Full Judgment Text
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2537 OF 2017
M/s. Geomysore Services (I) Pvt. Ltd.
& Anr. …. Appellant(s)
Versus
M/s. Hutti Goldmines Co. Ltd. & Ors. … Respondent(s)
With
CIVIL APPEAL NO. 2538 OF 2017
J U D G M E N T
Deepak Gupta J.
1. What is the role and power of the Central Government while
dealing with the request of a State Government for reservation of lands
Signature Not Verified
Digitally signed by
CHARANJEET KAUR
Date: 2018.08.25
10:52:27 IST
Reason:
for government companies or corporations owned and controlled by
the State Government under section 17A (2) of the Mines and Minerals
2
(Development and Regulations) Act, 1957 (hereinafter referred to as
“the Act”), is the main issue involved in this case.
THE FACTUAL BACKGROUND
2. This case has a long and chequered history. There are gold mines
in the State of Karnataka and parties are litigating in respect of their
rights to exploit those mines. We have two appellants before us, M/s.
Geomysore Services (India) Pvt. Ltd., Appellant No.1 (hereinafter
referred to as “Geomysore”) and Deccan Gold Exploration Services Pvt.
Ltd., Appellant No. 2 (hereinafter referred to as “Deccan”).
3. On 01.04.2000 Geomysore applied for grant of Reconnaissance
Permit (for short ‘RP’) for 315 sq. kms. of land in Hutti South Belt Gold
Mines area. After approval by the Central Government, the State
Government granted RP on 03.11.2000 for a period of 3 years.
Similarly, Deccan was granted RP in Northern part of Hutti Gold
Mines for an area measuring 501.48 sq. kms. for a period of 3 years
on 09.01.2003 after completing all formalities. The respondent no. 1
3
i.e. M/s Hutti Gold Mines Co. Ltd. (hereinafter referred to as “HGML”)
did not file any application for grant of RP for either of the two areas.
4. Geomysore conducted the reconnaissance and submitted a
consolidated report on 30.11.2003. Deccan submitted its consolidated
report on 21.04.2006. Both the Companies found evidence to suggest
the existence of gold deposits and need to carry out further
prospecting in certain areas. On the basis of the results of the
reconnaissance, Geomysore filed 4 applications for grant of
Prospecting Licence (for short ‘PL’) under Section 11(1) of the Act.
Deccan filed 7 applications for grant of PL with regard to the area
where it had conducted reconnaissance.
5. On 28.11.2006, HGML sent a letter to the Commissioner,
Geological Resources Development and Director, Department of Mines
and Geology, Bangalore praying for reservation of area for the purpose
of conservation exclusively for public sector undertakings under
Section 17A(2) of the Act. It was stated that HGML was keen to
continue prospecting investigations in the area in question. It was
submitted that grant of Mining Lease (for short ‘ML’) to different
4
organizations would create severe problems including safety hazards
and as such it was prayed that the entire area, including the area for
which RP had been granted to Geomysore and Deccan, be reserved
under Section 17A(2) of the Act. It appears that Geomysore came to
know about this proposal and it sent a letter on 28.11.2006 itself to
the Government of India and opposed the contemplated action of the
State of Karnataka to forward a proposal to the Ministry of Mines for
reservation of the mining area.
6. In the meantime, two other developments took place. The
Ministry of Mines published the National Mineral Policy, 2008 (for
short ‘the NMP 2008’) and the Government of Karnataka released the
Karnataka Mineral Policy, 2008 (for short ‘the KMP, 2008) in
consonance with NMP, 2008 to which we shall advert later.
7. On 27.12.2008, the Government of Karnataka wrote to
Government of India for reservation of area in favour of HGML and
recommended that 161 sq. kms. of land be allocated to HGML for
mining. This covered the areas for which RPs had been granted to
Geomysore and Deccan and, therefore, Geomysore and Deccan filed
5
revision petitions before the Central Government. The main challenge
to the decision of the State Government was that the appellants were
entitled to preference while considering their application for grant of
PL and also their PL applications have been filed earlier in time. It
was also urged that in terms of the NMP, 2008 and the KMP, 2008
reservation could not be made. The Central Government allowed the
revision petitions and directed the State of Karnataka to consider the
PL applications filed by Geomysore as well as Deccan.
8. Thereafter, HGML filed a writ petition in the Karnataka High
Court. The High Court held that the reservation of the area had not
yet taken place and since the Central Government was still to take a
decision on the request of the State Government, it was not necessary
to determine whether the preferential right claimed by Geomysore and
Deccan under Section 11 of the Act could defeat the right of the State
Government to seek reservation of the area under Section 17A(2) of
the Act. The High Court, after considering the judgment of this Court
in the case of . v.
Indian Charge Chrome Ltd & Anr. Union of India
1
& Ors. held as follows:
1
(2006) 12 SCC 331
6
“ 10 . Having held so, the Hon’ble Court has further held that
the power under Section 17A(2) is the statutory power and
normally there could be no estoppel against the exercise of
statutory power and upheld the recommendation of the State
Government seeking for approval of the Central Government. It
is clear that, in the instant case, the undisputed fact is that the
contesting respondents in any event have not been granted the
prospecting licence or mining lease and as such the area in
question is not the one which is already held under a
prospecting licence or mining lease. Therefore, if the above
decision is kept in view, the State Government was well within
its powers to seek approval of the Central Government to
reserve the area in question. In any event, the Central
Government before granting its approval would have to
consider all these aspects of the matter and any such
consideration by the Central Government could not have been
stifled by the contesting respondents in the form of revision
application and the revision authority was also not justified in
interfering. The preferential right claimed by the contesting
respondents cannot be accepted at this stage and a direction
could not have been issued to consider the applications of the
contesting respondents by setting aside the communication
dated 27.12.2008. The appropriate procedure would be to
allow the Central Government to take a decision on the
approval sought by the State Government by its
communication dated 27.12.2008. Thereafter, the
consideration or otherwise of the applications for prospecting
licence by any other person including the contesting
respondents would arise depending on the result of such
consideration by the Central Government. If for any reason,
the Central Government does not accede to the proposal of the
State Government and in such situation if the applications
remain open for consideration, then and only then the question
of preferential right would arise for consideration.”
9. Consequently, the orders passed by the Central Government were
set aside and the matter was remanded to the Central Government to
take decision on the recommendation made by the State Government
7
with a direction to dispose of the same in accordance with law. The
Central Government examined the matter and rejected the proposal of
the State Government for reservation of land under Section 17A(2) of
the Act for Government undertakings. The order notes that
Geomysore and Deccan had already filed PL applications after
completing reconnaissance pursuant to the RPs granted to them.
Instead of dealing with the PL applications of Geomysore and Deccan,
the State Government suddenly decided to make a request to the
Central Government to reserve the land. The Central Government
held that the action of the State Government is against the stated
purpose of Para 3.3 of the NMP, 2008 which provides that there
should a regulatory environment conducive to private investment; that
the procedure for grant of concession should be transparent and
seamless transition shall be guaranteed to the concessionaires; that
the action of the State Government was not transparent or fair; that
land could only be reserved where private players are not holding the
land or have not applied for exploration or mining unless security
considerations or specific public interests are involved; that since
Geomysore and Deccan had completed their RPs and applied for
8
seamless transition to PL, the proposal of the State Government to
reserve the land in favour of HGML was neither in public interest nor
in terms of the NMP, 2008 and, therefore, proposal of the State
Government to reserve land was rejected and again a direction was
issued that the request of Geomysore and Deccan for grant of PL be
considered expeditiously.
10. HGML then filed another writ petition challenging the order of the
Central Government dated 31.05.2011. Geomysore and Deccan filed a
joint reply in the writ petition and the High Court allowed the writ
petition vide the impugned judgment, which is under challenge before
us.
11. The main factor which weighed with the High Court in allowing
the writ petition was that whereas under Section 11 of the Act, a party
which had carried out reconnaissance pursuant to RP, was entitled to
preference at the time of granting PL, under Section 17A(2) of the Act,
the words “reconnaissance permit” do not find mention. The Court
further held that in its earlier judgment dated 18.02.2011, it had been
held that while taking a decision under section 17A(2) of the Act, the
9
preferential right under Section 11 of the Act had no role to play and,
therefore, the claim of the State Government could not be defeated on
this ground. Since the judgment had attained finality, the matter
should not be reopened. It further held that the NMP, 2008 cannot
overrule the provisions of Section 17A of the Act. The Court further
held that the policy has to give way to the statutory provisions. It was
held that the second order passed by the Central Government
contains the same flaws which were there in the earlier order and
hence the writ petition was allowed and the order of the Central
Government refusing to reserve the land was quashed.
THE LEGAL PROVISIONS
12. At the outset, we may point out that as far as this case is
concerned, we are dealing with the Act prior to its amendment in the
year 2015. Subsections (ha) and (hb) of Section 3 of the Act were
introduced w.e.f. 18.12.1999 and define ‘reconnaissance operations’
and ‘reconnaissance permit’ respectively. The same read as follows:
“(ha) “reconnaissance operations” means any operations
undertaken for preliminary prospecting of a mineral through
10
regional, aerial, geophysical or geochemical surveys and
geological mapping, but does not include pitting, trenching,
drilling (except drilling of boreholes on a grid specified from
time to time by the Central Government) or subsurface
excavation;
(hb) “reconnaissance permit” means a permit granted for
the purpose of undertaking reconnaissance operations;”
13. A reconnaissance permit allows the permit holder to carry out
reconnaissance operations. A reconnaissance permit holder carries
out operations to determine whether the area is fit for mining only by
way of noninvasive techniques, except for some minimal drilling.
Normally, reconnaissance permits are granted for huge areas of land.
14. Subsections (g) and (h) of Section 3 of the Act define ‘prospecting
licence’ and ‘prospecting operations’ respectively. The same read as
follows:
“(g) “prospecting licence” means a licence granted for the
purpose of undertaking prospecting operations;
(h) “prospecting operations” means any operations undertaken
for the purpose of exploring, locating or proving mineral
deposits;”
15. Normally, after reconnaissance is done, a party would determine
which is the best part of the huge area fit for prospecting to determine
with greater exactitude the location of mineral deposits. Thus, PL is
11
granted for an area which is much less than that of the RP area.
During prospecting, invasive methods can be used to the extent
allowed under law for determining the extant mineral deposits and
whether they can be exploited commercially.
16. After prospecting is done, comes the stage of grant of mining
lease. ‘Mining lease’ and ‘mining operations’ are defined in sub
sections (c) and (d) of Section 3 of the Act respectively. The same read
as under:
“(c) “mining lease” means a lease granted for the purpose of
undertaking mining operations, and includes a sublease
granted for such purpose;
(d) “mining operations” means any operations undertaken for
the purpose of winning any mineral;”
17. Investments during reconnaissance or prospecting are very large.
These are not small investments. Therefore, a person who had
conducted reconnaissance is given preference for grant of PL and a
person who had conducted prospecting is given preference while being
considered for grant of ML. In this behalf we may refer to Section 11
(1) of the Act which reads as follows:
“ 11 . Preferential right of certain persons . (1) Where a
reconnaissance permit or prospecting licence has been granted
in respect of any land, the permit holder or the licensee shall
12
have a preferential right for obtaining a prospecting licence or
mining lease, as the case may be, in respect of that land over
any other person:
Provided that the State Government is satisfied that the
permit holder or the licensee, as the case may be,
(a) has undertaken reconnaissance operations or prospecting
operations, as the case may be, to establish mineral resources
in such land;
(b) has not committed any breach of the terms and conditions of
the reconnaissance permit or the prospecting licence;
(c) has not become ineligible under the provisions of this
Act; and
(d) has not failed to apply for grant of prospecting licence or
mining lease, as the case may be, within three months after the
expiry of reconnaissance permit or prospecting licence, as the
case may be, or within such further period as may be extended
by the said Government.”
18. The purpose of the aforesaid Section is that in view of the money,
effort and time spent in undertaking reconnaissance or prospecting
operations and preparation of detailed reports of the mineral
discoverable or likely to be discovered pursuant to such operations,
such RP or PL holder would get a preferential right for undertaking the
next stage of operations.
19. Section17A of the Act reads as follows:
“ . (1)
17A Reservation of area for purposes of conservation.
The Central Government, with a view to conserving any
mineral and after consultation with the State Government, may
reserve any area not already held under any prospecting
13
licence or mining lease and, where it proposes to do so, it shall,
by notification in the Official Gazette, specify the boundaries of
such area and the mineral or minerals in respect of which such
area will be reserved.
(1A) The Central Government may in consultation with the
State Government, reserve any area not already held under any
prospecting licence or mining lease, for undertaking
prospecting or mining operations through a Government
company or corporation owned or controlled by it, and where it
proposes to do so, it shall, by notification in the Official
Gazette, specify the boundaries of such area and the mineral or
minerals in respect of which such area will be reserved.]
(2) The State Government may, with the approval of
the Central Government, reserve any area not already held
under any prospecting licence or mining lease, for undertaking
prospecting or mining operations through a Government
company or corporation owned or controlled by it and where it
proposes to do so, it shall, by notification in the Official
Gazette, specify the boundaries of such area and the mineral or
minerals in respect of which such areas will be reserved.
(3) Where in exercise of the powers conferred by
subsection (1A) or subsection (2) the Central Government or
the State Government, as the case may be, undertakes
prospecting or mining operations in any area in which the
minerals vest in a private person, it shall be liable, to pay
prospecting fee, royalty, surface rent or dead rent, as the case
may be, from time to time at the same rate at which it would
have been payable under this Act if such prospecting or mining
operations had been undertaken by a private person under
prospecting licence or mining lease.”
20. Though, in this case we are dealing mainly with Section 17A(2),
we feel that it would be appropriate to analyze the provisions of the
various parts of Section 17A of the Act. Under Section 17A(1), the
Central Government has the power to reserve any area to conserve any
14
mineral. The Central Government has to exercise this power after
consultation with the State Government. There is, however, one
caveat, which is, that if a PL or ML for the said area is held by any
person then the Central Government cannot reserve the area. Under
subsection (1A) of Section 17A, the Central Government has similar
power to reserve areas for undertaking prospecting or mining
operations through Government companies, but again, such areas
should not have been held under any PL or ML. As far as Section
17A(2) is concerned, this provision gives power to the State
Government to reserve an area not held under a PL or ML for
prospecting or mining by State Government owned companies.
However, this can be done only with the approval of the Central
Government and the area so reserved should be notified in the official
gazette along with the mineral and minerals for which the area has
been reserved. Though we are not directly concerned with subsection
(3) of Section 17A of the Act in this case, the said subsection provides
that where the Central Government or the State Government, as the
case may be, undertakes prospecting or mining operations in any area
in which mineral vests in the private person, then the Central
15
Government or the State Government concerned shall be liable to pay
prospecting fee, royalty, surface rent, dead rent etc..
21. We may also, at this stage, refer to Section 2 of the Act, which
reads as follows:
“ 2. Declaration as to the expediency of Union control. – It is
hereby declared that it is expedient in the public interest that
the Union should take under its control the regulation of mines
and the development of minerals to the extent hereinafter
provided.”
CONTENTIONS
22. Mr. Maninder Singh, learned Additional Solicitor General
appearing for the Union of India, submitted that Section 17A(2) of the
Act empowers the State Government to reserve any area not held
under PL or ML for any State Government undertaking. However, this
is subject to the prior approval of the Central Government. It is his
contention that the State Government cannot reserve an area (not held
under a PL or ML) without obtaining the prior approval of the Central
Government. He further submits that the Central Government, while
considering the request of the State Government, has to apply its mind
independently and while dealing with the request, it can take into
16
consideration the mineral policy. Therefore, according to him, the
High Court erred in holding that the Union could not take into
consideration the parameters set out in the mineral policy. According
to him, the absence of the words ‘reconnaissance permit’ from Section
17A(2) of the Act only indicates that whereas for those areas for which
PL or ML has been granted, there is an absolute bar, but where only
RP is granted, there is no bar and the State Government can, with the
approval of the Central Government, reserve that area.
23. Ms. Meenakshi Arora, learned senior counsel appearing for the
appellants adopted the arguments of Mr. Maninder Singh, but she
also urged that in view of the huge investments required to be made
by the RP holder, it is his legitimate expectation under Section 11 of
the Act that he would get the PL. She further submits that HGML had
not submitted any application for grant of RP or PL. Therefore, the
applications of Geomysore and Deccan being prior in time, should
have been considered. She has referred to various provisions of the
Act both prior to and after its amendment in the year 2015 to
emphasize that the intention of the Government is to encourage
private investment in the industry and to ensure that such private
17
investors are not left in lurch after investing huge amount and there is
seamless transition from the stage of reconnaissance to prospecting
and then to mining.
24. Mr. Basava Prabhu S. Patil, learned senior counsel appearing for
the State of Karnataka, submitted that it is the State which is the
owner of the minerals and keeping in view the federal structure of our
country, the Union cannot override the power of the State. According
to him, Section 2 of the Act does not empower the Union to reject the
claim of the State Government on grounds which are not provided for
in the statute itself. He also submits that the judgment rendered by
the Karnataka High Court in the first Writ Petition No.39969/39970 of
2010 decided the issues between the parties and that will operate as
resjudicata. He submits that in the earlier judgment the High Court
had clearly held that the preferential right claimed by Geomysore and
Deccan cannot override the power of the State Government under
Section 17A(2) of the Act He submits that the grounds taken in both
.
the orders passed by the Central Government are virtually identical.
According to him, since the words ‘reconnaissance permit’ have been
18
omitted from Section 17A(2) of the Act, the Central Government could
not have rejected the claim of the State Government on grounds which
are directly related to the fact that Geomysore and Deccan had carried
out reconnaissance in furtherance of such reconnaissance permit. He
further submits that the NMP, 2008 was not binding and has made
reference to clause 3.2 of the NMP, 2008, which indicates that what is
set out in the policy are the goals and that the Act, the Mineral
Concessions Rules and the Mineral Concessions Development Rules
will be amended in line with the policy. He submits that these
amendments took place in the year 2015 and, therefore, the policy
could not have been resorted to by the Central Government to reject
the claim of the State.
25. Mr. C.U. Singh and Mr. Jaideep Gupta, learned senior counsel,
appearing on behalf of HGML, submit that before Geomysore and
Deccan were granted RP, HGML had already done a lot of work in the
area. According to them, after the amendment of the Act, now these
mines can only be auctioned. Reliance has been placed on Para 160
2
of Monnet Ispat & Energy Ltd . v. Union of India & Ors . case. It
2
(2012) 11 SCC 1
19
was urged that the factors taken into consideration by the Central
Government while rejecting the proposal of the State Government were
not relevant factors. According to them, the right of the State to
reserve area under Section 17A(2) flows from the paramount right of
the State as owner of the land and minerals.
THE ISSUES
26. There are four main questions which need to be answered:
(i) Whether the State Government being the owner of land and
minerals can claim that its proposal to reserve such land for
exploitation of minerals by its undertakings is virtually binding on the
Central Government?
(ii) What are the considerations which can weigh with the Central
Government while dealing with a request of the State Government for
reservation of land under Section 17A(2) of the Act?
(iii) Whether Section 11(1) and Section 17A(2) of the Act operate in
totally separate spheres and what is the effect of the right of
20
preference granted to RP holder in terms of Section 11(1) of the Act
while dealing with a matter under Section 17A(2) of the Act?
(iv) Whether, in the present case, the Central Government is justified
in rejecting the proposal of the State of Karnataka?
27. The Act was initially enacted as the Mines and Minerals
(Regulation and Development) Act (for short ‘the MMRD Act’). At that
time, there was no Section 17A in the MMRD Act, which was later
introduced w.e.f. 10.02.1987. Section 17 of the MMRD Act dealt with
those lands in which minerals vested with the State Government.
Under subsection (2), the Central Government was empowered to
carry out prospecting or mining operations in any area not already
held under any PL or ML. This could, however, be done only after
consultation with the State Government concerned. Therefore,
Section 17 of the MMRD Act empowered the Central Government to
undertake prospecting operations. Vide Act 38 of 1999 the name of
the MMRD Act was changed from ‘The Mines and Minerals (Regulation
and Development) Act’ to ‘The Mines and Minerals (Development and
21
Regulation) Act’ w.e.f. 18.12.1999. By the same Act, in Section 17 of
the Act, the words ‘reconnaissance’ and ‘reconnaissance permit’ were
introduced w.e.f. 18.12.1999. Prior to that, there was no concept of
reconnaissance. Under the provisions of the Act, prior to the
introduction of Section 17A, there was no statutory provision which
empowered the State Government to reserve any land. However,
under the Mineral Concession Rules, 1960, (hereinafter referred to as
the ‘Rules’) there was a provision in Rule 58, empowering the State
Government to reserve such lands. After Section 17A was introduced
on 10.02.1987, Rule 58 was omitted on 13.04.1988. We are pointing
out these facts because some of the judgments cited, being prior to
introduction of Section 17A, have to be read in the context of Rule 58
of the Rules.
28. In Amritlal Nathubhai Shah and Others v. Union
3
, this Court held that the State
Government of India and Another
being the owner of the land, was entitled to reserve the land and,
therefore, was justified in rejecting the applications of the private
parties. This judgment was delivered in the context of Rule 58 of the
3
(1976) 4 SCC 108
22
Rules, as it existed at that time.
4
,
29. In State of T.N . v. M/s Hind Stone and Others the State of
Tamil Nadu formulated the Tamil Nadu Minor Mineral Concession
Rules. Under Rule 8C, the right to quarry black granite, a minor
mineral, was reserved in favour of the State Government and its
Corporations etc.. The validity of this Rule was challenged on various
grounds including the ground that the MMRD Act, 1957 did not
empower the State Government to make such a reservation. This
Court rejected this submission on the ground that the State was the
owner of the land and minerals and also that minor minerals vest in
the State Government. The Court held as follows:
“ 6. Rivers, Forests, Minerals and such other resources
constitute a nation’s natural wealth. These resources are not to
be frittered away and exhausted by any one generation. Every
generation owes a duty to all succeeding generations to develop
and conserve the natural resources of the nation in the best
possible way. It is in the interest of mankind. It is in the
interest of the nation……………… In the case of minor minerals,
the State Government is similarly empowered, after consultation
with the Central Government. The public interest which
induced Parliament to make the declaration contained in Section
2 of the Mines and Minerals (Regulation and Development) Act,
1957, has naturally to be the paramount consideration in all
matters concerning the regulation of mines and the development
of minerals. Parliament’s policy is clearly discernible from the
provisions of the Act. It is the conservation and the prudent and
4
(1981) 2 SCC 205
23
discriminating exploitation of minerals, with a view to secure
maximum benefit to the community. There are clear signposts
to lead and guide the subordinate legislating authority in the
matter of the making of rules. Viewed in the light shed by the
other provisions of the Act, particularly Sections 4A, 17 and 18,
it cannot be said that the rule making authority under Section
15 has exceeded its powers in banning leases for quarrying
black granite in favour of private parties and in stipulating that
the State Government themselves may engage in quarrying black
granite or grant leases for quarrying black granite in favour of
any corporation wholly owned by the State Government…….”
It would be pertinent to point out that in this very case this Court, in
the opening para, held as follows:
“……..It is now common ground between the parties that as a
result of the declaration made by Parliament, by Section 2 of the
Act, the State legislatures are denuded of the whole of their
legislative power with respect to regulation of mines and mineral
development and that the entire legislative field has been taken
over by Parliament……”
30. It would also be pertinent to point out that both
Amritlal
Nathubai Shah (supra) and Hind Stone (supra) were decided before
the introduction of Section 17A in the Act.
31. In . v.
Indian Metals and Ferro Alloys Ltd Union of India &
5
Ors . , this Court was dealing with Section 17A of the Act. Following
observations are pertinent:
5
1992 Supp.(1 ) SCC 91
24
“ 46 . Before leaving this point, we may only refer to the position
after 1986. Central Act 37 of 1986 inserted subsection (2) which
empowers the State Government to reserve areas for exploitation
in the public sector. This provision differs from that in Rule 58
in some important respects—
(i) the reservation requires the approval of the C.G.;
(ii) the reservation can only be of areas not actually held
under a PL or ML;
(iii) the reservation can only be for exploitation by a
government company or a public sector corporation
(owned or controlled by the S.G. or C.G.) but not for
exploitation by the government as such.
Obviously, Section 17A (2) and Rule 58 could not stand together
as Section 17A empowers the S.G. to reserve only with the
approval of the C.G. while Rule 58 contained no such restriction.
There was also a slight difference in their wording…..”
6
32. In State of T.N. v. M.P.P. Kavery Chetty , dealing with Section
17A(2) of the Act, this Court held as follows:
“15 ………Section 17A(2) applies when an area is sought to be
reserved by the State Government for undertaking mining
operations exclusively through a Government company or
corporation. When such area is notified the mineral or minerals
in respect of which it is notified must also be stated. Such
reservation cannot be made without the approval of the Central
Government…….”
33. The High Court has placed reliance on a judgment of this Court
delivered by a threeJudge Bench in Indian Charge Chrome (supra).
6
(1995) 2 SCC 402
25
Dealing with the interplay between Section 11 and Section 17A of the
Act, this Court held as follows:
“16. As we see it, the power under Section 17A is an
independent power. It is not related to the power available under
Section 11 of the Act. It is open to the Central Government to
reserve an area in terms of Section 17A(1) if it is thought
expedient and it is in the interests of the nation or that it is
necessary to conserve a particular metal or ore or the area
producing it. It is also open to the Central Government to decide
that such area should be exploited by a company or corporation
owned or controlled by it. Of course, that situation has not
arisen in this case. Under subsection (2) of Section 17A, with
the approval of the Central Government, the State Government
may reserve any area not already held under any prospecting
licence or mining lease for undertaking the exploitation through
a government company or corporation owned or controlled by it
and on fulfilling the conditions referred to in subsection (2) and
in an appropriate case, also the conditions of subsection (3).
Again, the exercise of power by the State Government under
subsection (2) of Section 17A has no reference to the
entertaining of applications under Section 11 or the preferences
available thereunder…..”
34. In Indian Charge Chrome (supra), an area of 1812.993 hectares
of land was granted to Tata Iron and Steel Company Ltd. (TISCO) for
mining of chromite ore. Initially, lease was granted in 1952, which
was renewed in 1972. However, at the time of renewal, the area was
reduced to 1261.476 hectares. In 1991, TISCO again applied for
renewal of lease but the renewal was granted only in respect of 650
hectares. TISCO challenged the said reduction in its area. In the
26
meantime, various private companies challenged renewal of lease in
favour of TISCO. The High Court allowed the writ petition and
directed reconsideration of the matter. Appeal filed by TISCO in this
Court was dismissed. The Union Government, on reconsideration,
renewed lease in favour of TISCO for 406 hectares and directed that
the balance area of 855.476 hectares be distributed by way of lease
amongst other claimants. Subsequently, the State Government made
a recommendation to the Union Government that half of the area of
855.476 hectares be reserved under Section 17A(2) of the Act and the
remaining half could be allotted to the 4 applicants who had filed writ
petitions in the Court. Thereafter, some other parties filed writ
petitions in the High Court claiming that they should also be given
mining rights. The Orissa Government then decided to grant the
balance land to the extent to 436.295 hectares on lease to the State
public sector undertaking i.e.,Orissa Mining Corporation Ltd.
(hereinafter referred to as “OMC”). This action of the State
Government was set aside by the High Court. This Court in
Indian
Charge Chrome (supra) was dealing with the appeals filed by those
applicants other than the 4 who had been granted mining leases and
27
also the appeal filed by OMC and the State Government. This Court
came to the conclusion that the Central Government had not taken a
decision on the request of the State Government to reserve the area
under Section 17A(2) and finally directed the Central Government to
first consider the request of the State Government for reservation of
land and held that this contingency of the private applicants being
granted mining leases would only arise in case the Central
Government does not grant approval to the request of the State
Government under Section 17A(2) of the Act. This Court held as
follows :
“32. ………This contingency may arise only if the Central
Government does not grant approval to the request of the State
Government under Section 17A(2) of the Act……”
35. This clearly envisages that this Court held that the State
Government could not make a reservation without approval of the
Central Government. It would be pertinent to mention here that this
Court directed the State Government to make a fresh request to the
Central Government and further directed that prior directions of this
Court or the High Court cannot and do not stand in the way of the
28
Central Government in applying its mind to exercise its power under
Section 17A(2) of the Act and in taking an independent decision.
36. In the case of . v.
Sandur Manganese and Iron Ores Ltd State
7
of Karnataka & Ors . , dealing with the powers of the State, this
Court held that in view of Section 2 of the Act, the State is denuded of
its accepted power with regard to the matters which fall within the
domain of the Central Government. It further held that the State
Government has to act and justify its actions only in accordance with
the Act and the Rules, and the State Government cannot be permitted
to justify its actions on criteria de hors the Act and the Rules. Dealing
with Section 11 of the Act, the Court held that an RP holder or PL
holder will have a preferential right to get a PL or ML as the case may
be. The following observations of the Court are relevant:
“80. It is clear that the State Government is purely a delegate of
Parliament and a statutory functionary, for the purposes of
Section 11(3) of the Act, hence it cannot act in a manner that is
inconsistent with the provisions of Section 11(1) of the MMDR
Act in the grant of mining leases. Furthermore, Section 2 of the
Act clearly states that the regulation of mines and mineral
development comes within the purview of the Union Government
and not the State Government. As a matter of fact, the
respondents have not been able to point out any other provision
7
(2010) 13 SCC 1
29
in the MMDR Act or the MC Rules permitting grant of mining
lease based on past commitments. As rightly pointed out, the
State Government has no authority under the MMDR Act to
make commitments to any person that it will, in future, grant a
mining lease in the event that the person makes investment in
any project. Assuming that the State Government had made any
such commitment, it could not be possible for it to take an
inconsistent position and proceed to notify a particular area.
Further, having notified the area, the State Government certainly
could not thereafter honour an alleged commitment by ousting
other applicants even if they are more deserving on the merit
criteria as provided in Section 11(3).”
37. In Monnet Ispat (supra), Justice Lodha, in his leading judgment
held that Section 2 of the Act does not affect the State’s ownership of
mines and minerals within its territory although the regulation of
mines and development of minerals have been taken under the control
of the Union. It was held that the Central Government may have
taken over the power to regulate the mines and development of
minerals but the State could not be denuded of its rights and followed
the decision of this Court in the case of
Amritlal Nathubhai Shah
(supra) wherein it was held that “the authority to order reservation
flows from the fact that the State is the owner of the mines and
minerals within its territory”. Dealing with Section 17A of the Act, it
was held that this section would have prospective operation only and,
30
therefore, it could not affect the earlier notifications. Thereafter, this
Court in Para 160 of the judgment held as follows:
“ 160 . The types of reservation under Section 17A and their
scope have been considered by this Court in Indian Metals and
Ferro Alloys Ltd . in paras 45 and 46 (pp. 13639) of the Report. I
am in respectful agreement with that view. However, it was
argued that Section 17A(2) requires prior approval of the
Central Government before reservation of any area by the State
Government for the public sector undertaking. The argument is
founded on an incorrect reading of Section 17A(2). This
provision does not use the expression, “prior approval” which
has been used in Section 11. On the other hand, Section 17A(2)
uses the words, “with the approval of the Central Government”.
These words in Section 17A(2) cannot be equated with prior
approval of the Central Government. According to me, the
approval contemplated in Section 17A may be obtained by the
State Government before the exercise of power of reservation or
after exercise of such power. The approval by the Central
Government contemplated in Section 17A(2) may be express or
implied. In a case such as the present one where the Central
Government has relied upon the 2006 Notification while
rejecting the appellants’ application for grant of mining lease, it
necessarily implies that the Central Government has approved
reservation made by the State Government in the 2006
Notification otherwise it would not have acted on the same. In
any case, the Central Government has not disapproved
reservation made by the State Government in the 2006
Notification.”
38. In . v.
State of Kerala and Ors Kerala Rare Earth & Minerals
8
Ltd. & Ors. , a threeJudge Bench of this Court again dealt with the
scope of Section 17A of the Act and per majority held as follows:
“ 15 . There is no gainsaying that the State Government can
8
(2016) 6 SCC 323
31
reserve any area not already held under any prospecting licence
or mining lease for undertaking prospecting or mining
operations through a government company or corporation owned
or controlled by it, but, in terms of subsection (2) of Section 17
A (supra) where the Government proposes to do so, it shall by
notification in the Official Gazette specify the boundaries of such
area and the mineral or minerals in respect of which such areas
will be reserved. Three distinct requirements emerge from
Section 17A(2) for a valid reservation viz.:
(i) the reservation can only be with the approval of the
Central Government and must confine to areas not already
held under any prospecting licence or mining lease;
(ii) the reservation must be made by a notification in the
Official Gazette; and
(iii) the notification must specify the boundaries of such
areas and the mineral or minerals in respect of which such
areas will be reserved.
xxx xxx xxx
xxx xxx xxx
“ . The upshot of the above discussion then is that while the
19
State Government is the owner of the mineral deposits in the
lands which vest in the Government as is the position in the
case at hand, Parliament has by reason of the declaration made
in Section 2 of the 1957 Act acquired complete dominion over
the legislative field covered by the said legislation. The Act does
not denude the State of the ownership of the minerals situate
within its territories but there is no manner of doubt that it
regulates to the extent set out in the provisions of the Act the
development of mines and minerals in the country. It follows
that if the State Government proposes to reserve any area for
exploitation by the Stateowned corporation or company, it must
resort to making of such reservation in terms of Section 17A
with the approval of the Central Government and by a
notification specifying boundaries of the area and mineral or
minerals in respect of which such areas will be reserved.
Inasmuch as the State Government has not so far issued any
notification in terms of Section 17A, the Industrial Policy, 2007
of the Kerala State Government does not have the effect of
making a valid reservation within the comprehension of Section
32
17A. The High Court was, therefore, justified in holding that
there is no valid reservation as at present no matter the
Government can make such a reservation if so advised in the
manner prescribed by law. In other words, the dismissal of this
appeal shall not prevent the State from invoking its right under
Section 17A(2) of the Act by issuing notification in respect of the
mineral deposits in question…..”
39. On a careful perusal of the judgments aforesaid, it would be more
than apparent that this Court has consistently held that the State is
the owner of the land and minerals. However, the control and
regulation of mines and development of minerals are in the domain of
the Union Government. The State Government is denuded of its
legislative power to make any law in respect of regulation of mines and
mineral development in so far as that field is covered by the provisions
of the Act. It is only if the field is vacant that the State can exercise its
legislative powers. Otherwise, it has to exercise its power strictly in
accordance with the powers specifically conferred on the State
Government by the Act and the Rules. It is also a well settled position
of law that while exercising the powers of reservation vested in Section
17A(2) of the Act, the State Government has to take approval of the
Central Government. In this case, we are not required to deal with the
question of prior approval as there is no approval and, in fact, the
33
request of the State has been rejected by the Central Government.
40. In the light of what has been said in the aforesaid judgments, we
have examined the facts of the instant case. The State Government
made a request to the Central Government for reservation. In the first
round of litigation, the High Court directed the Central Government to
first consider the request before considering the applications of
Geomysore and Deccan. The Central Government rejected the
proposal of the State Government on various grounds including the
grounds enumerated earlier, which flow from the NMP, 2008.
Arguments have been addressed to suggest that the Central
Government can only take into consideration issues of national
interest and security and cannot look into the other aspects. We are
not in agreement with this submission. Section 17A(2) of the Act
clearly provides that the State Government can reserve any area for
undertaking prospecting or mining operations through a Government
company or corporation with the approval of the Central Government.
The Act does not lay down the parameters which the Central
Government is required to follow. In our view, the Central
Government can take all factors which are relevant for the purpose of
34
deciding whether reservation should be made or not. The NMP, 2008
being a policy of the country, can definitely be taken into
consideration while considering such a request.
41. We may note that the policy of the Government can sometimes be
binding on the Government if the principles of promissory estoppel or
legitimate expectation come into play. We may make it clear that in
this case neither the principle of promissory estoppel nor the principle
of legitimate expectation is attracted. We are only making reference to
these principles to emphasize that a policy of a Government is an
important document. It cannot be brushed aside. The Central
Government, while considering the request of the State Government,
can take into consideration various factors which may include
economic factors, the factors reflecting the image of the country
internationally to the global world community and also other factors of
national security etc.. These are just illustrative and each case has to
be decided on its own facts. Therefore, we are not in agreement with
the Karnataka High Court that only those factors can be taken into
consideration, which flow from the Act or the Rules.
35
42. Another important aspect of the matter is that under Section
11(1) of the Act, an RP holder, who has carried out reconnaissance, is
entitled for preference when his case is being considered for grant of
PL. However, in Section 17A(2) of the Act, the bar to reservation is
only in those cases where the land is held under a PL or ML. When
any land is held under PL or ML, then the said land cannot even be
considered for reservation. If the land sought to be reserved is not
under PL or ML, then the State can make a proposal to reserve the
land. If the land sought to be reserved is covered by an RP there is no
bar to reserve the land for exploitation by State Government
undertakings. This, however, does not mean that while dealing with
the proposal of the State, the Central Government must make the
reservation. The Central Government while granting approval, has to
independently apply its mind and while doing so, there is nothing
which debars the Central Government from taking into consideration
the fact that some entity was granted RP and the effect thereof. No
doubt, the Central Government cannot reject the proposal only on the
ground that RP was issued since that would run counter to the
provisions of Section 17A(2) of the Act. However, this is a fact which
36
along with other facts can be taken into consideration while deciding
the issue of reservation of land.
43. As far as the present case is concerned, the Central Government
took into consideration various factors and notes that PL applications
had already been filed by Geomysore and Deccan pursuant to RPs. It
virtually held that the request of the State Government was at a
belated stage and was against the provisions of the NMP, 2008, the
emphasis in which was to provide a regulatory environment which is
conducive to private investment. It may be true that the Central
Government was influenced by the fact that Geomysore and Deccan,
pursuant to the RPs, had completed the reconnaissance and
submitted their consolidated reports, but there were other relevant
factors also which were taken into consideration such as that
Geomysore and Deccan had already applied for grant of PL and no
security consideration or public interest was involved in making
reservation for HGML. In our view, the factors taken into
consideration by the Central Government are relevant and germane to
the issues and cannot be said to be such factors which are extraneous
or could not have been taken into consideration.
37
44. We may also add that as far as the present case is concerned,
when on 27.12.2008, the Government of Karnataka recommended
that 161 sq. kms. land be allotted to HGML, no reservation had taken
place because approval of the Central Government had not come. In
fact, the State of Karnataka had not even notified the area, which was
sought to be reserved nor it identified the minerals for which
reservation was sought.
45. Section 17A(2) of the Act envisages following four conditions:
(a) The land is not held under prospecting licence or mining lease;
(b) there is approval by the Central Government;
(c) a notification is issued in the Official Gazette specifying the
boundaries of such area; and
(d) such notification should identify the mineral or minerals in
respect of which such areas are sought to be reserved.
Only the first condition was fulfilled. None of the other
conditions were satisfied. Therefore, the State of Karnataka could not
have issued recommendation in favour of HGML on 27.12.2008. The
38
cart could not have been put before the horse. Unless reservation
takes place, a private company stands on the same footing as a
Government company and in that eventuality, Section 11 of the Act
would be applicable and Geomysore and Deccan being the RP holders
and also being earlier PL applicants, had to be given preference.
CONCLUSION
46. In view of the above discussion, our answers to the four
questions are as follows:
(i) The State Government being the owner of the land and minerals,
has a right to make a proposal to the Central Government to reserve
lands not held under a prospecting licence or mining lease for
exploitation by the State Government companies or undertakings but
approval of the Central Government is necessary;
(ii) The Central Government cannot be bound by any specific
parameters. Each case has to be decided on its own merits. However,
as indicated by us above, the Central Government can not only take
into consideration factors of national security or public interest but
39
also economic factors, the policy of the Government and all such other
factors which are relevant to decide the issue whether the land should
be reserved for exploitation only by State Government Undertakings;
(iii) Section 11(1) and Section 17A(2) of the Act have no connection
with each other. Section 11(1) of the Act deals with preference to be
given to RP holder and PL holder while considering their case for grant
of PL and ML respectively. This has nothing to do with reservation of
land under Section 17A(2) of the Act. The only connection, if it can be
called that, is that if a land is held under a PL or ML, then action
under Section 17A(2) of the Act cannot even be initiated;
(iv) In view of the discussion held above, we feel that the Central
Government was justified in rejecting the request of the State of
Karnataka in reserving the land in question.
47. Before parting with the case, we may note that arguments were
addressed before us on the effect of the amendments made in 2015 to
the MMDR Act especially with regard to Section 10A and Section 10B.
We are not dealing with these issues, as decision on them is not
necessary to decide the present case.
40
48. In view of the above discussion, we are clearly of the view that
the Karnataka High Court erred in allowing the writ petition.
Accordingly, the judgment of the High Court passed in W.P. No.25899
of 2011 on 03.04.2012 is set aside and the decision of the Central
Government dated 31.05.2011 is upheld and the State of Karnataka is
directed to consider the case of Geomysore and Deccan for grant of PL
in accordance with the provisions of the Act as they now stand
amended in the year 2015.
49. The appeals are allowed in the aforesaid terms with no order as
to costs. Pending application(s), if any, stand(s) disposed of.
………………………..J.
(Madan B. Lokur)
…………………………J.
(Deepak Gupta)
New Delhi
May 08, 2018