Shivji Nathubhai Vs. The Union of
India & Ors  INSC 7 (19 January 1960)
SINHA, BHUVNESHWAR P.(CJ) GAJENDRAGADKAR,
GUPTA, K.C. DAS SHAH, J.C.
CITATION: 1960 AIR 606 1960 SCR (2) 775
CITATOR INFO :
RF 1961 SC1361 (8) R 1961 SC1669 (6,34) R
1962 SC1110 (8) D 1962 SC1513 (7) RF 1964 SC1140 (13) R 1964 SC1643 (4,7) R
1965 SC1595 (16) RF 1966 SC 671 (5) RF 1967 SC1507 (6) R 1967 SC1606 (8) APL
1970 SC1896 (18) R 1973 SC 678 (14) R 1974 SC 87 (11) D 1987 SC1802 (29) RF
1991 SC 818 (37)
Mining Lease-Grant by the State
Government-Cancellation in review by the Central Government-Such cancellation
if a quasi-judicial act-Mineral Concession Rules, 1949. rr. 52,54.
Rule 54 of the Mineral Concession Rules,
1949, provided as follows:
" Review. Upon receipt of such
application, the Central Government may, if it thinks fit, call for the
relevant records and other information from the Provincial Government, and
after considering any explanation that may be offered by the Provincial
Government, cancel the order of the Provincial Government or revise it in such
manner as the Central Government may deem just and proper.
The appellant was granted mining leases in
respect of five areas and possession was delivered to him. On an application
for review made by one of the respondents under r. 52 of the Rules, the Central
Government, without giving the appellant an opportunity of being heard,
cancelled the leases with regard to two of the areas and directed the State
Government to grant leases in respect thereof to the said respondent. The
appellant applied to the High Court under Art. 226 of the Constitution for
quashing the said order. The Single judge who heard the application as well as
the Division Bench on appeal held that the order of cancellation was an
administrative order and the appellant was not entitled to a hearing. It was
contended on behalf of the appellant in this Court that rr. 52-55 of the Rules
showed that the proceeding before the Central Government was a quasi-judicial
proceeding and, consequently, the rules of natural justice must apply.
Held, that the contention must prevail and
the order of cancellation be quashed.
In exercising its power of review under r. 54
of the Mineral Concessions Rules, 1949, the Central Government acted judicially
and not administratively.
Assuming that the act of the State Government
in granting a mining lease was an administrative act, it was not correct to say
that no right of any kind passed to the lessee there under until the review was
decided by the Central Government where a review had been applied for. Rule 52,
therefore, by giving the aggrieved party the right to a review created a lis
between him and the lessee and, consequently, in the absence of anything to the
contrary either in r. 54 or the statute itself, there could be no 99 776 doubt
that the Central Government was acting quasi- judicially under r. 54.
Province of Bombay v. Kushaldas S. Advani.
 S.C.R.621, applied.
R. v. Electricity Commissioner. (1924) I. K.
B. 171, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 428 of 1959.
Appeal from the judgment and order dated
February 25, 1959, of the Punjab High Court (Circuit Bench) at Delhi in Letters
Patent Appeal No. 47-D of 1955, arising out of the judgment and order dated
November 28, 1955 of the said High Court in Writ Petition No. 306-D of 1954.
N. C. Chatterjee, J. B. Dadachanji, S. N.
Andley, Rameshwar Nath and P. L. Vohra, for the appellant.
C. K. Daphtary. Solicitor-General of India,
R. Gapapathy Iyer, R. H. Dhebar and T. M. Sen, for respondents Nos. 1 & 2.
G. S. Pathak, S. S. Shukla and Mrs. E.
Udayaratnam, for respondent No. 3.
1960. January 19. The Judgment of the Court
was delivered by WANCHOO J.-This appeal upon a certificate granted by the
Punjab High Court raises the question whether an order of the Central
Government under r. 54 of the Mineral Concession Rules, 1949, (hereinafter
called the Rules) framed under s.
6 of the Mines and Minerals (Regulation and
Development) Act, No. 53 of 1941, (hereinafter called the Act) is quasi-
judicial or administrative. The brief facts necessary for this purpose are
these. The appellant was granted a mining lease by the then Ruler of Gangpur
State on December 30, 1947, shortly before the merger of that State with the
State of Orissa on January 1, 1948. This lease was annulled on June 29, 1949.
Thereafter the appellant was granted certificates of approval in respect of
prospecting licences and mining leases. Eventually, the appellant applied on
December 19, 1949, for mining leases for manganese in respect of five areas in
the district of Sundergarh (Orissa). He was asked on July 4, 1950, to submit a
separate 777 application for each area which he did on July 27, 1950.
Some defects were pointed out in these
applications and therefore the appellant submitted fresh applications on
September 6, 1950, after removing the defects. In the meantime, the third
respondent also made applications for mining leases for manganese for the same
area on July 10, 1950. These applications were not accompanied by the deposit
required under r. 29 of the Rules. Consequently, the third respondent was asked
on July 24, 1950, to deposit a sum of Rs. 500, which it did on August 3, 1950.
It was then found that the third respondent's applications were defective. It
was therefore asked on September 5, 1950, to send a separate application in the
prescribed form for each block and thereupon it submitted fresh applications on
September 6, 1950. Eventually, on December 22, 1952, the State of Orissa
granted the mining leases of the five areas to the appellant taking into
account r. 32 of the Rules, which prescribed priority. It was held that the
appellant's applications were prior and therefore the leases were granted to
him. Thereafter on April 21, 1953, possession of the areas leased was delivered
to the appellant. It seems, however, that the third respondent had applied for
review to the Central Government under r. 52 of the Rules. This review
application was allowed by the Central Government on January 28, 1954, and the
Government of Orissa was directed to grant a mining lease to the third
respondent with respect to two out of the five areas.
The appellant's complaint is that he came to
know in February, 1954, that the third respondent had applied to the Central
Government under r. 52 for review. He thereupon addressed a letter to the
Central Government praying that he might be given a hearing before any order
was passed on the review application. He was, however, informed on July 5,
1955, by the Government of Orissa of the order passed by the Central Government
on January 28, 1954, by which the lease granted to him by the State of Orissa
with respect to two areas was cancelled. Consequently, he made an application under
Art. 226 of the 778 Constitution to the Punjab High Court praying for quashing
the order of January 28, 1954, on the ground that it was a quasi-judicial order
and the rules of natural justice had not been followed inasmuch as he had not
been given a hearing before the review application was allowed by the Central
Government, thus affecting his rights to the -lease granted by the State of
Orissa. The writ petition was heard by a learned Single Judge of the High Court
and it was held that the order was not a quasi-judicial order but merely an
administrative one and that there being no lis, the appellant was not entitled
to a hearing. In the result, the writ petition failed. The appellant went up in
Letters Patent Appeal to a Division Bench of the High Court, which upheld the
order of the learned Single Judge. The appellant then applied for a certificate
to permit him to appeal to this Court which was granted; and that is how the
matter has come up before us.
Shri N. C. Chatterji appearing on behalf of
the appellant contends that the Central Government was acting in a quasi-
judicial capacity when it passed the order under r. 54 of the Rules and
therefore it was incumbent upon it to hear the appellant before deciding the
review application, and inasmuch as it did not do so it contravened the
principles of natural justice which apply in such a case and the order is
liable to be quashed. In support of this, learned counsel relies on Nagendra
Nath Bora and another v. The Commissioner of Hills Division and Appeals, Assam
and others (1), and submits that rr. 52 to 55 of the Rules which are relevant
for the purpose clearly show that the proceeding before the Central Government
is a quasi-judicial proceeding in view of the following circumstances appearing
from these rules: (1) Rule 52 gives a statutory right to any person aggrieved
by an order of the State Government to apply for review in case of refusal of a
mining lease; (2) It also prescribes a period of limitation, namely, two
months; (3) Rule 53 prescribes a fee for an application under r. 52.
These circumstances taken with the
circumstance that a lis is (1)  S.C.R. 1240.
779 created as soon as a person aggrieved by
an order is given the right to go up in review against another person in whose
favour the order has been passed by the State Government show that the
proceeding before the Central Government at any rate at the stage Of review is
quasi-judicial to which rules of natural justice apply.
Mr. G. S. Pathak appearing for the third
respondent on the other hand contends that the view taken by the High Court is
correct and that the order of January 28, 1954, is a mere administrative order
and therefore it was not necessary for the Central Government to hear either
party before passing that order. He points out that the minerals, for mining
which the lease is granted under the Rules, are the property of the State. No
person applying for a mining lease of such minerals has any right to the grant
of the lease. According to him, the right will only arise after the lease has
been granted by the State Government and the review application, if any, has
been decided by the Central Government. He submits that even under r. 32, which
deals with priority the State Government is not bound to grant the lease to the
person who applies first and it can for any special reason and with the prior
approval of the Central Government grant it to a person who applies later. His
contention further is that as at the earlier stage when the grant is made by
the State Government the order granting the lease is a mere administrative
order-as it must be in these circumstances (he asserts)-, the order passed on
review by the Central Government must also partake of the same nature.
In order to decide between these rival
contentions it is useful to refer to rules 52 to 55 which fall for
consideration in this case. These are the rules as they existed up to 1953.
Since then we are told there have been amendments and even the Act has been
replaced by the Mines and Minerals (Regulation and Development) Act, 1957. We
are, however, not concerned with the Rules as modified after January 1954 or
with the Act of 1957. Rule 52 inter alia provides that -any person aggrieved by
an order of the 780 State Government refusing to grant a mining lease may
within two months of the date of such order apply to the Central Government for
reviewing the same. Rule 53 prescribes a fee. Rule 54 may be quoted in extenso,
" Upon receipt of such application, the Central Government may, if it
thinks fit, call for the relevant records and other information from the State
Government and after considering any explanation that may be offered by the
State Government, cancel the order of the State Government or revise it in such
manner as the Central Government may deem just and proper. " Rule 55 then
says that the order of the Central Government under r. 54, and subject only to
such order, any order of the State Government under these rules shall be final.
This Court had occasion to consider the
nature of the two kinds of acts, namely, judicial which includes quasi-
judicial and administrative, a number of times. In Province of Bombay v.
Kushaldas S. Advani (1), it adopted the celebrated definition of a
quasi-judicial body given by Atkin L. J. in R. v. Electricity Commissioners
(2), which is as follows:- " Whenever any body of persons having legal
authority to determine questions affecting rights of subjects, and having the
duty to act judicially act in excess of their legal authority they are subject
to the controlling jurisdiction of the King's Bench Division exercised in these
writs. " This definition insists on three requisites each of which must be
fulfilled in order that the act of the body may be a quasi-judicial act,
namely, that the body of persons (1) must have legal authority, (2) to
determine questions affecting the rights of subjects, and (3) must have the
duty to act judicially. After analysing the various cases, Das J. (as he then
was) laid down the following principles as deducible there from in Kushaldas S.
Advani's case (1)at p. 725 :- " (i) That, if a statute empowers an
authority, not being a Court in the ordinary sense, to decide (1)  S.C.R.
(2)  1 K.B. 171.
781 disputes arising out of a claim made by
any party under the statute which claim is opposed by another party and to
determine' the respective rights of the contesting parties who are opposed to
each other, there is a lis and prima facie and in the absence of anything in
the statute to the contrary it is the duty of the authority to act judicially
and the decision of the authority is a quasi-judicial act;
and (ii) that if a statutory authority has
power to do any act which will prejudicially affect the subject, then, although
there are not two parties apart from the authority and the contest is between
the authority proposing to do the act and the subject opposing it, the final
determination of the authority will yet be a quasi-judicial act provided the
authority is required by the statute to act judicially. " It is on these
principles which are now well-settled that we have to see whether the Central
Government when acting under r. 54 is acting in a quasi-judicial capacity or
It is not necessary for present purposes to
decide -whether State Government when it grants a lease is acting merely
administratively. We shall assume that the order of the State Government
granting a lease under the Rules is an administrative order. We have, however,
to see what the position is after the State Government has granted a lease to
one of the applicants before it and has refused the lease to others.
Mr. Pathak contends that even in such a
situation there is no right in favour of the person to whom the lease has been
granted by the State Government till the Central Government has passed an order
on a review application if any. Rule 55, however, makes clear that the order of
the State Government is final subject to any order by the Central Government
under r. 54. Now when a lease is granted by the State Government, it is quite
possible that there may be no application for review by those whose
applications have been refused. In such a case the order of the State
Government would be final. It would not therefore be in our opinion right to
say that no right of any kind is created in favour of a person to whom the
lease is 782 granted by the State Government. The matter would be different if
the order of the State Government were not to be effective until confirmation
by the Central Government; for in that case no right would arise until the
confirmation was received from the Central Government. But r. 54 does not
provide for confirmation by the Central Government. It gives power to the
Central Government to act only when there is an application for review before
it under r. 54. That is why we have not accepted Mr. Pathak's argument that in
substance the State Government's order becomes effective only after it is
confirmed; r. 54 does not support this. We have not found any provision in the
Rules or in the Act which gives any power to the Central Government to review
suo motu the order of the State Government granting a lease. That some kind of
right is created on the passing of an order granting a lease is clear from the
facts of this case also. The order granting the lease was made in December
1952. In April 1953 the appellant was put in possession of the areas granted to
him and actually worked them thereafter. At any rate, when the statutory rule
grants a right to any party aggrieved to make a review application to the
Central Government it certainly follows that the person in whose favour the
order is made has also a right to represent his case before the authority to
whom the review application is made. It is in the circumstances apparent that
as soon as r. 52 gives a right to an aggrieved party to apply for review a lis
is created between him and the party in whose favour the grant has been made.
Unless therefore there is anything in the statute to the contrary it will be
the duty of the authority to act judicially and its decision would be a
The next question is whether there is
anything in the Rules which negatives the duty to act judicially by the
reviewing authority. Mr. Pathak urges that r. 54 gives full power to the
Central Government to act as it may deem I just and proper' and that it is not
bound even to call for the relevant records and other information from,, the
State Government before deciding an application for review. That is undoubtedly
783 so. But that in our opinion does not show that the statutory Rules negative
the duty to act judicially. What the Rules require is that the Central
Government should act justly and properly; and that is what an authority which
is required to act judicially must do. The fact that the Central Government is
not bound even to call for records again does not negative the duty cast upon
it to act judicially, for even courts have the power to dismiss appeals without
calling for records. Thus r. 54, lays down nothing to the contrary. We are
therefore of opinion that there is prima facie a lis in this case as between
the person to whom the lease has been granted and the person who is aggrieved by
the refusal and therefore Prima facie it is the duty of the authority which has
to review the matter to act judicially and there is nothing in r. 54 to the
contrary. It must therefore be held that on the Rules and the Act, as they
stood at the relevant time, the Central Government was acting in a
quasi-judicial capacity while deciding an application under r. 54. As such it
was incumbent upon it before coming to a decision to give a reasonable
opportunity to the appellant, who was the other party in the review application
whose rights were being affected, to represent his case. In as much as this was
not done, the appellant is entitled to ask us to issue a writ in the nature of
certiorari quashing the order of January 28,1954, passed by the Central
We therefore allow the appeal and setting
aside the order of the High Court quash the order of the Central Government
passed on January 28, 1954. It will, however, be open to the Central Government
to proceed to decide the review application afresh after giving a reasonable
opportunity to the appellant to represent his case. The appellant will get his
costs throughout from the third respondent, who is the principal contesting