HIGH COURT OF ORISSA: CUTTACK W.P.(C) No.7338 of 2011 In the matter of an application under Articles 226 and 227 of the Constitution of India. -------- M/s. MSP Sponge Iron Ltd. (formerly known as M/s. MSP Sponge Iron Pvt. Ltd.), At : Haldiaguna, P.O. Gobardhan, Dist : Keonjhar, Orissa, represented through its Director, Sri Pradip Kumar Dey. … Petitioner -Versus- State of Orissa and others … Opp. Parties For Petitioner : Mr. R.K. Rath, Senior Advocate, M/s. Dipak K. Dey, C.K. Dey & A.K. Das. For Opp. Parties : M/s. A.N. Das, N. Sarkar, E.A. Das & B.K. Jena (for Caveator) Government Advocate (for State) Mr. S.D. Das, Senior Advocate Asst. Solicitor General of India (for O.P. No.3) Mr. A.K. Parija, Sr. Advocate & M/s. S.P. Sarangi, B.C. Mohanty, P.P. Mohanty, D.K. Das, P.K. Das & R.K. Tripathy (for O.P. No.5) Mr. Jayanta Das, Sr. Advocate (for O.P. No.4) ------- P R E S E N T: THE HONOURABLE THE CHIEF JUSTICE SHRI.V.GOPALA GOWDA AND THE HONOURABLE SHRI JUSTICE B.N.MAHAPATRA Date of Judgement : 28.09.2011 B.N. Mahapatra, J. In the present writ petition challenge has been made to the decision taken on 18.02.2010 (Annexure-12) by opposite party No.1- State of Orissa, represented through its Principal Secretary to Government, Department of Steel & Mines, Orissa, Bhubaneswar. Under Annexure-12, opposite party No.1 has rejected the M.L. Application No.1217 dated 07.09.2001 filed by the petitioner and recommended partly in respect of an area of 101.6864 hectares of land for Iron and Manganese Ores situated at village Pattabeda in the district of Sundargarh, Orissa in favour of opposite party No.4 and rest part of said areas in favour of opposite party No.5. Further prayer of the petitioner is to issue a writ of mandamus or any other appropriate writ directing opposite party No.1 to recommend the petitioner’s M.L. Application No.1217 dated 07.09.2001 to the Central Government for grant of mining lease in its favour in respect of the same area of 101.6864 hectares situated at village Pattabeda in the district of Sundargarh for iron and manganese ores as has been similarly done in the case of M/s. OCL India Ltd., in respect of their applied area in Kundaposi vide letter dated 08.07.2008 under Annexure-14. 2. The petitioner’s case in a nutshell is that pursuant to IPR, 1996, the petitioner has set up a mineral based industry for manufacturing of Sponge Iron with an installed capacity of 54,000 MT per annum. The sponge iron unit of the petitioner is located in a rural area in village Haldiaguna, P.O. Gobardhan, Dist: Keonjhar, Orissa 2 which is a “Zone-B” category backward area as defined under IPR, 1996. It is a small scale industrial unit and is duly registered under the District Industries Centre (for short, DIC), Keonjhar. Later in April, 2008, the petitioner took over a steel manufacturing unit belonging to one of its associated company, namely, MSP Steels Pvt. Ltd., Haldiaguna, Keonjhar by way of amalgamation. 3. The petitioner company is a mineral based metallurgical industry where iron ore is used as base raw material for manufacturing of sponge iron ore which is further converted into steel. The company’s annual requirement of lump iron ore, base raw materials for steel making for the existing 54,000 MT per annum capacity sponge iron is 1,51,200 TPA. In addition to the existing sponge iron and steel manufacturing facilities, the promoters of the industry have decided for expansion of their sponge iron & steel manufacturing facilities at Haldiaguna and have also taken various steps for acquisition of land, captive power, private railway siding and necessary statutory clearances. The petitioner has also a Ferro Plant in Manuapally village, in the district of Raigarh, Chhatisgarh with an installed capacity of 26,657 TPA and manganese ore mineral is the base raw material for producing ferro alloys products such as Ferro Manganese and Silico Manganese etc. 4. The petitioner came to know that in the close vicinity of the company’s plant in the district of Sundargarh, Tata & Iron Steel Co. Ltd. (TISCO) had surrendered/relinquished an area of 1299.607 hectares of land in various villages, namely, Malda, Kolmang, Adaghat etc. including 3 Pattabeda containing iron ore and manganese ore deposits after retaining 822 hectares during 3rd renewal of ML. The petitioner was also aware of the fact that the said area was available for grant of lease for mining of iron ore and re-grant for mining of manganese. The petitioner was also aware that on 12th March, 1998, the State Government had, pursuant to an application made by one MGM Minerals Ltd., recommended their application for grant of prospecting licence to the Central Government and also recommended the case for relaxation under the provisions of Rule 59(2) of the Mineral Concession Rules, 1960 (for short, “M.C. Rules, 1960”). The Central Government vide order dated 04.08.1998 granted relaxation under Rule 59(2) of the MC Rules, 1960 in respect of the said ML Application of MGM Minerals Ltd. and accordingly, thereafter mining lease for iron ore was executed in favour of MGM Minerals Pvt. Ltd. Therefore, the petitioner made three applications for grant of mining lease for iron ore and manganese ore which were registered/numbered as M.L. Application Nos.1216, 1217 and 1218 all dated 7th September, 2001 in respect of different parts or villages of the areas relinquished by TISCO in Sundargarh district. The petitioner submitted all the required documents including geological map and geological report indicating mineral deposits in the applied area along with ML Application No.1217 dated 07.09.2001. The petitioner had a legitimate expectation that its application for grant of mining lease would be favourably recommended by the State Government. The petitioner took a decision to expand its existing sponge iron 4 manufacturing unit facility from 54,000 TPA to 1,74,000 TPA. In view of the expansion programme, the petitioner submitted a representation dated 16th April, 2003 to the Director of Mines, Bhubaneswar before whom the petitioner’s application was being processed stating therein the urgent need of captive iron ore mines for its existing sponge iron unit and further highlighting that apart from the existing unit the said captive mines could also feed the expanded capacity once the expansion is implemented. 5. The Director of Mines recommended for grant of lease in respect of mining lease application No.1217 dated 07.09.2001 and rejected petitioner’s two other applications for grant of mining lease bearing M.L. Applications Nos.1216 and 1218 both dated 07.09.2001 in view of the recommendation made by it for grant of mining lease in respect of M.L. application No.1217 dated 07.09.2001. Despite, lapse of substantial time, since the State Government did not make necessary recommendation for grant of mining lease in favour of the petitioner, the petitioner made a representation to the State Government on 12.04.2005 reiterating the requirement of the petitioner for iron ore for its value added end-use project and also drawing the attention of the State Government that the petitioner was in the process of implementing the backward and expansion and also forward integration programme. 6. Since the representation did not yield any result, the petitioner approached this Court in W.P.(C) No.6371 of 2005 praying inter alia for a direction to the State Government to consider the grant of 5 mining lease in respect of its pending application for the entire area applied for within a reasonable time. This Court vide order dated 30th August, 2005 disposed of the said writ petition with a direction to opposite party No.1-authority to consider and take a final decision on the representation of the petitioner for the area already recommended by the Director of Mines in his report dated 21.12.2004. As the petitioner’s ML Application No.1217 dated 07.09.2001 was in respect of 101.6864 hectares and not for 30 hectares only, the petitioner filed a review petition bearing RVWPET No.100 of 2005 before this Court seeking modification of the aforesaid order to the extent of directing the authorities to consider the grant of mining lease for the total area of 101.6864 hectares. While the aforesaid review petition was pending, the Joint Secretary, State of Orissa, Department of Steel and Mines wrote a letter bearing No.11543/SM dated 11th November, 2005 to the petitioner stating that the petitioner had not fulfilled conditions required under MOU alleged to have been signed with the petitioner on 27th November, 2004. As the petitioner had not signed any MOU with the State Government, the question of fulfilling the criteria referred to in the guidelines of the State Government in respect of MOU projects was not applicable to the petitioner. The petitioner vide letter dated 29th November, 2005 clarified the said position to the Joint Secretary, State of Orissa, Department of Steel and Mines. It was clarified that the petitioner’s existing unit had been in operation since the year 2000 and it was not a unit for which any MOU was executed. The petitioner 6 received a notice dated 15th May, 2006 issued by the Department of Steel and Mines, State of Orissa enclosing the notice dated 9th May, 2006, issued by the Joint Secretary, Department of Steel and Mines alleging that the petitioner had not fulfilled criteria, like financial closure in respect of the steel plant despite opposite party No.1-State’s letter dated 11th November, 2005. It was also alleged that the petitioner had not taken expeditious steps for establishment of its project in time and hence, the application was liable for rejection. The notice was stated to be one under Rule 26(1) of the MC Rules and calling upon the petitioner to appear before the Principal Secretary on 22nd May, 2006 for a personal hearing. Since, the State Government had issued the notice in respect of the entire area of 101.6864 hectares applied for pursuant to the mining lease application No.1217 dated 07.09.2001 and the said notice of hearing was not limited to only 30 hectares as recommended by the Director of Mines, the petitioner did not press its review petition, which was disposed of on 22nd June, 2006 by this Court as not pressed. 7. The representatives of the petitioner attended the hearing on 22nd May, 2006 and pointed out during the hearing that the notices dated 9th May and 15th May, 2006 were erroneous inasmuch as the petitioner had never signed any MOU with the State Government. The petitioner also explained the justification for grant of mining lease for the entire 101.6864 hectares, particularly, drawing attention to the existing unit of the petitioner and also the expansion programme which is under the process of implementation. The petitioner-Company had also 7 brought to the notice of the authority that the Orissa Industrial Infrastructure Development Corporation, (for short, ‘OIIDC’) had recommended vide letter dated 16th May, 2006 the acquisition of 60 acres of land for expansion project of the petitioner and that the petitioner had deposited a sum of Rs.6.0 lakhs towards administrative charges for acquisition of 60 acres of land. 8. On 03.06.2006, the petitioner received a communication letter from the State Government, wherein the State had refused to recommend the case of the petitioner for grant of mining lease over the applied area vide order dated 23.05.2006 inter alia on the grounds that the petitioner could not substantiate the stand for expansion of their sponge iron plant to steel making plant and the company had not signed any MOU with the State Government for such steel plant in Orissa. 9. Being aggrieved by the said order, the petitioner filed another writ petition bearing W.P.(C) No.16488 of 2006. The said writ petition was disposed of on 17th August, 2006 with a direction to the petitioner to avail the alternative remedy of revision. Pursuant to such direction, the petitioner approached the Central Government under Section 30 of the MMDR Act, 1957 read with Rule 54 of the MC Rules, 1960 by filing a revision application being Revision Case No.22(60)/2006-RC-I in accordance with the provisions of Rule 54 of the MC Rules, 1960 challenging the legality of the order dated 23.05.2006 passed by opposite party No.1 rejecting the ML application of the petitioner. The petitioner also filed an interim application along with the 8 said revision application praying for an interim direction to the State Government not to consider any other application for mineral concession over the applied area of the petitioner pending hearing and final disposal of the revision application of the petitioner. Since the Central Government did not take up the interim application for consideration, the petitioner approached this Court in W.P.(C) No.10488 of 2006 and this Court vide order dated 22.11.2006 disposed of the said writ petition with a direction that the iron and manganese ore involved in the case shall not be leased out to anybody unless and until the stay application of the petitioner is considered by the Central Government with a further direction to consider the interim stay application within a period of one month from the date of communication of the said order by the petitioner. Pursuant to the above order, revisional authority took up the revision application for final hearing and upon hearing the parties, i.e. the petitioner and opposite party Nos.1 and 2, the Central Government vide order dated 08.02.2008 allowed the revision application by setting aside the order dated 23.05.2006 passed by opposite party No.1 and directed the State Government to reconsider the M.L. Application No.1217 dated 07.09.2001 over an area of 101.6864 hectares for grant of mining lease in favour of the petitioner in accordance with the observation made therewith and the law applicable thereto within 90 days from the date of communication of the order. In the aforesaid order, it was held that the petitioner’s case was found to be a fit case for relaxation under Rule 59(2) of the M.C. Rules, 1960, for grant of mining 9 lease in favour of the petitioner. 10. Since the State Government did not implement the order of the Central Government passed in exercise of power vested with it under Section 30 of the MMDR Act read with Rules 54 and 55 of the M.C. Rules, 1960 in Revision Case No.22(60)/2006-RC-I vide order dated 08.02.2008 in its letter and spirit, the petitioner filed writ petition bearing W.P.(C) No.13786 of 2008 and this Court disposed of the said writ petition vide order dated 21.10.2008 inter alia directing the State Government to pass a reasoned order and communicate the same to the petitioner strictly in terms of the Central Government order dated 08.02.2008 and in accordance with law within four months from the date of the said order on the basis of assurance given on behalf of the State Government to this Court in that regard. 11. While the matter stood thus, opposite party No.1 issued a notice to the petitioner vide notice dated 19.01.2009 in purported exercise of powers under Rule 26(3) of the M.C. Rules, 1960 informing the petitioner that it’s ML Application is allegedly deficient in respect of the document described as “Authenticated Geological Prospecting Report of the applied area”. In the said notice the petitioner was called upon to submit the aforesaid wanting documents on or before 20.02.2009 to opposite party No.1. Further, the State Government also in the said notice called upon the petitioner purportedly under the provision of Rule 26(1) of the M.C. Rules, 1960 to appear before opposite party No.1 on 02.03.2009 for a personal hearing apparently on the question of refusal 10 for grant of mining lease in favour of the petitioner. After receipt of the aforesaid notice dated 19.01.2009, the petitioner immediately filed a representation before opposite party No.1 bringing to its notice that the State Government is already in possession of the aforesaid Geological Survey Report prepared by the Directorate of Geology duly authenticating the existence of mineral deposits (iron & manganese ores) in the area applied by the petitioner for mining lease way back in the year 2001 and the State Government has recommended for grant of mining lease to other applicant, i.e., M/s. OCL India Ltd. basing on similar survey report authenticating mineral deposits. 12. Since, no response was made by the State Government with regard to calling upon the petitioner to produce the document, i.e., “Authenticated Geological Prospecting Report of the applied area” for consideration of its mining lease application, the petitioner approached this Court in W.P.(C) No.3240 of 2009 with a prayer to quash the impugned notice dated 19.01.2009 and consider the petitioner’s M.L. Application No.1217 dated 07.09.2001. Pursuant to order dated 16.03.2009 passed in W.P.(C) No.3240 of 2009, the petitioner through its authorized representative appeared before opposite party No.1 on 30.03.2009 along with all documents justifying grant of mining lease in favour of the petitioner. 13. Opposite party No.4 filed an application seeking intervention in W.P.(C) No.3240 of 2009 claiming to have applied for prospecting licence in respect of the entire relinquished area of TISCO in Block-B, 11 which included the applied area of the petitioner. After hearing the parties, this Court vide order dated 11.12.2009 finally disposed of W.P. (C) No.3240 of 2009, inter alia, holding that the intervenor has no locus standi to intervene in this case and no relief can be granted to it. Accordingly, the prayer for intervention was rejected. It was further held that the geological report clearly shows existence of mineral contents, even if the area has not been earlier prospected and this Court directed opposite party No.1 to consider the geological survey report of the area as per Annexure-25 and take a decision on the application of the petitioner as early as possible. 14. The petitioner filed a review petition being Civil Review No.4 of 2010 seeking for limited clarification of the judgment dated 11.12.2009 passed in W.P.(C) No.3240 of 2009, which was dismissed by this Court vide order dated 28.01.2010. 15. Pursuant to direction of this Court, opposite party No.1 issued notice of hearing to the petitioner which was concluded on filing of written submission on 28.01.2010 by the petitioner before opposite party No.1. When the petitioner was awaiting for communication from opposite party No.1 in respect of consideration of its mining lease application, it came to know in the first week of January, 2011 that the State Government in its official website has displayed the Minutes of personal hearing for determination of inter se merit for consideration of Mineral Concession Application dated 18.02.2010. The said minutes of hearing have been displayed since 06.12.2010. In the said minutes of 12 hearing, the case of the petitioner, in view of the judgment dated 11.12.2009, has been separately dealt with in Annexure-A. The further case of the petitioner is that from the minutes of hearing, it appears that opposite party No.1 purportedly considered the applications for mining lease and prospecting licences of about 123 applicants on the very same day i.e. 18.02.2010 including that of the petitioner (at Serial No.47 in the minutes) to determine inter-se merit among them and concluded that the petitioner’s application for mining lease is liable to be rejected. Hence, the present writ petition. 16. Mr. R.K. Rath, learned Senior Advocate appearing on behalf of the petitioner submits that the process adopted by opposite parties to arrive at a conclusion to reject the Mining Lease application is ex facie bad in law, inasmuch as the same is contrary to the provisions of MMDR Act, 1957 and M.C. Rules, 1960 as well as the directions issued by the Central Government vide order dated 08.02.2008 and this Court vide order dated 21.10.2008 passed in WP (C) No.13786 of 2008 and judgment dated 11.12.2009 in W.P.(C) No. 3240 of 2009. The order of the State Government dated 23.5.2006 rejecting the petitioner’s mining lease application on the ground that the applied area comes under the provisions for “re-grant” which was granted earlier under a mining lease and admittedly the State Government has not notified the same under sub-rule (1) of Rule 59 of M.C. Rules to enable it to consider any mineral concession application unless relaxation of Rule 59 (1) is given by the Central Government in favour of the petitioner in terms of Rule 13 59(2) of the M.C. Rules is not correct. The petitioner has challenged legality of the said order dated 23.5.2006 passed by the State Government before the Central Government in Revision Application No.22(60)of 2006-RC-I. The Central Government after hearing the parties i.e. the petitioner and the State Government set aside the order of the State Government dated 23.5.2006. Thus, all the grounds adopted by the State Government to reject the mining lease application of the petitioner were set aside by the Central Government with a declaration that the petitioner’s case is a fit case for grant of relaxation under Rule 59(2) of the M.C. Rules and directed the State Government to reconsider the petitioner’s mining lease application for grant of mining lease in favour of the petitioner in accordance with the observation made therein and law applicable thereto within 90 days from the date of communication of the said order. Therefore, petitioner’s case should have been considered first and the State Government could not have considered any application for grant in view of provisions of Rule 60 of the M.C. Rules, 1960. This Court by order dated 21.10.2008 passed in W.P.(C) 13786 of 2008 (Annexure-5) issued direction to the State Government to consider the matter and pass a speaking and reasoned order strictly in accordance with law in terms of order dated 8.2.2008 passed by the Central Government. The aforesaid order was passed basing upon the assurance given on behalf of the State Government to comply with the direction of the Central Government. It is trite law that the rule of simultaneous hearing of all pending applications takes effect 14 from the provisions of Section 11(4) of the MMDR Act, which is consistent with the Rule 59(1) read with Rule 60 of M.C. Rules. Since the State Government has not notified the concerned area regarding availability of the same for grant as required under Rule 59(1) of the M.C. Rules, the consideration of the application of the petitioner on the basis of simultaneous hearing as recorded in the Minutes of hearing (Annexure-12) is legally unsustainable and without jurisdiction. 17. Mr. Rath, vehemently argued that Opposite party no.1, while referring to the judgment and order dated 11.12.2009 and extracting portion thereof has deliberately omitted the crucial part of the said decision solely with a view to project as if this Court has not expressed any opinion on the question of interpretation of law and the said opposite party is free to express its own view thereon. While this Court held that it had no hesitation to say that the geological report clearly shows existence of mineral contents even if the area has not been prospected, opposite party no.1 omitted this part in paragraph 5, Annexure-A to the minutes of hearing. The MMDR Act, 1957 and M.C. Rules, 1960 prescribe two distinct stages involved in the grant of mining lease. The first is the recommendation of the State Government to the Central Government in case of an area previously held under a mining lease, which could be in terms of Rule 59(1) or Rule 59(2) of the Rules, 1960 and consequent upon grant of approval by the Central Government under sec. 5(1) of the MMDR Act (where mineral involved is the mineral specified in schedule-1 of the said Act). The second stage, i.e., execution 15 of mining lease, could be done upon fulfilling inter alia the conditions stipulated in Sec.5 (2) (b) of the MMDR Act and Rule 22(4) and (5) of the M.C. Rules. Opposite party no.1 is aware of the said provisions of law as large number of mining leases have been granted in the past and particularly in case of mining lease granted in favour of the OCL Limited. 18. It was argued that opposite party no.1 has proceeded with the case of the petitioner with an erroneous construction of law as if no mining lease could be granted without availability of a prospecting report over the applied area. If such an interpretation of Section 5(2) (a) of the