Case: Amritlal Nathubhai Shah and Others Vs. Union Government of India and Another

and (4) of section 17 of the Act to which our attention has been invited by Mr. Sen on behalf of the appellants for the argument that they are the only provisions for specifying the boundaries of the reserved areas, and as they relate to prospecting or mining operations to be undertaken by the Central Government, they are enough to show that the Act does not contemplate or provide for reservation by any other authority or for any other purpose. The argument is however untenable because the aforesaid sub-sections of section 17 do not cover the entire field of the authority of refusing to grant a prospecting licence or a mining lease to any one else, and do not deal with the State Governments authority to reserve any area for itself. As has been stated, the authority to order reservation . flows from the fact that the State is the owner of the mines and the minerals within its territory, which vest in it. But quite apart fro m that, we find that rule 59 of the Rules, which have been made under sections 13 of the Act, clearly contemplates such reservation by an order of the State Government. That rule deals with the availability of areas for the grant of a prospecting licence or a mining lease in such cases, and provides as follows:"59. Availability of certain areas for grant to be notified --In the case of any land which is otherwise available for the grant of a prospecting licence or a mining lease but in respect of which the State Government has refused to grant a prospecting licence or a min ing lease on the ground that the land should be reserved for any purpose, the State Government shall, as soon as such land becomes again available for the grant of a prospecting or mining lease, grant the licence or lease after following the procedure laid down in rule 58."4. Mr. Sen has conceded that it is a valid rule. It clearly contemplates reservation of land for an y purpose, by the State Government, and its consequent non-availability for the grant of a prospecting licence or mining lease during the period it remains under reservation by an order of the State Government. A reading of rules 58, 59 and 60 makes it quite clear that it is not permissible for any person to apply for a licence or lease in respect of a reserved area until after it becomes available for such grant, and the availability is notified by the State Government in the Official Gazette. Rule 60 provides that an application for the grant of a prospecting, licence or a mining lease in respect of an area for which no such notification has been issued, inter alia, under rule 59, for making the area available for grant of a licence or a lease, would be premature, and "shall not be entertained and the fee. if any, paid in respect of any such application shah be refunded." It would therefore follow that as the areas which are the subject matter of the present appeals had been reserved by the State Government for the purpose stated in its notifications, and as those lands did not become available again for the grant of a prospecting licence or a mining lease, the State Government was well within its rights in rejecting the applications of the appellants under rule 60 as premature. The Central Government was thus justified in rejecting the revision applications which were filed against the orders of rejection passed by the State Government.We have gone through the decisions in State of Orissa V. Union of India(A.I.R 1972 Orissa 68.) and M/s S. Lal and Co. Ltd. v. The Union of India and others(A.I R. 1975 Patna 44.), on which reliance has been placed by Mr. Sen. In the former case the High Court of Orissa took the view that reservation of a particular area for being exploited in the public sector by the State could not be said to be a purpose for which it could be reserved under rule 59. In taking that view the High Court went by the consideration that the subject of the legislation in the Act became an "exclusive subject for legislation by Parliament" and there was no residuary power of working out mines and minerals without ob serving the conditions prescribed by the Act and the Rules. The High Court therefore went wrong in not appreciating that even , though the field of legislation had been covered by the declaration of the Parliament in section 2 of the Act, that could not justify the inference that the State Government thereby lost its right to the minerals which vested in it as a property within its territory. The High Court has also erred in taking t he view that the State was required to obtain a licence or a lease even though it was itself the owner of the land and there was nothing in the Act or the Rules to show that the provisions for the obtaining of a licence or lease would still be applicable to it.5. In S. Lai and Co. Ltd. v. Union of India and others (supra) the High Court noticed the decision in State of Orissa v. Union of India (supra) but it cannot be urged with any justification that the view expressed in it was followed by the Patna High Court. On the other hand the Patna High Court followed the view which was taken by the Gujarat High Court in the judgment which is the subject matter of the present appeals and held that the State Government has the power "to reserve certain areas for exploitation by itself. or by a statutory corporation or for a company in a public sector." The controversy in that case was. however, examined with reference to the provisions of article 298 of the Constitution. The two cases cited by Mr. Sen cannot thus be of any avail to the appellants.

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

Explanation:
0[ds]The argument is however untenable because the aforesaid sub-sections of section 17 do not cover the entire field of the authority of refusing to grant a prospecting licence or a mining lease to any one else, and do not deal with the State Governments authority to reserve any area for itself. As has been stated, the authority to order reservation . flows from the fact that the State is the owner of the mines and the minerals within its territory, which vest in it. But quite apart fro m that, we find that rule 59 of the Rules, which have been made under sections 13 of the Act, clearly contemplates such reservation by an order of the State Government. That rule deals with the availability of areas for the grant of a prospecting licence or a mining lease in such cases, and provides asAvailability of certain areas for grant to be notified --In the case of any land which is otherwise available for the grant of a prospecting licence or a mining lease but in respect of which the State Government has refused to grant a prospecting licence or a min ing lease on the ground that the land should be reserved for any purpose, the State Government shall, as soon as such land becomes again available for the grant of a prospecting or mining lease, grant the licence or lease after following the procedure laid down in rulehave gone through the decisions in State of Orissa V. Union of India(A.I.R 1972 Orissa 68.) and M/s S. Lal and Co. Ltd. v. The Union of India and others(A.I R. 1975 Patna 44.), on which reliance has been placed by Mr. Sen. In the former case the High Court of Orissa took the view that reservation of a particular area for being exploited in the public sector by the State could not be said to be a purpose for which it could be reserved under rule 59. In taking that view the High Court went by the consideration that the subject of the legislation in the Act became an "exclusive subject for legislation by Parliament" and there was no residuary power of working out mines and minerals without ob serving the conditions prescribed by the Act and the Rules. The High Court therefore went wrong in not appreciating that even , though the field of legislation had been covered by the declaration of the Parliament in section 2 of the Act, that could not justify the inference that the State Government thereby lost its right to the minerals which vested in it as a property within its territory. The High Court has also erred in taking t he view that the State was required to obtain a licence or a lease even though it was itself the owner of the land and there was nothing in the Act or the Rules to show that the provisions for the obtaining of a licence or lease would still be applicable toS. Lai and Co. Ltd. v. Union of India and others (supra) the High Court noticed the decision in State of Orissa v. Union of India (supra) but it cannot be urged with any justification that the view expressed in it was followed by the Patna High Court. On the other hand the Patna High Court followed the view which was taken by the Gujarat High Court in the judgment which is the subject matter of the present appeals and held that the State Government has the power "to reserve certain areas for exploitation by itself. or by a statutory corporation or for a company in a public sector." The controversy in that case was. however, examined with reference to the provisions of article 298 of the Constitution. The two cases cited by Mr. Sen cannot thus be of any avail to the appellants.