Industrial
Development Corporation of Orissa Ltd. Vs. Union
of India & Ors [1996] INSC 839 (23 July 1996)
Cji,
B.L. Hansaria Ahmadi, Cji
ACT:
HEAD NOTE:
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 & 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 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 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 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 involved 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 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 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 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 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 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 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
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 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, 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 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.
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 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
grievance does not survive. Hence IDCOL's appeals must also fail. Cost, cost in
the cause.
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