State Of Kerala & Ors vs M/S Kerala Rare Earth & Minerals Limited ...

3. By an order dated 15th September, 2004 the Government of Kerala sanctioned the grant of mining leases for Ilmenite, Rutile, Leucoxene, Zircon and Sillimanite (non-scheduled mineral) for a period of 20 years. The order came in exercise of the powers vested in the State Government under Section 11(5) of the Mines and Minerals (Development and Regulation) Act, 1957 and was preceded by the approval of the Government of India in terms of Section 5(1) thereof. Shortly after the issue of the sanction order, however, the State Government by another order dated 25th September, 2004 stayed further action in the matter on the ground that a detailed study on the environmental impact of the proposed leases need be undertaken before taking any further steps. This was followed by nine letters dated 12th October, 2006, 16th October, 2006 and 9th November, 2006 addressed to the respondent-company stating in no uncertain terms that the Government of Kerala did not consider it necessary to grant mining leases for mineral sand to private parties. Aggrieved by the said letters and communications, the respondents filed nine revision applications No. 14(1)/2007-RC-II to 14(3)/2007-RC-II and 14(6)/2007-RC-II to 14(11)/2007-RC-II under Section 30 of the Act aforementioned before the Government of India. These revision applications were heard and allowed by the prescribed revisional authority by a common order dated 30th November, 2009, setting aside the impugned orders and remanding the matters to the State Government to reconsider the cases in the light of the observations made in the order passed by the revisional authority. The operative portion of the order passed by the revisional authority was in the following words:

4. Upon remand, the Government of Kerala once again examined the matter and by an order dated 15th December, 2010 rejected all the applications filed by the respondents on the ground that although, as per Entry 54 List- I (Union List), Schedule VII of the Constitution of India, the Parliament is competent to make laws for regulation of mines and mineral development to the extent such regulation and development is declared by the Parliament by law to be expedient in public interest, yet, the power of granting mining leases for mining minerals vested only in the State Government under Section 10 of the Act aforementioned. The Government referred to and relied upon its own industrial policy of 2007 according to which mining and exploitation of minerals were permissible only through State/Central Public Sector Undertakings in order to restrict indiscriminate mining and exploitations of minerals having regard in particular to the geographical and ecological conditions as well as the density of the population in the State of Kerala. The State Government took the view that it had the power and control over the minerals lying in the land within its territory and that it was entitled to safeguard the same in larger public interest by formulating suitable policies on the subject. Relying upon the decisions of the High Court of Kerala in Shibu v. Tahsildar [1993 (2) KLT 870] and Gem Granites v. State of Kerala and Ors. [2006 (2) KLT 899] the Government declared that as the owner of the minerals lying in the land within its territorial limits it was entitled to determine in public interest that mining and exploitation of minerals will be permitted only through State/Central Public Sector Undertakings. The State Government insisted that such a policy was not contrary to the Act nor did it suffer from any constitutional infirmity. It also relied upon the fact that minerals in question were categorised as Atomic Minerals as per Part-B of the First Schedule to the Act aforementioned. The Government declared that environmental protection being one of its constitutional mandates, any decision that may affect environment or sections of people living in the coastal areas or which may affect environmental conditions in those areas cannot be said to be in public interest.

7. Aggrieved by the order passed by the Single Judge, the State Government preferred Writ Appeals No.1610, 1611 and 1621 of 2014 which were heard and dismissed by a Division Bench of that Court in terms of the order impugned in the present appeals. The High Court, while doing so, held that the State Government was not justified in declining mining leases on the ground that it had been simply directed to reconsider the matter. The refusal of the Government, according to the High Court, amounted to institutional insubordination. The appeals were accordingly dismissed with the observation that the State Government’s role in issuing the sanction was minimal, as the subject matter of the law fell within the domain of Central Government. The present appeals by special leave question the correctness of the above order, as already noted above.

2. It is not necessary for me to narrate the facts, as the facts are referred to in the judgment of His Lordship Justice T.S. Thakur.

I have gone through the judgment prepared by His Lordship Justice T.S. Thakur, Hon’ble the Chief Justice of India. For the reasons, which I have indicated below, I am unable to agree with the reasonings and the final decision arrived at by His Lordship. In my view, the judgment passed by the Division Bench of the High Court of Kerala is liable to be set aside and these appeals are to be allowed.

Considering the rich mineral deposits in the State, a comprehensive scheme to produce Titanium Metal, Titanium composites by using state-of-the-art technology shall be evolved with the help of Central Government agencies and International organizations. If the potential of this natural resource is used properly and scientifically, it will immensely pave way for rapid industrialization of the State as Titanium is a unique material for strategic applications. The approach is not to limit the activities to manufacturing alone but to harness its vast potential by setting up a chain of Titanium based industries through forward integration. However, utmost care shall be taken to contain the adverse impact on environment by mining, processing and related activities by adopting strict monitoring and control measures. To develop a package for making use of the immense potential of titanium, support shall be availed from national and international organizations.”

However, where a central PSU (at present only the Indian Rare Earths Limited in this field) is one of the proposed partners in the joint venture, the matter would also be referred to the Department of Atomic Energy for prior consultation and concurrence.”

38. In the present case, Joint Secretary (Mines) and Joint Secretary and Legal Advisor have passed the order in the revision petition. By allowing revision petition, Central Government directed the State to reconsider the matter. As noticed earlier, National Policy on Exploitation of Beach Sand Minerals issued by the Department of Atomic Energy reserves liberty to the State for selection of Companies/Entrepreneurs for setting up of projects/plants for exploitation of beach sand minerals. Grant or refusal of mining lease and mining of minerals involves considerable high stakes both in terms of commercial value and the fact that such a decision will have impact on the concept of mineral development, it is for the State to exercise its discretion either to grant or refuse mining lease.

When it is sought to be invoked, the court must consider all aspects including the result sought to be achieved and the public good at large. The fundamental principle of equity must forever be present to the mind of the court. Absence of it must not hold the Government or the public authority to its promise, assurance or representation.”

43. In the result, the impugned common judgment of the High Court is set aside and these appeals are allowed. No order as to costs.

..……………………J. (R. BANUMATHI) New Delhi;

April 8, 2016 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION Civil Appeal NO.3608 of 2016 (Arising out of SLP(C) No(s). 1490 of 2015) STATE OF KERALA & ORS. Appellant(s) VERSUS M/S KERALA RARE EARTH & MINERALS LIMITED & ORS. Respondent(s) WITH Civil Appeal NO.3609 of 2016 (Arising out of SLP(C)No.1840 of 2015) AND Civil Appeal NO.3610 of 2016 (Arising out of SLP(C)No.1914 of 2015) O R D E R In view of the majority of opinion, these appeals fail and are hereby dismissed.

.....................CJI.