Page 1 Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 2818 OF 2015

(@ SLP (C) NO(S).32226 OF 2009)

M/s. Muneer Enterprises ….Appellant

VERSUS

M/s Ramgad Minerals and Mining Ltd. & Ors. ….Respondents

J U D G M E N T

Fakkir Mohamed Ibrahim Kalifulla, J.

1.Leave granted.

2.This appeal is directed against the common judgment dated

26.08.2009, passed in W.A.No.5377 of 2004 and W.P.No.23782 of

2005.

3.The writ appeal was preferred by the first respondent herein

against the judgment in W.P.No.31690 of 2003 of the learned Single

Judge dated 10.11.2004 in and by which the order of transfer of

mining lease from the original licencee M/s. Dalmia Cements

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Page 2 (Bharat) Limited (hereinafter called “M/s. Dalmia”) to and in favour

of the first respondent herein was set aside.

4.Writ petition in W.P.No.23782 of 2005 was filed by one Dinesh

Kumar Singhi, a mine operator praying for a direction to the State of

Karnataka and Director of Mines and Geology to dispose of his

application dated 03.05.2001 for grant of licence to operate 819.20

acres of the forest mining area in Jaisinghpur village covered by the

erstwhile mining lease No.M.L.No.2010 of M/s. Dalmia. We are not

concerned with the said writ petition, as the said writ petitioner has

not challenged the order of the Division Bench by which his writ

petition was dismissed. We are only concerned with the judgment in

W.A.No.5377 of 2004.

5.Having regard to the chequered history of this case, the detailed

facts pertaining to the grant of mining lease with reference to

M.L.No.2010 over an extent of 331.50 hectares (819.20 acres) of

forest area in Jaisinghpur village, R.M.Block, Sandur Taluk, Bellary

District has to be necessarily stated. The said mining lease was

originally granted in favour of M/s. Dalmia on 25.11.1953. The said

lease expired on 24.11.1983. Based on the application of M/s.Dalmia

Cements, the mining lease was renewed for 20 years with

retrospective effect from 25.11.1983 by an order dated 07.03.1986.

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Page 3 It is required to be noted that though Forest (Conservation) Act,

1980, hereinafter called “The Forest Act, 1980” came into force

w.e.f. from 25.10.1980, the requirement of prior approval of the

Central Government as prescribed in Section 2 of the said Act was

not taken at the time of first renewal.

6.Be that as it may, the effect of non-compliance of approval

under Section 2 of the Forest Act, 1980 was the subject matter of

consideration of this Court in the decision reported in T.N.

Godavarman Thirumulkpad v. Union of India & Ors. - (1997) 2

SCC 267 (Godavarman I ). By virtue of the said judgment, the

Director of Mines and Geology, the third respondent herein directed

M/s.Dalmia to stop all mining activities by its order dated

25.01.1997. M/s.Dalmia stopped its mining activities from January

1997. Based on the subsequent judgment of this Court in T.N.

Godavarman Thirumulkpad v. Union of India & Ors. - (1997) 3

SCC 312 (Godavarman II), the Ministry of Environment and Forest

(MOEF) granted conditional in-principle (Stage-I) approval for

renewal of M/s. Dalmia’s mining lease over 201.50 hectares of forest

land out of 331.50 hectares by an order dated 24.12.1997.

7.By its letter dated 16.04.1999, M/s. Dalmia surrendered 196.58

hectares of land out of the leased area of 331.50 hectares to the

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Page 4 Forest Department of the State Government. Subsequently, M/s.

Dalmia in its letter dated 27.03.2001, expressed its desire to

surrender the remaining area held by it indicating that such notice

being given for determination of the lease as required under the

terms of the mining lease deed and that the lease would expire after

12 months notice period from 01.04.2001 or any time earlier if

permitted by the State Government. In response to M/s.Dalmia’s

letter dated 27.03.2001 by letter dated 25.05.2001, the office of the

Director of Mines while communicating to one of its officers marked

a copy of its letter dated 25.05.2001 calling upon M/s.Dalmia to

surrender its lease deed book and mining plan. By letter dated

16.06.2001 M/s.Dalmia surrendered the lease deed book and

informed that its mining plan was missing.

8.Subsequently, one M.S.P.L. Limited, through its Executive

Director Mr. Rahul Baldota applied for grant of mining lease of the

area held by M/s.Dalmia through its application dated 21.07.2001. It

is necessary to be noted that the said Rahul Baldota is the husband

of Mrs. Lavine R. Baldota the Executive Director of the first

respondent herein. In the application of M/s M.S.P.L. limited dated

21.07.2001 it was noted by the Director of Mines and Geology,

namely, one Dr.Reddy on 25.08.2001, stating among other things

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Page 5 that grant of mining lease of surrendered lands can only be

considered as specified in Rule 59(1) of the Mineral Concession

Rules.

9.Pursuant to such steps taken by M/s.Dalmia in its letter dated

27.03.2001, the suit bearing O.S.No.53 of 1993 filed against the

appellant herein relating to boundary dispute of the mines held by it

was dismissed for non-prosecution on 26.09.2001. By letter dated

09.01.2002 , the Director of Mines and Geology directed its Deputy

Director, Hospet to survey and demark the area covered by lease

deed of the appellant specifically pointing out the dismissal of

O.S.No.53 of 1993 by M/s.Dalmia.

10.On 30.01.2002, M/s.Dalmia made a payment of Rs.22,332/-

stated to be the arrears in respect of mining lease held by it in

M.L.No.2010. On 31.01.2002, the Director of Mines and Geology

issued a no due certificate to M/s.Dalmia confirming the receipt of a

sum of Rs.22,332/- by way of Demand Draft from M/s.Dalmia.

However on 04.02.2002, M/s.Dalmia applied to the State

Government for permission to transfer its mining lease M.L.No.2010

of 2010 including the 196.58 hectares said to have been

surrendered by it in 1999 to the first respondent herein. On

06.02.2002 the Director of Mines and Geology viz. Dr.Reddy who in

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Page 6 his earlier communication dated 25.08.2001 to M/s.M.S.P.L. Limited

informed that Rule 59(1) of Mineral Concession Rules would apply

for grant of licence in M.L.No.1020, this time recommended for the

transfer of licence from M/s.Dalmia to the first respondent herein.

On 16.03.2002, the State Government passed orders allowing the

application for transfer of mining lease as applied for by M/s Dalmia

in favour of the first respondent.

11.It was in the above stated background at the instance of the

appellant, the order dated 16.03.2002, of the State Government was

challenged in W.P.No.31690 of 2003 in the High Court of Karnataka.

The learned Single Judge of the Karnataka High Court allowed the

said writ petition, by order dated 10.11.2004. Challenging the same,

the first respondent preferred writ appeal in W.A.No.5377 of 2004.

By the order impugned in this petition, the Division Bench having set

aside the order of the learned Single Judge and restored the order of

transfer dated 16.03.2002, the appellant has come forward with this

appeal.

12.When the writ appeal was pending, based on the oral

application of the first respondent herein, the Division Bench

directed the State Government and the Director of Mines and

Geology to process its application for transfer of the renewal of the

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Page 7 lease in favour of the first respondent under the Forest Act, 1980

within two months and forward its report to the Central Government

with a further direction to the Central Government to decide the

same within three months. The appellant challenged the said order

dated 19.04.2006 in S.L.P.No.11508 of 2006. By an order dated

26.10.2007, this Court directed the Division Bench of Karnataka

High Court to dispose of Writ Appeal No.5377 of 2004 and that the

order of the Central Government dated 13.09.2006 granting its in-

principle (Stage I) ex post facto approval granted in favour of the

first respondent would not create right/equity in favour of the first

respondent. By the impugned order dated 26.08.2009, the Division

Bench held that renewal of mining lease without obtaining prior

approval under Section 2 of the Forest Act, 1980 would not render

such renewal void ab initio and any such illegality can be cured or

regularized by the Central Government by passing an order under

Section 2 of the Forest Act, 1980 ex post facto.

13.When this Special Leave Petition was entertained, by an order

dated 16.12.2009, it was directed that processing of Stage II

clearance be continued with a further direction to maintain status

quo as regards the mining activities. By order dated 09.09.2010,

Stage II clearance has also been granted in favour of the first

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Page 8 respondent and by subsequent order dated 23.09.2010, this Court

has directed that the status quo should remain operative pending

the Special Leave Petition.

14.In the above stated background, we heard Mr.Kapil Sibal,

learned senior counsel for the appellant, Mr.K.K.Venugopal and

Mr.Krishnan Venugopal, learned senior counsel for the first

respondent, Dr.Abhishek Manu Singhvi, learned senior counsel for

the fifth respondent in the writ appeal who was not added as a party

respondent in this Special Leave Petition and Ms.Anitha Shenoy,

Advocate-on-Record for the State of Karnataka and the Director of

Mines and Geology. Mr.J.S. Attri, learned senior counsel who

appeared for the Union of India, the fourth respondent.

15.Mr.Kapil Sibal, learned senior counsel appearing for the

appellant contended that once M/s.Dalmia surrendered its lease in

respect of M.L.2010, which surrender has become final and

conclusive, there was no scope for transfer of such surrendered

mining lease in favour of the first respondent herein. The learned

senior counsel then contended that assuming the surrender has not

come into effect, at the time of first renewal when in-principle stage-

I approval was granted by the Central Government through MOEF in

its order dated 24.12.1997, imposing very many conditions and

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Page 9 since M/s.Dalmia failed to comply with those conditions within five

years of the said order viz., 23.12.2002 and that the first renewal so

granted also expired in November 2003, by which time also the

conditions imposed in the in-principle stage-I approval was not

complied with, there was factually no renewal of the mining lease

which stood expired initially on 24.11.1983 and in any event after

the expiry of the first renewal viz., 24.11.2002.

16.The learned senior counsel further contended that there should

have been no second renewal or grant of in-principle stage-I

clearance after 23.12.2002 as well as by the present order dated

13.09.2006. The learned senior counsel contended that under Rule

59 of Mineral Concession Rules, when once the mining lease was

surrendered by M/s.Dalmia and when surrender has come into effect

thereafter, for subsequent grant of mining lease, the procedure

prescribed in the said Rule has to be followed and the order of the

State Government in having passed its order dated 16.03.2002

transferring the mining lease from M/s.Dalmia to the first

respondent was wholly illegal and void ab initio.

17.The learned senior counsel by referring to Rule 37 and Rule 29

of the Mineral Concession Rules, submitted that in the light of the

surrender of the mining lease by M/s.Dalmia, there was no right in

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Page 10 M/s.Dalmia to apply for transfer in favour of the first respondent. He

further contended that by virtue of the provision contained in Rule

29 of the Mineral Concession Rules, the mining lease was

determined by M/s.Dalmia and in such circumstances by virtue of

Section 19 of the Mines and Minerals Development and Regulations

Act any mining lease in contravention of the Act and Rules would be

void ab initio. The learned senior counsel contended that, therefore,

the so-called acquisition of mining lease of M/s.Dalmia by the first

respondent was void.

18.Dr. Abhishek Manu Singhvi, learned senior counsel for the

intervenor submitted that since the said applicant was added as the

fifth respondent before the Division Bench by order dated

08.06.2007, it was entitled to get intervened in this appeal. Though

the application for intervention was stoutly opposed on behalf of the

first respondent by referring to certain earlier orders of this Court in

the S.L.Ps. filed by the intervenor, since the said intervenor was

added as the fifth respondent by the first respondent itself in the

writ appeal, which was pending before the Division Bench, we are of

the view that due to failure of the appellant in not impleading the

intervenor as a party respondent in this appeal, it should not be

deprived of its right to be heard in this appeal. Therefore, without

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Page 11 any scope for anyone to quote as a binding precedent in any other

case, having regard to the peculiar facts of this case where the

intervenor was a party respondent before the Division Bench in the

Writ Appeal, the order of which is the subject matter of challenge in

this appeal, we are of the view that the intervenor can be permitted

to make its submissions and the I.A. for intervention stands allowed.

19.Dr. Abhishek Manu Singhvi, learned senior counsel in his

submissions contended that by virtue of Rule 29 read along with

Rule 59 of Mineral Concessions Rules the determination of the lease

at the instance of M/s.Dalmia having come into effect, nothing would

survive thereafter. According to the learned senior counsel, the

period of twelve months prescribed in Rule 29 cannot enure to the

benefit of the lessee and that such time period was meant for the

benefit of the State Government.

20.The learned senior counsel by referring to various dates from

27.03.2001 upto 31.01.2002 submitted that the State Government

understood the determination of the lease correctly as intended by

M/s.Dalmia and, therefore, when once the mining lease got

terminated by virtue of the complete surrender nothing would

survive thereafter. Dr.Singhvi thus contended that if the sequence of

events after the surrender had taken place are noted, viz., the

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Page 12 application made by M/s.M.S.P.L. on 21.07.2001 at the instance of

Mr.Rahul Baldota as the Executive Director of M/s.M.S.P.L. which

was rejected by the Director of Mines and Geology by order dated

25.08.2001, the signatory of which was one Dr.Reddy, the

subsequent application at the instance of M/s.Dalmia for transfer in

favour of the first respondent who was represented by its Executive

Director Mrs.Baldota who was none other than the wife of Mr.Rahul

Baldota whose earlier application for grant of mining lease was

rejected, it would show that all was not well in the passing of the

order of transfer dated 16.03.2002. In this connection, the learned

senior counsel pointed out that the very same Director of Mines and

Geology, Dr.Reddy who by his order dated 25.08.2001 rejected the

application of M/s.M.S.P.L. for grant of mining licence on the ground

that such grant can be considered only by following Rule 59, took a

diametrically opposite stand when he recommended for transfer of

surrendered mining lease in favour of the first respondent and

thereby serious fraud has been committed by the first respondent in

connivance with M/s.Dalmia, the first respondent and the officers of

the State Government. The learned senior counsel would contend

that such an action of the parties would amount to collusion

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Page 13 between the first respondent and the officials of the State

Government which should not be allowed to remain.

21.Dr.Singhvi, learned senior counsel then contended that there

were serious violations of Forest Act of 1980 on which ground as

well the order of transfer dated 16.03.2002 cannot be sustained.

The learned senior counsel pointed out that the first renewal of the

mining lease in M.L.No.2010 of 2010 was for the period between

25.11.1983 to 24.11.2003, which was granted on 07.03.1986

retrospectively from 25.11.1983 and that no prior approval as

prescribed in Section 2 of the Forest Act, 1980 was obtained. The

learned senior counsel further contended that the said violation of

the Forest Act, 1980 would strike at the root of the case and in

effect the very first renewal was void.

22.The learned senior counsel then contended that out of 331.50

hectares M/s.Dalmia surrendered 196.58 hectares of land as early as

on 16.04.1999 and that what remained was only 134.92 hectares for

which there was no ex post facto approval. The learned senior

counsel then contended that subsequently by an order dated

24.12.1997, MOEF granted in-principle stage-I approval imposing

conditions in respect of 201.50 hectares to M/s.Dalmia and the

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Page 14 conditions not having been complied with by M/s.Dalmia, the licence

could not have remained in force any further.

23.The learned senior counsel then contended that grant of ex post

facto approval by the Central Government as per the direction of

this Court in Godavarman judgments cannot be granted on every

occasion when the violation had taken place. According to the

learned senior counsel, the grant of such ex post facto approval as

per the directions of this Court having been already considered and

granted on 24.12.1997 and due to failure of compliance of the

conditions imposed in the said order, the lease had become

inoperative, there was no scope for grant of any further ex post

facto approval after the expiry of the first renewal viz., 23.11.2003.

24.The learned senior counsel placed reliance upon the decisions

reported in A. Chowgule and Company Limited v. Goa

Foundation & Ors. - (2008) 12 SCC 646, Nature Lovers

Movement v. State of Kerala and Ors. - (2009) 5 SCC 373 and

K. Balakrishnan Nambiar v. State of Karnataka and Ors. -

(2011) 5 SCC 353 in support of his submissions.

25.On Rule 59, according to the learned senior counsel the said

Rule provides for common hotchpot for the Government and that

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Page 15 once the lease was surrendered by M/s.Dalmia, the State had

become the owner of the land and any further grant of mining lease

can only be in accordance with Rule 59(1) by way of public auction

and, therefore, the acceptance of the transfer applied for by M/s

.Dalmia in favour of the first respondent in the order dated

16.03.2002 cannot be approved. The learned senior counsel also

relied upon the decisions reported in Janak Lal v. State of

Maharashtra & Ors. - (1989) 4 SCC 121, Bangalore

Development Authority v. Vijaya Leasing Limited & Ors. -

(2013) 14 SCC 737, Ram Preeti Yadav v. U.P. Board of High

School and Intermediate Education and Ors. - (2003) 8 SCC

311 and Bhaurao Dagdu Paralkar v. State of Maharashtra &

Ors. - (2005) 7 SCC 605 in support of his submissions.

26.As against the above submissions, on behalf of the first

respondent Mr. K.K. Venugopal and Mr. Krishnan Venugopal, learned

senior counsel made their submissions. The submission of Mr. K.K.

Venugopal was that the appellant had committed serious violation of

the Mines and Minerals Development and Regulations Act and its

Rules as well as the provisions of the Forest Act by indulging in

encroachment of forest land as well as the lands originally held by

M/s.Dalmia now held by the first respondent which amounted to

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Page 16 looting of the wealth of the nation and consequently they had no

locus to challenge the order of transfer dated 16.03.2002.

27.As far as the intervenor is concerned, the learned senior counsel

by referring to some of the earlier orders of this Court passed in

S.L.Ps. preferred by the intervenor himself submitted that having

failed in its attempt to get impleaded, he has come forward with this

intervention application and, therefore, he should not be heard.

28.As far as the question of surrender was concerned, according to

Mr.K.K.Venugopal, it was a mixed question of fact and law.

According to him, even while examining the factual surrender at the

instance of M/s.Dalmia, when the provisions of Mines and Minerals

Development and Regulations Act and the Mineral Concession

Rules, in particular Rule 29 read along with the terms and conditions

in the mining lease are examined, it would show that such

prescriptions were mandatory; negatively couched, and, therefore,

unless twelve months notice period is completed, there would have

been no scope for anyone to contend that the lease had come to an

end. The learned senior counsel contended that if the licencee

intends to surrender the mining lease, they should have submitted

to the State Government or such officer or specified authority

competent to accept such surrender and when any third party

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Page 17 alleges the surrender to have come into effect, the burden was

heavily upon the said third party to prove the same. In so far as the

alleged surrender of M/s.Dalmia is concerned, the learned senior

counsel contended that no surrender had taken place in the eye of

law, in as much as, such surrender was not carried out by

M/s.Dalmia strictly in accordance with Rule 29 of Mineral Concession

Rules and that 12 months period has also not expired before the

transfer in favour of first respondent was effected.

29.Mr.Krishnan Venugopal, learned senior counsel in his

submissions stated that the Director of Mines and Geology had no

power to accept the surrender and, therefore, there was no scope to

contend that the surrender was accepted before the expiry of 12

months. After referring to the relevant Notifications passed under

Section 26(2) of the Mines and Minerals Development and

Regulation Act, the learned senior counsel pointed out that there

was no delegation of power made in favour of the Director of Mines

and Geology in contemplation of Rule 29 of the Mineral Concession

Rules and therefore he was not the competent authority. It was

contended that if at all the surrender could have been effected, the

same could have been effected only with the State Government and

that too by passing a positive order by the State accepting such

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Page 18 surrender. The learned senior counsel contended that the letter

dated 25.05.2001 can never be taken as an order of acceptance of

surrender. The learned senior counsel relied upon the decisions

reported in Sandur Manganese and Iron Ores Limited v. State

of Karnatala and Ors. - (2010) 13 SCC 1, Sethi Auto Service

Station and Anr. v. Delhi Development Authority & Ors. -

(2009) 1 SCC 180 and Shanti Sports Club & Anr. v. Union of

India & Ors. - (2009) 15 SCC 705 in support of his submissions.

30.He also contended that after the Forest Conversion

(Amendment) Rules, 2014 in particular Rule 8(3)(a) & (d) old Rules

6 and 7 were substituted and new Rules 6, 7 and 8 were brought in

and by virtue of the newly amended Rules, the consequence of non-

compliance of Section 2 of the Forest Act, 1980 would not ipso facto

make the lease void ab initio except that the mining operation will

have to be stopped and after complying with the conditions, the

lessee will have to start afresh by getting the clearance under

Section 2 of the Forest Act, 1980. The learned senior counsel also

contended that under the MMDR Act, the only provision under which

the lease will become void is Section 19 and therefore the

contention of the appellant that non-compliance of Section 2 of the

Forest Conservation Act would render the lease void ab initio

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Page 19 cannot be accepted. He also contended that with the first renewal

of the lease by an order dated 07.03.1986 the lease was renewed

from 25.11.1983 to 24.11.2003, that on 04.02.2002, itself i.e., long

before 12 months prior to the expiry of the renewed lease,

application for transfer was made, that on 16.03.2002 itself the

State Government passed an order of transfer of the lease and in

the circumstances by virtue of Rule 24(A)(1) read along with Rule

26(1) of the Mineral Concessions Rules, the right for renewal

continued to exist and that no order of rejection of renewal under

Rule 26(1) was ever passed. It was, therefore, contended that as

on date the right of renewal was subsisting and it continue to

subsist.

31.The learned senior counsel contended that MMDR Act and

Forest Conversion Act, 1980 function in two different fields in the

sense that the existence and continuance of the lease and right of

renewal are independent of the approval to be received under the

Forest Act, 1980, that the consequence of violation of Section 2 of

the Forest Act, 1980 will not ipso facto determine the lease and

make it void and that only other consequence would be as provided

under Section 3(A) of the Forest Act, 1980. As far as renewal of the

lease is concerned, according to the learned senior counsel, the

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Page 20 same is exclusively under MMDR Act and once the lessee complies

with the requirements under the Forest Act, 1980 the right of

renewal of the lease would get automatically revived.

32.On the question of voidness, the learned senior counsel by

referring to the decisions in Smt. Lila Gupta v. Laxmi Narain &

Ors. - (1978) 3 SCC 258 and Pankaj Mehra & Anr. v. State of

Maharashtra & Ors. - (2000) 2 SCC 756 contended that equity is

in favour of the first respondent to sustain the lease and this is a fit

case to affirm the Section 2 approval and in the alternative to permit

the first respondent to apply under Section 2 for compliance.

33.By referring to Rule 29 of the Mineral Concession Rules, the

learned senior counsel would contend that the prescription of 12

months notice period in the said Rules is mandatory and has got a

purpose and intent and therefore unless the 12 months period

expires, after the lessee expressed its desire to surrender the lease

and that too such notice of termination is submitted before the

competent authority as prescribed under Rule 29, it cannot be held

that surrender would take effect the moment such a notice is

submitted by the lessee to some incompetent authority.

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Page 21 34.The learned senior counsel summarized his submissions on the

question of surrender by contending that the return of the Lease

Book by itself would not confirm the case of surrender unless the

period of 12 months as prescribed under Rule 29 expired, that even

if it is to be stated that the State Government waived the 12 months

period, unless there is a specific order accepting the surrender, it

cannot be held that the surrender had come into effect. The learned

senior counsel also submitted that there was no evidence to show

that such acceptance of surrender in the form of an order of the

State Government was issued. It was therefore contended that

there is no scope for inferring any such surrender based on certain

communications addressed to the authorities and the copies marked

to the lessee. As far as the no due certificate was concerned, the

learned senior counsel contended that the same was made four

days prior to the application of transfer and the payment was meant

for the purpose of effecting the transfer.

35.Countering the submissions of the learned senior counsel for the

first respondent Mr.Kapil Sibal submitted that in the decision

reported in Basheshar Nath v. Commissioner of Income Tax,

Delhi and Rajasthan & Anr. - AIR 1959 SC 149, the Constitutional

Bench has held that the right of waiver can be exercised by the

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Page 22 State and submitted that reading the said judgment in the light of

Rule 29 read along with paragraph 4 of the licence conditions

contained in Form K. Waiver exercised by the State while accepting

the surrender before 12 months under Rule 29 was valid in law. The

learned counsel also relied upon the decisions reported in

Commissioner of Customs, Mumbai v. Virgo Steels, Bombay

& Anr. - (2002) 4 SCC 316 and Vasu P. Shetty v. Hotel Vandana

Palace & Ors. - (2014) 5 SCC 660.

36.As against the arguments of the learned senior counsel for the

first respondent that any surrender should be made to the

concerned authority and should be accepted only by the competent

authority, Mr.Sibal submitted that surrender was made to the State

Government as disclosed in the statement of objections submitted

on behalf of the State Government, wherein, in paragraph 5 the

State Government itself has accepted that M/s. Dalmia made its

application dated 27.03.2001 to the State Government proposing to

surrender the lease held by it w.e.f 01.04.2001 and also

subsequently surrendered the Mining Lease Book to the State

Government. The learned counsel however pointed out that though

in the said paragraph 5, it was stated that the said application was

not considered and the State Government did not pass any orders

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Page 23 accepting the surrender of the mining lease, the learned senior

counsel pointed out that the grant of lease was by the Director of

Mines as disclosed in Form K of the mining lease which states that

the term lessor included its successors/assignees and also in the

condition for the determination of lease, it was the Director of Mines

who has affixed his signature. The learned senior counsel contended

that going by the opening set of expressions in Form K deeming

fiction would operate and the Director of Mines was the authority

who was competent to accept the surrender. The learned senior

counsel also contended that this question was never raised at the

instance of the first respondent and in the absence of proper

pleading before the High Court, the first respondent cannot be

permitted to raise the said issue which is a mixed question of fact

and law.

37.As regards the argument that surrender, whether it was

accepted and that too by a written order, the learned senior counsel

contended that acceptance of such surrender before expiry of

twelve months can also be gathered from the conduct of the parties

unless there is a statutory requirement. The learned senior counsel

after referring to the sequence of correspondence which emanated

from M/s.Dalmia’s letter dated 27.03.2001, the reply from the office

C.A. No……..of 2015 SLP (C) 32226 of 2009 23 of

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Page 24 of the Director of Mines and Geology dated 25.05.2001,

M/s.Dalmia’s letter dated 16.06.2001, the dismissal of the suit by

M/s.Dalmia dated 26.09.2001 and the no dues certificate issued by

the State Government on 31.01.2002 contended that the same

sufficiently disclosed that the lease was not only surrendered it was

also acted upon by the concerned authority.

38.As regards the contention of the first respondent that non-

compliance of Section 2 of the Forest Act, 1980 can have no

implication insofar as it related to the validity of the lease granted

under the Mines and Minerals (Development and Regulations) Act,

Mr.Sibal, learned senior counsel would contend that the said

submission cannot be accepted. According to the learned senior

counsel, even before coming into force of the Forest Act, 1980 under

the proviso to Section 5 of the Mines and Minerals (Development

and Regulations) Act the requirement of Central Government’s

approval was mandatory which came to be imposed as a statutory

condition in respect of the forest land under Section 2 of the Forest

Act, 1980. The learned senior counsel therefore contended that the

requirements of approval to be granted by the Central Government

being a statutory requirement, one made under the Mines and

Minerals (Development and Regulations) Act as well as under the

C.A. No……..of 2015 SLP (C) 32226 of 2009 24 of

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Page 25 Forest Act, 1980, the operation of the mining lease cannot be

carried out without the prior approval of the Central Government

under the Forest Act, 1980. In other words, according to the learned

senior counsel, the requirement of approval under the Forest Act,

1980 has to synchronize with the mining lease if the leaseholder

wants to carry on mining operation in respect of the minerals

specified in the first schedule of the Mines and Minerals

(Development and Regulations) Act. The learned senior counsel

contended that the only exception provided was under the

judgments of this Court in Godavarman I and II (cited supra)

which was by virtue of the extraordinary Constitutional power

vested in this Court under Article 142 and under no other

circumstance the mining operation can be carried on even if one

were to possess the licence under the Mines and Minerals

(Development and Regulations) Act.

39.The learned senior counsel pointed out that after the in-principle

Stage-I approval granted on 24.12.1997, when M/s.Dalmia failed to

comply with the conditions imposed till the expiry of the first

renewal which occurred on 24.11.2003, any attempt on behalf of the

first respondent through its communication dated 11.05.2004, based

C.A. No……..of 2015 SLP (C) 32226 of 2009 25 of

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Page 26 on the order of transfer dated 16.03.2002, could not have validated

the lease which already got lapsed on its own.

40.Mr.Sibal, learned senior counsel then contended that when the

writ petition was pending before the High Court, on behalf of the

Central Government, Ministry of Environment and Forest raised its

objections as disclosed in its objections dated 03.02.2004, for

granting any approval, after the expiry of the first renewal, due to

non-compliance of the conditions imposed in the in-principle stage-I

approval which weighed with the learned Judge of the High Court

when the renewal itself was quashed by the learned Judge in the

order dated 10.11.2004. The learned senior counsel then referred to

the judgment of the Division Bench in W.A.No.5377 of 2004, the

second renewal application and the in-principle stage-I approval

subsequently granted on 13.09.2006 and also the order of this Court

dated 26.10.2007 which made it clear that the first respondent

cannot claim any equity based on the order dated 13.09.2006. The

learned senior counsel submitted that, therefore, both the in-

principle stage-I approval dated 13.09.2006 as well as the final

approval dated 09.09.2010 will be of no avail to the first respondent

for getting the surrendered lease revived. The learned senior

counsel, therefore, contended that the claim of the first respondent

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Page 27 that the mining lease would be unaffected by the non grant of

approval under Section 2 of the Forest Act, 1980 cannot be

accepted. The learned senior counsel relied upon the decisions

reported in Ambica Quarry Works v. State of Gujarat & Ors. –

(1987) 1 SCC 213.

41.Mr. Sibal, learned senior counsel lastly contended that Section

10(1) and the second proviso to Section 11 of the Mines and

Minerals (Development and Regulations) Act has to be read along

with Rules 37 and 59 and contended that the application for

transfer under Rules 37(1)(a) or 1(A) cannot be automatically

granted. The learned senior counsel submitted that whatever would

apply to a fresh application as provided under Section 10(1) and

second proviso to Section 11 would equally apply even to the

transfer and the application for transfer cannot be granted just for

mere asking. The learned senior counsel would therefore contend

that under Rule 59, the necessity to notify before the grant of lease

is mandatory and there is no question of subverting the said Rule in

a case where the lease was surrendered. According to the learned

senior counsel in such a case for applying Rule 59, there must be a

notification to enable all those interested to stake their claim, which

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Page 28 would enable the State to derive the maximum benefit while

permitting mining of minerals, which is a national wealth.

42.Ms. Anitha Shenoy, Advocate-on-Record appearing for the State

of Karnataka submitted that the requirement of 12 months notice for

determining the lease at the instance of a lessee is mandatory. By

referring to Rule 27(2)(l), the learned counsel submitted that the

said sub-Rule mandates delivery of possession of land and mines on

surrender of the lease and that Clause 4 of Part VIII of Form-K viz.,

the lease deed specifically states that such determination will take

effect after the expiry of such notice. By referring to the

communication dated 27.03.2001 of M/s.Dalmia’s application for

surrender, letter of the Director of Mines to the Senior Geologist

dated 25.05.2001, the M/s. Dalmia’s letter dated 16.06.2001,

surrendering the lease deed book as well as no due certificate

issued by the Department of Mines on 31.01.2002, the learned

counsel submitted that, in spite of all these communications a

specific order of acceptance of surrender was still required which

was never issued. To support the said submission, the learned

counsel placed reliance upon the earlier communications in the

office of the Mining Department pertaining to various other mining

lease viz., those dated 12.03.1965, certain other orders passed in

C.A. No……..of 2015 SLP (C) 32226 of 2009 28 of

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Page 29 December, 1988 and 11.04.1989 and the Notification dated

19.06.1965 and contended that those communications disclosed

specific order of acceptance of surrender issued by the State

Government. The learned counsel would therefore contend that in

the case on hand, since such a specific order of acceptance of

surrender was not issued, it cannot be stated that the surrender as

applied for by M/s.Dalmia had taken place.

43.In his reply, Mr.Krishnan Venugopal, learned senior counsel for

the first respondent contended that going by the letter of the State

of Karnataka dated 21.02.1986, no lease could have been granted or

renewed except by the State and not by the Director of Mines. By

referring to Section 5 of the Mines and Minerals (Development and

Regulations) Act, the learned senior counsel reiterated that the

power is vested only with the State and in the absence of any

delegation, the Director of Mines will have no jurisdiction or power to

issue the lease or determine the lease. The learned senior counsel

further contended that by virtue of the Constitutional prescription as

contained in the Entries found in List I and List II read along with

Section 2 of the Mines and Minerals (Development and Regulations)

Act, the subject being controlled by the Parliament, strict

compliance of the provisions of the Act is warranted and, therefore,

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Page 30 in the absence of delegation of power with the Director of Mines, it

cannot be contended that the exercise of such power by the Director

would validate the surrender as claimed by the appellant. The

learned senior counsel would therefore contend that the period of 12

months required for determining the lease by the lessee is

mandatory and unless and until the said period expires which is for

the benefit of the State, it cannot be held that the surrender had

come to an end even before the expiry of the 12 months period.

44.In this context, the learned senior counsel referred to the

Government of India/Ministry of Environment and Forest letter dated

14.09.2001 to the Secretary (Forest) of all the States and Union

Territories, wherein, the Central Government after making reference

to various cases where the in-principle stage-I clearance was

granted by imposing conditions and the failure of the States and the

user agencies in reporting compliance after lapse of five years and

in some cases after more than 10 years, the MOEF stated that the

Central Government in respect of those cases took a decision to the

effect that in all those cases the in-principle approvals though stood

revoked summarily, depending upon the interest shown by the State

or the user agency in the project, they would be required to submit

a fresh proposal which would be considered de novo. The learned

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Page 31 senior counsel further contended that even the Central Government

has understood as to the manner in which any fresh proposal to be

considered in respect of cases where the user agencies failed to

comply with the conditions imposed in the in-principle stage-I

approval granted. According to him, such a decision of the Central

Government/MOEF was subsequently incorporated in the Forest

Conservation Rules by way of amendment to Rules 6, 7 and 8 in the

year 2014 and therefore it cannot be held that the non-compliance

of the conditions imposed while granting in-principle stage-I

approval would in any manner efface the lease granted under the

MMDR Act and Mineral Concession Rules.

45.Mr. Kapil Sibal, learned senior counsel while responding to the

submissions of Ms. Anitha Shenoy, Advocate-on-Record for the State

of Karnataka pointed out that in the documents now produced by

the learned counsel for the State which pertained to the years 1965,

1988 and 1989, those documents were signed by the Director while

accepting the surrender proposed by the lessees and that such

acceptance had been made not after the expiry of the 12 months

period from the date of application but before the expiry of such 12

months period. The learned senior counsel also submitted that the

State Government has not come forward with any affidavit by any

C.A. No……..of 2015 SLP (C) 32226 of 2009 31 of

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Page 32 responsible officer that surrender was not accepted by the State

Government. The learned counsel also contended that the lessee

viz., M/s. Dalmia wanted to surrender and the fact remains that the

lease had been determined. As regards the reference to Rule 27(2)

(l) the learned senior counsel contended that though the Rule states

that on surrender possession should be delivered, there is no

specific expression to the effect that such delivery of possession

should be by way of handing over.

46.Two questions that arise for consideration:

a.Whether M/s. Dalmia surrendered its mining

licence No.M.L. 2010?

b.If it was not surrendered, whether violation of

conditions of in-principle stage-I approval dated

24.12.1997 would ipso facto render the mining licence

invalid and inoperative in law?

47.While attempting to find an answer to the above two questions,

the submissions of counsel for both sides necessarily postulate

consideration and examination of the following factors:

a.Mining lease in M.L. No.2010 of M/s. Dalmia was

initially issued on 25.11.1953 which expired on

24.11.1983.

b.First renewal of M.L. No.2010 was by order dated

07.03.1986 for 20 years with effect from 25.11.1983

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Page 33 ending with 24.11.2003 without any statutory

approval of the Central Government and in particular

the prior approval of Central Government under

Section 2 of the Forest Act, 1980.

c.After the judgment of this Court in Godavarman I &

II, mining operations under M.L. 2010 were suspended

in January, 1997 and thereafter in-principle Stage-I

approval was granted in favour of M/s. Dalmia on

24.12.1997 by the Central Government imposing

conditions to be complied within five years i.e. on or

before 23.12.2002.

d.By letter dated 16.04.1999 M/s. Dalmia

surrendered 196.58 Hectares of land out of 331.50

Hectares to the Forest Department of State

Government.

e.On 27.03.2001 M/s. Dalmia wrote to Director of

Mines and Geology to determine the lease as it wanted

to surrender. M/s. Dalmia gave 12 months notice from

01.04.2001 or earlier if permitted by State

Government.

f.On 25.05.2001, the Director of Mines while

marking a copy of its letter addressed to the senior

Geologist to M/s. Dalmia simultaneously instructed to

surrender the lease book in respect of M.L. No.2010

along with the Mining Plan.

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Page 34 g.In the order dated 26.06.2001 passed in W.P.

No.6304 of 1998 learned Single Judge of Karnataka

High Court noted the stand of M/s. Dalmia with

reference to M.L. No.2010 that M/s. Dalmia was no

longer interested in working of said mines which was

adjoining the mines of the appellant. In fact the said

writ petition was disposed of by noting the said factor

also.

h.On 25.08.2001, the Director of Mines made a note

in the application No. 84AML 2001 and 92AML 2001 for

grant of mining lease over an area covered by M.L.

No.2010 to the effect that the said area was

surrendered by M/s. Dalmia, that two applications had

been received in respect of the said area, that Rule

59(1) of MCR Rule was attracted and therefore the

applications were not considered. The said

endorsement was made by Mr. Reddy, the then

Director of Mines and Geology.

i.On 26.09.2001, the suit filed by M/s. Dalmia

against the appellant in O.S. No.53 of 1993 on the file

of Civil Judge, Hospet in respect of the boundary

dispute was dismissed for non-prosecution.

j.On 09.01.2002, the Director of Mines ordered the

Deputy Director, Hospet to survey and demark the

area covered by the appellant’s lease, since O.S. No.53

of 1993 was dismissed and M/s. Dalmia surrendered its

lease.

C.A. No……..of 2015 SLP (C) 32226 of 2009 34 of

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Page 35 k.On 30.01.2002 M/s. Dalmia paid a sum of

Rs.22,332.00/- stated to be the arrears in respect of

M.L. NO.2010 and obtained no due certificate dated

31.02.2002.

l.On 04.02.2002 M/s. Dalmia applied to the State

Government the application for transfer of M.L.

No.2010 to the first Respondent.

m.On 06.02.2002, the Director of Mines and

Geologist namely the same Mr.Reddy recommended

the application for transfer.

n.On 16.03.2002, the State Government allowed the

application of M/s. Dalmia in favour of the first

Respondent.

o.On 21.07.2002, the Principal Chief Conservation of

Forest, Bangalore wrote to the Principal Secretary,

Department of Commerce and Industries pointing out

the failure of M/s. Dalmia to fulfill the conditions of in-

principle stage-I approval dated 24.12.1997 and

requested the State Government to withdraw the order

dated 16.03.2002.

p.In the Order dated 10.11.2004, learned Single

Judge of the Karnataka High Court set aside the order

of transfer dated 16.03.2002.

q.Pending first Respondent’s W.A. No.5377 of 2004,

the Central Government granted in-principle stage-I ex

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Page 36 post facto approval to the first Respondent on

13.09.2006.

r.During the pendency of Special Leave Petition, by

order dated 09.09.2010 stage II clearance in favour of

the first Respondent was granted. But by the Supreme

Court’s order dated 23.09.2010 the first Respondent

was directed to maintain status quo.

s.For transfer of M.L. No.2010 in favour of first

Respondent M/s. Dalmia has received a sum of

Rs.74,11,559/-.

t.After the order of transfer, the first respondent

paid Rs.2,18,42,600/- amount on 11.05.2004 to comply

with the condition imposed in the earlier in-principle

stage I clearance of 1997 pursuant to order dated

16.03.2002.

48.Having considered the rival submissions of the respective

counsel, the following questions arise for consideration:

i.Whether M/s. Dalmia surrendered the mining lease

bearing No.M.L.2010 and whether such surrender

has become final leaving no scope for M/s. Dalmia

to transfer it in favour of the first respondent?

ii.Whether for the purpose of surrender of a mining

lease to come into effect the expiry of the period of

12 months from the alleged date of surrender is

mandatory or not?

C.A. No……..of 2015 SLP (C) 32226 of 2009 36 of

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Page 37 iii.Whether there was surrender of 196.58 hectares of

forest land made by M/s. Dalmia on 16.04.1999 out

of the total extent of 331.50 hectares and thereby

what remained with M/s. Dalmia was only 134.92

hectares for which also there was no ex post facto

approval by the MOEF?

iv.Whether the act of surrender in order to become

complete should have been accepted by the State?

v.Whether pursuant to the act of surrender, delivery

of possession is mandatory under Rule 27(2)(l) of

the Mineral Concession Rules?

vi.Even if surrender has not taken place by reason of

the non-compliance of in-principle stage-I approval

granted in the order dated 24.12.1997 whether the

mining lease stood automatically expired on

24.11.2003?

vii.Whether by virtue of Rules 29 and 37 of the Mining

Concession Rules read with Section 19 of the MMDR

Act any mining lease in contravention of the Act

become void ab initio?

viii.Whether after the coming into force of the Forest

Act of 1980 when approval under Section 2 of the

said Act is mandatory, can it be said that there

could be any scope for ex post facto approval in

violation of the said provision. Whether the order of

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Page 38 Godavarman case can be relied upon for

subsequent renewals?

ix.Whether after the newly amended Forest

Conservation Rules 6, 7 and 8 non-compliance of

Section 2 of the Forest Act would still make the

lease void ab initio?

x.Whether right of renewal of the lease under MMDR

Act and the action of grant of approval under the

Forest Act are independent and one does not affect

the other?

xi.Whether based on the requirement of Central

Government approval under Section 5 of the MMDR

Act which was existing prior to the coming into force

of the Forest Act, 1980, can it be said that such a

requirement is now made as a mandatory one under

Section 2 of the Forest Act for a mining lease to

remain valid?

xii.Whether Section 10(1) and the second proviso to

Section 11 of the MMDR Act as well as Rule 37 and

59 of the Mineral Concession Rule mandatory to the

effect that any transfer applied for under Section 37

(1)(a) cannot be automatically granted?

xiii.Whether the order of transfer dated 16.03.2002 was

bonafide taking into account the sequence of

events?

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Page 39 xiv.Whether the transfer of lease by order dated

16.03.2002 can be held to be valid since such

transfer order came to be passed before the expiry

of the first renewal, namely, before 24.11.2003?

xv.Whether the stage-I approval dated 13.09.2006 and

the final approval dated 09.09.2010 can be held to

be valid in the light of the order of this Court dated

26.10.2005?

49.In order to consider the first question as to whether M/s. Dalmia

surrendered the mining lease M.L. No.2010 and whether such

surrender has become final and conclusive, we have to recapitulate

certain basic facts relating to the said lease. The said lease M.L.

No.2010 was granted on 25.11.1953 for 30 years and the extent of

land was 331.50 hectares covering 819.20 acres of forest land in

Jaisinghpur village R.N. Block, Sandur Taluk, Bellary District. The

said initial lease period expired on 24.11.1983 and by order dated

07.03.1986 the lease was renewed for another 20 years

retrospectively from 25.11.1983, which was to expire by 24.11.2003.

The relevant fact to be noted is that by the time the lease expired

on 24.11.1983, the Forest Act 1980 had come into force and under

Section 2 of the Forest Act in order to carry on any further mining

activity in the entirety of the 331.50 hectares of land covered by

M.L.No. 2010, the prior approval of the Central Government was

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Page 40 necessary and required. It is not in dispute that when the mining

lease was renewed by order dated 07.03.1986 by the Department of

Mines of the State Government, Section 2 of the Forest Act of 1980

was not complied with. It remained unnoticed till the issue came to

be considered by this Court in the judgment concerned in

Godavarman-I. By virtue of the direction issued by this Court all

the mines, which did not comply with the requirement of Section 2

of the Forest Act were directed to stop all their mining activities.

Consequently by order dated 25.01.1997 the second respondent

herein namely Director of Mines and Geology called upon M/s.

Dalmia to stop all mining activities pertaining to M.L. No.2010 and

the mining activities were stopped by M/s. Dalmia. Thereafter, by

the Godavarman-II judgment, which is reported in (1997) 3 SCC

312, the MOEF was directed to consider those applications for ex

post facto approval. Pursuant to the said direction of this Court, by

order dated 24.12.1997, MOEF granted conditional in-principle

stage-I approval for the renewal of M/s. Dalmia’s mining lease for an

extent of 201.50 hectares of forest land. The said stage-I approval

was subject to fulfillment of specific conditions within six months

from the date of the order. It was also specifically mentioned that

only after receipt of compliance report of the conditions stipulated in

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Page 41 the stage-I approval, consideration for grant of final approval under

Section 2 of the Forest Conservation Act would be made and issued.

After the receipt of the order dated 24.12.1997 M/s. Dalmia

surrendered 196.58 hectares of land out of 331.50 hectares to the

forest department of the State Government through their letter

dated 16.04.1999. By virtue of the said surrender made by M/s.

Dalmia out of 331.50 hectares the M/s. Dalmia can be said to have

retained only 134.92 hectares for its mining operations. Be that as it

may, on 27.03.2001 M/s. Dalmia wrote to the Directors of Mines and

Geology expressing its decision to determine the lease and

surrender the remaining area and gave notice as required under the

terms of the mining lease deed for determination of the lease. In the

said letter M/s. Dalmia mentioned that such determination of lease

would take effect upon expiry of 12 months notice period from

01.04.2001 or earlier if permitted by the State Government.

50.In response to the said communication of M/s. Dalmia, the State

Government through the office of the Director of Mines and Geology

in its letter dated 25.05.2001 addressed to the Senior Geologist of

the State Government stated that M/s. Dalmia has stopped all its

mining activities from 1997 and that it has now expressed in its

letter dated 27.03.2001 to surrender the lease, namely, M.L.No.

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Page 42 2010 even earlier than the 12 months period and called upon the

said officer to intimate as to whether any arrears were due and

payable by M/s. Dalmia for taking further action. Copy of the said

communication dated 25.05.2001 was also sent to M/s. Dalmia for

information and also by way of instructions to surrender the lease

deed book in respect of M.L.No. 2010 along with the mining plan

approved by Indian Bureau of Mines immediately for taking further

action. In response to the said letter of Director of Mines and

Geology M/s. Dalmia forwarded its letter dated 16.06.2001 directly

addressed to the Director of Mines and Geology mentioning that as

instructed by the said authority, they surrender the lease deed book,

namely, M.L.No. 2010. The said letter further stated that the mining

plan was not available with them. It was specifically mentioned at

the bottom of the said letter that mining lease deed book was being

enclosed along with the said letter.

51.When we make a reference to M/s. Dalmia’s earlier letter dated

16.04.1999, the intention of M/s. Dalmia of its decision to surrender

196.58 hectares out of 331.50 hectares was explicitly stated. If the

said decision taken by M/s. Dalmia is accepted which decision was

clearly spelt out in the said communication dated 16.04.1999 what

was really retained by it subsequent to the stage-I in-principle

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Page 43 approval of MOEF dated 24.12.1997 was only 134.92 hectares. In

fact, it is mentioned therein that originally an area of 130 (331.50 –

130 = 201.50) hectares was already surrendered by it prior to

16.04.1999, that virgin area not broken up in an extent of 66.58

hectares was being surrendered as disclosed in the letter dated

16.04.1999 and consequently what was practically retained by it

was only 134.92 hectares. It was also stated in the said letter that

when such was the position relating to the actual land area retained

by M/s. Dalmia with reference to which any demand by way of penal

compensation aforestation charges could be claimed, the same

could not have been claimed for 201.50 hectares as mentioned in

the stage-I in-principle approval granted in the order dated

24.12.1997. Though the said communication dated 16.04.1999 at

the instance of M/s. Dalmia was addressed to the forest department,

in that context, it was very clearly stated that what was retained by

it as on that date was only 134.92 hectares, out of the total extent

of 331.50 hectares. It is necessary to keep the said factor in mind

while considering the issue relating to the surrender raised in these

proceedings.

52.Apart from the above factors, certain other factors relating to

the factum of surrender are also required to be noted. At the

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Page 44 instance of the appellant herein a writ petition came to be filed in

Writ Petition No.6304 of 1998 in the High Court of Karnataka as

against the Mine Authorities and Chief Conservator of Forest as well

as M/s. Dalmia. In that writ petition, the issue pertained to a

boundary dispute as between the appellant and M/s. Dalmia. But the

said Writ Petition came to be disposed of by learned Single Judge by

order dated 26.06.2001 by stating as under:

“7. A subsequent development requires to be noticed at

this stage when the matter came up for consideration on

the last date of hearing Shri B.T. Parthasarthy appearing

for 3

rd

respondent stated that the 3

rd

respondent is no

longer interested in working in the mine situated in the

land adjoining the petitioner’s land therefore at present

no boundary dispute as such exists between the

petitioner and the 3

rd

respondent. This will have some

bearing on the validity of the impugned order dated

06.11.1997 as the entire order is on the assumption that

a boundary dispute exists between the petitioner and the

neighboring owner. Be that as it may.”

(Emphasis added)

53.The said stand of M/s. Dalmia which was the third respondent in

that writ petition also disclosed that M/s. Dalmia categorically made

it clear that it was not operating the mines covered by M.L.No. 2010.

After the letter of M/s. Dalmia dated 27.03.2001 expressing its

decision to surrender the lease and determine the same, the

Director of Mines sent its communication dated 25.05.2001 pursuant

to which M/s. Dalmia surrendered the lease deed book of M.L.No.

C.A. No……..of 2015 SLP (C) 32226 of 2009 44 of

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Page 45 2010 along with its letter dated 16.06.2001. Thereafter, an

application came to be filed at the instance of a company called

‘M.S.P.L. Limited’ through its Executive Directed Mr. Rahul Baldota

on 21.07.2001 for the grant of mining lease which was held by M/s.

Dalmia and shown as government land in its application. In the said

application an endorsement was made on 25.08.2001 by the

Director of Mines to the effect that the area applied for fell within

the area surrendered by M/s. Dalmia, that a prior application was

also made for mining lease over the same area by third parties, that

under Rule 59(1) of the Mineral Concession Rules grant of mining

lease can be only by way of a notification in the official gazette and

therefore such grant cannot be considered based on individual

applications. In this context it is also relevant to note that on

30.01.2002 M/s. Dalmia made a payment of Rs.22,332/- towards

arrears payable by it in respect of M.L.No. 2010, which was

acknowledged by the Deputy Director of Department of Mines and

Geology in its letter dated 31.01.2002. The said letter specifically

stated that as per the revised audit report the arrears were

determined in a sum of Rs.22332/- and the same was paid by M/s.

Dalmia through DD No.88545 dated 30.01.2002 and thereby no due

certificate was being issued. One other relevant document of the

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Page 46 office of the Director of Mines and Geology is the letter dated

09.01.2002 addressed to its own Deputy Director wherein the

Director of Mines while calling upon the Deputy Director to

demarcate the area of mining lease No.2151 of the appellant

mentioned therein that the said survey is required to be made for

the purpose of renewal of M.L.No. 2151 inasmuch as the boundary

dispute as between the appellant and M/s. Dalmia which was

pending in the Civil Court in O.S. No.53 of 1993 was dismissed for

non-prosecution on 26.09.2001 and the further fact that M/s. Dalmia

surrendered their lease as on that date and therefore the dispute as

between appellant and M/s. Dalmia did not survive.

54.Keeping the above material facts relating to the alleged

surrender of mining lease in M.L.No. 2010 by M/s. Dalmia, the

various submissions relating to the said surrender by the respective

counsel requires to be dealt with.

55.While considering the various questions on surrender, the first

question that arise for consideration relates to the surrender of

196.58 hectares of forest land which was made by M/s. Dalmia on

16.04.1999 out of the total extent of 331.50 hectares and that what

remained with it was only 131.44 hectares. To show that M/s.

Dalmia earlier surrendered 196.58 hectares, its own letter dated

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Page 47 16.04.1999 was placed before us. When we perused the letter dated

16.04.1999 of M/s. Dalmia which was addressed to the Principal

Chief Conservator of Forest, Bangalore, it is mentioned therein that

they have already surrendered 130.1 hectares out of 331.50

hectares and the balance area in their possession was only 201.50

hectares. Even out of the remaining 201.50 hectares, according to

M/s. Dalmia, 110 hectare was broken up for mining, 5.75 hectare

was used for roads, dams, stores, office etc., 19.17 hectares was

broken up but unusable virgin area used for roads and that it was

non ore-bearing area and the remaining virgin area which was not

yet broken and which was being surrendered was 66.58 hectares. It

is also further stated therein that the management decided to

surrender even the virgin area of 66.58 hectares and ultimately

wanted to retain only 134.92 hectares.

56.In fact this letter, dated 16.04.1999 apparently appeared to

have been sent in response to the in-principle stage-I approval

granted by the Government of India in its letter dated 24.12.1997

wherein certain conditions were imposed. While responding to the

said order, M/s. Dalmia in its letter dated 16.04.1999 mentioned that

as far as conditions (i) and (ii) of the Government of India dated

24.12.1997, no action need be taken since it decided to surrender

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Page 48 nearly 196.58 hectares and what was to be retained was only

134.92 hectares. As regards condition No.(iii), namely, the cost of

penal compensatory aforestation charges was concerned, while

referring to the demand, twice the area of 201.50 hectares i.e. 403

hectares @ Rs.40,700/- per hectare, M/s. Dalmia pointed out that

there cannot be a demand by Government of India to that extent

and at best the demand can only be raised in respect of the broken

up area of 134.92 hectares. It was further contended that since M/s.

Dalmia was carrying mining operations even in that 134.92 hectares

with the permission of the State Government Authorities from time

to time, no penal compensatory aforestation charges can be claimed

over that area.

57.When we consider the said letter of M/s. Dalmia what transpires

is that a conscious decision was taken by M/s. Dalmia to surrender

196.58 hectares and its further decision to retain only 134.92

hectares in the year 1999 after the earlier surrender of 130 hectares

prior to 1999. The said decision of M/s. Dalmia, which was

consciously taken as early as on 16.04.1999 disclose that it

possessed as on that date only 134.92 hectares out of 331.50

hectares, which it was holding earlier under M.L. No.2010 of 2010.

When the said factual position cannot be controverted, having

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Page 49 regard to the document which was addressed by M/s. Dalmia to the

Principal Chief Conservator of Forest, Bangalore with a copy marked

to the Inspector General of Forest, Ministry of Environment and

Forest Government of India and other State Level Officers of the

Forest Department, M/s. Dalmia cannot later on turn around and

state that it continued to retain with it the whole extent of 331.50

hectares covered by M.L. No.2010.

58.Keeping the said aspect in mind relating to the action of

surrender effected by M/s. Dalmia, when we proceed to examine the

further development that had taken place after 16.04.1999, what

comes next is the letter dated 27.03.2001 which was again a

communication written by M/s. Dalmia to the Director of Mines and

Geology of its decision to determine the lease in its favour and to

surrender the remaining area under the terms of the mining lease

deed. It will be necessary to make a detailed reference to the

contents of the said communication dated 27.03.2001.

59.Before referring to the contents of the said letter, it will have to

be kept in mind that pursuant to the general directions issued by

this Court in Godavarman-I, all mining operations through out the

country were directed to be stopped for violation of Section 2 of the

Forest Act, 1980. By virtue of the general directions issued by this

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Page 50 Court, the mining operations in respect of M.L.No. 2010 also came to

a grinding halt from the last week of January 1997. Thereafter, by

virtue of the order passed in Godavarman-II, ex post facto

approval under Section 2 of the Forest Act was considered and by

order dated 24.12.1997 the in-principle stage-I clearance was

granted by imposing three conditions for M/s. Dalmia to comply. In

the said letter dated 24.12.1997 also, it was specifically mentioned

that such approval for renewal of mining lease was granted for an

extent of only 201.50 hectares of forest land and thereby affirming

the earlier surrender of 130.11 hectares of land long prior to

16.4.1999. Condition No.(i) stated that immediate action should be

taken for transfer and mutation of non-forest land equivalent in

extent to the forest area to be broken up afresh and condition No.(ii)

mentioned that user agency will transfer the costs of compensatory

aforestation over non-forest land in favour of State Forest

Department. Condition No.(iii) further directed that user agency

should transfer the cost of penal compensatory aforestation raised

as on that date to incorporate existing structure over double the

degraded forest land in favour of the state forest department.

60.We have earlier noticed that as a sequel to the said letter dated

24.12.1997, when M/s. Dalmia was faced with the requirement of

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Page 51 compliance of those three onerous conditions, M/s. Dalmia in its

letter dated 16.4.1999, took the stand that it has decided to retain

only 134.92 hectares and that since even in respect of 134.92

hectares, mining operations were carried on with the permission of

the State Government authorities, even condition No.(iii) need not

be complied with.

61.In that background, when we now refer to the present letter of

M/s. Dalmia dated 27.3.2001 addressed to the Director of Mines and

Geology, we find, that, in the said letter M/s. Dalmia expressed its

proposed decision to determine the lease and surrender the same.

It also mentioned that it was giving twelve months’ notice as

required under paragraph 4 of Part VIII of the mining lease deed

executed between M/s. Dalmia and Government of Karnataka

through the Director of Mines and Geology, that the Director of

Mines and Geology should determine the lease on expiration of

twelve months period i.e. from 01.04.2001 or earlier if the Director

of Mines and Geology permit to do so. In the last para of the said

letter, it was reiterated on behalf of M/s. Dalmia that out of 331.50

hectares it had already surrendered an area of 196.58 hectares to

the Forest Department through its letter dated 16.4.1999 which

should also be kept in mind by the Director of Mines and Geology.

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Page 52 62.A cumulative consideration of the letter dated 16.4.1999 along

with the ex post facto approval order dated 24.12.1997 and the

letter dated 27.3.2001 of M/s. Dalmia, it transpires that as on

27.3.2001 M/s. Dalmia was in possession of only 134.92 hectares of

the total area of 331.50 hectares covered by mining lease No.2010.

As noted by us in the letter dated 27.3.2001, M/s. Dalmia wanted

the Director of Mines and Geology to determine the lease even in

respect of 134.92 hectares which was in its physical possession,

either on expiry of the twelve months’ period or any earlier date

which the concerned authority may permit. To be more precise,

M/s.Dalmia surrendered 130 hectares of land prior to 16.04.1999.

Along with its letter dated 16.04.1999 surrender of 196.58 hectares

was effected. The remaining 134.92 hectares was surrendered

through its letter dated 27.03.2001.

63.In response to the said letter dated 27.3.2001, the office of the

Director of Mines and Geology in their letter dated 25.5.2001

addressed to the Senior Geologist of the State Government,

Department of Mines and Geology instructed him by stating that

M/s. Dalmia had stopped mining operations in the area covered by

M.L. No.2010 since 1997, that they wanted to surrender the lease

with the Department of Mines and Geology and, therefore, intimate

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Page 53 as to whether any arrears were due from M/s. Dalmia. A copy of the

said letter dated 25.5.2001 was marked to M/s. Dalmia. While

marking the said communication, it was stated that it was being

forwarded for information and with an instruction to surrender the

lease deed book in respect of M.L. No.2010 along with the mining

plan approved by Indian Bureau of Mines immediately for taking

further action.

64.In response to the copy of the letter dated 25.5.2001 of the

Director of Mines and Geology, M/s. Dalmia along with its letter

dated 16.6.2001 by referring to the instructions mentioned in the

letter dated 25.5.2001 stated that it was surrendering the lease

deed book in respect of M.L. No.2010 and that the approved mining

plan was not available with it. At the bottom of the said letter, it

was stated that mining lease deed book was being enclosed along

with the said communication.

65.That apart, in the Writ Petition which was pending before the

High Court of Karnataka in WP 6304 of 1998 as between the first

respondent and the Director of Mines, as well as, Chief Conservator

of Forest where M/s. Dalmia was also a party respondent, namely,

third respondent, on its behalf its counsel represented before the

High Court that M/s. Dalmia was no longer interested in the working

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Page 54 of the mines situated in the land adjoining the writ appellant,

namely, the first respondent therein and, therefore, as on that date,

no boundary dispute was existing as between them. The said stand

of M/s. Dalmia was the main ground which weighed with the learned

Single Judge for setting aside the order dated 16.11.1997 which was

impugned before it in the said Writ Petition at the instance of the

first respondent. The said stand of M/s. Dalmia was clearly reflected

in the order of the Learned Single Judge dated 26.6.2001.

66.Apart from the above facts, after the forwarding of the letters

dated 16.4.1999, 27.3.2001 and 16.6.2001 by M/s. Dalmia whereby

the surrender of the lands in its entirety, as well as, the mining lease

itself, third parties were aspiring to get the mining lease in respect

of the surrendered lands held by M/s. Dalmia. One such application

was taken out by one M/s. M.S.P.L. Ltd. through its Executive

Director, Mr. Rahul Baldota. The said application was made on

21.7.2001 for grant of mining lease in its favour. The said

application was considered by the Director of Mines and an

endorsement was made on the said application by the Director of

Mines on 25.8.2001 which has been placed before this Court. On a

perusal of the said document, we find the following endorsements

made by the Director of Mines viz:

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Page 55 “the area in respect of which mining lease is sought for

by the applicant in the present application had been

already granted by ML 2010 to M/s. Dalmia Cements

(Bharat) Ltd. The area applied falls within the

surrendered area by them (M/s. Dalmia Cements). Two

applications 84 AML 2001 and 92 AML 2001 seeking

mining lease have been received in respect of this area.

Rule 59(1) of MCR Rules is attracted. At present

consideration of the application is not possible as the

area is not available.

Sd/- 25.8.2001.”

67.The Director of Mines while referring to the surrender of M.L.

No.2010 by M/s. Dalmia noted that the said area falls within the

surrendered area, that two applications 84AML 2001 and 92AML

2001 seeking mining lease were received in respect of that area but

since Rule 59(1) of MCR Rules was attracted, consideration of

application for grant of lease was not possible and that the area was

not available for such a grant.

68.A cumulative consideration of all the above sequence of events

disclose that right from 1999 in fact even prior to that date, M/s.

Dalmia surrendered major part of the land covered by M.L. No.2010

and that by its letter dated 27.3.2001, it expressed its decision to

determine the lease of the remaining area of 134.92 hectares and

wanted the Director of Mines to accept such surrender either after

the expiry of twelve months’ period or even earlier. By 25.5.2001,

the Director of Mines in response to M/s. Dalmia’s desire to

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Page 56 determine the lease, directed it to surrender the lease book of M.L.

No.2010 as well as the mining plan, and that M/s. Dalmia

surrendered the lease book while stating that mining plan was not

available with it at that point of time. Closely followed by that, when

third parties applied for grant of lease, the Director of Mines stated

in no uncertain terms that those lands were surrendered by M/s.

Dalmia but lease cannot be granted based on applications and that

Rule 59 (1) of MCR Rules will have to be followed for grant of such

lease. In fact, subsequent to the above development on 26.9.2001,

the suit filed by M/s. Dalmia against first respondent relating to the

boundary dispute was also dismissed for non-prosecution. Yet

another factor to be borne in mind is that on 30.1.2002, M/s. Dalmia

paid a sum of Rs.22,332/- towards the arrears in respect of its

mining lease and claimed that no further amount was due and

payable in respect of M.L. No.2010. By a letter dated 31.1.2002, the

office of the Deputy Director, Department of Mines and Geology

issued a no dues certificate to M/s. Dalmia by acknowledging the

receipt of Rs.22,332/- based on the revised audit report and that no

other amount was due in respect of the said mining lease.

69.If we consider the above material evidence placed before us, it

can be stated that as on 27.3.2001 M/s. Dalmia tacitly decided to

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Page 57 surrender its mining lease M.L. No.2010 and that in pursuance of the

said decision, it informed the Director of Mines and Geology to

determine the lease either on expiry of twelve months or on any day

earlier to that and in response to the said desire expressed by M/s.

Dalmia, the Director of Mines and Geology also responded by

directing M/s. Dalmia to surrender the lease book as well as the

mining plan and then subsequently also collected whatever arrears

which were due and payable by M/s. Dalmia as on 31.01.2002. It

must, therefore, be held that in effect the leasehold rights of M/s.

Dalmia had come to an end by 31.1.2002.

70.Keeping the said factual scenario in mind, when we consider the

contentions made on behalf of the respective parties according to

the appellants, M/s. Dalmia had surrendered the entirety of the

lands held by it under M.L.No. 2010 which surrender had come into

effect pursuant to its letter dated 27.03.2001 accepted and

acknowledged by the Department of Mines and Geology in their

letter dated 31.01.2002. We have also noted the various factual

aspects of the development that had taken place in regard to the

said surrender of M/s. Dalmia and noted that a conscious decision

was taken by M/s. Dalmia to surrender its mining lease in M.L.No.

2010 and factual surrender was also effected in writing to the

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Page 58 Director of Mines and Geology and that the Office of Director of

Mines and Geology also acknowledged such surrender. However, not

to accept the plea of surrender as projected, on behalf of the

appellants Mr. K.K.Venugopal and Mr.Krishnan Venugopal relied

upon various statutory prescriptions and contended that in reality if

the case of surrender pleaded by the appellants is to be accepted,

the compliance of such statutory requirements have to be fulfilled.

71.In furtherance of such contention in the first place Mr. Krishnan

Venugopal, learned senior counsel contended that as prescribed

under Rule 29 of M.C.R. Rules completion of 12 months period from

the date of the intimation of the surrender should have been

completed which is mandatory for the surrender to come into effect.

In other words, the contention was that in law for the surrender to

take place the mandatory requirement of 12 months period was

necessarily to be fulfilled. It was also contended that under Rule 29,

which is negatively coached and it is mandatory for the surrender to

come into effect 12 months period should lapse. It was also

contended that under the said Rule surrender has to be to the State

Government or such other officer or specified authority. It was

further contended that if a third party come forward with a case of

surrender, a duty is cast on the third party to satisfy that letter of

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Page 59 surrender was sent to such authority and the burden is heavily upon

such third party to establish the said fact. In order to give a thrust to

the above submissions, namely, the satisfaction of the compliance

of the mandatory prescription contained in Rule 29 reliance was also

placed upon Section 11(A) as well as the schedule and contended

that the philosophy underlying the MMDR Act was that every single

requirement of Rule 29 should be satisfied in order to accept the

theory of surrender pleaded on behalf of the appellants. It was also

contended that minerals other than minor minerals are controlled by

the Central Government, power is vested with the Central

Government to make rules and the State Government are bound by

the rules of the Center and case of surrender cannot come into

effect unless the statutory prescriptions contained in the Rules are

strictly adhered to.

72.In support of the above submissions reliance was also placed

upon the terms of the lease as specified in Form ‘K’ in particular

paragraph 4 of Part VIII of Form ‘K’ to contend that notice of

termination should be for full 12 calendar months and that too on

ratification of the required formalities. It was contended that there

was no power with the delegate of State Government to accept or

determine the lease instantaneously.

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Page 60 73.The sum and substance of the contention on this aspect by the

learned counsel for the first respondent was that major mineral

being under the exclusive control of the Government of India, there

should be strict compliance of the statutory requirements both in

respect of grant of lease as well as the termination of it either by

surrender or by way of termination at the instance of the State and

that such requirement is contained in Rule 29 which is negatively

couched and, therefore, when such prescription for the purpose of

surrender to come into effect has been specifically spelt out in the

statutory rule read along with para 4 of Part VIII of the lease

document, such surrender propounded on behalf of the appellant

can be accepted only if it was satisfactorily demonstrated that those

statutory prescriptions were strictly applied and followed.

74.As against the above submissions, on behalf of the appellant Mr.

Kapil Sibal, learned senior counsel contended that there was no

lacunae in accepting the surrender offered by M/s. Dalmia, that such

surrender had really taken place by virtue of the conduct of the

parties, namely, M/s. Dalmia as well as the Department of Mines and

Geology of the State Government and, therefore, it was too late in

the day for the first respondent to contend that the surrender made

by M/s. Dalmia had not taken place.

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Page 61 75.Having considered the respective submissions on this question,

there can be no two opinions that when the grant, operation and

termination of mining lease is governed by the MMDR Act and the

Mineral Concession Rules, anyone of those factors viz., either grant

of lease, operation of the mines based on such grant and the

termination of it either by way of surrender at the instance of the

lessee or by way of termination at the instance of the State should

be carried out strictly in accordance with the prescribed stipulations

of the provisions of the above Act and the Rules.

76.Keeping the said legal principles in mind, when we refer to Rule

29, the caption of the said Rule reads as “restriction on

determination of lease”. The relevant part of the said Rule can be

extracted while analyzing its implications which reads as under :

“29. Restrictions on determination of lease.- (1) The

lessee shall not determine the lease except after notice in

writing of not less than twelve calendar months to the

State Government or to such officer, or authority as the

State Government may specify in this behalf.”

Sub-Rule (1) states that the lessee shall not determine the lease

after notice in writing of not less than 12 calendar months to the

State Government or to such officer or authority as the State

Government may specify in this behalf. While referring to sub-Rule

(1), it will be necessary to refer to Form ‘K’ which is the model form

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Page 62 of mining lease deed. As per M.L.No. 2010, which has been drawn

as per Form ‘K’, it is not in dispute that the said lease deed was as

between the State Government which expression should be

deemed to include the successors and assigns who would be the

first party as the lessor. Paragraph 4 of Part VIII, which is the

provision for determination of the lease by way of surrender as

prescribed under Rule 29, stipulates that the lessee may at any

time determine the lease by giving not less than 12 calendar

months’ notice in writing to the State Government to such office or

to such officer or authority as the State Government may specify in

that behalf and the rest of the stipulation contained therein refers

to the payment of rents, water rates, royalties, compensation for

damages etc. Therefore, reading Rule 29(1) what is provided is that

not less than 12 calendar months notice should be issued by the

lessee for determining the lease and such notice should be issued

to the State Government or to such officer or authority as the State

Government may specify in that behalf.

77.In fact, Xerox copy of the mining lease M.L.No. 2010 referring to

the date of grant as 07.03.1986 providing for 20 years from

25.11.1983 duly registered as document No.28 of 1986-87 has been

placed before us. On a reference to the said document, we find that

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Page 63 while on behalf of M/s. Dalmia, one P.M. Balasubramaniam has

affixed his signatures, on behalf of the Governor of Karnataka, the

Director of Mines and Geology has put his signature along with one

K.R.Nirmala, Superintendant of DMG, Bangalore. One other relevant

fact to be noted from the said document is para 5 falling under Part

VIII which reads as under:

“5. On such date as the State Government may elect

within 12 calendar months after the determination of this

lease or of any renewal thereof, the amount of the refund

of security deposit paid in respect of this lease and then

remaining in deposit with the State Government and not

required to be applied to any of the purposes mentioned

in this lease shall be refunded to the lessee/lessees. No

interest shall run on the security deposit.

(underlining is ours)

78.When we examine the contention made on behalf of the first

respondent about the statutory requirement to be satisfied under

Rule 29 read along with para 4 and 5 of Part VIII of the lease deed, it

is clear that on behalf of the lessor, namely, the State Government,

the signatory to the lease deed was the Director of Mines and

Geology. Therefore, there can be no controversy as to who can

validly represent the State Government with reference to the grant

of lease, operation of it as well as its determination who is none

other than the Director of Mines and Geology. When the Director of

Mines and Geology was authorized to sign the lease deed on behalf

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Page 64 of the Governor of the State of Karnataka, it must be taken to mean

that he was the authority who was validly authorized by the State

Government as stipulated in Rule 29(1) of the Rules for the purpose

of the lessee to inform about its decision to determine the lease

while giving 12 months’ notice. It must be stated that the very fact

that the Director of Mines and Geology was authorized to sign the

lease deed on behalf of the Governor of State of Karnataka, it was

quite explicit that he was the only authority who was competent to

authenticate the grant of the lease as well as for its determination.

Unless there was any other Authority prescribed to carryout the said

task as a statutory requirement.

79.Once we steer clear of the said position as to who is the

competent authority for the purpose of operating Rule 29(1), any

amount of reliance placed upon the Notification No.CI3MMM95,

Bangalore dated 27.05.1995 issued by the Commerce and Industries

Department of the State of Karnataka will be of no avail. The said

notification was relied upon to contend that while specific direction

was issued to the effect that the powers exercisable by the State

Government in relation to matters with reference to various

provisions as conferred by sub-section (2) of Section 26 of the

MMDR Act vested with the Director of Mines and Geology,

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Page 65 Government of Karnataka, there was no reference to the powers

exercisable by the State under Rule 29. When the State of Karnataka

had authorized the Director of Mines and Geology to sign the very

mining lease deed itself on behalf of the Governor of State as

disclosed in the Xerox copy of the mining lease M.L.No. 2010, it is

futile on the part of the first respondent to contend that for the

purpose of determination of that very lease, a different Authority

should be preferred. In fact, M/s. Dalmia itself having understood

the prescribed Authority, sent its letter of determination of the lease

dated 27.03.2001 only to the Director of Mines and Geology. The

said Authority also responded to the letter of determination in its

letter dated 25.05.2001 addressed to its subordinate officer marking

a copy to M/s.Dalmia. Therefore, the said contention raised on

behalf of the first respondent that the surrender of the lease not

having been forwarded to the authorized officer of the State

Government by M/s. Dalmia, the so-called letter of surrender dated

16.04.1999 and 27.03.2001 cannot be validly construed as the act

of M/s. Dalmia to determine the lease is to be stated only to be

rejected. We are afraid that it is too late in the day for the first

respondent to come forward with such a contention when M/s.

Dalmia having entered into lease deed with the State of Karnataka

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Page 66 duly represented by the Director of Mines and Geology exercised its

right to determine the lease by addressing its communication on

27.03.2001 to the very same Authority. It must be stated that such

a decision taken and communicated by M/s. Dalmia to the Director

of Mines and Geology was valid in law and was in consonance with

the prescription contained in sub-Rule (1) of Rule 29.

80.What remains to be considered is the question whether one

should wait for the expiry of the 12 months period to lapse from

27.3.2001 for the surrender to come into effect by relying upon para

4 of Part VIII of the lease deed. In the first place, even according to

M/s. Dalmia in their letter dated 27.3.2001 M/s. Dalmia themselves

while giving 12 months notice as required under para 4 of Part VIII of

the mining lease deed also stated that it may be determined on any

earlier date i.e. prior to 1.4.2001 if the Director of Mines and

Geology so permit. When such a categorical stand was made on

behalf of M/s. Dalmia, acting upon it, the office of Director of Mines

and Geology in their letter dated 25.5.2001 addressed to the Senior

Geologist while marking its copy to M/s. Dalmia directed it to

surrender the lease deed book along with the mining plan

immediately to enable its office to take further action. In fact, in the

body of the letter addressed to Senior Geologist, the Director of

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Page 67 Mines and Geology specifically mentioned that M/s. Dalmia wanted

to surrender the lease M.L. No.2010 earlier than 12 months period.

Apart from such specific instructions issued, M/s. Dalmia themselves

in their reply dated 16.6.2001 to the Director of Mines and Geology

surrendered the lease deed book of M.L. No.2010 and as regards the

mining plan it stated that the same was not available with it.

Thereafter, as was noticed earlier, on 30.1.2002, M/s. Dalmia paid a

sum of Rs.22,332/- towards arrears in respect of the mining lease

which was also acknowledged by the Director of Mines and Geology

which was duly communicated to M/s. Dalmia by stating that by

issuing such no due certificate, no further amount was due and

payable in respect of said mining lease.

81.When we consider the above correspondence exchanged

between M/s. Dalmia and the office of the Director of Mines and

Geology, there is no room for doubt for anyone to still contend that

the surrender had not come into effect. On the other hand, we find

that there was due compliance of Rule 29(1) when M/s. Dalmia

expressed its desire to determine the lease in its letter dated

27.3.2001 addressed to Director of Mines and Geology. Then by

specifically stating in the said communication that it may even be

permitted to determine the lease prior to 12 months period and that

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Page 68 based on such specific plea made on behalf of M/s. Dalmia, the

Director of Mines and Geology also decided to determine the lease

without waiting for the expiry of 12 months period by calling upon

M/s. Dalmia to surrender the lease book which was also duly

surrendered by M/s. Dalmia on 16.06.2001 and thereafter by issuing

a no due certificate on 31.2.2002, the said sequence of events had

put an end to the operation of the lease in M.L.No. 2010 by duly

accepting the surrender made on behalf of M/s. Dalmia. The

contention that there was no scope for such surrender to come into

effect before the expiry of twelve months is concerned, it will also

be relevant to make a reference to para 5 of the lease deed M.L.No.

2010 in Part VIII which has been extracted above. The said

paragraph 5 empowers the State Government to elect within 12

calendar months after the determination of lease for the purpose of

refunding the security deposit made by the lessee. We do not find

any specific bar in para 4 of Part VIII that while on the one hand the

lessee has to give not less than twelve calendar months notice, on

receipt of such notice the state government should wait for the

expiry of the twelve months period.

82.The contention that only on expiry of the twelve months period,

the surrender will come into effect does not stand to reason also. In

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Page 69 fact, we do not see any sound basis in making such a contention on

behalf of the first respondent. On the other hand, para 5 of the

lease deed itself gives ample right to the lessor, namely the Director

of Mines and Geology to refund the security deposit, if any, to make

the determination of lease within the 12 months period of notice.

The said clause provides clear indication for such earlier acceptance

of the determination of the lease. We have noted extensively that

long prior to 16.04.1999 as well as from 16.4.1999 onwards till M/s.

Dalmia by its communication dated 27.3.2001 positively expressed

its decision to determine the lease, M/s. Dalmia themselves were

only referring to the mining operations to the extent of 130.4

hectares which remained with them as on 27.03.2001. Even in

respect of the said extent of lands by virtue of the general directions

issued by this Court in Godavarman I no mining operation was

being carried on from January 1997. Subsequently, based on

Godavarman II order of this Court, when the Ministry of

Environment and Forest was directed to consider issuance of ex

post facto approval, one such order was issued in favour of M/s.

Dalmia on 24.12.1997 by way of in principle stage-I approval by

imposing three conditions. Even as on 16.4.1999, M/s. Dalmia in

writing categorically stated and took the stand that it need not

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Page 70 comply with the conditions imposed in the order dated 24.12.1997.

In effect M/s. Dalmia was not operating its right of carrying out any

mining activity in respect of the entirety of 334.40 hectares after the

first renewal effected in the year 1983. Ultimately, in its letter dated

27.03.2001, it made explicitly clear that it was not operating the

mines and, therefore, it wanted to surrender either after expiry of

twelve months period from the date of issuance of such notice or

any day earlier that may be acceptable to the State Government.

83.In the light of such a clear stand disclosed by M/s. Dalmia, we

fail to understand as to for what reason the State Government

should wait for the expiry of the twelve months period for the

surrender to come into effect. On the other hand, the decision

made by the Director of Mines and Geology in its communication

dated 25.5.2001 addressed to the Senior Geologist with a copy

marked to M/s. Dalmia to determine the lease earlier and for that

purpose directed M/s. Dalmia to surrender mining lease book,

namely, M.L. No.2010 along with the mining plan was a pointer to

the effect that the surrender was decided to be accepted on behalf

of the State Government instantaneously which was also not

prohibited either under the Rules or under the terms of the lease

deed or under any other statutory provision.

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Page 71 84.In this context, the reliance placed upon some of the decisions

of this Court by Mr. Kapil Sibal, learned senior counsel appearing for

the appellant needs to be considered. The learned senior counsel

relied upon the earliest judgment of this Court reported as

Basheshar Nath (supra) for the proposition that the principle of

waiver will have different shades when it comes to the question of

such waiver being opted depending upon the nature of right as to

whether it would be for the benefit of individual or for the general

public. This Court has held as under in paragraph 66:

“66……...I may refer in this connection to the provisions

in Part XIII which relate to trade, commerce and

intercourse within the territory of India. These provisions

also impose certain restrictions on the legislative powers

of the Union and of the States with regard to trade and

commerce. As these provisions are for the benefit of the

general public and not for any particular individual, they

can not be waived, even though they do not find place in

Part III of the Constitution. Therefore, the crucial question

is not whether the rights or restrictions occur in one part

or other of the Constitution. The crucial question is the

nature of the right given: is it for the benefit of individuals

or is it for the general public?”

85.The said well settled principle of law set down by this Court will

have universal application. When such principle is applied to the

case on hand, as rightly pointed out by Mr.Sibal, learned senior

counsel when the State of Karnataka chose to accept the surrender

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Page 72 made by M/s. Dalmia in its letter dated 27.03.2001, immediately

thereafter by directing M/s. Dalmia to surrender the lease book of

M.L.2010 along with mining plan such action of the State

Government for the purpose of ensuring the effective surrender

offered by M/s.Dalmia having been made in the general public

interest, as the leasehold rights of the mining activities would be in

the lands belonging to the State and that too Forest Lands, such

action taken in accepting the surrender by waiving the 12 months

period should be taken as having come into effect. We find force in

the said submission of the learned senior counsel for the appellant.

86.In this context, the various orders relied upon and placed before

this Court by Mrs. Anitha Shenoy, Advocate-on-Record appearing on

behalf of the State Government, namely, the orders dated

December 1988, 11.4.1989, Notification dated 12.3.1965 and

Notification dated 19.6.1965 require to be examined. The order

dated December, 1988 relates to the acceptance of full surrender of

M.L. No.994 in Sankalapuram village, Hospet Taluk, Bellary district.

The said document has been signed by the Director of Mines and

Geology, Bangalore on behalf of Government of Karnataka stating

that full surrender of mining lease No.994 was accepted with effect

from 1.7.1986. The order dated 11.4.1989 is another order in

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Page 73 respect of mining lease No.1759. Here again the said order was

signed by Director of Mines and Geology, Bangalore on behalf of the

State Government for accepting the surrender. The earlier

notification dated 12.3.1965 states that as provided under proviso to

Rule 29, one Shri G.R. Thiruvengadam Chetty, the lessee of M.L.

No.419 was permitted to surrender some part of the lease hold

lands which was notified in the name of the Governor of Mysore.

Similar is the Notification dated 19.6.1965 in respect of mining lease

No.414 held by one Shri M.B. Jhaveri. While those notifications were

of the years 1965, 1988 and 1989, we find that surrender of mining

lease was duly acknowledged by the Director of Mines and Geology

on behalf of the state of Karnataka. Therefore, even going by the

earlier orders pertaining to acceptance of surrender issued by the

State of Karnataka read along with the orders dated 25.5.2001 and

31.1.2002 issued in the case of M/s. Dalmia and for the various

reasons referred to above, we hold that M/s. Dalmia surrendered its

mining lease M.L. No.2010 in respect of the entire extent of 331.50

hectares in Jaisinghpur village, R.M. Block, Sandur Taluk, Bellary,

State of Karnataka which surrender was duly accepted by and on

behalf of State of Karnataka which had come into effect on

acknowledgment of the receipt of the sum of Rs.22,332/- towards

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Page 74 arrears in respect of the said mining lease in the acknowledgment

letter dated 31.1.2002.

87.When once such surrender had come into effect, it must be

stated that there was no scope for M/s. Dalmia to resile from the

said surrender and contend that it still had a right to transact with

the said M.L. No.2010 for any other purpose including for effecting

any transfer in favour of anyone much less in favour of the first

respondent.

88.In this context, the reliance placed upon some of the decisions

of this Court by Mr. Krishnan Venugopal learned senior counsel

appearing for the first respondent needs to be considered. The

learned senior counsel for the first respondent relied upon the

decisions reported in Sethi Auto Service Station (supra) and

Shanti Sports Club (supra) for the proposition that ‘noting’ in the

department files do not have sanction of law to be an effective order

unless it culminate into an executable order affecting the rights of

the parties and only when it reaches the final decision making

authority in the department get his approval and the final order is

communicated to the person concerned. There can be no dispute

with regard to the said principle stated in the above referred to two

decisions. But in the case on hand, we have extensively noted the

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Page 75 various sequence of events relating to the factum of surrender

effected by M/s. Dalmia to the extent of 130 hectares long prior to

16.04.1999 and an extent of 196.58 hectares in its letter dated

16.04.1999 itself and subsequently by its letter dated 27.03.2001,

its desire to sanction the whole of the mining lease covered by

M.L.No.2010. We also referred to various communications which

emanated from the office of the Director of Mines and Geology

confirming acceptance of surrender proposed by M/s. Dalmia which

came to an end on 31.01.2002. In the light of the said voluminous

correspondence between M/s. Dalmia and the Department of Mines

and Geology of the State Government available on record the

reference to file noting dated 28.05.2001, by the Director of Mines

and Geology, was only an additional supporting material to confirm

the act of surrender effected by M/s. Dalmia and its final conclusions

as recorded in the proceedings of the Director of Mines and Geology.

We therefore do not find any support for the first respondent by

referring to the above two decisions.

89.Mr. Krishnan Venugopal, learned senior counsel further relied

upon the decisions in Lila Gupta (supra) and Pankaj Mehra

(supra) for the proposition that all acts in violation of the lease

which do not provide for consequence of the breach would be void.

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Page 76 90.In the decision reported in Lila Gupta (supra), the said

principle has been set out in paragraph 10 and while stating so, this

Court has explained as to how such a principle would vary when it

comes to the question of affecting the public at large. In that case,

it was stated so in paragraph 10 while dealing with the claim of a

woman while ascertaining her status as the wife and it was in that

context, the principle was stated. This Court further in paragraph 11

explained as to how the said principle cannot have universal

application.

91.As far as the decision reported in Pankaj Mehra (supra) is

concerned, the statement of law set out in paragraph 14 itself is

clear in its term and states that the word ‘void’ has different

nuances in different connotation and one of them is to the effect

that it should be construed as having no legal force or binding effect

while in another circumstances, it should be construed as ‘unable in

law to support the purpose for which it was intended’. The relevant

paragraph for our purpose reads as follows:

“14.………….The word 'void' in its strictest sense, means

that which has no force and effect, is without legal

efficacy, is incapable of being enforced by law, or has no

legal or binding force, but frequently the word is used and

construed as having the more liberal meaning of

'voidable.

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Page 77 The word 'void' is used in statutes in the sense of utterly

void so as to be incapable of ratification, and also in the

sense of voidable and resort must be had to the rules of

construction in many cases to determine in which sense

the Legislature intended to use it. An act or contract

neither wrong in itself nor against public policy, which has

been declared void by statute for the protection or

benefit of a certain party, or class of parties, is voidable

only."

(underlining is ours)

92.Therefore, if such a different connotation is followed for the

expression ‘void’ and when we apply the said principle to the case

on hand with particular reference to Rule 37(1A) we have explained

in detail as to how the voidness of the leasehold right would result in

by virtue of the serious violations committed by M/s. Dalmia while

dealing with the mining lease in M.L.No.2010 while carrying out the

first renewal in the year 1983 when the violation of Section 2 of the

Forest Act, 1980 occurred and subsequently when Stage I ex post

facto approval was granted on 24.12.1997 by imposing conditions

which were flagrantly violated by M/s. Dalmia and thereby made the

lease void ab initio.

93.In the light of the above circumstances, pertaining to the case

on hand, we do not find any scope to apply the above decisions

relied upon by the learned senior counsel for the first respondent.

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Page 78 94.It will be useful to refer to paragraphs 10 and 11 of the decision

reported in Lila Gupta (supra) to highlight the distinctions stated

above as to how those decisions can be of no application to the facts

of this case.

“(10) ………….the interdict of law is that it shall not be

lawful for a certain party to do a certain thing which

would mean that if that act is done it would be unlawful.

But whenever a statute prohibits a certain thing being

done thereby making it unlawful without providing for

consequence of the breach, it is not legitimate to say

that such a thing when done is void because that would

tantamount to saying that every unlawful act is void.

……….

(11) Undoubtedly, where a prohibition is enacted in public

interest, its violation should not be treated

lightly…………….”

(Emphasis

added)

95.Our above conclusion as regards the surrender effected by M/s.

Dalmia answers question Nos.(i) to (iii) framed in paragraph 48. With

that we come to the next question as to whether the act of

surrender in order to become complete should have been accepted

by the State. It must be stated that acceptance by the State though

not a statutory requirement, the provisions contained in the mining

lease, in particular, Part VIII paragraphs 4 and 5 impliedly require

such acceptance. While answering question Nos.(i) to (iii), we have

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Page 79 elaborately noted as to the manner in which M/s. Dalmia’s proposal

to determine the lease as initiated in its communication dated

27.3.2001 ultimately resulted in the surrender of the lease by

acknowledging the sum of Rs.22,332/- towards final dues payable by

it under the said lease. We have also held that the Director of Mines

and Geology was the competent authority to receive a proposal for

determination of lease by M/s. Dalmia. The subsequent

correspondence exchanged between M/s. Dalmia and the Director of

Mines and Geology also confirm that the proposal of M/s. Dalmia

was considered and subsequent directions were issued for the

purpose of accepting the surrender proposed and ultimately by

acknowledging the payment of arrears and issuance of no due

certificate the surrender was finally accepted on behalf of the State

Government by the Director of Mines and Geology. Therefore, while

holding that acceptance of surrender is impliedly mandated under

Rule 29 read along with paragraphs 4 and 5 of Part VIII of the mining

lease, there was a factual acceptance on behalf of the State of

Karnataka of the mining lease M.L. No.2010.

96. Reliance was placed upon the decision reported as Bhagwati

Prasad Pawan Kumar v. Union of India - (2006) 5 SCC 311

wherein this Court held that the Courts must examine the evidence

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Page 80 to find out whether in the facts and circumstances of the case the

conduct of the “offeree” was such as amounted to an unequivocal

acceptance of the offer made. Paragraph No.19 is relevant for our

purpose which reads as under:

“19. It is well settled that an offer may be accepted by

conduct. But conduct would only amount to acceptance if

it is clear that the offeree did the act with the intention

(actual or apparent) of accepting the offer. The decisions

which we have noticed above also proceed on this

principle. Each case must rest on its own facts. The

courts must examine the evidence to find out whether in

the facts and circumstances of the case the conduct of

the "offeree" was such as amounted to an unequivocal

acceptance of the offer made. If the facts of the case

disclose that there was no reservation in signifying

acceptance by conduct, it must follow that the offer has

been accepted by conduct. On the other hand, if the

evidence disclose that the "offeree" had reservation in

accepting the offer, his conduct may not amount to

acceptance of the offer in terms of Section 8 of the

Contract Act.”

(underlining is ours)

97.In the case on hand, we have considered various documents by

way of correspondence exchanged between M/s.Dalmia and the said

authorities prior to 1999 and after 16.04.1999, ending with

31.01.2002 to hold that there was an unequitable acceptance of the

surrender offered by M/s.Dalmia. Having regard to our said

conclusions, it is no longer open for anyone to contend that the

surrender had not come into effect.

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Page 81 98.Having answered the said question, when we come to the next

question as to whether pursuant to the act of surrender, delivery of

possession was mandatory under Rule 27 (2) (l) of the Mineral

Concession Rules, it would be necessary to make a reference to the

said Rule which reads as under:

“(l) The delivery of possession of lands and mines on the

surrender expiration or determination of the lease;”

99.Under Rule 27, it is stated that every mining lease shall be

subject to certain conditions. Sub-Rule (2) states that a mining lease

may contain such other conditions as the State Government may

deem necessary in regard to conditions (a) to (o). Under the said

sub-Rule (2) in clause (l), it is provided that delivery of possession of

lands and mines on the surrender, expiration or determination of

lease. What is required under Rule (2) of Rule 27 was that a mining

lease may contain many conditions including what is specified in

Clause (l). The reference to Rule 27 (2)(l) was relied upon by

learned counsel for the State. Except merely drawing our attention

to the said sub-clause (l) of Rule 27 (2), we were not drawn to any of

the clause contained in the mining lease in M.L. No.2010 to state

that such a condition was specifically incorporated in the mining

lease. It is not even the case of the first respondent or the

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Page 82 respondent State that such a condition for physical possession of the

lands on surrender was specified in the mining lease.

100.In such circumstances, we do not find any need or necessity to

delve deep into the said contention in order to find out whether or

not such a condition should have been fulfilled by M/s. Dalmia or by

the State Government for the purpose of surrender to come into

effect. We, therefore, hold that insofar M.L. No.2010 was concerned,

there being no specific provision as specified in Clause (l) of Rule 27

(2) there was no mandatory requirement of delivery of possession

as stipulated therein.

101.When we come to question Nos.(vi), (vii), (viii), (ix) and (x) the

said questions would arise if at all the surrender had not taken place

and thereby assuming the lease continued for non-compliance of the

conditions imposed in the in principle stage-I approval in the order

dated 24.12.1997, did the mining lease stood automatically expired

on 24.11.2003. Question No.(vii) again pertains to the lease

becoming void ab initio by virtue of contravention of Rules 29 and

37 of Mining Concession Rules read with Section 19 of the MMDR

Act. The next question pertains to the prior approval for any mining

lease to come into operation as stipulated in Section 2 of the Forest

Act of 1980. In fact, the said question was required to be considered

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Page 83 in the light of the contention raised on behalf of the appellants that

ex post facto approval is not provided for under the Forest Act of

1980 and that such a course was adopted only by this Court in

Godavarman I and II as a one time measure. Whereas on behalf of

the first respondent, it was contended that there was a clear

distinction as regards the grant of mining lease on the one hand

under the provisions of MMDR Act and the Mining Concession Rules

and the requirement of approval under Section 2 of the Forest Act

1980 and the one does not overlap the other. In the first instance, in

support of the said stand made on behalf of the first respondent,

reliance was placed upon amended Forest Conservation Rules, in

particular Rules 6, 7 and 8 and state that non-compliance of Section

2 of the Forest Act will not ipso facto make the lease void ab initio.

The consideration of the said questions would become relevant for

the purpose of considering the subsequent claim of M/s. Dalmia as

well as the first respondent that mining lease M.L. No.2010 stood

transferred by M/s. Dalmia in favour of the first respondent pursuant

to the application of transfer dated 4.2.2002 made by M/s. Dalmia

and the order dated 16.3.2002 of the State Government by which

such a transfer of lease of M.L. No. 2010 was granted in favour of

the first respondent.

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Page 84 102.When we consider question Nos.(vi), (vii), (viii), (ix) and (x) as

far as question No.(vi) is concerned, we have found that when

during the operation of the first renewal viz., between 25.11.1983

and 24.11.2003, there was a statutory violation in as much as the

mandatory requirement of approval under Section 2 of the Forest

Act, 1980 was not secured on the date when the first renewal was

granted viz., 07.06.1986. However, fortunately for M/s.Dalmia,

Godavarman I and Godavarman II judgments of this Court came

for its rescue by way of a general direction while all mining

operations were directed to be stopped in Godavarman I ,

subsequently in Godavarman II direction was issued to the Central

Government to consider ex post facto approval under Section 2 of

the Act as a one time measure. Pursuant to the said direction, in

the case of M/s.Dalmia, an order came to be passed on 24.12.1997,

granting in-principle first stage approval by imposing three

conditions. The said order further directed that while granting in-

principle first stage approval, to enable M/s.Dalmia to carry on its

mining operations, the requirement of fulfillment of three conditions

were mandated to be complied within a period of five years from the

date of the said order i.e. on or before 24.12.2002. Admittedly,

M/s.Dalmia did not comply with those conditions. The stand of

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Page 85 M/s.Dalmia was that as on that date it was in possession of only

134.92 hectares and that even in respect of those areas since it was

carrying on mining operations with the permission of the Forest

Department of the State Government, no further compliance was

required.

103.As far as the surrender of land and afforestation compensation

was concerned, M/s. Dalmia took a categorical stand that it was not

liable to comply with those directions. Therefore, the outcome of

such a stand taken on by M/s.Dalmia was to the effect that in-

principle stage I approval granted by MOEF was not carried out. Of

course, Mr.Krishnan Venugopal, learned senior counsel in his

submissions contended that having regard to the subsequent

amendment of the Forest (Conservation) Rules in particular Rules 6,

7 and 8 and also a communication of the MOEF dated 14.9.2001, the

non-compliance of the conditions will not have any impact on the

validity of the lease as the amended Rules and the communication

of the MOEF made it clear that the compliance of such conditions

imposed can always be carried out even after the expiry of the initial

period of five years and the MOEF came forward to give extension of

time for compliance of whatever conditions which were imposed at

the time of grant of the first renewal to enable the lessee to

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Page 86 continue to retain its mining lease and thereby seek for further

renewal.

104.It is true that a reference to the amended Rules 6, 7 and 8 as

well as the earlier communication of MOEF did to some extent

support the stand of the learned senior counsel for the first

respondent. However, persuasive such a contention may be as

raised on behalf of the first respondent, we find it extremely difficult

to accept such a contention. As rightly pointed out by Mr.Kapil

Sibal, learned senior counsel when we construe Rules 29 and 37(1A)

read along with Section 19 of the MMDR Act, de hors any liberal

approach offered by the authorities of MOEF under the provisions of

the Forest Act, such relaxation in the matter of compliance of

conditions of prior approval would always be subject to the mining

lease granted under the provisions of MMDR Act and the Mineral

Concession Rules is in a live stage. In other words, unless the

mining lease granted under the provisions of the MMDR Act read

along with the provisions contained in the Mineral Concession Rules

continue to remain valid and operative, the question of compliance

of the conditions for prior approval under Section 2 of the Forest Act

even with whatever relaxation granted by the authorities under the

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Page 87 said Act will be of no use. In this context, when we apply Section 19

of the MMDR Act. Section 19 of the MMDR Act reads as follows:

“19. Prospecting licences and mining leases to be

void if in contravention of Act:- Any reconnaissance

permit, prospecting licence or mining lease granted,

renewed or acquired in contravention of the provisions of

this Act or any rules or orders made thereunder shall be

void and of no effect.

Explanation:- Where a person has acquired more than

one reconnaissance permit, prospecting licence or mining

lease and the aggregate area covered by such permits,

licences or leases, as the case may be, exceeds the

maximum area permissible under section 6, only that

reconnaissance permit, prospecting licence or mining

lease the acquisition of which has resulted in such

maximum area being exceeded shall be deemed to be

void.”

105.Thus, Section 19 makes the position clear that any mining lease

granted originally or renewed subsequently in contravention of the

provisions of the MMDR Act or any Rules or any Order made

thereunder to be void and of no effect. The expression used in

Section 19 is mandatory and therefore if any contravention of the

provisions of MMDR Act or Rules or Orders found in respect of a

mining lease originally granted or subsequently renewed such

mining lease should be treated to be void and inoperative for

operating the said mining lease. It must also be kept in mind that

carrying on any non-forest activity in a Forest Land can only be with

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Page 88 the prior approval of the Central Government under Section 2 of the

Forest Act of 1980. Therefore, for a mining lease to remain valid,

twin requirements of the approval of the Central Government under

the proviso to Section 5(1) of MMDR Act and Section 2 of the Forest

Act of 1980 have to be fulfilled. Therefore, a lessee cannot be heard

to contend that such statutory requirements are to be thrown

overboard and permitted to seek for such approvals after the expiry

of the lease at its own sweet will and pleasure and the time to be

fixed on its own and that the operation of the mining lease should be

allowed ignoring such mandatory prescription.

106.Keeping the above said mandatory prescription in Section 19 in

mind, when we analysis the case on hand, in the first place,

admittedly after the first renewal, there was a serious violation of

failure to get the prior approval under Section 2 of the Forest Act,

1980 i.e. when the renewal order was passed on 07.03.1986.

Therefore, if we strictly apply Section 19, it must be stated that even

as on 07.03.1986, for violation of Section 2 of the Forest Act, 1980 it

must be stated that, in law, there was no mining lease at all in

existence as it became void on the expiry of the initial period of the

original lease granted in 1953. It may be contended that such

violation get cured by virtue of the judgments in Godavarman I and

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Page 89 Godavarman II, though for argument sake, such a contention put

forth on behalf of M/s.Dalmia and the first respondent can be taken

to be available, as pointed out by us earlier, based on the said

judgments of this Court when the in-principle first stage approval

was granted by imposing conditions in the order dated 24.12.1997,

such conditions were blatantly violated by M/s.Dalmia by taking a

stand that it was not bound to comply with those conditions. The

reply of M/s.Dalmia dated 16.04.1999, was sufficient to confirm the

said stand of M/s.Dalmia. Therefore, as on 16.04.1999, since the

lessee viz., M/s.Dalmia refused to comply with the conditions

imposed in the in-principle first stage approval, it cannot lie in the

mouth of either M/s.Dalmia or anyone who seek to claim any right

through M/s.Dalmia by contending that any violation of Section 19 of

MMDR Act or any of the Rules of Mineral (Concession) Rules or

orders made therein or Section 2 of the Forest Act of 1980 should

be ignored and the plea made on behalf of M/s.Dalmia as well as the

first respondent should be accepted.

107.We are unable to accept such an extreme proposition

canvassed on behalf of M/s.Dalmia and the first respondent, as in

our considered opinion, the violation had occurred at the time of the

order of first renewal viz., 07.03.1986 itself, striking at the very root

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Page 90 of the validity of the lease, as it must be held that it was void at that

very stage itself for non-compliance of the prior approval under

Section 2 of the Forest Act, 1980 and in any case, on the blatant

refusal to comply with the conditions imposed in the in-principle first

stage approval granted in the year 24.12.1997. Once we are able to

come to the said conclusion, we hold that the mining lease which

was held by M/s.Dalmia in M.L.No.2010 became void and inoperative

for violation of the mandatory requirements of the conditions. In

this context, it will also be relevant to refer to Rule 37(1A). The said

Rule reads as under:

“Rule 37(1A): The State Government shall not give its

consent to transfer of mining lease unless the transferee

has accepted all the conditions and liabilities which the

transferor was having in respect of such mining lease.”

A reading of the said sub-Rule which was introduced by G.S.R.

724(E), dated 27.09.1994, a substantive condition is imposed while

considering an application for consent for transfer of mining lease.

108.In the first blush it may appear that what all required is the

acceptance by the transferee to comply with all the conditions and

liabilities which the transferor was obliged to fulfill in respect of the

mining lease. But on a deeper scrutiny of the said Rule, it will have

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Page 91 to be stated that if there was a total violation of mandatory

statutory conditions under the MMDR Act and by virtue of the

requirements in this case of the fulfillment of Section 2 of the Forest

Act, 1980 as well as the proviso to Section 5 of the MMDR Act, the

question of considering the very application for consent to transfer

should be held to be not available at all. As we have held in the

earlier part of this order that M/s.Dalmia committed serious violation

in regard to the compliance of Section 2 of the Forest Act, 1980 at

the time of first renewal in the year 1983/86 itself and in any event,

by refusing to comply with the conditions imposed in the order

dated 24.12.1997, the said violation would strike at the very root of

the claim for transfer of the dead lease as stipulated in Section 19 of

the MMDR Act. Therefore, on this ground as well, it must be held

that there was no scope at all for the State Government to consider

the application made by M/s.Dalmia for transferring of its mining

lease in favour of the first respondent. When we go little further and

examine Rule 29, as we have held that M/s.Dalmia had surrendered

its mining lease M.L.No.2010 once and for all, based on its proposal

made on 27.03.2001 and accepted by the Director of Mines and

Geology on behalf of the State Government which became

conclusive as on 31.01.2002, there was no live lease for the purpose

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Page 92 of considering any application for transfer under Rule 37 of the

Mineral (Concession) Rules. When that be the legal consequence in

respect of the lease, which was void and inoperative, it must be held

that there was no scope for holding that there was a valid transfer

made by M/s.Dalmia in favour of the first respondent on 16.03.2002.

109.We find that the reliance placed upon by Dr. Singhvi, learned

senior counsel on the decisions of this Court needs to be mentioned,

which fully supports his submissions. He placed reliance upon the

decision reported in A. Chowgule (supra) for the proposition that

the requirement of approval under Section 2 of the Forest Act has

got greater significance and that non-compliance of the said

provision would result in serious consequences. In the said decision,

this Court while referring to Rules 4, 6, 2A and 5 read along with

Section 2 of the Forest Act held that prior approval cannot be

granted unless the procedure prescribed in the said Rules were duly

complied with and that such approval under Section 2 is sine qua

non for the State Government and the other authorities before

taking any steps in respect of the Forest land. The relevant

paragraph No.18 of the said decision reads as under:

“18…………… A bare perusal of the aforesaid provisions

would show that prior approval is required for the

diversion of any forest land and its use for some other

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Page 93 purpose. This is further fortified by a look at Rule 4 which

provides that every State Government or other authority

seeking prior approval under Section 2 of the Act shall

submit a proposal to the Central Government in the

prescribed form and Rule 6 stipulates that the proposals

would be examined by a committee appointed under Rule

2-A within the parameters and guidelines postulated in

Rule 5……………………………..”

(Underlining is ours)

110.Similar view has been expressed in the decision reported in

Nature Lovers Movement (supra). Paragraph Nos. 47 and 48 are

relevant for our purpose which read as under:

“47. The ratio of the above noted judgments is that the

1980 Act is applicable to all forests irrespective of the

ownership or classification thereof and after 25.10.1980,

i.e., date of enforcement of the 1980 Act, no State

Government or other authority can pass an order or give

a direction for de-reservation of reserved forest or any

portion thereof or permit use of any forest land or any

portion thereof for any non-forest purpose or grant any

lease, etc. in respect of forest land to any private person

or any authority, corporation, agency or organization

which is not owned, managed or controlled by the

Government.

48. Another principle which emerges from these

judgments is that even if any forest land or any portion

thereof has been used for non-forest purpose, like

undertaking of mining activity for a particular length of

time, prior to the enforcement of the 1980 Act, the

tenure of such activity cannot be extended by way of

renewal of lease or otherwise after 25.10.1980 without

obtaining prior approval of the Central Government.”

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Page 94 111.It is relevant to note that to the same effect is the decision

reported in Rural Litigation and Entitlement Kendra vs. State

of U.P. - 1989 Supl. (1) SCC 504.

112.Mr. Sibal, learned senior counsel then relied upon the decision

reported in Ambica Quarry Works (supra) to repel the

submission made on behalf of the first respondent that the non-

grant of approval under Section 2 of the Forest Act, 1980 will be of

no consequence as the continued existence of the lease which was

granted prior to coming into force of the Forest Act, 1980 and it

came to be renewed in the year 1983 after the Forest Act came into

force. In the said decision in paragraph 15 is relevant which reads

as under:

“15. The rules dealt with a situation prior to the coming

into operation of 1980 Act. '1980 Act' was an Act in

recognition of the awareness that deforestation and

ecological imbalances as a result of deforestation have

become social menaces and further deforestation and

ecological imbalances should be prevented. That was the

primary purpose writ large in the Act of 1980. Therefore

the concept that power coupled with the duty enjoined

upon the respondents to renew the lease stands eroded

by the mandate of the legislation as manifest in 1980 Act

in the facts and circumstances of these cases. The

primary duty was to the community and that duty took

precedence, in our opinion, in these cases. The obligation

to the society must predominate over the obligation to

the individuals.”

(underlining is ours)

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Page 95 Consequently, the question Nos.vi, vii, viii, ix and x are

answered to the said effect.

113.With that when we come to the next question No.(xi), namely,

the requirement of Central Government under Section 5 of MMDR

Act for grant of approval which was again stipulated in Section 2 of

the Forest Act and whether compliance of the said provision are

mandatory for a mining lease to remain valid. Similarly, question

No.(xii) whether Section 10 (1) and the second proviso to Section 11

of the MMDR Act as well as Rules 37 and 59 of Mineral Concession

Rules mandate to the effect that any transfer applied for under Rule

37 (1)(a) cannot be automatically granted. That question would

arise only if the lease hold right of M/s. Dalmia under M.L. No.2010

was available with it for the purpose of effecting any transfer.

Inasmuch as we have held that the said lease was duly surrendered

by M/s. Dalmia and accepted by the State Government, we do not

find any necessity to examine those questions and we leave it open

for consideration as and when any need arises for deciding those

questions.

114.As far as the question Nos.(xiii) and (xiv) are concerned, as to

whether the order of transfer dated 16.3.2002 was bona fide taking

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Page 96 into account the sequence of events and whether the transfer of

lease dated 16.3.2002 can be held to be valid, we wish to

recapitulate the various sequence of events as from 16.4.1999 till

30.1.2002 pertaining to the surrender of lease made by M/s. Dalmia.

Since we have extensively dealt with the said issue in the earlier

part of our order, we merely state that our conclusion as regards the

coming into force of the surrender made on behalf of the M/s.

Dalmia and its acceptance by the State Government from

31.01.2002 would be sufficient to hold that there was total lack of

bona fides on the part of the State government in taking a sudden

U-turn for passing the order of transfer dated 16.3.2002 in favour of

the first respondent. In this context, as rightly contended on behalf

of the appellant, the conduct of the Director of Mines and Geology,

one Dr. Reddy who dealt with the applications made by one M.S.P.L.

Ltd. through its Executive Director Mr. Rahul Baldota on 21.7.2001

and another applicant with reference to which Dr. Reddy made an

endorsement in the office note dated 25.8.2001 which stated that

the land covered by M.L. No.2010 was surrendered by M/s. Dalmia,

that certain other applications were also received for grant of lease

in respect of those lands apart from M.S.P.L. Ltd. and that there was

no scope to consider any of those applications since in respect of

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Page 97 surrendered land Rule 59(1) of Mineral Concession Rules would

automatically come into play and any future grant of lease can only

be done as specified under the said Rule. When such a clear stand

was spelt out by the said officer, namely, Dr. Reddy while making

the endorsement on 25.8.2001, we fail to see any justifiable reason

as to how the very same officer in his capacity as Director of Mines

and Geology could be a signatory to its recommendation dated

6.2.2002 for effecting the transfer and based on his

recommendation the State Government allowed the application for

transfer of M.L. No. 2010.

115.Reliance was placed upon the decision reported in Bangalore

Development Authority (supra) , certain facts noted in that

judgment in paragraph 15 and based on such facts the order passed

by the learned Single Judge and reversal of the order of the learned

Single Judge by the Division Bench which was found to be correct

have been stated in paragraphs 15 and 18 which are relevant for our

purpose and the said paragraph reads as under:

“15. We are of the view that the above principles when

applied to the case on hand, it can be safely concluded

that the order of the learned Single Judge in the light of

the peculiar facts noted therein cannot be faulted. We

also wonder as to why the Hon’ble Minister concerned

should have taken upon himself the extraordinary effort

of making an inspection for which no special reasons

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Page 98 were adduced in the report. That apart none of the

reasons which weighed in the report of the Hon’ble

Minister reflected the true facts. The conclusion of the

Hon’ble Minister that the possession continued to remain

with the owner was contrary to what was found on

records. The Mahazar dated 09.12.1983 as noted by

learned Single Judge from the original file reveal that the

conclusion of the Hon’ble Minister was ex facie illegal and

untrue. The said conclusion obviously appeared to have

been made with some ulterior motive and purpose and

with a view to show some undue favour to the first

respondent herein. The acquisition became final and

conclusive as far back as on 15.7.1971 when Section 6

declaration came to be issued. At no point of time was

there any challenge to either preliminary notification

dated 21.9.1967 or the final declaration notified on

15.7.1971. Even the award dated 21.11.1983 approved

on 29.11.1983 was not the subject matter of challenge in

any proceedings.

16. xxx xxx xxx

17. xxx xxx xxx

18. In our considered opinion, the Division Bench failed to

take note of the above gross illegality committed by the

Hon’ble Minister while directing the issuance of the de-

notification dated 05.10.1999 in spite of the fact that

possession had already been handed over to the State as

early as on 09.12.1983 and that the decree of the Civil

Court did not in any way create any fetters on the

authorities concerned to take steps for possession by

resorting to appropriate legal means. At the risk of

repetition, it will have to be stated that the Civil Court

decree to that effect was dated 15.12.1981 and that the

possession was taken by taking necessary steps under

the provisions of the Land Acquisition Act under the

Mahazar dated 09.12.1983 which was never challenged

by any party much less the first respondent herein. The

Division Bench unfortunately completely omitted to take

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Page 99 note of the relevant facts while interfering with the order

of the learned Single Judge. The appeals, therefore, stand

allowed. The order of the Division Bench is set aside and

the order of the learned Single Judge dated 26.8.2002

passed in Vijaya Leasing Ltd. v. State of Karnataka stands

restored by this common judgment.”

(underlining is ours)

116.The above judgment throws some light as to how certain excess

role played on behalf of the State without any justifiable reasons

were brought to the notice of the Court, the Court should not

hesitate to set aside such orders in the interest of Rule of Law.

When we compare the facts set out in paragraph 15 of the said

judgment, when we refer to the facts dealt with by us in this case,

we have noted as to how after surrender made by M/s.Dalmia had

become conclusive as on 31.01.2002, on behalf of the State

Government the very same officer who held the post of Director of

Mines and Geology as on 25.08.2001 came forward to recommend

for the transfer applied for by M/s.Dalmia on 04.02.2002, in the

recommendation order dated 06.02.2002 and by simply glossing

over the gross violations of the Forest Act, 1980, the order came to

be passed on 16.03.2002 approving of the transfer applied for by

M/s.Dalmia in favour of the first respondent. In the said

circumstances, the order of the learned Single Judge in setting aside

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Page 100 the said order dated 16.03.2002, was perfectly justified and the

interference with the same by the Division Bench by the order

impugned is required to be set aside, in view of the various

incongruities which were prevalent in the case on hand.

117.We are, therefore, convinced that when once M.L. No.2010 had

come to an end by virtue of the surrender effected by M/s. Dalmia

and accepted by the State Government, there was no legal right or

power with the State Government or any authority acting on behalf

of the State Government to consider the very application for transfer

made at the instance of M/s. Dalmia on 4.2.2002 and for passing the

order of transfer dated 16.3.2002. It can only be stated that such a

decision taken and passed in the order dated 16.3.2002 was in total

violation of the provisions of the MMDR Act and the Mineral

Concession Rules. It will have to be stated that once surrender of

M.L. No.2010 had come into effect the only other course open to the

State Government was to invoke Rule 59 by throwing open those

lands by way of public auction in order to get the maximum revenue

by granting any lease hold rights. Here again, it must be stated that

apart from the act of surrender made by M/s.Dalmia which became

final and conclusive due to non-compliance of the conditions

imposed in the in-principle Stage I clearance dated 24.12.1997,

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Page 101 M/s.Dalmia lost its right to retain the lease and the consequence of

it rendered the lease itself void as per Rule 37(1A) and on this

ground as well, there was no scope for the State Government or any

other Authority acting on its behalf to have considered the transfer

application of M/s.Dalmia with reference to a lease which ceased to

exist as from 31.01.2002 due to the act of surrender and in any case

from 24.12.2002 when the 5 year period to comply with the

conditions imposed in the order dated 24.12.1997 expired.

118.In this context, it will be more relevant to state that mines and

mineral being national wealth, dealing with the same as the largesse

of the State by way of grant of lease or in the form of any other right

in favour of any party can only be resorted to strictly in accordance

with the provisions governing disposal of such largesse and could

not have been resorted to as has been done by the State

Government and the Director of Mines and Geology of the State of

Karnataka by passing the order of transfer dated 16.3.2002. Such a

conduct of the State and its authorities are highly condemnable and,

therefore, calls for stringent action against them.

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Page 102 119.In the light of our above answers to the various questions posed

for consideration, we hold that the subsequent stage-I in-principle

approval dated 13.09.2006 and the final approval dated 09.09.2010

based on the acceptance of the transfer of lease in the order dated

16.03.2002 cannot survive and the same are set aside. As we have

set aside the stage-I in-principle approval dated 13.09.2006 and the

final approval dated 09.09.2010 which were not allowed to operate,

we observe that whatever statutory payments made in compliance

of the said orders are refundable to the party who made the

payments. We, however, make it clear that the payments made in

pursuance of the in-principle stage-I approval or final approval of the

first renewal granted ex post facto, covering the period from 1983 to

2003 shall not be refundable. Further, as serious allegations were

raised by M/s. Dalmia when the lease was in force that there were

encroachments into the lands held by it, at the instance of the first

respondent, we direct the Mining as well as Forest Authorities to

ensure that the entire extent of 331.44 hectares of land covered by

M.L. No.2010 is surveyed, demarcated and its physical possession

by the State/Forest Authorities be ensured by removing whatever

encroachments, if any, exist in the said land. We also direct that in

order to ensure that no further encroachments take place into the

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Page 103 said land, necessary steps as required under Rule 59 of Mineral

Concession Rules are taken for leasing out the lands in accordance

with law and by following the required statutory procedure. The

appeal is allowed and the order of the Division Bench is set aside

with the above directions. No costs.

….………….………………………………J.

[Fakkir Mohamed Ibrahim Kalifulla]

..……………………………………………J.

[Shiva Kirti Singh]

New Delhi;

March 12, 2015

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