PETITIONER:
AMRITLAL NATHUBHAI SHAH AND OTHERS
Vs.
RESPONDENT:
UNION GOVERNMENT OF INDIA AND ANOTHER
DATE OF JUDGMENT24/08/1976
BENCH:
SHINGAL, P.N.
RAY, A.N. (CJ)
UNTWALIA, N.L.
CITATION:
1976 AIR 2591 1977 SCR (1) 372
1976 SCC (4) 108
ACT
Mines and Minerals (Regulation and Development) Act,
1957--State Government reserved certain areas for exploita-
tion of minerals in public sector--if had the power to do
so--State Government---If could reject application of pri-
vate persons.
HEADNOTE
The appellants’ applications for grant of mining leases
were rejected by the State Government on the ground that the
areas for exploitation of which they had . applied, had been
reserved for exploitation in the public sector. The
Central Government dismissed the revision applications
pointing out that since the minerals vested in the State
Government it had inherent right to reserve any particular
area for exploitation in the public sector.
In writ petitions challenging the orders of the State
Government the appellants contended before the High Court
that the State Government had no authority to reserve any
area for exploitation of minerals in the public sector and
its action had no support under the Mines and Minerals
(Regulation and Development) Act, 1957. The High Court
dismissed the petitions.
Dismissing the appeals,
HELD: The State Government was well within its rights in
rejecting the applications of the appellants under r.60 as
premature and the Central Government was justified in
rejecting the revision applications. [376 B]
(i) ,The 1957-Act declared that it. was expedient in the
public interest that the Union should take under its control
the regulation of mines and the development of minerals.
The State Legislature’s power under Entry 23 of List II was
thus taken away .so that regulation of mines and mineral
development had to be in accordance with the Act and the
Rules. [374 C]
(ii) The State Government is the owner of the minerals
within its territory, and the minerals vest in it, and no
person has any right to exploit them otherwise than in
accordance with the provisions of the Act and the Rules.
[374- D]
(iii) There is nothing in the Act or the Rules to re-
quire that the restrictions imposed by the Rules would be
applicable even if the State Government itself wanted to
exploit the minerals. There is no reason why the State
Government could not reserve any land for itself for any
purpose and such reserved land would then not be available
for the grant of prospecting licence or a mining lease. [374
H]
(iv) The State Government’s power under s. 10 of the Act
to entertain applications includes the power to refuse to
grant a licence or a lease on the ground that land was not
available for such grant by reason of its having been re-
served by the State Government for any purposes. [375 B]
(v) The authority to order reservation flows from the
fact that the State is the owner of the mines and the miner-
als within its territory. Rule 59 clearly contemplates
reservation by an order of the State Government. [375 E]
(vi) Under rr. 58, 59 and 60 it is not permissible for
any person to apply for a licence or lease in respect of a
reserved area until after it becomes available for such
grant and the availability is notified by the State Govern-
ment. The State Government in the present case reserved
the areas for the purpose stated in the notifications and
as these lands did not become available again for grant of a
prospecting licence or a mining lease, it was well within
its rights in rejecting the applications of the appellants
under r. 60 as premature. [375 H; 376 A]
State of Orissa (1) v. Union of India, A.I.R. 1972
Orissa 68 and M/s. S. Lal and Co. Ltd. v. TIre Union of
India and others A.I.R. 1975 Patna 44 held inapplicable.
373
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1554-64/72.
(From the Judgment and Order dated 4-5-1972 of the
Gujarat High Court in Special Civil Appln. Nos. 1018 and
1045-1054/68 respectively).
A.K. Sen, Bishamber Lal Khanna and E.C. Aggrawala for
the Appellants.
L.N. Sinha, Sol. Genl. of India and Mr. Girish Chandra,
for’ the Respondents.
The Judgment of the Court was delivered by
SHINGHAL J.,---These appeals by certificate are directed
against a common judgment of the High Court of Gujarat dated
May 4, 1972. We have heard them together and will dispose
them of by a common judgment. The facts giving rise to the
appeals are similar in essential respects and may be shortly
stated.
There are large deposits of bauxite in Gujarat
State. The State Government issued a notification
on December 31,1963, intimating that the lands in
all the talukas of Kutch district and in Kalyanpur
taIuka of Jamnagar district had been reserved for
exploitation of bauxite in the public sector. A
similar notification was issued on February 26,
1964, in respect of all areas of Jamnagar and
Junagarh districts. Even so, the appellants made
applications to. the State Government for grant of
mining leases for bauxite in the ’reserved areas.
There were no other applications to that effect,
but the State Government rejected the applica-
tions of the appellants on the ground that, as had
been notified, it had reserved the areas for the
public sector. The appellants felt aggrieved and
applied to the Central Government flor revision of
the State Government’s orders. The revision appli-
cations were dismissed after obtaining the comments
of the State Government and the orders of rejection
were upheld. In doing so, the Central Government
referred to the fact that the minerals "vested" in
the State Government which was "owner of minerals"
and that the State Government had the "inherent
right" to reserve any particular area for exploi-
tation in the public sector. It also pointed out
that once a notification had been issued by the
State Government for the reservation of any partic-
ular area, no party could, as of right, claim any
mineral concession in the reserved area. While
making its orders of rejection, the Central Govern-
ment explained the circumstances in which mineral
leases were granted to Carborundum Universal
Limited and the Gujarat Mineral Development Corpo-
ration. The appellants felt aggrieved, and chal-
lenged the orders of the State Government and the
Central Government by writ petitions to the Gujarat
High Court. It was urged that the State Govern-
ment had no authority to reserve any area of land
for exploitation of bauxite in the public sector,
and that the refusal to grant mining leases to the
appellants was based on a ground which was alto-
gether extraneous and irrelevant and could not be
supported with reference to the Mines and Minerals
(Regulation and Development) Act, 1957. hereinafter
referred to as the Act, and the rules made thereun-
der. It appears that although the writ petitions
374
were based on that short ground, the Controversy in the High
Court ranged over a wider field including that relating to
the scope of the executive power of the State Government in
respect of the impugned reservations. The High Court there-
fore examined the controversy with reference to articles
162 and 298 of the Constitution, and the relevant entries in
the Lists in the Seventh Schedule, but we are not concerned
with that aspect of the matter as the arguments before us
have been confined to the provisions of the Act and to the
Mineral Concession Rules, 1960, hereinafter referred to as
the Rules, made thereunder.
It may be mentioned that in pursuance of its exclusive
power to make laws with respect to the matters enumerated in
entry 54 of List I in the Seventh Schedule, Parliament
specifically declared in section 2 of the Act that it was
expedient in the public interest that the Union should take
under its control the regulation of mines and the develop-
ment of minerals to the extent provided in the Act. The
State Legislature’s power under entry 23 of List II was thus
taken away, and it is not disputed before us that regulation
of mines and mineral development had therefore to be in
accordance with the Act and the Rules. The mines and the
minerals in question (bauxite) were however in the territo-
ry of the State of Gujarat and, as was stated in the orders
which were passed by the Central Government on the revision
applications of the appellants, the State Government is the
"owner of minerals" within its territory, and the minerals
"vest" in it. There is nothing in the Act or the Rules to
detract from this basic fact. That was why the Central
Government stated further in its revisional orders that the
State Government had the "inherent right to reserve any
particular area for exploitation in the public sector". It
is therefore quite clear that, in the absence of any law or
contract etc. to the contrary, bauxite, as a mineral, and
the mines thereof, vest in the State of Gujarat and no
person has any right to exploit it otherwise than in accord-
ance with the provisions of the Act and the Rules. Section
10 of the Act and Chapters II, III and IV of the Rules, deal
with the grant of prospecting licences and mining leases in
the land in which the minerals vest in the Government of a
State. That was why the appellants made their applications
to the State Government.
Section 4 of the Act provides that no person shall
undertake any prospecting or mining operations in any area,
except under and in accordance with the terms and condi-
tions of a prospecting licence or, as the case may be, a
mining lease, granted under the Act and the rules made
thereunder, and that no such licence or lease shall be
granted "otherwise than in accordance with the provisions of
the Act and the rules." But there is nothing in the Act or
the Rules to require that the restrictions imposed by Chap-
ters II, III or IV of the Rules would be applicable even if
the State Government itself wanted to exploit a mineral for,
as has been stated, it was its own property. There is there-
fore no reason why the State Government could not, if it so
desired, "reserve" any land for itself, for any purpose, and
such reserved land would then not be available for the grant
of a prospecting licence or a mining lease to any person.
375
Section 10 of the Act in fact provides that in respect
of minerals which vest in the State, it is exclusively for
the State Government to entertain applications for the grant
of prospecting licences or mining leases and to grant or
refuse the same. The section is therefore indicative of the
power of the State Government to take a decision, one way or
the other, in such matters, and it does not require much
argument to hold that power included the power to refuse
the grant of a licence or a lease on the ground that the
land .in question was not available for such grant by reason
of its having been reserved by the State Government for any
purpose.
We have gone through sub-sections (2) and (4) of section
17 of the Act to which our attention has been invited by Mr.
Sen on behalf of the appellants for the argument that they
are the only provisions for specifying the boundaries of the
reserved areas, and as they relate to prospecting or mining
operations to be undertaken by the Central Government, they
are enough to show that the Act does not contemplate or
provide for reservation by any other authority or for any
other purpose. The argument is however untenable because
the aforesaid sub-sections of section 17 do not cover the
entire field of the authority of refusing to grant a pros-
pecting licence or a mining lease to any one else, and do
not deal with the State Government’s authority to reserve
any area for itself. As has been stated, the authority to
order reservation . flows from the fact that the State is
the owner of the mines and the minerals within its territo-
ry, which vest in it. But quite apart from that, we find
that rule 59 of the Rules, which have been made under sec-
tions 13 of the Act, clearly contemplates such reservation
by an order of the State Government. That rule deals with
the availability of areas for the grant of a prospecting
licence or a mining lease in such cases, and provides as
follows:
"59. Availability of certain areas for grant
to be notified --In the case of any land which is
otherwise available for the grant of a prospecting
licence or a mining lease but in respect of which
the State Government has refused to grant a pros-
pecting licence or a mining lease on the ground
that the land should be reserved for any purpose,
the State Government shall, as soon as such land
becomes again available for the grant of a pros-
pecting or mining lease, grant the licence or lease
after following the procedure laid down in rule
58."
Mr. Sen has conceded that it is a valid rule. It clear-
ly contemplates reservation of land for any purpose, by the
State Government, and its consequent non-availability for
the grant of a prospecting licence or mining lease during
the period it remains under reservation by an order of the
State Government. A reading of rules 58, 59 and 60 makes it
quite clear that it is not permissible for any person to
apply for a licence or lease in respect of a reserved area
until after it becomes available for such grant, and the
availability is notified by the State Government in the
Official Gazette. Rule 60 provides that an application for
the grant of a prospecting, licence or a mining lease in
respect of an area for which no such notification has been
issued, inter alia, 8--1104SCI/76
376
under rule 59, for making the area available for grant of a
licence or a lease, would be premature, and "shall not be
entertained and the fee. if any, paid in respect of any such
application shah be refunded." It would therefore follow
that as the areas which are the subject matter of the
present appeals had been reserved by the State Government
for the purpose stated in its notifications, and as those
lands did not become available again for the grant of a
prospecting licence or a mining lease, the State Government
was well within its rights in rejecting the applications of
the appellants under rule 60 as premature. The Central
Government was thus justified in rejecting the revision
applications which were filed against the orders of rejec-
tion passed by the State Government.
We have gone through the decisions in State of Orissa V.
Union’ of India(1) and M/s S. Lal and Co. Ltd. v. The Union
of India and others(2), on which reliance has been placed by
Mr. Sen. In the former case the High Court of Orissa took
the view that reservation of a particular area for being
exploited in the public sector by the State could not be
said to be a purpose for which it could be reserved under
rule 59. In taking that view the High Court went by the
consideration that the subject of the legislation in the Act
became an "exclusive subject for legislation by Parliament"
and there was no residuary power of working out mines and
minerals without observing the conditions prescribed by the
Act and the Rules. The High Court therefore went wrong in
not appreciating that even ,though ’the field of legislation
had been covered by the declaration of the Parliament in
section 2 of the Act, that could not justify the inference
that the State_ Government thereby lost its right to the
minerals which vested in it as a property within its terri-
tory. The High Court has also erred in taking the view that
the State was required to obtain a licence or a lease even
though it was itself the owner of the land and there was
nothing in the Act or the Rules to show that the provisions
for the obtaining of a licence or lease would still be
applicable to it.
In S. Lai and Co. Ltd. v. Union of India and others
(supra) the High Court noticed the decision in State of
Orissa v. Union of India (supra) but it cannot be urged with
any justification that the view expressed in it was followed
by the Patna High Court. On the other hand the Patna High
Court followed the view which was taken by the Gujarat High
Court in the judgment which is the subject matter of the
present appeals and held that the State Government has the,,
power "to reserve certain areas. for exploitation by itself.
or by a statutory corporation or for a company in a public
sector." The controversy in that case was. however, examined
with reference to the provisions of article 298 of the
Constitution. The two cases cited by Mr. Sen cannot thus be
of any avail to the appellants.
For the, foregoing reasons there is no merit in these
appeals and they are dismissed with costs.
P.B.R. Appeals
dismissed
(1) A.I.R 1972 Orissa 68.
(2) A.I R. 1975 Patna 44.
377