submitted that even the Rao Report
had not given its enthusiastic approval to the concept of
captive mining and assuming that it had, its effect would be
negatived by the fact that this Court had in the Indian
Metals case expressly rejected the theory of captive
mining. Learned counsel further submitted that the concept
of captive mining has been wrongly applied since no mining
activity can be carried out only for Captive consumption.
Different industries require varied grades of more for their
activities and a single mining area cannot produce a
particular type of ore required by one industry alone.
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Consequently, he submitted that such a condition would lead
to ineffective exploitation of the ore. TISCO’s counsel
further submitted that none of the other parties who were
before this Court to stake. their claim for mining leases,
had any industry of their own where the chromite ore could
be used for manufacturing purposes and, therefore, they were
not in a position to use it for captive consumption. Hence,
he submitted, the argument of captive consumption was wholly
misplaced. He further Contended that the Committee had erred
in applying the principle of equitable distribution of
mining leases; according to him the correct principle is
that of equitable distribution of minerals and not of mining
leases.
We have studied the Committee’s report on this issue
and we find that most, if not all, of these contentions have
been dealt with in the report. We find it difficult to
accept the contention that the Rao Committee had not
endorsed the concept of captive mining because, as we have
already mentioned, it does in fact do so. Having studied the
decision in the Indian Metals case, we find that on the
issue of the requirement of captive mining, this Court had
expressly refrained from giving an opinion on the issue as
it did not arise for its consideration; however, it did
recommend that chromite ore be supplied to needy applicants
in an equitable manner. It must be pointed out that nowhere
in the Rao Report nor in the report of the Committee, has
the requirement of captive mining been interpreted to mean
that every industry within the State would, by reason of its
existence, be entitled to a mining lease. The captive
requirement of an industry is a factor that has to be kept
in mind while granting leases but, it is to be done on a
comparative scale. While the Central Government exercises
its discretion in granting or renewing a lease, it is clear
that the capacity of an industry to effectively exploit the
ore, will be a predominant considerations The submission of
the learned counsel that none of the other parties before
this Court required the mineral ore for captive consumption
cannot be accepted. This aspect has been specifically
examined by the Committee at pages 260-263 of its report. In
order to properly appreciate the issue of captive
consumption, the Committee examined the needs of the other
parties before it. It stated that each of these parties had
manufacturing industries which produce value-added products
and earn considerable foreign exchange for the country, and
it was therefore of the view that an analysis of their total
requirement was necessary in the interests of mineral
development as also that of the nation. Based on the
information supplied to it, the Committee thereafter made an
assessment, for a total period of 50 years, of the captive
and net requirements of ICCL, IMFA, FACOR and JSL. At page
349 of its report, the Committee has also taken note of the
projected captive and net requirements of Ispat Alloys. This
being a finding of fact that has been recorded by the
Committee, we have to accept that the argument of captive
consumption does have a basis in the facts of the present
case. On the issue of the application of the principle of
equitable distribution, we are of the view that the
Committee had, after having taken note of the prevailing
situation and the problems faced by needy manufacturers,
taken the correct view in recommending its implementation.
We are, therefore, of the view that the Committee had
correctly interpreted the relevant material available for
appreciating the concept of "mineral development" and
adopting the stance that it encompassed the concept of
captive mining as well as the principle of equitable
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distribution.
5. Validity of the Central
Government’s order dated August 17,
1995 which declared that renewing
TISCO’s lease over an area of 406
hectares would satisfy its needs
and requirements.
The Committee made an estimate of the captive mining
requirement of each of the parties appearing before it after
coming to the conclusion that this was a fundamental
guideline to be kept in mind while renewing TISCO’s lease.
To complete this exercise, it relied upon the’ submissions
of counsel, technical evidence submitted a them and the
relevant technical information available. In the case of
TISCO, after taking into account all the technical grounds
and objections put forth by the learned counsel for TISCO,
the Committee came to the conclusion that its lease should
be granted renewal for a period of 20 years over a
contiguous area of 461 hectares.
By its order dated August 17, 1995, the Central
Government while endorsing the finding of the Committee
recommended to the State Government that TISCO’s lease be
renewed for 20 years over a reduced area of 406 hectares.
The reasons for the reduction were also provided.
The decision of the Committee and the consequent
order of the Central Government have been assailed by the
learned counsel for TISCO on a number or technical grounds.
Many of these have already been dealt with by the Committee.
At this juncture, we think it fit to make a few
observations about our general approach to the entire case.
This is a case of the type where legal issues are
intertwined with those involving determination of policy and
plethora of technical issues. In such a situation, courts of
law have to be very wary and must exercise their
jurisdiction with circumspection for they must not
transgress into the realm of policy making, unless the
policy is inconsistent with the constitution and the laws.
In the present matter, in its impugned judgment, the High
Court had directed the Central to set up a committee to
analyses the entire gamut of issues thrown up by the present
controversy. The Central Government had consequently
constituted a committee comprising high level functionaries
drawn from various Governmental/ institutional agencies who
were equipped to deal with the entire range of technical and
long-term consideration involved. This Committee, in
reaching its decision, consulted a number of policy
documents and approached the issue from a holistic
perspective. We have sought to give our opinion on the legal
issues that arises for out consideration. From the scheme of
the Act it is clear that the Central Government is vested
with discretion to determine the policy regarding the grant
or renewal of leases. On matters affecting policy and those
that require technical expertise, we have shown deference to
and followed the recommendations of, the Committee which is
more qualified to address these issues.
We are, therefore, of the view that the Central
Government was justified in issuing its order dated August
17, 1995.
For the foregoing reasons, we are of the view that the
High Court and the Committee were justified in the view they
took. Consequently the appeals filed by TISCO stand
dismissed. IDCOL has filed the appeals on much the same
grounds as TISCO while additionally claiming that the
Committee should have heard its claim too while hearing the
other parties. Since we have heard them at length, the
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grievance does not survive. Hence IDCOL’s appeals must also
fail. Cost, cost in the cause.