* THE HON'BLE SRI JUSTICE GODA RAGHURAM AND * THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN + WRIT PETITION Nos.9706 & 27650 of 2008; 7777 AND 8733, 10175, 10976, 11610, 13755, 14596, 17281, AND 20226 of 2009. % 25.01. 2010 WRIT PETITION No. 9706 of 2008: # M.V.Siva Prasad. … Petitioner. and $ The Government of A.P., Industrial and Commerce (SPIU & Sand) Department, Secretariat, Hyderabad, rep., by its Secretary & three others. ….. Respondents ! Counsel for the petitioner: Sri Andapalli Sanjeev Kumar ^ Counsel for respondents: G.P. for Mines & Geology & Smt. N. Shoba (For R-3) < Gist: >Head Note ? [1] 1986 Supp SCC 20 2 (1981)2 SCC 205 3 (1999) 1 SCC 475 THE HON'BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION Nos.9706 & 27650 of 2008; 7777 AND 8733, 10175, 10976, 11610, 13755, 14596, 17281, AND 20226 of 2009. COMMON ORDER: (Per Hon’ble Sri Justice Ramesh Ranganathan) As common questions of law arise for consideration, these batch of writ petitions were heard together and are now being disposed of by a common order. It is however convenient to briefly note the facts in each of the writ petitions. W.P. No.9706 of 2008: The memo of the 1st respondent dated 18.04.2008 granting extension of lease of 72 days in favour of the 3rd respondent is under challenge in this writ petition. The District Collector, vide proceedings dated 04.10.2007, issued confirmation orders in favour of the 3rd respondent in respect of Lankapalli Sand Reach, Pamidimukkala Mandal, Krishna District for a period of six months upto 31.03.2008 and directed execution of the lease deed within one month. The 3rd respondent failed to execute the lease deed within time. The Government issued an order dated 07.12.2007 condoning the delay in execution of the lease deed subject to the condition that the bidder agreed to execute the lease document with retrospective effect from 10.10.2007. In his representation, the 3rd respondent requested for extension of 100 days for the non-operation period when Government was in the process of issuing orders condoning the delay. The Government favourably considered the 4th respondent’s request for extension of lease for a period of 72 days from the date the order was passed. W.P. No.7777 of 2009: The memo of the State Government dated 08.04.2009, granting extension of 87 days in respect of reach No.7 of Penna River at Murnlumudi village, Nellore Rural Mandal, Nellore District in favour of the 4th respondent, is under challenge in this writ petition. The impugned memo records that the 4th respondent had requested for extension of lease for the 87 days non-operation period; the Assistant Director of Mines & Geology in his report had opined that the 4th respondent should not be allowed to extract sand and that the lessee had misrepresented facts in his representation seeking extension of lease only to hamper the forthcoming auction process. In his report the Zonal Director, Mines & Geology, Ongole observed that the subject reach was confirmed in the public auction; an agreement was executed on 30.05.2007; the first year lease expired on 30.03.2008; the second year lease was in force upto 31.03.2009 and failure of the Assistant Director to issue despatch permits without valid reason had resulted in the lessee not being able to operate the lease for a period of 87 days from 30.08.2008 to 25.11.2008. The Director of Mines & Geology requested the Government to consider the representation of the 4th respondent under Rule 9-K(3) of the A.P. Mines and Minerals Concession Rules, 1966 (hereinafter called the 1966 Rules), as he was denied despatch permits. In exercise of its powers under Section 9-K(3) the Government permitted the 4th respondent to operate the lease for a further period of 87 days. W.P. No.10175 of 2009: The memo of the 1st respondent dated 13.05.2009, whereby the 4th respondent was permitted to carry out sand quarry operations for the 317 days non-operation period in respect of reach No.4 at Godavarru, Duggirala Mandal of Guntur District, is under challenge in this writ petition. The 4th respondent was granted lease for a period of one year with effect from 29.10.2003. Relying on the petition filed by Sri Thota Rambabu, lessee of reach No.3, the District Panchayat Officer vide letter dated 10.02.2004 stopped quarrying of sand. The District Level Sand Committee requested the Executive Engineer for his report in the matter. The District Panchayat Officer, vide proceedings dated 30.07.2004, allowed a new ramp and temporarily stopped the existing ramp. This order was stayed by the Government on 03.08.2004. The District Panchayat Officer, vide letter dated 04.08.2004, again stopped quarrying operations till receipt of the Government orders regarding the ramp point. The 4th respondent was permitted to quarry sand from 24.09.2004. The second year lease was from 29.10.2004 till 28.10.2005. The Government subsequently vacated the stay granted by them earlier. W.P. No.19228 of 2004 was filed by Sri Thota Rambabu and this Court, by order dated 26.10.2004, remanded the matter to the Government which, by proceedings dated 31.12.2004, decided that there was no need to change the original ramp and directed the 4th respondent to use the authorized ramp only. Aggrieved by the order of the Government the 4th respondent filed W.P. No.1042 of 2005 and this Court by order dated 03.02.2005, while setting aside the memo dated 31.12.2004, directed the Government to consider the matter afresh. Thereafter the District Panchayat Officer, vide proceedings dated 08.11.2005, directed the 4th respondent to stop sand quarry operations for violation of certain agreement conditions. The 4th respondent represented that he was not permitted to quarry sand for a period of 248 days during the first year lease period and for 141 days in the second year lease period and that he should be granted extension of lease for the 389 days non-operation period. The 4th respondent was allowed to continue quarrying operations for a period of 72 days after taking into account the period, if any, operated by him. The 4th respondent, in his representation dated 26.12.2006, stated that from out of the 389 days non-operation period he had been granted extension only for 72 days and that he should be permitted to quarry sand for the remaining 317 days non-operation period also. Thereafter vide proceedings dated 16.10.2007 Sri Ram Nivas Reddy, who was the highest bidder, was permitted to conduct sand quarry operations for a period of one year. As Sri V. Ram Nivas Reddy failed to pay the second year lease amount he was not allowed to continue quarrying operations from 01.04.2008 onwards. The Government issued memo dated 13.06.2008 directing the authorities not to conduct auctions till the disposal of the revision application filed by 4th respondent for grant of extension of lease for the 317 days non- operation period. Thereafter the impugned memo came to be passed whereby the Government permitted the 4th respondent to conduct sand quarry operations for a period of 317 days. W.P. No.10976 of 2009: The order of the 1st respondent dated 13.05.2009, granting extension of lease for 48 days to the 4th respondent to conduct sand quarry operations at Illuru Sand reach, Thotlavalluru Mandal of Krishna District, is under challenge in this writ petition. The 4th respondent was granted lease of Illuru Sand reach for a period of one year from 24.01.2008 to 23.01.2009. It is his case that because of floods and the Shivarathri festival during the lease period he could not conduct sand quarry operations for a period of 48 days. Relying on the report of the Director of Mines & Geology, the State Government vide memo dated 20.04.2009 rejected the request of the 4th respondent. Aggrieved thereby, the 4th respondent approached this Court and, by order in W.P.M.P. No.12702 of 2009 in W.P. No.9769 of 2009 dated 01.05.2009, the Government memo dated 20.04.2009 was suspended. The 4th respondent thereafter submitted another representation dated 02.05.2009 requesting the Government to consider his representation for grant of extension of lease for the 48 days non- operation period as was given in several other reaches. The Government, on re-examination of the matter, permitted the 4th respondent to operate the sand quarry at Illuru Sand reach for the non-operation period of 48 days subject to the outcome of the Writ Petition. W.P. No.13755 of 2009: The proceedings of the State Government dated 29.06.2009, and the Director of Mines and Geology dated 30.06.2009, extending the lease period in favour of the 5th respondent are under challenge in this writ petition. In its memo dated 20.06.2009 the Government took note the representations submitted by the 5th respondent that he was the highest bidder in the sand auction held on 26.10.2006 for Pallipadu reach in Nellore District; the department officials had failed to show the path way and earmark the boundaries as a result of which the lease deed could not be executed in time; the lease deed was executed for a period of two years from 26.06.2007 to 25.06.2009 despite which no quarrying operations could commence since the department did not show the path way; because of obstruction by the villagers he could not operate for a period of one year from out of the two year lease period and as such he should be granted extension of lease for the non-operation period of one year. In his report the Director of Mines and Geology informed that on 05.11.2007 the 5th respondent had requested the authorities to lay a new path contending that the villagers were objecting to the old existing ramp; the Assistant Director had informed the lessee to obtain clearance from the competent authority for laying a new ramp; the lessee had obtained despatch permits for 2,28,249 cubic metres of sand during the lease period from 06.07.2007 to 11.06.2009; the Assistant Director had informed that at no point was there any hindrance for excavation and transportation of ordinary sand and it was the 5th respondent who had failed to produce the relevant documents. The Director of Mines and Geology opined that the Government could consider the 5th respondent’s request subject to the condition that the extension would only be for one year on payment of Rs.49.25 lakhs. The Government decided to favourably consider the 5th respondent’s request for grant of extension of lease for the non-operation period on condition that it would only be for one year; on payment of a minimum of Rs.49.25 lakhs and on payment of proportionate siegniorage fee for the amount exceeding Rs.49.25 lakhs. W.P. No.14596 of 2009 The memo of the 1st respondent dated 29.6.2009, and the subsequent order of the Director of Mines and Geology dated 30.6.2009, are under challenge, in this writ petition. In the sand auctions conducted on 26.10.2006, for Pallipadu sand reach in Nellore District, the 3rd respondent was the highest bidder. There was a delay in execution of the lease deed which was eventually executed for a period of two years from 26.6.2007 till 25.6.2009. The 3rd respondent contended before the Government that despite execution of the lease deed quarry operations could not be commenced since the department had failed to show the path way and the villagers had obstructed lifting of sand for a period of more than one year. The 3rd respondent requested the Government to grant extension of lease for the non- operation period of one year from 26.6.2009. The Director of Mines and Geology informed that the 3rd respondent had continued quarrying operations from the old existing ramp; he had represented to the authorities on 05.11.2007 to lay a new path contending that the villagers were objecting to the old existing ramp; he had obtained despatch permits for 2,28,249 cubic meters of sand during the lease period from 6.7.2007 to 11.6.2009; as the lessee had despatched 2.28 lakh cubic meters of sand for a period of two years the seigniorage fee worked out to 82.09 lakhs; the average seigniorage fee per annum which the 3rd respondent would have paid to the Department had it been as per cubic meter rate was Rs.41.04 lakhs; 20% enhancement thereupon amounted to Rs.49.25 lakhs and even if the Government considered the 3rd respondent’s request due to the difficulties expressed by him it should be with the condition that it would be given only for one year on payment of Rs.49.25 lakhs. The Government directed that the 3rd respondent should be permitted to quarry sand for one year on payment of Rs.49.25 lakhs. W.P. No.17281 of 2009 The proceedings of the Assistant Director of Mines and Geology dated 20.2.2009, whereby the 6th respondent was permitted to lift sand of 25000 cubic meters for a period of one year from 20.2.2009 to 19.2.2010 from the sand reach of Dharmora village, Morthad Mandal of Nizamabad District located on Peddavagu, is under challenge in this writ petition. The 6th respondent, in his representation dated 02.09.2008, requested the Government for grant of extension of lease for the one year non-operation period from 01.04.2002 to 31.03.2003. The Government, vide memo dated 07.01.2009, exercised its powers under Rule 9-K(3) and granted permission to the 6th respondent to lift sand from the sand reach of Dharmora Village, Morthad Mandal of Nizamabad district for a period of 12 months duly relaxing the auction procedure under Rule 9-B of the Rules. The Assistant Director of Mines and Geology, Nizamabad was requested to evaluate the quantity of sand from Dharmora sand reach and issue necessary orders. A general survey was conducted in the demarcated area on 23.01.2009. The quantity of 25000 cubic meters was evaluated for the purpose of quarrying and the 6th respondent was permitted to lift ordinary sand of 25000 cubic meters for a period of one year from 20.02.2009 till 19.02.2010 subject to certain conditions. W.P. No.20226 of 2009 The memo of the Government dated 16.09.2009, whereby the 5th respondent was permitted to lift sand for the 49 days non- operation period from Kotikalapudi sand reach, Ibrahimpatnam Mandal of Krishna District, is under challenge in this writ petition. The revision petition filed by the 5th respondent was allowed and the Government, vide proceedings 15.05.2009, granted extension of lease for the 49 days non-operation period in favour of the 5th respondent. Subsequently temporary permits were issued in favour of the A.P. Mineral Development Corporation to excavate sand from Kotikalapudi sand reach for a period of 60 days or till fresh auctions were conducted whichever was earlier. This Court, by order in W.P. No.13618 of 2009 and 14787 of 2009 dated 21.08.2009, directed the respondent not to issue temporary permits to the APMDC for a period in excess of 60 days in between grant of leases by tender-cum-auction process as stipulated in Rule 9-B. In his report dated 11.09.2009, the Director of Mines and Geology informed that though the Government, vide its memo dated 15.05.2009, had granted extension of lease for the 49 days non-operation period to the 5th respondent he did not evince interest in operating the area. The Government after careful examination of the matter revalidated the orders issued in its proceedings dated 15.05.2009 and granted extension of lease for the 49 days non-operation period to the 5th respondent. Before examining the rival contentions on the validity or otherwise of the orders impugned in this batch of writ petitions it is useful to briefly note the relevant statutory provisions. The Mines and Minerals (Development & Regulation) Act, 1957 (Act No.67 of 1957) is an Act to provide for the development and regulation of mines and minerals under the control of the Union. Section 3(e) of the said Act defines ‘minor minerals’ to mean building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral. Section 3(f) defines ‘prescribed’ to mean prescribed by rules made under the Act. Section 15(1) empowers the State Government, by notification in the official gazette, to make rules for regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purposes connected therewith. As sand is a minor mineral, Section 15(1) of Act 67 of 1957 is the source of power for the State Government to make rules for grant of quarry leases of ordinary sand. In exercise of the powers conferred by Section 15(1) of Act No.67 of 1957, the 1966 Rules were made and notified in G.O.Ms. No.1172, Industries (B-1) dated 4th September, 1967. Rule 4(f)(i) thereof defines “ordinary sand” to mean ordinary sand used for building or other similar purposes but not used for industrial purposes such as refractory, ceramic, glass staring and metallurgical industries. Rule 5 stipulates that no person shall undertake quarry of any minor mineral in any area except under and in accordance with the terms and conditions of a quarry lease or a permit granted under the Rules. Rule 9(ii) prohibits grant of quarry lease in respect of areas covering any tank or river bid, irrigation or drainage channel and of lands under the control of the public works department, a municipality, or a local authority except after consultation with the Executive Engineer of the Division or the River Conservator, or the Commissioner of the Municipality or the Block Development Officer of the Panchayat Samithi or the concerned Executive Officer. The 1966 Rules, as amended and notified in G.O.Ms. No.84 dated 10.04.2007, are the Rules presently in force. Rule 9-B(1) of the amended Rules provides that all sand bearing areas in the State shall be leased out by sealed tender cum public auction, reach or mandal wise wherever applicable, by the auctioning authority as specified under Rule 9-H(1) financial year wise, in any case for not more than 2 years with an yearly enhancement of 20% of the knocked down amount and subject to the conditions prescribed in the notice of sealed tender cum public auction as prescribed in Rule 9-D subject to approval of the District Level Committee as specified in sub-rule (5). Rule 9-B(6) prescribes that the District Level Committee shall be the competent authority to decide the issues mentioned in the Rules and the proposals received from the Assistant Director of Mines and Geology concerned, duly obtaining the necessary reports/clearances from the Conservator of River and the Director, Ground Water Department. Rule 9-K relates to the powers of the State Government and Rule 9-L is the penal clause. They read as under: 9-K Powers of the State Government:- (1) The Government shall have the power to cancel the auction conducted and confirmation orders issued thereon by the competent authority duly recording its reasons thereof. (2) The Government shall have the power to condone the delay in issue of confirmation orders, execution of lease deed etc., for valid reasons to be recorded. (3) The Government shall have the power to issue orders/clarifications, if any, not specifically mentioned in implementation of these rules. 9-L Penal Clause:- The successful tenderer or bidder shall have no claims for any compensation due to floods or heavy rains or any other situation and extension of the lease period shall not be granted under any circumstances. Under Rule 11 (1) (b), the Government reserved the right to grant leases for any minor minerals by duly exempting from the priorities fixed under different provisions under the Rules on nomination or otherwise subject to certain specified conditions for any category of land in favour of any section of the society. Act No.67 of 1957 is an Act referable to Entry 54 of List I of the Seventh Schedule to the Constitution of India. Entry 54 reads as under: “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 the public interest.” In Section 2 of Act No.67 of 1957 Parliament has declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and minerals development to the extent provided under the Act. Entry 23 of List II of the Seventh Schedule relates to regulation of mines and mineral development subject to the provision of List I with respect to regulation and development under the control of the Union. The power of the State Legislature to make laws under Entry 23 of List II is subject to Entry 54 of List I. Under Article 162, the executive power of the State extends to matters with respect to which the Legislature of the State has the power to make laws. As the State Legislature does not have the power to make laws with respect to regulation and development of mines and minerals under the control of the Union as provided in Entry 54 of List I, the executive power of the State does not extend to such matters also. The power conferred on the State Government under Section 15 of Act 67 of 1957 to make rules is as a delegate of the Union Government and a subordinate rule making authority. Its power to make rules is therefore restricted and circumscribed by matters set out in Section 15 of Act No.67 of 1957. Section 14 of Act 67 of 1957 specifies that the provisions of Sections 5 to 13 shall not apply to quarry leases, mining leases or other minor concessions in respect of minor minerals. The exclusion of the application of sections 5 to 13 to minor minerals, under Section 14, means that it is left to the State Governments to prescribe such restrictions as they think fit by rules made under Section 15(1). (D.K. Trivedi & Sons v. State of Gujarat[1]). The power of the State Government to pass orders is limited to the extent it has been conferred power to do so under the 1966 Rules. No one has a vested right to the grant or renewal of a lease and none can claim a vested right to have an application for the grant or renewal of a lease dealt with in a particular manner, by applying particular provisions. In the absence of a vested right, an application for grant of or renewal of lease has necessarily to be dealt with according to the rules in force. (State of T.N. v. Hind Stone[2]). Likewise, extension of lease would also be governed by the rules in force. The validity of the amended 1966 rules, as notified in G.O.Ms. No.84 dated 10.04.2007, is not under challenge in any of these writ petitions. The validity of the impugned orders have therefore to be decided in the light of the amended 1966 rules notified in G.O.Ms. No.84 dated 10.04.2007 as it is these rules which are presently in force. Rule 9-L is in two parts. The first limb of Rule 9-L prohibits the competent authority from entertaining any claim made by a successful tenderer/bidder seeking compensation on account of floods or rains or other situation. The second limb of Rule 9-L prohibits grant of extension of lease under any circumstances. Irrespective of the nature of the claim for extension of lease, be it for a valid reason or otherwise, Rule 9-L prohibits the competent authority from granting extension of lease under any circumstances. In view of this prohibition, any order passed by the Government or the Director of Mines granting extension of lease would be ultravires Rule 9-L of the 1966 Rules. The Learned Government Pleader for Industries, and the Learned Counsel for the respondents who were granted extension of lease by the Government, would however contend that the Government has the power to grant extension of lease under Rule 9-K(3). Rule 9-K(3) confers power on the Government to issue orders/clarifications, if any, not specifically mentioned in the implementation of the A.P. Minor and Mineral Concession Rules, 1966. The twin limitations under Rule 9-K(3) for the exercise of power by the Government to issue orders/ clarifications is (i) to implement the rules and (ii) with respect to matters not specifically mentioned in the rules. The impugned orders granting extension of lease