Case: M/S GEOMYSORE SERVICES(I) PVT. LTD.&amp;ANR Vs. M/S HUTTI GOLDMINES CO. LTD.

THE FACTUAL BACKGROUND2. This case has a long and chequered history. There are gold mines in the State of Karnataka and parties are litigating in respect of their rights to exploit those mines. We have two appellants before us, M/s. Geomysore Services (India) Pvt. Ltd., Appellant No.1 (hereinafter referred toOn 01.04.2000 Geomysore applied for grant of Reconnaissance Permit (for shortfor 315 sq. kms. of land in Hutti South Belt Gold Mines area. After approval by the Central Government, the State Government granted RPfor a period of 3 years. Similarly, Deccan was granted RP in Northern part of Hutti Gold Mines for an area measuring 501.48 sq. kms. for a period of 3 yearsafter completing all formalities. The respondent no. 1 i.e. M/s Hutti Gold Mines Co. Ltd. (hereinafter referred todid not file any application for grant of RP for either of the two areas.4. Geomysore conducted the reconnaissance and submitted a consolidated report on 30.11.2003. Deccan submitted its consolidated report on 21.04.2006. Both the Companies found evidence to suggest the existence of gold deposits and need to carry out further prospecting in certain areas. On the basis of the results of the reconnaissance, Geomysore filed 4 applications for grant of Prospecting Licence (for shortunder Section 11(1) of the Act. Deccan filed 7 applications for grant of PL with regard to the area where it had conducted reconnaissance.5. On 28.11.2006, HGML sent a letter to the Commissioner, Geological Resources Development and Director, Department of Mines and Geology, Bangalore praying for reservation of area for the purpose of conservation exclusively for public sector undertakings under Section 17A(2) of the Act. It was stated that HGML was keen to continue prospecting investigations in the area in question. It was submitted that grant of Mining Lease (for shortto different organizations would create severe problems including safety hazards and as such it was prayed that the entire area, including the area for which RP had been granted to Geomysore and Deccan, be reserved under Section 17A(2) of the Act. It appears that Geomysore came to know about this proposal and it sent a letter on 28.11.2006 itself to the Government of India and opposed the contemplated action of the State of Karnataka to forward a proposal to the Ministry of Mines for reservation of the mining area.6. In the meantime, two other developments took place. The Ministry of Mines published the National Mineral Policy, 2008 (for short ‘the NMPand the Government of Karnataka released the Karnataka Mineral Policy, 2008 (for short ‘the KMP, 2008) in consonance with NMP, 2008 to which we shall advert later.7. On 27.12.2008, the Government of Karnataka wrote to Government of India for reservation of area in favour of HGML and recommended that 161 sq. kms. of land be allocated to HGML for mining. This covered the areas for which RPs had been granted to Geomysore and Deccan and, therefore, Geomysore and Deccan filed revision petitions before the Central Government. The main challenge to the decision of the State Government was that the appellants were entitled to preference while considering their application for grant of PL and also their PL applications have been filed earlier in time. It was also urged that in terms of the NMP, 2008 and the KMP, 2008 reservation could not be made. The Central Government allowed the revision petitions and directed the State of Karnataka to consider the PL applications filed by Geomysore as well as Deccan.8. Thereafter, HGML filed a writ petition in the Karnataka High Court. The High Court held that the reservation of the area had not yet taken place and since the Central Government was still to take a decision on the request of the State Government, it was not necessary to determine whether the preferential right claimed by Geomysore and Deccan under Section 11 of the Act could defeat the right of the State Government to seek reservation of the area under Section 17A(2) of the Act. The High Court, after considering the judgment of this Court in the case of Indian Charge Chrome Ltd. & Anr. v. Union of India & Ors.10. Having held so, theCourt has further held that the power under Section 17A(2) is the statutory power and normally there could be no estoppel against the exercise of statutory power and upheld the recommendation of the State Government seeking for approval of the Central Government. It is clear that, in the instant case, the undisputed fact is that the contesting respondents in any event have not been granted the prospecting licence or mining lease and as such the area in question is not the one which is already held under a prospecting licence or mining lease. Therefore, if the above decision is kept in view, the State Government was well within its powers to seek approval of the Central Government to reserve the area in question. In any event, the Central Government before granting its approval would have to consider all these aspects of the matter and any such consideration by the Central Government could not have been stifled by the contesting respondents in the form of revision application and the revision authority was also not justified in interfering. The preferential right claimed by the contesting respondents cannot be accepted at this stage and a direction could not have been issued to consider the applications of the contesting respondents by setting aside the communication dated 27.12.2008. The appropriate procedure would be to allow the Central Government to take a decision on the approval sought by the State Government by its communication dated 27.12.2008. Thereafter, the consideration or otherwise of the applications for prospecting licence by any other person including the contesting respondents would arise depending on theresult of such consideration by the Central Government. If for any reason, the Central Government does not accede to the proposal of the State Government and in such situation if the applications remain open for consideration, then and only then the question of preferential right would arise for consideration.Consequently, the orders passed by the Central Government were set aside and the matter was remanded to the Central Government to take decision on the recommendation made by the State Government with a direction to dispose of the same in accordance with law. The Central Government examined the matter and rejected the proposal of the State Government for reservation of land under Section 17A(2) of the Act for Government undertakings. The order notes that Geomysore and Deccan had already filed PL applications after completing reconnaissance pursuant to the RPs granted to them. Instead of dealing with the PL applications of Geomysore and Deccan, the State Government suddenly decided to make a request to the Central Government to reserve the land. The Central Government held that the action of the State Government is against the stated purpose of Para 3.3 of the NMP, 2008 which provides that there should a regulatory environment conducive to private investment; that the procedure for grant of concession should be transparent and seamless transition shall be guaranteed to the concessionaires; that the action of the State Government was not transparent or fair; that land could only be reserved where private players are not holding the land or have not applied for exploration or mining unless security considerations or specific public interests are involved; that since Geomysore and Deccan had completed their RPs and applied for seamless transition to PL, the proposal of the State Government to reserve the land in favour of HGML was neither in public interest nor in terms of the NMP, 2008 and, therefore, proposal of the State Government to reserve land was rejected and again a direction was issued that the request of Geomysore and Deccan for grant of PL be considered expeditiously.10. HGML then filed another writ petition challenging the order of the Central Government dated 31.05.2011. Geomysore and Deccan filed a joint reply in the writ petition and the High Court allowed the writ petition vide the impugned judgment, which is under challenge before us.

Court's reasoning:
39. On a careful perusal of the judgments aforesaid, it would be more than apparent that this Court has consistently held that the State is the owner of the land and minerals. However, the control and regulation of mines and development of minerals are in the domain of the Union Government. The State Government is denuded of its legislative power to make any law in respect of regulation of mines and mineral development in so far as that field is covered by the provisions of the Act. It is only if the field is vacant that the State can exercise its legislative powers. Otherwise, it has to exercise its power strictly in accordance with the powers specifically conferred on the State Government by the Act and the Rules. It is also a well settled position of law that while exercising the powers of reservation vested in Section 17A(2) of the Act, the State Government has to take approval of the Central Government. In this case, we are not required to deal with the question of prior approval as there is no approval and, in fact, the request of the State has been rejected by the Central Government.40. In the light of what has been said in the aforesaid judgments, we have examined the facts of the instant case. The State Government made a request to the Central Government for reservation. In the first round of litigation, the High Court directed the Central Government to first consider the request before considering the applications of Geomysore and Deccan. The Central Government rejected the proposal of the State Government on various grounds including the grounds enumerated earlier, which flow from the NMP, 2008. Arguments have been addressed to suggest that the Central Government can only take into consideration issues of national interest and security and cannot look into the other aspects. We are not in agreement with this submission. Section 17A(2) of the Act clearly provides that the State Government can reserve any area for undertaking prospecting or mining operations through a Government company or corporation with the approval of the Central Government. The Act does not lay down the parameters which the Central Government is required to follow. In our view, the Central Government can take all factors which are relevant for the purpose of deciding whether reservation should be made or not. The NMP, 2008 being a policy of the country, can definitely be taken into consideration while considering such a request.41. We may note that the policy of the Government can sometimes be binding on the Government if the principles of promissory estoppel or legitimate expectation come into play. We may make it clear that in this case neither the principle of promissory estoppel nor the principle of legitimate expectation is attracted. We are only making reference to these principles to emphasize that a policy of a Government is an important document. It cannot be brushed aside. The Central Government, while considering the request of the State Government, can take into consideration various factors which may include economic factors, the factors reflecting the image of the country internationally to the global world community and also other factors of national securityThese are just illustrative and each case has to be decided on its own facts. Therefore, we are not in agreement with the Karnataka High Court that only those factors can be taken into consideration, which flow from the Act or the Rules.42. Another important aspect of the matter is that under Section 11(1) of the Act, an RP holder, who has carried out reconnaissance, is entitled for preference when his case is being considered for grant of PL. However, in Section 17A(2) of the Act, the bar to reservation is only in those cases where the land is held under a PL or ML. When any land is held under PL or ML, then the said land cannot even be considered for reservation. If the land sought to be reserved is not under PL or ML, then the State can make a proposal to reserve the land. If the land sought to be reserved is covered by an RP there is no bar to reserve the land for exploitation by State Government undertakings. This, however, does not mean that while dealing with the proposal of the State, the Central Government must make the reservation. The Central Government while granting approval, has to independently apply its mind and while doing so, there is nothing which debars the Central Government from taking into consideration the fact that some entity was granted RP and the effect thereof. No doubt, the Central Government cannot reject the proposal only on the ground that RP was issued since that would run counter to the provisions of Section 17A(2) of the Act. However, this is a fact which along with other facts can be taken into consideration while deciding the issue of reservation of land.43. As far as the present case is concerned, the Central Government took into consideration various factors and notes that PL applications had already been filed by Geomysore and Deccan pursuant to RPs. It virtually held that the request of the State Government was at a belated stage and was against the provisions of the NMP, 2008, the emphasis in which was to provide a regulatory environment which is conducive to private investment. It may be true that the Central Government was influenced by the fact that Geomysore and Deccan, pursuant to the RPs, had completed the reconnaissance and submitted their consolidated reports, but there were other relevant factors also which were taken into consideration such as that Geomysore and Deccan had already applied for grant of PL and no security consideration or public interest was involved in making reservation for HGML. In our view, the factors taken into consideration by the Central Government are relevant and germane to the issues and cannot be said to be such factors which are extraneous or could not have been taken into consideration.44. We may also add that as far as the present case is concerned, when on 27.12.2008, the Government of Karnataka recommended that 161 sq. kms. land be allotted to HGML, no reservation had taken place because approval of the Central Government had not come. In fact, the State of Karnataka had not even notified the area, which was sought to be reserved nor it identified the minerals for which reservation was sought.45. Section 17A(2) of the Act envisages following four conditions:(a) The land is not held under prospecting licence or mining lease;(b) there is approval by the Central Government;(c) a notification is issued in the Official Gazette specifying the boundaries of such area; and(d) such notification should identify the mineral or minerals in respect of which such areas are sought to be reserved.Only the first condition was fulfilled. None of the other conditions were satisfied. Therefore, the State of Karnataka could not have issued recommendation in favour of HGML on 27.12.2008. The cart could not have been put before the horse. Unless reservation takes place, a private company stands on the same footing as a Government company and in that eventuality, Section 11 of the Act would be applicable and Geomysore and Deccan being the RP holders and also being earlier PL applicants, had to be given preference.In view of the above discussion, our answers to the four questions are as follows:(i) The State Government being the owner of the land and minerals, has a right to make a proposal to the Central Government to reserve lands not held under a prospecting licence or mining lease for exploitation by the State Government companies or undertakings but approval of the Central Government is necessary;(ii) The Central Government cannot be bound by any specific parameters. Each case has to be decided on its own merits. However, as indicated by us above, the Central Government can not only take into consideration factors of national security or public interest but also economic factors, the policy of the Government and all such other factors which are relevant to decide the issue whether the land should be reserved for exploitation only by State Government Undertakings;(iii) Section 11(1) and Section 17A(2) of the Act have no connection with each other. Section 11(1) of the Act deals with preference to be given to RP holder and PL holder while considering their case for grant of PL and ML respectively. This has nothing to do with reservation of land under Section 17A(2) of the Act. The only connection, if it can be called that, is that if a land is held under a PL or ML, then action under Section 17A(2) of the Act cannot even be initiated;(iv) In view of the discussion held above, we feel that the Central Government was justified in rejecting the request of the State of Karnataka in reserving the land in question.In view of the above discussion, we are clearly of the view that the Karnataka High Court erred in allowing the writ petition.