M/S. Pallava
Granite Industries (India) Pvt. Ltd. Vs. Union of India & Ors [2006] Insc 759 (7 November 2006)
Arijit
Pasayat & S. H. Kapadia
(Arising
out of S. L.P.(C) No.15690-15695 of 2004) WITH
[C.A. Nos 4703 /2006@ SLP (C) Nos.16109-16113/2004, C.A. Nos. 4704 /2006@ SLP
(C) Nos.18842-18844/2004, C.A. No. 4705 /2006@ SLP (C) No.20281 of 2004, C.A.
No. 4707 /2006@ SLP (C) No.9670 of 2005, C.A. Nos. 4706 /2006@ SLP (C)
Nos.21905-21908/2004, C.A. Nos. 4708 /2006@ SLP (C) Nos.20230-20232/2005, C.A.
Nos. 4709 /2006@ SLP (C) Nos.20225-20228/2005, and Contempt Petition (c)
No.157/2006 in SLP (c) No.20225-20228/2005] KAPADIA, J.
Leave
granted in Special Leave Petitions.
In
this batch of civil appeals by grant of special leave to appeal two questions
arise for determination, namely, whether the G.O.No.1290 dated 27.8.91
constitutes a decision to grant or whether it constitutes a grant of mining
lease per se and secondly whether the decision to revoke the said G.O. was
actuated by mala fides in order to deprive the appellants of their mining
rights.
For
the sake of clarity we reproduce herein the facts in the case concerning M/s.
Rita Industrial Corporation Ltd. __ Appellant in C.A. Nos. of 2006 @ S.L.P. (C)
Nos.20225-28 of 2005, they are as follows:
An
area admeasuring Acs. 86.50 in Survey no.55/5 of Village Rajupalem-Lakshmipuram,
Cheemakurthy Mandal, Prakasam District, Andhra Pradesh, being agricultural
lands vested as surplus lands under Section 11 of the Andhra Pradesh Land
Reforms (Ceiling on Agricultural Holdings) Act, 1973 (for short, "the 1973
Act") in the State Government. These lands were surrendered by the land
holders under the said 1973 Act to the State Government. Later on, it was realised
that these lands had galaxy granites and, therefore, proposals were made by the
Collector, District Prakasam, the Commissioner of Land Reforms and the Director
of Mines and Geology to lease out the said area for mining purposes. By
G.O.No.1290 dated 27.8.91, the State Government accepted the above proposals
and decided to appropriate by leasing out the lands for mining under Section 14
(6) of the 1973 Act; that out of the total area of the surrendered lands
admeasuring Acs. 86.50, an area admeasuring Acs. 60 be leased out to the four
appellants, namely, M/s. Rita Industrial Corporation Ltd., M/s. Upendra
Granites, M/s. Acropolis Granites Ltd. and M/s. Pallava Granite Industries Ltd.
and that each of the appellant was to be given Ac.15 for mining purposes. Under
the said G.O.No.1290, the State Government stated that Acs. 15 each be leased
out to the above four firms on the terms and conditions in G.O.No.876 dated
3.6.89 subject to the modification that the lease shall be for 10 years and the
lessees shall pay Rs.600/- per acre, per annum for the first five years and Rs.900/-
per acre, per annum for the remaining five years. By the said G.O. the
Collector, District Prakasam, was requested to take further action by making
proper allotment of land keeping in view the principle of contiguity.
The
said G.O.No.1290 was challenged in a PIL.
When
the notice of the PIL was received by the State Government, G.O.No.1361 dated
11.9.91 came to be issued by which the earlier G.O.No.1290, stood cancelled.
This cancellation was challenged by M/s. Rita Industrial Corporation Ltd. vide
Writ Petition No.12386 of 1991 in the High Court.
By
judgment and order dated 18.10.96, the learned Single Judge of the High Court
held that the cancellation of G.O.No.1290 was ab initio void for want of
hearing and reasons in support of the cancellation. By the said judgment of the
learned Single Judge, the District Collector was directed to execute the
surface lease in favour of M/s. Rita Industrial Corporation Ltd. in terms of
G.O.No.1290. By the said judgment the Director of Mines and Geology was also asked
to dispose of the application made by M/s. Rita Industrial Corporation Ltd. for
mining lease in accordance with law.
Being
aggrieved by the judgment, the State Government preferred Writ Appeal No.672 of
1997.
Pending
the said writ appeal, the Collector, District Prakasam, wrote to the Director
of Mines and Geology stating that in view of the judgment dated 18.10.96 he had
no objection to the grant of mining lease to the extent of Acs.15 in terms of
G.O.No.1290. Similarly, by letter dated 18.2.97 addressed by Deputy Director of
Mines and Geology to Director of Mines and Geology, a request was made to
consider the mining lease application filed by M/s. Rita Industrial Corporation
Ltd. in terms of the judgment of the learned single judge dated 18.10.96. In
the said letter, the Dy. Director has stated that since the Collector, District
Prakasam, had allotted the land lease to M/s. Rita Industrial Corporation Ltd.
there could be no objection to grant quarry lease over an extent of Acs.15 in
Survey no.55/5.
Along
with the said letter dated 18.2.97 an inspection report was enclosed. This
inspection report was prepared by Dy. Director of Mines and Geology. In the
said inspection report it was stated that in terms of the judgment of the
learned Single Judge dated 18.10.96 the Collector had handed over the lands to
M/s. Rita Industrial Corporation Ltd.; that the Collector had agreed to grant
the land lease and, therefore, till the judgment dated 18.10.96 remains in
force, M/s. Rita Industrial Corporation Ltd. had a right to obtain a mining
lease.
Accordingly,
the Dy. Director requested the Director of Mines and Geology to take a decision
on the quarry application of M/s. Rita Industrial Corporation Ltd. at the
earliest. A survey report was also annexed with the letter dated 18.2.97 in
which it was recited that the Dist.
Collector
had given N.O.C. for the grant of quarry lease and, therefore, the application
made by M/s. Rita Industrial Corporation Ltd. for grant of quarry lease may be
disposed at the earliest.
By
judgment and order dated 27.6.97, the Division Bench disposed of the
above-mentioned Writ Appeal No.672 of 1997 stating that there was no infirmity
in the judgment of the learned Single Judge dated 18.10.96; that, there was
violation of the rules of natural justice inasmuch as the decision to cancel
G.O.No.1290 was taken without hearing and without giving reasons and was
therefore void and accordingly the writ appeal was dismissed. However, it was
made clear by the Division Bench that its judgment and order dated 27.6.97 will
not prevent the Government from taking steps to cancel G.O.1290, if such right
exists in the Government, in accordance with law.
Accordingly,
a show cause notice was issued by the State Government on 21.2.98 to the
appellants. That show cause notice was challenged vide Writ Petition No.6098 of
1998. Pending the said writ petition, the State Government issued G.O.Nos.267
and 268 on 27/29.9.97 under Rule 9-A(1) of the Andhra Pradesh Minor Mineral
Concession Rules, 1966 (for short, "the 1966 Rules"). Under the said G.Os.
the State Government, after examination of the report of the Director of Mines
and Geology, ordered that an area admeasuring Acs.61.50 in Survey no.55/5 shall
be reserved for exploitation by Andhra Pradesh Mineral Development Corporation
Limited which is a State-owned Corporation (for short, "APMDC"), in
public interest.
These
G.O.Nos.267 and 268, however, were issued without prior approval of the Central
Government under Section 17A(2) of the Mines and Minerals (Regulation and
Development) Act, 1957 (for short, "the 1957 Act"). These G.O.Nos.267
and 268 were challenged by filing writ petitions mainly on the ground that they
were invalid as prior approval of the Central Government was not obtained.
These writ petitions were filed in October 1997. On 24.10.97 pending the writ
petitions the State Government sought approval of the Central Government
stating that APMDC is a State-owned company, set up to acquire mining rights
from the Government; that the Corporation is a profit making organisation; that
the Corporation is equipped with expertise and machinery to undertake mining in
a scientific manner; that the State Government had identified Acs.61.50 in
Survey no.55/5 for exploitation of galaxy granite and accordingly the Central
Government was asked to grant its approval under Section 17A(2) of the 1957
Act. By letter dated 23.7.99, the Central Government enquired from the State
Government whether there existed any order of injunction from the competent
court in the pending writ petitions. Ultimately, the Central Government vide
letter dated 29.10.99 gave its approval for reservation of Acs.61.50 of granite
bearing area in Survey no.55/5 out of the total area of Acs.86.50 subject to
two conditions, namely, that the reservation shall not be applicable to areas
held under mining or quarry lease; and secondly, that the approval granted
shall be subject to the outcome of pending court cases.
In
terms of the said approval the State Government on 14.2.2002 issued G.O.No.72
(later on published in the Official Gazette of A.P. as Notification No.88 dated
26.2.97). By the said G.O.No.72 an area admeasuring Acs.61.50 was declared as
granite bearing area. In the said G.O.No.72 there is a reference to the
approval granted by the Government of India. The said G.O. further stated that
it was issued without prejudice to G.O.Nos.267 and 268 dated 27/29.9.97.
The
above G.O.No.72 dated 14.2.97 became the subject-matter of the second round of
litigation which has given rise to these civil appeals.
In the
second round of litigation appellants sought the declaration that G.O.Nos.267
and 268 were illegal and void; that the show cause notice dated 21.2.98 issued
by the State Government should be quashed; that the grant of approval dated
29.10.99 by the Central Government was illegal, void and unenforceable; and
lastly that the cancellation and revocation of mining lease applications, was
arbitrary and bad in law.
By
judgment and order dated 28.3.2002, the learned Single Judge set aside
G.O.Nos.267 and 268 on the ground that prior approval of the Central Government
was not obtained. Accordingly, the show cause notice dated 21.2.98 was also set
aside. The Court further held that the State Government did not disclose to the
Central Government the fact that the appellants were holding leases which were
the subject-matter of the pending writ petitions in the High Court and
consequently the State Government had violated the above two conditions imposed
by the Central Government in its approval dated 29.10.99. Consequently, the
learned Single Judge held that the orders cancelling the land leases and the
decision to reject the applications for grant of mining leases, was illegal and
accordingly set aside the decision of the State Government rejecting the
applications made for grant of mining leases. By the said decision the State
Government was directed to consider the mining lease applications afresh and
dispose of the same in accordance with law.
Being
aggrieved by the decision of the learned Single Judge, the State Government
went in writ appeal to the Division Bench. By impugned judgment dated
24.3.2004, the Division Bench after reciting the above facts and after taking
into account the arguments advanced before it held that it was totally
unnecessary to examine the validity of G.O.Nos.267 and 268 respectively since
vide subsequent decision dated 29.10.99 the Central Government had granted
approval for reserving an area admeasuring Acs.61.50 as granite bearing area.
Since
the Central Government had granted approval the subsequent G.O.No.72 dated
14.2.2002 cannot be faulted. By the aforestated judgment the Division Bench
took the view that G.O.No.72 dated 14.2.2002 was issued after obtaining prior
approval from the Central Government and, therefore, the said G.O. did not
suffer from any legal or constitutional infirmities. The Division Bench further
held that the decision to cancel G.O.No.1290 was valid; that the reservation of
an area admeasuring Acs.61.50 was in public interest and that there were no mala
fides in cancelling G.O.No.1290 as alleged by the appellants.
Aggrieved
by impugned judgment dated 24.3.2004 allowing the writ appeals filed by the
State Government, the appellants have come to this Court by way of special
leave to appeal.
Before
coming to the arguments advanced before us, we are required to summarise the
relevant provisions concerning the 1973 Act, the 1966 Rules and the 1957 Act
read with the Mineral Concession Rules, 1960.
The
1973 Act is an Act to consolidate and amend the law relating to the fixation of
ceiling on agricultural holding and taking over of surplus lands and to provide
for the matters connected therewith. The said Act provides for the imposition
of a ceiling on agricultural holdings ranging from Acs.27 to Acs.324 depending
upon the class of land. Under Section 14(1) of the said Act the surplus lands
vested in the Government are to be allotted for use as house-sites for
agricultural labourers and village artisans or transferred to the weaker
sections of the society depending on agriculture. The main purpose of the Act
is to distribute agricultural land among the landless and other persons to subserve
the common good and to limit the extent of land to be held by a person.
Section
14 of the said Act deals with disposal of land vested in the Government.
Section 14 (6) begins with a non-obstante clause. It enables the Government to
lease out any land vested in it for such purposes and on terms and conditions
as may be specified. It also enables the Government to reserve such land for
any common use or benefit of the community.
In the
Seventh Schedule to the Constitution, in the Union List, Entry 54 provides for
regulation of mines and minerals to the extent to which such a regulation under
the control of the Union is declared by Parliament, by law,
to be expedient in public interest. Accordingly, the 1957 Act provides for the
development and regulation of mines under the control of the Union. Under Section 3(c) "mining lease" is
defined to mean a lease granted for the purpose of undertaking mining
operations, and includes a sub-lease granted for such purpose. Section 5 deals
with restrictions on the grant of prospecting licences or mining leases. Under
Section 5(1) it is, inter alia, provided that a State Government shall not
grant a mining lease unless such a person is an Indian national or a company as
defined under Section 3(1) of the Companies Act, 1956 and satisfies such
conditions as may be prescribed. There is a proviso to Section 5(1).
This
proviso lays down that no mining lease, in respect of any mineral specified in
the First Schedule, shall be granted without the prior approval of the Central
Government. Under Section 5(2) no mining lease is to be granted by the State
Government unless it is satisfied that an area, for which the lease is sought,
has been prospected earlier and that there is a mining plan duly approved by
the Central Government. Section 8 deals with periods for which mining leases
may be granted.
Section
13 concerns power of Central Government to make rules in respect of minerals.
Section 15 concerns power of State Governments to make rules in respect of
minor minerals. In exercise of the powers, conferred by Section 15(1) of the
1957 Act, the State Government has framed the 1966 Rules. Rule 8 concerns the form
in which the lease deed shall be executed. This is because under Rule 5 of the
1966 Rules, no person can undertake quarrying of any mineral except in
accordance with a quarry lease or a permit. The mining lease has to be executed
in Form 'G'. Rule 9-A of the 1966 Rules reads as under:
"9-A.
Reservation of areas for exploitation in the public sector, etc.: -
(1)
The State Government may, by notification in the Official Gazette, reserve any
area for exploitation by the Government, a Corporation established by any
Central, State or Provincial Act or a Government Company within the meaning of
Section 617 of the Companies Act, 1956 (Central Act 1 of 1956).
(2)
Availability of area for regrant to be notified:- No area which has been
reserved by the Government under Rule 9-A (1) shall be available for grant of
quarry lease unless the availability of the area for grant is notified in the
Official Gazette specifying a date (being a date not earlier than thirty days
from the date of the publication of such notification in the Official Gazette)
from which such area shall be available for grant.
(3)
Premature applications:- Applications for the grant of a quarry lease in
respect of areas whose availability for grant is required to be notified under
Rule 9-A (2) shall if, -
(a) no
notification has been issued under that rule; or
(b)
Where any such notification has been issued, the period specified in
notification has not expired, shall be deemed to be premature and shall not be
entertained; and the application fee thereon, if any paid, shall be refunded
(Added in G.O. Ms.No.310, Ind. & Com., dt. 11.7.84)" Section 17A of
the 1957 Act concerns reservation of area for purposes of conservation. Under
Section 17A(1) the Central Government, with a view to conserving any mineral
and after consultation with the State Government, may reserve any area not
covered by a mining lease by issuing a notification in the Official Gazette.
The said notification will specify the boundaries of the reserved area. Under
Section 17A(1A) the Central Government may in consultation with the State
Government reserve any area not covered by a mining lease for undertaking
mining operations through a Government company or corporation, owned or
controlled by it. Under Section 17A(2) the State Government may, with the
approval of the Central Government, reserve any area not covered by any
existing mining lease for undertaking mining operations through a Government
company or corporation and where it proposes to do so it shall, by notification
in the Official Gazette, specify the boundaries of such area and the mineral in
respect of which such area will be reserved.
In
this case, we are concerned with Section 17A(2) of the 1957 Act. In exercise of
the powers conferred by Section 13 of the 1957 Act, the Central Government has
enacted the 1960 Rules. The said Rules require making of an application for the
grant of mining lease in respect of the land in which the minerals vest in the
Government of State.
Mr.
P.P. Rao, learned senior counsel appearing on behalf of M/s. Rita Industrial
Corporation Ltd.-Appellant, submitted that G.O.No.1290 dated 27.8.91 conferred
on the appellant the right to get a lease of Acs.15 in Survey no.55/5 for
mining purpose. In this connection, the learned counsel urged that the State
Government being the competent authority for granting surface rights over the
land and also for granting mining lease under Section 5(1) of the 1957 Act
after sanctioning the lease in favour of the appellant, had directed the
District Collector to implement G.O.No.1290. Further, learned counsel urged
that in the earlier round of litigation, the learned Single Judge vide judgment
dated 18.10.96 had directed the District Collector in Writ Petition No.12386 of
1991 to enter into surface lease with the appellant in respect of the land
admeasuring Acs.15 in Survey no.55/5; that, by the said judgment the Director
of Mines and Geology was also directed to consider the appellant's application
for grant of mining lease in accordance with law and accordingly by reason of
the said judgment dated 18.10.96 an important right stood conferred on the
appellant to obtain the land lease from the District Collector and a further
right to get the application for grant of mining lease disposed of by the
Director of Mines and Geology. This judgment dated 18.10.96, according to
learned counsel, got affirmed by the Division Bench holding that there was no
illegality in the judgment dated 18.10.96 and consequently it was urged that
the State Government was bound to implement the directions contained in the
judgment dated 18.10.96. Learned counsel submitted that it was not open to the
State Government to evade the implementation of the judgment of the High Court
dated 18.10.96 by taking recourse to cancellation of G.O.No.1290 or by taking
recourse to the reservation of the area in favour of APMDC. It was further
submitted that rights became crystallized in favour of the appellants by reason
of the said judgment dated 18.10.96 affirmed by the Division Bench, which
rights cannot be obliterated by cancellation of G.O.No.1290 or by reservation
in favour of APMDC.
The
learned counsel for the appellant further submitted that G.O.Nos.267 and 268
were illegal and void ab initio for want of previous approval granted by the
Central Government. In this connection, reliance was placed on the provisions
of Section 17A(2) of the 1957 Act. In this connection, learned counsel urged
that the said G.O.Nos.267 and 268 purported to reserve granite bearing area for
exploitation by APMDC which required prior approval of the Central Government
and since such approval was not obtained the said G.Os. were rightly set aside
in the second round of litigation by the learned Single Judge vide judgment
dated 28.3.2002.
The
learned counsel for the appellant next contended that the approval granted by
the Central Government on 29.10.99 was not in accordance with law for the
following reasons:
(a)
While granting approval, the Central Government referred to letter dated
24.10.97, letter dated 13.2.98, letter dated 5.11.98 and letter dated 23.12.98
received from the State Government; that, the Central Government failed to take
notice that in the last communication dated 23.12.98, the State Government had
placed a new proposal for reservation of the entire granite bearing areas
exceeding Acs.61.50 in favour of APMDC.
(b)
That, this last proposal was made in substitution for reservation of Acs.61.50
only.
According
to the learned counsel, the Central Government in its approval dated 29.10.99
did not refer to the contents of the last proposal dated 23.12.98 which shows
that the Central Government gave its approval only to the proposal dated
24.10.97 for reserving Acs.61.50 and which, according to the learned counsel,
shows non-application of mind on the part of the Central Government.
(c)
That, the grant of approval by the Central Government dated 29.10.99 stood
vitiated by non-application mind since the State Government had superceded its
earlier communication dated 24.10.97 by a subsequent proposal dated 23.12.98.
In the
circumstances, it was urged that the approval granted on 29.10.99 was liable to
be set aside.
It was
further submitted that the scheme under Section 17A of the 1957 Act is not to
disturb the existing rights which stood crystallized in favour of the appellants
vide G.O.No.1290; that, the grant of mining lease, cannot be set at knot by the
State Government by cancellation of the said G.O.No.1290 or by reserving the
area allotted to the appellants for exploitation by APMDC. On behalf of the
appellants it was urged that the entire exercise undertaken by the State
Government was to defeat the rights of the appellants which has crystallized by
reason of the judgment dated 18.10.96. Accordingly, it was submitted that the
decision to reserve the said area admeasuring Acs.61.50 as granite bearing area
stood vitiated by mala fides. According to the learned counsel, the entire
exercise constituted colourable exercise of power under Section 17A(2) of the
Act. In this connection, it was further urged that the said section did not
contemplate conditional approval. In this connection, it was pointed out that
in the approval granted by the Central Government dated 29.10.99 two conditions
were stipulated, namely, that the reservation shall not apply to areas covered
by existing mining leases/quarry leases and that the approval was subject to
the outcome of pending court cases. The learned counsel submitted that such
conditional approvals run counter to Section 17A(2) and, therefore, the
approval granted by the Central Government dated 29.10.99 was bad in law. It
was urged that such conditional approvals do not permit mining operations to be
carried out by the Government Corporation till the pending cases are decided
and if the granite is exploited during the pendency of the cases it would have
the effect of defeating the claims for mining leases in respect of that very
area for which litigation is pending and which would amount to interference in
the exercise of judicial power.
Moreover,
while seeking approval of the Central Government, the State Government had not
brought to the notice of the Central Government that, in fact, leases were
already granted to the appellants, that the appellants were in possession of
the land; that the writ petitions were pending in the High Court and that if
all these particulars were to be submitted to the Central Government, it would
not have granted the approval.
According
to the learned counsel, the approval dated 29.10.99 came to be issued on
account of non-disclosure of material facts by the State Government and,
therefore, it ought to have been set aside by the Division Bench.
On the
above grounds, appellants have also challenged G.O.No.72 dated 14.2.2002 which
is based on the approval granted by the Central Government on 29.10.99. In this
connection, it was urged that the said G.O.No.72 was not valid as it did not
stipulate the conditions subject to which the Central Government gave its
approval on 29.10.99 and that, by the time the said G.O. came to be issued the
State Government had withdrawn its proposal dated 23.12.98 except in respect of
Acs.61.50 to which there was no response from the Central Government.
Lastly,
it was urged on behalf of the appellants that during the pendency of the civil
appeals, the State Government by a Memo dated 14.3.2006 permitted exchange of
areas between APMDC and M/s. Victorian Granite Private Limited in order to
deprive M/s. Rita Industrial Corporation Ltd. of its rights in the mining
lease; that without the approval of the Central Government under Section 17A(2)
of the 1957 Act it was not permissible to exchange the lands and therefore the
said Memo dated 14.3.2006 was unlawful and invalid in law and should be set
aside by this Court.
In
conclusion, it was urged on behalf of the appellants that the entire conduct of
the State and its officers show a colourable exercise of power to circumvent
the binding directions given by the High Court in favour of the appellants vide
judgment dated 18.10.96 and to frustrate the rights which have accrued to the
appellants on account of G.O.No.1290 which was partly implemented by the
Collector, District Prakasam, by his communications to Director of Mines and
Geology dated 10.1.97 and by giving of possession of the land to the appellants
after demarcation and survey made by the officers of the Revenue Department.
While
adopting the arguments of Shri P.P. Rao, learned counsel for M/s. Pallava
Granite Industries Ltd. submitted that reservation by the State Government
without adjudication of the show cause notice dated 21.2.1998 invalidated
G.O.No.72 dated 14.2.02 particularly when G.O.No.1290 was in the nature of
government grant. It was urged that by G.O.No.72 the vested rights cannot be
obliterated particularly when the scheme of Section 17A(2) of the 1957 Act is
not to interfere with such rights.
Mr.
Anoop G. Chaudhary, learned senior counsel appearing on behalf of State of
Andhra Pradesh, submitted that the said G.O.No.1290 dated 27.8.91 did not
create any interest or right in favour of any of the appellants. He submitted
that the said G.O. indicates that proposals were made by certain officers of
the State Government to release the lands declared as surplus under Section
14(6) of the 1973 Act in order to exploit galaxy granite by granting lease to
private parties, namely, the appellants. The learned counsel submitted that the
said G.O. was only an acceptance of the proposals made by the District
Collector, Commissioner of Land Reforms, the Director of Mines and Geology and
the requests made by the above-mentioned four applicants. Therefore, according
to the learned counsel, the said G.O.No.1290 did not amount to crystallization
of any right in favour of the appellant, as alleged. In this connection, it was
further pointed out that in this case there is no execution of surface lease;
that there is no application in the prescribed form made by any of the
appellants seeking mining lease; that the Government till date has not executed
a mining lease in Form 'G' and in the circumstances no proprietary right could
be claimed by the appellants. It was submitted further that the decision to
grant the lease vide G.O.1290 stood withdrawn by the subsequent G.O.No.1361
followed by the decision to reserve the area admeasuring Acs.61.50 for
exploitation by APMDC either by itself or through joint venture. In this
connection it was urged that the State has decided to invite global tenders for
exploitation of galaxy granite and to earn revenue and profits and, therefore,
there is no merit in the submission made on behalf of the appellants that the
conduct of the State Government was mala fide or that the exercise undertaken
by State of Andhra Pradesh was colourable exercise of power to circumvent the
judgment of the High Court dated 18.10.96.
Mr. Altaf
Ahmad, learned senior counsel, appearing on behalf of APMDC invited our
attention to the topographical picture of Acs.86.50 of land in question in
Survey no.55/5. He submitted that the Memo dated 14.3.2006 had to be issued by
the State Government allowing exchange of areas between APMDC and M/s.
Victorian Granite Private Limited in order to form a compact area of land in
which APMDC could operate and excavate the granite; that this exchange became
necessary since the land earlier leased to M/s. Victorian Granite Private
Limited on 2.4.94 admeasuring Acs.25 obstructed the formation of a compact
area. It was submitted that no prior approval for the said exchange was
required to be obtained from the Central Government under Section 17A(2) of the
1957 Act; that such approval was required if the boundaries of the reserve area
stood altered. The learned counsel urged that in the present case the
boundaries of the reserve area admeasuring Acs.61.50 remained unaltered and,
therefore, prior approval of the Central Government was not required.
The
submissions made by the learned counsel appearing on behalf of the APMDC were
adopted by Mr. R.F. Nariman, learned senior counsel appearing on behalf of M/s.
Victorian Granite Pvt. Ltd. Mr. Nariman, further pointed out that in the matter
of readjustment within the demarcated boundary, prior approval of the Central
Government was not required under Section 17A(2) of the 1957 Act. The learned
counsel further pointed out that the decision to exchange the lands was a
business decision; that the said decision was taken keeping in mind that an
area under lease dated 2.4.94 in favour of M/s. Victorian Granite Pvt. Ltd.
contained 2,60,000/- cubic meter of granite as on 14.3.2006; that M/s.
Victorian Granite Pvt. Ltd. had a valid quarry lease in its favour commencing
from 1994 till 2007; and that the exchange was undertaken in order to have
convenient mining operations in a contiguous area by shifting the lease-hold
areas of M/s. Victorian Granite Pvt. Ltd. to one end in the said Survey no.55/5
so that a compact mining area of Acs.61.50 is available to APMDC. It was
further pointed out that before taking the above decision concerning exchange
of lands two reports of the high- level committees have examined the viability
of the said exchange and, therefore, it cannot be said that Memo dated
14.3.2006 concerning exchange of lands was actuated by mala fides or
arbitrariness. According to the learned counsel the exchange was in the
interest of APMDC.
Mr. Vikas
Singh, learned Additional Solicitor General of Union of India, submitted that Memo dated
14.3.2006 is the subsequent development. According to the learned counsel, in
view of Section 17A(2) of the 1957 Act, the State Government should have taken
prior approval before issuing the said Memo dated 14.3.2006.
The
learned counsel submitted that this aspect is under consideration by the
Central Government and it will take action in accordance with law in near
future.
The
short question which needs to be answered is:
whether
on the facts and circumstances of this case the said G.O.No.1290, being a
decision to grant a mining lease constituted a fetter on the executive powers
of the State Government to recall its decision in public interest.
At the
outset, we are of the view that G.O.No.1290 is not in the nature of the grant
as alleged. In this connection we may recapitulate that the 1973 Act stood
enacted to consolidate and amend the law relating to the fixation of ceiling on
agricultural holdings and taking over the surplus lands. The land in question
fell in the category of surplus lands. These surplus lands in Survey no.55/5
stood vested in the Government under the 1973 Act. These surplus lands were
frozen under Prohibitory Order Book (POB). Subsequently it was detected that
these lands contained galaxy granite. It was an important asset for the
government. This aspect needed exploitation. Therefore, a proposal was made by
the various authorities referred to above to release these lands from POB and
to allow these lands to be exploited by private parties so that the State could
earn revenue.
Under
the said 1973 Act these lands were meant for the benefit of the weaker
sections. Therefore, they were kept under POB. However, in order to earn larger
revenues the Government accepted the proposal to exploit the above-mentioned
granite. This is done through G.O.No.1290. This was the primary purpose of the
said G.O. Conferment of rights on the appellants was not the main purpose of
the said G.O. In fact, as stated above, the said G.O.No.1290 was issued on
27.8.91 and within one month it was withdrawn on 18.10.91. As stated above,
when the said G.O. was issued on 27.8.91 a public interest litigation, Writ
Petition No.2356 of 1991, was filed in the High Court. On receipt of notices
from the High Court in the said PIL the said G.O. was withdrawn.
In the
case of Antoni Buttigieg v. Stephen H.
Cross
- AIR 1947 Privy Council 29, it has been held that a government cannot by
contract hamper its freedom of executive action in matters which concern the
welfare of the State [See: page 31].
In the
case of Edward Keventers (Successors) Pvt. Ltd. v. Union of India etc. AIR
1983 Delhi 376, the Delhi High Court has held that every grant has to be
subject to any future executive action, which must be decided by the needs of
the community and that the Government cannot, by contract, hamper its freedom
of action in matters concerning the welfare of the State [See: page 382].
Creation
of a right or interest in the property is different from transfer of those
rights/interests. Whether a particular transfer is a grant or not is a mixed
question of law and fact. In this connection, we quote hereinbelow the relevant
passage from "The Transfer of Property Act" by Dr. Sir Hari Singh Gour,
11th Edition, page 46:
"It
is further subject to any future executive action, which must necessarily be
determined by the needs of the community when the question arises, as the
Government cannot by contract hamper its freedom of action in matters which
concern the welfare of the states. Whether a particular transfer is a grant governed
by the Government Grants Act or not is mixed question of law and fact. The
character of the land, the manner of making lease and its contents in this case
all indicate that the lease in question was a Government grant and in the
absence of any legislation prior or posterior thereto on its subject matter the
lease shall take effect according to its tenor and will not be regulated by the
provisions of the Transfer of Property Act unless justice, equity and good
conscience require that the principles contained therein should be applied.
Applying
the above test to the facts of the present case, we are of the view that
G.O.No.1290 dated 27.8.91 was not a grant but at the highest a decision of the
State Government to execute a lease in favour of the appellants for mining
purposes. There is no evidence of the appellants being put in possession, as
claimed. The correspondence between the authorities, referred to above, makes
it very clear that the District Collector took steps of writing to the Dy.
Director of Mines and Geology in terms of the directions contained in the
judgment of the learned Single Judge dated 18.10.96. That decision was subject
to the decision of the Division Bench dated 27.6.97. In that decision it was
made clear that the direction given in the order dated 18.10.96 to the District
Collector to enter into land leases, did not disable the State Government from
taking steps to cancel G.O.No.1290 in accordance with law.
The
question which arises for determination in this case is : whether the decision
to cancel G.O.No.1290 was valid in law and whether that decision stood vitiated
by mala fides.
As
stated above, G.O.No.1290 was a decision to grant a mining lease in favour of
the appellants. Even assuming for the sake of the argument that G.O.No.1290
constituted a grant by itself still, as held in the above decisions, such a
grant cannot fetter or hamper future executive action/decision to revoke the
grant in public interest. In the present case, the State Government detected an
important source of revenue in the form of granite reserves. It is true that at
one point of time the State Government decided to exploit the granite through
private parties. However, later on with globalization, the State Government
decided to go for global tender. This course of action was open to the State
Government. The State Government decided to exploit the granite through its
agency, namely, APMDC. The object was to earn commercial profits and revenue.
APMDC was given liberty either to excavate the granite on its own or through
joint ventures. The land belongs to the State Government. The granite belongs
to the State Government. Therefore, a mere decision in G.O.No.1290 to grant
mining leases to the appellants cannot hamper or fetter the power of the
Government to exploit the resources through its own agency. In the
circumstances, we do not find any mala fides in the decision of the Government
reserving the area admeasuring Acs.61.50 for exploitation by APMDC, either on
its own or through its joint ventures/partners.
It has
been vehemently urged before us on behalf of the appellants that the approval
dated 29.10.99 contained in G.O.No.72 is invalid since Section 17A(2) of the
1957 Act does not contemplate conditional approval.
In
this connection, the following facts are required to be noted. The Central
Government granted approval for reservation of an area admeasuring Acs.61.50
subject to two caveats, namely, that the reservation shall not be applicable in
case of areas already held under any mining lease or quarry lease and that the
approval was subject to the outcome of pending cases. It was submitted on
behalf of the appellants that such conditional approval did not permit mining
operations to be carried out by the State Government Corporation till the
pending cases were decided and, therefore, if APMDC is allowed to exploit
during the pendency of the cases then the conditional approval would have the
effect of defeating the claims for mining leases in respect of the very area
pending adjudication. We do not find any merit in these arguments. As stated
above APMDC was entitled to enter into joint venture agreements with private
partners. The alleged condition attached to the approval dated 29.10.99 was not
to annul the transaction but only to render it subservient to the rights of the
parties to the litigation. If the appellants were to succeed in the pending
litigation they had the monetary claim against the joint venture.
Therefore,
in order to put the third parties to notice the above condition was
incorporated. Such a condition did not make the approval a conditional approval
and, therefore, it is not hit by Section 17A(2) of the 1957 Act.
We
also do not find any merit in the contention of the appellant that the approval
dated 29.10.99 granted by the Central Government stood vitiated on account of
non-application of mind. In the approval granted by the Central Government
dated 29.10.99 the subject-matter referred to four communications, namely,
letter dated 24.10.97, letter dated 13.2.98, letter dated 5.11.98 and letter
dated 23.12.98. These letters were addressed by the State Government. The
initial proposal of the State Government was to reserve an area admeasuring
Acs.61.50 only in Survey no.55/5 for exploitation by APMDC. However, later on
in the last letter dated 23.12.98 the State Government proposed reservation for
a larger area covering the entire granite bearing area to be exploited by the
APMDC. It is equally true that while granting approval dated 29.10.99 the
Central Government did not refer to the last proposal dated 23.12.98 and as a
result gave its approval for reserving Acs.61.50 only. On that basis it is
urged on behalf of the appellants that the Central Government had never applied
its mind to the later proposal of the State Government and consequently even
the approval granted for reserving a limited area of Acs.61.50 stood vitiated
on account of non-application of mind. As stated above, the property belongs to
the State Government. The mineral vests in the State Government. The State has
decided to earn more revenue by inviting global tenders. The State has obtained
the prior approval of the Central Government. The Central Government has
restricted its approval to an area admeasuring Acs.61.50. In the circumstances,
we do not find any illegality in the State Government's order of reserving the
area admeasuring Acs.61.50 for mining operations through APMDC or through
private/public sector enterprises. We reiterate that the rights, if any, under
G.O.No.1290 were inchoate rights. These rights never stood crystallized. No
mining lease was ever granted by the State Government to the appellants. In the
circumstances, there was no bar in reserving an area admeasuring Acs.61.50 for
exploitation of galaxy granite through State public sector undertaking.
Before
concluding one aspect needs to be mentioned. During the pendency of these civil
appeals, the State Government permitted exchange of areas between APMDC and
M/s. Victorian Granite Pvt. Ltd. vide Memo dated 14.3.2006. This event took
place during the pendency of the special leave petition. The question as to
whether such an exchange required approval of the Central Government and
whether such exchange was in the interest of the State exchequer, cannot be
decided by us in the present proceedings. It is a distinct and separate cause
of action. We do not wish to express any opinion on the validity of the said
exchange as well as on the merits of the said exchange.
It is
for the Central Government to examine the validity of the said exchange. In any
event, it is a subsequent cause of action. Hence, we express no opinion on the
validity of the said exchange.
Subject
to above, we do not find any merit in these civil appeals and the same are
accordingly dismissed.
Contempt
petition, filed by M/s. Rita Industrial Corporation Ltd. during the course of
pending of civil appeals, is also accordingly disposed of. No order as to
costs.
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