A

B

c

D

E

F

G

372

AMRITLAL NATHUBHAI SHAH AND OTHERS

v.

UNION GOVERNMENT OF INDIA AND ANOTHER

August 24, 1976.

[A. N. RAY, C.J., N. L. UNTWALIA AND P. N. SmNGHAL, JJ.]

Mines and Minerals (Regulation and Development) Act, 1957-State Gov­

emme11t reserved certain areas for exploitation of minerals in public sector-if

had the power to do so-Stale Governmellf~If could reject application of private

persons.

The appellants' applications for grant of mining leases

were rejected by the

State Government on the ground that the areas for exploitation of which they had

applied, had been reserved for exploitation in the public sector. The Central

Government dismissed the revision applications pointing out that since the mine­

rals vested in the State Government it had inh,erent right to reserve any particular

area for exploitation in the public sector.

In writ petitions challenging the orders of the

State Government the appel­

lants contended before the High Court that the State Government had no autho­

rity to reserve any a~ea for exploitation of minerals in the public sector and its

action had no support under the Mines and Minerals (Regulation and Develop­

ment) Act, 1957. The High Court dismissed the petiti )ns.

Dismissing the appeals,

HELD : The State Government was well within its rights in rejecting the appli­

cations of the appellants under r.60 as premature and the Central Government

was justified in rejecting the revisiorr applications. [376 BJ

(i) The 1957-Act declared that it was expedient in the public interest that the

Union should take under its control the regulation of mines and the developm!lnt

of minerals. The State Legislature's power under Entry 23 of List II was thus

taken away so that regulation of mines and mineral development had to

be in

accordance with the Act and the Rules. [374

CJ

(ii) The

State Government is the owner of the minerals within its territory,

and the minerals vest in it, and no person has any right to exploit them otherwise

than

in accordance with the provisions of the Act and the Rules. [374 DJ

(iii) There is nothing in the Act or the Rules to require that the restrictions

imposed by the Rules would be applicable even if the

State Government itself

wanted to exploit the minerals. There is no reason why the State Government

could not reserve any land for itself for any purpose and such reserved land would

then not

be available for the grant of prospecting licence

or a minirrg lease. [374

HJ

(iv) The State Government's power under s. 10 of the Act to entertain appli­

cations includes the power to refuse to grant a licence or a lease on the ground

that land was

not available for such grant by reason of its having been reserved

by the

State Government for any purposes. (375 BJ

(v) The authority to order reservation flows from the fact that the State is the

owner

of the

mines and the minerals within its territory. Rule 59 clearly con­

templates reservation

by an order of the

State Government. (375 E]

(vi) Under rr. 58, 59 and 60 it is not permissible for any person to apply for

a licence

or lease in respect of a reserved area until after it becomes available for

such grant and the availability

is notified by the

State Government. The State

Government in the present case reserved the areas .for the purpose stated in the

notifications and

as these lands did not become available again for grant of a pros­pecting licence or a· mining lease. it was well within its rights in rejecting the appli-

H cations of the appellants under r. 60 as premature. [375 H; 376 A]

State! of Orissa v. Union of India, A.LR. 1972 Oris.sa 68 and Mis. S. Laf and

Co. Ltd. v. The Union of India and others A.I.R. 1975 Patna 44 held inapp!ic

cable.

(

(

J

(

;

>·

AMRITLAL NATHUBHAI SHAH v. UNION OF INDiA (Shinghal, J.) 373

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1554-64/72.

(From the Judgment and Order dated 4-5-1972 of the Gujarat

High

Court in Special Civil Appln. Nos.

1018 and 1045-1054/68

respectively). ·

A. K. Sen, Bishamber Lal Khanna and E. C. Aggrawala for the

Appellants.

L. N.

Sinha, Sol. Genl. of India and Mr. Girish Chandra, for the

Respondents. ·

The Judgment of the Court was delivered by

SHINGHAL J.,-These appeals by certificate are directed against a

common judgment

of

the High Court of Gujarat dated May 4, 1972.

We have heard them together and will dispose them of by a common

judgment. The facts giving rise to the appeals are similar

in essential

respects and may be shortly stated. '

There are large deposits of bauxite in Gujarat State.

The

State

Government issued a notification on December 31, 1963, intimating

that the lands in all the talukas of Kutch district and in Kalyanpur

taluka of Jamnagar district had been reserved for exploitation of bau­

xite in the public sector. A similar notification was issued on Febru­

ary 26, 1964, in respect of all areas of Jamnagar and Junagarh districts.

Even so, the appellants made applications to the State Government

for grant of mining leases for bauxite in the 'reserved areas. There

were no other applications to that effect, but the State Government

rejected the applications of the appellants on the ground that, as had

been notified, it had reserved the areas for the public sector.

The

appellants felt aggrieved and applied to the Central

Govlernment lfor

revision of the State Government's orders. The revision applications

were dismissed after obtaining the comments of the State Government

and the orders

of rejection were upheld. In doing, so, the Central

Government referred to

the fact

.that the minerals "vested" in the State

Government which was "owner of minerals" and that the State Gov­

ernment had the "inherent right" to reserve any particular area 'for

exploitation in the public sector.

It also pointed out that once a

notification had been issued by the

State Government for the reservation

of any particular area, no party could, as of right, claim any mineral

concession

in the. reserved area. While making its orders of rejection,

the Central Government explained the circumstances in which mineral

leases were granted to Carborundum Universal Limited and the

Gujarat Mineral Development Corporation. The appellants felt aggriev­

ed. and challenged the orders

of the State Government and the Central

Government by writ petitions to the Gujarat High Court.

It was

urgecl that the 'State Government had no authority to reserve any area

of land for exploitation of bauxite

in the public sector, and that the

refusal to grant mining leases

to the appellants was

based· on a ground

which was altogether extraneous and irrelevant and could

not be

supported with reference to the Mines

and Minerals (Regulation and

Development) Act, 1957, hereinafter referred

to as the Act, and the

rules made tliereunder.

It appears that although the writ petitions

A

B

c

D

E

F

G

H

A

B

c

D

E

F

G

H

374

SUPREME COURT REPORTS [1977] 1 S.C.R.

were based on that short ground, the controversy in the High Court

ranged over a wider

field including 'that relating to the scope of the

executive power

of the

State Government in refJPect of the impugned

reservations. The High Court therefore examined the controversy

with reference to articles 162 and 298 of the Constitution, and the

relevant entries

in the Lists in the

Seventh Schedule, but we are not

concerned with that a~pect of the matter as the arguments before us

have been confined -to the provisions of the Act and to the Mineral

Concession Rules, 1960, hereinafter referred to

as the Rules, made

thereunder.

It may be mentioned that in pursuance of its exclusive power to

make laws with respect to the matters enumerated in entry 54 of List

I in the

Seventh Schedule, Parliament specifically declar:ed in ,section 2

of the Act that it

was expedient in the public interest that the

Union

should take under its control the regulation of mines and the develop­

ment of minerals

to the extent prov\ided in the Act.

Thy State Legis­

lature's power under entry 23 of List

II was thus taken away, and it is

not disputed before us that regulation of mines and mineral develop­

ment had therefore

to be in accordance with the Act and the Rules. The

mines and the minerals in question (bauxite) were however in the

territory of the

Sta,te of Gujarat and, as was stated in the orders which

were passed

by the Central Government on the revision applications

of the appellants, the

State Government is the "owner of minerals"

within its territory, and the minerals "vest" in it. There is nothing

in the Act or the Rules to detract from this basic fact. That

was why

the Central Government stated further in its revisional orders that the State Government had the "inhereut right to reserve any particular

area for exploitation in the public sector". It is therefore quite clear

that, in the absence of any law or contract etc. to the contrary,

bauxite, as a mineral, and the mines thereof, vest

in the

State of

Gujarat and no person has any right to .exploit it otherwise than

in

accordance with the provisions of the Act and the Rules.

Section 10

of the Act and Chapters II, III and IV of the Rules, deal with the

grant of prospecting licences and mining leases in the land

in which

the minerals vest in the Government of a

State. That was why the

appellants made their applications to the State Government.

Section 4 of the Act provides that no person shall undertake any

prospecting or mining operations in any area, except under 'and in

accordance with the terms and conditions

of a prospecting licence or,

as the case may be, a mining lease, granted under the Act and the rules

made thereunder, and that no such licence or lease shall be granted "otherwise than in accordance with the provisions of the Act and the

rules." But there is nothing in the Act or the Rules to require that the

restrictions imposed by Chapters II,

III or

IV of the Rules would be

applicable even

if the

State Government itself wanted to exploit a mine­

ral for,

as has been stated, it was its own property. There is therefore

no reason

why the

State Government could not, if it so desired, "re­

serve" any land for itself, for any purpose, and such reserved land

would then not be available for the grant of a prospecting licence or a

mining lease to any person.

( •

I

f

AMR~TLAL NATHUBHAI SHAH v. UNION OF INDIA (Shinghal, !.) 375

Secti©n 10 of the A,ct in fact provides that in respect of minerals

which vest in the State, it is exclusively for the State Governmt;nt to

entertain applications far the grant of prospecting licences or mining

leases and to grant or refuse the sa.me. The section is therefore indi­

cative of the power· of the State Government to take a decision, one

way

or the other, in such matters, and it does not require much argu­

ment to hold that that power included the power to refuse the grant

of a licence or a lease on the ground that the land

cin question was not

available for such grant by reason of its having been reserved by

the State Government for any purpose.

We have gone through sub-sections (2) and (4) of section 17 of

the Act

to

which our attention has been invited by Mr. Sen on behalf

of the appellants for the argument that they are the only provisions for

specifying the boundaries of the reserved areas, and as they relate to

prospecting

or mining operations to be undertaken by the Central

Government, they are enough to show that the Act does not contemplate

or provide for reservation by any other authority or for any other

purpose. The argument

is however untenable because the aforesaid

sub-sections of section 17 do not cover the entire

field of the authority

ef

refusing to grant a prospecting licence 0r a mining lease to any one el$e,

and do not deal with the State Government's authority to reserve any

area for itself. As has been stated, the authority to order reservation

flows from the fact that the

Stat0 is the owner of the mines and the

minerals .within its territory, which vest in it.

But quite apart from

that,

we find that rule 59 of the Rules, which have been made under sectim1

13 of the Act, clearly contemplates such reservation by an order of the

State Government. That rule deals with the availability of areas for

the grant of a prospecting licence or a mining lease in such cases, and

provides as follows :

"59. Availability of certain areas for grant to be notified

-In the case of any land which is otherwise available for the

grant of a prospecting licence

or a mining lease but in

respect

of which the State Government has refused to grant a pros­

pecting licence

or a mining lease on the ground that the land

should be reserved for any purpose, the

State Government

shall, as soon as such land becomes again available for the

grant of a prospecting or mining lease, grant the licence

or

lease after following the

procedure laid down in rule 58."

A

c

D

F

Mr. Sen has conceded that it is a vialid rule. It clearly contem-G

plates reservation of land for any purpose, by the State Gover.nment,

and its c;@nsequent non-availability for the grant of a prospecting licence

or mining lease during the period

it remains under

rese:f'l.lation by an

order of the State Government. A reading of rules 58, 59 and 60

makes it quite clear that it is not permissible for any person to apply

for a licence

or lease in respect of a reserved area until after it

becemes

available for such grant, and the availability is notified by the State H

Government in the Official Gazette. Rule 60 provides that an applica-

tion for the grant of a IJrospecting licence or a mining lease in respect

of an area for which no such notification has been issued, inttt alia,

8-1104SCI/76

A

B

D

E

F

G

37G SUPREME COURT REPORTS (1977] 1 S.C.R.

under rule 59, for making the area available for grant of a licence or a

lease, would be premature, and "shall not be entertained and the fee.

if any, paid in respect of any such application shall be refunded." It

would therefore follow that

as the areas which are the

<SUbject matter o;'

the present appeals had been reserved by the State Governmt:nt for the

purpose stated in its notifications, and

as those lands did not become

available again for the grant of a prospecting licence or a mining lease. the State Government was well within its rights in rejecting the applica­

tions of the appellants under rule 60 as premature. The Central Gov­

ernment was thus justified in rejecting the :revision applications which

were

filed against the orders of rejection passed by

the State Govern­

ment.

We have gone through the decisions in State of Orissa v. Union of

Indicl(l) and M/s S. Lal and Co. Ltd. v. The Union of .India and

others(

2

), on which reliance has

bfOen placed by Mr. Sen. In the for­

mer case the High Court of Orissa took the view that reservation of a

particular area for being exploited in the public sector by the State

could not be said to be

,a

purpose for which it could be reserved under

rule 59. In taking that view the High Court went by the consideration

that the subject of the legislation in the Act became an "exclusive sub­

ject for legislation by Parliament" and there was no residuary power

of working out mines and minerals without observing the conditions

prescribed by the Act and the Rules. The High Court therefore went

wrong in not appreciating that even though the

field of legislation had

been covered by the declaration of the Parliament in section 2 of the

Act, that could not justify the inference that

th@ State Government

thereby lost its right to the minerals which vested in it as a property

within its territory. The High Court has also erred in taking the view

that the State was required to obtain a licence or a lease even though it

was itself

the owner of the land and there was nothing in the Act or the

Rules to show that the provisions for the obtaining of a licence

or

lease would still be applicable to it.

Tn

S. Lai and Co. Ltd. v. Union of India and others (supra) the

High Court noticed the decisi0n in State of Orissa v. Union of India

(supra) but it cannot be urged with any justification that the view ex­

pressed in it was followed by the Patna High Court. On the other hand

the Patna High Court followed the view which was taken by the Guja­

rat High Court in the judgment which

is the subject matter of the

present appeals and held that the

State Government has the power "to

reserve certain areas for exploitation by itself, or by a statutory corpor­

ation

or for a company in a public

sector." The controversy in that

ca<.'~ was, however, examined with reference to the provisions of article

298 of the Constitution. The two cases cited by Mr. Sen cannot thus

be of any avail to the appellants.

For the foregoing reasons there

is no merit in these appeals and they

are

disa1issed with costs.

H P.B.R. Appeals dismissed

(I) -AJ.~. l972 01TsM 68.

(2) A.LR.

1975

Pat'1a 44.

(