Appeals Nos 1554 6472
From the Judgment and Order dated 4 5 1972 of the Gujarat High Court in Special Civil Appln
1018 and 1045 105468 respectively
AK Sen Bishamber Lal Khanna and EC Aggrawala for the Appellants
LN Sinha Sol
of India and Mr Girish Chandra for  the Respondents
The Judgment of the Court was delivered by SHINGHAL J
 These appeals by certificate are directed against a common judgment of the High Court of Gujarat dated May 4 1972
We have heard them together and will dispose them of by a common judgment
The facts giving rise to the appeals are similar in essential respects and may be shortly stated
There are large deposits of bauxite in Gujarat State
The State Government issued a notification on December 311963 intimating that the lands in all the talukas of Kutch district and in Kalyanpur taIuka of Jamnagar district had been reserved for exploitation of bauxite in the public sector
A similar notification was issued on February 26 1964 in respect of all areas of Jamnagar and Junagarh districts
Even so the appellants made applications to
the State Government for grant of mining leases for bauxite in the reserved areas
There were no other applications to that effect but the State Government rejected the applica tions of the appellants on the ground that as had been notified it had reserved the areas for the public sector
The appellants felt aggrieved and applied to the Central Government flor revision of the State Government s orders
The revision appli cations were dismissed after obtaining the comments of the State Government and the orders of rejection were upheld
In doing so the Central Government referred to the fact that the minerals vested in the State Government which was owner of minerals and that the State Government had the inherent right to reserve any particular area for exploi tation in the public sector
It also pointed out that once a notification had been issued by the State Government for the reservation of any partic ular area no party could as of right claim any mineral concession in the reserved area
While making its orders of rejection the Central Govern ment explained the circumstances in which mineral leases were granted to Carborundum Universal Limited and the Gujarat Mineral Development Corpo ration
The appellants felt aggrieved and chal lenged the orders of the State Government and the Central Government by writ petitions to the Gujarat High Court
It was urged that the State Govern ment had no authority to reserve any area of land for exploitation of bauxite in the public sector and that the refusal to grant mining leases to the appellants was based on a ground which was alto gether extraneous and irrelevant and could not be supported with reference to the 
hereinafter referred to as the Act and the rules made thereun der
It appears that although the writ petitions 374 were based on that short ground the Controversy in the High Court ranged over a wider field including that relating to the scope of the executive power of the State Government in respect of the impugned reservations
The High Court there fore examined the controversy with reference to articles 162 and 298 of the Constitution and the relevant entries in the Lists in the Seventh Schedule but we are not concerned with that aspect of the matter as the arguments before us have been confined to the provisions of the Act and to the Mineral Concession Rules 1960 hereinafter referred to as the Rules made thereunder
It may be mentioned that in pursuance of its exclusive power to make laws with respect to the matters enumerated in entry 54 of List I in the Seventh Schedule Parliament specifically declared in section 2 of the Act that it was expedient in the public interest that the Union should take under its control the regulation of mines and the develop ment of minerals to the extent provided in the Act
The State Legislature s power under entry 23 of List II was thus taken away and it is not disputed before us that regulation of mines and mineral development had therefore to be in accordance with the Act and the Rules
The mines and the minerals in question bauxite were however in the territo ry of the State of Gujarat and as was stated in the orders which were passed by the Central Government on the revision applications of the appellants the State Government is the owner of minerals within its territory and the minerals vest in it
There is nothing in the Act or the Rules to detract from this basic fact
That was why the Central Government stated further in its revisional orders that the State Government had the inherent right to reserve any particular area for exploitation in the public sector
It is therefore quite clear that in the absence of any law or contract etc
to the contrary bauxite as a mineral and the mines thereof vest in the State of Gujarat and no person has any right to exploit it otherwise than in accord ance with the provisions of the Act and the Rules
Section 10 of the Act and Chapters II III and IV of the Rules deal with the grant of prospecting licences and mining leases in the land in which the minerals vest in the Government of a State
That was why the appellants made their applications to the State Government
Section 4 of the Act provides that no person shall undertake any prospecting or mining operations in any area except under and in accordance with the terms and condi tions of a prospecting licence or as the case may be a mining lease granted under the Act and the rules made thereunder and that no such licence or lease shall be granted otherwise than in accordance with the provisions of the Act and the rules
 But there is nothing in the Act or the Rules to require that the restrictions imposed by Chap ters II III or IV of the Rules would be applicable even if the State Government itself wanted to exploit a mineral for as has been stated it was its own property
There is there fore no reason why the State Government could not if it so desired reserve any land for itself for any purpose and such reserved land would then not be available for the grant of a prospecting licence or a mining lease to any person
375 Section 10 of the Act in fact provides that in respect of minerals which vest in the State it is exclusively for the State Government to entertain applications for the grant of prospecting licences or mining leases and to grant or refuse the same
The section is therefore indicative of the power of the State Government to take a decision one way or the other in such matters and it does not require much argument to hold that power included the power to refuse the grant of a licence or a lease on the ground that the land in question was not available for such grant by reason of its having been reserved by the State Government for any purpose
We have gone through sub sections 2 and 4 of section 17 of the Act to which our attention has been invited by Mr Sen on behalf of the appellants for the argument that they are the only provisions for specifying the boundaries of the reserved areas and as they relate to prospecting or mining operations to be undertaken by the Central Government they are enough to show that the Act does not contemplate or provide for reservation by any other authority or for any other purpose
The argument is however untenable because the aforesaid sub sections of section 17 do not cover the entire field of the authority of refusing to grant a pros pecting licence or a mining lease to any one else and do not deal with the State Government s authority to reserve any area for itself
As has been stated the authority to order reservation 
flows from the fact that the State is the owner of the mines and the minerals within its territo ry which vest in it
But quite apart from that we find that rule 59 of the Rules which have been made under sec tions 13 of the Act clearly contemplates such reservation by an order of the State Government
That rule deals with the availability of areas for the grant of a prospecting licence or a mining lease in such cases and provides as follows 59
Availability of certain areas for grant to be notified In the case of any land which is otherwise available for the grant of a prospecting licence or a mining lease but in respect of which the State Government has refused to grant a pros pecting licence or a mining lease on the ground that the land should be reserved for any purpose the State Government shall as soon as such land becomes again available for the grant of a pros pecting or mining lease grant the licence or lease after following the procedure laid down in rule 58 Mr Sen has conceded that it is a valid rule
It clear ly contemplates reservation of land for any purpose by the State Government and its consequent non availability for the grant of a prospecting licence or mining lease during the period it remains under reservation by an order of the State Government
A reading of rules 58 59 and 60 makes it quite clear that it is not permissible for any person to apply for a licence or lease in respect of a reserved area until after it becomes available for such grant and the availability is notified by the State Government in the Official Gazette
Rule 60 provides that an application for the grant of a prospecting licence or a mining lease in respect of an area for which no such notification has been issued inter alia 8 1104SCI76 376 under rule 59 for making the area available for grant of a licence or a lease would be premature and shall not be entertained and the fee
if any paid in respect of any such application shah be refunded
 It would therefore follow that as the areas which are the subject matter of the present appeals had been reserved by the State Government for the purpose stated in its notifications and as those lands did not become available again for the grant of a prospecting licence or a mining lease the State Government was well within its rights in rejecting the applications of the appellants under rule 60 as premature
The Central Government was thus justified in rejecting the revision applications which were filed against the orders of rejec tion passed by the State Government
We have gone through the decisions in State of Orissa V Union  of India1 and Ms section Lal and Co Ltd vs The Union of India and others2 on which reliance has been placed by Mr Sen
In the former case the High Court of Orissa took the view that reservation of a particular area for being exploited in the public sector by the State could not be said to be a purpose for which it could be reserved under rule 59
In taking that view the High Court went by the consideration that the subject of the legislation in the Act became an exclusive subject for legislation by Parliament and there was no residuary power of working out mines and minerals without observing the conditions prescribed by the Act and the Rules
The High Court therefore went wrong in not appreciating that even though the field of legislation had been covered by the declaration of the Parliament in section 2 of the Act that could not justify the inference that the State_ Government thereby lost its right to the minerals which vested in it as a property within its terri tory
The High Court has also erred in taking the view that the State was required to obtain a licence or a lease even though it was itself the owner of the land and there was nothing in the Act or the Rules to show that the provisions for the obtaining of a licence or lease would still be applicable to it
In section Lai and Co Ltd vs Union of India and others supra the High Court noticed the decision in State of Orissa vs Union of India supra but it cannot be urged with any justification that the view expressed in it was followed by the Patna High Court
On the other hand the Patna High Court followed the view which was taken by the Gujarat High Court in the judgment which is the subject matter of the present appeals and held that the State Government has the power to reserve certain areas
for exploitation by itself
or by a statutory corporation or for a company in a public sector
 The controversy in that case was
however examined with reference to the provisions of article 298 of the Constitution
The two cases cited by Mr Sen cannot thus be of any avail to the appellants
For the foregoing reasons there is no merit in these appeals and they are dismissed with costs
PBR Appeals dismissed 1 AIR 1972 Orissa 68
2 AI R 1975 Patna 44


Summary:
The appellants  applications for grant of mining leases were rejected by the State Government on the ground that the areas for exploitation of which they had 
applied had been reserved for exploitation in the public sector
The Central Government dismissed the revision applications pointing out that since the minerals vested in the State Government it had inherent right to reserve any particular area for exploitation in the public sector
In writ petitions challenging the orders of the State Government the appellants contended before the High Court that the State Government had no authority to reserve any area for exploitation of minerals in the public sector and its action had no support under the 
The High Court dismissed the petitions
Dismissing the appeals HELD The State Government was well within its rights in rejecting the applications of the appellants under r60 as premature and the Central Government was justified in rejecting the revision applications
376 B i The 1957 Act declared that it
was expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals
The State Legislature s power under Entry 23 of List II was thus taken away so that regulation of mines and mineral development had to be in accordance with the Act and the Rules
374 C ii The State Government is the owner of the minerals within its territory and the minerals vest in it and no person has any right to exploit them otherwise than in accordance with the provisions of the Act and the Rules
374 D iii There is nothing in the Act or the Rules to re quire that the restrictions imposed by the Rules would be applicable even if the State Government itself wanted to exploit the minerals
There is no reason why the State Government could not reserve any land for itself for any purpose and such reserved land would then not be available for the grant of prospecting licence or a mining lease
374 H iv The State Government s power under section 10 of the Act to entertain applications includes the power to refuse to grant a licence or a lease on the ground that land was not available for such grant by reason of its having been re served by the State Government for any purposes
375 B v The authority to order reservation flows from the fact that the State is the owner of the mines and the miner als within its territory
Rule 59 clearly contemplates reservation by an order of the State Government
375 E vi Under rr
58 59 and 60 it is not permissible for any person to apply for a licence or lease in respect of a reserved area until after it becomes available for such grant and the availability is notified by the State Govern ment
The State Government in the present case reserved the areas for the purpose stated in the notifications and as these lands did not become available again for grant of a prospecting licence or a mining lease it was well within its rights in rejecting the applications of the appellants under r 60 as premature
375 H 376 A State of Orissa 1 vs Union of India AIR 1972 Orissa 68 and Ms section Lal and Co Ltd vs TIre Union of India and others held inapplicable