LPA 658/2010 Page 1 of 31 * IN THE HIGH COURT OF DELHI AT NEW DELHI + Letters Patent Appeal No. 658/2010 Reserved on: 5th August, 2011 % Date of Decision:1st September, 2011 Union of India & Anr. ....Appellants Through Mr. Jatan Singh, Advocate. VERSUS Central Colleries Company & Anr. ....Respondents Through Mr.Rishi Kapoor and Mr.Paras, Advocates for the respondent No.1. CORAM: HON’BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJIV KHANNA 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not ? Yes. 3. Whether the judgment should be reported in the Digest ? Yes. SANJIV KHANNA, J. The Union of India has filed the present intra court appeal assailing the decision dated 16th April, 2010 passed by the learned Single Judge allowing Writ Petition (Civil) No. 8944/2005, filed by the Central Collieries Company Limited, respondent No. 1 herein. Learned Single Judge has given the following directions in paragraph 63 of the impugned decision: LPA 658/2010 Page 2 of 31 “63. It is hereby directed that within a period of four weeks from today, the lease deed will be executed afresh by the State Government in terms this judgment in favour of CCCL incorporating the conditions set out by the Central Government in its letter dated 28th December 1999. CCCL will be permitted to submit a revised mining plan to the Central Government which will consider the said mining plan in accordance with law and grant CCCL permission subject to any condition as it may deem fit to impose within a period of four weeks thereafter. CCCL will adhere to the conditions imposed by the Central Government in granting such approval. The consequential orders will be passed by the State Government within a period of four weeks thereafter.” 2. The respondent No. 2 in the present appeal is the State of Maharashtra. 3. The respondent No. 1 had applied to the Ministry of Coal, Union of India, for allotment of Takli-Jena-Bellora block for development as a captive coal mine for a proposed power project. The proposal was considered by the Screening Committee constituted by the Ministry of Coal and allocation of southern part of the Takli-Jena Bellora block was approved for 3x30 MWs Captive Power Plant (CPP), subject to conditions, two of which are as under:- “(c) The party shall set up a washery for washing this coal and use washed coal for generation of power through these CPPs. (d) The party shall take necessary steps for obtaining mining lease within six months of issue of these minutes and comply with various legal requirement.” LPA 658/2010 Page 3 of 31 4. Screening Committee was an inhouse mechanism set up by the Central Government to identify coal blocks which can be allotted. Coal mines were nationalized with enactment of Coal Mines (Nationalisation) Act, 1973 (CMNA). The said Act allows private sector Indian companies engaged in the specified industrial activity to carry on coal mining for their end use in accordance with Section 3(iii) of the said Act. 5. By a letter dated 2nd September, 1999, Ministry of Coal, Government of India had approved the mining plan submitted by respondent No. 1. The said letter further mentions that they were directed to convey approval of the Central Government under Section 5(2)(b) of the Mines & Minerals (Development and Regulations) Act, 1957 (MMDR Act, for short). There is controversy with regard to the approved mining plan and this aspect has been noticed below. 6. In respect of major minerals, powers to make rules to carry out the purposes of MMDR Act, vest with the Central Government. The provisions of MMDR Act, in respect of major minerals have been noticed and discussed below. 7. Section 5 of the MMDR Act reads as under:- LPA 658/2010 Page 4 of 31 “5. Restrictions on the grant of prospecting licences or mining leases-(1) A State Government shall not grant a [reconnaissance permit, prospecting licence or mining lease] to any person unless such person – (a) is an Indian national, or a Company as defined in sub- section (1) of Section 3 of the Companies Act, 1956; and (b) satisfies such conditions as may be prescribed : Provided that in respect of any mineral specified in the First Schedule, no [reconnaissance permit, prospecting licence or mining lease] shall be granted except with the previous approval of the Central Government. Explanation – For the purposes of this sub-section, a person shall be deemed to be an Indian national, - (a) in the case of a firm or other association of individuals, only if all the members of the firm or members of the association are citizens of India; and (b) in the case of an individual, only if he is a citizen of India;] (2) No mining lease shall be granted by the State Government unless it is satisfied that- (a) there is evidence to show that the area for which the lease is applied for has been prospected earlier or the existence of mineral contents therein has been established otherwise than by means of prospecting such area; and (b) there is a mining plan duly approved by the Central Government, or by the State Government, in respect of such category of mines as may be specified by the Central Government, for the development of mineral deposits in the area concerned.” 8. It is clear from Section 5(1), that the State Government cannot grant a mining lease to any person in respect of any mineral specified in the first Schedule, except with the previous approval of LPA 658/2010 Page 5 of 31 the Central Government. A prior approval is mandatory as per the proviso to sub-section (1) to Section 5 of the MMDR Act. 9. Sub-section (2) to Section 5, prescribes the parameters which a State Government is to keep in mind before granting a mining lease, but it does not affect or nullify the proviso to sub-section (1) to Section 5 which requires prior approval of the Central Government for grant of a mining lease in case of any mineral specified in the first Schedule. The proviso to sub-section (1) obviously is not applicable in respect of minerals not specified in the first schedule. 10. On 15th October, 1999, respondent No. 2 forwarded a proposal for grant of mineral lease to the respondent No.1 for a prior approval of the Central Government under Section 5(1) of the MMDR Act. The relevant portion of the said letter reads as under:- “3. Under the circumstances explained above the Mining lease may be granted to M/s. Central Collieries Company Ltd. for the total area 271.00 hects. on usual terms and conditions and following additional conditions:- i) No mining operation should be started in any area which is not prospected by State Government or by the company. ii) Minerals extracted from the above mines should be used as a captive source of raw material for their own plant only. LPA 658/2010 Page 6 of 31 iii) The coal should not be used for commercial and trading purpose. 4. You are, therefore, requested to move the Government of India to approve the above proposal of the State Government to grant of Mining lease M/s. Central Collieries Company Ltd. Nagpur.” 11. Ministry of Mines and Minerals, Department of Coal by their letter dated 28th December, 1999 granted approval. The said letter is relevant and for the sake of completeness is reproduced below:- “Shri J P Dange Secretary Government of Maharashtra Trade, Commerce & Mining Department Mantralaya Mumbai-400 032 Subject: Grant of coal mining lease over an area of 271.00 hectares in Village Bellora-Jena-Takli, South Part, Tehsil Bhadrawati, District Chandrapur, Maharashtra to M/s Central Collieries Company Limited. Sir, I am directed to refer to your letter No.MNA- 1298/1586/(7642)/Desk-IV dated 15.10.99 on the subject mentioned above and to convey previous approval of the Central Government under the proviso to Section 5 (1) of the Mines and Minerals (Regulation & Development) Act, 1957 for grant of coal mining lease over an area of 271.00 hectares in Village Bellora- Jena-Takli, South Part, Tehsil Bhadrawati, District Chandrapur, Maharashtra to M/s Central Collieries Company Limited for a period of 30 years. 2. Previous approval of the Central Government under Rule 27(3) of the Mineral Concession Rules, 1960 is also hereby accorded for incorporation of the following additional conditions in the lease deed to be LPA 658/2010 Page 7 of 31 executed between the State Government and M/s Central Collieries Company Limited:- (a) No coal mining operations in the leased area shall be started by M/s Central Collieries Company Limited unless that area is not prospected either by the State Government or by M/s Central Collieries Company Limited. (b) All raw coal mined from the leased area by M/s Central Collieries Company Limited shall be exclusively used for power generation in the power plants of M/s Central Collieries Company Limited who may improve the quality of the raw coal by beneficiation in the washeries owned by them before feeding into their power plants. 3. A copy of the lease deed executed with M/s Central Collieries Company Limited with the above mentioned additional conditions incorporated therein may be forwarded to this Department immediately after execution. Yours faithfully, (A Banerji) Director Copy for information and necessary action to Shri. G D Daga, Director, M/s Central Collieries Company Limited, Temple Road, Civil Lines, Nagpur 440 001 with reference to his letter No.CCCL/99-2000/F-31A/250 dated 6.11.99. (A Banerji) Director” 12. Copy of the said letter was also marked to Mr. G.D. Daga, Director of the respondent No. 1, with reference to his letter dated 6th November, 1999. LPA 658/2010 Page 8 of 31 13. In the meanwhile, however, respondent No. 1 had written a letter dated 10th November, 1999 to respondent No. 2 seeking withdrawal of the 3 conditions imposed by the said respondent in their earlier letter dated 15th October, 1999, which has been quoted above. 14. Respondent No. 2 by their letter dated 21st December, 1999, informed the respondent No. 1 that the matter had been examined at their end and they had decided to waive the three conditions mentioned in the letter dated 15th October, 1999. The respondent No. 1 claims that this letter was sent to the appellant. The appellant, however, states that the copy of this letter was not available on their records and came to their possession only on or after 24th May, 2002. We do not think this controversy is required to be resolved/decided for the reasons stated below, but it does appear that the stand of the appellant is correct. It is difficult to accepted the finding of the learned single judge that the denial of the receipt of the letter dated 21st December, 1999 by the Central Government was not convincing as the counter affidavit filed by the respondent No. 2, indicated that the copy of the said letter was indeed marked to the Central Government. Learned single judge has rightly LPA 658/2010 Page 9 of 31 adversely commented upon the vacillating stand of the second respondent. The letter dated 21st December, 1999, written by the respondent No. 2 to respondent No. 1 reads as under:- “M/s Central Collieries Co. Ltd., 5, Temple Road, Civil Lines, Nagpur-440 001. Sub. :- WAIVAL (sic) OF ADDITIONAL CONDITIONS FOR GRANT OF COAL MINING LEASE-TAKLI-JENA-BELLORA AREA COAL BLOCK. Ref.:- YOUR LETTER NO.CCCL/COAL/F-31A/99- 2000/253 DATED 10TH NOVEMBER, 1999 & NO.CCCL/COAL/F-31A/99-2000, DATED 15TH DECEMBER, 1999. Dear Sir, We are in receipt of your letter No.CCCL/COAL/F- 31A/99-2000/253 dated 10th November, 1999 & No. CCCL/COAL/F-31A/99-2000 dated 15th December, 1999 requesting us to waive conditions put by us vide our letter No.MNA-1298/1586/(7642)Desk-IV dated 15th October, 1999. The matter has been examined t our end and we are pleased to inform you that the additional conditions namely “3 (i) No mining operation should be started in any area which is not prospected by State Government or by the company (ii) Minerals extracted from the above mines should be used as a captive source of raw material for their own plant only (iii) the coal should not be used for commercial and trading purpose are being waived. Yours faithfully, (J.P. DANGE) Secretary to Government” LPA 658/2010 Page 10 of 31 15. The said letter as noticed above, is not addressed to the Central Government. The letter does not seek approval of the Central Government under Section 5(1) of the MMDR Act. We have already referred to and quoted above the letter dated 15th October, 1999, written by respondent No. 2 to the Central Government seeking approval under Section 5(1) of the MMDR Act. In case, the respondent No. 2 wanted to amend or modify their earlier letter dated 15th October, 1999, this should have been mentioned and stated in the letter dated 21st December, 1999. As noticed above, prior approval under Section 5(1) of the MMDR Act is mandatory. Further, the approval granted by the Central Government vide letter dated 28th December, 1999 was specific and clear. It was accorded and subject to the condition that the lease deed executed between the two respondents shall have a condition that all raw coal mined from the lease area shall be exclusively used for power generation in the power plant of the respondent No. 1 who may improve the quality of raw coal by beneficiation in the washeries owned by them before feeding into their power plants. Even if it is assumed that the letter dated 21st December, 1999 was sent to and received by the Central Government, it was of no consequence as the Central LPA 658/2010 Page 11 of 31 Government had imposed a specific condition. We may also notice here that the respondent No. 1 did not challenge or question the said condition inspite of letter dated 21st December, 1999 written by respondent No. 2 to the respondent No. 1 deleting/waiving three conditions which were mentioned in their letter dated 15th October, 1999. The respondent no.1 did question and challenge the conditions imposed by the appellant by writing a letter of protest. 16. Learned counsel for the respondent No. 1, has emphasized and referred to the unamended Rule 27(3) of the Mineral Concession Rules 1960 (MC Rules, for short). The Rule 27(3), before amendment w.e.f. 17th January, 2000, read as under:- “The State Government, if it is of the opinion that in the interest of mineral development it is necessary so to do, may, in any case, with the previous approval of the Central Government, impose such further conditions as it thinks fit”. 17. The aforesaid Rule stipulates that the State Government with the previous approval of the Central Government could impose further conditions as it deemed fit. The learned Single Judge has accepted the contention of the respondent No. 1 that the three conditions imposed by the respondent No. 2 in their letter dated 15th October, 1999, were additional or further conditions covered by Rule LPA 658/2010 Page 12 of 31 27(3) and, therefore, these could have been withdrawn and waived by the State Government without previous approval of the Central Government. The learned Single Judge in this regard has contrasted Rule 27(3) of the MCR after its amendment w.e.f. 17th March, 2000, which thereafter reads as under:- “The State Government may, either with the previous approval of the Central Government or at the instance of the Central Government, impose such further conditions as may be necessary in the interests of mineral development, including development of atomic minerals.” 18. No doubt there is difference in the language of Rule 27(3) before and after its amendment, but this to our mind is inconsequential and irrelevant in the present case, as the Central Government has power to reject or approve a proposal under the proviso to Section 5(1) of the MMDR Act. The rules can supplement but cannot supplant the main enactment. There cannot be iota of doubt that the Central Government can impose a condition while granting an approval under section 5(1) of the MMDR Act. A conditional approval can be granted. The Central Government while granting approval had directed and stated that the two conditions including the condition of captive use of the mined coal in the power LPA 658/2010 Page 13 of 31 plant must be mentioned in the lease deed executed between the two respondents. It is also apparent that in the approval dated 28th December, 1999, the Central Government had examined the proposal on the basis of the conditions mentioned in the letter dated 15th October, 1999. As noticed above, in case these conditions mentioned in the letter dated 15th October, 1999, were deleted or waived, the approval of the Central Government was still necessary under Section 5(1) of the MMDR Act. Approval can be given by the Central Government after examining and considering the proposal. Approval cannot be given to a proposal which has not been examined or considered. The approval dated 28th December, 1999, therefore, cannot be regarded as approval by the Central Government of the letter dated 21st December, 1999 deleting the three conditions. Approval granted by the Central Government was on the basis of and on the presumption that the letter of proposal dated 15th October, 1999, had been not been amended or altered. 19. Learned Single Judge has held that the lease deed after it was executed on 17th February, 2000, without incorporating the conditions imposed by the Central Government in their letter dated 28th December, 1999, was sent to the Indian Bureau of Mines and LPA 658/2010 Page 14 of 31 Chief Inspector of Mines, in accordance with Rule 57 of the MCR. Thus it can be presumed that the said lease deed was within the knowledge of the Central Government throughout and, therefore, it cannot claim ignorance that the lease deed was executed without incorporating the additional conditions. 20. Letter granting permission dated 28th December, 1999 had specifically stipulated that the lease deed executed between the two respondents with the conditions stipulated in paragraph 2 of the approval should be forwarded to “this department immediately after the execution”. This letter was written by the Department of Coal, Ministry of Mines and Minerals, Government of India. It will be wrong to presume that once a copy of the lease deed was sent to the Chief Inspector of Mines and Indian Bureau of Mines, the concerned department who had granted the permission had come to know and were aware that the lease deed executed on 17th February, 2000 had not incorporate the additional conditions mentioned in the approval. There cannot be any such assumption. 21. In this regard, the following correspondence exchanged between the parties may be noticed. The respondent No. 1 by letter dated 1st December, 1999, made an application to open the mines LPA 658/2010 Page 15 of 31 under clause 14 of the Colliery Control Order 1945 (CCO, for short). By letter dated 17th December, 1999, the Coal Controller, Calcutta informed respondent No. 1 that the approved mining plan has not been enclosed with the application. By another letter dated 28th January, 2000, Coal Controller’s Organisation, Nagpur informed the respondent No. 1 that the matter had been discussed with the Coal Controller, Calcutta and the respondent No. 1’s request for opening of the coal mines under clause 14 of the CCO could be examined after obtaining copy of the mining lease. By letter dated 8th February, 2000, respondent No. 1 enclosed a copy of the Government order granting them coal mining lease. The letter did not enclose a copy of the mining lease. Along with the letter dated 18th February, 2000, an application for permission for opening of coal mine was enclosed. Against Column 9, respondent No. 1, with regard to details of mining lease, had stated that “the mining lease granted by the Government of Maharashtra (respondent No. 2) vide order No. xxx dated 29th January, 2000, was annexed as Annexure B”. The said application form again did not specifically and clearly state that the mining lease which was executed on 17th February, 2000 was enclosed. It is not clear whether the order dated 29th January, 2000 LPA 658/2010 Page 16 of 31 was enclosed or the mining lease executed a day earlier was enclosed. Approval in respect of the opening of the mine was granted under new CCO, 2000 vide letter dated 28th February, 2000. The above correspondence, does not support the contention of the respondent no.1 that a copy of the mining lease was furnished to the Department of Coal, Central Government. 22. In this context, we may examine the controversy with regard to the approved mining plan. The said plan had to be approved by the Central Government. Learned Single Judge has held that the respondent No. 1 had submitted a detailed mining plan in which they had stated that at least upto sixth year after the mine was opened, it would not get sufficient quantity of coal for being used in the power plant. This has been interpreted to mean that the coal extracted from the mine would remain as an over burden and unutilized for first six years after opening of the mine. It is stated in the impugned decision that there was no denial by the appellant of the assertion made by the respondent No. 1 in this regard. In this connection, we may notice the specific finding recorded in the order dated 3rd November, 2004 passed under Section 30 of the MMDR Act, wherein it has been held :- LPA 658/2010 Page 17 of 31 “12…… i) M/s CCCL had submitted that the mining plan approved by the Central Government allowed them to dispose coal during the interim period till the mine reaches its rated capacity in the 6th year of production at pages 15-16 of Annexure-III of the Supplementary Note on the Mining Plan. To substantiate this submission copies of the relevant pages from the mining plan retained with them were submitted by M/s. CCCL and the Government of Maharashtra respectively. This was rebutted by the Department of Coal, who submitted that the approved mining plan retained with the Department has no such provision and produced the mining plan retained with them before the undersigned. Department of Coal explained that from the mining plan approved by the Central Government one copy was retained in the Department and one was sent/given to M/s. CCCL, who were requested to give original to the State Government and retain a photocopy with themselves. M/s. CCCL, in their subsequent written submission, however, inter- alia stated that they do not wish to press this point any further. It is interesting to note that this permission by the Central Government in the approved mining plan to sell coal during the interim period does not seem to find mention at any time before the case was taken up revision. Department of Coal would do well to have it investigated as to how the mining plan with it and those with M/s CCCL and that given to Government of Maharashtra by M/s. CCCL differ. However, for the purpose of this case, the copy with Department of Coal is considered to be the authentic copy and is relied upon, also since M/s. CCCL has submitted not to press the argument that the mining plan approved by the Central Government allowed them to sell coal.” 23. Therefore, the finding on the mining plan in the impugned decision in this regard is contrary to the facts on record. The mining LPA 658/2010 Page 18 of 31 plan available on record of the Central Government, was not disputed by the respondent No. 1. 24. The conduct of the Central Government may also be noticed. On the basis of the report received from the Western Coal Fields Limited and the Officer on Special Duty, Coal Controller’s Office that the respondent No. 1 had started coal mining activities without installing the plant/unit to consume coal produce, a show cause notice dated 27th October, 2000 was issued by the appellant – Central Government to the respondent No. 1 to show