uld be open to all the parties to place their claims or further claims as the case may be in regard to the areas applied for by them on or before 3041987 hacked by supporting reasons before the State Government in the form of representations within four weeks from the date of this order that the State Government would dispose of these applications within the statutory period failing which the parties will have their remedy under the statute by way of revision to the Central Government that in arriving at its decisions it will be open to the State Government to take into account the dis cussions and findings of the Rao Report in the light of this judgment that the State Government should also keep in mind that no leases to any of the parties other than OMC and IDCOL could be granted unless either the areas so proposed to be leased out are deserved and thrown open to appellants from the public or unless the Central Government after considering the recommendations of the State Government for reasons to be recorded in writing considers a relaxation in favour of any of the parties necessary and justified
96B E  CIVIL APPELLATE JURISDICTION Civil Miscellaneous Peti tion Nos
16435 37 of 1987
IN Writ Petition No 14116 of 1984
Under Article 32 of the Constitution of India
WITH Special Leave Petition C Nos
516388 with 8574 of 1989 read with IA No 189
K Parsaran Dr LM Singhvi G Ramaswamy VC Maha jan Harish N Salve Rajan Mahapatra Ms Lira Goswami section Sukumaran C Mukhopadhyay A Subba Rao ADN Rao PK Mehta Ms Mona Mehta Girish Chandra SC Patel T Sriku mar p 36 Parmeshwaran Bishamber Lal Khanna and MC Bhandare for the appearing parties
SC Roy Advocate General and AK Panda for the State of Orissa
The Judgment of the Court was delivered by RANGANATHAN J
THE DRAMATIS PERSONAE All these matters are in the nature of off shoots of a basic controversy raised in WP No 1411684 which was disposed of by the orders of this Court dated 30487 and 61087
The parties are now seeking certain clarifications and directions in relation to the orders passed by this Court in the above writ petition
There have been several subsequent developments having an impact on the issue origi nally brought to this Court in the Writ Petition WP and at present the matter has become very complicated and involves the interests of a large number of parties
To give a cogent narration of the necessary facts it is best to start with an enumeration of the various parties with whom we are concerned in the matters which are being disposed of by this judgment
The writ petition as well as the connected matters arise out of applications for grant of rights for the mining of chrome ore or Chromite in the State of Orissa
Chrome ore is one of the minerals specified in the First and Second Sched ules to and not a minor mineral within the meaning of section 3f of the Mines and Minerals Development and Regulation Act 1957
The right to grant mining rights in respect of this mineral is vested in the State Government subject as we shall see later on control by the Union of India
The State of Orissa SG and the Union of India CG are therefore the primary respondents in this litigation
On the other side are ranged a number o applicants for the mining rights we have referred to above
These are 1 Indian Metals and Ferro Alloys Limited IMFA 2 Ferro Alloys Corporation Limited FACOR 3 Orissa Cements Limited OCL 4 Orissa Industries Limited ORIND 37 5 Orissa Mining Corporation OMC 6 Industrial Development Corporation of Orissa Ltd IDCOL and 7 Shri Mantosh Aikath
Of the above the first four are companies in the private sector the next two are public sector corporations owned substantially by the State of Orissa and the last a private individual
THE PRESENT CONTROVERSY The principal question for decision before us is as to whether all or any of the various parties referred to above are entitled to obtain leases for the mining of chrome ore hereinafter referred to as MLs and if so to what extent
In particular we are concerned with an area consisting of five blocks referred to in para 8 of the WP to which reference will be made later
The controversy primarily turns round applications made in respect of these blocks by IMFA FACOR AIKAT and OCL
ORIND also lays claim to mining rights in respect of a portion of these blocks
It has filed a special leave petition which is separately numbered as SLP No 8574 of 1989 and is directed against an order dated 7489 passed by the Orissa Government rejecting an application made by the company on 5th July 1971
FACOR has also preferred SLP No 5163 of 1988 from an order of the High Court of Orissa dated 11111987 dismissing a writ petition filed against an order of rejection by the SG of an application made by it on 1871977 for grant of a ML which was confirmed by the CG
As already mentioned this Court disposed  of WP No 14116 1984 by its order of 30487
We shall have to con sider this and several other orders passed by this Court in the course of the hearing more closely but a brief reference may be made here to the resultant effect thereof
When this Court found that there were a large number of applications for MLs over varying extents of land in the areas in ques tion this Court decided that the respective merits of the applications  could not be gone into by this Court but that they should be considered by a responsible officer of the CG
Accordingly by the orders above referred to this Court referred the entire controversy to the Secretary to the Government of India in the Ministry of Mines Shri BK Rao Rao for short for a detailed consideration of the claims of the various parties
When the matter went to Rao OMC and IDCOL also 38 put forward claims that the public sector units in the State of Orissa were entitled to the grant of mining rights in the State to the exclusion of all private parties inasmuch as there was a reservation in their favour by an appropriate notification issued by the State Government
The other parties objected to the intervention of the OMC and IDCOL at what they alleged was a belated stage of the proceed ings
However on applications made by OMC and IDCOL this Court directed that the claims of these two public sector undertakings would also be examined by Rao
Eventually Rao after considering the claims of all parties reduced his conclusions in the form of a report dated 1st February 1988
in his report Rao accepted the claim of reservation made on behalf of the OMC and the IDCOL
Nevertheless it appears that bearing in mind certain interim orders passed by this Court in the various applications made to it during the pendency of the writ petitions Rao came to the conclu sion that only three of the parties other than the two public sector undertakings should be granted leases to the extent mentioned by him
Broadly speaking Rao accepted partially the claims of IMFA FACOR and AIKATH
He rejected the claims made by ORIND and OCL
He accepted the claim of the public sector undertakings but he recommended for them leases in respect of only the balance of the lands left after fulfilling the claims of the others which he had accepted
Applications have now been filed before us which inter alia seek directions on Rao s report
There has been a good deal of contest before us as to the precise legal character of the report submitted by Rao
One suggestion is that Rao was nothing more than a commissioner appointed by the Court to examine the claims of the various parties and to submit a detailed report thereon
It is submitted that this report having been received we should pass such orders thereon as we may consider appropriate
A second approach suggested is that the Rao report should be taken to be the decision of the Central Government which it is now for the State Gov ernment to implement leaving it open to any aggrieved party to take such appropriate proceedings as may be available to them in law for successfully challenging the findings reached by Rao
A third line of argument which has been addressed before us particularly by the State of Orissa the OMC and the IDCOL is that Dr Rao s report suffers from a fundamental defect in that he has completely ignored the reservation made by the State Government in favour of the public sector
According to them Rao was not right in suggesting the grant of leases to any of the other parties and should have simply left it to the State to exploit the mines in public sector including inter alia the OMC and IDCOL
A fourth 39 stance taken up by the State Government may also be men tioned here The learned Advocate General for the State made a statement before us that without prejudice to a conten tion that the Rao report suffered from the fundamental defect referred to above the State Government was prepared to abide by the findings of Rao provided this Court decides to accept the same in toto without any modifications
He clarified that this is not because they think the Rao report is  correct
On the other hand they have got several objec tions to the validity and correctness of Dr Rao s report
However having regard to the interim orders passed by this Court and having regard to the fact that what Rao has done is virtually to implement various orders passed by this Court during the pendency of the writ petition the State Government without prejudice to its contentions in relation to the Rao report is prepared to abide by it
However the learned Advocate General said the State Government wish to make it clear that if for some reason this Court does not accept the Rao Report in toto then the State Government would like to put forward their contentions against the report of Dr Rao
In that event the State Government should be given the liberty to attack Dr Rao s report and urge all contentions that are open to it in respect of the grant of mining leases relating to chrome ore in the State of Orissa
The above stance understandably is not acceptable to OCL and ORIND or indeed even to OMC and IDCOL who have got nothing at the hands of Rao
IMFA and FACOR are substantial ly satisfied with the report given by Dr Rao except for certain minor contentions which they are prepared to give up for the present with liberty to make representations to the State Government but they also wish to make it clear that in case the Rao report is not to be accepted by this Court they would also like to put forward all their contentions so that their case may not go by default
In that event in particular they would like to attack the reservation plea urged by the SG OMC and IDCOL both as belated as well as on merits
AIKATH s submission is that he is a small opera tor who discovered the mines and that Rao s recommendation for the grant of a ML in his favour in respect of a small extent of land should not be disturbed by us
We have only broadly set out here the attitudes of the various parties to the Rao report and shall discuss their contentions later in detail
In the light of these various contentions we have to determine the legal character of the Rao report and decide whether the findings of Rao are to be given effect to in toro or are to be modified and if so in what respects
Before dealing with these questions and even setting out the details of the claims of the various parties and the material they placed 40 before Rao to substantiate their claims it will be useful to survey the relevant statutory provisions relating to the grant of mineral concessions of the nature we are concerned with here
This we shall at once proceed to do
THE RELEVANT STATUTORY PROVISIONS a Constitution Article 297 of the Constitution of India unequivocally declares that all lands minerals and other things of value underlying the ocean   shall vest in the Union and be held for the purposes of the Union 
Arti cle 298 defines the extent of the executive power of the Union and of each State thus 298
Power to carry on trade etc
The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition holding and disposal of property and the making of contracts for any purpose Provided that a the said executive power of the Union shall in so far as such trade or business or such purpose is not one with respect to which Parliament may make laws be subject in each State to legislation by the State and b the said executive power of each State shall in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws be subject to legislation by Parliament The Union and the States have both been vested with powers to legislate in respect of mining rights under the Seventh Schedule to the Constitution
The respective rights of the Union and the States in this regard are contained in the following entries in the said Schedule List 1 Entry 54 Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in public interest
41 List H Entry 23 Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and develop ment under the control of the Union
b Act In exercise of the above powers the Union legisla ture has enacted the Mines and Minerals Development  Regulation Act 1957 hereinafter referred to as the Act 
The Act has been substantially amended and several drastic changes introduced in 1986 with a view inter alia to prevent unscientific mining remove bottle necks and promote speedy development of mineral based industries
We are concerned only with the provisions relating to the grant of mining leases and we may proceed to consider the same
section 2 of the Act contains the declaration referred to in Entry 54 referred to above
It reads 2
Declaration as to expediency of Union control It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided
 With this declaration the Act proceeds to circumscribe the extent to which the regulation of mining rights in the States should be subject to the control of the Union
We may now proceed to refer to the relevant provisions of the Act in relation to minerals like chrome ore which may be described for convenience as major minerals
section 4 of the Act provides as follows No person shall undertake any prospecting or mining opera tion in any area except under and in accordance with the terms and conditions of a prospecting licence or as the case may be a mining lease granted under this Act and the rules made thereunder
2 No prospecting licence or mining lease shall be granted otherwise than in accordance with the provisions of this Act and the rules made thereunder
 Sections 10 and 11 outline the procedure for obtaining a prospecting 42 licence PL or a mining lease ML
They read thus 10
Application for prospecting licences or mining leases 1 An application for a prospecting licence or a mining lease in respect of any land in which the minerals vest in the Government shall be made to the State Government con cerned in the prescribed form and shall be accompanied by the prescribed fee
2 Where an application is received under sub section 1 there shall be sent to applicant an acknowledgement of its form
3 On receipt of an application under this section the State Government may having regard to the provisions of this Act and any rules made thereunder grant or refuse to grant the licence or lease
Preferential right of certain person 1Where a pros pecting licence has been granted in respect of any land the licensee shall have a preferential right for obtaining the mining lease in respect of the said land over any other per son XXX XXX XXX 2 Subject to the provisions of sub section 1 where two or more persons have applied for a prospecting licence or a mining lease in respect of the same land the applicant whose application was received earlier shall have a prefer ential right for the grant of the licence or lease as the case may be over an applicant whose application was received later Provided that where any such applications are received on the same day the State Government after taking into consideration the matters specified in subsection 3 may grant the prospecting licence or mining lease as the case may be to such one of the applicants as it may deem fit
3 The matters referred to in sub section 2 are the following 43 a any special knowledge of on experience in prospecting operations or mining operations as the case may be possessed by the applicant b the financial resources of the applicant c the nature and quality of the technical staff employed or to be employed by the applicant d such other matters as may be prescribed
4 Notwithstanding anything contained in sub section 2 but subject to the provisions of sub section 1 the State Government may for any special reasons to be recorded and with the previous approval of the Central Government
grant a prospecting licence or a mining lease to an applicant whose application was received later in preference to an applicant whose application was received earlier
 We may next to refer to section 17A which has been inserted in the Act by the 1986 amendment
It reads thus section 17 A Reservation of area for purposes of conservation 1 The Central Government with a view to conserving any mineral and after consultation with the State Government may reserve any area not already held under any prospecting licence or mining lease and where it proposes to do so it shall by notification in the Official Gazette
specify the boundaries of such area and the mineral or minerals in respect of which such area will be reserved
2 The State Government may with the approval of the Central Government reserve any area not already held under any prospecting licence or mining lease for undertaking prospecting or mining operations through a Government compa ny or corporation owned or controlled by it or by the Cen tral Government and where it proposes to do so it shall by notification in the Official Gazette specify the boundaries of such area and the mineral or minerals in respect of which such areas will be reserved
3 Where in exercise of the powers conferred by subsection 2 the State Government undertakes prospecting 44 or mining operations in any area in which the minerals vest in a private person it shall be liable to pay prospecting fee royalty surface rent or dead rent as the case may be from time to time at the same rate at which it would have been payable under this Act if such prospecting or mining operations had been undertaken by a private person under prospecting licence or mining lease
section 19 of the Act declares that any prospecting licence or mining lease granted renewed or acquired in contravention of the provisions of this Act or any rules or orders made thereunder shall be void and of no effect
section 30 confers revisional powers on the CG
It reads The Central Government may of its own motion or on appli cation made within the prescribed time by an aggrieved party revise any order made by the State Government or other authority in exercise of the powers conferred on it by or under this Act
 These are the provisions of the Act relevant for our pur poses
c Rules Turning now to the rules framed under the Act which also have a material bearing on the present issues they are contained in Chapter IV of the Mineral Concessions Rules 1960 which deals with the grant of mining leases in respect of land the minerals in which vest the Government
Rule 22 outlines the procedure in respect of applications for MLs
It requires the application to be made in a pre scribed form and accompanied by a fee of Rs500 and certain documents and particulars
Rules 24 and 26  prescribe the procedure for disposal of such applications
Sub rules 1 and 3 of rule 24 are relevant for our present purposes and are extracted below 24
Disposal of application for mining lease 1 An appli cation for the grant of a mining lease shall be disposed within twelve months from the date of its receipt
XXX XXX XXX 3 If any application is not disposed of within the period specified in sub rule 1 it shall be deemed to have been refused
XXX XXX XXX 45 Under rule 26 the SG may after giving an opportunity of being heard and for reasons to be recorded in writing and communicated to the applicant refuse to grant or renew a mining lease over the whole or part of the area applied for
Rule 31 prescribes that where an order for grant of a lease is made a lease deed has to be executed within a period of six months of the order or such further period as the SG may allow in this behalf
Failure to do this if attributable to any default on the part of the appellant could entail the revocation of the lease
The lease shall commence from the date of the lease deed
We next turn to rule 54 which deals with applications for revision to the CG
It reads in so far as is relevant for our purposes 54
Application for revision 1 Any person aggrieved by any order made by the State Government or other authority in exercise of the powers conferred on it by the Act or these rules may within three months of the date of communication of the order to him apply to the Central Government in triplicate in Form N for revision of the order
The appli cation should be accompanied by a treasury receipt showing that a fee or  Rs500 has been paid into a Government treas ury or in any branch of the State Bank of India doing the treasury business to the credit of Central Government under the head of account 128 Mines and Minerals Mines Depart ment Minerals Concession Fees and Royalty  Provided that any such application may be entertained after the said period of three months if the applicant satisfies the Central Government that he had sufficient cause for not making the application within time
xxx xxx xxx 4 On receipt of the application and the copies thereof the Central Government shall send a copy of the application to each of the parties impleaded under sub rule 2 speci fying a date on or before  which he may make his representa tions if any against the revision application
Explanation For the purposes of this rule where a State 46 Government has failed to dispose of an application for the grant of renewal of a prospecting licence or a mining lease within the period specified in respect thereof in these rules the State Government shall be deemed to have made an order refusing the grant or renewal of such licence or lease on the date on which such period expires
Rule 55 provides that the CG after getting the comments of the SG and other parties on the application and after giving each of them an opportunity to put forward their comments on the stand taken by the others may confirm modify or set aside the order of the SG or pass such other order in relation thereto as it may deem just and proper
Three more rules need to be set out which deal with the topic of reservation
Rules 58 59 and 60 before 1980 were in the following terms 58
Availability of areas for regrant to be notified 1 No area which was previously held or which is being held under prospecting licence or a mining lease so the case may be or in respect of which the order granting licence or lease has been revoked under sub rule 1 of the rule 15 or sub rule 1 of rule 31 shall be available for grant un less a an entry to the effect is made in the register referred to in sub rule 2 of rule 21 or sub rule 2 of rule 40 as the case may be in ink and b the date from which the area shall be available for grant is notified in the Official Gazette at least thirty days in advance
2 The Central Government may for reasons to be recorded in writing relax the provision of sub rule 1 in any special case
Availability of certain areas for grant to be notified In the case of any land which is otherwise avail able for the grant of a prospecting licencor a mining lease but in respect of which the State Government has refused to grant a prospecting 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 avail able for the grant of prospecting licence or mining lease grant the licence or lease after following the procedure laid down in rule 58
47 60
Premature applications Applications for the grant of a prospecting licence or a mining lease in respect of the areas in which a no notification has been issued under rule58 or rule59 or b if any such notification has been issued the period specified in the notification has not expired
Shall be deemed to be premature and shall not be entertained and the fee if any paid in respect of any such application shall be refunded GSR 146 dated 16th January 1980 substantially amended these rules
After this amendment Rule 58 reads 58
Reservation of areas for exploitation in the public sector etc
 The State Government may by notification in the Official Gazette reserve any area for exploitation by the Government a Corporation established by any Central State or Provincial Act or a Government company within the meaning of Section 6 17 of the  1 of 1956
Rule 59 is relevant only in part
It reads 59
Availability of area for regrant to be notified 1 No area XXX XXX XXX e which has been reserved by the State Government Sub stituted for the words reserved by the Government by GSR 86E wef 10287 under Rule 58 or us 17A These words were inserted by GSR 146E dated 16180 wef 2280 shall be available for grant unless i an entry to the effect that the area is available for grant is made in the register referred to in sub rule 2 of Rule 21 or sub rule 2 of Rule 40 as the case may be in ink and ii the availability of the area for grant is notified in the Official Gazette and specifying a date being a date not 48 earlier than thirty days from the date of the publication of such notification in the Official Gazette from which such area shall be available for grant XXX XXX XXX 2 The Central Government may for reasons to be recorded in writing relax the provisions of sub rule 1 in any special case
Rule 60 deals with premature applications
It reads 60
Premature applications Applications for the grant of a prospecting licence or mining lease in respect of areas whose availability for grant is required to be notified under Rule 59 shall if a no notification has been issued under that rule or b where any such notification has been issued the period specified in the notification has not expired shall be deemed to be premature and shall not be entertained and the application fee thereon if any paid shall be refunded
The above are the relevant rules governing application for and grant of leases revision petitions and reservation of areas in the light of which the issues in the present case have to be considered
We shall now proceed to give the details of the various applications for MLs preferred by the parties before us
ML APPLICATIONS OF THE PARTIES Though it was the IMFA which came to this Court with a writ petition there were a number of other applications for grant of MLs pending before the State Government
The broad details of these applications are set out below 1
IMFA a Previous Histor IMFA made five applications for grant of mining lease in respect of five blocks of land as per the following details which are hereinafter referred to as items 1 to 5 respectively 49 Area Date of Area Village  District No Applica applied for tion 1
171981 634359 Ghotarangia and other villages 871981 hects
Dhankanal Distt
 2 2361981 142000 Ostapal Village SukhindaTehsil hects
Cuttack Distt  3
671981 108860 Kamarada and padar villages hects
Cuttack Distt  4
991981 37008 Ostapal and Gurjang villages Sukhinda 1091981 hects
Tehsil Cuttack Distt 5 2411
1981 147693 Ostapal and Gurjang villages Sukhinda hects
Tehsil Cuttack Distt  The SG did not dispose of these applications within the prescribed period of twelve months
They were there fore deemed to have been rejected under rule 243
IMFA applied to the CG for the revision of these deemed rejec tion orders of the SG
The CG set aside the deemed rejec tion orders and directed the SG to dispose of the matter on merits within a period of 200 days
However the SG did not take any action on the applications of the IMFA within the period of 200 days
IMFA made a representation to the Central Government but the Central Government gave no relief on the ground that it had become functus officio and had no jurisdiction to issue further directions to the State Gov ernment
Thereupon IMFA filed Writ Petition No14116 of 1984 in this Court
IMFA alleged that while its applications were kept pending the SG had granted leases in favour of FACOR and thus discriminated against IMFA
It prayed for the issue of a writ of mandamus to the SG to grant leases to IMFA also
b Subsequent developments This Court on 27984 passed an order extracted later directing the SG to consider IMFA s applications by 231084 and restraining it from granting MLS to any one else in the meanwhile
FACOR moved for a recall of this order
The Court passed an inter im order on 181084 holding over the implementation of the earlier order in regard to grant of lease to IMFA and call ing for the records
However it appears on 211184 the SG had agreed to grant a ML in favour of AIKATH in respect of 140 acres out of 14769 hectares covered by item No 5 above
On 261284 the SG filed a counter affidavit pointing out a that there was a reservation of the 50 areas for the public sector and b that except item 1 the areas covered by the other applications overlapped areas covered by earlier applications of OMC IDCOL and others
Nevertheless it was stated on due consideration in the light of the observations of this Court the SG had tenta tively decided to grant a ML to IMFA in respect of 634359 hectares in item 1
On 271184 IMFA stated that it was not interested in item 1 which according to it contained only low grade ore and was not commercially viable unless IMFA was given at the same time areas bearing high quality ore which could be blended with the low grade ore
It stated that it was willing to accept ML in respect of items 2 3 and either item 4 or half of item 5
On 2185
the SG passed formal orders rejecting IMFA s application in respect of items 2 to 5 of the list
This was on the ground so far as item 2 was concerned that the area fell within the reserved areas that there were prior applications of OMC  FACOR in respect of the areas and that the SG had already agreed to lease out item 1 to IMFA
On 15285 the SG informed IMFA that on reconsideration it had recommended grant of MLs to it in respect of 13937 hectares out of 142 hectares of item 2 and the entire area of item 3
On 18285 the SG submitted in court that it had already agreed to grant 140 acres in item 5 to AIKATH and the rest to FACOR as per compromises in the writ proceedings pending in the Orissa High Court
The compromise with AIKATH had been placed before
and accepted by the Orissa High Court on 41284 but the final terms and conditions were proposed on 18285 and accepted on 19285
In respect of FACOR also the compromise agreeing to lease to it 596 acres out of which 180 acres were covered by item 5 of IMFA s applica tion had been filed in the Orissa High Court only on 18285
The validity of these allotments was challenged by IMFA before this Court
Without going into the merits or  this controversy this Court on 28285 passed an order directing the SG to grant a lease to IMFA in respect of item 3 in full and 2662 hectares in item 4
This order was objected to by FACOR and on 8585 the Court passed an order directing the grant of a lease to FACOR over 180 acres in item 5
IMFA says that it has not been given physical possession of the areas granted to it except to an extent of a small area of 2 hectares
The net result is that out of the five items applied for by IMFA i item 1 has been given but surrendered ii the SG is agreeable to give 13937 acres out of 142 acres of item 2 iii this Court has directed the grant to IMFA of item 3 iv in item 4 this Court has directed the grant to IMFA of 2662 out of 37008 hectares of item 4 and v In item 5 the SG has agreed to lease our 140 acres to AIKATH and 180 acres to FACOR
FACOR aEarlier History FACOR S applications for mining leases for chrome ore were made on various dates between 1974 and 1978
Relevant particulars in respect of the said applications are set out in the following table Sl
Village Extent Date of Date of final Particulars No appli final order of of the pro cation disposal of ceedings in revision app High Court 1
Ostapal 142000 8774 2976 12376 OJC 67 of 79 Distt
hects
31578 3778 12179 Cuttack or 359 acres 2
Chingudi 74932 8774 2176 21476 OJC 66 of 79 pal Distt
hects
27878 30578 12179 3
Samole 248447 6874 18277 29877 OJC 72 of 79 Distt
hects
15179 Dhankanal 618 acres 4
Bangur 4047 22677 43278 17878 OJC 1309 of Distt
hects
80 21180 Keonjhar 100 acres 5
Ostapal  31242 7678 52879 21979 OJC 2036 of Gurjang hects
57980 26980 31881 Distt
Cuttack 6
Kamarda 108 61078 1780 1180 OJC 1028 of Distt
hects
51382 291082 11583 All the six applications made by FACOR were rejected by the SG
Against the revision orders of the CG affirming the orders of the SG FACOR filed writ petitions in the High Court of Orissa and these writ petitions are pending dispos al there except the one re item 4 which was dismissed by the High Court on 111187 and is the subject matter of SLP C 5163 of 1988 before us
In this sense the appli cations of FACOR were alive and awaiting disposal when IMFA filed W P 14 116 of 1984 in this Court
52 b Subsequent developments As we shall mention later
FACOR had obtained leases over 486 acres at Barua in Keonjhar district and 280 acres at Kathpal over Dhankanal district in 1971 72
The above applications were rejected and the writ petitions filed against the rejections were pending in the Orissa High Court when the writ petition was filed
It has been stated that the SG had entered into a compromise with FACOR on 18285 agreeing to grant a mining lease in its favour in respect of 596 acres out of 772 acres applied under item No 5 above on condition that FACOR gave up its claim in respect of the balance of the area of 702 acres as well as the claim made in the other five applica tions
It may be added that on 18585 this Court passed an interim order directing that FACOR be given a lease in respect of 180 acres out of the 596 acres covered by the compromise dated 18285
A lease was accordingly executed by the SG in favour of FACOR on 16885 after obtaining the approval of the CG to the lease under section 52 of the Act before its amendment in 1986 as well as to the relaxa tion under rule 591 of the Rules
The net result there fore
is that though FACOR made six applications it had agreed to give up all of them in lieu of a ML for 596 acres out of item 5 out of which a lease in respect of 180 acres has already been obtained and is being exploited by FACOR
MANTOSH AIKATH a Previous History This gentleman had obtained a lease from the Raja Sri Pitamber Bhupati Harichandan Mohapa tra the proprietor of Sukhinda Estate on 171052 regis tered on 281052 for a period of 20 years in respect of 640 acres situated in village Gurjang in Cuttack District
On 12153 the State Government in whom the estate of the former Zamindar had come to vest wef
271152 under the Orissa Estates Abolition Act issued a notice terminating the lease
Mr AIKATH made representations against the termination
It is said that ultimately a compromise was reached between him and the SG whereunder it was agreed that a lease in respect of half of the area covered by the original lease deed on the southern side could be retained by him
Thereupon it is said he filed a formal application on 25554 for a mining lease in respect of 320 acres
But this was rejected on the ground that the SG preferred to exploit the area in public sector
A revision petition to the CG was rejected on 9272
Mr AIKATH filed a writ petition in the High Court of Orissa impleading the CG and the SG as parties
The Orissa High Court on 1841984 set aside the order of the CG and directed the CG to dispose of Mr 53 AIKATH S application afresh
The CG in turn set aside the order of the SG on 3878 and directed the SG to decide the application of the party afresh after taking into account the plea of the party that the area could not be reserved for exploitation in the public sector
However no orders were passed by the SG
The petitioner therefore
again filed a revision application before the CG which passed orders on 121279 directing the State Government to pass a speaking order and dispose of the application on merits
The SG by an order dated 17180 rejected the application
Mr AIKATH filed a writ petition in the High Court and this was pending when WP 1411684 was filed here by IMFA
b Subsequent Development On 211184 AIKATH and the SG entered into a compromise under which the former was to be granted a lease in respect of 140 acres situated on the eastern side of the 320 acres referred to earlier
This compromise was accepted by the High Court of Orissa on 41284
Thereafter the SG offered a lease of 140 acres on certain terms and conditions and these were accepted by AIKATH on 19285
This was reported by the SG to this Court but no orders were passed by this Court and no ML has been executed in favour of AIKATH
It may be mentioned that one of the areas applied for by IMFA on 241181 covered the area which
according to AIKATH had been in his possession all along
ORISSA INDUSTRIES LIMITED ORIND a Previous History  ORIND made an application for mining lease on 5771
It applied for mining leases over an area of 112925 hectares in the villages of Telangi Patna
Ostapal and Gurjang in District Cuttack
This application was rejected by the SG on 231073 on the ground that the area was reserved for exploitation in the public sector
It is stated that subsequently on a representation made by ORIND on 151273 the SG recommended to the CG that a lease in favour of ORIND may be granted in respect of 74982 out of 112925 hectares applied for
However
this recommen dation was withdrawn as will be discussed later
The CG by an order dated 23277 directed the SG to pass a speaking order on the application but the SG did not comply with this direction
The company therefore filed writ petition
OJC 1585198 1 in the High Court of Oris sa
This writ petition was pending when WP 1411684 was filed here
It may be here mentioned that one of the contentions of ORIND 54 before us is that it had also applied on 5771 lot a lease of mining rights in respect of 44638 hectares in village Sukrangi in Distt
Cuttack
That had been rejected but a revision petition had been filed before the CG against the said rejection
The SG it is said
while Lending its comments on 26274 to the CG on the ORIND s revision petition
had reiterated that their revision petition may be rejected as SG had already decided to grant ORIND a lease of 74982 out of the area of 112925 hectares applied for by it
b Subsequent developments It is stated that the SG has subsequently withdrawn its recommendations for the area of hectares
The SG rejected ORIND s application for 112925 hectares by an order dated 7489
The contents of the order are discussed later It concludes In view of the above facts and pendency of Writ Petition No 14116 of 1984 before the Hon ble Supreme Court of India
it is not possible for the SG at this stage to pass any order on the mining lease application dated 57
1971 of ORIND and
accordingly the said application is disposed of
ORIND has preferred SLP No 857489 from this order of the SG So far as the other application of ORIND is con cerned
no information has been given to us as to what orders
if any
the CG has passed on ORIND S revision or as to what steps the applicant has taken subsequently
ORISSA CEMENT LIMITED OCL a Previous History The company s grievance is that it has been filing applications for mining rights in respect of chrome ore right from the year 1961 but none of the applications have been considered by the State Government on the plea that the areas applied for had been reserved for exploitation in the public sector
Further applications were made by OCL in respect of following areas 55 SI
Date Area Date of Orders Orders Remarks No of and Revis passed passed Appeal Village sion of by the by the appli State Central cation Govt
 if any
if any
1 2 3
11570 354505 3571 5271 3672 This area Hectare The area was free Gurjang is reser previously  Telan ved by held by gi PS the State Aikath for Sukinda Govt
for 320 Acrs
Distt exploita The State Cuttack tion in Govt
has public now gran sector
ted ie in the year 1985 as per compromise petition filed be fore High Court Ori ssa
Ms Aikath 140 Acs
Factor 180 Acs
Same application filed again 2 8574 354505 Deemed 23277 Rejected Although Hectares Rejec Ms
Facor s Gurjang tion application  on 7678 Ostapal was much Distt
after our Cuttack application they were granted ML by SGvide No6844 dated 24585 In fairness SG should have given us this area
As per deci sion taken by them earlier 50 of the area should be released to us keep 56 ing in view the principles of natural justice as recommended by State Govt
vide in their letter No17410 dated 26274 to centre for 142 Acrs
to Orissa Cement
15570 22622 1572 10271 1672 Although Ferro Hecta on the Alloys Corpo res same ration have no Boula plea unit in Orissa  Soso reser but have a Distt
ved manufacturing Keonjher for state unitin Andhra exploita the Central tion Govt
passed orders as un der in 1971 72 over an area of 18703 hects
against strong opposi tion by State Govt
 Whereas the Central Govt
in exercise of the powers conferred by Rule 582 of the NC Rules 1960 relaxed the provision of rule 581 as a special case for the reason that the appli cants having establis 57 hed a big fac tory for manu facturing Fer ro Chrome ore provision has to be made for procurement of raw materials for the proper running of the factory
Based on the said decision a fresh revi sion petition was filed on 6473 but the CG it rejec ted on301174 although the SGrecommen ded vide letter No17410 NG dated2621974 for approval for grant of 142 Acrs
to OCL Same application filed again 4
10474 22622 No 6675 29875 The Please see re Hectares Orders Central marks in Sl3 Boula were Govt
set 142 Ac
could Keonjhar passed aside the have been gra as re the deemed nted
This quired rejection application by sta and reman was filed pur tute
ded the suant to the matter back Notification to the SG issued by the for consi SG throwing deration
open for re grant 58 The State vide No3873 Govt
on dated 5374
2591975 The State Govt rejected latter changed the appln
their decision on the plea for working in that the public sector area over contrary to laps other the decision lease area
pronounced by Our earlier Supreme Court appln
as referred to 15370 in AIR
1976 was rejec Delhi
ted but was granted to Keeping in some other view principle party ie of justice FerroAlloys 50 of this Corporation area should be for a redu released to ced area
Orissa Cement
11570 388498 221070 231070 7472 CG rejected Hectares as above the applica Shrhranqi tion on the  plea they did Tailangi not like to PS interfere with Sukinda
the decision District taken by the Cuttack
SG for keep ing the area reserved for exploitation in public sector
Same application filed again 6
8574 388498 Deemed 23277 3677 The Ms Sirajudin Hectares rej delay was was holding Sukrangi ection explained the area of  but rejec 100 Ac
under Tailangi ted becau ML for 20 Distt
se of delay years from cuttack
8885 which expired in 1975
59 Renewal has been refused Sirajudin being a trader However Ms Sirajudin  Co has gone in writ to Orissa High Court which is still pen ding OMC has been granted lease over 382709 Hects
8574 7 Sq
Deemed 6675 8676 The This could miles rejec Central Govthave been Kala tion set aside granted to us ran the deemed but Ms
OMS is gista rejection working which  Ka and reman can be taken liapani ded to SG out from them Distt
The SG to grant the Cuttack
rejected our property to us appln
but OMC was just granted a permitted to free area work on ad hoc of 3 sqkm
basis
to OMC who are holding a lease from more than 70 sq Kms
approx
and hardly working 1520 sq
in different ML areas granted to Ms OMC
231082 20072 Dee 141183 The CG set hec med aside the tares re order of area jec tion 60 Bangura deemed rejec etc
tion on Distt
231283
No Keonjhar final order has been passed by the SG 9
231082 5491098 Dee 141183 291283 as This has Hectares med above been gran Kalia rej ted to Ms pani  ec OMC
Gurjang tion etc
231082 365467 Dee 141182 191283 This area Hecta med as above pertains res re to Sl12 Ostopal jec therefore  Gur tion the jang remarks etc
stated Distt
therein Cuttack
stand
231082 16087 Dee 141183 191283 As The SG Hecta med above
rejected res rej it on Bangu ec 27 6 1985 ra tion
on the PS ground Soso that the Distt
area over Keonjhar laps in full with the area previously held by Sirajudin  Co Re newal was refused by StateGovt
21183 29477 Deemed 28384 Against Hectares rejec The CG this rejec of 7264 tion remanded tion we Acs
the mat filed re Sajana ter back vision on garh PS to 2985 before CG 61 Nilgiri SG Therefore it Distt
is free
It Balascre
No should be orders granted to us have On similar been grounds the passed
SG has granted
28685 55874 No orders acres or passed by 22614 SG des hectares pite CG s Asurbandha orders on Distt
revision kanal 14
27186 35670 No orders hectares passed by in Namla SG Revi bhanga sion peti in Karma tion filed khya nagar before CG Distt
on 18387 Dhankanal The previous history as well as the latter developments are indicated in the above columns
It will be seen there from that the first seven and the eleventh applications of OCL were duly disposed of before the present litigation started and the party s grievance is that in respect of some of them leases have been granted to others like IMFA FACOR AIKATH  OMC
The others are pending before the SG after a remand by the CG or in revision before the CG
The thirteenth and fourteenth applications are pending before the SG and CG respectively
ORISSA MINING CORPORATION LIMITED OMC OMC is a State Government undertaking
It submitted an application for an area of 72521 hectares in village Chin gripal on 30682
62 Though this area was within the area of 1460 sq
re served for exploitation of chromium ore in public sector as per the State Government notification dated 3877 its application remained un disposed of and was deemed to be rejected on the expiry of the statutory period of one year
The CG by an order dated 101083 on a revision filed by OMC directed the SG to dispose of the application within 200 days
The SG however did not grant OMC any lease but instead granted ML to IMFA on 14385 in respect of 2662 hectares which was well within the area applied for by OMC
OMC has also made an application for mining rights regarding 10886 hectares in Kamrarda Balipada villages and 22015 hectares in Gurjang village which has not been grant ed
In the result the OMC has not been granted by mining lease despite its claim that the area in question has been reserved for exploitation in public sector though IMFA has been given ML in respect of 2662 acres out of the area covered by these applications
However
from the details given earlier pertaining to OCL it will be seen that OMC has been permitted to exploit about 382709 Hectares in one area on an ad hoc basis and has leases over about 70 sq
and 3 sq
in other areas
INDUSTRIAL DEVELOPMENT CORPORATION OF ORISSA LIMITED IDCOL This company submitted two applications on 11183 before the SG for grant of mining leases for chromium ore over an area of 74067 hectares in village Patna Chingiripal and 17173 hectares in village Gurjang
The applications were not disposed of by the SG within the specified time
The CG set aside the deemed refusal and directed the application to be disposed of but no decision has been taken by the SG apparently on the ground that the entire dis pute regarding grant of mining rights for chromium ore is pending in this Court in WP 1411684
ORDERS PASSED BY THIS COURT It is now necessary to refer to the various interim orders passed by this Court in this matter because some of the parties have made a grievance that though their claims for leases were pending at various levels IMFA and FACOR have been able to obtain from this Court orders directing the grant of leases to them and that this procedure was wholly unjustified
To start with it must be mentioned the CG the SG and certain officers of the CG and SG were impleaded as respondents 1 to 6 in the Writ Petition with FACOR as the 7th respon 63 dent
In the writ petition IMFA referred to its applications in respect of five blocks of land detailed in para 8 of the writ petition and alleged that while the petitioner s application for a lease in respect of the five blocks re ferred to earlier remained pending for more than a year for consideration in pursuance of the CG s directions for its disposal the SG had granted mining leases for chrome ore in favour of FACOR which according to the petitioner was similarly placed
In view of this allegation this Court passed a detailed and stiff interim order on 27984 in the following words after hearing the counsel for the petition ers and the standing counsel to the SG Mr RK Mehta learned counsel appears on behalf of Respondents Nos
4 to 6 pursuant to the notice served upon him as Standing Counsel for those respondents and he asks for time in order to enable him to obtain instructions from those respondents and to file a counter affidavit for these respondents
We would therefore adjourn the Writ Petition to 301084
But in the meanwhile we would direct respondents Nos 4 to 6 not to grant to anyone else other than the petitioners mining lease for chromite ore in re spect of the areas applied for by the petitioners and form ing the subject matter of applications made by them as set out in paragraph 8 of the Writ Petition
Since the project which is being set up by the petitioners is a very important export oriented project for which the necessary permission has already been granted by the Govt
of India and the Consortium of Foreign Banks has already agreed to finance the Project and it is a project which will earn considerable foreign exchange for the country and provide employment to a large number of workmen we would direct the 4th respondent to consider and decide the application of the petitioners set out in paragraph 8 of the Writ Petition on or before 23 1084 after giving an opportunity to the petitioners of being heard in the matter
We have no doubt that the 4th respondent will keep in view the nature and importance of the project and its foreign exchange earning capacity as also its potential for providing job employment to a large number of workmen in the State of Orissa while considering and deciding the applications of the petitioners
The 4th respondent will also take into account the fact that similar mining leases have been given to the 7th respondent and prima facie there does not appear to be any reason for denying the same facility to the petitioners for 64 otherwise the action of the 4th respondent may be liable to be condemned as discriminatory and arbitrary and moreover the 4th respondent cannot over look the fact that if mining lease as applied for are not granted the petitioners will have to import chromite and that will be a drain on the foreign exchange resources of the country
There are matters where national interest alone must count
It is indeed surprising that though the Central Govt
directed the 4th respondent to dispose of the application of the petitioners more than a year ago the 4th respondent has not yet chosen to dispose of the applications
We would direct the 4th respondent to carry out the direction given by us and dis pose of the applications of Ithe
petitioners in the light of the observations contained in this order on or before 231084
The decision taken by the State Govt
on the application shall contain the reasons and will be communi cated to the petitioners and also placed before this Court along with the Counter affidavit
The previous order made by us in regard to the production of files will stand and the files shall be produced at the next hearing of the Writ Petition
The Writ Petition stands adjourned to 301084
On coming to know of this order FACOR had the matter men tioned and after hearing the arguments of its counsel the Court passed an order on 181084 the material portion of which reads as under On the application of Mr Kapil Sibbal learned counsel appearing on behalf of the 7th respondent we direct that no decision shall be taken on the applications of the petitioner until 301084 unless a decision has already been taken
In the event the decision has already been taken it shall not be implemented until then
The files relating to the applications of the petitioner and the 7th respondent for mining leases in respect of chromite ore shall be sent to the Registry of this Court forthwith in a sealed cover along with a responsible officer of the State Government so as to reach the Registry of this Court by 2 pm on Satur day 20th October 1984
 A little later Mr Aikath was impleaded as respondent No 8 and pending the filing of a counter affidavit by him the Court passed the following order on 282
1985 65   
We would direct the State Government to give to the petitioners within 15 days from today the leases in respect of the areas of item No 3 and 2662 hectares area out of item No 4 set out in para 8 of the writ petition  so far as the remaining controversy is concerned we shall dispose it of on 2485 after hearing the parties
 The State Government will make an application to the Union of India within 5 days from today for the approval of the leases and the Union of India shall grant approval to them within 10 days
By the next date of hearing viz 8585 ORIND entered into the fray and was ordered to be made respondent No 9 in the writ petition
Pending further affidavits by the parties the Court gave another direction in the following terms    the State Government will give to respondent No 7 within 3 weeks from today lease in respect of 180 acres in item No 5set out in paragraph 8 of the writ peti tion excluding the area which the State Government propose to give to respondent No 8
This order is without preju dice to the rights and contentions of the parties  
The State will make an application to the Union of India within a week from today for the approval of the lease and the Union of India will grant its approval within a period of 2 weeks from that date
Then comes the order dated 30487 by which the writ peti tion was disposed of
It needs to be set out in full After hearing counsel appearing for the parties we consider that the proper order to be passed is to direct the parties who have applied for grant of mining leases to file representations before the Secretary Ministry of Mines and Steel Department of Mines Government of India within ten days from today setting out their claims in respect of the areas covered by their respective applications
We direct that the Secretary Department of Mines shall consider the claims of the various parties in respect of the areas cov ered by their application in the light of the observations contained in the orders already passed by the Court namely the Order dated 27th September 1984 and 66 8th May 1985 after duly taking into consideration the re quirements of the manufacturing industries concerned and decide about the question of grant of mining leases after giving an opportunity of being heard to the parties con cerned
Final orders in the matters should be passed by the Secretary within a period of six weeks from today
It is made clear that the memoranda of compromise said to have been filed in the High
Court of Orissa will be treated as not binding either on the parties or on the State Government and the whole question will be treated as being fully open for fresh consideration and determination by the Secretary Department of Mines Government of India
The status quo as obtaining at present with regard to the carting out of the mining operations over the areas will continue until the representations are disposed of by the Secretary pursuant to this order within six weeks from today
As already indicated the entire matter will be fully open for consideration by the Secretary and the orders passed by this Court should not be treated as final in regard to the allocation of the areas to the different claimants
The fact that certain writ petitions are pending before the High Court of Orissa will not in any way hamper the effective carrying out of this order
It is needless to add that the disposal of the matter by the Secretary should be by a reasoned order
The writ petition is disposed of on the above terms
 Sometime later IMFA moved an application for clarification of the Court s order dated 30487
On this the following order was passed on 610 1987 There are several claimants for the grant of mining leases in different parts of Orissa
This question has come up from time to time before this Court
The first relevant order was the one dated the 28th February 1985
Therein a bench consisting of PN Bhagwati J as he then was and V Balakrishna Eradi J directed the State Govern ment to give to the petitioners MS Indian Metal  Ferro Alloys Ltd within 15 days from today the leases in respect of the full areas of Item No 3 and 2662 hectares area out or  Item No 4 as set out in paragraph 8 of the Writ Peti tion
This Court further directed so far as the remaining controversy was concerned that the same shall be disposed of later on 67 by giving certain other consequential directions as the petitioners might seek which it is not necessary to refer  here
It was directed that the State Government was to make an application to the Union of India within 5 days from the date of the order for the approval of the leases by the Union of India and which should grant approval within ten days therefrom
Thereafter it appears that on 8585 another order was passed by the same bench of this Court wherein it was di rected that the Orissa Industries Ltd should be joined as respondent No 9 in the Writ Petition and respondent No 9 would file counter affidavit and directions were also given for filing rejoinder if any
It was directed that pending hearing and final disposal of the writ petition the State Government would give to the respondent No 7 within three weeks from today lease in respect of 180 acres in Item No 5 set out in paragraph 8 of the writ petition the State excluding the area which the State Government proposed to give to respondent No 8
 It was stated that this order was made without prejudice to the rights and contentions of the parties directions were given for hearing of the writ peti tions
Finally the order with which we are directly concerned with is the order dated the 30th April 1987 which was passed by a bench consisting of Hon ble V Balakrishna Eradi J and one of us GL Oza J The said order is set out in paragraph 2 of the CMP Nos 16435 3787
It is not necessary to set out in detail the order
It may be noted that the Court directed that the proper order to be passed was to direct the parties who had applied for grant of mining eases to file representations before the Secretary Ministry of Mines and Steel Department of Mines Government of India within ten days from that date setting out their claims in respect of the areas covered by their respective applications
This Court directed the Secretary Department of Mines to consider the claim of the various parties in respect of the areas covered by their applications in the light of the observations contained in the orders already passed by this Court namely the orders dated the 22nd September 1984 and the 8th May 1985 after duly taking into consideration the requirements of the manufacturing Indus tries concer 68 ned and decide about the question of grant of Mining Leases after giving an opportunity of being heard to the parties concerned
Thereafter the present applications have been made by different claimants seeking for directions for being added for consideration by the Secretary subject to their existing rights under the existing leases and grant of future leases
Mr Kapil Sibbal counsel appearing for the respondent No 7 and Dr Gauri Shankar counsel appearing for the applicant submitted that there are existing leases in their favour which cannot be entertained sic by any order passed by the Secretary and they are entitled to work out their full rights
On the other hand the Orissa Mining Corporation as well as Industrial Development Corporation Orissa are also claiming for grant of Mining leases includ ing respondent No 8 who is alleged to have found out the mines
In our opinion the proper order would be to pass order in terms of the order passed by this Court on 30487
The claims of thedifferent claimants including Mr Sibal s clients as well as Dr Gauri Shankar s should be considered in accordance with law by the Secretary in making his con siderations
The Secretary should bear in mind the previous orders made in their favour and the previous leases and the rights if any granted therefrom and their consequences
Similarly the public benefit and public interest involved and proper exploitation of the mines should be borne in mind
Bearing these facts it is directed that the Secretary should arrive at a just equitable and objective decision and send a report to this Court within three months on receipt of the copy of the order within a fortnight from today
The Secretary should only consider the applications of those who had existing leases applications at the time when the order of 30487 was made and not of those who had no existing leases applications on 30487
The copy of the report to be made shall be supplied to the parties
 It is in pursuance of this order Rao has heard the parties and submitted the report which has now been placed before us for further directions
OTHER PENDING APPLICATIONS It is necessary to clear the ground to refer to a number of applications made by the various parties subse quent to the order of this Court dated 30587 69 i By CMP No 1334787 FACOR pointed out that a lease in respect of 180 acres being part of item 5 had been granted to it by the SG on 13885 in pursuance of this Court s order dated 8585
It claimed that it had made substantial investments engaged a huge labour force and started mining in this area
It was disturbed by the fact that OMC and IDCOL had suddenly entered into the picture and claimed before Rao that they were entitled to leases on the basis of reservations
According to the applicant only the parties to the writ petition could be heard by Rao and OMC and IDCOL should not be permitted to join the proceedings before Rao and allowed to disturb the leases directed to the given to it and IMFA by the orders dated 28285 and 8585
A second point taken in the application was this 13
That it is submitted that the order dated 30487 does not make it clear as to under what statutory authority the Secretary to theGovernment of India shall dispose of the representations made by the various parties to the writ petition
This matter requires to be clarified by this Hon ble Court
This application was opposed by the OMC and the IDCOL
The Court by its order dated 61087 rejected the first re quest and allowed OMC and IDCOL to participate in the pro ceedings before Rao it was directed that the claims of all parties whose applications for lease were subsisting on 30487 should be heard by Rao
It was however clarified that in arriving at his conclusions the Secretary should bear in mind the previous orders made in favour of IMFA and FACOR the previous leases and rights granted to them and their consequences
The second aspect to which the applica tion referred was however not clarified
ii A second application of FACOR CMP 2258877 was directed primarily at the IMFA
It was submitted here that the order dated 28285 needed to be recalled and FACOR allowed to put forward claims in respect of the areas di rected to be leased out to IMFA as IMFA had not at all been operating its export oriented unit EOU since 1984 and was attempting to divert the ore to its domestic units whereas FACOR was the one that was operating an EOU and needed all the ore it could get
No notice was issued on this applica tion apparently as all the claims had already been referred to Rao
iii In August 1987 IMFA moved CMP 215781987
This was in the nature of a counter to CMP 1334787 moved by FACOR
This 70 application also prayed that the consideration before the Rao Committee should be confined to the parties to the writ petition
IMFA also took this occasion to request that the area of 180 hectares leased out to FACOR by the order dated 3585 should be treated as provisional and taken into account in the allotment to be decided on by Rao
FACOR tiled a reply
No orders have however been passed on the petition
again
apparently since all the claims were before Rao
ivCMP
928488 was filed by OCL to quash the order of 1288 passed by Rao which has totally rejected the claims of OCL
No orders on this petition have been passed so far but this will now have to be disposed of in the light of the conclusions we may reach in regard to OCL s claims on the merits and no separate orders need to be passed thereon
v IA 189 was filed by ORIND challenging the cor rectness of Rao s findings and praying that pending dispos al of WP 1411684 which according to it stands undisposed of despite the orders dated 30487 and 61087 the SG OMC Tisco
Sirajuddin  Co and Mysore Minerals the re spondents to the application should be directed to supply to ORIND 3000 MT of chrome ore per month
No orders have been passed on this application so far but since the writ petition itself is now being disposed of no interim orders as prayed for in this application are at all called for
STATUTORY INADEQUACIES 1 Delay and Ineffectiveness Now the first thing that strikes one on perusing the course of the proceedings in the case is the extremely unsatisfactory and impractical proce dure followed under the Act in regard to the grant of mining leases for important minerals like chrome ore
The statute envisages that the application should be made to the SG and disposed of by it within a prescribed period
But the course of events in the case and other reported cases show that this time limit is observed more in breach than in observance
Anticipating this possibility the rules provide that if an application is not disposed of within the statu tory period it shall be deemed to have been refused
So far so good as at least the applicant can on the expiry of the period have recourse to a higher authority
The remedy provided to the aggrieved applicant is to file a revision application before the CG under section 30 of the Act for revision of the order within three months thereafter
Rule 55 enables the CG after hearing all necessary parties to confirm modify or set aside the order or pass such other order in relation to 71 thereto as the Central Government may deem just and proper
A note under rule 55 also says that during the pendency of a revision application the State Government should not take any action in respect of the area which is the subject matter of the revision petition as the matter becomes sub judice
Having regard to the wide powers thus conferred
one would except the CG to dispose of the application on merits either granting the lease in whole or in part or rejecting it
But curiously in most of the cases which come up before Courts as also in this case the CG seems reluctant to pass any order except to set aside the deemed refusal and direct the SG to dispose of the application afresh within a specified period
That was the order passed for example in IMFA s case the time given being 200 days
But the SG does not seem to pay any heed to this direction and no order is passed within a reasonable period
Well one would think a second approach to the CG may be helpful
IMFA tried it but got back a reply to say that the CG was helpless in the matter
The original order in revision has stated should the State Government fail to pass order on the petitioner s application he may seek redress in an appropriate Court of Law if so advised and the subsequent application was rejected by the CG on the ground that the CG becomes functus officio when it passes the order in revision and has no jurisdiction to revise it
So all that the applicant can do is to wait for some time and then file a writ petition
Even if the writ petition were to be heard quickly all that the Court can do is to direct the SG to dispose of the application expeditiously
This is an ex tremely cumbrous and ineffective procedure in which several years pass but the application stands still
Thus for eg ORIND made an application in 1971 and is yet to know what the fate of its application would be
It puzzles us why the CS even in the first instance could not dispose of the application on merits in the light of the report received from the SG and after hearing concerned parties
2 Proliferation of applications Another problem created by the passage of time is the entry of new parties in the fray
We shall later point out that though section 11 tries to enunciate a simple general principle of first come first served in practice priority of an application in point of time does not conclude the issue
In this case itself
for instance during the period ORIND s application of 1971 has been under consideration before various authorities and in the writ petition filed in Orissa High Court several other competitors have come into the picture
The statutory provi sion is not clear as to which of the applications in respect of any particular area are to be considered together
If ORIND s application of 1971 for example were to be 72 considered only on the basis of the persons who had made applications at that time or a short time before or after one result would follow if on the other hand if all the applications pending for disposal at the time ORIND s appli cation is to be granted or rejected are to be considered
the result would be totally different
Since the interests of the nation require that no lease for mining rights should be granted without all applications therefore at any point of time being considered and the best among them chosen or the areas distributed among such of them as are most effi cient and capable the latter is the only reasonable and practical procedure
That is why this Court in its order dated 30487 laid down we think rightly that all appli cations pending for consideration as on 30487 should be considered by Rao
3 Procedure for consideration of applications A further confusion created in this case is due to the fact that leases of different areas in different villages and dis tricts have been applied for
No attempt has been made to locate with reference to any compact block of land who exactly are the competitors and whether there are areas in respect of which there is no competition at all
It will be seen later how this has caused difficulty in the present case
But what we wish to point out here is that the statute must lay down clearer guidelines and procedure
Having regard to the new avenues for vast industrial development in the country the more workable procedure would be for the SG to call for applications in respect of specified blocks by a particular date and deal with them together other later entrants not being permitted in the field
Otherwise only confusion will result as here
There was a time when the SG looked to private enterprises for mineral develop ment in its territory
Even now it has been stated that 87 of the State territory containing chromite is under lease to one industrial house
Of late however competition has crept in
The SG has its own public sector corporations and various entrepreneurs are interested in having mining leases for their purposes
It is therefore vital that there should be a better and detailed analysis district wise and area wise and that a schedule for consideration of applications in respect of definite areas should be drawn up with a strict time frame so that the State is no longer constrained to deal with sporadic applications or make a routine grant of leases in order of priority of applica tions
These are aspects which call for careful considera tion and appropriate statutory amendments
IS section 112 CONCLUSIVE Now to turn to the contentions urged before us Dr Singhvi who 73 appeared for ORIND vehemently contended that the rejection of the application of ORIND for a mining lease was contrary to the statutory mandate in section 11 2 that subject only to the provision contained in section 111 which had no application here the earliest applicant was entitled to have a prefer ential right for the grant of a lease and that a considera tion of the comparative merits of other applicants can arise only in a case where applications have been received on the same day
It is no doubt true that section 112 of the Act read in isolation gives such an impression which in reality is a misleading one
We think that the sooner such an impres sion is corrected by a statutory amendment the better it would be for all concerned
On a reading of section 11 as a whole one will realise that the provisions of sub section4 completely override those of sub section 2
This sub section preserves to the SG a right to grant a lease to an applicant out of turn subject to two conditions a record ing of special reasons and b previous approval of the CG
It is manifest therefore that the SG is not bound to dispose of applications only on a first come first served basis
It will be easily appreciated that this should indeed be so for the interests of national mineral development clearly require in the case of major minerals
that the mining lease should be given to that applicant who can exploit it most efficiently
A grant of ML in order of time will not achieve this result
In the context of his submission pleading for priority on the basis of the time sequence Dr Singhvi referred to certain observations in the decisions reported as Ferro Alloys Corporation of India vs Union ILR 1977 Delhi 189 at p 196 and as Mysore Cements Ltd vs Union AIR at p 15 1
we do not think these decisions help him
In the former case an application by FACOR for a lease was rejected on the ground that an earlier application was being accepted
FACOR contended this was wrong that the SG could not have refused to look into its application merely because another applicant had a preferential right under section 112 and that its application as well as that of the earlier applicant should have been considered together
It is in the situation that the Court observed that rule 11 primarily embodies the general principle of fist come first served and an out ofturn consideration under section 114 was an exception for which a strong case had to be made out
The petitioner could not have a grievance if the general principle was followed
So also in the latter case an earlier application having been accepted and a lease granted the consideration of a later application was held to be uncalled for
These decisions cannot be treated as authorities for the proposition that the SG is bound to grant an earlier application as soon as it is received 74 and cannot wait for other applications and consider them all together and grant a later one if the circumstances set out in rule 114 are fulfilled
That apart it has to be remem bered that the SG did reject ORIND s application by an order dated 2310
This order was set aside in the CG on 202
1977 and the SG directed to consider it afresh
The SG did not comply with this order and so a writ petition was filed by ORIND which was pending when this writ petition was filed
Subsequently the High Court on 9289 directed the SG to consider and dispose of ORIND s application on merits
The SG on  7489 dismissed ORIND s application on the ground that the issue is before us and hence the SLP against the order of rejection of the SG
Even assuming that we accept the SLP filed by ORIND that will only entitle ORIND to have its application reconsidered for grant along with such other applications as may be pending as on the date of such reconsideration
In the context of the scheme of the Act and the importance of a lease being granted to one or more of the better qualified candidates where there are a number of them it would not be correct to say that as the SG s order of 29101973 has been set aside ORIND s application should be restored for reconsideration on the basis of the situation that prevailed as on 2910
1973 and that therefore it has to be straight away granted as there was no other application pending on that date before the SG
In matters like this subsequent applications cannot be ignored and a rule of thumb applied
We are unable to accept the submission of Dr Singhvi that the application of ORIND being the earliest in point of time should have been accepted and that we should direct accord ingly
As to how far the requirements of section 114 are ful filled in the present case that is an aspect which will be considered later
PROMISSORY ESTOPPEL It will be convenient here also to deal with another argument raised by Dr Singhvi based on grounds of promisso ry estoppel
Dr Singhvi points out that when ORIND applied to the CG for revision of the order of rejection of its application on 231073 the SG on 26274 wrote to the CG as follows Ms Orissa Industries Limited made representation to the State Government on  1512
1973 for reconsidering grant of lease to serve the captive requirements of their refractory plant
They also brought to the notice of the State Government an export order of refractories of sizeable value of about Rs2 crores received from National 75 Iranian Steel Mills
Teheran Chromite being essential raw material for manufacture of refractories they pressed for grant of Mining Lease
After careful consideration of the representation the State Government have revised the policy of reserving the chromite area only for exploitation in public sector and have decided for grant of chromite to serve the captive requirements of industry within the State should be given first priority
Accordingly it is proposed to grant the mining lease for chromite over the available areas subject to revision of the previous order of the State Government by Government of India us 30 of the Mines  Minerals Regulation  Development Act 1957 and us 52 of the said Act
Steps are being separately taken to exclude this area from the operation of reservation notification for exploitation of chromite in the public sector
In the interest of the local industries
the State Govt
do not intend to throw open the area after releasing from reservation
Approval of Government of India would also be necessary for not throwing open the area in the relaxa tion of the rule 58 of the Mineral Concession Rules 1960
Out of 112925 hectares applied for an area of 37993 hectares is covered by overlapping of applied leases or applications including an area of 142 hectares which is being separately recommended to Government of India for grant of Mining lease in favour of Ms Orissa Cement Limit ed
As such the net area available for grant of mining lease is therefore
74932 hectares
The State Government having rejected the application of the party in Government Proceeding No 1043 dated 2310
1973 are got obtain to revise their own order by granting Mineral Concession as instructed in your department letter No MV I44561 dated 5172
The case is therefore
recom mended to Government of India for grant of Mining Lease over an area of 74932 hects
in favour of Ms Orissa Industries Limited revising the above order of the State Government us 30 of the 
As chromite ore is specified mineral under the first schedule of the Act approval of Government of India is also requested us 52 of the Act
I would therefore request you to kindly obtain and communicate orders of Government of India on revision us 30 of Mines  Minerals Regulation  Development Act 1957 and approval us 52 of the said Act and in relaxation of Rule 58 of the Mineral Concession Rules
1960 for grant of Mining Lease for chromite over an area of 74932 hectares in Cuttack District in favour of Orissa Industries Limited
 Simultaneously it is pointed out the SG while sending its comments to the CG on the contents of another revision application filed by ORIND against the rejection of its application also dated 5771 for a lease of 44638 hec tares in village Sukrangi of Cuttack District had this to say Recently in State Government letter No 1747MG dated 26274 chromite bearing area to the extent of 74932 hectares in Cuttack district has been recommended to Govern ment of India for grant in favour of Ms Orissa Industries Ltd The need of Ms Orissa Industries Ltd will be met from this
It is the responsibility of the party to obtain raw materials for its factory and the State Government cannot take such responsibility as contended by the petitioner
The party is at liberty to purchase the chrome ore from Orissa Mining Corporation
XXX XXX XXX The State Government have already recommended an area in favour of Ms Orissa Industries Ltd to the Govt
of India to meet the requirements of their industry
The State Government have already decided to grant the area applied for by Ms Orissa Industries Ltd in their ML application under revision to Ms Orissa Mining Corporation Ltd who are now working the area as an agent of the State Government
Hence the question of granting this area to Ms Orissa Industries Ltd does not arise
 Also on 5374 the SG published a notification dereserv ing the said 74932 hectares said to have been earlier reserved for exploitation in the public sector by a notifi cation of 37
1962
Dr Singhvi submitted on the strength of this correspondence and notification that the SG having sought to justify its rejection of ORIND s application for 77 44638 acres on the ground that the company s application for 74932 hectares was being recommended after dereserva tion it was not open to the SG now to take up a different stand and that ORIND s application for 122925 hectares now under consideration should have been granted at least to the extent of 74432 hectares the dereservation and lease in favour of ORIND of which had been recommended by the SG itself as early as 1974
In support of this contention learned counsel relied on the observations made in a series of decisions of this Court Kanai Lal Sur vs Paramnidhi Sadhukhan  Ms Motilal Padampat Sugar Mills Co P Ltd vs State of Uttar Pradesh and Ors
   Gujarat State Financial Corporation vs Ms Lotus Hotels Pvt Ltd  Surya Narain Yadav  Ors
vs Bihar State Electricity Board  Ors 1985 Suppl
1 SCR 605 Union of India  Ors
vs Godfrey Phi lips India Ltd 1985 Suppl
3 SCR 123 and Mahabir Auto Stores  Ors
vs Indian Oil Corporation  Ors 1990 JT 1 SC 363
This argument is interesting but overlooks certain very important relevant circumstances
As mentioned earlier ORIND s revision petition was disposed of by the CG on 232
This order contains no reference to the SG s letter of 26274 on the contrary it proceeds on the footing that no comments had been received from the SG
Possibly this is because the letter of 26274 was not in the form of comments on the ORIND s revision application but was in the form of the SG s recommendations on ORIND s representation to it dated 151273 although it does sug gest that the CG could set aside the order of 231073 and direct the grant of a lease to ORIND in respect of 74932 hectares
Be that as it may the CG did not accept the recommendation of the SG
Indeed we find on record that having regard to a letter of the CG dated 15574 the SG sent a letter dated 17774 withdrawing the earlier recommendation made by it on 26274 for the allotment of 74932 acres to ORIND
In view of this letter the CG simply set aside the order of 231073 on the ground that it was not a speaking order and directed the SG to dispose of ORIND s application within 100 days in the light of the letter of the CG dated 15574
Interestingly this letter had been written in reply to a proposal from the SG that the exploitation of chromite had to be entrusted to the public sector
Accepting this suggestion the letter pro ceeded to lay down certain broad priorities on the basis of which leases could be granted and certain other directions in respect of research and development
The position there fore is that the CG did not accept the SG s recommenda tions regarding the grant of a lease to ORIND in respect of 74932 hectares out of the 112925 78 hectares applied for
There was however delay in the disposal of the application by the SG
When the SG took up consideration of the matter once again it took note of three circumstances to reject the application of ORIND
These were i One of the directions in the CG s letter of 15574 was that no lease of lumpy ore for metallurgical and re fractory grade be granted to private sector unless mining undertakings of the State or Central Government are not interested in the exploitation of ore in these leaseholds and the requirement of ORIND was for lumpy chromite ore ii Two notifications had been issued on 28477 and 3877 reserving certain areas for exploitation by the public sector
The former dealt specifically with the 74932 hec tares which had been proposed for allocation to ORIND in the letter of the SG dated 26274
The latter covered a huge area of 1460 sq km
in various districts of the State iii The claims of all applicants had been considered by Rao and Rao had come to the conclusion that no mining leases need be given to ORIND
We shall consider later the claim of ORIND on merits
But for the present we only wish to point out that no grounds have been made out which could support a plea of promissory estoppel
The grant of a lease to ORIND had to be approved by the CG
The CG never approved of it
The mere fact that the SG at one stage recommended the grant cannot stand in the way of their disposing of the application of ORIND in the light of the CG s directives
Perhaps the highest that ORIND can claim is that since this lease of 74932 acres has not come through the SG s order rejecting its application in respect of 44638 hectares deserves to be considered
But that area is not the subject matter of the present SLP by ORIND
Moreover ORIND has not placed before us any information as to what happened to the revi sion petition filed by it against the rejection of the application in respect of 44638 hectares of the further proceedings if any in relation thereto
We express no opinion as to ORIND s entitlement to a lease on that appli cation in case it does not succeed in its claim here in respect of 74932 hectares
It will be open to ORIND to pursue such remedies in respect thereof as it may be advised and as may be available to it in law
79 THE RESERVATION POLICY The principal obstacle in the way of ORIND as well as the other private parties getting any leases was put up by the SG OMC and IDCOL
They claimed that none of the private applications could at all be considered because the entire area in all the districts under consideration is reserved for exploitation in the public sector by the noti fication dated 3877 earlier referred to
All the private parties have therefore joined hands to fight the case of reservation claimed by the SG OMC and IDCOL
We have indicated earlier that the SG expressed its preparedness to accept the Rao report and to this extent waive the claim of reservation
Interestingly the OMC and IDCOL have en tered caveat here and claimed that as public sector corpora tions they could claim independently of the SG s stand that the leases should be given only to them and that the Rao report recommending leases to IMFA FACOR and AIKATH should not be accepted by us
The relevant provisions of the Act and the rules have been extracted by us earlier
Previously rule 58 did not enable the SG to reserve any area in the State for exploi tation in the public sector
The existence and validity of such a power of reservation was upheld in Kotiah Naidu vs State of AP AIR 1959 AP 185 and Amritlal Nathubhai Shah vs Union AIR 1973 Guj 117 the latter of which was approved by this Court in  pointed out earlier rule 58 has been amended in 1980 to confer such a power on the SG
It is also not in dispute that a notification of reservation was made on 3877
The SG OMC and IDCOL are therefore right in contending that ex facie the areas in question are not available for grant to any person other than the SG or a public sector corpora tion rule 591 proviso unless the availability for grant is renotified in accordance with law rule 591e or the CG decides to relax the provisions of rule 591 rule 592 
None of those contingencies have occurred since except as is indicated later in this judgment
There is therefore no answer to the plea of reservation put forward by the SG OMC and IDCOL
The private applicants seek to get over this difficulty in several ways
In the first place they all vociferously urge that this plea has been taken by the SG belatedly that the OMC and IDCOL have come into the picture very late and that this plea should not be allowed to be raised at this stage
The learned Advocate General for the State of Orissa has pointed out we think rightly that there is no substance 80 this grievance
The objection regarding reservation was raised by the SG at the very first opportunity it had in a preliminary counter affidavit filed by it in the writ petition dated 29101984
The counteraffidavit mentioned about the reservation in no uncertain terms and a copy of the relevant page of the Orissa Gazette dated 12877 which contained the reservation notification dated 3877 was also annexed to the counter affidavit
Reference was also made to the statutory provisions and judicial decisions
The claim was reiterated when ORIND joined the proceedings in a reply filed by the State to the counter affidavit filed by ORIND on 22885 this reply affidavit refers to the letter of the CG dated 15574 and the notification of reserva tion dated 28477 pertaining to the 74932 acres in respect of which ORIND had made an application
In a further coun ter affidavit dated 241189 filed in reply to the addi tional submissions dated 171089 filed on behalf of ORIND the notification of 38
1977 has also been referred to
OMC and IDCOL had submitted their applications for lease but no orders had been passed thereon
When they came to know that the applications of IMFA and FACOR were considered by this Court and certain interim orders passed they approached Rao to consider their applications as well
This request was opposed by the other parties whereon OMC and IDCOL sought and obtained the directions of this Court that their appli cations should also be considered by Rao
Before Rao they supported the SG plea of reservation
In the circumstances Set out above it is difficult to accept the contention of the various private applicants that the plea as to reserva tion should not be entertained at all on the ground of delay and 1aches
It is then argued that though the SG may have formally notified a reservation it has not been very serious about this and has always been willing to consider private appli cations for leases
In support of this contention reliance is placed on the following circumstances a On 26274 the SG has clearly expressed its willingness to dereserve the area of 74932 acres and indeed followed it up on 5374 with a notification of dereservation
b Though the SG claims that reservation is neces sary to meet the SG s requirements because 81 of chromite ore rich lands already stand leased out to a private party TISCO the SG proceeded to renew the grant in favour of that party
c The SG has been willing enough to lease out lands to private parties i The SG has granted leases to FACOR on 81 9272 71072 and 121176 in respect of 15705 hects 13331 hects
and 7284 hects
respectively in Bokhla Kathpal and Ostapal villages
ii it has entered into an agreement with AIKATH to grant a lease in respect of a part of the land applied for by him in item 8 iii it has agreed to lease out item 3 and 2662 hectares out of item 4 in favour of IMFA iv it agreed to lease out 180 acres in item 5 in favour of I FACOR
d Even at this final stage of hearing of the writ petition
the Advocate General of the State has conceded that the SG is prepared to abide by the Rao report ie the SG is willing to grant leases to IMFA FACOR and AIKATH but not to OCC or ORIND
This is patently discrimina tory
We do not however think that these circumstances establish that the State is not serious about its plea of reservation
So far as item a is concerned
we have al ready pointed out that this was the initial attitude of the Government but this policy was changed in pursuance of the CG s letter dated 15574 and its order on ORIND s revi sion application
The SG itself had in fact withdrawn the recommendations made on 26274 by its letter of 17774
The thought of dereservation had therefore been given up by the SG in July 74 itself though the notifica tion of dereservation was superseded only in 1977
In regard to items b  c the position is that the lease of 1976 was after the dereservation of 5374
The leases to FACOR in 1972 the details of which are not available before us are stated to have been granted after obtaining CG s order for relaxation
The full circumstances in which the lease in favour of TISCO was renewed are not before us but perhaps such renewal was dictated by the nature of the industry run by TISCO and its importance for the economy of the State and the country
These apart the Court approved of the grant of leases to IMFA and FACOR
So far as d is concerned the learned Advocate General of Orissa has made it clear that the SG does not accept the Rao report in so far as it ignores its claim of reservation
The concession made only is that since the Rao Committee in recommending grant of leases to IMFA and FACOR is only giving effect to a fait accompli in pursuance of the interim directions of this Court they are willing to abide by it
It will therefore be clear that except for two or three instances where leases have been granted by the SG on its own the SG has generally and consistently adhered to its stand that the chromite bearing lands are reserved for exploitation in the public sector
The rules permit the CG to relax the rigid requirements of reservation in individual cases after re cording special reasons
We are 82 not here called upon to decide whether the relaxations made in the above eases were in accordance with the rules or not
It is sufficient to say here that these exceptional and isolated instances of lease are not sufficient to sustain the plea of the parties before us that the policy of reser vation is merely being raised as a formal defence and has never been seriously implemented by the SG Dr Singhvi also raised a plea of arbitrariness and mala fide to challenge the reservation policy
He urges on the first count that it was not open to the SG to go on shift ing its reservation policy from time to time without ade quate reasons Such conduct was also vitiated he said as amounting to malice in law and referred in this context to the observations of this Court in Venkataraman vs Union  We do not think this contention has any substance
Chromite ore is an important major mineral and the importance of its conservation and proper utilisation for our country s development cannot be gainsaid
The SG rightly decided upon a policy of reservation in 1967 and this was kept up till 1974
In February 1974 the SG was in favour of freer issue of mining leases but gave up this policy in pursuance of the CG s letter of 15574
Reser vation was therefore clamped in 1977 again
Applications could still be considered to see how far a relaxation was permissible having regard to the nature of the applicant s needs the purpose for which the lease was asked for the nature of the ore sought to be exploited the relative needs of the State the availability of a public sector undertak ings to carry out the mining more efficiently and other relevant considerations
There is no material on record to substantiate a plea that the SG has been acting arbitrari ly or mala fide in its policy formulations in this regard
Our conclusion that the areas in question before us were all duly reserved for public sector exploitation does not however mean that private parties cannot be granted any lease at all in respect of these areas for as pointed out earlier it is open to the CG to relax the reservation for recorded reasons
Nor does this mean as contended for by OMC and IDCOL that they should get the leases asked for by them
This is so for two reasons
In the first place the reservation is of a general nature and does not directly confer any rights on OMC or IDCOL
This reservation is of two types
Under section 17A1 inserted in 1986 the CG may after consulting the SG just reserve any area not covered by a PL or a ML with a view to conserving any mineral
Apparently the idea of such reservation is that the miner als in this area will not be exploited at all neither by private parties nor in the public sector
It is not neces sary to consider whether any area so 83 reserved can be exploited in the public sector as we are not here concerned with the scope of such reservation there having been no notification under section 17A1 after 1986 and after consultation with the SG
The second type of reserva tion was provided for in rule 58 of the rules which have already been extracted earlier in this judgment
This reser vation could have been made by the SG without any neces sity for approval by the CG  and was intended to reserve areas for exploitation broadly speaking in the public sector
The notification itself might specify the Govern ment Corporation or Company that was to exploit the areas or may be just general on the lines of the rule itself
Under rule 591 once a notification under rule 58 is made the area so reserved shall not be available for grant unless the two requirements of sub rule e are satisfied viz an entry in a register and a Gazette notification that the area is available for grant
It is not quite clear whether the notification of 5374 complied with these requirements but it is perhaps unnecessary to go into this question because the reservation of the areas was again notified in 1977
These notifications are general
They only say that the areas are reserved for exploitation in the public sector
Whether such areas are to be leased out to OMC or IDCOL or some other public sector corporation or a Government Company or are to be exploited by the Government itself is for the Government to determine de hors the statute and the rules
There is nothing in either of them which gives a right to OMC or IDCOL to insist that the leases should be given only to them and to no one else in the public sector
If there fore the claim of reservation in 1977 in favour of the public sector is upheld absolutely and if we do not agree with the findings of Rao that neither OMC nor IDCOL deserve any grant all that we can do is to leave it to the SG to consider whether any portion of the land thus reserved should be given by it to these two corporations
Here of course there are no competitive applications from organisa tions in the public sector controlled either by the SG or the CG but even if there were it would be open to the SG to decide how far the lands or any portion of them should be exploited by each of such Corporations or by the CG or SG Both the Corporations are admittedly instrumen talities of the SG and the decision of the SG is binding on them
We are of the view that if the SG decides not to grant a lease in respect of the reserved area to an instru mentality of the SG that instrumentality has no right to insist that a ML should be granted to it
It is open to the SG to exercise at any time a choice of the State or any one of the instrumentalities specified in the rule
It is true that if eventually the SG decides to grant a lease to one or other of them in respect of such land the instru mentality whose application is rejected may be aggrieved by the 84 choice of another for the lease
In particular where there is competition between an instrumentality of the CG and one of the SG or between instrumentalities of the CG inter se or between the instrumentalities of the SG inter se a question may well arise how far an unsuccessful in strumentality can challenge the choice made by the SG
But we need not enter into these controversies here
The ques tion we are concerned with here is whether OMC or IDCOL car object to the grant to any of the private parties on the ground that a reservation has been made in favour of the public sector
We think the answer must be in the negative in view of the statutory provisions
For the SG could always denotify the reservation and make the area available for grant to private parties
Or short of actually dere serving a notified area persuade the CG to relax the restrictions of rule 591 in any particular case
It is
therefore
open to the SG to grant private leases even in respect of areas covered by a notification of the SG and this cannot be challenged by any instrumentality in the public sector
Before leaving this point we may only refer to the position after 1986
Central Act 37 of 1986 inserted sub section 2 which empowers the State Government to reserve ureas for exploitation in the public sector
This provision differs from that in rule 5  in some important respects i the reservation requires the approval of the CG ii the reservation can only be of areas not actually held under a PL or ML iii the reservation can only be for exploitation by a Government company or a public sector corporation owned or controlled by the SG or CG  but not for exploitation by the Government as such
Obviously section 17A2 and rules 58 could not stand together as section 17A empowers the SG to reserve only with the approv al of the CG while rule 58 contained no such restriction
There was also a slight difference in their wording
Perhaps because of this rule 58 has been omitted by an amendment of 1988 GSR 449E of 1988 made effective from 13488
Rule 59 however contemplates a relaxation of the reservation only by the CG
By an amendment of 1987 effective on 102
1987 GSR 86 E of 87 the words reserved by the State Government were substituted for the words reserved by the 85 Government in rule 591e
Later rule 591 has been amended the insertion of the words or under section 17 A of the Act after the words under rule 58 in clause e as well as in the second proviso
The result appears to be this  i After 13488 certainly the SG cannot notify any reservations without the approval of the CG as rule 58 has been deleted
Presumably the position is the same even before this date and as soon as Act 37 of 1986 came into force
ii However it is open to the SG to denotify a reservation made by it under rule 58 or section 17A Presumably dereservation of an area reserved by the SG after the 1986 amendment can be done only with the approval of the CG for it would be anomalous to hold that a reservation by the SG needs the CG s approval but not the dereservation
Anyhow it is clear that relaxation in respect of reserved areas can be permitted only by the CG iii It is only the CG that can make a reservation with a view to conserve minerals generally but this has to be done with the concurrence of the SG
We are concerned in this case with reservations made by the SG under rule 58 before 1986 which there is no reason to doubt continue in force even after the introduction of section 17A
These as pointed out above can be dereserved by th SG but a relaxation can be done by the CG only
We shall consider later whether this power of the CG can be or has been or should be exercised in this case
It is sufficient to observe here that the reservations notified in 1977 do not necessarily vitiate the grant of leases to private parties
STATUS OF RAO REPORT We now come to the question regarding the status of and the weight to be attached to the Rao report
The writ petition and other proceedings before us were directed against the SG s failure to pass favourable orders on the applications of various parties
Normally in such a case this Court would either have directed the SG to consider the applications afresh and pass appropriate orders or left it to the parties to file revision petitions before the CG against the SG s orders
Here as described earlier the various parties came up before 86 this Court one after the other and some of them had their writ petitions pending in the Orissa High Court
This Court therefore decided that the best course would be to consoli date all the applications that were pending on 30487 for the consideration of the CG so that a satisfactory deci sion could be arrived at after an examination of the rela tive merits of the various applicants
This Court did not specify the statutory provision under which this was to be done but it is apparent that it was intended to be an exer cise of the power of the CG under section 30 though this aspect was not clarified when FACOR draw attention to it in CMP 1334787
We have no difficulty in construing the Rao report as a decision on the claims of the various parties before it though having regard to the terms of the order of this Court dated 61087 it has been styled as a report
The objections to this conclusion are three fold and they are dealt with below First it is pointed out that revisions to the CG under section 30 can be validly dealt with only by a tribunal and not by a single officer
We find that the procedure indicated is not dictated by the statute or the rules
It is only a forum outlined in an office order more as a matter of internal regulation than as a rigid rule of procedure
We have seen one of these orders dated 107
It consti tutes three Single Bench Tribunals each consisting of a designated Joint Secretary in the Department of Mines and three Divisional Bench Tribunals each comprising of a desig nated Joint Secretary in the Department of Mines and a designated Joint Secretary in the Department of Legal Af fairs in the Ministry of Law and Justice
The instructions are To the extent possible cases in which parties have not asked for personal hearing should be disposed of by Single Bench Tribunals unless the member feels that some complicated legal issue is involved requiring advice of the member from the Law Ministry
The cases where personal hearing has been requested by parties the Single Member Tribunals will decide whether to dispose of the cases after grant of hearing by himself or whether the hearing should be held by Division Bench Tribu nal
 It will thus be seen that even regular revision petitions under section 30 can be validly disposed of solely by a Joint Secretary in the Department of Mines unless he considers it necessary either because a personal hearing is asked for or because some complicated legal issue is involved to 87 invoke the aid of a Joint Secretary in the Law Ministry
Here there is no regular revision petition except perhaps in one case the disposal is by the Secretary to the Depart ment of Mines he has been specially authorised to deal with the matter by this Court and no legal issued at all are involved
We therefore see nO irregularity or defect in the procedure forged by this Court for a speedy and effec tive disposal of the claims before the Court
Secondly it is said that though the order of 3041987 directs the secretary to dispose of the representations by a reasoned final order the subsequent order of 61087 asks him to sent a report to this Court
We do not think there is any inconsistency between the two orders
Even the order of 61087 requires the Secretary to arrive at a just equita ble and objective decision
He has been asked to send a report of his decision to the Court with copies to the parties only in order that if any of the parties are aggrieved by his decision their grievances may be consid ered by this Court in this WP itself instead of driving the parties to a fresh course of litigation
Thirdly it is submitted that Rao s hands were more or less tied by the various observations and directions of this Court thus preventing him from coming to independant conclu sions of his own
This criticism is unfounded and also belied by the contents of the report
This Court had made it clear that Rao should not consider himself bound by the memoranda of compromise filed in the High Court of Orissa with AIKATH and FACOR or the orders passed by this Court in regard to the allocation of areas to IMFA and FACOR though necessarily he had to bear in mind the previous orders made in their IMFA and FACOR favour and the previ ous leases and the rights if any granted therefrom and their consequences
He was also asked to bear in mind the public benefit and public interest involved and also the need for the proper exploitation of the mines
In fact also we find that although Rao has approved the grants made in favour of IMFA and FACOR by the SG which he remarks were perhaps based on the observations made by this Court
he has clearly reached his conclusions on these independent ly
In fact he has set out a basis for justifying the grants to IMFA and FACOR
It is also clear that there were no Court orders that could have influenced his decisions on the claims of the other parties
This objection is there fore not at all tenable
OMC IDCOL OCL and ORIND complain indeed that Rao has been completely overwhelmed by the weight of the observa tions and the leases granted by the SG pursuant to interim orders of this 88 Court
They have gone to the length of criticising and indeed challenging the validity of these interim orders which had been passed without notice to any of them
They have invoked in support several passages from the decision of this Court in Antulay vs Nayak  We think these criticisms are unfounded
This Court had only directed the grant of two leases pending disposal of the writ petition
At the time these directions were made only IMFA FACOR and AIKATH were before the Court
IMFA had pointed out that FACOR had been given certain leases al though its earlier applications were pending before the CG
The SG submitted to the Court that a lease in respect of item 1 had been granted to FACOR that item 5 had already been agreed to be leased in favour of AIKATH and FACOR and that it was willing to grant a ML in respect of item 3 and 2662 acres out of item 4 to IMFA
It was in view of this that the Court passed the order
Similarly the ML directed to be granted to FACOR was also in consequence of the SG s acquiescence therein
It is therefore incorrect to characterise these orders as erroneous or unjustified
They were fully within the scope of the writ petition and were passed after hearing the parties before the Court
No doubt OCC ORIND OMC and IDCOL were not there then
After they put in their appearance this Court made it clear that while the earlier orders the observations therein and the leases granted in pursuance thereof should be kept in mind Rao would not be bound by them but would be free to arrive at his conclusion
We therefore do not see any grounds for the criticisms put forward by these parties in regard to the interim orders passed by the Court
For the above reasons we are of opinion that though styled a report the findings given by Rao are in the nature of a decision of the CG on the claims of the various parties
We therefore proceed to consider the Rao report on its merits
MERITS OF THE RAO REPORT This takes us then to the merits of the various claims put forward before Rao and his decision thereon
For our present purposes we think we can consider the Rao report in two parts a his endorsement of the SG s decision to grant ML to IMFA FACOR and AIKATH b the rejection by him of the claims put forward by the above three parties for leases in respect or areas over the above what 89 has been allotted to them as well as the rejection of the claims of the other parties
So far as the first aspect is concerned we think that Rao s decision that the leases that have been granted already in favour of IMFA FACOR be confirmed should be upheld
In our view these should be treated as leases legitimately granted to them in exercise of the powers of relaxation under rule 592
It is true that the orders granting the leases do not elaborately record the reasons but they were passed in the context of this litigation and have to be considered in the light of the affidavits and counter affidavits filed herein
We are also of opinion that the Rao s decision regarding the grant of a lease to AIKATH not yet implemented should also be upheld
In these three cases we think the records disclose sufficiently the reasons on the basis of which the leases have been decided upon and are adequate to justify the MLs actually granted
We shall just summarise these reasons which have also been taken note of by Rao
a ML to AIKATH IMFA FACOR 1
AIKATH is admittedly an individual who discovered chromite ore in the State
He had secured a lease as early as in 1952 though that lease was annulled by the State when it took over
Again as against a lease of 640 acres which he had once obtained and started operating upon the SG has finally approved of a lease in respect of only 140 acres
AIKATH had been actually working some mines from 1553
His original grant had been approved before the area was reserved on 3762
If the SG considers these to be weighty considerations and entered into a compromise with him for a lease of 140 acres and this has also been recorded by the Orissa High Court there are no grounds to interfere with the decision of the SG 2
So far as FACOR is concerned the requirements for their plant in Andhra Pradesh were met by the ML granted to them in 1971 72 at Kathpal and Boula thus recognising their claim for a ML to meet part of their requirements of ore
Their present needs were in connection with their plant at Randia in Balasore District which required about 120000 tons per annum of ore
The compromise entered into with FACOR agreeing to grant a ML for an area 7284 hectares having a potential of about 24 million tons would cater to 50 of its needs on a 20 year time frame making allowances for wastage in recovery
IMFA needs 50000 tons per annum for their plant at Therbauli and 120000 tons in respect of a plant at Chandwar run by a subsidiary
While the reserve potential of 2662 hectares allotted to IMFA out of item 4 is roughly 08 million tons the reserve potentials of 10886 acres given out of area 3 and of another 1702 hectares in Balasor District given for the plant of the subsidiary were yet to be assessed
Nevertheless
it was expected that they would cater to the needs of IMFA more or less to the same extent that the ML in favour of FACOR catered to its needs
It is true that a relaxation under rule 592 has to be made by the CG
The orders of grant do recite the approval of the CG in this regard
An objection has been taken that the CG granted the approval not after applying its mind to the matter but merely because this Court had directed it to do so
We do not think this contention can be accepted
Apparently when the SG agreed to lease out the areas to IMFA and FACOR it was pointed out that this could not be given effect to without the CG s approval
This Court thereupon directed that the SG should seek such approval
The direction to the CG is only that its approval should be given within the particular time limit set out therein
It cannot be construed reasonably as a direction compel ling the CG to grant approval whether it agreed with the SG 
s decision or not
We would
therefore reject this contention and treat the grants to IMFA anti FACOR as made in exercise of the power of relaxation us 592 
Once again we would like to observe that though there is no specific recording of reasons by the SG or CG inasmuch as these leases came to be granted by way of com promise it is a fair inference that the compromise propos als were prompted by the at least partial acceptance of the claims put forward by these parties
Since the grant of leases to these three parties can be attributed to the relaxation of the reservation rule in particular cases the finding of Rao that these leases may be confirmed deserves acceptance
We have to add a few words in respect of AIKATH
Though the SG and AIKATH had entered into a compromise as early as 412
1984 no lease has yet been granted in his favour perhaps as the CG has had no occasion to consider the matter earlier
We do not think that any useful purpose will be served by remitting the matter and asking the SG to seek the formal approval of the CG therefore
The decision of Rao itself can be taken as containing the approval of the CG in this regard
We would therefore uphold Rao s decision 91 and direct the SG to execute at as early as possiblea ML in favour of AIKATH in respect of the 140 acs
agreed to be leased to him under the compromise dated 41284
b OTHER CLAIMS It is asserted on behalf of OCL and ORIND that if there are factors justifying the relaxation of reservation in favour of IMFA and FACOR there are equally valid factors justifying a like relaxation in favour of these two compa nies as well
The operative part of the Rao report in regard to the claims of these two parties reads thus For the requirement of the other parties viz
Ms Orissa Industries Ltd Ms Orissa Cements Ltd manufactur ing refractories their requirements of chrome ore are relatively less and that too consisting mostly of hard lumpy ore
The potential for hard lumpy ore in the areas under consideration is relatively less since most of it is located in the areas which have already been leased out to TISCO who are also one of the larger producers of hard lumpy ore and are capable of meeting the needs of other industries also
The occurrence of chrome ore is such
that hard lumpy ore lumpy friable ore and fine ore occur together and in varying proportion
The refractory manufacturers require ments are such that if they want to get hard lumpy ore from the areas under consideration they will have to necessarily become traders of the other grades which will be in higher proportion
They have been carrying on their business for the past several years without any captive mines
Hence
it is felt that their requirements can be adequately met by the other producers of chrome ore including hard lumpy ore
Hard lumpy ore will be available from other producers of chrome ore to meet their requirements including the Orissa Mining Corporation and no captive mining leases need be given to them in the areas under consideration XXX XXX XXX The Refractory industries viz the Orissa Industries Ltd and Ms Orissa Cements Ltd for their level of production 92 and their need for hard lumpy ore captive mines in the areas under consideration do not optimally meet their re quirements and there is enough lumpy ore in the State from other sources
 Rao s line of reasoning is criticised by OCL and ORIND
Sri Bhandare on behalf of OCL urges inter alia a The company s refractory plant is in need of at least 35000 to 40000 MT of ore per annum not 15000 MT as worked out by Rao and for securing a regular uninterrupted supply it needs a captive mine badly instead it is thrown at the mercy of traders like TISCO or Sirajuddin  Co or the OMC who are unable to supply the quantities of ore needed by OCL
b The company which has a vital mineral based industry has not been granted even a single ML for which it had been applying from 1961 to 1986 whereas traders like Mohanty and Sirajuddin have been granted leases
c Besides supply of refractories for domestic consumption OCL has also a vast export market and has earned huge foreign exchange by exports to countries like Pakistan Bangladesh Korea Kenya etc
d The company has also employed about 3000 workers who are adivasis or who belong to the Scheduled Castes and Scheduled Tribes
e The industrial licence granted to OCL by the CG envisages that the OCL should secure PL and ML from the SG for its needs of ore
f The SG had made on 25172 a grant of a ML to OCL over an area of 18702 hectares with the approval of the CG
The SG had indeed recommended the grant of ML to OCL
g It is also stated that in certain informal meet ings held recently the SG has expressed itself in favour of granting ML in favour of the OCL
Likewise on behalf of ORIND it has been urged that Rao has erred in thinking that the need of the company was of lumpy ore which 93 could be adequately met by procuring the ore from private parties and that it would not be necessary to grant a mining lease for meeting its requirements
It is submitted in particular that i ORIND s requirements are not small as suggested by the SG but come to a minimum of 25000 MT per annum and would indeed go up to 65000 MT with the setting up of a ferroalloys plant for which steps are being taken ii the reasoning that ORIND has been functioning without a captive source all along and hence could continue to do so is bad logic and also a misleading argument which overlooks that ORIND has been put to great difficulty in obtaining even 8000 to 10000 MT about one half of its needs in driblets from various sources being at their mercy in regard to quantity price and other vagaries
Even OMC has been capricious in its supplies of ore in that it has agreed to supply 25000 MT to OCL against their needs of 15000 MT only whereas it is willing to supply only 9000 MT only to ORIND against its present requirements of 20000 MT
iii the assumption that ORIND needs only lumpy ore is not correct
Actually more than 60 to 65 of the ore used by ORIND is friable ore
iv ORIND alsodeserves grant of ML on other grounds of national and public significance
It supplies basic refrac tories not only to core and strategic domestic industries but also exports them outside India and the exports made by it being value added and involving proportionately less consumption of ore earn much more foreign exchange than the exports of IMFA  FACOR
The want of a captive source of supply has gravely prejudiced the commissioning of ORIND s first benefaction plant for refractories
It also employs a strong labour force and thus provides opportunities for large scale employment
v if MLs can be granted to AIKATH IMFA FACOR ORIND also deserves one
OMC has been allotted huge areas which remain idle and unexploited and a predominant portion of its ore is supplied to the metallurgical industry not leaving much for the refractory industry
vi atleast the area marked as Area No 7 in the plan filed 94 by ORIND should be allotted to it
We have briefly summarised the claims of ORIND  OCL
It is unnecessary to discuss these contentions at length as we cannot but help feeling that the claims of OCL and ORIND have been rejected summarily by Rao without an advertence to the various considerations urged by them
In our opinion this part of Rao s decision has to be set aside as being too cryptic and unsustainable
Pursuant to this conclusion it is open to us to direct these claims to be considered afresh by the CG We however think it more expedient that the claims of the OCL and ORIND should be restored for detailed consideration in all their several aspects before the SG as the SG has had no opportunity to consider the various aspects pointed out and as this course will also provide one opportunity to the claimants to approach the CG again if dissatisfied with the SG s decision to consider whether despite the reservation some relaxation can be made also in favour of these two companies
The learned Advocate General for Orissa criticised the conclusion of Rao conceding the right of industries set up in the State even of FACOR and IMFA to captive mines for meeting their requirements
We are inclined to think he is right in saying that merely because an industry is allowed to be set up in the State by grant of an industrial licence andor certain other conces sions it does not follow that it becomes entitled to a captive mine to cater to its needs
We however express no concluded opinion on this issue  which does not arise for our consideration
The SG has to take into account various factors and aspects some of which have also been referred to in the interim order of this Court dated 27984 before granting a ML to an individual concern carving out an excep tion to its reservation policy
This it has done in respect of IMFA and FACOR for certain special reasons which have been elaborated upon earlier
Whether it would do so also in favour of OCL and ORIND is for the State to consider
We express no opinion on these claims and leave it for the consideration of the SG and CG
It would have been noticed that the applications of these two companies have not been considered in this light earlier
We therefore restore the applications of OCL and ORIND for the consideration of the SG
The learned Advocate General of Orissa also submitted that Special Leave Petition No 857489 filed by ORIND from the order of the SG is not maintainable
He urged that the SG in disposing of applications for ML is not function ing as tribunal and he cited the decisions in Shivji vs Union  and Indo China Steam Navigation Co vs Jasjit Singh  in support
We do not 95 consider it necessary to go into this issue
The SG has by the impugned order rejected ORIND s application inter alia on the ground that in view of the pendency of WP 1411684 before this Court it could not at that stage pass any order on the application
It would therefore be open to ORIND to ask the SG to reconsider the application in the light of our present order
We see no necessity f6r insisting on such a formal request and would therefore direct the SG to consider ORIND s application afresh in the light of this judgment
So far as OMC  IDCOL are concerned Rao has recommend ed that the areas of items I  2 left after the grants to IMFA and FACOR
be given on lease to OMC
We have seen that there are huge areas of mineral bearing lands which have been reserved for the public sector
Its interests do not clash or come into conflict with those of private applicants which can only claim a right to the extent the SG is willing to relax the rule of reservation
We do not think the OMC or IDCOL have any voice in requiring that the SG should keep certain extents of land reserved and should not grant any ML at all in favour of an private party
The interests of these corporations are safe in the hands 01  the SG and the allocation of MLs to these organisations is a matter of discretion with the SG Strictly speaking therefore
no question of any application by them for ML need arise at all
But when made their applications arc considered by the SG and on revision by the CG as a matter of form
To this extent they have a statutory remedy but beyond this
we think they cannot go
We are of opinion that their interests are safe with the SG and need no directions from us
Even IMFA and FACOR urge that their claims to further leases deserve consideration
Rao has already adjudicated upon their claims and recommended leases to them to the extent indicated
If they apply to the SG for more leases
it is open to the SG to consider whether they deserve any further leases and if so to what extent
more reserved areas could be released in their favour
The learned Advocate General for the State emphasised that the State is also interested in its industrial develop ment and the national economy and that while reserving substantial areas for public sector exploitation the State has a well formulated policy in respect of grant of private leases which has been placed before Rao
He also submits that even if grant of a ML in favour of a particular party is not found feasible the State will do its best to ensure that the ore mined in the 96 State is equitably distributed so as to meet the legitimate needs of all industries operating in the State
We have no doubt that the SG will keep
all relevant aspects urged by the parties in reaching their decision on the matters re manded to it by us
In the circumstances we accept and confirm Rao s recom mendation for grant of MLs to IMFA FACOR and AIKATH to the extent indicated by him
We set aside his rejection of the claims of OCL and ORIND
We leave it open to all the parties to place their claims or further claims as the case may be in regard to the areas applied for by them on or before 3041987 backed by supporting reasons before the SG in the form of representations within four weeks from the date of this order
The SG we hope will dispose of these applications within the statutory period failing which the parties will have their remedy under the statute by way of revision to the CG
In arriving at its decisions it will be open to the SG to take into account the discussions and findings of the Rao report in the light of this judgment
The SG should also keep in mind that no leases to any of the parties other than OMC  IDCOL can be granted unless either the areas so proposed to be leased out are dereserved and thrown open to applications from the public or unless the CG after considering the recommendations of the SG for reasons to be recorded in writing considers a relaxa tion in favour of any of the parties necessary and justi fied
Before we conclude we should like to place on record our appreciation of the detailed and excellent report given by Dr Rao
He has brought together all the relevant data and analysed the various claims put forward before him a detailed note on chromite deposits in the State of Orissa prepared by the Chief Mining Geologist of the Indian Bureau of Mines has also been made an Annexure to the report
The report and its annexures are bound to be of immense help and value to the SG and CG in arriving at their decisions not only on the various applications but also in regard to their future policy in the matter of grant of chromite leases and of the supply of chromite to the needy applicants in an equitable manner
WP No 1411687 and the other applications are dis posed of in the above terms
There will be no order as to costs
GN Petitions disposed of


Summary:
The writ petitionersappellants had been appointed as Government Counsel Civil Criminal Revenue by the State of UP
By its circular dated 621990 the State terminated the appointment of all Government Counsel with effect from 282
1990 irrespective of the fact whether the term of the incumbent had expired or was subsisting
At the same time the Government directed preparation of fresh panels to make appointments in place of existing incumbents
The appellants challenged the validity of this State action which was rejected by the High Court
Before this Court it was contended inter alia on behalf of the petitionersappellants that the relationship of the Government Counsel with the Government was not merely one of client and counsel as in the case of a private client but one of status in the nature of public employment or appoint ment to a public office  so that termination of the ap pointment of a Government Counsel could not be equated with the termination by a private litigant of his Counsel s engagement which was purely contractual
without any public element attaching to it
On behalf of the State it was urged that i the rela tionship of the appointees to these offices of Government Counsel in the districts was purely contractual depending on the terms of the contract and was in the nature of an en gagement of a Counsel by a private party who could be changed at any time at the will of the litigant with there being no right in the counsel to insist on continuance of the engagement ii there was no element of public employ ment in such appointments and the provisions in the Legal Remembrancer s Manual and Section 24 of the Code of Criminal Procedure were merely to provide for making a suitable choice iii the appointment of a District Government Counsel was only professional engagement terminable at will on either side and not appointment to a post under the Government and the Government had 626 the power to terminate the appointment at any time without assigning any cause  and hence this circular did not suffer from the vice of arbitrariness
Allowing the writ petitions and the appeals this Court HELD 1 The provisions in the Legal Remembrancer s Manual clearly show that the Government Counsel in the districts are treated as law Officers of the State who are holders of an office  or post 
These provisions further indicate that the appointment and engagement of District Government Counsel is not the same as that by a private litigant of his counsel and there is obviously an element of continuity of the appointment unless the appointee is found to be unsuitable either by his own work conduct or age or in comparison to any more suitable candidate available at the place of appointment
2 All Government Counsel are paid remuneration out of the public exchequer and there is a clear public element attaching to the office  or post 
3 Clause 3 of para 706 of the LR Manual which enables the Government to terminate the appointment at any time without assigning any cause  merely means that the termination may be made even during the subsistence of the term of appointment and the expression without assigning any cause  means without communicating any cause to the appointee whose appointment is terminated
4 The non assigning of reasons or the non communica tion thereof may be based on public policy but termination of an appointment without the existence of any cogent reason in furtherance of the object for which the power is given would be arbitrary and therefore against public policy
Liberty Oil Mills vs Union of India   referred to
5 In the case of Public Prosecutors the public ele ment flowing from statutory provisions in the Code of Crimi nal Procedure undoubtedly invest the Public Prosecutors with the attribute of holder of a public office which cannot be whittled down by the assertion that their  engage ment is purely professional between a client and his lawyer with no public element attaching to it
627 Mahadeo vs Shantibhai  Mundrika Prasad Sinha vs State of Bihar 1980 1 SCR 759 Mukul Dalaiand Others vs Union of India and Others  and Malloch vs Aberdeen Corporation  referred to
6 The presence of public element attached to the office  or post  of District Government Counsel of every category covered by the impugned circular is sufficient to attract Article 14 of the Constitution and bring the ques tion of validity of the impugned circular within the scope of judicial review
7 The scope of judicial review permissible in the present case does not require any elaborate consideration since even the minimum permitted scope of judicial review on the ground of arbitrariness or unreasonableness or irration ality once Article 14 is attracted is sufficient to invali date the impugned circular
8 Even otherwise and sans the public element so obvi ous in these appointments the appointment and its concomi tants viewed as purely contractual matters after the ap pointment is made also attract Article 14 and exclude arbitrariness permitting judicial review of the impugned State action
9 The personality of the State requiring regulation of its conduct in all spheres by requirements of Article 14 does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition
It is not as if the require ments of Article 14 and contractual obligations are alien concepts which cannot co exist
10 The scope and permissible grounds of judicial review in such matters and the relief which may be avail able are different matters but that does not justify the view of its total exclusion
This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form con tracts between unequals
11 To the extent challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary unfair or unreasonable the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14
628 12 It is significant to note that emphasis now is on review ability of every State action because it stems not from the nature of function but from the public nature of the body exercising that function and all powers possessed by a public authority howsoever conferred are possessed solely in order that it may use them for the public good 
Jones vs Swansea City Counsel 1990 1 WLR 54 referred to
13 It can no longer be doubted at this point of time that Article 14 of the Constitution of India applies also to matters of governmental policy and if the policy or any action of the Government even in contractual matters fails to satisfy the test of reasonableness it would be unconsti tutional
Ramana Dayaram Shetty vs The International Airport Authority of India   Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir  and Col AS Sangwan vs Union of India 1980 Supp
SCC 559 referred to
14 The basic requirement of Article 14 is fairness in action by the State and it is difficult to accept that the State can be permitted to act otherwise in any field of its activity irrespective of the nature of its function when it has the uppermost duty to be governed by the rule of law
Non arbitrariness in substance is only fair play in ac tion
This obvious requirement must be satisfied by every action of the State or its instrumentality in order to satisfy the test of validity
Ms Dwarkadas Marlaria and Sons vs Board of Trustees of the Port of Bombay  and Mahabir Auto Stores 15 There is a presumption of validity of the State action and the burden is on the person who alleges violation of Article 14 to prove the assertion
However where no plausible reason or principle is indicated nor is it dis cernible and the State action therefore appears to be exfacie arbitrary the initial burden to prove the arbi trariness is discharged shifting onus on the State to justi fy its action as fair and reasonable
16 The wisdom of the policy or the lack of it or the desirability of a better alternative is not within the permissible scope of judicial review in such cases
It is not for the courts to recast the policy or to substitute it with another which is considered to be more appropriate once the attack on the ground of arbitrariness is success fully repelled by 629 showing that the act which was done was fair and reasonable in the facts and circumstances of the case
Council of Civil Service Union vs Minister for the Civil Service  17 Arbitrariness is the very negation of the rule of law
Satisfaction of this basic test in every State action is sine qua non to its validity and in this respect
the State cannot claim comparison with a private individual even in the field of contract
18 Every State action must be informed by reason and it follows that an act uninformed by reason is arbitrary
Rule of law contemplates governance by laws and not by humour whims or caprices of the men to whom the governance is entrusted for the time being
19 Irrespective of the nature of appointment of the Government Counsel in the districts in the State of UP and the security of tenure being minimal as claimed by the State the impugned circular in order to survive must withstand the attack of arbitrariness and be supported as an informed decision which is reasonable
SG Jaisinghani vs Union of India  20 In the present case
the initial burden on the petitioners appellants has been discharged by showing that there is no discernible principle for the impugned action at the district level throughout the State of UP since there is nothing in the circular to indicate that such a sweeping action for all districts throughout the State was necessary which made it reasonable to change all Government Counsel in the districts throughout the State
even those whose tenure in office had not expired
21 Non application of mind to individual cases before issuing a general circular terminating all such appointments throughout the State is itself eloquent of the arbitrariness writ large on the face of the circular
John Wilkes s case 22 Arbitrariness is writ large in the impugned circu lar issued by the State of Uttar Pradesh
It gives the impression that this action was 630 taken under the mistaken belief of applicability of spoils system under our Constitution and the cavalier fashion in which the action has been taken gives it the colour of treating the posts of DGCs
as bounty to be distributed by the appointing authority at its sweet will
Nothing worth while has been shown on behalf of the State of UP to support the impugned action as reasonable and non arbitrary