Case: Industrial Development Corporation of Orissa Limited Vs. Union of India and Others

The appellants in these appeals are the Tata Iron and Steel Company, Limited, (hereinafter called "TISCO") and the Industrial Development Corporation of Orissa Limited (hereinafter called "IDCOL"). The principal respondents are the Union of India, the State of Orissa, M/s. Indian Charge Chrome Limited, (hereinafter called "ICCL"), Indian Metal &Ferro Alloys Limited (hereinafter called "IMFA"), M/s. Jindal Strips Limited, (hereinafter called "JSL"), Ferro Alloys Corporation Limited (hereinafter called "FACOR") and Ispat Alloys LimitedThe factual matrix of the case is as follows:The appellant, TISCO, is a limited company, one of whose primary objects has been to carry on business as a mining industry. It claims that it was the first to discover Chrome or e in the Sukinda Valley, Orissa, in the year 1949. It applied to the Raja of Sukinda for a prospecting licence and was granted the same in 1952. On October 22, 1952, it was granted a mining lease over an area of 1813 hectares for chromite for a period of 20 years. Subsequently, under the provisions of the Orissa Estates Abolition Act, 1952, on the rights of the Raja having vested in the State Government, the latter recognised the lease of TISCO for a period of 20 years with effect from January 12, 1953TISCO claims that over the years, it has spent more than Rs.180 crores for the development of the mine, including Rs.27 crores spent in setting up a beneficiation plant. It utilises the Chrome ore mined by it for the manu facture of Charge Chrome/Ferro Chrome refractories. It also supplies ore to forty Chrome ore based industries situated in different parts of the country.In the year 1957, Parliament enected the Mines &Minerals (Regulation &Development) Act, 1957, (hereinafter called "the Act"). Section 8 of the Act deals with the renewal of mining leases which are to be granted by the Central Government, Applications under this Section are to be made through the State Government which is to furnish all relevant information and material to the Central Government. On October 10, 1980, the Central Government issued a circular which laid down guidelines in this behalf. Under the provisions of the Mineral Conservation &Development Rules, 1988, framed under Section 18 of the Act, the Indian Bureau of Mines is also required to furnish relevant information to the Central GovernmentSince the lease was to expire on January 12, 1973 TISCO sought its renewal which was duly granted under Section 8(2) in respect of 1261.476 hectares for a period of 20 years i.e. till January 11, 1993, subject to the condition that it would set up a beneficiation plantOn October 3, 1991, more than a year prior t o the date of expiry of the lease, TISCO applied for a second renewal under Section 8 (3) of the Act for a further period of 20 years, On November 28, 1992, the State Government, acting on the basis of a favourable report dated March 31. 1992 submitted by the Director of Mines &Geology, Orissa Recommended to the Central government that the entire lease of TISCO be renewed for a period of 10 years under Section 8(3) of the Act. On April 27, 1993, the Indian Bureau of Mines, after analysing the mining plan submitted by TISCO, recommended to the Central Government that TISCOS lease be renewed in its entiretyOn June 3, 1993, the Central Government authorised the renewal of the lease over the entire area of 1261.476 hectares. However, before the formal lease could be executed, the Union Minister of State for Steel &Mines, acting on a complaint filed by Shri G.C. Munda, Member of Parliament, directed that the matter be kept in abeyance. On September 2 7, 1993, the said Union Minister wrote a letter to the Chief Minister of Orissa stating that the lease area of TISCO should be reduced by half and the balance should be distributed in an equitable manner taking into consideration the need of genuine consumers for captive consumption.On October 5, 1993, the Central Government superseded its earlier approval dated June 3, 1993, and renewed TISCOs lease over a reduced area of 651 hectares. On October 19, 1993, TISCO filed a writ petition in the High Court, being OJC No.7729/93, under Article 226 of the Constitution challenging the order dated October 5, 1993, inter alia on the ground that the scheme of equitable distribution on mining leases on the basis of need of an indus try is extrancous to the concept of mineral development, which alone is relevant under Section 8(3). of the Act. Meanwhile, FACOR, Ispat Alloys, JSL and Jindal Ferro Alloys Ltd. applied for mining leases of the area held by TISCO, but the State Government refused to entertain them as being premature under Rules 59 and 60 of the Mineral Concession Rules framed under the Act (hereinafter called "the Rules")While TISCOs writ petition was pending, ICCL and JSL filed writ petitions, being OJC No.5422/94 and OJC No.7054/94, challenging the renewal of TISCOs lease by the Central Government, both the order dated June 3, 1993 (which had authorised the renewal of the entire lease area of 1261 hectares) and the order dated October 5, 1993 (which subsequently reduced the authorisation to 651 hectares) were challengedBy its impugned order dated April 4, 1995 the High Court of Orissa struck down the renewal of TISCOs lease granted by the Central Government through its decisions dated June 3, 1993 and October 5, 1993. Thereafter, it directed the Central Government to reconsider TISCOs application for renewal of the lease in accordance with law; the Central Government was also directed to give a personal hearing to, and consider the applications of, the other parties before the CourtThe High Court of Orissa after hearing lengthy arguments of counsel appearing for different interests including the Central and the State Governments concluded in paragraph 57 of its judgment that two courses were open toit, namely, (i) to accept the submission of the counsel for the State Government that all the writ petitions should be dismissed and the parties may be asked to exhaust the alternative remedy of permitting the State Government to take a decision as authorised by the Central Government and if any party is aggrieved it may move the Central Government under the Act and the Rules, or (ii) the Court may dispose of the writ petitions giving certain specific directions in the shape of guidelines to the Governments as well as other authorities under the Act to consider in the light thereof if there is any necessity to renew the lease for the w hole or part of the area covered under the lease. The High Court took the second course, in that, it accepted the submission of counsel for the State Government that the Central Government should hear the matter de novo on TISCOs application for renewal of the lease after hearing all parties including ICCL and JSL. It set aside the orders dated June 3, 1993 and October 5, 1993, inter alia on the ground that the Central Government had not kept in view the recommendation made by the Rao Committee which was accepted by this Court in the case of Indian Metals &Ferro Alloys Ltd. v. Union of India, and directed the Central Government to hear the application for renewal of t he lease, keeping in view the report submitted by the Rao Committee and the decision of this Court in the aforesaid caseAfter the judgment of the High Court was delivered on April 4, 1995, a Committee was constituted by the Ministry of Mines, Governmentof India, under the Chairmanship of one Shri S.D. Sharma for rehearing and reconsidering the issue in regard to the renewal of mining lease to TISCO. The Committee submitted a report dated August 16, 1995, recommending renewal of the lease for a reduced area to TISCO. Acting on that report, on the very next day, August 17, 1995, the Central Government authorised the renewal of TISCOs lease over the reduced area of 406 hectares which, according to the Central Government, would meet TISCOs captive requirements and requested the State Government to issue orders for the same. At the same time, in exercise of powers conferred" by Rule 59(2) of the Rules, the Central Government relaxed the provisions ofe (1) with the objective of expediting the process of granting chromite ore and requested the State Government to grant mining leases to four other parties, namely, ICCL, JSL, IMFA and FACOR for the balance area of 855.476 hectares.SLP Nos.10838 /95, 11391/95 and 11392/95 seek to challenge the order dated April 4, 1995 of the Orissa High Court and SLP Nos.22710/95, 23131/95 and 23132/95 seek to challenge the Central Governments decision dated August 17, 1995, made pursuant to the High Courts order dated April 4, 1995. While the first four special leave petitions have been filed by TISCO, the last two have been filed by IDCOLBefore we proceed to deal with the arguments of counsel appearing for the different parties, we must de al with the impugned judgment of the Orissa High Court and the report of the Committee that was set up pursuant to its directions, in some detailIn its impugned judgment, the High Court has taken the view that Section 8(3) of the Act is applica ble to the dispute in the present case; it further held that this provision mandatorily requires the Central Government to give reasons as to why it was in the interest of mineral development to renew TISCOs lease The High Court took note of the decision of this Court in Indian Metals case where, faced with a dispute involving the grant of rights for the mining of chromite ore in the State of Orissa, this Court had appointed a Committee headed by the Secretary to the Government of India in the Ministry of Mines, Mr. B.K. Rao thereinafter called the Rao Committee") to consider the claims of the various parties. The Rao Committee submitted its report wherein it studied the issue of mining of chromite ore in the Sta te of Orissa at great length and gave its specific findings. This Court, in rendering its final decision in the Indian Metals case, relied on the Rao Committee report and also opined that the report was bound to be of use. to the Central Government as well as the State Government of Orissa in regard to their future policy in the matter of grant of chromite leases.The. High Court of Orissa was, therefore, of the view that in deciding to renew TISCOs lease, the Central Government should have considered the Rao Committee report as well as the decision of this Court in Indian Metals case and for its failure to do so, the High Court struck down the orders of the. Central gvernment renewing TISCOs lease. The High Court directed the Committee that was to be set up, to consider the issue keeping in mind the Rao Committee report, this Courts decision in Indian Metals case, the National Mineral Policy and all other factors relevant under the Act. Before the High Court, the learned counsel for TISCO put forth a preliminary objection; he argued that since the matter concerned the issue of renewal of TISCOs lease, the other parties before the High Court had no locus standi in view of the express bar in Rules 59 and 60 of the Rules . After considering these submissions, the High Court while directing the constitution of Committee to look into the matter, made following observations:The Committee which was appointed by th e Central Government pursuant to the directions of the High Court of Orissa, consisted of senior officers from the Ministry of Mines, the Indian Bureau of Mines and the Geological Survey of India. The Chairman of the Committee on Sukinda Valley C hromite Lease of Tata Iron &Steel Corporation Ltd. (hereinafter called "The Committee") was Shri S.D. Sharma, Joint Secretary, Ministry of Mines. The Committee was required to submit its report within two weeks. In view of the express d irections of the High Court, the Committee gave a personal hearing to the advocates appearing for TISCO, FACOR, ICCI, IMFA, JSL and Ispat Alloys and thereafter, submitted its report which extends to four hundred andIn its voluminous report, complete with elaborate annexures, the Committee has, dealt with many of the legal issues that have been canvassed before us and also with other technical considerations lnvolved in the mining of chrome ore in the Sukinda Valley. It would, therefore, be appropriate for us to examine the recommendations of the Committee and their basis for putting them forthIn its analysis of the submissions of the various parties before it, the Committee first dealt with the issue of the relevance of the Rao Committee and the decision of this Court in Indian Metals case to the present disputeThe learned counsel appearing for TISCO before the Committee attacked the Rao Report on several. grounds. H e pointed out that the High Court had required the Central Government only to consider the Rao Report and not necessarily to adopt its recommendations; he submitted that it would be open to the Committee to examine the correctness of the le gal and factual premises of the Rao Report. He contended that since TISCO was not a party before the Rao Committee, its report wag not binding for the purposes of considering TISCOs lease. He further urged that the Rao Report does not, in essence, uphold a principle of policy and was superseded in many respects by this Court in the Indian Metals case. He contended that the Rao Committee did not endorse the policy of distributing leases on the basis of the captive mining requirement of industries and, in the alternative, argued that even if the Rao Report were to do 80, such a policy was unsustainable under the scheme of the Act and the Rules and, at no point of time had the said principle been applied in determining the question of renewal of lease or in deciding on whom the right should be conferred.The Committee was of the firm opinion that the Central Government was required to take note of the Rao Report as it contains important findings, guidelines an d directions regarding the grant of chromite leases and supply of chromite ore to needy applicants in an equitable manner. The Committee took note of the fact that, in reaching its final decision, this Court, in the Indian Metals case relied upon the findings of the Rao Report. It also noted that the High Court of Orissa had studied the Rao Report and had required it to rely upon the findings therein. Finally, the Committee took note of the observations of this Court in para 42 of the judgem ent in the Indian Metal case:The committee rejected the contention of TISCO that the Rao Re port had provided incorrect information about TISCOs mining lease. The Committee relied upon the report of the Gopalachari Committee, which was constituted subsequent to the Rao Report to look into the issue of mining leases in the entire country, to refute TISCOs contentions in this regard. This being so, the Committee rejected the arguments put forth by TISCO to dilute the significance of the Rao Report for the consideration of the present disputeThereafter, the Committee analysed the National Mineral Policy, 1993 and the Industrial Policy of Orissa, 1992 to obtain an understanding of the concept of mineral development as envisaged by Section 8(3) of the Act. Learned counsel for TISCO submitted that the concept of captive mining was not really part of the National Mineral Policy and, though propagated by the Rao Report, this concept does not find support from the National Mineral Policy. The Committee came to the conclusion that the National Mineral Policy, having been factor in the decision making process of the Government and, both in the National Mineral Policy as well as the Industrial Policy of the State of Orissa, captive mining has been recognised as a funda mental guideline in determining the criteria for granting mining leases.On the issue of equitable distribution of resources, in view of the fact that TISCO held 55% of the total chromite resource of the country, the Committee was of the opinion that Article 39(b) and Article 14 of the Constitution must be taken into consideration for deciding the issue under Section 8(3) of the ActThereafter the Committee examined the requirements of Section 8(3) of the Act. The provision as it originally stood was amended in 1986 and again in 1994. The application for renewal of lease was filed by TISCO in the year 1991. On behalf of TISCO, a series of alternative arguments was put forth to support TISCOs claim that it was entitled to a second renewal of its lease. There was also an argument that the law as it stood after the 1994 amendment should apply to TISCOs case. However, the Committee took the view that the law applicable would be the law as it stood between 1986 and 1994. Interpreting Section 8(3) of the Act, the Committee was of the view that TISCO could not claim to have any legal right over the renewal of its lease for the second time and, if the Central Government was to renew it, it would have to record reasons why such a measure would be in the interest of mineral developmentMoving on to the issue of whether it was necessary to renew the mining lease of TISCO in the interest of mineral development, the Committee took note of the various arguments put forth by the learned counsel appearing for TISCO. The learned counsel submitted that TISCO had played a pioneering role in the development of chromite and other minerals in the area; had been doing scientific mining in a manner that ensured optimum recovery; had taken steps for environmental management; had complied with the provisions of all the relevant rules and regulations ; had made massive investment in the leasehold area including research and development efforts etc. and, are therefore entitled to the renewal of the entire area in the interest of mineral development. The learned counsel submitted technical reports to show that the technique of mining adopted by TISCO was in consonance with prescribed practices. He stressed on the fact that the Indian Bureau of Mines had sanctioned the mining plan of TISCO and its operations had also met with the requirements of the Gopalachari Commit tee, set up by the Government of India to review mining practices across the country. To appreciate the technical arguments put forth by TISCO and the other parties before it, the Committee undertook a vast examination of the technical details of the mining of chromite ore including discussions on mineable reserve, recoverable reserve and conditional reserves in the Sukinda Valley; the status ofl andl studies; the existing status of mining in the valley; infrastructural facilities; research and development expenditure relating to mining in the valley; the relative merits and underground mining; the prices of chromite ore, etc.After considering all these issues, the Committee made its recommendations. It prefaced the recommendations by stating that it was of the firm pinion that it would be necessary in the interest of mineral development to authorise the renewal of chromite lease to TISCOs under Section 8(3) of the Act strictly in terms of TISCOs requirement and keeping in view the requirements of needy manufacturing industries. The Committee was of the view that if renewai was granted to TISCO for the entire area when they would, in effect, be needing and using only a small fraction of the entire area, it could not be said that such a grant would be said serving the interest of mineral development or that of the national interest, particularly when there were other needy manufa cturers who had been facing serious problems for want of adequate. The Committee felt that it could not ignore the fact that the other parties had made huge capital investments in establishing their industries and did not have a dequate raw materials. The Committee approved the principle of allotting leases to different industries by taking into consideration their requirements for captive mining and for doing so, it relied upon the Rao Report, the Orissa Industrial Policy and the National Mineral Policy. It was, therefore, of the opinion that the best way of benefitting an establishedd industry with a large ore consumption was to provide ar status to the different industrial units. There upon, the Committee undertook an analysis of the competing interests of the other needy manufacturers. It took note of the observations of the High Court of Orissa that it was not the forum for distributing mining leases in favour of the other pa rties; however, in order to properly appreciate the issue, the Committee examined the need of the other parties as well as. their problems of obtaining raw materials. While forming an estimate of TISCOs requirement, the Committee reIied upon the docu ments submitted by TISCO as well as other relevant material. It noted the fact that in view of the scarcity of chromite ore, repeated recommendations have been made that underground mining must be planned and taken up for harnessing the available chromite ore. However, over the last four decades during which TISCO had held the lease, it had not relied upon the method of underground mining to the required level. The committee came to the conclusion that open cast mining, which was being primarily employed by TISCO, has an adverse effect upon the environment and the most effective way of tapping the ore was the method of underground mining. It was, therefore, of the view that TISCO should makeefforts to initiate underground mining on a large scale which would allow it to better exploit the ore within itsleaseholdarea. The learned counsel for TISCO had put forth a number of arguments expressing the difficulty of dividing or splitting itsleasehold area. The Committee took into account these submissions while assessing what it deemed should be the extent of TISCOs lease. In its view, which was formed after taking into account a host of technical factors, the appropriate area catering to TISCOs requirement would total 461 hectares. The Committee also, formed an estimate of requirements of the other parties appearing before it. In addition, it recommended the imposition of special conditions which could be kept in mind while granting renewals or fresh leases in future.

Court's reasoning:
From this, the High Court inferred that the subsequent renewal of lease as envisaged and contemplated under Section 8(3) refers to very rare circumstances which may require renewals to be made. The Court, therefore, held that the conditions which make for the rare cases and diverse circumstances have to be clearly and pointedly articulated, for which the recording of proper and detailed reasons was necessaryWe are of the view, however, that the issue can be decided without locking horn s with the controversy over the situations in which utterances in the legislature are relevant for statutory interpretation. To us, the language of Section 8(3) is quite clear in its import. Ordinarily, a lease is not to be granted beyond the time and the number of periods mentioned in clauses (1)and. If, however, the Central Government is of the view that to allow a lessees lease to be renewed further would be in the interest of mineral development, then, it is empowered to do so, provided there exist on record sound reasons for such an actionandthose reasons are recorded. Since such a measure has been incorporated in the legislative scheme as a safeguard against arbitrariness, the letterandspirit of the law must be adhered to in a strict manner.We have studied the orders of the Central Government dated June 3, 1993andOctober 5, 1993. The order dated June 3, 1993 is a statement which declares the grant of a second renewal to TISCO. It does not profess to give any reasons for such a decision, for that reason, falls foul of the requirement of Section 8(3), as has rightly been pointed out by the High Court. The order dated October 5, 1993 is more generous in terms of the reasons it offers; however, the High Court was of the view that, since it did not take into account the findings of the Rao Report, the decision of this court in the Indian Metals caseandthe National Mineral Policy, it could not have justified its decision as having been made after a proper analysis of the interest of mineral developmentWe are, therefore, of the view that the High Courtandthe Committee were justified in taking note of the findings of the Rao Report as well as the observations of this Court in the Indian Metals case in considering he issue of renewal of TISCOs leaseSince the Order dated October 5, 1993 did not make any reference to the Rao Report or the decision of this Court, we feel that the High Court was justified in striking it down for not having taken into account all t he factors relating to a proper appreciation of the concept of mineral developmentIt must also be noted that in its order dated August 17, 1995, the Central Government had, in exercise of powers conferred on it by Rule 59(2) relaxed the requirement of Rule 59(1) to enable the other parties to be granted leases. We are of the view that the High Court had taken the correct step in allowing the prospective applicants to put forth their points of view with reg rd to the renewal of TISCOs lease. As we have already pointed out, these issues involve considerably high stakes, both in terms of commercial valueandthe effect that such a decision will have on the concept of mineral developmentandthe consequent national interest. To that extent, those likely to be affectedandindeed, those who can legitimately have a stake in the proper formulation of such a vital policy, can be heard. No exception can be taken to the High Court treating them as proper partiesanddirecting the Committee to hear themWe, therefore, hold that both the High Courtandthe Committee were justified in hearing the prospective applicants while considering the issue of renewal of TISCOs leaseFor the foregoing reason, the Committee was the view that the concept of mineral development" under Section 8(3) of the Act requires the assessment of the captive mining requi rement of different industries as also the application of the principle of equitable distribution of mining leasesOn the issue of the application of the principle of equitable distribution, we are of the view that the Committee had, after having taken note of the prevailing situationandthe problems faced by needy manufacturers, taken the correct view in recommending its implementation.We are, therefore, of the view that the Committee had correctly interpreted the relevant material available for appreciating the concept of "mineral development"andadopting the stance that it encompassed the concept of captive mining as well as the principle of equitable distributionOn the issue of the application of the principle of equitable distribution, we are of the view that the Committee had, after having taken note of the prevailing situationandthe problems faced by needy manufacturers, taken the correct view in recommending its implementation.We are, therefore, of the view that the Committee had correctly interpreted the relevant material available for appreciating the concept of "mineral development"andadopting the stance that it encompassed the concept of captive mining as well as the principle of equitable distributionThe decision of the Committeeandthe consequent order of the Central Government have been assailed by the learned counsel for TISCO on a number or tech nical grounds. Many of these have already been dealt with by the Committee. At this juncture, we think it fit to make a few observations about our general approach to the entire case. This is a case of the type where legal issues a re intertwined with those involving determination of policyandplethora of technical issues. In such a situation, courts of law have to be very waryandmust exercise their jurisdiction with circumspection for they must not transgress into the realm of policy making, unless the policy is inconsistent with the constitutionandthe laws. In the present matter, in its impugned judgment, the High Court had directed the Central to set up a committee to analyses the entire gamut of issues thrown up by the present controversy. The Central Government had consequently constituted a committee comprising high level functionaries drawn from various Governmental/ institutional agencies who were equipped to deal with the en tire range oftechnicalandm consideration involved. This Committee, in reaching its decision, consulted a number of policy documentsandapproached the issue from a holistic perspective. We have sought to give our opinion on the legal issues that arises for out consideration. From the scheme of the Act it is clear that the Central Government is vested with discretion to determine the policy regarding the grant or renewal of leases. On matters affecting policyandthose that requiretechnicalexpertise, we have shown deference toandfollowed the recommendations of, the Committee which is more qualified to address these issues.We are, therefore, of the view that the Central Government was justified in issuing its order dated August 17, 1995For the foregoing reasons, we are of the view that the High Courtandthe Committee were justified in the view they took. Consequently the appeals filed by TISCOdismissed. IDCOL has filed the appeals on much the same grounds as TISCO while additionally claiming that the Committee should have heard its claim too while hearing the other parties.