Case: Chougule &amp; Company, Pvt., Limited Vs. Union of India &amp; Another

2. The facts are as follows. The appellant is a firm which claims to have an established business house engaged in the business ofmining of iron and manganese ores. It was granted a prospecting licence in respect of an area of Ac.in S. No. 17 (1) part of village Palade, Taluk Supa Petha, North Kanara District which was then in the territory of the State of Bombay. It was granted a certificate of approval by the Bombay Government on 27th October, 1961: Thereafter, as a result of theof the States the area mentioned above became a part of the territory of the State of Mysore. The appellant made an application to the State of Mysore for renewal of the prospecting licence but the State Government did not renew the same. The appellant thereupon made an application for revision to the Central Government for the purpose of obtaining a renewal of the prospecting licence but the revision application was not allowed. On October 25, 1962 the State of Mysore, respondent No. 2 herein, notified the grant of mining lease of an area of Ac,in favour of one L. K. Suthankar out of an area of Ac.mentioned above. It is claimed by the appellant that without notifying the area for regrant as required under R. 58 of the Mineral Concession Rules (sic). The appellant thereupon filed an application on November 19, 1962 for revision of the order of the State of Mysore in favour of Suthankar. Inspite of the pending application for revision respondent No, 2 executed a lease in favour of Suthankar. The Central Government cancelled the mining lease in favour of Suthankar by an order dated October 20, 1964 and directed the State of Mysore to take action as required under Rule 58 of the Mineral Concession Rules, Suthankar moved an application under Art. 226 of the Constitution before the High Court of Mysore for quashing the order of the Central Government. On that application the High Court passed an interim order on April 6, 1965 directingof the area in terms of the said rule 58. The State of Mysore issued an advertisement on July 22, 1965 declaring the area of Ac.as available for grant. The appellant submitted an application for a mining lease on 28th August, 1965 contending inter alia in its application that it had a preferential right to a mining lease in respect of the whole area of Ac.of which the said Ac.formed a part. It appears that on that very day the Director of the State Department of Mysore, Mines and Minerals, had sanctioned the grant of a lease to Suthankar. The State of Mysore did not inform the appellant thereof and did not care to pass any order on the application of the appellant. As the appellants application was to be deemed to have been refused in terms of Rule 24 (3) of the Mineral Concession Rules, 1960 after the lapse of nine months from the date of the application even if no order was made, the appellant filed an application in revision before the Union of India under Rule 54 of the Mineral Concession Rules on the 21st July 1966. In terms of the said rule the Union of India asked for comments from the State of Mysore on the appellants revision application. The State submitted its comments on September 30,1966. On receipt of the same the appellant filed its reply to the said comments before the Central Government on November 29, 1966. On April 4, 1967 the impugned order was passed by the Central Government over the signature of an Under Secretary of which the text is asI am directed to refer to your revision application datedand letter datedon the above subject and to say that after careful consideration of the grounds stated therein, the Central Government have come to the conclusion that there is no valid ground for interfering with the decision of the Government of Mysore to reject your application for grant of mining lease for manganese and iron ore over an area of 774 acres in village Palade, taluk Supe Petta, District North Canara. Your application for revision is therefore rejected."

Court's reasoning:
Quite apart from the preferential claim it was necessary for the state Government to consider the relative merits of the claims to the lease put forward by the appellant and Suthankar. They should have considered which of the two applicants were to be preferred on account of its special knowledge or experience in prospecting operations or mining operations, the relative financial resources and the nature and quality of the technical staff employed by them. The Directorate of Mines of the State of Mysore preferred the claim of Suthankar merely because he had carried on some operations under a lease which was cancelled by the Government of India and had carried on some mining operations under that cancelledorder refers to "the decision of the Government of Mysore to reject" the applicants application for grant of a mining lease whereas in point of fact the Government of Mysore never came to any such decision nor passed any order thereon. It was as a result of the application of the Mineral Concession Rules that the appellants application to the State was deemed to be rejected because no order had been passed thereon for the space of nine months. Further according to learned counsel there was no reference to the comments of the State Government made on the revision application of the appellant and the order apparently was not based on the grounds given in such comment, unless it be held that a reference to the appellants letter dated 29th November, 1966 indirectly brought in the comments of the State Government.11. There is a striking similarity between the impugned order passed in this case and the one which was quashed in Bhagat Rajas case. It will be noted that excepting for the difference in the dates and the details of the lands in respect of which the lease was claimed the texts of the two orders are identical. One cannot but remark that orders rejecting such applications appear to be made on a formula which is well known to the department. In our view Departments cannot be allowed to perform their tasks so perfunctorily in disposing of claims of parties to valuable rights and it is incumbent on them to indicate the grounds on which the revision applications are disposed of unless the State Government had already in its order of rejection given the grounds and the Union Government referred to such grounds in its capacity as a revising authority.