Geomin Mineralas & Marketing P.Ltd. Vs State of Orissa .

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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4561 OF 2013 (ARISING OUT OF SLP(C) NO.31593 OF 2010)

GEOMIN MINERALS & MARKETING (P) LTD. … APPELLANT

VERUS

STATE OF ORISSA AND ORS. … RESPONDENTS

WITH

CIVIL APPEAL NO. 4562 OF 2013 (ARISING OUT OF SLP(C) NO.31957 OF 2010)

STATE OF ORISSA … APPELLANT

VERUS

GEOMIN MINERALS & MARKETING (P) LTD. … RESPONDENTS AND ORS.

WITH

CIVIL APPEAL NO. 4563 OF 2013 (ARISING OUT OF SLP(C) NO.32040 OF 2010)

POSCO INDIA PVT. LTD. … APPELLANT

VERUS

GEOMIN MINERALS & MARKETING (P) LTD AND ORS. … RESPONDENTS

J U D G M E N T

SUDHANSU JYOTI MUKHOPADHAYA, J.

Leave granted.

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2. These appeals by special leave have been

preferred against the order of Division Bench of

Orissa High Court, Cuttack dated 14th July, 2010 in

W.P. (C) No.23 of 2009 whereby the writ petition

preferred by Geomin Minerals & Marketing (P) Ltd.

was allowed and the recommendation made by the State

Government dated 9th January, 2009 in favour of POSCO

India (P) Ltd. was set aside with a direction to the

State Government to take a fresh decision in terms of

order dated 27th September, 2007 passed by the

Revisional Authority in Revision Application File

No.22 (41)/2007RC1 by giving the Geomin Minerals &

Marketing (P) Ltd. the preferential right of

consideration. The Division Bench further observed

that in the event the State Government decides to

invoke the provisions of Section 11(5) of the Mines

and Minerals (Development and Regulation) Act, 1957

(hereinafter referred to as the “MM(D&R) Act”) ,

“special reasons” for the same in terms of guidelines

dated 24th June, 2009 issued by the Ministry of

Mines, Government of India be recorded in writing.

The State Government was directed to complete the

entire exercise within specified period.

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3. The factual matrix of the case is as follows:

The availability of two sets of land for fresh

grant of lease was notified by the State of Orissa

vide Notification dated 20th August, 1991 issued

under Rule 59(1) of the Mineral Concession Rules,

1960. The first set comprised of 85.60 acres plus

94.47 acres of land in Village Kansar and Village

Gokhurang of Balangir District which had earlier been

granted on lease in favour of Shri S.K. Padhi and

Shri B.K. Agarwal. These leases were subsequently

surrendered to the State Government and were,

therefore, available for regrant. The State

Government vide notification dated 20th August, 1991

notified the availability w.e.f. 24th October,1991.

The second set of land comprised of 283.06 square

miles in Horomoto Guali Block, Malangtoli Block,

KhandhdharPahar in Block Keonjhar and Sundargarh

districts, Taldihi Toda Block, Sundargarh District

and Dubna Block I and III which was declared to be

reserved for public sector corporations vide

Notification dated 05.06.1962 and 06.12.1962. The

State Government decided to dereserve the said

mineral bearing areas and the availability of the

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said area was notified vide Notification dated 23rd

August,1991. The date of availability for regrant

was on and from 29th October,1991. The dispute in

the case of Geomin’s SLP No. 31593/2010 is regarding

186 hectares of land located in village Rantha

District Sundergarh. Although, the recommendation

made in favour of POSCO covers an area of 2500

hectares, thus Geomin’s interest is limited to a

fraction of the land recommended for POSCO.

4. POSCO had made an application for prospecting

licence for an area of 6828.54 hectares. Initially a

recommendation was made to the Central Government in

favour of POSCO for an area of 6204.352 hectares by

the State Government on 19.12.2006. The

recommendation was challenged by Kudremukh Iron Ore

Company (hereinafter referred to as the “Kudremukh

Company”) by means of a writ petition being W.P. No.

1775 of 2007. The High Court refrained from

exercising its discretion since the matter was

pending before the Central Government and directed

that representation of Kudremukh Company may be

treated as revisional application. The

recommendation of the State Government was set aside

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vide order dated 27th September,2007 by the

Revisional Authority as all mineral concession

applications were not considered simultaneously and

no orders were passed on those applications. It was

directed that all pending applications be considered

simultaneously and inter se merit be examined and

then order be passed as per law after affording an

opportunity of hearing to all the applicants.

Earlier the Central Government by its letter dated

16.7.2007 had informed the State Government that the

recommendation in favour of POSCO could not be

processed as the process of hearing in respect of 203

applicants was still not complete. It was noted that

the recommendation in favour of POSCO was for an area

which was partially notified and partially non

notified and, hence, the applications should be

considered accordingly as per law.

5. The order passed by the Revisional Authority

dated 27th September, 2007 was challenged by one

‘Dhananjay Kumar Dagara’ before the Orissa High Court

in a Writ Petition being W.P(C) No. 15315 of 2007. It

was challenged on the ground that the directions for

simultaneous consideration of all applications

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affects the preferential rights of the first day

applicants under Section 11(2) of the MM(D&R) Act.

In the said Writ Petition No. 15315 of 2007, Geomin

Minerals & Marketing (P) Ltd. filed an application

for intervention. The intervention application was

dismissed by the Orissa High Court on 22nd February,

2008 with the observation that Geomin Minerals &

Marketing (P) Ltd. may take independent steps in

respect of its grievance. On 2nd May, 2008 the Orissa

High Court by judgment in W.P(C) No.15315 of 2007

held that there was no preferential right for the

applicant. The High Court thus dismissed the writ

petition and upheld the order of the Revisional

Authority dated 27th September, 2007.

6. Geomin Minerals & Marketing (P) Ltd. filed

another Writ Petition being W.P(C) No.6484 of 2008

praying expeditious disposal of all pending

applications for mineral concessions filed by it,

based on its right arising from Rule 63A of the MC

Rules. The said writ petition was disposed of on

14th July, 2008 by the Orissa High Court with a

direction to the State Government to consider the

pending PL/RP applications of Geomin Minerals &

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Marketing (P) Ltd. preferably within a period of six

months without discrimination and in accordance with

law.

7. In the meantime, during the pendency of the

applications preferred by different persons including

Geomin Minerals & Marketing (P) Ltd. for Preferential

Licence (‘PL’ for short) and Mining Licence (‘ML’ for

short), on 20th December, 1999 amendments carried out

in Section 11 of MM(D&R) Act became effective. By

the amending Act, the first proviso to Section 11(2)

of MM(D&R) Act was inserted as under:

“11. Preferential right of certain persons.

(2)..... Provided that where an area is available for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, and the State Government has invited applications by notification in the Official Gazette for grant of such permit, licence or lease, all the applications received during the period specified in such notification and the applications which had been received prior to the publication of such notification in respect of the lands within such area and had not been disposed of, shall be deemed to have been received on the same day for the purposes of assigning priority under this subsection.”

The non obstante clause i.e. Subsection (4) of

Section 11 was renumbered as Subsection (5), and a

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new Subsection (4) was introduced, which reads as

under:

“11. (4) Subject to the provisions of subsection (1), where the State Government notifies in the Official Gazette an area for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, all the applications received during the period as specified in such notification, which shall not be less than thirty days, shall be considered simultaneously as if all such applications have been received on the same day and the State Government, after taking into consideration the matters specified in subsection (3), may grant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit.”

8. Pursuant to the order of the Revisional

Authority dated 27th September, 2007 passed in the

case of Kudremukh Company, the State Government

issued a notice to Geomin Minerals & Marketing (P)

Ltd. under Rule 12(1) of the MC Rules giving them

opportunity of being heard. The officials of the

Geomin Minerals & Marketing (P) Ltd. attended the

hearing. Thereafter, by a minutes of the meeting,

inter se merits of all applicants was prepared by the

State of Orissa on 17th October, 2008, but no

recommendation was made. Therefore, Geomin Minerals

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& Marketing (P) Ltd. filed a Writ Petition being

W.P(C) No.23 of 2009 inter alia with the following

prayer:

“Order the opposite parties to dispose of all pending applications for Mineral Concessions filed by the petitioner and set out in the petition in accordance with its vested right to preferential consideration in view of the fact that the petitioner’s applications have been filed on the first date of availability and eligibility.

Issue a writ of prohibition or any other appropriate writ, order or direction restraining the opposite parties from considering applications for Mineral Concessions of later applicants to the petitioner until the applications of the petitioner are first considered and disposed of by according priority or preferential right based on the petitioner being a first day applicant having applied for the concerned Mineral Concessions set out in the petition on the first date of availability and eligibility.”

The Writ Petition was filed on 5th January, 2009

by Geomin Minerals & Marketing (P) Ltd. and just

after few days on 9th January, 2009, the State

Government made impugned recommendation to the

Central Government in favour of POSCO under Section

11(3) and (5) of the MM(D&R) Act. The said

recommendation was challenged by Geomin Minerals &

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Marketing (P) Ltd. by filing a petition for

amendment.

9. On hearing the parties, the High Court framed

the following issues for consideration:

1.Whether the writ petition is maintainable due to availability of alternative remedy ?

2. Whether the writ petition is premature ?

3. Whether the writ petition is maintainable due to delay and laches ?

4. Whether the writ petition is barred by resjudicata ?

5. Whether the area in question was earlier reserved or it is a nonreserved area?

6. Whether the petitioner has any preferential right under Section11 of the M.M. (D&R) Act ?

7. Whether recommendation made by the State Government under section 11 (5) of the M.M.(D&R) Act in favour of POSCO is valid ?

10. In the present case, the second issue is

important as the respondents to the writ petitions

raised the question of maintainability on one of the

grounds that the application was premature. The

said issue was answered by the High Court in a

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cryptic manner without any reason, as apparent from

its finding which is produced below.

“Issue no.2, Whether the writ petition is premature ?

This issue is answered in favour of the petitioner as the petitioner has approached this Court at a time when its right to be considered along with POSCO has been threatened to be infringed by the action of the State, which, according to the petitioner, is illegal and contrary to the statutory provision. So the petitioner prayed for preferential right under Article 226 of the Constitution of India.

Hence the writ petition cannot be said to be premature as the petitioner could not have waited till the harm is caused to him (See Bengal Immunity Co. Ltd., v. State of Bihar and others, AIR 1955 SC661).”

Issue Nos. 6 and 7 relate to preferential right

of Geomin Minerals & Marketing (P) Ltd. under

Section 11 of the MM (D&R) Act and validity of

recommendation made by the State Government under

Section 11(5) of the said Act in favour of POSCO.

Both the issues were determined by the High Court in

favour of Geomin Minerals & Marketing (P) Ltd., and

against the POSCO. Referring to Section 11(2), (3)

and (4) the High Court held that the Geomin Minerals

& Marketing (P) Ltd. has preferential right for grant

of licence and lease and that the recommendation made

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by the State Government under Section 11 (5) in

favour of POSCO is invalid.

11. The judgment aforesaid has been challenged by

Geomin Minerals & Marketing (P) Ltd. by filing an

appeal as no specific direction has been given for

issuance of licence in its favour. The POSCO and the

Government of Orissa have also challenged the

judgment by filing their respective appeals. No

separate appeal has been preferred by Kudremukh

Company or Jindal Steel and Power Ltd. or any other,

but some of them have filed intervention applications

and petitions for impleadment. Accordingly, at the

time of hearing of the appeals, respondents and

interveners were heard and, therefore, we allow the

applications for intervention and impleadment.

12. The learned counsel for the parties argued in

detail for few days but in view of the nature of

order we intend to pass it is not necessary to

discuss each and every submission except the relevant

one, as recorded hereunder:

Stand of POSCO India Pvt. Ltd.

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13. Learned counsel Mr. K.K.Venugopal appearing on

behalf of POSCO India Pvt. Ltd. made the following

submissions:

13.1 The recommendation in favour of POSCO India has

been made in accordance with the provisions contained

in Section 11 (2), (3) and (5) of MM(D&R) Act and

other relevant provisions of Mineral Concession

Rules, 1960.

13.2 The POSCO was found to be the most meritorious

applicant and “hence the State Government by

exercising its power under Section 11(5) of MM(D&R)

Act, 1957 has decided to recommend an extent of 2500

Hectares to Government of India for prior approval

for grant of PL in their favour.

13.3 In the present case, there are at least two

reasons as to why there cannot be any claim of

priority on the part of Geomin. When the area in

question was released from reservation and de

notified on 23.8.1991, no outside date before which

applications had to be made had been fixed. The

Government of India (Revisional Authority), in

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exercise of its revisional jurisdiction, vide order

27.9.2007, had directed the State Government to

consider all the pending applications simultaneously.

This order was challenged by one Dhananjay Kumar

Dagara, and the Writ Petition was dismissed by the

High Court. The decision of the Central Government

thus became final. If the applications were to be

considered simultaneously, which means as if they

were received on the same day, the proviso to

Section11(2) of the Act would apply. Indubitably,

in any comparison based on the factors set out in the

tabulated statements, POSCO would be far ahead of

the other applicants, based on its experience,

investment, technology used, integrated project,

captive use of the iron ore, total employment (direct

and indirect) and, above all, public interest.

Thus, Section 11(3) of the Act wholly applies in

POSCO’s favour.

13.4 Apart from Section 11(3), the State Government

has made the recommendation also under Section 11(5)

for the simple reason that POSCO stood head and

shoulders above the other applicants, in respect of

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public interest. If the gap between POSCO and the

other applicants, even in regard to the very

considerations specified in Section 11(3) is so

vast, then, in such a case, the very same factors,

qualitatively and quantitatively, would attract

Section 11(5) as well. In any event, in this case,

there is one factor which beyond doubt attracts

Section 11(5), and that is the sophisticated and

advanced finex technology, which not only reduces

pollution but is also able to utilize low grade ore

to make steel. Section 11(5) would clearly be

attracted on this ground alone, and, in whatever

manner one approaches the issue, POSCO has rightly

been recommended by the State Government for grant of

the Prospecting Licence.

13.5 The recommendation dated 9.1.2009 made in

favour of POSCO falls within the parameters of

Sections 11(3) and 11(5) of the MM(D&R) Act. The

State Government followed the direction of the

Revisional Authority (Central Government ) dated

27.9.2007, which was upheld by the High Court and

had become final, and simultaneously considered

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the inter se merits of all the applicants whose PL

applications were pending disposal before the State

Government. It was after a rigorous exercise of

calling all the applicants for personal hearing and

to make a presentation that the State Government took

the considered view to hold that POSCO was the most

meritorious applicant.

13.6 Once there was a direction of the Revisional

Authority, which was affirmed by the Orissa High

Court in the Dagara case (which order attained

finality), that the State Government was required to

consider all pending applications simultaneously and

come to a decision after evaluating the inter se

merits of all the applicants. An inter se comparison

of multiple applicants for grant of a mineral

concession is envisaged only under Section 11(3) of

the MM(D&R) Act. This being so, in any inter se

comparison (whether pursuant to Section 11(2) or

not), the criteria on the basis of which a decision

must be taken by the State Government is what is

specified in Section 11(3).

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13.7 The High Court has failed to point out as to

what would amount to “special reasons”. The

Impugned Judgment also does not appreciate that the

recommendation in favour of POSCO has been made by

the State Government keeping in mind the larger

interests of the State and its citizens. The basis

of this decision was the economic and environmental

benefit accruing to the State from POSCO’s mining

methods.

13.8 POSCO is a wholly owned subsidiary of M/s

POSCO, which is a Korean compay having more than 25

years experience in developing minerals in various

countries in the world and is the world’s second

largest steel maker by market value and Asia’s most

profitable steel maker. M/s POSCO’s operating profit

margin is the top in the World Steel Industry, and

it is the most competitive steel maker as per 2010

World Steel Dynamics. According to 2010 World

Economic Forum M/s POSCO is one among the 100

companies to last the next 100 years. Geomin is a

company which was incorporated in September, 1991,

with an authorised share capital of Rs.1,00,000/

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(Rupees one lakh), obviously only with a view to take

advantage of the notification dated 23.8.1991 issued

by the State Government. Geomin did not have any

experience of having undertaken any mining

activities, and, therefore, cannot be said to have

possessed any special knowledge or experience in

mining operations. Further, sometime in the year

2007, control of Geomin, through acquisition of a

majority of the share of the company, was taken over

by one ‘Navayuga Steel Limited’. In the submission

of the appellant, the experience and/or

qualifications of ‘Navayuga Steel Limited’ cannot be

used in support of Geomin’s application made in the

year 1991, since the merit of an applicant for a

prospecting license/mining lease would have to be

judged as on the date of the application itself, as

otherwise the process of selection would be rendered

arbitrary if an applicant is permitted to add to its

qualifications after knowing the relative

qualifications of other applicants. If this is

permitted, such a process of adding to one’s

qualifications would become neverending. In any

event, if in substance and in effect a totally new

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entity has been permitted to be brought into

existence, by transfer of substantial shares to

another company, the original applicant can no more

claim priority o its application as its character has

undergone a substantial transformation.

13.9 The reliance by Kudremukh Company on Section

11(1) of the Act is wholly erroneous, as (admittedly)

no reconnaissance permit was ever granted in its

favour. Under Section 11(1) of the MM(D&R) Act,

preference can be claimed if an applicant for the

grant of a PL has already been granted a

reconnaissance permit qua the said area; and the

conditions prescribed in the first proviso to Section

11(1) are met. The reconnaissance work stated to

have been carried out by the Department of Geology of

the State Government, at Kudremukh’s expense, also

cannot attract Section 11(1) of the Act in its

favour. Further, in any event, Kudremukh Company is

bound by the aforementioned direction for

simultaneous consideration of all applications given

by the Central Government, as per the decision of

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Revisional Authority, which was upheld by the High

Court.

Stand of Geomin Minerals & Marketing (P) Ltd.

14. Learned counsel for the Geomin Minerals &

Marketing (P) Ltd. made the following submissions:

14.1 A preferential right in the field of mining is

an important right. The preferential right conferred

under unamended Section 11 upto 1999 cannot be

curtailed under amended Section 11. Since Geomin

Minerals & Marketing (P) Ltd. applied on 29th

October, 1991 the law that was applicable on the said

date of application i.e. an amended Section 11 shall

be applicable for consideration of application filed

by Geomin Minerals & Marketing (P) Ltd.

14.2 On the other hand if the amended Section 11 is

applied, in that event the judgment of this Court in

Sandur Manganese & Iron Ores Limited v. State of

Karnataka (2010) 13 SCC 1 will apply. The

consequence will be as follows:

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(a) Section 11(4) of the amended Section will

apply.

(b) Section 11(5) will not be available.

(c) If amended Section 11(4) applies, then all

persons applied on 29th October, 1991 will be

treated as first applicants. The choice

between them will be governed by Section

11(3).

(d) Even if Section 11(5) is applied, special

reasons referred to in Section 11(5) cannot be

same that of the reasons to be recorded for

the purpose of Section 11(3).

In the present case, the exercise which State

Government has done mixes up the matter under Section

11(3) and 11(5) for recommending the name of M/s

POSCO India Pvt. Ltd., therefore it is contrary to

the provisions of Section 11 and recommendation in

favour of the POSCO India Pvt. Ltd. is not bona fide.

14.3 Amended Section 11 is prospective in nature. It

is the Rule on the date of application that would be

applicable and not the Rule on the date of

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consideration. In view of Rule 8(C) of Mineral

Concession Rules it cannot be said that Section 11

will be applicable from the date of consideration.

As per the ratio of the judgement in Sandur

Manganese & Iron Ores Limited v. State of Karnataka

(2010) 13 SCC 1 if amended Section 11 is applied

then Geomin Minerals & Marketing (P) Ltd. is

entitled for benefit of the aforesaid judgment.

14.4 Memorandum of Understanding or the arrangements

outside the provisions of the MM(D&R) Act cannot be

used to trample on the rights of prior or same day

applicants. This principle is to be followed

irrespective of whether the unamended or amended

Section 11 is applied.

14.5 First Day Applicant enjoys and is entitled to

priority over all subsequent days applications

including the POSCO application which was made on

27th September, 2005 i.e. after about 14 years from

the date of the Geomin applications.

Stand of the State of Orissa:

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15. Mr. Rakesh Dwivedi, learned senior counsel for

the State of Orissa to the facts as noticed above

contended as follows:

15.1 Initially a recommendation was made to the

Central Government in favour of POSCO for an area of

6204.352 hectares by the State Government on 19th

December, 2006. Pursuant to which the Revisional

Authority after hearing the matter set aside the

recommendation made in favour of POSCO and the State

Government was directed vide order dated 27th

September, 2007 to consider all pending applications

simultaneously and to decide inter se merit and then

pass an order as per law after affording an

opportunity to all the applicants. Earlier the

recommendation in favour of POSCO was made for an

area which was partially notified and partially non

notified and other applications were not considered

and hence the matter was remitted back by the

Revisional Authority to the State Government.

15.2 The State Government had thereafter granted

hearing to all the applicants and had considered the

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inter se merit of the applicants. An overall

holistic consideration and record shows that the

Government had an inter se comparison of the

applicants as directed by the Central Government and

had also made recommendation in favour of POSCO by

invoking Section 11(5) of the MM(DR) Act, 1957.

15.3 The case of Geomin had been considered. During

the hearing, Geomin stated that it is a joint venture

between Navyuga Group and T.P. Minerals Group and it

wanted to set up one ore based steel complex of 12

MTPA capacity but at that time their project was

under consideration by the High level clearance

authority. The case of Kudremukh Company based on PL

No.1991 dated 17/2/2002 was considered. This company

proposed to invest Rs.100 Crores in mines and

Rs.5,000 Crores in industry and its plant was in

Mangalore, State of Karnataka. It was proposing some

plants in Sundergarh District but there was no

definite proposal received by the State. Jindal

Steel and Power Limited (hereinafter referred to as

the ‘JSPL’) had submitted four PL and one ML

applications. The PL applications are dated

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22/2/2007. They did not submit sufficient documents

as required under Rule 22(3)(i) of MC Rules and

legally accepted Geological Prospecting Report for

their ML application. This company is part of Jindal

Group and was operating a steel plant at Raigarh,

Chhattisgarh. It was considered to be a serious

contender for the applied area. There applied area

was 4930.57 hectares after clubbing the four PL

applications. Out of this only 90 hectares are

overlapping with the PL application of POSCO. Thus,

their PL applications cover an area which is

overwhelmingly distinct from the area recommended for

POSCO. Consequently, JSPL had not filed any Writ

Petition nor had applied for impleadment before the

High Court. It has chosen to move an intervention

application belatedly in the SLP filed by Geomin.

This application has not been allowed and it is

liable to be rejected. The PL Application No. 2122

dated 27/9/2005 for 6828.54 hectares filed by POSCO

India was considered and they were considered to be a

front runner and possessing outstanding merit in

comparison to all other applicants. They proposed to

set up a World's first steel plant project using

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FINEX technology which was a next generation eco

friendly process which allows direct use of cheap

iron ores fines and noncoking coal as feed stock and

has consequently lower emissions as compared to blast

furnace. They had assured captive consumption of the

mineral at their plant at Paradip which was to be a

port based steel plant. It was likely to create huge

employment and generate huge revenue.

15.4 In PartF, Summary, it has been noted that only

two companies i.e. POSCO India Ltd. and Jindal

Stripes have achieved the miles stones or the

eligibility criteria laid down in the MOU for

recommendation of rawmaterial linkage to their

proposed steel plant. It mentions "as far as relevant

merits are concerned in terms of proposed investment,

financial resources capability for scientific mining

and exploration of ore, it could be safely concluded

that M/s. POSCO India (P) Ltd. stands out as the most

meritorious among all the MOU signed applicants and

as well as other applicants as narrated above, it

mentions that application of Jindal Stainless was

being considered for other areas. The "conclusion"

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has been drawn and it has been specifically stated in

subpara (c) that Geomin Minerals and Marketing has

some merit but they cannot be considered at par with

POSCO India. Kudremukh Company was found to be

highly meritorious but its merit was not comparitable

with M/s. POSCO India taking into account the

comprehensive advantage of POSCO in terms of revenue

and employment generation. In subpara (f) it was

concluded that on account of the ability to carry out

scientific exploration and mining, capability to

mobilize adequate financial resources for investment,

setting up of value addition facilities including 12

MTPA steel plant based on ecofriendly and resource

use efficient technology which will generate huge

revenue and employment, the POSCO India deserves

precedence over all other applicants and it stands

out as the most meritorious.

15.5. While considering the extent of area to be

recommended, it was noted that POSCO had applied for

6828.24 hectares in Kandhar region. Considering all

relevant aspects the State Government decided to

recommend an area of 4050 hectares only in favour of

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POSCO to the Government of India for prior approval

for grant of PL. Expressly invoking Section 11(5) of

MMDR Act, 1957 in addition to the inter se comparison

of merits, the comparative statement table prepared

with the parameters under Section 11(3) in view and

with table forms parts of the minutes. The minutes

recorded that applications are to be disposed of in

accordance with Section 11(2) & (3) and relevant

provisions of Mineral Concession Rules. The State

Government has complied with the directions of the

Central Government and has applied its mind to all

relevant factors and material produced by the various

applicants and after making inter se comparison of

minutes arrived at a conclusion that POSCO was more

meritorious from the point of scientific exploration

and mining, mobilization of financial resources, use

of ecofriendly and resources – use efficient

technology investments including the steel plant

project and general of employment and revenue. In

addition, the State Government has also invoked the

provisions of Section 11(5) of the Act.

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15.6 Further stand of the State of Orissa is that:

Geomin's application PL No.1334 dated 29/10/1991

cannot be considered to be a prior application in

view of the following facts:

Geomin had made 7 PL applications for different

areas to the State Government of Orissa. An area of

186 hectares in Village Rantha, District Sundergarh

applied vide application No.1334 dated 29.10.1991 is

overlapping. Thus, the area recommended for POSCO

includes about 186 hectares of area applied for by

Geomin.

15.7 The order of the High Court dated 14th July, 2008

had been passed in the context of PL Application

No.1338 in Malantoli Block. This has nothing to do

with the area recommended for POSCO.

After the above High Court order, Geomin made a

representation with respect to PL Application

No.1337.

15.8 Geomin's applications, in particular PL No.1334,

all dated 29th October, 1991 were made on an

individual basis as a Private Ltd. Company. The

nature of business indicated was mining, processing

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and sale of minerals and mineral products. The

affidavit mentions that it is a new company and

therefore there are no income tax/sales tax returns

or clearance certificates. As regards financial

resources the application simply says "sound" and

refers to Articles of Association. In the experience

column Geomin shows no experience and refers to

qualified and experienced "people" in the company.

No name or details are given. Geomin does not hold

any PL or ML. There is no claim that any Director has

any such experience. The application is highly

deficient and there is no proposal for setting up any

industry based on minerals. After 14 years from the

notification under Rule 59 a letter dated 7.09.2004

for sympathetic consideration was made and order

dated 15.7.2003 passed by the Central Government

(Tribunal) was referred to Geomin, also wrote a

letter dated 27.12.2005 requesting that they should

be allowed to submit fresh proposal. Earlier on

20.12.2004 AXL also submitted a letter. Thereafter

another letter dated 30.12.2006 was written. In this

letter for the first time it was proposed that a 0.5

MTPA capacity steel plant in the State of Orissa

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would be set up through our group company AXL

Industries and PLs were required for that purpose.

In the aforesaid letters, there is no claim for any

preference under Section 11(2). The third letter

dated 7.6.2007 refers to the proposal to set up 0.5

MTPA capacity steel plant in Orissa and also offers

to consider setting up of the project through Geomin

itself or to consider amalgamation of the two

companies. Then by letter dated 6.10.2007 it

informed that Geomin has now entered into a

partnership with the Navyuga Group of companies who

are a large conglomerate with interests in

engineering, exports, mining, ports, power, real

estate, I.T., etc. It further informed that Navyuga

Group is planning to set up steel plant in Orissa

with 12 MTPA capacity. By letter it was also

informed that Navyuga has already acquired 50% equity

stake in Geomin. Therefore the request was made to

consider its application "keeping the above in mind'.

By the fifth letter dated 13.11.2007 they wished to

know the status of Geomin's applications regarding

the process of evaluation of applications over

Khandhar Block. District Sundargarh.

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15.9 If the provisions operating at the time of the

applications are to be considered then Geomin's

application would stand rejected in terms of Rule

24(3) of Mineral Concession Rules, 1960 which was

omitted on 7.01.1993. Secondly, the Geomin's

application was highly deficient and the deficiencies

were partially removed which were provided after the

notice issued. Moreover, Geomin first placed reliance

on 0.5 MTPA steel plant being set up by its group

company AXL Industries then offered to set up the

said project by itself. Thereafter relied upon 12

MTPA steel plant being set up by Navyuga Group which

acquired 50% equity stake was later increased to 70%

of the equity share. Application was sought to be

considered on this basis. Therefore, Geomin's

application is effectively and substantively of

October/December, 2007.

15.10 Section 11 as amended by Act 38 of 1999

w.e.f. 18th December, 1999, would apply. The

contention of Geomin that the old provisions would

apply is incorrect. This matter is not res integra.

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In the case of State of Tamil Nadu vs. Hind Stone,

(1981) 2 SCC 205, this Court has decided that the

provisions of the Act and Rules as operating at the

time of consideration would be applicable.

Stand taken by Kudremukh Company:

16. Learned senior counsel appearing on behalf the

Kudremukh Company submitted as follows:

16.1 That the State Government vide letter dated

25.04.2009 has communicated the rejection of the

applications of the Company, to the extent of an area

of 2130 hectares, which was within the recommended

area of POSCO of 2500 hectares. The applications of

the Company were rejected on the ground that the M/s.

POSCO was the most meritorious of all the

applications. The rejection of the Companys’ ML/PL

application had been challenged before the Ld.

Central Mines Tribunal by filing Revision Application

No.22(6)/2009RCI & Revision Application

No.22(7)/2009RCI respectively. The Revisional

Authority vide final orders dated 23.8.2011, has been

pleased to allow the revision applications and set

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aside the orders dated 25.4.2009 passed by the State

Government rejecting the ML and PL applications of

the Company.

16.2. The State of Orissa has filed two Writ

Petitions being W.P.(C) No.6429 of 2012 and W.P.(C)

No.6431 of 2012 against the Final Order No.550/2011 &

549/11 dated 23.09.2011 passed by Government of India

in Revision Application No.22(6)/2009RCI & Revision

Application No.22(7)/2009RCI respectively. The

same is pending adjudication before the Orissa High

Court. The Company is not aware if M/s. POSCO has

challenged the said order passed by the Ld.

Revisional Authority.

16.3 The recommendation in favour of POSCO

purportedly under Section 11(5) is not a valid

recommendation as per the provisions of the Act.

Section 11(5) would have no application in the

present case where the applicants were being

considered simultaneously and the same has to be

granted to the applicant who satisfies the criteria

under Section 11(3) when compared with the others.

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The Revisional Authority vide order dated 27.09.2007

had directed to consider all applications

‘simultaneously'. Therefore, all the applications had

to be considered taking into consideration the

parameters of Section 11(3). The State Government

itself in its recommendation dated 9.01.2009 had

stated that the applicants were evaluated and taken

up for disposal in accordance with Section 11(2) and

(3) of the Act. But ultimately made the purported

recommendation in favour of POSCO under Section 11(5)

of the Act, which is not applicable.

16.4 Section 11(5) would be applicable only if the

area is ‘nonnotified’ and the State Government has

for 'special reasons' wants to give preference to a

later applicant to an application which was received

earlier. The 'special reasons' need not be other

than what has been mentioned in Section 11(3) but may

be over and above the reasons mentioned in Section

11(3). Section 11(5) will have no application where

applications are considered simultaneously for areas

which are notified, which is the present case. The

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recommendation dated 9.01.2009 made by the State

Government is not sustainable.

17. As far as the contentions raised by Geomin

Mienrals claiming priority by virtue of being an

earlier applicant, it was submitted that the said

contention no longer holds force after the amendment

of Section 11(2) of the Act. As per the amended

Section 11(2), all applications which were made

during the period of notification and all

applications received prior to the publication and

had not been disposed of shall be deemed to have been

received on the same day for the purpose of assigning

priority. Therefore, a prior applicant has no

preferential right to be considered over a later

applicant. It is submitted that the right, if any,

under the preamended provisions stands obliterated

after the amendment came into force and cannot be

construed as a 'vested' right.

18. It was further contended that the Court, if it

so deems fit may direct the Central Government to

consider all applications while deciding grant of

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prior approval under Section 5(1) of the Act, after

giving the parties a right to represent and decide

the same taking all factors into consideration that

Kudremukh Company is a public sector undertaking and

the substantial area of the proposed recommended area

was prospected at the cost of Kudremukh Company. The

same may be decided uninfluenced by any observations

made in the impugned judgment and the recommendation

made under Section 11(5).

19. The contentions of the Kudremukh Company was

summarised as follows:

(i) The Kudremukh Company is a public sector undertaking which is best suited to protect national resources of the country.

(ii) The Company may be allotted at least the portion of the area which was prospected by the Department of Geology at the cost of more than 1 crore;

(iii) Based on the assurances of the State Government at the highest level, the Company has altered its position to its detriment and the Government ought to have granted the Pl/ML to the petitioner;

(iv) The Company is more meritorious as compared to others, as it has special knowledge in mining operations, the nature and quality of the technical staff and adequate financial resources, which are the

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prescribed considerations in Section 11(3) of the Act. As far as the socalled proposed investment in Industry based on mines by POSCO is concerned, it is still illusory and nothing tangible has been invested on the ground. The Company’s merit has also been recognised by the State Government, but it erroneously claimed that POSCO is more meritorious on the ground of the socalled proposed steel plant which is yet to take off and the work on the plant has not yet commenced.

20. In the aforesaid factual background and rival

contentions made in the appeals, intervention

petitions as well as counter affidavits, the main

issue emerges for consideration is whether the writ

petition was premature and in the case of applicants

whether pre amended Section 11 or amended Section 11

of the MM(D&R) Act is applicable.

21. Before deciding the aforesaid issues it is

relevant to note that the issue relating to

competence of the State Government to make

reservation and the 1962 notification issued by the

State Government reserving certain areas fell for

consideration before this Court in Monnet Ispat and

Energy Limited v. Union of India & Ors. (2012) 11

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SCC 1. In the said case, this Court held that the

authority of the State Government to make reservation

of a particular mining area within its territory for

its own use is the offspring of ownership, and it is

inseparable therefrom unless denied to it expressly

by an appropriate law. By MM(D&R) Act that has not

been done by Parliament. Setting aside by a State of

land owned by it for its exclusive use and under its

dominance control, is an incident of sovereignty and

ownership.

In the light of aforesaid observation made by

this Court in Monnet Ispat Energy v. Union of India

& Ors. (2012) 11 SCC 1 and in view of the relevant

facts of the present case, it is to be determined as

to whether the writ petition preferred by Geomin was

premature.

22. Under Section 5 of the MM(D&R) Act, the State

Government cannot grant a reconnaissance permit,

prospective licence or mining lease to any person

unless previous approval of the Central Government

has been obtained. The proviso to Section 5(1)

expressly prohibits grant of PL except with previous

approval of Central Government as quoted hereunder:

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Further, where Section 11(5) is invoked, there

also prior approval of the Central Government is also

required. The proviso to Section 11(5) prescribes

that prior approval of Central Government shall be

obtained "before passing any order under the sub

section". In the present case the State Government

has only made recommendations and has sought

approval of Central Government under proviso to

Section 5(1) and proviso to Section 11(5) but no

final decision has been taken. The State Government

can pass final order granting mining licence only if

approval is granted by the Central Government under

Section 5(1) or Section 11(5) which reads as follows:

“5(1). A State Government shall not grant a reconnaissance permit, prospecting licence or mining lease to any person unless such person— (a) is an Indian national, or a

company as defined in subsection (1) of section 3 of the Companies Act, 1956 (1 of 1956); and

(b) satisfies such conditions as may be prescribed:

Provided that in respect of any mineral specified in the First Schedule, no reconnaissance permit, prospecting licence or mining lease shall be granted except with the previous approval of the Central Government.

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11(5). Notwithstanding anything contained in subsection (2), but subject to the provisions of subsection (1), the State Government may, for any special reasons to be recorded, grant a reconnaissance permit, prospecting licence or a mining lease, as the case may be, to an applicant whose application was received later in preference to an applicant whose application was received earlier:

Provided that in respect of minerals specified in the First Schedule, prior approval of the Central Government shall be obtained before passing any order under this subsection.”

23. Iron ore is a major mineral specified in Para C

of the First Schedule. In matters of such major

mineral, even State Government itself cannot

undertake prospective or mining operations without

having prior consultation with the Central Government

as per Section 4(3) of the Act, and if prospecting

licence or mining lease is to be granted to any other

person, then previous approval of Central Government

is to be obtained under proviso to Section 5(1). The

consideration of recommendation made by the Central

Government for grant of prior approval is an

exclusive jurisdiction of the Central Government

under the MM(D&R) Act, 1957 and there is no good

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reason for preempting the Central Government from

considering the merits of the recommendation.

24. Until the Central Government has passed an order

either granting or refusing approval under Section

5(1) and Section 11(5) of the Act, it would not be

permissible for any person to file a writ petition

under Article 226 of the Constitution of India and

any such petition if filed would be premature. In

the instant case, the High Court committed a grave

error of law in proceeding to observe that 'special

reasons' did not exist on invoking Section 11(5) and

that there was no comparison of merits in the record.

The record has been shown to this Court and it is

apparent that the State Government has tabulated and

evaluated the inter se merits and has concluded that

POSCO is more meritorious. All applications were

given a hearing. In the circumstances, the High

Court's observations are not justified and in fact

the High Court appears to have usurped the

jurisdiction of the Central Government in proceeding

to make these remarks. The scrutiny of the merits

was premature and the High Court should have

refrained from entering into the merits.

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25. The second proviso to Rule 63A also provides

that the disposal of the applications by the State

Government in case of minerals listed in the First

Schedule to the Act shall mean either recommendation

to the Central Government for grant of mineral

concession, and in all other cases disposal shall

mean refusal to grant the mineral concession. This is

also an indication that the recommendation made by

the State Government does not constitute an order as

envisaged by Section 30 of the Act.

26. The next issue relates to application of Section

11 i.e. whether preamended Section 11 or post

amended Section 11 shall apply.

We have noticed that by amending Act, First

Proviso to Section 11(2) was inserted. Preamended

non obsente clause i.e. sub Section 4 of Section 11

was renumbered as sub Section 5 to Section 11 and a

new sub Section 4 to Section 11 was introduced by

amending Act.

The pre amended provisions of Section 11(2), (3)

and (4) and the post amended provisions of Section

11(2), (3), (4) and (5) read as follows:

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Preamended provisions of Section 11(2), (3) and (4) are as follows:

“11(2). Subject to the provisions of sub section (1), where two or more persons have applied for a prospecting licence or a mining lease in respect of the same land, the applicant whose application was received earlier shall have a preferential right for the grant of the licence or lease, as the case may be, over an applicant whose application was received later:

Provided that where any such applications are received on the same day, the State Government,after taking into consideration the matters specified in subsection (3), may grant the prospecting licence on mining lease, as the case may be, to such one of the applicants as it may deem fit.

11(3). The matters referred to in sub section (2) are the following: (a) any special knowledge of, or experience in, prospecting operations or mining operations, as the case may be, possessed by the applicant; (b) the financial resources of the applicant; (c) the nature and quality of the technical staff employed or to be employed by the applicant; (d) such other matters as may be considered.

11(4). Notwithstanding anything contained in subsection (2) but subject to the provisions of subsection (1), the State Government may for any special reasons to be recorded and with the previous approval of the Central Government, grant a prospecting licence or a mining lease to an applicant whose application was received later in preference to an applicant whose application was received earlier.

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Post amended provisions of Section 11(2), (3), (4) and (5) are as follows:

11(2). Subject to the provisions of sub section(1), where the State Government has not notified in the Official Gazette the area for grant of reconnaissance permit or prospecting licence or mining lease, as the case may be, and two or more persons have applied for a reconnaissance permit, prospecting licence or a mining lease in respect of any land in such area, the applicant whose application was received earlier, shall have the preferential right to be considered for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, over the applicant whose application was received later:

Provided that where an area is available for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, and the State Government has invited applications by notification in the Official Gazette for grant of such permit, licence or lease, all the applications received during the period specified in such notification and the applications which had been received prior to the publication of such notification in respect of the lands within such area and had not been disposed of, shall be deemed to have been received on the same day, for the purposes of assigning priority under this sub section.

Provided further that where any such application are received on the same day, the State Government, after taking into consideration the matter specified in sub section(3), may grant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit.

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11(3). The matters referred to in sub section (2) are the following:

(a)any special knowledge of, or experience in, reconnaissance operations, prospecting operations or mining operations, as the case may be, possessed by the applicant; (b) the financial resources of the applicant; (c) the nature and quality of the technical staff employed or to be employed by the applicant; (d) the investment which the applicant proposes to make in the mines and in the industry based on the minerals; (e) such other matters as may be prescribed.

11(4). Subject to the provisions of sub section (1), where the State Government notifies in the Official Gazette an area for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, all the applications received during the period as specified in such notification, which shall not be less than thirty days, shall be considered simultaneously as if all such applications have been received on the same day and the State Government, after taking into consideration the matters specified in sub section (3), may grant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit.

11(5). Notwithstanding anything contained in subsection (2), but subject to the provisions of subsection (1), the State Government may, for any special reasons to be recorded, grant a reconnaissance permit, prospecting licence or a mining lease, as the case may be, to an applicant whose application was received later in

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preference to an applicant whose application was received earlier:

Provided that in respect of minerals specified in the First Schedule, prior approval of the Central Government shall be obtained before passing any order under this subsection.”

27. The State of Orissa and some others have taken

plea that amended Section 11, as amended by Act 38 of

1999 w.e.f. 20th December, 1999, would apply.

28. According to the State of Orissa the

preferential right envisaged in Section 11(1) is

considerably distinct from the preference envisaged

by Section 11(2). It is only in the case of Section

11(1) where a person has already held a

reconnaissance permit or a prospective licence that

he gets a preferential right for obtaining a

prospecting licence or mining lease. It may be seen

that Section 11(5) is subject to the provisions of

subsection (1) and, therefore, the State Government

has no authority to give special reasons for

overriding the preference. Further, Section 11(5) is

notwithstanding Section 11(2), thus the preference

under Section 11(2) can be overridden by special

reasons.

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29. Another distinction is that while Section 11(1)

uses the expression "shall have a preferential right

for obtaining", Section 11(2) uses the expression

"shall have the preferential right to be considered

for grant". Thus, under Section 11(2), the

preferential right is only in relation to

consideration. The preference envisaged under Section

11(2) does not mean that the other applicants are not

to be considered. It could only mean that if on an

inter se consideration, the applicants are at par,

then the prior application may be given a preference.

30. On the other hand learned counsel for the Geomin

has submitted that preamended Section 11(2) shall be

applicable.

31. In State of Tamil Nadu v. M/s Hind Stone, (1981)

2 SCC 205 similar question fell for consideration

before this Court. That was a case relating to

renewal of lease for mining minerals. The argument

was that Rule 9 itself laid down the criteria for

grant of renewal of lease and therefore, Rule 8C

should be confined, in considering applications for

grant of leases in the first instance. This Court

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held that an application for the renewal of a lease

is, in essence an application for the grant of a

lease for a fresh period and, therefore, the

Rule 8C is attracted.

32. Amended Section 11(2) is applicable where the

State Government has not notified in the Official

Gazette the area for grant of reconnaissance permit

or prospective licence or mining lease and two or

more persons have applied for reconnaissance permit,

prospective licence or mining lease in respect of any

land in such area, the applicant whose application

was received earlier, shall have the preferential

right to be considered for grant of reconnaissance

permit, prospective licence or mining lease, over the

applicant whose application was received later.

However, as per First proviso to Section 11(2)

where an area is available for grant of

reconnaissance permit, prospecting licence or mining

licence, and the State Government has invited

applications by notification in the Official Gazette

for grant of such permit, licence or lease, all the

applications received during the period specified in

such notification and the applications which had been

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received prior to the publication of such

notification in respect of the lands within such area

and had not been disposed of, shall be deemed to have

been received on the same day for the purposes of

assigning priority under said subsection. Thus

under amended Proviso to Section 11(2), even those

applications received prior to the publication but

had not been disposed of, shall be deemed to have

been received on the same day for the purpose of

assigning priority under the said sub Section.

33. According to us, this is not the stage to decide

as to whether in the present case the preamended or

amended Section 11(2) shall be applicable and thereby

priority should be assigned under preamended or

amended Section 11(2) as the matter has already been

considered by the State Government and recommendation

is required to be considered by the Central

Government under Section 5(1) of the Act.

The Central Government is required to go through

the relevant facts of each case to determine whether

the recommendation is to be approved or not. While

deciding the question the Central Government will

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keep in mind the order which was passed by the

Revisional Authority(Central Government) in the case

of Dagara on 2nd May, 2008.

34. It is well settled that no applicant has

statutory or fundamental right to obtain prospecting

licence or a mining lease. In this connection one

may refer to this Court decision in Monnet Ispat

(supra). Therefore, the High Court before interfering

with the recommendation, ought to have looked into

the nature of recommendation.

35. In view of the finding as recorded above, we are

of the view that the High Court committed a grave

error of law in deciding the case on merits and

deciding the question of legality of the

recommendation made by the State Government. In fact

they should have left the matter to the Central

Government to pass an appropriate order in accordance

with law instead of entertaining a premature writ

petition. The State Government by its recommendation

having forwarded the tabulated chart showing inter se

merit of each applicant, it was not for the High

Court to sit in appeal to decide who amongst all is

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more meritorious and is entitled for preferential

right.

36. We, accordingly, set aside the impugned

judgment dated 14th July, 2010 passed by the Division

Bench of the Orissa High Court and remit the matter

to the Central Government to consider the question of

approval under Section 5(1) taking into consideration

the recommendations made by the State Government.

While deciding the question it will keep in mind the

objections raised by the parties as noticed in the

preceding paragraphs. It is expected that the

decision will be taken on an early date and shall be

communicated to the State Government. The appeals

are allowed with the aforesaid observation and

direction, but there shall be no order as to costs.

……………………………………………….J. ( R.M. LODHA )

……………………………………………….J. ( SUDHANSU JYOTI

MUKHOPADHAYA)

NEW DELHI, MAY 10, 2013.

52

GEOMIN MINERALAS & MARKETING P.LTD. Vs STATE OF ORISSA .

GEOMIN MINERALAS & MARKETING P.LTD. Vs STATE OF ORISSA .