Case: M/S Kabaini Minerals Pvt. Ltd.  Vs. State Of Orissa

grant of lease beyond fifty hectares before commencement of production on confirmation received from the financing institution or the Deputy Director of Mines or the Mining Officer. (iii) a person who is a raiyat of the land;(iv) any other category;Provided that in the case of an applicant under category (iii) or (iv) the lease may be granted by the competent authority on being satisfied that the applicant shall be able to invest or arrange sufficient funds to carry on his quarrying activity in a proper, skilful and workmen- like manner.(7) No quarry lease/permit/auction for road metals including ballas and ordinary boulders shall be granted within the area for which a lease has been granted for quarrying rocks used for decorative, industrial and export purposes including dimension stones." 6. On a reading of the language of Rule 6 it is clear that three types of precedence/priority are embodied in the provision. First is a normal case where the application which has been received earlier is given precedence over the latter application. An exception is carved out in sub-rule (5-a) to the effect that if the State Government is of the opinion that in the interest of mineral department it is necessary to do so it may for reasons to be recorded in writing grant quarry lease in preference to the applications made earlier. Sub-rule (6) deals with another category of priority. In the present case Sub-rule (6) does not have much relevance. Sub-rule (6-a) carves out a category of applicants who have applied for minor minerals of the enumerated categories i.e. all types of rocks used for decorative, industrial or export purpose including dimension stones. The present case relates to priority as provided in the said Sub-rule. It provides for priority to a person who has already set up an industry for processing of such minor minerals. From the documents placed on record more particularly the letter of the Corporation dated 23.5.2003 it is clear that M/s Valley Granites (P) Ltd. was operating a running unit. The letter in clear terms states that possession of the unit was handed over to respondent No.4 and the unit is being run by the said Company. 7. Learned counsel for appellant No.1 submitted that in fact the unit taken over by respondent No.4 was not functional and it had applied for permanent registration certificate which was under process as is evident from the letter of the District Industrial Centre, Mayurbhanj. 8. The question really is whether the unit had been set up and not whether it was running. Undisputedly, prior to its take over by respondent No.4 the industry had been set up and used for processing of decorative stones. Though, it was contended by learned counsel for appellants that by the time the applications were made the respondent No.4 had not taken over the unit yet that really is of consequence. 9. Appellant No.1 had also not set up an industry. It had merely entered into an agreement for purchasing the land and placed orders for the machineries. The expression set up has a definite connotation of its own. 10. The expression "setting up" means, as is defined in the Oxford English Dictionary, to place on foot or to establish, and is contradistinction to commence. The distinction is this that when a business is established and is ready to commence business, and then it can be said of that business that it is set up. But before it is ready to commence business it is not set up. (See Commissioner of Wealth Tax, Madras v. Ramaraju Surgical Cotton Mills Ltd. (1967 (1) SCR 761 ). 11. In the said case, it was further held that the word "set up" is equivalent to the word established but operations for establishment cannot be equated with the establishment of the unit itself of its setting up.12. The question of priority is to be adjudged only at the time of consideration of the applications. Undisputedly, respondent No.4 had taken over the unit on the date the applications were considered. Therefore, the stand of the appellants that at the time the applications were made by respondent No.4 it had not set up an industry is really without substance. As was observed by this Court in Indian Metals & Ferro Alloys Ltd. v. Union of India and Ors. (AIR 1991 SC 818 ), since the applicant had already set up an industry for processing minor minerals on the date of consideration of the application its claim for priority was to be judged on the basis of the factual position on the date of consideration of the applications. 13. It was submitted by learned counsel for the appellants that no reasons were indicated by the authorities as to why the respondent No.4 was to have priority over the appellants. Reference in this context is made to sub-rule (5-a) of Rule 6. 14. It is to be noted that in a case covered by sub-rule (5-a) the State Government has to objectively assess as to whether in the interest of mineral development preference is given to a person though he made the application later. In such a case the Governments opinion that in the interest of mineral development it is necessary to do so obviously has an objective angle involved and, therefore, there is necessity to record reasons. So far as Sub-rule (6-a) is concerned, there is no requirement indicated to record reasons. The fact that priority is given to a person who has already set up an industry is itself the reason for giving priority. Therefore, the enumeration of the order of priority is itself the reason inbuilt in the process of consideration of the applications. That itself is the foundation and forms the rational for the priority given. It is not the case of the appellant that the order of priority is irrational. That being so, stand of learned counsel for the appellants that reasons were not recorded and, therefore, the action is vitiated is really of no consequence.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]The present case relates to priority as provided in the said Sub-rule. It provides for priority to a person who has already set up an industry for processing of such minor minerals. From the documents placed on record more particularly the letter of the Corporation dated 23.5.2003 it is clear that M/s Valley Granites (P) Ltd. was operating a running unit. The letter in clear terms states that possession of the unit was handed over to respondent No.4 and the unit is being run by the said Company.Appellant No.1 had also not set up an industry. It had merely entered into an agreement for purchasing the land and placed orders for the machineries. The expression set up has a definite connotation of its own.In the said case, it was further held that the word "set up" is equivalent to the word established but operations for establishment cannot be equated with the establishment of the unit itself of its setting up.12. The question of priority is to be adjudged only at the time of consideration of the applications. Undisputedly, respondent No.4 had taken over the unit on the date the applications were considered. Therefore, the stand of the appellants that at the time the applications were made by respondent No.4 it had not set up an industry is really without substance. As was observed by this Court in Indian Metals & Ferro Alloys Ltd. v. Union of India and Ors. (AIR 1991 SC 818 ), since the applicant had already set up an industry for processing minor minerals on the date of consideration of the application its claim for priority was to be judged on the basis of the factual position on the date of consideration of the applications.It is to be noted that in a case covered by sub-rule (5-a) the State Government has to objectively assess as to whether in the interest of mineral development preference is given to a person though he made the application later. In such a case the Governments opinion that in the interest of mineral development it is necessary to do so obviously has an objective angle involved and, therefore, there is necessity to record reasons. So far as Sub-rule (6-a) is concerned, there is no requirement indicated to record reasons. The fact that priority is given to a person who has already set up an industry is itself the reason for giving priority. Therefore, the enumeration of the order of priority is itself the reason inbuilt in the process of consideration of the applications. That itself is the foundation and forms the rational for the priority given. It is not the case of the appellant that the order of priority is irrational. That being so, stand of learned counsel for the appellants that reasons were not recorded and, therefore, the action is vitiated is really of no. On a reading of the language of Rule 6 it is clear that three types of precedence/priority are embodied in the provision. First is a normal case where the application which has been received earlier is given precedence over the latter application. An exception is carved out in sub-rule (5-a) to the effect that if the State Government is of the opinion that in the interest of mineral department it is necessary to do so it may for reasons to be recorded in writing grant quarry lease in preference to the applications made earlier. Sub-rule (6) deals with another category of priority. In the present case Sub-rule (6) does not have much relevance. Sub-rule (6-a) carves out a category of applicants who have applied for minor minerals of the enumerated categories i.e. all types of rocks used for decorative, industrial or export purpose including dimension stones.The present case relates to priority as provided in the said Sub-rule. It provides for priority to a person who has already set up an industry for processing of such minor minerals. From the documents placed on record more particularly the letter of the Corporation dated 23.5.2003 it is clear that M/s Valley Granites (P) Ltd. was operating a running unit. The letter in clear terms states that possession of the unit was handed over to respondent No.4 and the unit is being run by the said Company.