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2016 DIGILAW 599 (ORI)

Essel Mining & Industries Ltd. v. Union of India

2016-08-05

B.R.SARANGI, VINEET SARAN

body2016
JUDGMENT VINEET SARAN, CJ. - By means of this writ petition the petitioner, which is a company carrying on mining operations, has assailed the order dated 29.02.2016 passed by the Revisional Authority under Section 30 of the Mines and Minerals (Development and Regulation) Act, 1957 [for short, “Act 1957”] read with Rules 55 of the Mineral Concessions Rules, 1960 [for short, “Rules 1960”] whereby the order dated 20.08.2015 passed by the State Government, declaring the mining lease of the petitioner to have lapsed under Rule 28(1) of the Rules 1960, has been affirmed. 2.The brief facts of the case are that the petitioner was initially granted mining lease on 14.09.1955 for a period of 30 years, which was valid upto 13.09.1985. Prior to expiry of the period of thirty years, the petitioner had applied for renewals of its lease in accordance with the provisions of the Act and Rules, which was renewed for a period of 20 years, i.e., from 14.09.1985 to 13.09.2005. Although there is said to be some dispute with regard to reduction of mining area, but since it is not an issue in this petition, we are not considering the same. Prior to one year of expiry of the period of renewal, which was up to 13.09.2005, the petitioner had applied for second renewal on 02.09.2004, which application remained pending, and by virtue of the provisions of Rule 24-A(6) of the Rule 1960, the lease was deemed to have been renewed as no order was passed by the State Government on the pending renewal application. 3.In view of the said position of law, it is not disputed that the petitioner continued its mining operation on the basis of its pending application for renewal of lease, till 22.11.2012, on which date the Divisional Forest Officer, Keonjhar, directed for suspension of mining operations. For the aforesaid reason, the mining operations of the petitioner remained suspended/discontinued for over two years. Rule 28(1) of the Rules 1960 provides that on discontinuance of mining operations by a lease holder for a period exceeding two years, the State Government shall declare the mining lease as lapsed. For the aforesaid reason, the mining operations of the petitioner remained suspended/discontinued for over two years. Rule 28(1) of the Rules 1960 provides that on discontinuance of mining operations by a lease holder for a period exceeding two years, the State Government shall declare the mining lease as lapsed. 4.After two years of discontinuance of mining operations from 22.11.2012, even though no order of lapsing had been passed by the State Government, the petitioner, on 06.05.2015, filed an application under Rule 28-A of the Rules 1960 for revival of the lease, giving reasons for discontinuance of mining operations for over two years, although such application remained pending, the State Government on 20.08.2015 passed an order declaring lapsing of the mining lease of the petitioner, retrospectively with effect from 22.11.2014, i.e. immediately after two years of the suspension of the mining operations, which was on 22.11.2012. Aggrieved by the said order, the petitioner filed a Revision under Section 30 of Act 1957 within the stipulated time. Since the same was not being decided because the Revisional Authority was not functioning, the petitioner filed as writ petition before the Delhi High Court, wherein a direction was given to dispose of the revision within a stipulated time. Pursuant thereto, by order dated 29.02.2016, the Revisional Authority passed an order affirming the order of the State Government dated 20.08.2015. Challenging the said orders, this writ petition has been preferred. 5.We have heard Shri P.Chidambaram, learned Senior Counsel appearing along with Shri V. Narasingh, learned counsel for the petitioner, as well as Miss Savitri Ratho, learned Addl. Government Advocate appearing for the contesting opp.party No. 3 State of Odisha and Shri D.K. Sahoo, learned counsel for the Union of India-opp. Parties 1 and 2, and with consent of the learned counsel for the parties, this writ petition is being disposed of at the stage of admission. 6.The brief submission of the learned Senior Counsel appearing for the petitioner, is that in view of the judgment of the Apex Court dated 04.04.2016 in the case of Common Cause v. Union of India passed in Writ Petition (Civil) Nos. 114 of 2014, there cannot be an automatic lapsing of a mining lease. 6.The brief submission of the learned Senior Counsel appearing for the petitioner, is that in view of the judgment of the Apex Court dated 04.04.2016 in the case of Common Cause v. Union of India passed in Writ Petition (Civil) Nos. 114 of 2014, there cannot be an automatic lapsing of a mining lease. It is contended that prior to passing of an order under Section 4-A (4) of the Act 1957, read with Rule 28 (1) of the Rules 1960, the petitioner ought to have been given opportunity, and the order of lapsing should not have been passed without complying with the principles of natural justice, which has not been done in the present case. It has also been submitted, that in view of the fact that the order of automatic lapsing of lease was passed on 20.08.2015, which was after the petitioner had filed an application dated 06.05.2015 for revival of its lease, the State Government ought to have considered the reasons given therein for non-operation of the mining, prior to declaring the lease to have lapsed automatically under Rule 28(1) of the Rule 1960 with retrospective effect from 22.11.2014. 7.Per contra, learned Addl. Govt. Advocate appearing for the State has submitted, that the question of granting any opportunity of hearing would arise only when an application had been filed by the petitioner under Section 4-A (4) of the Act 1957 read with Rule 28(2) of the Rules 1960 and, according to the learned counsel, in the facts of the present case, since it is not disputed that mining operation had been discontinued for over two years, the same had automatically lapsed by virtue of law, immediately after the period of two years of discontinuance. As regards the application dated 06.05.2015 filed by the petitioner under Rule 28-A of the Rules 1960, it has been contended that the same was to be considered only after the order of lapsing had been passed, as the question of revival would arise only thereafter and, as such, the said application was not to be considered while passing of the order dated 20.08.2015. 8.For proper appraisal of the case, the relevant provisions of the Act 1957 and the Rules 1960 are reproduced below. 8.For proper appraisal of the case, the relevant provisions of the Act 1957 and the Rules 1960 are reproduced below. Act of 1957: “Section 4-A: Termination of prospecting licenses or mining leases.-(1) xx xx xx (2) xx xx xx (3) xx xxxx (4) Where the holder of a mining lease fails to undertake mining operations for a period of [two years] after the date of execution of the lease or, having commenced mining operations, has discontinued the same for a period of [two years], the lease shall lapse on the expiry of the period of [two years] from the date of execution of the lease or, as the case may be, discontinuance of the mining operations: Provided that the State Government may, on an application made by the holder of such lease before it lapses and on being satisfied that it will not be possible for the holder of the lease to undertake mining operations or to continue such operations for reasons beyond his control, make an order, within a period of three months from the date of receiving of such application, subject to such conditions as may be prescribed, to the effect that such lease shall not lapse: Provided further that such lease shall lapse on failure to undertake mining operations or inability to continue the same before the end of a period of six months from the date of the order of the State Government: Provided also that the State Government may, on an application made by the holder of a lease submitted within a period of six months from the date of its lapse and on being satisfied that such non-commencement or discontinuance was due to reasons beyond the control of the holder of the lease, revive the lease within a period of three months from the date of receiving the application from such prospective or retrospective date as it thinks fit but not earlier than the date of lapse of the lease: Provided also that no lease shall be revived under the third proviso for more than twice during the entire period of the lease. Xx xx xx Rules 1960: “ Rule 24-A: Renewal of mining lease.- (1) xx xx xx (2) xx xx xx (3) xx xxxx (4) xx xx xx (5) xx xxxx (6) If an application for first renewal of a mining lease made within the time referred to in sub-rule (1) is not disposed of by the State Government before the date of expiry of the lease, the period of that lease shall be deemed to have been extended by a further period of two years or till the State Government passes order thereon, whichever is earlier: Provided that the leases where applications for first renewal of mining lease have been made to the State Government and which have not been disposed of by the State Government before the date of expiry of lease and are pending for disposal as on the date of the notification of this amendment, shall be deemed to have been extended by a further period of two years from the date of coming into force of this amendment or till the State Government passes order thereon or the date of expiry of the maximum period allowed for first renewal, whichever is the earliest: Provided further that the provisions of this sub-rule shall not apply to renewal under sub-Section (3) of Section 8 of the Mines and Minerals (Development and Regulation) Act. 1957 (67 of 1957)” (7) xx xx xx (8) xx xxxx (9) xxxxxx (10) xx xxxx Rule 28 : Lapsing of leases :- (1) Subject to the other conditions of this rule where mining operations are not commenced within a period of one year (sic two years) from the date of execution of the lease, or is discontinued for a continuous period of one year (sic two years) after commencement of such operations, the State Government shall, by an order, declare the mining lease as lapsed and communicate the declaration to the lessee. (2) Where a lessee is unable to commence the mining operation within a period of one year (sic two years) for the date of execution of the mining lease, or discontinues mining operations for a period exceeding one year (sic two years) for reasons beyond his control, he may submit an application to the State Government, explaining the reasons for the same, at least three months before the expiry of such period. (3) xxxxxx (4) (to be reproduced here) “S. 28-A (1): Where a lessee is unable to commence the mining operations within a period of two years from the date of execution of the mining lease, or discontinues mining operations for a period of exceeding two years for reasons beyond his control, he may submit an application to the State Government explaining the reasons for the same at least within six months from the date of its lapse: Provided that the lease has not been revived under this provision for more than twice during the entire period of the lease. (2) Every application under sub-rule (1) shall be accompanied by a fee of rupees 500. (3) The State Government on receipt of an application made under Sub-rule (1) and on being satisfied about the adequacy and genuineness of the reasons for non-commencement of mining operations or discontinuance thereof taking into consideration the matters specified in the Explanation to rule 28, pass an order reviving the lease.” 9. As we have noticed above, the only question to be considered by this Court is the correctness of the orders passed by the Revisional Authority and the State Government with regard to automatic lapsing of the mining lease under Section 4-A(4) of the Act 1957, read with Rule 28 (1) of the Rules 1960. 10.On a plain reading of sub-rule (1) of Rule 28, it could be understood that the lapsing of the mining lease would be automatic after discontinuance of the mining operation for a period of more than two years. However, the Hon”ble Supreme Court in the case of Common Cause (supra) has considered the question at length as to whether prior to passing of the order under Rule 28(1), the affected party is to be given opportunity or not. While considering the same, the Apex Court in paragraphs- 29,30 and 31 of the said judgment, has held as under: “29. According to learned counsel, the only remedy available to such a leaseholder, to prevent the lease from lapsing is, to move an application, either prior to the expiry of the period of two years (of non-mining operations), or thereafter. The State Government on being satisfied, that mining operations were not discontinued as expressed above, for the reasons beyond the control of the leaseholder, could made an order, in the first contingency, that the lease would not lapse. The State Government on being satisfied, that mining operations were not discontinued as expressed above, for the reasons beyond the control of the leaseholder, could made an order, in the first contingency, that the lease would not lapse. And in the second contingency, that the lease would rematerialize. 30. It is not possible for us to accept, that vital vested rights in a leaseholder, can be curtailed without affording him an opportunity to repudiate the impression (s) of the competent authority, namely, that the leaseholder could not have (or had actually not) carried out mining operations, for a continuous period of two years. Our instant contemplation, stands affirmed through Rule 28 of the Mineral Concession Rules. The same is reproduced below: “28. Lapsing of leases – (1) Subject to the other conditions of this rule where mining operations are not commenced within a period of one year (sic. Two years) from the date of execution of the lease, or is discontinued for a continuous period of one year (sic. Two years) after commencement of such operations, the State Government shall, by an order, declare the mining lease as lapsed and communicate the declaration to the lessee. (2) Where a lessee is unable to commence the mining operations within a period of one year (sic. Two years) from the date of execution of the mining lease, or discontinues mining operations for a period exceeding one year (sic. Two years) for reasons beyond his control, he may submit an application to the State Government, explaining the reasons for the same, at least three months before the expiry of such period. (3) Every application under sub-rule (2) shall be accompanied by a fee of Rs. 200. Two years) for reasons beyond his control, he may submit an application to the State Government, explaining the reasons for the same, at least three months before the expiry of such period. (3) Every application under sub-rule (2) shall be accompanied by a fee of Rs. 200. (4) The State Government may on receipt of an application made under sub-rule (2) and on being satisfied about the adequacy and genuineness of the reasons for the non-commencement of mining operations or discontinuance thereof, pass an order before the date on which the lease would have otherwise lapsed, extending or refusing to extend the period of the lease: Provided that where the State Government on receipt of an application under sub-rule(2) does not pass an order before the expiry of the date on which the lease would have otherwise lapsed, the lease shall be deemed to have been extended until the order is passed by the State Government or until a period of two years, whichever is earlier. Explanation1. – Where the non-commencement of the mining operations within a period of two years from the date of execution of mining lease is on account of – (a) delay in acquisition of surface rights ; or (b) delay in getting the possession of the leased area; or (c) delay in supply or installation of machinery; or (d) delay in getting financial assistance from banks, or any financial institutions; or (e) ensuring supply of the mineral in an industry of which the lessee is the owner or in which he holds not less than 50% of the controlling interest, and the lessee is able to furnish documentary evidence supported by a duly sworn affidavit, the State Government may consider if there are sufficient reasons for non-commencement of operations for a continuous period of more than one year (sic. Two years). Explanation 2. – where the discontinuance of mining operations for a continuous period of two years after the commencement of such operations is on account of – (a) orders passed by any statutory or judicial authority; or (b) operations becoming highly uneconomical; or (c) strike or lockout, and the lessee is able to furnish documentary evidence supported by a duly sworn affidavit, the State Government may consider if there are sufficient reasons for discontinuance of operations for a continuous period of more than one year (sic. Two years). Explanation 3. Two years). Explanation 3. – In case of mining lessee who has undertaken reconnaissance operations or in case of mining lessee whose capital investment in mine development is planned to be in excess of Rs. 200 cores and where the mine development is likely to take more than two years, the State Government shall consider it to be sufficient reason for non-commencement of mining operations for a continuous period of more than two years.” (emphasis is ours) It is apparent from a perusal of sub-rule(1) extracted above, that the State Government is mandated to pass an order, and thereby, declare that a mining lease had lapsed. It is also the mandate of sub-rule (1) aforesaid, that such an order passed by the State Government, must be communicated to the leaseholder. On a conjoint reading of Section 4A(4) and Rule 28(1), we are satisfied to hold, that a mining lease under Section 4A(4) would not be deemed to have lapsed, till the State Government passes an order, declaring the mining lease to have lapsed, and further communicates the same to the leaseholder. 31. Rule 28(4) of the Mineral Concession Rules, caters to a situation wherein a leaseholder has moved an application, that his lease by permitted to continue even though mining operations could not be carried on (or had actually not been carried on) for a continuous period of two years. The proviso under Rule 28(4) is clear and categoric to the effect, that in cases where the State Government, on receipt of such application, does not pass an order, the lease would be deemed to have been extended, until an order was actually passed by the State Government. This further affirms, that lapse of a mining lease is not automatic. Despite non-operation of a mining lease under Rule 28(2), in case the leaseholder has moved an application for extension, on account of non commencement of mining operations, or on account of discontinuation of mining operations, the lease period shall be deemed to have continued till the date of passing the order, or for a period of two years beyond the contemplated lease period (in case such an order is not passed). The above conclusions, rule out the submissions advanced on behalf of the non-applicant- petitioner and the Union of India, that lapse (contemplated under Section 4A(4) of the MMDR Act) is automatic, and that, for a lease to lapse, no express order needs to be passed.” 11.While concluding, the Apex Court summarized the matter. The relevant Clause (vii) of the summary is also reproduced below: “(vii) Based on the interpretation placed by us Section 4A (4) of the MMDR Act, and Rule 28 of the Mineral Concession Rules, we can draw the following conclusions. Firstly, unless an order is passed by the State Government declaring, that a mining lease has lapsed, the mining lease would be deemed to be subsisting, up to the date of expiry of the lease period provided by the lease document. Secondly, in situations where in an application has been filed by a leaseholder, when he is not in a position to (or for actually not ) carrying on mining operations, for a continuous period of two years, the lease period will not be deemed to have lapsed, till an order is passed by the State Government on such application. Where no order has been passed, the lease shall be deemed to have been extended beyond the original lease period, for a further period of two years. Thirdly, a leaseholder having suffered a lapse, is disentitled to any benefit of the amended MMDR Act, because of the express exclusion contemplated under Section 8A (9) of the amended MMDR Act.” 12. The Apex Court has considered the question of automatic lapsing at length, and has concluded that there cannot be a deeming provision for automatic lapsing of lease, as the lease holder could have valid reasons for discontinuance, which could be because of an order passed by an authority, or any other legal compulsion. In the facts of the present case, an order of automatic lapsing has been passed on 20.08.2015, much after expiry of the period of two years of discontinuance of mining lease (which was on 22.11.2014), and even after an application dated 06.05.2015 was pending before the State Government explaining the reasons for discontinuance of mining operation for the aforesaid period two years, with the prayer for revival of mining lease of the petitioner. 13.The date, which has been taken into consideration for mining lease as non-operational, is 22.11.2012. 13.The date, which has been taken into consideration for mining lease as non-operational, is 22.11.2012. The same was because of the reason that the D.F.O. had passed an order of suspension of mining operations. Considering two years from that date and by merely stating in the impugned order dated 20.8.2015, that the mining lease lapses on expiry of 2 years, on 20.11.2014 without considering that the same was absolutely beyond the control of the petitioner, cannot be a valid ground for declaring the lease to have lapsed under Rule 28(1) of the Rules 1960. Instead of justifying the action on the basis of the order dated 20.08.2015 on the face of the documents itself, learned counsel for the opp.parties relies on the detailed explanation given in the counter affidavit, which is not the contents of the said order, that has been communicated to the petitioner. 14.The Apex Court in Commissioner of Police, Bombay v. Gordhandas Bhanji, AIR (39) 1952 SC 16 has held as follows: “Public orders publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer madding the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.” In Mohinder Singh Gill and another v. The Chief Election Commissioner, New Delhi and others, AIR 1978 SC 851 , the apex Court held as follows: “When a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out “ In view of the law laid down by the apex Court, as mentioned supra, subsequent explanation given in the counter affidavit justifying the order date 20.08.2015 passed in Annexure-1 cannot sustain in the eye of law, reason being the order impugned has to be adjudged on the basis of the reason assigned therein. No subsequent explanation by way of an affidavit filed by the opposite party should be taken into consideration to supplant the reasons for passing of such order. 15.Even if, for a moment, we assume that the show cause notice was not to be given (as has not been given in the present case), then too the explanation of the petitioner given in the application dated 06.05.2015 for discontinuance of mining operations after 22.11.2012 was well on record, which ought to have been considered, but has not been done so while passing the order dated 20.08.2015. 16.The order dated 29.02.2016 was passed by the Revisional Authority prior to passing of the judgment of the Apex Court in the case of Common Cause (supra). However, after the said judgment was brought to the notice of the same Revisional Authority in 56 other similar revisions pending before it, the Revisional Authority, in compliance with the aforesaid judgment in the case of Common Cause (supra), allowed the revisions and remanded the matter to the State Government for fresh decision. The operative portion of the order dated 11.05.2016 of the Revisional Authority, passed in 56 other similar revisions, is reproduced below: “6. Notwithstanding the perceived understanding on lapsing provisions, with the Apex Court judgment, on the issue there is clarity on the lapsing framework and related process. In accordance with Apex Court direction now it is clear position that lapsing is not an automatic provision and cause of discontinuation of mining operation has to be preceded by scrutiny and steps fulfilling the maxim of natural justice. In view of above discussion, the Impugned Orders listed in Annexure-A, need reconsideration to follow the directions provided in the said Apex Court judgment. Therefore, all the Impugned Orders as list in Annexure-A are set aside herewith and remanded back to the State Government for suitable reconsideration in-line with the Hon’ble Apex Court’s direction on the provisions of lapsing expeditiously. In view of above discussion, the Impugned Orders listed in Annexure-A, need reconsideration to follow the directions provided in the said Apex Court judgment. Therefore, all the Impugned Orders as list in Annexure-A are set aside herewith and remanded back to the State Government for suitable reconsideration in-line with the Hon’ble Apex Court’s direction on the provisions of lapsing expeditiously. “ 17.In view of the aforesaid facts, and keeping in view the judgment of the Apex Court in the case of Common Cause (supra), we allow the writ petition and quash the order dated 29.02.2016 passed by the Revisional Authority, as well as the order dated 20.08.2015 passed by the State Government , leaving it open to the State Government to pass necessary orders after giving opportunity of hearing to the petitioner, and in the light of the judgment of the Apex Court in the case of Common Cause (supra). No orders as to costs. Petition allowed.