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2012 DIGILAW 2261 (RAJ)

State of Rajasthan v. Union of India

2012-12-04

MOHAMMAD RAFIQ

body2012
ORDER : This writ petition has been filed by the State of Rajasthan through Secretary to the Government, Mines Department; Director, Mines & Geology Department and Mining Engineer, Mines & Geology Department at Udaipur against the order passed by the Central Government dated 21-7-1998 by which revision petition filed by respondent No. 2 Hindustan Zinc Ltd., a public sector undertaking, has been allowed. 2. Respondent No. 2 - Hindustan Zinc Ltd. filed the revision petition against the order dated 2-9-1998 passed by the petitioner-Mining Engineer by which, an amount of Rs. 36,85,58,744/- was ordered to be recovered from them for sale of 18762 tonnes of rock phosphate to private parties for the period from 1975-76 to 1986-87. 3. Contention of the learned counsel for the petitioner is that mining lease was allotted to Hindustan Zinc Ltd. - respondent No. 2 vide order dated 3-11-1969 (Ann.1) under Rule 22 (i) of the Mineral Concession Rules, 1960 (for short, the Rules of 1960). Allotment was made on the condition that lessee shall not dispose of any quantity of rock phosphate surplus to lessee’s requirement but shall hand over such surplus quantity to the Director of Mines and Geology, Government of Rajasthan or other officer authorised by him in this regard. The surplus quantity shall be so handed over at a price, which will include a reasonable return on capital employed. Learned counsel submitted that Hindustan Zinc Ltd. sold the surplus rock phosphate to private parties for a long period from 1975 to 1988 in open market, which was contrary to the aforesaid condition for grant of mining lease. Petitioner wrote letter to Hindustan Zinc Ltd. on 10-6-1988 followed by reminders dated 6-7-1988, 30-7-1988 and 1-8-1988 calling upon them to give details/statement of the quantity of rock phosphate sold to private parties during the aforesaid period but Hindustan Zinc Ltd. failed to furnish any detail. It was thereafter that vide order dated 2-9-1988, the Mining Engineer in context of the letter of the State Government dated 23-2-1988 computed the quantity of rock phosphate sold by Hindustan Zinc Ltd. to private parties weighing 18762 tonnes and raised demand for a sum of Rs. 36,85,58,744/- from Hindustan Zinc Ltd. Aggrieved thereby, Hindustan Zinc Ltd. filed revision petition, which was allowed by the Central Government vide order dated 13-9-1977. 4. Mr. 36,85,58,744/- from Hindustan Zinc Ltd. Aggrieved thereby, Hindustan Zinc Ltd. filed revision petition, which was allowed by the Central Government vide order dated 13-9-1977. 4. Mr. Zakir Hussain, learned Additional Government Counsel argued that the State Government though pursuant to the aforesaid revisional order withdrew its earlier order dated 27-1-1976 whereby, Hindustan Zinc Ltd. was prohibited from selling rock phosphate to any private party but that did not amount to waiver of Condition No. 11(2) of the order dated 3-11-1969. The aforesaid condition clearly put a bar on the entitlement of Hindustan Zinc Ltd. to sell or otherwise dispose of any quantity of surplus rock phosphate to a private party. Hindustan Zinc Ltd. was under an obligation to sell this surplus rock phosphate to the State Government alone and none else. Central Government was wholly unjustified in setting aside the demand notice dated 2-9-1988 and the order passed by the Central Government dated 21-7-1998 in this behalf is totally illegal and without jurisdiction. In the alternative, learned Additional Government Counsel argued that even if right of Hindustan Zinc Ltd. to sell rock phosphate to private party is accepted for the sake of argument, though not admitted, it would have no right to retain the excess amount of reasonable investment as mine was captive and Hindustan Zinc Ltd. was bound to comply with the specific condition of the mining lease. 5. Per contra, Shri Mahendra Singh, learned counsel appearing for Hindustan Zinc Ltd. opposed the writ petition and submitted that a request was made by the Hindustan Zinc Ltd. to the State Government to purchase rock phosphate but the Government disowned the request on the ground that its quality was sub-standard. It was thereafter that Hindustan Zinc Ltd. requested for permission to sell surplus rock phosphate to private parties. Government vide order dated 27-1-1976 refused this permission. Hindustan Zinc Ltd. thereafter filed revision petition under Section 30 of the Mines and Minerals (Development and Regulation) Act, 1957 read with Rule 55 of the Mineral Concession Rules, 1960 before the Central Government against such refusal. Central Government vide its order dated 13-9-1977, allowed the revision and set-aside the order dated 27-1-1976. It was thereafter that the State Government itself vide its order dated 21-7-1998 withdrew its earlier order dated 27-1-1976 prohibiting Hindustan Zinc Ltd. to sell rock phosphate to any private party. Central Government vide its order dated 13-9-1977, allowed the revision and set-aside the order dated 27-1-1976. It was thereafter that the State Government itself vide its order dated 21-7-1998 withdrew its earlier order dated 27-1-1976 prohibiting Hindustan Zinc Ltd. to sell rock phosphate to any private party. That meant that the State Government itself then permitted Hindustan Zinc Ltd. to sell rock phosphate to private parties in open market. State Government did not raise any objection till 1988 when for the first time it issued letter dated 10-6-1988 followed by three reminders dated 6-7-1988, 30-7-1988 and 1-8-1988. It is contended the earlier order passed by the Central Government dated 13-9-1977 accepting revision was not challenged by the State Government by filing writ petition or otherwise. The said order dated 13-9-1977 allowing the revision petition filed by Hindustan Zinc Ltd. thus attained finality. Subsequent revision petition by the impugned-order has righly been allowed by a detailed and considered order. Writ petition therefore deserves to be dismissed. 6. I have given my anxious consideration to the rival submissions and gone through the entire material available on record. 7. Undeniably, Hindustan Zinc Ltd. requested and offered the State Government to purchase surplus rock phosphate in 1975. State Government rejected the request on the ground of quality being sub-standard. The Central Government while accepting the revision petition of Hindustan Zinc Ltd. in its order dated 13-9-1977 has observed that there has been no deliberate attempt at offer/ production by it. State Government agreed that any surplus production would be taken over by it at the suitable price but the State Government refused to take over the mineral and denied permission sought for selling the rock phosphate in the open market, which was not justified. It was not in the interest of mineral development to insist the mineral being kept idle and not sold whether in private or in public sector. With this observation, the order of the State Government dated 27-1-1976 was set-aside. The State Government did not assail the validity of the aforesaid order dated 13-9-1977 before any forum. Aforesaid order therefore attained finality. With this observation, the order of the State Government dated 27-1-1976 was set-aside. The State Government did not assail the validity of the aforesaid order dated 13-9-1977 before any forum. Aforesaid order therefore attained finality. State Government did not raise any objection about sale of the surplus rock phosphate by Hindustan Zinc Ltd. in local market to private parties from 1977 till 1988 when for the first time, it issued letter dated 10-6-1988 followed by three reminders dated 6-7-1988, 30-7-1988 and 1-8-1988 to Hindustan Zinc Ltd. It is on this basis that the Central Government has accepted the subsequent revision petition filed by Hindustan Zinc Ltd. vide order dated 21-7-1998 and annulled the recovery order dated 2-9-1988 issued by the State Government. It was contended before the Central Government that rock phosphate was offered for sale to the State Government through Rajasthan State Minor Mineral Ltd. (for short RSMML), which was their authorised representative. The RSMML in 1984-85 and 1985-86 did not purchase the rock phosphate on the plea of its being low grade and not suitable for their use because of low P2 O5 and prohibitively having high silica. It is further mentioned that there is no regular market for this poor grade of ore. Central Government noted that Hindustan Zinc Ltd. every time offered the rock phosphate and only after sale was declined, that the same was sold to private party. 8. In view of above factual scenario when the State Government had lost the earlier revision petition against its order dated 27-1-1976 whereby permission to sell rock phosphate to private party was declined and subsequently when the State Government withdrew its earlier order dated 27-1-1976 vide order dated 22-2-1976, it would be now estopped from questioning the sale of rock phosphate to private parties in open market by the respondent-Hindustan Zinc Ltd., which in any case is a public sector undertaking. Alternate submission that respondent-Hindustan Zinc Ltd. may be required to refund the amount in excess of reasonable return on the capital employed because Hindustan Zinc Ltd. had no right to sell the balance excess ore in the market in view of specific condition No. 11(2) of the order dated 3-11-1969, also cannot be accepted because when the respondent-Hindustan Zinc Ltd. offered to sell surplus rock phosphate to RSMML, State Undertaking, at that time declined to purchase the same on the ground of its being sub-standard and of lower grade and not suitable for their use because of low P2 O5 and prohibitively having high silica. The Central Government in earlier order dated 13-9-1977 while allowing the revision petition of respondent-Hindustan Zinc Ltd. observed that surplus rock phosphate was offered @ Rs. 360/- per ton to the State Government/RSMML, which was quite a favourable rate considering price of Rs. 525/- per ton for Jhamarkotra rock phosphate prevailing at that time. Mineral was sought to be offered by the respondent-Hindustan Zinc Ltd. even to the State Government in terms of Condition No. 11(2) of the order dated 3-11-1969 at the above price indicating reasonable return of capital employed. There is no material on record indicating that Hindustan Zinc Ltd. made any undue or sizeable benefit by selling the rock phosphate to private parties in open market. There is therefore no reason for this Court to direct payment of any such assumed amount received by way of sale proceeds from the private parties. 9. I therefore do not find any merit in this petition, which is accordingly dismissed. Petition dismissed.