Case: M/S.Veet Rag Homes Private Limited Vs. Union of India, Through Secretary, Ministry of Mines &amp; Others

sustained. It is the normal rule of construction that when a statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself. This principle has been reiterated in CIT v. AnjumM.H. Ghaswala, SCC at p. 644; Captain Sube Singh v. Lt. Governor of Delhi and State of U.P. v. SingharaSingh.The observation in the order that it may be worthwhile to consider the respondent no.3s case because it is an emerging entrepreneur is extraneous to the provisions of the Act, which require the State Government only to take into account the factors or attributes referred to in section 11, sub-sections (2) and (3). It is not possible to accept the justification that because the respondents are said to have taken steps to establish the project, they are entitled to the mining lease. Rule 35 of the Mineral Concession Rules prescribe that the end use of the mineral is a factor that may be taken into account. While doing so, it was not permissible for the State Government to take into account the mere intention of the respondent no.3 to set up an alumina plant in Kolhapur district in which they are said to have supposedly invested Rs.2,000 crores and which will generate employment for 800 to 900 people. The end use contemplated by rule 35 is the end use of mineral by the applicant. That is, the use to which the applicant intends to put the mineral i.e. for example iron ore will be used for steel and so on. This may of course include sale to another. The location of the use such as whether it will be used in a particular district is not a relevant factor.9. Lastly, in paragraph 7 of the order, the Minister for Mining has classified the applicants into groups `A and `B. Group `A comprises the applicants who are financially sound but do not have experience of mining. Seven applicants have been included in this group. Group `B includes names of the applicants who have experience in mining. Nine names have been included in this group. The name of the respondent no.3 has been included in this group of applicants who have experience in mining. It seems that the respondent no.3 has been held as having experience in mining, even though it does not have any mining experience, only on the basis that one group company i.e. M/s.Akash Mining Pvt. Ltd. holds a mining lease of granite and iron ore in Orissa. The State Government, in our view, could not have clubbed the experience of a company other than the respondent no.3 as experience of the respondent no.3. It is not permissible to do so.10. In New Horizons Ltd. v. Union of India [(1995) 1 SCC 478] the Supreme Court has observed that the experience of a company which has merged into a re-organized company may be taken into consideration even though the tender has not been submitted in its name and has been submitted in the name of the re-organised company which does not have experience in its name. Then, while considering the converse, the Supreme Court observed as follows:-Conversely there may be a split in a company and persons looking after a particular field of the business of the company form a new company after leaving it. The new company, though having persons with experience in the field, has no experience in its name while the original company having experience in its name lacks persons with experience. The requirement regarding experience does not mean that the offer of the original company must be considered because it has experience in its name though it does not have experienced persons with it and ignore the offer of the new company because it does not have experience in its name though it has persons having experience in the field.Further, the Supreme Court has observed as follows:-The terms and conditions of such a document have to be construed from the standpoint of a prudent businessman. When a businessman enters into a contract whereunder some work is to be performed he seeks to assure himself about the credentials of the person who is to be entrusted with the performance of the work. Such credentials are to be examined from a commercial point of view which means that if the contract is to be entered with a company he will look into the background of the company and the persons who are in control of the same and their capacity to execute the work. He would go not by the name of the company but by the persons behind the company. While keeping in view the past experience he would also take note of the present state of affairs and the equipment and resources at the disposal of the company. The same has to be the approach of the authorities while considering a tender received in response to the advertisement issued on 22-4-1993. This would require that first the terms of the offer must be examined and if they are found satisfactory the next step would be to consider the credentials of the tenderer and his ability to perform the work to be entrusted. For judging the credentials past experience will have to be considered along with the present state of equipment and resources available with the tenderer. Past experience may not be of much help if the machinery and equipment is outdated. Conversely lack of experience may be made good by improved technology and better equipment.We find from the impugned order that nowhere it has been examined how experience of the group company can be treated as the experience of the respondent no.3. Prima facie, it would not be permissible to club the experience of two separate companies together and hold that though any applicant company has no experience itself, it may be condoned as a company which has experience because some other group company has experience.

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

Explanation:
1[ds]7. On a plain reading ofsubsections (2) and (3)of section 11 above, it is clear that the State Government is empowered to grant a mining lease only after taking into consideration the matters specified in(3) which includes special knowledge or experience in mining operations, etc. It is thus not open for the State Government to refuse to consider whether the applicant has special knowledge or experience in mining operations. According to the respondent no.3, however, though the State Government cannot refuse to consider if an applicant has special knowledge or any mining experience, it is not necessary for an applicant to actually have any such knowledge or experience if on a consideration of all the other factors or attributes required in the section, the State Government considers the applicant fit to be granted such lease. In other words, according to the respondent no.3,subsections (2) and (3)of section 11 of the Act only requires the State Government to advert to and take into account whether the applicant possesses the attributes referred to in(3), but the State Government can grant a mining lease to an applicant who does not possess such attributes in its sole discretion as it may deem fit. It is not possible to accept this contention thatsubsections (2) and (3)only require the State government to inquire into and take into account whether an applicant possesses the attributes required by those provisions, but that nevertheless the State Government may grant a mining lease even to an applicant who does not possess an attribute if he possesses other attributes referred to in theAccepting this contention would render the provisions meaningless. For example, if the contention were to be accepted, the State Government would be entitled to grant an applicant who possesses no financial resources, vide subsection 3(b), or who has technical staff which is wholly unqualified for the work, vide3(c) and so on. In the circumstances, we are of view that the State Government which is a delegatee of Parliament can grant a mining lease only to an Applicant who has the attributes specified by(3) of section 11.8. In the circumstances, we are of view that the impugned order of the Minister for Mining recommending the grant of a mining lease to the respondent no.3 though the said respondent is not shown to have any special knowledge or experience in mining operations is illegal and violative of section 11 of the Act. The order is also arbitrary in that it rejects the applications of two other applicants, viz., M/s.R.W.SawantCo., Thane, and M/s.Entegra Infrastructures Ltd., Mumbai, on the ground that they are new entrants in the field of mining and do not have any experience. There is no reason why a different yardstick ought to have been applied to the case of the respondent no.3 apparently on the ground that the respondent no.3 is an emerging entrepreneur. It is settled law vide Sandur ManganeseIron Ores Ltd. v. State of Karnataka [(2010) 13 SCC 1]  that the State Government cannot justify a grant based on criteria that are de hors the Act and the Mineral Concession Rules,seems that the respondent no.3 has been held as having experience in mining, even though it does not have any mining experience, only on the basis that one group company i.e. M/s.Akash Mining Pvt. Ltd. holds a mining lease of granite and iron ore in Orissa. The State Government, in our view, could not have clubbed the experience of a company other than the respondent no.3 as experience of the respondent no.3. It is not permissible to do so.