Case: M/S. Medley Minerals India Ltd Vs. State Of Orissa

Rule 9. It is also clear that even at that time the application for transfer of the quarry lease was pending with the State Government. The State Governments order was made on 5th February 2003 and the transfer deed was executed on 7th February, 2003. The transfer of lease was only for the unexpired period i.e. from 7.2.2003 to 10.2.2003. Thus it was impossible for the appellant to have complied with the requirements of Rule 9(2), namely, to make an application in Form E at least 90 days before the expiry of the lease. He also drew our attention to Rule 31 under which the State Government is empowered in the interest of mineral development, to relax the provisions of these rules in deserving cases in such manner as they deem proper". Learned counsel contended that in the circumstances the State Government was fully justified in relaxing the rules and treating the application dated 7.2.2003 as continuation of the earlier application of Jitendra Kumar Lohia for renewal of the lease. Thus, according to the learned counsel, the High Court was not justified in quashing the renewal of the quarry lease in favour of the appellant. 14. The learned counsel for the State Government supported the view canvassed by the appellants counsel.15. The learned counsel for the fourth respondent contended that there was no such relaxation at all as evident from the impugned order. He pointed out from the recital in the impugned order that what had been relaxed was only prescribed time limit for disposal of the application as provided in proviso to sub-rule (3) of Rule 6 of the OOMC Rules in exercise of the State Governments power of relaxation under Rule 31. The learned counsel pointed out that Rule 6(3) was only the rule which laid down the period within which the application by the competent authority is required to be disposed of. As a matter of fact, sub-rule (3) of Rule 6 was omitted w.e.f. 8.2.1994 and was not even in existence on the date on which the State Government made the impugned order. He also alleged that application for renewal was granted contrary to the provisions of Rule 9 and was vitiated by malafides.16. We are unable to accept the contention of the learned counsel for the 4th respondent that the action of the State Government was vitiated by malafides. It is trite that plea of malafides has to be specific and demonstrable. Not only this, but the person against whom the malafides are alleged must be made a party to the proceedings and given reasonable opportunity of hearing. We find no such attempt made in the writ petition before the High Court. At the highest even putting the most liberal construction on the writ petition, what was alleged was contravention of the Rules and, consequently, legal malafides and nothing beyond that. The argument of malafides must therefore fail. Next, it is urged by the learned counsel for the respondent that it is an elementary principle of law that an individual shareholder of a company cannot be considered as equivalent to the company, for company has a distinct legal personality. Consequently, he contends that the application made by Jitendra Kumar Lohia could not have enured to the benefit of the appellant company. According to him, Jitendra Kumar Lohia and the appellant being two distinct legal entities, the assumption of the State Government, that the application for renewal of the quarry lease could be treated as a continuation of Jitendra Kumar Lohias application, was erroneous and unsustainable in law. We are unable to accept this contention. We have highlighted as to how the State Government and Jitendra Kumar Lohia treated the application for renewal of quarry lease made by Jitendra Kumar Lohia as enuring for the benefit of the appellant company. If the State Government had treated them to be separate legal entities, there was no question of imposing a condition on the appellant that the transfer of the lease was granted on the specific condition that Jitendra Kumar Lohia and his family members hold the controlling interest in the company. The facts and circumstances belie this contention of the learned counsel for the fourth respondent. It cannot be accepted.17. Learned counsel for the fourth respondent took us through the provisions of Rule 9 and contended that there is contravention of the proviso to Rule 9(3). In fact, we find no such contention urged or accepted before the High Court as evidenced from its judgment. On the contrary, the judgment of the High Court clearly holds that there was no contravention of the proviso to Rule 9(3). The writ petition succeeded only on the sole ground that there was contravention of Rule 9(2) inasmuch as the application of a renewal made by the appellant company was not made at least 90 days before the expiry of the lease. Barring this contention, nothing else seems to have appealed to the High Court.18. The contention, in our view, has no substance for two reasons. First, the State Government was justified in treating the appellants application as continuation of the application for renewal of the lease made by Jitendra Kumar Lohia. Secondly, the State Government had enough powers to relax the provisions of the Rules in the interest of mineral development in deserving cases in such manner as they deem proper". True, that the order of the State Government quotes a wrong rule for relaxation, but, that, in our view hardly matters. As long as the State Government had the power of relaxation, then irrespective of any recitation, it must construed that the State Government has in its discretion made the order by exercising its power of relaxation. Looked at from this point of view, we find no substance in the contention.19. In the result, we are of the opinion that the High Court erred in quashing the order No. 5507/IV(E)(DS)/SM 4/2003 dated 22nd May 2003, by which the quarry lease had been renewed in favour of the appellant company.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We are unable to accept thehe learned counsel for the 4th respondent that theof the State Governmentwas vitiated by malafides. It is trite that plea of malafides has to be specific and demonstrable. Not only this, but the person against whom the malafides are alleged must be made a party to the proceedings and given reasonable opportunity of hearing. We find no such attempt made in the writ petition before the High Court. At the highest even putting the most liberal construction on the writ petition, what was alleged wasof the Rulesand, consequently, legal malafides and nothing beyond that. The argument of malafides must therefore fail.Next, it is urged by the learned counsel for the respondent that it is an elementary principle of law that an individual shareholder of a company cannot be considered as equivalent to the company, for company has a distinct legal personality. Consequently, he contends that the application made by Jitendra Kumar Lohia could not havehe benefit of the appellant company.According to him, Jitendra Kumar Lohia and the appellant being two distinct legal entities, theof the StateGovernment, that the application for renewal of the quarry lease could be treated as aof Jitendra KumarLohias application, was erroneous and unsustainable inlaw. We are unable to accept this contention. We have highlighted as to how the State Government and Jitendra Kumar Lohia treated the application for renewal of quarry lease made by Jitendra Kumar Lohia as enuring forbenefit of the appellant company.If the State Government had treated them to be separate legal entities, there was nong a condition on the appellant that the transfer of the lease was granted on the specific condition that Jitendra Kumar Lohia and his family members hold the controlling interest in the company. The facts and circumstances belie thishe learned counsel for the fourth respondent. It cannot be accepted.17. Learned counsel for the fourth respondent took us through the provisions of Rule 9 and contended that there ishe proviso to Rule 9(3). In fact, we find no such contention urged or accepted before the High Court as evidenced from its judgment. On the contrary, the judgment of the High Court clearly holds that there was nohe proviso to Rule 9(3). The writ petition succeeded only on the sole ground that there wasof Rule 9(2)inasmuch as thea renewal made by the appellant company was not made at least 90 days before the expiry of the lease. Barring this contention, nothing else seems to haveHigh Court.18. The contention, in our view, has no substance for two reasons. First, the State Government was justified in treating the appellants application asof the applicationfor renewal of the lease made by Jitendra Kumar Lohia. Secondly, the State Government had enough powers to relax the provisionsof the Rulesin the interest of mineral development in deserving cases in such manner as they deem proper". True, that the orderof the Statequotes a wrong rule for relaxation, but, that, in our view hardly matters. As long as the State Government had the power of relaxation, then irrespective of any recitation, it must construed that the State Government has in its discretion made the order by exercising its power of relaxation. Looked at from this point of view, we find no substance in the contention.19. In the result, we are of the opinion that the High Court erred in quashing the order No. 5507/IV(E)(DS)/SM 4/2003 dated 22nd May 2003, by which the quarry lease had been renewed in favour of the appellant company.