M/S MUNEER ENTERPRISES MINE OWNERS BY PARTNER Vs. M/S RAMGAD MIN.& MINING P.LTD.& ORS.
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 2818 of 2015, Judgment Date: Mar 12, 2015
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.
Leave granted.
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.
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 (Bharat) Limited (hereinafter called
"M/s. Dalmia") to and in favour of the first respondent herein was set
aside.
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.
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. 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.
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.
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 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.
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 that grant of mining lease of surrendered lands can only be
considered as specified in Rule 59(1) of the Mineral Concession Rules.
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.
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 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.
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.
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 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.
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 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.
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.
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 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.
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.
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 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.
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 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.
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.
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 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 between the first
respondent and the officials of the State Government which should not be
allowed to remain.
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.
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 conditions not having been complied with by M/s.Dalmia, the licence
could not have remained in force any further.
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.
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.
On Rule 59, according to the learned senior counsel the said Rule provides
for common hotchpot for the Government and that 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.
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 looting of the wealth of the nation and consequently they had
no locus to challenge the order of transfer dated 16.03.2002.
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.
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 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.
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 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.
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 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.
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 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.
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.
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.
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.
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 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.
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 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.
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 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.
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 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.
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 on the order of transfer dated
16.03.2002, could not have validated the lease which already got lapsed on
its own.
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 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.
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 would enable the State to derive the
maximum benefit while permitting mining of minerals, which is a national
wealth.
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 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.
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, 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.
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 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.
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 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.
Two questions that arise for consideration:
Whether M/s. Dalmia surrendered its mining licence No.M.L. 2010?
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?
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:
Mining lease in M.L. No.2010 of M/s. Dalmia was initially issued on
25.11.1953 which expired on 24.11.1983.
First renewal of M.L. No.2010 was by order dated 07.03.1986 for 20 years
with effect from 25.11.1983 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
On 06.02.2002, the Director of Mines and Geologist namely the same Mr.Reddy
recommended the application for transfer.
On 16.03.2002, the State Government allowed the application of M/s. Dalmia
in favour of the first Respondent.
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.
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.
Pending first Respondent's W.A. No.5377 of 2004, the Central Government
granted in-principle stage-I ex post facto approval to the first Respondent
on 13.09.2006.
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.
For transfer of M.L. No.2010 in favour of first Respondent M/s. Dalmia has
received a sum of Rs.74,11,559/-.
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.
Having considered the rival submissions of the respective counsel, the
following questions arise for consideration:
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?
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?
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?
Whether the act of surrender in order to become complete should have been
accepted by the State?
Whether pursuant to the act of surrender, delivery of possession is
mandatory under Rule 27(2)(l) of the Mineral Concession Rules?
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?
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?
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 Godavarman case can be relied upon for
subsequent renewals?
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?
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?
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?
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?
Whether the order of transfer dated 16.03.2002 was bonafide taking into
account the sequence of events?
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?
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?
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 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 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.
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. 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.
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 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.
Apart from the above factors, certain other factors relating to the factum
of surrender are also required to be noted. At the 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 3rd respondent stated that the 3rd 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 3rd 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)
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. 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 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.
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.
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 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.
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 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.
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 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.
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.
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 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.
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 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.
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.
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.
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
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.
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.
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 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.
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:
"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."
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.
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 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.
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 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.
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 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.
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 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.
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.
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.
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.
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.
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 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.
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 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)
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 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.
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, 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 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.
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 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.
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 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.
The contention that only on expiry of the twelve months period, the
surrender will come into effect does not stand to reason also. In 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 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.
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.
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?"
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 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.
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 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 arrears in
respect of the said mining lease in the acknowledgment letter dated
31.1.2002.
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.
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 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.
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.
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.
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.
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)
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.
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.
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)
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 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.
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 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)
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.
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;"
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 respondent State that such a
condition for physical possession of the lands on surrender was specified
in the mining lease.
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.
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 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.
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 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.
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 continue to retain its mining lease and thereby seek
for further renewal.
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 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."
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 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.
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 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.
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 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.
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 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 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.
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 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)
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."
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.
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)
Consequently, the question Nos.vi, vii, viii, ix and x are answered
to the said effect.
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.
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 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
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.
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 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 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)
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 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.
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, 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.
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.
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 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