Case: M/S. Pallava Granite Industries(I)P.Ltd Vs. Union Of India

3. For the sake of clarity we reproduce herein the facts in the case concerning M/s. Rita Industrial Corporation Ltd. Appellant in C.A. Nos. of 2006 @ S.L.P. (C)8 of 2005, they are as follows:An area admeasuring Acs. 86.50 in Survey no.55/5 of Village, Cheemakurthy Mandal, Prakasam District, Andhra Pradesh, being agricultural lands vested as surplus lands under Section 11 of the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973 (for short, the 1973 Act) in the State Government. These lands were surrendered by the land holders under the said 1973 Act to the State Government. Later on, it was realised that these lands had galaxy granites and, therefore, proposals were made by the Collector, District Prakasam, the Commissioner of Land Reforms and the Director of Mines and Geology to lease out the said area for mining purposes. By G.O.No.1290 dated 27.8.91, the State Government accepted the above proposals and decided to appropriate by leasing out the lands for mining under Section 14 (6) of the 1973 Act; that out of the total area of the surrendered lands admeasuring Acs. 86.50, an area admeasuring Acs. 60 be leased out to the four appellants, namely, M/s. Rita Industrial Corporation Ltd., M/s. Upendra Granites, M/s. Acropolis Granites Ltd. and M/s. Pallava Granite Industries Ltd. and that each of the appellant was to be given Ac.15 for mining purposes. Under the said G.O.No.1290, the State Government stated that Acs. 15 each be leased out to the above four firms on the terms and conditions in G.O.No.876 dated 3.6.89 subject to the modification that the lease shall be for 10 years and the lessees shall pay Rs.600/per acre, per annum for the first five years and Rs.900/per acre, per annum for the remaining five years. By the said G.O. the Collector, District Prakasam, was requested to take further action by making proper allotment of land keeping in view the principle of contiguity3. The said G.O.No.1290 was challenged in a PIL. When the notice of the PIL was received by the State Government, G.O.No.1361 dated 11.9.91 came to be issued by which the earlier G.O.No.1290, stood cancelled. This cancellation was challenged by M/s. Rita Industrial Corporation Ltd. vide Writ Petition No.12386 of 1991 in the High Court4. By judgment and order dated 18.10.96, the learned Single Judge of the High Court held that the cancellation of G.O.No.1290 was ab initio void for want of hearing and reasons in support of the cancellation. By the said judgment of the learned Single Judge, the District Collector was directed to execute the surface lease in favour of M/s. Rita Industrial Corporation Ltd. in terms of G.O.No.1290. By the said judgment the Director of Mines and Geology was also asked to dispose of the application made by M/s. Rita Industrial Corporation Ltd. for mining lease in accordance with law5. Being aggrieved by the judgment, the State Government preferred Writ Appeal No.672 of 1997. Pending the said writ appeal, the Collector, District Prakasam, wrote to the Director of Mines and Geology stating that in view of the judgment dated 18.10.96 he had no objection to the grant of mining lease to the extent of Acs.15 in terms of G.O.No.1290. Similarly, by letter dated 18.2.97 addressed by Deputy Director of Mines and Geology to Director of Mines and Geology, a request was made to consider the mining lease application filed by M/s. Rita Industrial Corporation Ltd. in terms of the judgment of the learned single judge dated 18.10.96. In the said letter, the Dy. Director has stated that since the Collector, District Prakasam, had allotted the land lease to M/s. Rita Industrial Corporation Ltd. there could be no objection to grant quarry lease over an extent of Acs.15 in Survey no.55/5. Along with the said letter dated 18.2.97 an inspection report was enclosed. This inspection report was prepared by Dy. Director of Mines and Geology. In the said inspection report it was stated that in terms of the judgment of the learned Single Judge dated 18.10.96 the Collector had handed over the lands to M/s. Rita Industrial Corporation Ltd.; that the Collector had agreed to grant the land lease and, therefore, till the judgment dated 18.10.96 remains in force, M/s. Rita Industrial Corporation Ltd. had a right to obtain a mining lease. Accordingly, the Dy. Director requested the Director of Mines and Geology to take a decision on the quarry application of M/s. Rita Industrial Corporation Ltd. at the earliest. A survey report was also annexed with the letter dated 18.2.97 in which it was recited that the Dist. Collector had given N.O.C. for the grant of quarry lease and, therefore, the application made by M/s. Rita Industrial Corporation Ltd. for grant of quarry lease may be disposed at the earliest6. By judgment and order dated 27.6.97, the Division Bench disposed of thed Writ Appeal No.672 of 1997 stating that there was no infirmity in the judgment of the learned Single Judge dated 18.10.96; that, there was violation of the rules of natural justice inasmuch as the decision to cancel G.O.No.1290 was taken without hearing and without giving reasons and was therefore void and accordingly the writ appeal was dismissed. However, it was made clear by the Division Bench that its judgment and order dated 27.6.97 will not prevent the Government from taking steps to cancel G.O.1290, if such right exists in the Government, in accordance with law7. Accordingly, a show cause notice was issued by the State Government on 21.2.98 to the appellants. That show cause notice was challenged vide Writ Petition No.6098 of 1998. Pending the said writ petition, the State Government issued G.O.Nos.267 and 268 on 27/29.9.97 under Rule) of the Andhra Pradesh Minor Mineral Concession Rules, 1966 (for short, the 1966 Rules). Under the said G.Os. The State Government, after examination of the report of the Director of Mines and Geology, ordered that an area admeasuring Acs.61.50 in Survey no.55/5 shall be reserved for exploitation by Andhra Pradesh Mineral Development Corporation Limited which is ad Corporation (for short, APMDC), in public interest8. These G.O.Nos.267 and 268, however, were issued without prior approval of the Central Government under Section 17A(2) of the Mines and Minerals (Regulation and Development) Act, 1957 (for short, the 1957 Act). These G.O.Nos.267 and 268 were challenged by filing writ petitions mainly on the ground that they were invalid as prior approval of the Central Government was not obtained. These writ petitions were filed in October 1997. On 24.10.97 pending the writ petitions the State Government sought approval of the Central Government stating that APMDC is ad company, set up to acquire mining rights from the Government; that the Corporation is a profit making organisation; that the Corporation is equipped with expertise and machinery to undertake mining in a scientific manner; that the State Government had identified Acs.61.50 in Survey no.55/5 for exploitation of galaxy granite and accordingly the Central Government was asked to grant its approval under Section 17A(2) of the 1957 Act. By letter dated 23.7.99, the Central Government enquired from the State Government whether there existed any order of injunction from the competent court in the pending writ petitions. Ultimately, the Central Government vide letter dated 29.10.99 gave its approval for reservation of Acs.61.50 of granite bearing area in Survey no.55/5 out of the total area of Acs.86.50 subject to two conditions, namely, that the reservation shall not be applicable to areas held under mining or quarry lease; and secondly, that the approval granted shall be subject to the outcome of pending court cases9. In terms of the said approval the State Government on 14.2.2002 issued G.O.No.72 (later on published in the Official Gazette of A.P. as Notification No.88 dated 26.2.97). By the said G.O.No.72 an area admeasuring Acs.61.50 was declared as granite bearing area. In the said G.O.No.72 there is a reference to the approval granted by the Government of India. The said G.O. further stated that it was issued without prejudice to G.O.Nos.267 and 268 dated 27/29.9.9710. The above G.O.No.72 dated 14.2.97 became ther of the second round of litigation which has given rise to these civil appeals11. In the second round of litigation appellants sought the declaration that G.O.Nos.267 and 268 were illegal and void; that the show cause notice dated 21.2.98 issued by the State Government should be quashed; that the grant of approval dated 29.10.99 by the Central Government was illegal, void and unenforceable; and lastly that the cancellation and revocation of mining lease applications, was arbitrary and bad in law12. By judgment and order dated 28.3.2002, the learned Single Judge set aside G.O.Nos.267 and 268 on the ground that prior approval of the Central Government was not obtained. Accordingly, the show cause notice dated 21.2.98 was also set aside. The Court further held that the State Government did not disclose to the Central Government the fact that the appellants were holding leases which were ther of the pending writ petitions in the High Court and consequently the State Government had violated the above two conditions imposed by the Central Government in its approval dated 29.10.99. Consequently, the learned Single Judge held that the orders cancelling the land leases and the decision to reject the applications for grant of mining leases, was illegal and accordingly set aside the decision of the State Government rejecting the applications made for grant of mining leases. By the said decision the State Government was directed to consider the mining lease applications afresh and dispose of the same in accordance with law13. Being aggrieved by the decision of the learned Single Judge, the State Government went in writ appeal to the Division Bench. By impugned judgment dated 24.3.2004, the Division Bench after reciting the above facts and after taking into account the arguments advanced before it held that it was totally unnecessary to examine the validity of G.O.Nos.267 and 268 respectively since vide subsequent decision dated 29.10.99 the Central Government had granted approval for reserving an area admeasuring Acs.61.50 as granite bearing area. Since the Central Government had granted approval the subsequent G.O.No.72 dated 14.2.2002 cannot be faulted. By the aforestated judgment the Division Bench took the view that G.O.No.72 dated 14.2.2002 was issued after obtaining prior approval from the Central Government and, therefore, the said G.O. did not suffer from any legal or constitutional infirmities. The Division Bench further held that the decision to cancel G.O.No.1290 was valid; that the reservation of an area admeasuring Acs.61.50 was in public interest and that there were no mala fides in cancelling G.O.No.1290 as alleged by the appellants14. Aggrieved by impugned judgment dated 24.3.2004 allowing the writ appeals filed by the State Government, the appellants have come to this Court by way of special leave to appeal.

Reasoning:
34. At the outset, we are of the view that G.O.No.1290 is not in the nature of the grant as alleged. In this connection we may recapitulate that the 1973 Act stood enacted to consolidate and amend the law relating to the fixation of ceiling on agricultural holdings and taking over the surplus lands. The land in question fell in the category of surplus lands. These surplus lands in Survey no.55/5 stood vested in the Government under the 1973 Act. These surplus lands were frozen under Prohibitory Order Book (POB). Subsequently it was detected that these lands contained galaxy granite. It was an important asset for the government. This aspect needed exploitation. Therefore, a proposal was made by the various authorities referred to above to release these lands from POB and to allow these lands to be exploited by private parties so that the State could earn revenue. Under the said 1973 Act these lands were meant for the benefit of the weaker sections. Therefore, they were kept under POB. However, in order to earn larger revenues the Government accepted the proposal to exploit thed granite. This is done through G.O.No.1290. This was the primary purpose of the said G.O. Conferment of rights on the appellants was not the main purpose of the said G.O. In fact, as stated above, the said G.O.No.1290 was issued on 27.8.91 and within one month it was withdrawn on 18.10.91. As stated above, when the said G.O. was issued on 27.8.91 a public interest litigation, Writ Petition No.2356 of 1991, was filed in the High Court. On receipt of notices from the High Court in the said PIL the said G.O. was withdrawn39. As stated above, G.O.No.1290 was a decision to grant a mining lease in favour of the appellants. Even assuming for the sake of the argument that G.O.No.1290 constituted a grant by itself still, as held in the above decisions, such a grant cannot fetter or hamper future executive action/decision to revoke the grant in public interest. In the present case, the State Government detected an important source of revenue in the form of granite reserves. It is true that at one point of time the State Government decided to exploit the granite through private parties. However, later on with globalization, the State Government decided to go for global tender. This course of action was open to the State Government. The State Government decided to exploit the granite through its agency, namely, APMDC. The object was to earn commercial profits and revenue. APMDC was given liberty either to excavate the granite on its own or through joint ventures. The land belongs to the State Government. The granite belongs to the State Government. Therefore, a mere decision in G.O.No.1290 to grant mining leases to the appellants cannot hamper or fetter the power of the Government to exploit the resources through its own agency. In the circumstances, we do not find any mala fides in the decision of the Government reserving the area admeasuring Acs.61.50 for exploitation by APMDC, either on its own or through its joint ventures/partners40. It has been vehemently urged before us on behalf of the appellants that the approval dated 29.10.99 contained in G.O.No.72 is invalid since Section 17A(2) of the 1957 Act does not contemplate conditional approval. In this connection, the following facts are required to be noted. The Central Government granted approval for reservation of an area admeasuring Acs.61.50 subject to two caveats, namely, that the reservation shall not be applicable in case of areas already held under any mining lease or quarry lease and that the approval was subject to the outcome of pending cases. It was submitted on behalf of the appellants that such conditional approval did not permit mining operations to be carried out by the State Government Corporation till the pending cases were decided and, therefore, if APMDC is allowed to exploit during the pendency of the cases then the conditional approval would have the effect of defeating the claims for mining leases in respect of the very area pending adjudication. We do not find any merit in these arguments. As stated above APMDC was entitled to enter into joint venture agreements with private partners. The alleged condition attached to the approval dated 29.10.99 was not to annul the transaction but only to render it subservient to the rights of the parties to the litigation. If the appellants were to succeed in the pending litigation they had the monetary claim against the joint venture. Therefore, in order to put the third parties to notice the above condition was incorporated. Such a condition did not make the approval a conditional approval and, therefore, it is not hit by Section 17A(2) of the 1957 Act41. We also do not find any merit in the contention of the appellant that the approval dated 29.10.99 granted by the Central Government stood vitiated on account ofn of mind. In the approval granted by the Central Government dated 29.10.99 ther referred to four communications, namely, letter dated 24.10.97, letter dated 13.2.98, letter dated 5.11.98 and letter dated 23.12.98. These letters were addressed by the State Government. The initial proposal of the State Government was to reserve an area admeasuring Acs.61.50 only in Survey no.55/5 for exploitation by APMDC. However, later on in the last letter dated 23.12.98 the State Government proposed reservation for a larger area covering the entire granite bearing area to be exploited by the APMDC. It is equally true that while granting approval dated 29.10.99 the Central Government did not refer to the last proposal dated 23.12.98 and as a result gave its approval for reserving Acs.61.50 only. On that basis it is urged on behalf of the appellants that the Central Government had never applied its mind to the later proposal of the State Government and consequently even the approval granted for reserving a limited area of Acs.61.50 stood vitiated on account ofn of mind. As stated above, the property belongs to the State Government. The mineral vests in the State Government. The State has decided to earn more revenue by inviting global tenders. The State has obtained the prior approval of the Central Government. The Central Government has restricted its approval to an area admeasuring Acs.61.50. In the circumstances, we do not find any illegality in the State Governments order of reserving the area admeasuring Acs.61.50 for mining operations through APMDC or through private/public sector enterprises. We reiterate that the rights, if any, under G.O.No.1290 were inchoate rights. These rights never stood crystallized. No mining lease was ever granted by the State Government to the appellants. In the circumstances, there was no bar in reserving an area admeasuring Acs.61.50 for exploitation of galaxy granite through State public sector undertaking42. Before concluding one aspect needs to be mentioned. During the pendency of these civil appeals, the State Government permitted exchange of areas between APMDC and M/s. Victorian Granite Pvt. Ltd. vide Memo dated 14.3.2006. This event took place during the pendency of the special leave petition. The question as to whether such an exchange required approval of the Central Government and whether such exchange was in the interest of the State exchequer, cannot be decided by us in the present proceedings. It is a distinct and separate cause of action. We do not wish to express any opinion on the validity of the said exchange as well as on the merits of the said exchange. It is for the Central Government to examine the validity of the said exchange. In any event, it is a subsequent cause of action. Hence, we express no opinion on the validity of the said exchange.