Case: Bhagat Raja Vs. The Union Of India &amp; Ors

In response to a notification dated January 8, 1964 published in the State Gazette by the Andhra Pradesh government inviting applications under R 58 of the rules framed under the Mines and Minerals (Regulation and Development) Act 1957 (hereinafter referred to as the Rules and the Act) the appellant submitted two applications in the prescribed form viz., form "I" for areas aggregating The, Ac. 113 . 50 in village Brahmanapall and Ac. 13. l0 in village Ippatta both . in the district of Cuddapah for mining asbestos. Respondent No. 3 also made similar applications on the same date. According, to the appellant his applications complied with all the requirements of form "I" while those of respondent No.3 were defective in some respects. Besides the appellant and the respondent NO. 3, there was only one other person who applied for a prospecting licence which was rejected `off hand. As between the appellant and the respondent No. 3, the Government of Andhra Pradesh preferred the latter. The relevant portion of the order dated 19th October 1964 in respect of the village Brahmanapa1li under S. 10 (3) of the Act was as follows:"As between the other applicants Sri Bhagat Raja and M/s. Tiffins Barytes, Abestos and Paints Ltd.. the Government prefer for M/s. Tiffins Barytes, as they are having adequate general experience and technical Knowledge, and are old lessees in the district, without any arrears of mineral dues to the Government. The mining lease application of Sri Bhagat Raja for the areas covered by the mining lease application of M/s. Tiffins Barytes, Asbestos and Paints Ltd. is rejected."The text of the order with regard to village Ippatta is practically the same3. The appellant filed application in revision in the prescribed form i. e. form N. under S.30 of the Act read with R. 54 to the Union of India on December 14 1964. The appellant tried to bring out in his revision application that the financial condition of the 3rd respondent was extremely precarious as would be evidenced by the documents, copies whereof were annexed to his petition. The 3rd respondent filed a counter statement to the revision application. in April 1965 In March 1966 the appellant received the comments of the Andhra Pradesh Government on his revision applications The appellant filed rejoinder to the counter statements of the 3rd respondent in May 1965 and to the comments of the Andhra Pradesh Government in April 1966. He also asked for the grant -of a personal hearing before the decision of the case which was not given. Ultimately his applications were rejected by Orders quoted hereinabove.

Court's reasoning:
it will he amply clear that in exercising its powers of revision under R. 55 the Central Government must take into consideration not only the material which was before the State Government but comments and counter-comments, if any, which the parties may make regarding the order of the State Government. In other words, it is open to the parties to show how and where the State Government had gone wrong, or, why the order of the State Government should be confirmed. A party whose application for a mining lease is turned down by the State Government is therefore given an opportunity of showing that the State Government had taken into consideration irrelevant matters or based its decision on grounds which were not justified. At the time when applications for a licence are made by different parties to the State Government they tire not given an opportunity of showing any defects or demerits in the applications of the others or why their applications should he preferred to others. The State Government has to make up its mind by considering the applications before it as to which party is to be preferred to the other or others. S 11 (3), as already noted prescribes the matters which the State Government must consider before selecting one` out of the numerous applicants the possibility of the State Government being misled in its consideration of the matters cannot be ruled out. It may be that a party to whom a lease is directed to be granted has in fact no special knowledge or experience requisite for the mining operations or it may be that his financial resources have not been properly disclosed, It may also be that the nature and quality of the technical staff employed or to be employed by him is not of the requisite is standard. In an application for revision under R. 55 it will be open to an aggrieved party to contend that the matters covered by TV sub-s. (3) of S. 11 were not properly examined by the State Government, or that the State Government had not before it all the available material to make up its mind with respect thereto before granting a licence. In a case where complaints of this nature are made off necessity, the central Government has to scrutinise matters which were not canvassed before the State Government A question may arise in such cases as to whether the order of the Central Government in the form in which it was made in this case would be sufficient, specially in view of the fact that the correctness thereof may be tested in appeal to this Court8. It is now well settled that in exercising its powers of revision under R.55 the Central Government discharges functions which are quasi Judicial;10. The order of the Central Government of June 22, 1966 is so worded as to he open to the construction that the reviewing authority was primarily concerned with finding out whether any grounds had been made out for interfering with the decision of the State Government. In other words the Central Government was not so much concerned to examine the grounds or the reasons for the decision of the State Government but to find out whether there was any cause for disturbing the same. Prima facie the order does not show that the reviewing authority had any thought of expressing its own reasons for maintaining the decision arrived at. If detailed reasons had been given by the State Government and the Central Government had indicated clearly that it was accepting the reasons for the decision of the State Government, one would be in a position to say that the reasons for the grant of a lease to a person other than the appellant were obvious. But, where as here, the State Government does not find any fault or defect in the application of the unsuccessful applicant and merely prefers another on the ground that "he had adequate general experience and technical knowledge and was an old lessee without any arrears of mineral dues" it is difficult to say what turned the scale in favour of the successful applicant excepting the fact that he was known to the State Government from before. We do not want to express any views on this but if this be a proper test, then no new entrant in the field can have any chance of success where there is an old lessee competing with him. The order of the Central Government does not bring out any reason for its own decision except that no grounds for interference with the decision arrived at was established15. As has already been noted, the board of directors in that case did not give any reasons for the refusal to register and the Central Government adopting the same course reversed the decision of the directors without giving any reasons. Clearly, the act of the Central Government there savored of arbitrariness. Under the articles of association of the company the directors were not obliged to give any reasons. Their power of refusal was unrestricted if they acted bona fide or in the interest of the company. The reversal of their discretion clearly amounted to a finding that they had acted arbitrarily or mala fide and one was left to guess the reasons of the Central Government for coming to this conclusion. As has already been said, when the authority whose decision is be owed gives reason for its conclusion and the reviewing authority affirms the decision for the reasons given by the lower authority one can assume that the reviewing authority found the reasons given by the lower authority as acceptable to it; but, where the lower authority itself fails to give any reason other than that the successful applicant was an old lessee and the reviewing authority does not even refer to that ground, this Court has to grope in the dark for finding into reasons for upholding or rejecting the decision of the reviewing authority . After all a tribunal which exercises judicial or quasi judicial powers can certainly indicate its mind as to why it acts in a particular way and when important rights of parties of far-reaching consequence to them are adjudicated upon in a summary fashion. without giving a personal hearing where proposals and counter-proposals are made and examined, the least can be expected is that the tribunal should tell the party why the decision is going against him in all cases where - the law gives a further right of appealOur attention was drawn in particular to R. 26 of the Mineral Concession Rules which enjoined upon the State Government to communicate in writing the reasons for any order refusing to grant or renew a mining lease. The absence of any provision in R. 55 for giving such reasons was said to be decisive on the matter as indicative of the view of the legislature that there was no necessity for giving reasons for the order on review. We find ourselves enable to accept this contention. Take the case where the Central Government sets aside the order of the State Government without giving any reasons as in Harinagar Sugar Mills case. The party who loses before the Central Government cannot know why he had lost it and would be in great difficulty in pressing his appeal to the Supreme Court and this Court would have to do the best it could in circumstances which are not conducive to the proper disposal of the appeal.. In a case wherethe Central Government merely affirms the order of the State Government, it should make it clear in the order itself as to why it is affirming the same. It is not suggested that the Central Government should write out a judgment as Courts of law are wont to do. But we find no merit in the contention that an authority which is called upon to determine and adjudicate upon the rights of parties subject only to a right of appeal to this Court should not he expected to give all outline of the process of reasoning by which they find themselves in agreement with the decision of the State Government. As a matter of fact, R. 26 considerably lightens the burden of the Central Government in this respect. As the State Government has to give reasons, the Central Government after considering the comments and counter-comments on the reasons given by the State Government should have no difficulty in making up its mind as to whether the reasoning of the State Government is acceptable and to state as briefly as possible the reasons for its own conclusionThe above observations were sought to be pressed into service by the counsel for the respondents but there is a good dead of difference between that case and the one with which we have to deal. The High Court there was merely called upon to give its opinion on the statement of facts set out by the Appellate Tribunal. It was for the Income-tax Officer in the first instance to accept or reject the explanation with regard to the cash credit. If the Income-tax Officer found the assessees explanation unacceptable, he had to say why he did not accept it. Unless the assessee in appeal was able to point out to the Appellate authorities some flaw in the reasoning of the Income-tax Officer, it is not necessary for the appellate authorities to give their reasons independently. The explanation of the assessee is either accepted or rejected; but in the case which we have before us, the State Government has to consider the merits and demerits of the applications and to give its reasons why it prefers one to the other or others. There is a dispute between two or more contesting parties and the reasons for preferring one to the other or others may be more than one. It is not a question of accepting or rejecting an explanation. In our opinion what was said in the above Income-tax case will not apply in the case of a review by the Central Government of a decision of the State Government under the Act and the Rules22. Thecase for giving reasons or for making a speaking order becomes much stronger when the decision can be challenged not only by the issue of a writ of certiorari but an appeal to this CourtWe have already commented that the order ,of the Central Government in this case is couched in the came language as was used in the case before this Court ~ 1966-1 SCR 466  =(AIR 1966 SC, 6711 (supra), in August 1965The old R. 55 was replaced by a new rule which Came into forces on 19th July1965. Whereas the old rule directed the Central Government to consider comments on the petition of review by the State Government or other authority only the new rule is aimed at calling upon all the parties including the State` Government to make their comments in the matter and the parties are given the right to make further comments on those made by the other or others. In effect, the parties are given a right to bring forth material which was not before the State Government. It is easy to see that an unsuccessful party may challenge the grant of a lease in favour of another by pointing out defects or demerits which did not come to the knowledge of the State Government. The order in this case does not even purport to show that the comments and counter-comments, which were before the Central Government in this case, had been considered. It would certainly have been better if the order of 22nd June 1966 had shown that: the Central Government had taken into consideration all the fresh material adduced before it and for the reasons formulated they thought that the order of the State Government should not be disturbed.