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PETITIONER:

STATE OF ASSAM & ORS.

Vs.

RESPONDENT:

OM PRAKASH MOHTA & ORS.

DATE OF JUDGMENT22/12/1972

BENCH:

ALAGIRISWAMI, A.

BENCH:

ALAGIRISWAMI, A.

DUA, I.D.

VAIDYIALINGAM, C.A.

CITATION:

1973 AIR 678 1973 SCR (3) 169

1973 SCC (1) 584

CITATOR INFO :

F 1976 SC1433 (2)

ACT:

Mines and Minerals (Regulations and Development) Act, 1057--

Sec. 8-Mineral Concession Rules 1960-Rule 24(3) and

explanation to Rule 54 whether unreasonable and ultra vires

section 8 of the Act-Renewal of Mining tease granted to the

father of Respondents-Order in revision of State Govt.

refusing renewal of lease under deeming provisions of Rules

whether unreasonable.

HEADNOTE:

On 29-4-1942, a mining lease was granted by the Crown

Representative to the father of the respondents for a period

of 20 years to operate the coal. mines. The father died on

18-5-1961. On 3-8-61, the respondents applied for renewal

of the lease. By his order dated 27-6-62, the Deputy

Commissioner Khasi Jayantia Hills informed the respondents

that the application for renewal must be deemed to have

been refused. On 22-10-1962. the respondents filed a

revision petition to the Central Government under Rule 54.

This was rejected on 8-2-1963. On 7-5-63, the respondents

filed a writ petition before the High Court for quashing the

order dated 27-6-62 and for a writ of mandamus directing the

renewal of the lease. The High Court allowed the petition

filed by the respondents holding that Rule 24(3) of the

Rules under which the application by the respondents was

deemed to have been rejected was unreasonable and ultra

vires of Sec. 8 of the Act, and the deemed refusal of the

application for renewal had no legal effect that the

explanation to Rule 54 should also be struck down as

repugnant to the main sections of the Act.

On appeal by special leave to this Court,

HELD : (i) The Act and the Rules contained the complete code

in respect of the grant and renewal of prospecting licence

as well as mining lease in lands belonging to the

Government, as well as the lands belonging to private

persons. The mining lease in question is in a land

belonging to Government and it is for a mineral included in

the First Schedule to the Act in respect of which no mining

lea-,P. can be granted without previous approval of the

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Government. Normally, the Government like any other owner

of property is entitled to choose with WhoM it shall deal

and what sort of a contract it will enter into, but being a

public authority, its acts are necessarily regulated by

certain Rules. The Act and Rules in this case are intended

to regulate the development of mines and minerals under the

control of the Union an contained the provisions necessary

for that purpose. No person can claim as of right any lease

or prospecting licence in any land belonging to Government

or in any mines in anv lands belonging to Government except

under and in accordance with the Act at the Rules or any

right except these created or conferred by the Act. [174G-H]

As a result of the provisions of Sections 19 and 20 of the

Act, renewal of the lease granted to the father of the

respondents is governed by Act and the Rules. Rule 24(3) as

amended. has the effect that while the provisions regarding

disposal within 90 days of an application for renewal still

stands, provision for deeming it should have been

170

refused is no longer there. The explanation to Rule 54 has

two purposes : (i) to state the effect of the failure to

dispose of the applications referred to in Rule 24 sub-rule

(1) and (2) within the periods specified within these sub-

rules as also (ii) to provide the starting point for the

purpose of computing the period of two months within which

an application for re-vision under Rule 54 must be

preferred. [175D, G & 176A]

(ii)There is nothing unreasonable in the order passed by

the Central Government. It has been mentioned in that order

that after careful considerations of the facts stated in

that review application, it was rejected as time barred.

The application to the Central Government preferred by the

respondents contained, all the facts. There is no reason to

assume that the Central Government did not apply their minds

to these facts. [177 DE]

(iii)Rule 24(3) and the explanation to Rule 54 cannot

be said to contravene the provisions of Section 8 of the

Act. They are within the rule making powers of the

Government and in view of the provisions of Rule 24 and 54,

the only reason which the State Govt. can give under Rule 26

is that because 90 days are over, the application should be

deemed to have been refused. The High Court's view that

Rule 24(3) and the explanation to Rule 54 are in

contravention of Sec. 8 is vitiated by its assumption that

every order to be passed on an application for renewal

should be approved by the Central Government. This is

incorrect. Only renewal cannot be granted with the Central

Govt's approval and not rejection. [177 F-H]

Shivji Nathubhai v. Union of India & Others, [1960] 2S.C.R.

775, Supreme Court judgment dated 7-8-1967 in C.A. 657/67

distinguished.

Seeta Ramaiah v. State of Andhra Pradesh, A.I.R. 1963 A.P.

54, Shivaji Nathubhai v. Union of India, A.I.R. 1959 Punjab

510 referred to.

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1240 of

1967.

Appeal from the judgment and order dated June 24, 1964 of

the Assam and Nagaland High Court at Gauhati in Civil Rule

No. 57 of 1963.

D. N. Mukherjee, for respondents Nos. 1 to 3.

B. D. Sharma and S. P. Nayar, for respondent No. 4.

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The Judgment of the Court was delivered by

ALAGIRISWAMI, J. This is an appeal by special leave against

the judgment of the High Court of Assam allowing the

petition filed by respondents questioning the validity of

the order dated 27-6-1962 issued by the Deputy Commissioner,

Khasi Jaintia Hills on behalf of the Government of Assam

that their application for renewal of the mining lease

granted to their father must be deemed to have been refused

under sub-rule (3) of Rule 24 of the Mineral Concession

Rules, 1960.

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The lease in question was granted by the Crown

Representative on 29th April, 1942 to Bhagirath Mohta the

father of the respondents for a period of 20 years to

operate the coal-mines. Bhagirath Mohta died on 18-5-1961

and on 3-8-1961 the respondents applied for renewal of the

lease. By his order earlier mentioned the Deputy

Commissioner informed the respondents that the application

for renewal must be deemed to have been refused. On 22-10-

1962 the respondents filed a revision petition to the

Central Government under Rule 54 of the Mineral Concession

Rules, and this was rejected on 8-2-1963. On 7-5-1963 the

respondents filed a petition before the High Court of Assam

for quashing the order dated 27th June, 1962 and for a writ

of Mandamus directing the renewal of the lease. The

appellants contended that the rights of the respondents, if

any, were wholly contractual and based on disputed facts and

they could only establish them by. filing a regular suit in

a Civil Court.

The High Court of Assam allowed the petition filed by the

respondents holding that Rule 24(3) of the Mineral

Concession Rules, under which the application by the

respondents was deemed to have been rejected, was

unreasonable and ultra vires of Section 8 of the Mines &

Minerals (Regulation and Development) Act, 1957, and the

deemed refusal of the application for renewal had no legal

effect, that the explanation to Rule 54 should also be

struck down as repugnant to the main sections of the Act.

It, therefore, quashed the order of the Deputy Commissioner

dated 27th June, 1962 and issued a writ of Mandamus to the

State Government to deal with and dispose of the application

of the petitioners dated 3-8-1961 for renewal.

The first question to be decided, therefore, is whether Rule

24(3) and the explanation to Rule 54 are repugnant to the

provisions of Section 8 of the Act and, therefore. liable to

be struck down. We may first set out the relevant

provisions. Rule 24 reads as follows :

"24. Disposal of application for mining lease.(1) An

application for the grant of a mining lease shall be

disposed of within nine months from the date of its receipt.

(2)An application for the renewal of a mining lease shall

be disposed of within ninety days from the date of its

receipt.

(3)If any application is not disposed of within the period

specified in sub-rule (1), of sub-rule (2), it shall be

deemed to have been refused."

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Rule 54 reads as follows:

"Application for revision.-(1) Any person aggrieved by any

order made by the State Government or other authority in

exercise of the powers conferred on it by the Act or these

rules may, within two months of the date of communication of

the order to him, apply to the Central Government in

duplicate in Form N for revision of the order. The

application should be accompanied by a treasury receipt

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showing that a fee of Rs. 100 has been paid into a

Government treasury or in any branch of the State Bank of

India doing the treasury business to the credit of the

Central Government......

Provided that any such application may be entertained after

the said period of two months, if the applicant satisfies

the Central Government that he had sufficient cause for not

making the application within time.

(2)In every application under sub-rule (1) against the

order of a State Government refusing to grant a prospecting

licence or a mining lease, any person to whom a prospecting

licence or mining lease was granted in respect of the same

area or for a part thereof, shall be impleaded as a party.

(3)Along with the application under sub-rule (1), the

applicant shall submit as many copies thereof as there are

parties impleaded under sub-rule (2).

(4)On receipt of the application and the copies thereof,

the Central Government shall send a copy of the application

to each of the parties impleaded under sub-rule (2) speci

fying a date on or before which he may make his

representations, if any, against the revision application.

Explanation.-For the purpose of this rule, where a State

Government has failed to dispose of an application for the

grant or renewal of a prospecting licence or a mining lease

within the period specified in respect thereof in these

rules. the State Government shall be deemed to have made an

order refusing the grant or renewal of such licence or lease

on the date on which such period expires.

"8. (1) The period for which a mining lease may be granted

shall not-

(a) in the case of coal. iron ore or bauxite, exceed thirty

years; and

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(b) in the case of any other mineral, exceed twenty years.

(2) A mining lease may be renewed-

(a) in the case of coal. iron ore or bauxite, for one

period not exceeding thirty years; and

(b) in the case of any other mineral, for one period not

exceeding twenty years :

Provided that no mining lease granted in respect of a

mineral specified in the First Schedule shall be renewed

except with the previous approval of the Central Government.

(3)Notwithstanding anything contained in subsection (2),

if the Central Government is of opinion that in the

interests of mineral development it is necessary so to do,

it may, for reasons to be recorded, authorise the renewal of

a mining lease for a further period or periods not exceeding

in each case the period for which the mining lease was

originally granted."

From a reading of Section it is difficult to see how exactly

the rules referred to above can be said to be contrary to

the provisions contained in that Section. Let us,

therefore, consider the scheme of the Act.

It is an Act to provide for the regulation of mines and the

development of minerals under the control of the Union.

Section 4 lays down that no person shall undertake any

prospecting or mining operations in any area, except under

and in accordance with the terms and conditions of a

prospecting licence, or as the case may be, a mining lease,

granted under this Act and the rules made thereunder.

Section 5 lays down certain restrictions in the matter of

granting prospecting licences or mining leases. Section 6

lays down the maximum area for which a prospecting licence

or mining lease may be granted. Section 7 lays down periods

for which prospecting licences may be granted or renewed.

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Section 8 lays down the periods for which mining leases may

be granted or renewed. Section 10 lays down the procedure

for applying for prospecting licences or mining leases.

Section 11 lays down the preferential rights of certain

persons to the grant of prospecting licences and mining

leases. Section 13 enables the Central Government to make

rules for regulating the grant of prosecuting licences and

mining leases. Among the clauses contained in subsection

(2) of that Section, which specify the purpose for which

rules may be made, are clauses (g) and (r) which are as

follows

(g)the terms on which. and the conditions subject to

which, any other prospecting licence or mining lease may be

granted or renewed;

174

(r)any other matter which is to be, or may be prescribed

under this Act.

Section 19 lays down that any 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. Section 20 lays

down that the provisions of the Act and the rules made

thereunder shall apply in relation to the renewal after the

commencement of this Act of any prospecting licence or

mining lease granted before such commencement as they apply

in relation to the renewal of a prospecting licence or

mining lease granted after such commencement. Section 30

enables the Central Government of its own motion or on

application made within the prescribed time by an aggrieved

party, revise any order made by a State Government or other

authority in exercise of the powers conferred on it by or

under the Act.

The first Schedule to the Act contains a list of minerals in

respect of which no prospecting licence or mining lease

shall be granted except with the previous approval of the

Central Government.

The Mineral Concession Rules, 1960 were made under this Act.

Chapter 11 of the rules contains provisions regarding certi-

ficate of approval. Chapter III deals with grant of

prospecting licences in respect of land in which the

minerals vest in the Government. Chapter IV deals with

grant of mining leases in respect of land in which the

minerals vest in the Government. Rule 24 is found in this

Chapter. Chapter V deals with procedure for obtaining a

prospecting licence or mining lease in respect of land in

which the minerals vest in a person other than the Govern-

ment. Chapter VI deals with grant of prospecting licences

and mining leases in respect of land in which the minerals

vest partly in Government and partly in a private person.

Chapter VII deals with revision. Rule 54, the explanation

to which has been held void by the Assam High Court, is

found in this Chapter. It is not necessary for the purpose

of this discussion to refer to Chapters VIIII and DC.

The Act and the Rules thus contain the complete code in res-

pect of the grant and renewal of prospecting licences as

well as mining leases in lands belonging to Government as

well as lands belonging to private persons. The main point

to be kept in mind is the fact that the mining lease in

question is in a land belonging of Government and it is for

a mineral included in the First Schedule to the Act in

respect of which no mining lease can be granted without the

previous approval of the Central Government. Normally the

Government like any other owner of property is entitled to

choose with whom it shall deal and what sort of a contract

it will enter into, but being a public authority its

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175

acts are necessarily regulated by certain rules. The Act

and the rules in this case are intended to regulate the

development of mines and minerals under the control of the

Union and contain the provisions necessary for that purpose.

No person can claim any right in any land belonging to

Government or in any mines in any land belonging to

Government except under and in accordance with the Act and

the Rules or any right except those created or conferred by

the Act. There is no question of any fundamental right in

any person to claim that he should be granted any lease or

any prospecting licence or mining lease in any land

belonging to the Government. It is necessary to bear this

in mind because some sort of vague right was claimed on

behalf of the respondents as though there is a right of

renewal of the mining lease in question even apart from the

rules.

The original lease in favour of the father of the

respondents contained a clause that if the lessee were

desirous of taking a renewed lease for a further term of

years he should give six calendar months' previous notice in

writing to that effect and the Crown Representative will

deliver a renewed lease for a further term of 20 years. Now

as a result of the provisions of Section 19 and 20 of the

Act renewal of the lease granted to the father of the res-

pondents is governed by the Act and the Rules. Rule 24(3)

provides that an application for the grant of a mining lease

shall be disposed of within ninety days from the date of its

receipt, and if it is not so disposed of it shall be deemed

to have been refused. A later amendment omitted the words

"or sub-rule (2)" found in that sub-rule with the result

that the sub-rule (3) now reads as follows :

"If any application is not disposed of within the period

specified in sub-rule (1) it shall be deemed to have been

refused."

This might seem a little confusing. Does it mean that the

period specified in sub-rule (1) applies not merely to the

grant of a mining lease mentioned in sub-rule (1) but also

to the renewal of a mining lease mentioned in sub-rule (2) ?

But we think that it will be a reasonable interpretation to

hold that the effect of this amendment would be that while

the provision regarding disposal within 90 days of an

application for renewal still stands, the provision for

deeming it to have been refused is no longer there. But

this does not dispose of the matter because the "plantation

to rule 54 lays down that for the purposes of that rule,

where a State Government has failed to dispose of an

application for the grant or renewal of a prospecting

licence or a mining lease within the Period specified in

respect thereof, the State Government shall be deemed to

have made an order refusing the grant or renewal on the date

on which such period expires. So the explanation

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has two purposes (i) to state the effect of the failure to

dispose of the applications referred to in Rule 24, sub-rule

(1) & (2) within the periods specified in those sub-rules,

as also (ii) to provide the starting point for the purpose

of computing,the period of two months within which an

application for revision under Rule 54 must be preferred.

It has been urged vehemently that a provision to the effect

that if the State Government does not dispose of an

application for renewal within 90 days it should be deemed

to have been refused is an unreasonable one and should,

therefore, be struck down. As we have already mentioned it

cannot be said that the respondents had any right apart from

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the rights conferred on them by the Act and the Rules.

Their right, if any, is a creation of, and only flows from,

the Act and the Rules. They cannot claim any right de hors

the Act and the Rules. So if the Act and the Rules provide

that an application not disposed of within 90 days should be

deemed to have been refused, they have to abide by the Rules

and take the consequences. There is no question of any

contravention of any rights of the respondents in the making

of these rules. It is said that there is no way of the

respondents knowing what has been done about their

application for renewal and if the concerned officer or

authority neglects to take any action with regard to their

application they should not be penalised. We do not see

how, if that is the Legislative policy, it can be ques-

tioned. It cannot be said to be in contravention of any

provision of the Constitution. Nor is there any question of

the principles of natural justice having been violated.

Indeed there may be some purpose in such a provision. It is

well known that in almost all statutes regarding local

bodies it is provided that applications for building

licences that are not disposed of within a specified period

should be deemed to have been granted. It has never been

argued in those cases that it is unfair to the local bodies

concerned. That is the provision of law. Let us assume that

in a case like the present rule 24(2) did not exist. Let us

assume that the officer or authority dealing with the

application for renewal simply sleeps over it for years.

The applicant will then be in a worse position. Apparently

the idea was that the officer or authority dealing with an

application for renewal must dispose of it quickly and if he

did not it should be deemed to have been refused thus giving

an opportunity to the aggrieved party to approach the

Central Government to exercise its powers of revision under

Rule 54. Under Rule 55 the Central Government can call- for

the records from the State Government and after considering

any comments made on the petition by the State Government or

other authority, may confirm, modify or set aside the order

or Pass such other order in relation thereto as the Central

Government may deem just and proper. It also provides for

an opportunity to the

177

applicant to make his representation against the comments,

if any, received from the State Government or other

authority. Thus the fact that the application for renewal

is deemed to have been refused as a result of Rule 24(2)

does not prohibit- the Central Government from passing any

order it may deem just and proper including an order

granting renewal. In this case the respondents did not file

an application for renewal within two months of the Deputy

Commissioner's informing them that their application should

be deemed to have been rejected, though that letter of the

Deputy Commissioner itself was issued nearly nine months

after their date of application. Indeed they could have

filed an application. for revision when they failed to get a

reply within 90 days of their application for renewal. It

means that it is the respondents that were not alert.

We can see nothing unreasonable in the order passed by the

Central Government. It has been mentioned in that order

that after careful consideration of the facts stated in

their review application it was rejected as being time

barred. The application to the Central Government preferred

by the respondents contained all the facts. The

applications for revision have to be in form (L) appended to

the Rules. It has to specify the minerals for which the

revision application is filed. the details of the area in

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respect of which the revision application is filed and a map

or plan- for the area has also to be attached. There is no

reason to assume that the Central Government did not apply

their minds to these facts.

We are unable to see how Rule 24 (3) and explanation to Rule

54 can be said to contravene the provisions of Section 8 of

the Act. They are within the rule making powers of the

Government. Clause (g) of Section 13 too enables the

Government to make rules regarding the terms on which and

conditions subject to which any prospecting licence or

mining, lease may be granted or renewed. It includes the

power to make rules regarding conditions subject to which

they may be refused. We do not see how the provision of

Rule 26, which lays down that 'where the State Government

passes any order refusing to grant or renew a mining lease,

it shall communicate in writing the reasons for such order

militates against this conclusion. In view of the

provisions of Rule 24 and 54 the only reason which the State

Government can give under Rule 26 is that because 90 days

are over the application should be deemed to have been

refused.

The High Court's view that Rule 24(3) and the explanation to

Rule 54 are in contravention of Section 8 is vitiated by its

assumption that every order to be 'Passed on an application

for renewal should be approved by the Central Government.

This is not correct. Only renewal cannot be granted without

the Central Governments approval and not rejection.

-L631Sup CI/73

178

The only relevant decisions of this Court are reported in

1960 (2) S.C.R. 775, Shivji Nathubhai v. Union of India &

others and the, decision in C.A. No. 657 of 1967 dated 17-8-

67. In both of them it was held that the power of the

Central Government under Rule 54 is a quasi-judicial power.

They do not deal with the nature of the power exercised by

the State Government in granting or refusing mining leases

renewals thereof. The decisions or in Seeta Ramaiah v. State

of Andhra Pradesh(1) and Shivji Nathubhai v. Union of

India(2) more or less take the same view of the

matter as we have.

We do not feeld called upon to deal with the question

whether as a result of the order passed by the Central

Government there has been a merger and the application by

the respondents before the High Court, which did not ask for

setting aside the order of the Central Government, cannot

succeed as that point was not taken before the High Court;

nor it is necessary to deal with the question in the view

that we have taken of this case in its other aspects. In

the result we hold that the High Court was in error in

holding that Rule 24(3) and the explanation to Rule 54 of

the Mineral Concession Rules 1960 are contrary to the

provisions of the Act and should be struck down.

The appeal is allowed and the order of the High Court is set

aside. The respondents will pay the appellant's costs.

S.B.W. Appeal

allowed.

(1) A.I.R. 1963 A.P. 54. (2) A.I.R. 1959 Punjab 510.

179