1 IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA CWPs No. 49 of 2010 alongwith 145, 146, 147, 148, 169, 239, 240, 254, 255, 50, 51, 54, 811, 812, 900, 976, 968, 969 and 970 of 2010 Date of Decision: 26th March, 2010 1. CWP No. 49 of 2010 Ramesh Kumar Awasthi Vs. State of H.P. & another 2. CWP No.145 of 2010 Ranjit Kumar Vs. State of H.P. & another 3. CWP No.146 of 2010 Surinder Singh Vs. State of HP & another 4. CWP No.147 of 2010 Surinder Singh Vs. State of HP & another 5. CWP No.148 of 2010 Rajinder Parsad Bhardwaj vs. State of HP & anr. 6. CWP No.169 of 2010 Lohala Ram Vs. State of H.P. & anr. 7. CWP No. 239 of 2010 Krishan Chand Vs. State of H.P. & anr. 8. CWP No.240 of 2010 Surinder Kumar Vs. State of H.P. & anr. 9. CWP No.254 of 2010 Sudhir Sharma Vs. State of H.P. & anr. 10. CWP No.255 of 2010 M/s Shiv Shakti Enterprises vs. State of H.P. 11. CWP No.50 of 2010 Naresh K. Sharma Vs. State of H.P. & anr. 12. CWP No.51 of 2010 Gian Chand Vs. State of H.P. & anr. 13. CWP No.54 of 2010 Suresh Chand Vs. State of H.P. & anr. 14. CWP No.811 of 2010 Rakesh Patial Vs. State of H.P. & anr. 15. CWP No.812 of 2010 Atul Kumar Vs. State of H.P.& anr. 16. CWP No.900 of 2010 Sugreev Chand Vs. State of H.P. & anr. 17. CWP No.976 of 2010 Ravinder P. Singh Vs. State of H.P.& anr. 18. CWP No.968 of 2010 Jayanti Construction Work Vs.State of H.P. & anr. 19. CWP No.969 of 2010 M/s New Jayanti Construction Vs. State of H.P. 20. CWP No. 970 of 2010 M/s New Jayanti Construction Vs. State of H.P. 2 Coram The Hon’ble Mr. Justice Deepak Gupta,J. The Hon’ble Mr. Justice Sanjay Karol,J. Whether approved for reporting1? Yes. For the petitioners: S/Shri O.P.Sharma, Sr. Advocate with Mr.K.R.Kashyap, and S/Shri Adarsh Vasisht, Ajay Mohan Goel, Vikas Rajput, Naresh Kaul, Arvind Sharma, Bhupender Pathania, Advocates. For the respondents: Mr.Vivek Singh Thakur, Addl. Advocate General. For the intervener Mr.J.S.Bhogal, Senior Advocate, with Mr. C.N.Singh Advocate, and Mr.B.C.Negi Advocate in CWP No.969/2010. Deepak Gupta, J. (Oral) All these cases are being disposed of by one judgment since common question of facts and law are involved in these writ petitions. All the petitioners had obtained leases granting them concessions to extract minor minerals from certain areas in the river/stream beds. This Court in CWP No. 188 of 2001, titled Jagjit Singh vs. State of Himachal Pradesh, directed the State of Himachal Pradesh to formulate a policy to regulate the grant of mining leases in the river/stream beds. This order was passed with the object of ensuring Whether the reporters of Local Papers are allowed to see the Judgment? 3 that exploitation of minor minerals is done in such a manner that the ecology and environment is not adversely affected. Pursuant to the directions issued by this Court, River/Stream Bed Mining Policy Guidelines for the State of Himachal Pradesh were notified on 28.2.2004. In the policy itself one of the concerns mentioned was that over exploitation and extraction of the minerals at a pace which is much higher than the pace at which nature could replenish the extracted minerals was causing a conflict between the need to preserve the environment on the one hand and requirement of minerals especially sand, bazari etc., which are required for construction, on the other. Taking into consideration the relevant legislations on the subject and keeping in view the need of development and conservation, the policy was framed. Clause 9.5 of the policy reads as follows:- “9.5 Strategy 5 Mining in River/Stream beds shall be subject to the following general conditions in addition to Site specific conditions as specified by the Committee. 9.5. a. No River/Stream bed mining shall be allowed without the recommendations of the Sub Divisional Level Committee. 9.5. b. No River/Stream bed mining shall be allowed without getting clearance under Forest Conservation Act, 1980 if the area attracts the provisions of FCA, 1980. 4 9.5.c. No River/Stream bed mining shall be allowed within 75 meters from the periphery of soil conservation works, nursery plantation, check dams or within the distance as recommended by the Sub- Divisional Committee, whichever is more. 9.5.d. No River/Stream bed mining shall be allowed within 1/5th of its span or 5 meters from the bank or as specified by the Sub Divisional Committee which ever is more. 9.5.e. No River/Stream bed mining shall be allowed within 200 meters U/S and D/S of Water Supply Scheme or the distance as specified by the Sub Divisional Committee which ever is more. 9.5.f. No River/Stream bed mining shall be allowed within 200 meters U/S and 200 to 500 mts. D/S of bridges depending upon the site- specific conditions. 9.5.g. No approach road from PWD road shall be allowed to River/Stream beds mining, unless lessee/contractor obtains written permission from XEN PWD for making road leading to all intake places from the PWD Roads. 9.5.h. No mechanical mining i.e. through mechanical excavator etc. shall be allowed in River/ Stream beds, for which amendment in the Rules shall be made. Mechanical mining shall not be allowed even for projects of national importance, power projects etc. In the power project areas, no mining activities by power project Companies/promoters shall be allowed in the river beds. Each project shall identify captive mining area dully approved by the 5 competent authority. In the exceptionally inevitable situations where subject projects require extraction of sand from river beds, prior approval of Council of Ministers shall be obtained. Royalty for use of various kind of minerals by power project shall be realized fully by evolving a transparent and scientific procedure and mechanism. 9.5.i. No boulder/cobbles/hand broken road ballast shall be allowed to be transported outside the state from River/Stream beds, so as to reduce pressure on the River/Stream beds. 9.5.j. No digging of more than 3 feet shall be allowed in River/Stream beds. 9.5.k. Every leaseholder shall supply in advance the Registration Nos. of vehicle engaged in transportation of mineral from mining area to his industrial unit. This would ensure checking of illegal vehicles carrying minerals. 9.5.l. Every lessee/contractor shall ensure that his labour does not involve in fish poaching. 9.5.m. No blasting shall be allowed in river/stream beds.” This clause clearly lays down the general conditions subject to which mining can be done in river/stream beds. These conditions admit of no exception. The clause with which we are concerned in the present batch of cases is clause 9.3.c, which originally read as follows:- 6 “9.3.c. The grant of lease shall be preferred over the auction At the first instance and in the interest of systematic/scientific mining and to reduce pressure on river/stream beds, no auction shall be done in border area like Nalagarh sub-division and Kasauli tehsil of District Solan, where there are chances of over exploitation of River/Stream beds and chances of illegal transportation of mineral outside the State. Other border areas shall also be included on the basis of study to be conduct.” As per the original clause, the grant of lease was to be preferred to the auction of the lease hold rights. There was also a further condition that in respect of border areas, like Nalagarh sub-division and Kasauli tehsil of District Solan, where there are chances of over exploitation of river/stream beds, no auction should be conducted and the mining rights should be given by grant of lease. This clause did not by itself prohibit the grant of mining concession by auction. Only a preference was envisaged in favour of grant of lease by negotiations. The petitioners held leases which after the notification of the policy in question had to be considered afresh in terms of the policy. The petitioners applied for grant of leases in favour of their respective areas, which they were exploiting even prior to the issuance of the policy. Some of 7 them may have asked for further areas also, in terms of the policy. Their applications were considered. A joint inspection committee constituted in terms of clause 9.6.B. of the policy conducted inspections of the sites and recommended the grant of mining leases in favour of the petitioners. However, the mining leases were not actually executed in favour of the petitioners. The petitioners were, however, permitted to extract minerals on the basis of short term permits granted to them in accordance with Section 24 of the Minor Mineral (Concession) Revised Rules, 1971. The State, thereafter, issued auction notices on 23.12.2009, whereby dates were fixed for auctioning the rights to extract minerals from the various river/stream beds in various districts of the State of Himachal Pradesh. The auctions were fixed on 27th and 28th January, 2010. Some of the petitioners filed writ petitions, which were taken by a learned vacation Judge of this Court and orders were passed that auction(s) may take place but the same shall not be finalized without the leave of the Court. Thereafter the auction(s) was in fact not held on the date(s) so fixed. There is disagreement between the parties as to what was the cause for postponement, but we need not dilate on it. The auctions were then fixed from 26.3.2010 onwards. The matters were listed before us on 26.2.2010 when we vacated the stay orders 8 and in fact directed that if any of the petitioners indulges in any activity of stalling the auction his writ petition will be dismissed on this short ground. It appears that some other petitions were also filed, which were listed before a Bench headed by Hon’ble the Chief Justice. In CWP No.726 of 2010 a prayer was made that a writ be issued directing the respondents to frame a uniform policy qua rates of minor minerals in the State, at least district wise, for the purpose of auctioning river/stream beds. This writ petition was disposed of with a direction that the Director of Industries will look into the matter and take appropriate action before conducting the auction, so that the fixing of rates is not left open to the whims and fancies of the individual contractors. Writ petition being CWP No.321/2010 was filed by one Shri Sanjay Singh, who has filed an application for impleadment in some of the writ petitions before us, in which a prayer was made that the State be directed to carry out the auction within a reasonable period. This petition was disposed of with a direction to the respondents to finalise the proceedings with regard to the auction as per the schedule already fixed. Without impleading Shri Sanjay Singh as a party in the petition, we have permitted Shri J.S.Bhogal, Senior Advocate, to assist us by 9 arguing the matter on behalf of the intervener. Admittedly, the auctions are not being held even as per the schedule previously fixed. The explanation given by the State is that in terms of judgment of this Court in CWP No.726 of 2010 upset price for conducting the auction has to be fixed. This will take at least three more weeks. In the first batch of writ petitions, the petitioners had based their case on the unamended clause 9.3.c, quoted hereinabove and claimed that the State was bound to grant leases and could not auction the rights of extraction of minerals from river/stream beds. The State in its reply to these petitions averred that in fact it had amended the policy guidelines vide Notification dated 17.11.2009 and now it is auction/tender, which is the only mode available for grant of mining leases for extraction of stone, sand, bazri etc. for open free sale in river/stream beds falling in the government land and mining lease for the same purpose shall be granted only in private lands. Clause 9.3 C and 9.3.D read as follows:- 9.3.c. Permission for the extraction of sand and bajri for open/free sale in the River/Stream Beds falling in Government land shall be granted through auction/tender whereas mining lease for the same purpose shall be granted only in private land. Provided that neither auction shall be done nor mining lease for open sale of 10 mineral shall be granted in border areas like Nalagarh sub Division and Kasauli Tehsil of District Solan, where there are chances of over exploitation of River/Stream beds and illegal transportation of mineral outside the State. Other border areas shall also be included on the basis of study to be conducted. 9.3.d. Leases for free sale upto area measuring 5 hectare for a period upto 5 years in areas other than as specified in para 9.3.b. shall be granted in private land subject to the condition that no boulders/cobbles/hand broken road ballast shall be allowed to be transported outside the State”. After this reply was filed, some of the petitioners have filed fresh petitions and now have challenged the amended clause 9.3.c. We have heard Shri O.P.Sharma, Senior Advocate, with Shri K.R.Kashyap and S/Shri Adarsh Vasisht, Ajay Mohan Goel, Vikas Rajput, Naresh Kaul, Arvind Sharma, Bhupender Pathania Advocates, on behalf of the petitioners and Shri Vivek Singh Thakur, learned Additional Advocate General, on behalf of the State and Shri J.S.Bhogal, Senior Advocate assisted by Shri C.N.Singh, Advocate and Shri B.C.Negi, Advocates, for the intervener. The main grounds urged on behalf of the petitioners are that the State for more than three 11 years kept asking the petitioners to get their leases renewed/granted and they had to run from one office to another to get various permissions. It is also the case of the petitioners that they have invested huge sums of money in running these businesses on the basis of short term permits. They have also invested money in purchasing land/constructing roads and some of them have set up allied businesses, such as, factories for construction of hollow bricks etc. in the expectation that mining leases would be granted in their favour. On this basis, it is urged that the petitioners had a legitimate expectations that mining leases would be granted in their favour. It is also urged that the principle of promissory estoppel is applicable to the present case and therefore, the State is bound to grant mining leases in favour of the petitioners. It has been further urged that in case the mining rights in river/stream beds are permitted to be auctioned then the highest bidders will over exploit the minerals in these river/stream beds and this will cause environmental havoc in the area. In the petitions wherein the challenge has been laid to the amendment made to clause 9.3.c. it has been urged that the reasons given by the State for amending clause 9.3.c. are not germane to the object of the policy and have no reasonable nexus with the same. In the alternative it is urged by the petitioners that they 12 being small entrepreneurs and having invested huge sums in the business, their rights should be protected. It is urged that even if auction has to be conducted the lands on which they are already mining be excluded and they are ready to pay the royalty at the same rate which the government will get through auction. The State has assigned two reasons for amending clause 9.3.c. The first is that in view of the judgment of this Court in CWP No.1077/2006, titled as Khatri Ram vs. State of H.P., decided on 22.11.2007, the State was not entitled to grant mining leases over lands which had vested in it under the provisions of H.P. Village Common Lands (Vesting and Utilization) Act, 1974. According to the State, the lands which the petitioners were mining, had vested in it under the said Act and, therefore, lease could not be granted to them. It was pointed out that the Apex Court had stayed the judgment of this Court in Khatri Ram’s case, but, according to the State the Law Department had opined that no fresh mining lease should be granted till the stay is confirmed or vacated by the Apex Court. Therefore, they have decided to grant mining concession by way of auction/tender. We are of the considered view that the first ground taken by the State to justify the amendment has 13 no connection with this clause whatsoever. The judgment in Khatri Ram’s case has no relevance to this clause. In that case it was held that in case of lands which had vested with the State under the provisions of H.P. Village Common Lands (Vesting and Utilization) Act, the State could not grant mining rights in the said lands whether by mining leases or by auction. However, the fact remains that the judgment of this Court no longer operates since the same has been stayed by the Apex Court and as such the State is free to deal with the vested lands in any manner it deems fit. The opinion of the Law Department of the State to the contrary is totally illegal. The second ground taken by the State in its reply to justify the amendment reads as follows:- “Para 7. That the contents of this para are admitted as a matter of record. However, the process to grant mineral concession by way of mining lease was started as per the provisions of River/Stream Bed Mining Policy guidelines for the State of H.P.-2004 notified on 28.2.2004 as provided at Clause 9.6.2 of the Policy Guidelines. Most of the mineable areas had been applied by the different applicants for grant of mining lease, no contiguous minerable area was left for auction and therefore, the process of auction was discontinued. The Policy provided provision to prefer mining lease over auction was being followed but 14 experience proved that smaller patches applied for mining leases are not in the interest of sustainable mining and forced the respondent State to change provision in the Policy Guidelines to provide preference to mining lease over auction. The Government in view of sustainable mining amended the provision to grant mineral concession for open sale of minerals by way of auction/tender on government lands which is also more transparent, more revenue earning and larger areas fit for sustainable mining than the smaller patches being applied for grant of mining leases by the Petitioner and similar situated persons. The amended provision provides that mineral concession for open sale of mineral shall be granted only in private lands. Para-8. That the contents of this pare are partially admitted being a matter of record. It is further submitted that by experience, it was observed that people applied numerous selected small patches in the river/stream beds leaving adjacent areas for giving scope for illegal mining and not leaving enough scope for putting such left out areas for open auction as no contiguous areas were left available which could be mined scientifically by way of auction. The small applied for areas are difficult to be mined in a sustainable way and have hardly any scope of environmental management. The Government of India, in view of the sustainable mining has drafted new Act repealing the existing principal Act name “The Mines & Mineral (Development & 15 Regulation) Act, 1957” where a provision is being covered that mining lease for minor mineral shall not be granted for area of less than 5 Hects. Of land with a view that smaller areas are difficult to work for sustainable mining and larger areas are required for sustainable mining. To overcome the above stated problems, the State Government decided to amend the River/Stream Bed Mining Policy Guidelines for the State of H.P. -2004 by providing the provision that “the mineral concession for open sale of minerals in the Government lands shall be granted by way of auction/tender and mining lease for this purpose shall be granted only in the private lands”. The earlier provision to prefer mining leases over auction as provided at Clause 9.3(C) of the Policy Guidelines has been deleted by amendment issued vide Notification No.Ind-II(F)2-1/2000-1 dated 17.11.2009. Copy of the amended Notification is annexed at Annexure R-1. In view of the amended provision in the Policy Guidelines, all mining lease pending for grant of mining lease in government lands for open sale of minerals were to be refused to provide way to put such available government lands for public auction. While caring out single quarry unit, larger areas have been incorporated in a single proposed minor mineral quarry. These proposed areas are also subject to the approval of Sub Divisional Level Committee which has been provided at Clause 9.6.3 of the River/Stream Bed Mining Policy Guidelines for the State 16 of H.P.-2004. No proposed area shall be auctioned which is not approved by this Sub Divisional Committee and also in accordance with any term and conditions imposed by the Sub Divisional Committee. The mining lease application of the petitioner and all other similar situated applicants have been refused who had applied for grant of mining lease for open sale of minerals in the government lands.” The second ground raised by the State in paras 7 and 8 of the reply, quoted hereinabove, cannot be said to be unreasonable. According to the State small lease holders, like the petitioners, take mining lease on land over small areas and there are gaps left in between various lease areas. Thus, there is no scientific and effective mining and according to the State in case mining concession is granted for the entire river/stream bed is granted, it would lead to better, economic and more sustained mining process of the river/stream beds. The petitioners contest this allegation of the State. This Court is not an expert body to decide as to which of the two methods will lead to over exploitation of the materials. However, if the rule of law is to be followed and conditions laid in clause 9.5, quoted hereinabove, are strictly enforced by the State and its officials there can not be any over exploitation or over extraction of the minerals. There can be no manner of doubt that in 17 case the auctions are conducted then the State will earn higher revenue. In fact this has not been seriously disputed by the petitioners, who themselves now have offered that they will match the offers made by the highest bidders. In our view, the doctrine of legitimate expectations is not at all applicable in the present case. The petitioners have placed reliance on the judgment of the Apex Court in Union of India and another vs. International Trading Co. and another, (2003) 5 SCC 437. In para 12 of this judgment, the Apex Court has clearly held that doctrines of promissory estoppel and legitimate expectation cannot come in the way of public interest. Indisputably the Public interest must prevail over private interest. Reliance has been placed on the observations of the Apex Court in paras 14 and 16, which read as follows:- “14. It is trite law that Article 14 of the Constitution 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 unconstitutional. x xx x x x x x x x x x x x x x x x x x 16. Where a particular mode is prescribed for doing an act and there is no impediment in adopting the procedure, the deviation to act in different manner which does not disclose any discernible principle which is reasonable itself shall be labelled as arbitrary. Every State action must be informed by reason and it follows that an 18 act uninformed by reason is per se arbitrary.” There can be no dispute with the aforesaid proposition of law that any policy framed by the Government should satisfy the test of reasonableness. There can also be no quarrel with the proposition that that when a particular mode is provided to do any act, the deviation from that