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Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 2818 OF 2015 (@ SLP (C) NO(S).32226 OF 2009)

M/s. Muneer Enterprises  ….Appellant

VERSUS

M/s Ramgad Minerals and Mining Ltd. & Ors.     ….Respondents

J U D G M E N T

Fakkir Mohamed Ibrahim Kalifulla, J.

1. Leave granted.

2. This  appeal  is  directed against  the common judgment  dated  

26.08.2009, passed in W.A.No.5377 of 2004 and W.P.No.23782 of  

2005.

3. The writ  appeal  was preferred by the first  respondent herein  

against the judgment in W.P.No.31690 of 2003 of the learned Single  

Judge dated 10.11.2004 in and by which the order of  transfer of  

mining  lease  from  the  original  licencee  M/s.  Dalmia  Cements  

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(Bharat) Limited (hereinafter called “M/s. Dalmia”) to and in favour  

of the first respondent herein was set aside.   

4. Writ petition in W.P.No.23782 of 2005 was filed by one Dinesh  

Kumar Singhi, a mine operator praying for a direction to the State of  

Karnataka  and  Director  of  Mines  and  Geology  to  dispose  of  his  

application dated 03.05.2001 for grant of licence to operate 819.20  

acres of the forest mining area in Jaisinghpur village covered by the  

erstwhile mining lease No.M.L.No.2010 of M/s. Dalmia.  We are not  

concerned with the said writ petition, as the said writ petitioner has  

not challenged the order of the Division Bench by which his writ  

petition was dismissed.  We are only concerned with the judgment in  

W.A.No.5377 of 2004.

5. Having regard to the chequered history of this case, the detailed  

facts  pertaining  to  the  grant  of  mining  lease  with  reference  to  

M.L.No.2010 over an extent of 331.50 hectares (819.20 acres) of  

forest area in Jaisinghpur village, R.M.Block, Sandur Taluk, Bellary  

District  has  to  be necessarily  stated.  The  said  mining lease was  

originally granted in favour of M/s. Dalmia on 25.11.1953.  The said  

lease expired on 24.11.1983. Based on the application of M/s.Dalmia  

Cements,  the  mining  lease  was  renewed  for  20  years  with  

retrospective effect from 25.11.1983 by an order dated 07.03.1986.  

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It  is  required to  be noted that  though Forest  (Conservation)  Act,  

1980,  hereinafter  called  “The  Forest  Act,  1980”  came  into  force  

w.e.f.  from 25.10.1980,  the  requirement  of  prior  approval  of  the  

Central Government as prescribed in Section 2 of the said Act was  

not taken at the time of first renewal.

6. Be that  as  it  may,  the effect  of  non-compliance  of  approval  

under Section 2 of the Forest Act, 1980 was the subject matter of  

consideration  of  this  Court  in  the  decision  reported  in  T.N.  

Godavarman Thirumulkpad v. Union of India & Ors.- (1997) 2  

SCC  267  (Godavarman I).  By  virtue  of  the  said  judgment,  the  

Director of Mines and Geology, the third respondent herein directed  

M/s.Dalmia  to  stop  all  mining  activities  by  its  order  dated  

25.01.1997.  M/s.Dalmia stopped its mining activities from January  

1997.  Based  on  the  subsequent  judgment  of  this  Court  in  T.N.  

Godavarman Thirumulkpad v. Union of India & Ors. - (1997) 3  

SCC 312 (Godavarman II), the Ministry of Environment and Forest  

(MOEF)  granted  conditional  in-principle  (Stage-I)  approval  for  

renewal of M/s. Dalmia’s mining lease over 201.50 hectares of forest  

land out of 331.50 hectares by an order dated 24.12.1997.

7. By its letter dated 16.04.1999, M/s. Dalmia surrendered 196.58  

hectares of land out of the leased area of 331.50 hectares to the  

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Forest  Department  of  the  State  Government.  Subsequently,  M/s.  

Dalmia  in  its  letter  dated  27.03.2001,  expressed  its  desire  to  

surrender the remaining area held by it indicating that such notice  

being given for determination of the lease as required under the  

terms of the mining lease deed and that the lease would expire after  

12  months  notice  period  from  01.04.2001 or  any  time  earlier  if  

permitted by the State Government.  In  response to  M/s.Dalmia’s  

letter dated 27.03.2001  by letter dated 25.05.2001, the office of the  

Director of Mines while communicating to one of its officers marked  

a copy of  its  letter  dated 25.05.2001 calling upon M/s.Dalmia  to  

surrender its  lease deed book and mining plan.   By  letter  dated  

16.06.2001  M/s.Dalmia  surrendered  the  lease  deed  book  and  

informed that its mining plan was missing.

8. Subsequently,  one  M.S.P.L.  Limited,  through  its  Executive  

Director Mr. Rahul Baldota applied for grant of mining lease of the  

area held by M/s.Dalmia through its application dated 21.07.2001.  It  

is necessary to be noted that the said Rahul Baldota is the husband  

of  Mrs.  Lavine  R.  Baldota  the  Executive  Director  of  the  first  

respondent herein.  In the application of M/s M.S.P.L. limited dated  

21.07.2001  it  was noted by the Director  of  Mines  and Geology,  

namely, one Dr.Reddy on 25.08.2001, stating among other things  

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that  grant  of  mining  lease  of  surrendered  lands  can  only  be  

considered  as  specified  in  Rule  59(1)  of  the  Mineral  Concession  

Rules.   

9. Pursuant to such steps taken by M/s.Dalmia in its letter dated  

27.03.2001,  the  suit  bearing  O.S.No.53 of  1993 filed  against  the  

appellant herein relating to boundary dispute of the mines held by it  

was dismissed for non-prosecution on 26.09.2001.  By letter dated  

09.01.2002 , the Director of Mines and Geology directed its Deputy  

Director, Hospet to survey and demark the area covered by lease  

deed  of  the  appellant  specifically  pointing  out  the  dismissal  of  

O.S.No.53 of 1993  by M/s.Dalmia.

10. On  30.01.2002,  M/s.Dalmia  made  a  payment  of  Rs.22,332/-  

stated to be the arrears in respect  of  mining lease held by it  in  

M.L.No.2010.  On  31.01.2002,  the  Director  of  Mines  and  Geology  

issued a no due certificate to M/s.Dalmia confirming the receipt of a  

sum  of  Rs.22,332/-  by  way  of  Demand  Draft  from  M/s.Dalmia.  

However  on  04.02.2002,  M/s.Dalmia  applied  to  the  State  

Government for permission to transfer its mining lease M.L.No.2010  

of  2010  including  the  196.58  hectares  said  to  have  been  

surrendered  by  it  in  1999  to  the  first  respondent  herein.   On  

06.02.2002 the Director of Mines and Geology viz. Dr.Reddy who in  

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his earlier communication dated 25.08.2001 to M/s.M.S.P.L. Limited  

informed that Rule 59(1) of Mineral Concession Rules would apply  

for grant of licence in M.L.No.1020, this time recommended for the  

transfer of licence from M/s.Dalmia to the first respondent herein.  

On 16.03.2002, the State Government passed orders allowing the  

application for transfer of mining lease as applied for by M/s Dalmia  

in favour of the first respondent.   

11. It was in the above stated background at the instance of the  

appellant, the order dated 16.03.2002, of the State Government was  

challenged in W.P.No.31690 of 2003 in the High Court of Karnataka.  

The learned Single Judge of the Karnataka High Court allowed the  

said writ petition, by order dated 10.11.2004.  Challenging the same,  

the first respondent preferred writ appeal in W.A.No.5377 of 2004.  

By the order impugned in this petition, the Division Bench having set  

aside the order of the learned Single Judge and restored the order of  

transfer dated 16.03.2002, the appellant has come forward with this  

appeal.

12. When  the  writ  appeal  was  pending,  based  on  the  oral  

application  of  the  first  respondent  herein,  the  Division  Bench  

directed  the  State  Government  and  the  Director  of  Mines  and  

Geology to process its application for transfer of the renewal of the  

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lease in favour of the first respondent under the Forest Act, 1980  

within two months and forward its report to the Central Government  

with a further direction to the Central  Government to decide the  

same within three months. The appellant challenged the said order  

dated 19.04.2006 in S.L.P.No.11508 of  2006.  By an order dated  

26.10.2007,  this  Court  directed  the  Division  Bench  of  Karnataka  

High Court to dispose of Writ Appeal No.5377 of 2004 and that the  

order of the Central Government dated 13.09.2006 granting its in-

principle (Stage I)  ex post facto approval granted in favour of the  

first respondent would not create right/equity in favour of the first  

respondent.  By the impugned order dated 26.08.2009, the Division  

Bench  held  that  renewal  of  mining  lease without  obtaining  prior  

approval under Section 2 of the Forest Act, 1980 would not render  

such renewal  void ab initio and any such illegality can be cured or  

regularized by the Central Government by passing an order under  

Section 2 of the Forest Act, 1980 ex post facto.

13. When this Special Leave Petition was entertained, by an order  

dated  16.12.2009,  it  was  directed  that  processing  of  Stage  II  

clearance be continued with a further direction to maintain status  

quo as regards the mining activities.  By order dated 09.09.2010,  

Stage  II  clearance  has  also  been  granted  in  favour  of  the  first  

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respondent and by subsequent order dated 23.09.2010, this Court  

has directed that the status quo should remain operative pending  

the Special Leave Petition.

14. In  the  above  stated  background,  we  heard  Mr.Kapil  Sibal,  

learned  senior  counsel  for  the  appellant,  Mr.K.K.Venugopal  and  

Mr.Krishnan  Venugopal,  learned  senior  counsel  for  the  first  

respondent, Dr.Abhishek Manu Singhvi, learned senior counsel for  

the fifth respondent in the writ appeal who was not added as a party  

respondent  in  this  Special  Leave  Petition  and  Ms.Anitha  Shenoy,  

Advocate-on-Record for the State of Karnataka and the Director of  

Mines  and  Geology.   Mr.J.S.  Attri,  learned  senior  counsel  who  

appeared for the Union of India, the fourth respondent.

15. Mr.Kapil  Sibal,  learned  senior  counsel  appearing  for  the  

appellant contended that once M/s.Dalmia surrendered its lease in  

respect  of  M.L.2010,  which  surrender  has  become  final  and  

conclusive,  there  was  no  scope for  transfer  of  such  surrendered  

mining lease in favour of the first respondent herein.  The learned  

senior counsel then contended that assuming the surrender has not  

come into effect, at the time of first renewal when in-principle stage-

I approval was granted by the Central Government through MOEF in  

its  order  dated  24.12.1997,  imposing  very  many  conditions  and  

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since M/s.Dalmia failed to comply with those conditions within five  

years of the said order viz., 23.12.2002 and that the first renewal so  

granted also  expired in  November 2003, by which  time also  the  

conditions  imposed  in  the  in-principle  stage-I  approval  was  not  

complied with, there was factually no renewal of the mining lease  

which stood expired initially on 24.11.1983  and in any event after  

the expiry of the first renewal viz., 24.11.2002.  

16. The learned senior counsel further contended that there should  

have  been  no  second  renewal  or  grant  of  in-principle  stage-I  

clearance after 23.12.2002 as well as by the present order dated  

13.09.2006.  The learned senior counsel contended that under Rule  

59 of Mineral Concession Rules, when once the mining lease was  

surrendered by M/s.Dalmia and when surrender has come into effect  

thereafter,  for  subsequent  grant  of  mining  lease,  the  procedure  

prescribed in the said Rule has to be followed and the order of the  

State  Government  in  having  passed  its  order  dated  16.03.2002  

transferring  the  mining  lease  from  M/s.Dalmia  to  the  first  

respondent was wholly illegal and void ab initio.  

17. The learned senior counsel by referring to Rule 37 and Rule 29  

of the Mineral Concession Rules, submitted that in the light of the  

surrender of the mining lease by M/s.Dalmia, there was no right in  

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M/s.Dalmia to apply for transfer in favour of the first respondent.  He  

further contended that by virtue of the provision contained in Rule  

29  of  the  Mineral  Concession  Rules,  the  mining  lease  was  

determined by M/s.Dalmia and in such circumstances by virtue of  

Section 19 of the Mines and Minerals Development and Regulations  

Act any mining lease in contravention of the Act and Rules would be  

void ab initio. The learned senior counsel contended that, therefore,  

the so-called acquisition of mining lease of M/s.Dalmia by the first  

respondent was void.

18. Dr.  Abhishek  Manu  Singhvi,  learned  senior  counsel  for  the  

intervenor submitted that since the said applicant was added as the  

fifth  respondent  before  the  Division  Bench  by  order  dated  

08.06.2007, it was entitled to get intervened in this appeal. Though  

the application for intervention was stoutly opposed on behalf of the  

first respondent by referring to certain earlier orders of this Court in  

the S.L.Ps.  filed by the intervenor,  since the said  intervenor  was  

added as the fifth respondent by the first respondent itself in the  

writ appeal, which was pending before the Division Bench, we are of  

the view that due to failure of the appellant in not impleading the  

intervenor as a party respondent in this  appeal,  it  should not be  

deprived of its right to be heard in this appeal.  Therefore, without  

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any scope for anyone to quote as a binding precedent in any other  

case,  having regard to  the peculiar  facts  of  this  case where the  

intervenor was a party respondent before the Division Bench in the  

Writ Appeal, the order of which is the subject matter of challenge in  

this appeal, we are of the view that the intervenor can be permitted  

to make its submissions and the I.A. for intervention stands allowed.

19. Dr.  Abhishek  Manu  Singhvi,  learned  senior  counsel  in  his  

submissions contended that by virtue of Rule 29 read along with  

Rule 59 of Mineral Concessions Rules the determination of the lease  

at the instance of M/s.Dalmia having come into effect, nothing would  

survive  thereafter.   According to  the learned senior  counsel,  the  

period of twelve months prescribed in Rule 29 cannot enure to the  

benefit of the lessee and that such time period was meant for the  

benefit of the State Government.

20. The learned senior counsel by referring to various dates from  

27.03.2001 upto 31.01.2002 submitted that the State Government  

understood the determination of the lease correctly as intended by  

M/s.Dalmia  and,  therefore,  when  once  the  mining  lease  got  

terminated  by  virtue  of  the  complete  surrender  nothing  would  

survive thereafter. Dr.Singhvi thus contended that if the sequence of  

events  after  the  surrender  had  taken  place  are  noted,  viz.,  the  

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application made by M/s.M.S.P.L. on 21.07.2001  at the instance of  

Mr.Rahul Baldota  as the Executive Director of M/s.M.S.P.L.  which  

was rejected by the Director of Mines and Geology by order dated  

25.08.2001,   the  signatory  of  which  was  one  Dr.Reddy,  the  

subsequent application at the instance of M/s.Dalmia for transfer in  

favour of the first respondent who was represented by its Executive  

Director Mrs.Baldota  who was none other than the wife of Mr.Rahul  

Baldota  whose  earlier  application  for  grant  of  mining  lease  was  

rejected, it would show that all was not well in the passing of the  

order of transfer dated 16.03.2002.  In this connection, the learned  

senior counsel pointed out that the very same Director of Mines and  

Geology, Dr.Reddy who by his order dated 25.08.2001 rejected the  

application of M/s.M.S.P.L. for grant of mining licence on the ground  

that such grant can be considered only by following Rule 59, took a  

diametrically opposite stand when he recommended for transfer of  

surrendered  mining  lease  in  favour  of  the  first  respondent  and  

thereby serious fraud has been committed by the first respondent in  

connivance with M/s.Dalmia, the first respondent and the officers of  

the State Government. The learned senior counsel would contend  

that  such  an  action  of  the  parties  would  amount  to  collusion  

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between  the  first  respondent  and  the  officials  of  the  State  

Government which should not be allowed to remain.  

21. Dr.Singhvi,  learned senior  counsel  then contended that  there  

were serious violations of Forest Act of 1980 on which ground as  

well  the order of  transfer dated 16.03.2002 cannot be sustained.  

The learned senior counsel pointed out that the first renewal of the  

mining lease in M.L.No.2010 of 2010 was for the period between  

25.11.1983  to  24.11.2003,  which  was  granted  on  07.03.1986  

retrospectively  from  25.11.1983  and  that  no  prior  approval  as  

prescribed in Section 2 of the Forest Act, 1980 was obtained. The  

learned senior counsel further contended that the said violation of  

the Forest Act,  1980 would strike at the root of the case and in  

effect the very first renewal was void.

22. The learned senior counsel then contended that out of 331.50  

hectares M/s.Dalmia surrendered 196.58 hectares of land as early as  

on 16.04.1999 and that what remained was only 134.92 hectares for  

which  there was  no  ex  post  facto approval.   The learned senior  

counsel  then  contended  that  subsequently  by  an  order  dated  

24.12.1997,  MOEF  granted  in-principle  stage-I  approval  imposing  

conditions  in  respect  of  201.50  hectares  to  M/s.Dalmia  and  the  

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conditions not having been complied with by M/s.Dalmia, the licence  

could not have remained in force any further.

23. The learned senior counsel then contended that grant of ex post  

facto approval by the Central Government as per the direction of  

this Court in Godavarman judgments cannot be granted on every  

occasion  when  the  violation  had  taken  place.   According  to  the  

learned senior counsel, the grant of such ex post facto approval as  

per the directions of this Court having been already considered and  

granted  on  24.12.1997  and  due  to  failure  of  compliance  of  the  

conditions  imposed  in  the  said  order,  the  lease  had  become  

inoperative,  there was no scope for grant of any further  ex post  

facto approval after the expiry of the first renewal viz., 23.11.2003.

24. The learned senior counsel placed reliance upon the decisions  

reported  in  A.  Chowgule  and  Company  Limited  v.  Goa  

Foundation  &  Ors.  - (2008)  12  SCC  646,  Nature  Lovers  

Movement v. State of Kerala and Ors. - (2009) 5 SCC 373 and  

K. Balakrishnan Nambiar v.  State of  Karnataka and Ors.  -  

(2011) 5 SCC 353 in support of his submissions.  

25. On Rule 59, according to the learned senior counsel the said  

Rule provides for common hotchpot for the Government and that  

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once  the  lease  was  surrendered  by  M/s.Dalmia,  the  State  had  

become the owner of the land and any further grant of mining lease  

can only be in accordance with Rule 59(1) by way of public auction  

and, therefore,  the acceptance of the transfer applied for by M/s  

.Dalmia  in  favour  of  the  first  respondent  in  the  order  dated  

16.03.2002 cannot be approved.  The learned senior counsel also  

relied  upon  the  decisions  reported  in  Janak  Lal  v.  State  of  

Maharashtra  &  Ors. -  (1989)  4  SCC  121,  Bangalore  

Development Authority v.  Vijaya Leasing Limited & Ors.  -  

(2013) 14 SCC 737,  Ram Preeti Yadav v. U.P. Board of High  

School and Intermediate Education and Ors.  - (2003) 8 SCC  

311 and  Bhaurao Dagdu Paralkar v. State of Maharashtra &  

Ors. - (2005) 7 SCC 605 in support of his submissions.

26. As  against  the  above  submissions,  on  behalf  of  the  first  

respondent Mr. K.K. Venugopal and Mr. Krishnan Venugopal, learned  

senior counsel made their submissions. The submission of Mr. K.K.  

Venugopal was that the appellant had committed serious violation of  

the Mines and Minerals Development and Regulations Act and its  

Rules as well  as the provisions of  the Forest Act  by indulging in  

encroachment of forest land as well as the lands originally held by  

M/s.Dalmia  now held  by the first  respondent which  amounted to  

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looting of the wealth of the nation and consequently they had no  

locus to challenge the order of transfer dated 16.03.2002.

27. As far as the intervenor is concerned, the learned senior counsel  

by referring to some of the earlier orders of this Court passed in  

S.L.Ps.  preferred by the intervenor himself  submitted that having  

failed in its attempt to get impleaded, he has come forward with this  

intervention application and, therefore, he should not be heard.

28. As far as the question of surrender was concerned, according to  

Mr.K.K.Venugopal,  it  was  a  mixed  question  of  fact  and  law.  

According to him, even while examining the factual surrender at the  

instance of M/s.Dalmia, when the provisions of Mines and Minerals  

Development  and  Regulations  Act  and  the  Mineral  Concession  

Rules, in particular Rule 29 read along with the terms and conditions  

in  the  mining  lease  are  examined,  it  would  show  that  such  

prescriptions were mandatory; negatively couched, and, therefore,  

unless twelve months notice period is completed, there would have  

been no scope for anyone to contend that the lease had come to an  

end.   The  learned  senior  counsel  contended that  if  the  licencee  

intends to surrender the mining lease, they should have submitted  

to  the  State  Government  or  such  officer  or  specified  authority  

competent  to  accept  such  surrender  and  when  any  third  party  

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alleges  the  surrender  to  have  come into  effect,  the  burden was  

heavily upon the said third party to prove the same. In so far as the  

alleged surrender of  M/s.Dalmia  is  concerned,  the learned senior  

counsel contended that no surrender had taken place in the eye of  

law,  in  as  much  as,  such  surrender  was  not  carried  out  by  

M/s.Dalmia strictly in accordance with Rule 29 of Mineral Concession  

Rules and that 12 months period has also not expired before the  

transfer in favour of first respondent was effected.

29. Mr.Krishnan  Venugopal,  learned  senior  counsel  in  his  

submissions stated that the Director of Mines and Geology had no  

power to accept the surrender and, therefore, there was no scope to  

contend that the surrender was accepted before the expiry of 12  

months.  After referring to the relevant Notifications passed under  

Section  26(2)  of  the  Mines  and  Minerals  Development  and  

Regulation Act,  the learned senior counsel pointed out that there  

was no delegation of power made in favour of the Director of Mines  

and Geology in contemplation of Rule 29 of the Mineral Concession  

Rules and therefore he was not the competent authority.   It  was  

contended that if at all the surrender could have been effected, the  

same could have been effected only with the State Government and  

that too by passing a positive order by the State accepting such  

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surrender.  The  learned  senior  counsel  contended  that  the  letter  

dated 25.05.2001 can never be taken as an order of acceptance of  

surrender.  The  learned  senior  counsel  relied  upon  the  decisions  

reported in Sandur Manganese and Iron Ores Limited v. State  

of Karnatala and Ors.  - (2010) 13 SCC 1,  Sethi Auto Service  

Station and Anr.  v.  Delhi  Development Authority & Ors.  -  

(2009) 1 SCC 180 and  Shanti Sports Club & Anr. v. Union of  

India & Ors. - (2009) 15 SCC 705 in support of his submissions.

30. He  also  contended  that  after  the  Forest  Conversion  

(Amendment) Rules, 2014 in particular Rule 8(3)(a) & (d)  old Rules  

6 and 7  were substituted and new Rules 6, 7 and 8 were brought in  

and by virtue of the newly amended Rules, the consequence of non-

compliance of Section 2 of the Forest Act, 1980 would not ipso facto  

make the lease void ab initio except that the mining operation will  

have to be stopped and after complying with the conditions,  the  

lessee  will  have  to  start  afresh  by  getting  the  clearance  under  

Section 2 of the Forest Act, 1980.  The learned senior counsel also  

contended that under the MMDR Act, the only provision under which  

the  lease  will  become  void  is  Section  19  and  therefore  the  

contention of the appellant that non-compliance of Section 2 of the  

Forest  Conservation  Act    would  render  the  lease  void  ab  initio  

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cannot be accepted.  He also contended that with the first renewal  

of the lease by an order dated 07.03.1986 the lease was renewed  

from 25.11.1983 to 24.11.2003, that on 04.02.2002, itself i.e., long  

before  12  months  prior  to  the  expiry  of  the  renewed  lease,  

application  for  transfer  was  made,  that  on  16.03.2002 itself  the  

State Government passed an order of transfer of the lease and in  

the circumstances by virtue of Rule 24(A)(1) read along with Rule  

26(1)  of  the  Mineral  Concessions  Rules,  the  right  for  renewal  

continued to exist and that no order of rejection of renewal under  

Rule 26(1)  was ever passed.  It was, therefore, contended that as  

on  date  the  right  of  renewal  was  subsisting  and  it  continue  to  

subsist.

31. The  learned  senior  counsel  contended  that  MMDR  Act  and  

Forest Conversion Act, 1980 function in two different fields in the  

sense that the existence and continuance of the lease and right of  

renewal are independent of the approval to be received under the  

Forest Act, 1980, that the consequence of violation of Section 2 of  

the Forest Act,  1980 will  not ipso facto determine the lease and  

make it void and that only other consequence would be as provided  

under Section 3(A) of the Forest Act, 1980.  As far as renewal of the  

lease  is  concerned,  according to  the  learned senior  counsel,  the  

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same is exclusively under MMDR Act and once the lessee complies  

with  the  requirements  under  the  Forest  Act,  1980  the  right  of  

renewal of the lease would get automatically revived.

32. On  the  question  of  voidness,  the  learned  senior  counsel  by  

referring to the decisions in Smt. Lila Gupta v. Laxmi Narain &  

Ors. -  (1978) 3 SCC 258 and Pankaj Mehra & Anr. v. State of  

Maharashtra & Ors. - (2000) 2 SCC 756 contended that equity is  

in favour of the first respondent to sustain the lease and this is a fit  

case to affirm the Section 2 approval and in the alternative to permit  

the first respondent to apply under Section 2 for compliance.

33. By referring to  Rule 29 of  the Mineral  Concession Rules,  the  

learned senior counsel  would contend that the prescription of  12  

months notice period in the said Rules is mandatory and has got a  

purpose  and  intent  and  therefore  unless  the  12  months  period  

expires, after the lessee expressed its desire to surrender the lease  

and  that  too  such  notice  of  termination  is  submitted before  the  

competent authority as prescribed under Rule 29, it cannot be held  

that  surrender  would  take  effect  the  moment  such  a  notice  is  

submitted by the lessee to some incompetent authority.

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34. The learned senior counsel summarized his submissions on the  

question of surrender by contending that the return of the Lease  

Book by itself would not confirm the case of surrender unless the  

period of 12 months as prescribed under Rule 29 expired, that even  

if it is to be stated that the State Government waived the 12 months  

period, unless there is a specific order accepting the surrender, it  

cannot be held that the surrender had come into effect.  The learned  

senior counsel also submitted that there was no evidence to show  

that such acceptance of surrender in the form of an order of the  

State  Government  was  issued.   It  was  therefore  contended  that  

there is no scope for inferring any such surrender based on certain  

communications addressed to the authorities and the copies marked  

to the lessee.  As far as the no due certificate was concerned, the  

learned senior  counsel  contended that  the same was  made four  

days prior to the application of transfer and the payment was meant  

for the purpose of effecting the transfer.

35. Countering the submissions of the learned senior counsel for the  

first  respondent  Mr.Kapil  Sibal  submitted  that  in  the  decision  

reported in  Basheshar Nath v. Commissioner of Income Tax,  

Delhi and Rajasthan & Anr. - AIR 1959 SC 149, the Constitutional  

Bench has held that the right of  waiver can be exercised by the  

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State and submitted that reading the said judgment in the light of  

Rule  29  read  along  with  paragraph  4  of  the  licence  conditions  

contained in Form K. Waiver exercised by the State while accepting  

the surrender before 12 months under Rule 29 was valid in law.  The  

learned  counsel  also  relied  upon  the  decisions  reported  in  

Commissioner of Customs, Mumbai v. Virgo Steels, Bombay  

& Anr. - (2002) 4 SCC 316 and Vasu P. Shetty v. Hotel Vandana  

Palace & Ors. - (2014) 5 SCC 660.

36. As against the arguments of the learned senior counsel for the  

first  respondent  that  any  surrender  should  be  made  to  the  

concerned authority and should be accepted only by the competent  

authority, Mr.Sibal submitted that surrender was made to the State  

Government as disclosed in the statement of objections submitted  

on behalf  of  the State Government,  wherein,  in  paragraph 5 the  

State Government  itself  has accepted that  M/s.  Dalmia  made its  

application dated 27.03.2001  to the State Government proposing to  

surrender  the  lease  held  by  it  w.e.f  01.04.2001  and  also  

subsequently  surrendered  the  Mining  Lease  Book  to  the  State  

Government. The learned counsel however pointed out that though  

in the said paragraph 5, it was stated that the said application was  

not considered and the State Government did not pass any orders  

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accepting  the  surrender  of  the  mining  lease,  the  learned  senior  

counsel pointed out that the grant of lease was by the Director of  

Mines as disclosed in Form K of the mining lease which states that  

the term lessor included its  successors/assignees and also in the  

condition for the determination of lease, it was the Director of Mines  

who has affixed his signature. The learned senior counsel contended  

that going by the opening set of expressions in Form K deeming  

fiction would operate and the Director of Mines was the authority  

who was competent to accept the surrender.  The learned senior  

counsel also contended that this question was never raised at the  

instance  of  the  first  respondent  and  in  the  absence  of  proper  

pleading  before  the  High  Court,  the  first  respondent  cannot  be  

permitted to raise the said issue which is a mixed question of fact  

and law.

37. As  regards  the  argument  that  surrender,  whether  it  was  

accepted and that too by a written order, the learned senior counsel  

contended  that  acceptance  of  such  surrender  before  expiry  of  

twelve months can also be gathered from the conduct of the parties  

unless there is a statutory requirement.  The learned senior counsel  

after referring to the sequence of correspondence which emanated  

from M/s.Dalmia’s letter dated 27.03.2001, the reply from the office  

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of  the  Director  of  Mines  and  Geology  dated  25.05.2001,  

M/s.Dalmia’s letter dated 16.06.2001, the dismissal of the suit by  

M/s.Dalmia dated 26.09.2001 and the no dues certificate issued by  

the  State  Government  on  31.01.2002  contended  that  the  same  

sufficiently disclosed that the lease was not only surrendered it was  

also acted upon by the concerned authority.

38. As  regards  the  contention  of  the  first  respondent  that  non-

compliance  of  Section  2  of  the  Forest  Act,  1980  can  have  no  

implication insofar as it related to the validity of the lease granted  

under the Mines and Minerals (Development and Regulations) Act,  

Mr.Sibal,  learned  senior  counsel  would  contend  that  the  said  

submission cannot be accepted.  According to the learned senior  

counsel, even before coming into force of the Forest Act, 1980 under  

the proviso to Section 5 of the Mines and Minerals (Development  

and  Regulations)  Act  the  requirement  of  Central  Government’s  

approval was mandatory which came to be imposed as a statutory  

condition in respect of the forest land under Section 2 of the Forest  

Act, 1980.  The learned senior counsel therefore contended that the  

requirements of approval to be granted by the Central Government  

being  a  statutory  requirement,  one  made  under  the  Mines  and  

Minerals (Development and Regulations) Act as well as under the  

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Forest  Act,  1980,  the  operation  of  the  mining  lease  cannot  be  

carried out without the prior approval of the Central Government  

under the Forest Act, 1980.  In other words, according to the learned  

senior counsel, the requirement of approval under the Forest Act,  

1980 has to synchronize with the mining lease if  the leaseholder  

wants  to  carry  on  mining  operation  in  respect  of  the  minerals  

specified  in  the  first  schedule  of  the  Mines  and  Minerals  

(Development  and Regulations)  Act.   The  learned senior  counsel  

contended  that  the  only  exception  provided  was  under  the  

judgments of  this  Court  in  Godavarman I  and II (cited supra)  

which  was  by  virtue  of  the  extraordinary  Constitutional  power  

vested  in  this  Court  under  Article  142  and  under  no  other  

circumstance the mining operation can be carried on even if one  

were  to  possess  the  licence  under  the  Mines  and  Minerals  

(Development and Regulations) Act.

39. The learned senior counsel pointed out that after the in-principle  

Stage-I approval granted on 24.12.1997, when M/s.Dalmia failed to  

comply  with  the  conditions  imposed  till  the  expiry  of  the  first  

renewal which occurred on 24.11.2003, any attempt on behalf of the  

first respondent through its communication dated 11.05.2004, based  

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on the order of transfer dated 16.03.2002, could not have validated  

the lease which already got lapsed on its own.

40. Mr.Sibal, learned senior counsel then contended that when the  

writ petition was pending before the High Court, on behalf of the  

Central Government, Ministry of Environment and Forest raised its  

objections  as  disclosed  in  its  objections  dated  03.02.2004,  for  

granting any approval, after the expiry of the first renewal, due to  

non-compliance of the conditions imposed in the in-principle stage-I  

approval which weighed with the learned Judge of the High Court  

when the renewal itself was quashed by the learned Judge in the  

order dated 10.11.2004.  The learned senior counsel then referred to  

the judgment of  the Division Bench in W.A.No.5377 of  2004, the  

second  renewal  application  and  the  in-principle  stage-I  approval  

subsequently granted on 13.09.2006 and also the order of this Court  

dated  26.10.2007 which  made  it  clear  that  the  first  respondent  

cannot claim any equity based on the order dated 13.09.2006. The  

learned  senior  counsel  submitted  that,  therefore,  both  the  in-

principle  stage-I  approval  dated  13.09.2006  as  well  as  the  final  

approval dated 09.09.2010 will be of no avail to the first respondent  

for  getting  the  surrendered  lease  revived.   The  learned  senior  

counsel, therefore, contended that the claim of the first respondent  

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that  the  mining  lease  would  be  unaffected  by  the  non  grant  of  

approval  under  Section  2  of  the  Forest  Act,  1980  cannot  be  

accepted.   The  learned  senior  counsel  relied  upon  the  decisions  

reported in Ambica Quarry Works v. State of Gujarat & Ors. –  

(1987) 1 SCC 213.

41. Mr. Sibal, learned senior counsel lastly contended that Section  

10(1)  and  the  second  proviso  to  Section  11  of  the  Mines  and  

Minerals (Development and Regulations) Act has to be read along  

with  Rules  37   and  59   and  contended  that  the  application  for  

transfer  under  Rules  37(1)(a)   or  1(A)  cannot  be  automatically  

granted.  The learned senior counsel submitted that whatever would  

apply to a fresh application as provided under Section 10(1) and  

second  proviso  to  Section  11  would  equally  apply  even  to  the  

transfer and the application for transfer cannot be granted just for  

mere asking.  The learned senior counsel would therefore contend  

that under Rule 59, the necessity to notify before the grant of lease  

is mandatory and there is no question of subverting the said Rule in  

a case where the lease was surrendered.  According to the learned  

senior counsel in such a case for applying Rule 59, there must be a  

notification to enable all those interested to stake their claim, which  

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would  enable  the  State  to  derive  the  maximum  benefit  while  

permitting mining of minerals, which is a national wealth.

42. Ms. Anitha Shenoy, Advocate-on-Record appearing for the State  

of Karnataka submitted that the requirement of 12 months notice for  

determining the lease at the instance of a lessee is mandatory.  By  

referring to Rule 27(2)(l),  the learned counsel  submitted that the  

said sub-Rule mandates delivery of possession of land and mines on  

surrender of the lease and that Clause 4 of Part VIII of Form-K viz.,  

the lease deed specifically states that such determination will take  

effect  after  the  expiry  of  such  notice.  By  referring  to  the  

communication  dated  27.03.2001  of  M/s.Dalmia’s  application  for  

surrender,  letter of  the Director  of  Mines to the Senior  Geologist  

dated  25.05.2001,  the  M/s.  Dalmia’s  letter  dated  16.06.2001,  

surrendering  the  lease  deed  book  as  well  as  no  due  certificate  

issued  by  the  Department  of  Mines  on  31.01.2002,  the  learned  

counsel  submitted  that,  in  spite  of  all  these  communications  a  

specific order of acceptance of surrender was still  required which  

was  never  issued.   To  support  the  said  submission,  the  learned  

counsel  placed  reliance  upon  the  earlier  communications  in  the  

office of the Mining Department pertaining to various other mining  

lease viz., those dated 12.03.1965, certain other orders passed in  

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December,  1988  and  11.04.1989  and  the  Notification  dated  

19.06.1965  and  contended  that  those  communications  disclosed  

specific  order  of  acceptance  of  surrender  issued  by  the  State  

Government.  The learned counsel would therefore contend that in  

the  case  on  hand,  since  such  a  specific  order  of  acceptance  of  

surrender was not issued, it cannot be stated that the surrender as  

applied for by M/s.Dalmia had taken place.

43. In his reply, Mr.Krishnan Venugopal, learned senior counsel for  

the first respondent contended that going by the letter of the State  

of Karnataka dated 21.02.1986, no lease could have been granted or  

renewed except by the State and not by the Director of Mines. By  

referring to Section 5 of the Mines and Minerals (Development and  

Regulations)  Act,  the  learned  senior  counsel  reiterated  that  the  

power  is  vested  only  with  the  State  and  in  the  absence  of  any  

delegation, the Director of Mines will have no jurisdiction or power to  

issue the lease or determine the lease.  The learned senior counsel  

further contended that by virtue of the Constitutional prescription as  

contained in the Entries found in List I and List II read along with  

Section 2 of the Mines and Minerals (Development and Regulations)  

Act,  the  subject  being  controlled  by  the  Parliament,  strict  

compliance of the provisions of the Act is warranted and, therefore,  

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in the absence of delegation of power with the Director of Mines, it  

cannot be contended that the exercise of such power by the Director  

would  validate  the  surrender  as  claimed  by  the  appellant.   The  

learned senior counsel would therefore contend that the period of 12  

months  required  for  determining  the  lease  by  the  lessee  is  

mandatory and unless and until the said period expires which is for  

the benefit of the State, it cannot be held that the surrender had  

come to an end even before the expiry of the 12 months period.

44. In  this  context,  the  learned  senior  counsel  referred  to  the  

Government of India/Ministry of Environment and Forest letter dated  

14.09.2001 to  the Secretary  (Forest)  of  all  the States and Union  

Territories, wherein, the Central Government after making reference  

to  various  cases  where  the  in-principle  stage-I  clearance  was  

granted by imposing conditions and the failure of the States and the  

user agencies in reporting compliance after lapse of five years and  

in some cases after more than 10 years, the MOEF stated that the  

Central Government in respect of those cases took a decision to the  

effect that in all those cases the in-principle approvals though stood  

revoked summarily, depending upon the interest shown by the State  

or the user agency in the project, they would be required to submit  

a fresh proposal which would be considered de novo.  The learned  

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senior counsel further contended that even the Central Government  

has understood as to the manner in which any fresh proposal to be  

considered in respect  of  cases where the user agencies failed to  

comply  with  the  conditions  imposed  in  the  in-principle  stage-I  

approval granted. According to him, such a decision of the Central  

Government/MOEF  was  subsequently  incorporated  in  the  Forest  

Conservation Rules by way of amendment to Rules 6, 7 and 8 in the  

year 2014 and therefore it cannot be held that the non-compliance  

of  the  conditions  imposed  while  granting  in-principle  stage-I  

approval would in any manner efface the lease granted under the  

MMDR Act and Mineral Concession Rules.

45. Mr. Kapil Sibal, learned senior counsel while responding to the  

submissions of Ms. Anitha Shenoy, Advocate-on-Record for the State  

of Karnataka pointed out that in the documents now produced by  

the learned counsel for the State which pertained to the years 1965,  

1988  and 1989, those documents were signed by the Director while  

accepting  the  surrender  proposed  by  the  lessees  and  that  such  

acceptance had been made not after the expiry of the 12 months  

period from the date of application but before the expiry of such 12  

months period.  The learned senior counsel also submitted that the  

State Government has not come forward with any affidavit by any  

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responsible officer  that  surrender was not accepted by the State  

Government.  The learned counsel also contended that the lessee  

viz., M/s. Dalmia wanted to surrender and the fact remains that the  

lease had been determined.  As regards the reference to Rule 27(2)

(l) the learned senior counsel contended that though the Rule states  

that  on  surrender  possession  should  be  delivered,  there  is  no  

specific  expression to the effect  that  such delivery of  possession  

should be by way of handing over.

46. Two questions that arise for consideration:

a. Whether  M/s.  Dalmia  surrendered  its  mining  licence No.M.L. 2010? b. If  it  was  not  surrendered,  whether  violation  of  conditions  of  in-principle  stage-I  approval  dated  24.12.1997 would ipso facto render the mining licence  invalid and inoperative in law?

47. While attempting to find an answer to the above two questions,  

the  submissions  of  counsel  for  both  sides  necessarily  postulate  

consideration and examination of the following factors:

a. Mining lease in M.L. No.2010 of M/s. Dalmia was  initially  issued  on  25.11.1953  which  expired  on  24.11.1983.

b. First renewal of M.L. No.2010 was by order dated  07.03.1986 for 20 years with effect from 25.11.1983  

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ending  with  24.11.2003  without  any  statutory  approval of the Central Government and in particular  the  prior  approval  of  Central  Government  under  Section 2 of the Forest Act, 1980.

c. After the judgment of this Court in Godavarman I &  II, mining operations under M.L. 2010 were suspended  in  January,  1997  and  thereafter  in-principle  Stage-I  approval  was  granted  in  favour  of  M/s.  Dalmia  on  24.12.1997  by  the  Central  Government  imposing  conditions to be complied within five years i.e. on or  before 23.12.2002.

d. By  letter  dated  16.04.1999  M/s.  Dalmia  surrendered  196.58  Hectares  of  land  out  of  331.50  Hectares  to  the  Forest  Department  of  State  Government.

e. On  27.03.2001 M/s.  Dalmia  wrote  to  Director  of  Mines and Geology to determine the lease as it wanted  to surrender.  M/s. Dalmia gave 12 months notice from  01.04.2001  or  earlier  if  permitted  by  State  Government.

f. On  25.05.2001,  the  Director  of  Mines  while  marking a copy of  its  letter addressed to the senior  Geologist to M/s. Dalmia simultaneously instructed to  surrender the lease book in respect of M.L.  No.2010  along with the Mining Plan.

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g. In  the  order  dated  26.06.2001  passed  in  W.P.  No.6304 of  1998 learned  Single  Judge  of  Karnataka  High  Court  noted  the  stand  of  M/s.  Dalmia  with  reference  to  M.L.  No.2010 that  M/s.  Dalmia  was  no  longer interested in working of said mines which was  adjoining the mines of the appellant. In fact the said  writ petition was disposed of by noting the said factor  also.

h. On 25.08.2001, the Director of Mines made a note  in the application No. 84AML 2001 and 92AML 2001 for  grant of  mining lease over an area covered by M.L.  No.2010  to  the  effect  that  the  said  area  was  surrendered by M/s. Dalmia, that two applications had  been received in respect of  the said area, that Rule  59(1)  of  MCR  Rule  was  attracted  and  therefore  the  applications  were  not  considered.  The  said  endorsement  was  made  by  Mr.  Reddy,  the  then  Director of Mines and Geology.

i. On  26.09.2001,  the  suit  filed  by  M/s.  Dalmia  against the appellant in O.S. No.53 of 1993 on the file  of  Civil  Judge,  Hospet  in  respect  of  the  boundary  dispute was dismissed for non-prosecution.

j. On 09.01.2002, the Director of Mines ordered the  Deputy  Director,  Hospet  to  survey  and  demark  the  area covered by the appellant’s lease, since O.S. No.53  of 1993 was dismissed and M/s. Dalmia surrendered its  lease.

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k. On  30.01.2002  M/s.  Dalmia  paid  a  sum  of  Rs.22,332.00/- stated to be the arrears in respect of  M.L.  NO.2010 and obtained no due certificate  dated  31.02.2002.

l. On  04.02.2002 M/s.  Dalmia  applied to  the State  Government  the  application  for  transfer  of  M.L.  No.2010 to the first Respondent.

m. On  06.02.2002,  the  Director  of  Mines  and  Geologist  namely  the  same Mr.Reddy recommended  the application for transfer.

n. On 16.03.2002, the State Government allowed the  application  of  M/s.  Dalmia  in  favour  of  the  first  Respondent.

o. On 21.07.2002, the Principal Chief Conservation of  Forest,  Bangalore  wrote  to  the  Principal  Secretary,  Department of Commerce and Industries pointing out  the failure of M/s. Dalmia to fulfill the conditions of   in- principle  stage-I  approval  dated  24.12.1997  and  requested the State Government to withdraw the order  dated 16.03.2002.

p. In  the  Order  dated  10.11.2004,  learned  Single  Judge of the Karnataka High Court set aside the order  of transfer dated 16.03.2002.

q. Pending first Respondent’s W.A. No.5377 of 2004,  the Central Government granted in-principle stage-I ex  

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post  facto approval  to  the  first  Respondent  on  13.09.2006.

r. During the pendency of Special Leave Petition, by  order dated 09.09.2010 stage II clearance in favour of  the first Respondent was granted.  But by the Supreme  Court’s  order dated 23.09.2010 the first  Respondent  was directed to maintain status quo.

s. For  transfer  of  M.L.  No.2010  in  favour  of  first  Respondent  M/s.  Dalmia  has  received  a  sum  of  Rs.74,11,559/-.  

t. After  the  order  of  transfer,  the  first  respondent  paid Rs.2,18,42,600/- amount on 11.05.2004 to comply  with the condition imposed in the earlier in-principle  stage  I  clearance  of  1997  pursuant  to  order  dated  16.03.2002.

48. Having  considered  the  rival  submissions  of  the  respective  

counsel, the following questions arise for consideration:

i. Whether M/s. Dalmia surrendered the mining lease  bearing  No.M.L.2010  and  whether  such  surrender  has become final leaving no scope for M/s. Dalmia  to transfer it in favour of the first respondent?

ii. Whether for the purpose of surrender of a mining  lease to come into effect the  expiry of the period of  12 months  from the  alleged date  of  surrender  is  mandatory or not?

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iii. Whether there was surrender of 196.58 hectares of  forest land made by M/s. Dalmia on 16.04.1999 out  of the total extent of 331.50 hectares and thereby  what remained with  M/s.  Dalmia  was only  134.92  hectares for which also there was no  ex post facto  approval by the MOEF?

iv. Whether the act  of  surrender in  order to  become  complete should have been accepted by the State?

v. Whether pursuant to the act of surrender, delivery  of  possession is  mandatory under Rule 27(2)(l)  of  the Mineral Concession Rules?

vi. Even if surrender has not taken place by reason of  the non-compliance of in-principle stage-I approval  granted in the order dated 24.12.1997 whether the  mining  lease  stood  automatically  expired  on  24.11.2003?  

vii. Whether by virtue of Rules 29 and 37 of the Mining  Concession Rules read with Section 19 of the MMDR  Act  any mining lease in  contravention  of  the  Act  become void ab initio?

viii. Whether after the coming into force of the Forest  Act of 1980 when approval under Section 2 of the  said  Act  is  mandatory,  can  it  be  said  that  there  could be any scope for  ex post facto approval  in  violation of the said provision. Whether the order of  

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Godavarman  case  can  be  relied  upon  for  subsequent renewals?

ix. Whether  after  the  newly  amended  Forest  Conservation Rules  6,  7 and 8 non-compliance of  Section  2  of  the  Forest  Act  would  still  make  the  lease void ab initio?

x. Whether right of renewal of the lease under MMDR  Act and the action of grant of approval under the  Forest Act are independent and one does not affect  the other?

xi. Whether  based  on  the  requirement  of  Central  Government approval under Section 5 of the MMDR  Act which was existing prior to the coming into force  of the Forest Act, 1980, can it be said that such a  requirement is now made as a mandatory one under  Section 2 of  the Forest Act  for  a mining lease to  remain valid?

xii. Whether Section 10(1) and the second proviso to  Section 11 of the MMDR Act as well as Rule 37 and  59 of the Mineral Concession Rule mandatory to the  effect that any transfer applied for under Section 37  (1)(a) cannot be automatically granted?

xiii. Whether the order of transfer dated 16.03.2002 was  bonafide  taking  into  account  the  sequence  of  events?

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xiv. Whether  the  transfer  of  lease  by  order  dated  16.03.2002  can  be  held  to  be  valid  since  such  transfer order came to be passed before the expiry  of the first renewal, namely, before 24.11.2003?  

xv. Whether the stage-I approval dated 13.09.2006 and  the final approval dated 09.09.2010 can be held to  be valid in the light of the order of this Court dated  26.10.2005?

49. In order to consider the first question as to whether M/s. Dalmia  

surrendered  the  mining  lease  M.L.  No.2010  and  whether  such  

surrender has become final and conclusive, we have to recapitulate  

certain basic facts relating to the said lease. The said lease M.L.  

No.2010 was granted on 25.11.1953 for 30 years and the extent of  

land was 331.50 hectares covering 819.20 acres of forest land in  

Jaisinghpur  village R.N.  Block,  Sandur  Taluk,  Bellary  District.  The  

said initial lease period expired on 24.11.1983 and by order dated  

07.03.1986  the  lease  was  renewed  for  another  20  years  

retrospectively from 25.11.1983, which was to expire by 24.11.2003.  

The relevant fact to be noted is that by the time the lease expired  

on 24.11.1983, the Forest Act 1980 had come into force and under  

Section 2 of the Forest Act in order to carry on any further mining  

activity in the entirety of the 331.50 hectares of land covered by  

M.L.No.  2010, the prior  approval  of  the Central  Government was  

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necessary and required. It is not in dispute that when the mining  

lease was renewed by order dated 07.03.1986 by the Department of  

Mines of the State Government, Section 2 of the Forest Act of 1980  

was not complied with. It remained unnoticed till the issue came to  

be  considered  by  this  Court  in  the  judgment  concerned  in  

Godavarman-I. By virtue of the direction issued by this Court all  

the mines, which did not comply with the requirement of Section 2  

of the Forest Act were directed to stop all  their mining activities.  

Consequently  by  order  dated  25.01.1997 the  second  respondent  

herein  namely  Director  of  Mines  and  Geology  called  upon  M/s.  

Dalmia to stop all mining activities pertaining to M.L. No.2010 and  

the mining activities were stopped by M/s. Dalmia. Thereafter, by  

the  Godavarman-II judgment, which is reported in (1997) 3 SCC  

312, the MOEF was directed to consider those applications for  ex  

post facto approval. Pursuant to the said direction of this Court, by  

order  dated  24.12.1997,  MOEF  granted  conditional  in-principle  

stage-I approval for the renewal of M/s. Dalmia’s mining lease for an  

extent of 201.50 hectares of forest land. The said stage-I approval  

was subject to fulfillment of specific conditions within six months  

from the date of the order. It was also specifically mentioned that  

only after receipt of compliance report of the conditions stipulated in  

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the stage-I approval, consideration for grant of final approval under  

Section 2 of the Forest Conservation Act would be made and issued.  

After  the  receipt  of  the  order  dated  24.12.1997  M/s.  Dalmia  

surrendered 196.58 hectares of land out of 331.50 hectares to the  

forest  department  of  the  State  Government  through  their  letter  

dated 16.04.1999.  By  virtue of  the said  surrender  made by M/s.  

Dalmia out of 331.50 hectares the M/s. Dalmia can be said to have  

retained only 134.92 hectares for its mining operations. Be that as it  

may, on 27.03.2001 M/s. Dalmia wrote to the Directors of Mines and  

Geology  expressing  its  decision  to  determine  the  lease  and  

surrender the remaining area and gave notice as required under the  

terms of the mining lease deed for determination of the lease. In the  

said letter M/s. Dalmia mentioned that such determination of lease  

would  take  effect  upon  expiry  of  12  months  notice  period  from  

01.04.2001 or earlier if permitted by the State Government.  

50. In response to the said communication of M/s. Dalmia, the State  

Government through the office of the Director of Mines and Geology  

in its letter dated 25.05.2001 addressed to the Senior Geologist of  

the State Government stated that M/s. Dalmia has stopped all  its  

mining activities from 1997 and that it  has now expressed in its  

letter  dated  27.03.2001 to  surrender  the  lease,  namely,  M.L.No.  

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2010 even earlier than the 12 months period and called upon the  

said officer  to  intimate as to  whether any arrears  were due and  

payable by M/s. Dalmia for taking further action. Copy of the said  

communication dated 25.05.2001 was also sent to M/s. Dalmia for  

information and also by way of instructions to surrender the lease  

deed book in respect of M.L.No. 2010 along with the mining plan  

approved by Indian Bureau of Mines immediately for taking further  

action.  In  response  to  the  said  letter  of  Director  of  Mines  and  

Geology M/s. Dalmia forwarded its letter dated 16.06.2001 directly  

addressed to the Director of Mines and Geology mentioning that as  

instructed by the said authority, they surrender the lease deed book,  

namely, M.L.No. 2010. The said letter further stated that the mining  

plan was not available with them. It was specifically mentioned at  

the bottom of the said letter that mining lease deed book was being  

enclosed along with the said letter.  

51. When we make a reference to M/s. Dalmia’s earlier letter dated  

16.04.1999, the intention of M/s. Dalmia of its decision to surrender  

196.58 hectares out of 331.50 hectares was explicitly stated. If the  

said decision taken by M/s. Dalmia is accepted which decision was  

clearly spelt out in the said communication dated 16.04.1999 what  

was  really  retained  by  it  subsequent  to  the  stage-I  in-principle  

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approval of MOEF dated 24.12.1997 was only 134.92 hectares. In  

fact, it is mentioned therein that originally an area of 130 (331.50 –  

130  =  201.50)  hectares  was  already  surrendered  by  it  prior  to  

16.04.1999, that virgin area not broken up in an extent of 66.58  

hectares  was  being  surrendered as  disclosed  in  the  letter  dated  

16.04.1999 and consequently  what  was  practically  retained by it  

was only 134.92 hectares. It was also stated in the said letter that  

when such was the position relating to the actual land area retained  

by M/s. Dalmia with reference to which any demand by way of penal  

compensation  aforestation  charges  could  be  claimed,  the  same  

could not have been claimed for 201.50 hectares as mentioned in  

the  stage-I  in-principle  approval  granted  in  the  order  dated  

24.12.1997. Though the said communication dated 16.04.1999 at  

the instance of M/s. Dalmia was addressed to the forest department,  

in that context, it was very clearly stated that what was retained by  

it as on that date was only 134.92 hectares, out of the total extent  

of 331.50 hectares. It is necessary to keep the said factor in mind  

while considering the issue relating to the surrender raised in these  

proceedings.

52. Apart from the above factors, certain other factors relating to  

the  factum  of  surrender  are  also  required  to  be  noted.  At  the  

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instance of the appellant herein a writ petition came to be filed in  

Writ  Petition No.6304 of  1998 in the High Court  of  Karnataka as  

against the Mine Authorities and Chief Conservator of Forest as well  

as  M/s.  Dalmia.  In  that  writ  petition,  the  issue  pertained  to  a  

boundary dispute as between the appellant and M/s. Dalmia. But the  

said Writ Petition came to be disposed of by learned Single Judge by  

order dated 26.06.2001 by stating as under:

“7. A subsequent development requires to be noticed at   this stage when the matter came up for consideration on  the last date of hearing Shri B.T. Parthasarthy appearing  for 3  rd   respondent stated that the 3  rd   respondent is no    longer interested in working in the mine situated in the  land adjoining the petitioner’s land therefore at present  no  boundary  dispute  as  such  exists  between  the   petitioner and the 3  rd   respondent. This  will  have some    bearing  on  the  validity  of  the  impugned  order  dated  06.11.1997 as the entire order is on the assumption that  a boundary dispute exists between the petitioner and the  neighboring owner. Be that as it may.”   

(Emphasis added)  

53. The said stand of M/s. Dalmia which was the third respondent in  

that writ petition also disclosed that M/s. Dalmia categorically made  

it clear that it was not operating the mines covered by M.L.No. 2010.  

After  the  letter  of  M/s.  Dalmia  dated  27.03.2001  expressing  its  

decision  to  surrender  the  lease  and  determine  the  same,  the  

Director of Mines sent its communication dated 25.05.2001 pursuant  

to which M/s. Dalmia surrendered the lease deed book of M.L.No.  

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2010  along  with  its  letter  dated  16.06.2001.  Thereafter,  an  

application came to be filed at the instance of a company called  

‘M.S.P.L. Limited’ through its Executive Directed Mr. Rahul Baldota  

on 21.07.2001 for the grant of mining lease which was held by M/s.  

Dalmia and shown as government land in its application. In the said  

application  an  endorsement  was  made  on  25.08.2001  by  the  

Director of Mines to the effect that the area applied for fell within  

the area surrendered by M/s. Dalmia, that a prior application was  

also made for mining lease over the same area by third parties, that  

under Rule 59(1) of the Mineral Concession Rules grant of mining  

lease can be only by way of a notification in the official gazette and  

therefore  such  grant  cannot  be  considered  based  on  individual  

applications.  In  this  context  it  is  also  relevant  to  note  that  on  

30.01.2002 M/s.  Dalmia  made a  payment  of  Rs.22,332/-  towards  

arrears  payable  by  it  in  respect  of  M.L.No.  2010,  which  was  

acknowledged by the Deputy Director of Department of Mines and  

Geology in its letter dated 31.01.2002. The said letter specifically  

stated  that  as  per  the  revised  audit  report  the  arrears  were  

determined in a sum of Rs.22332/- and the same was paid by M/s.  

Dalmia through DD No.88545 dated 30.01.2002 and thereby no due  

certificate was being issued. One other relevant document of the  

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office  of  the  Director  of  Mines  and  Geology  is  the  letter  dated  

09.01.2002  addressed  to  its  own  Deputy  Director  wherein  the  

Director  of  Mines  while  calling  upon  the  Deputy  Director  to  

demarcate  the  area  of  mining  lease  No.2151  of  the  appellant  

mentioned therein that the said survey is required to be made for  

the purpose of renewal of M.L.No. 2151 inasmuch as the boundary  

dispute  as  between  the  appellant  and  M/s.  Dalmia  which  was  

pending in the Civil Court in O.S. No.53 of 1993 was dismissed for  

non-prosecution on 26.09.2001 and the further fact that M/s. Dalmia  

surrendered their lease as on that date and therefore the dispute as  

between appellant and M/s. Dalmia did not survive.  

54. Keeping  the  above  material  facts  relating  to  the  alleged  

surrender  of  mining  lease  in  M.L.No.  2010  by  M/s.  Dalmia,  the  

various submissions relating to the said surrender by the respective  

counsel requires to be dealt with.

55. While considering the various questions on surrender, the first  

question  that  arise  for  consideration  relates  to  the  surrender  of  

196.58 hectares of forest land which was made by M/s. Dalmia on  

16.04.1999 out of the total extent of 331.50 hectares and that what  

remained  with  it  was  only  131.44  hectares.  To  show  that  M/s.  

Dalmia  earlier  surrendered 196.58 hectares,  its  own letter  dated  

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16.04.1999 was placed before us. When we perused the letter dated  

16.04.1999 of  M/s.  Dalmia  which  was addressed to  the  Principal  

Chief Conservator of Forest, Bangalore, it is mentioned therein that  

they  have  already  surrendered  130.1  hectares  out  of  331.50  

hectares and the balance area in their possession was only 201.50  

hectares. Even out of the remaining 201.50 hectares, according to  

M/s. Dalmia, 110 hectare was broken up for mining, 5.75 hectare  

was used for roads, dams, stores, office etc.,  19.17 hectares was  

broken up but unusable virgin area used for roads and that it was  

non ore-bearing area and the remaining virgin area which was not  

yet broken and which was being surrendered was 66.58 hectares. It  

is  also  further  stated  therein  that  the  management  decided  to  

surrender  even the  virgin  area of  66.58 hectares  and  ultimately  

wanted to retain only 134.92 hectares.  

56. In  fact  this  letter,  dated  16.04.1999 apparently  appeared  to  

have  been  sent  in  response  to  the  in-principle  stage-I  approval  

granted by the Government of India in its letter dated 24.12.1997  

wherein certain conditions were imposed. While responding to the  

said order, M/s. Dalmia in its letter dated 16.04.1999 mentioned that  

as far as conditions (i) and (ii)  of the Government of India dated  

24.12.1997, no action need be taken since it decided to surrender  

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nearly  196.58  hectares  and  what  was  to  be  retained  was  only  

134.92 hectares. As regards condition No.(iii), namely, the cost of  

penal  compensatory  aforestation  charges  was  concerned,  while  

referring to the demand, twice the area of 201.50 hectares i.e. 403  

hectares @ Rs.40,700/- per hectare, M/s. Dalmia pointed out that  

there cannot be a demand by Government of India to that extent  

and at best the demand can only be raised in respect of the broken  

up area of 134.92 hectares. It was further contended that since M/s.  

Dalmia was carrying mining operations even in that 134.92 hectares  

with the permission of the State Government Authorities from time  

to time, no penal compensatory aforestation charges can be claimed  

over that area.  

57. When we consider the said letter of M/s. Dalmia what transpires  

is that a conscious decision was taken by M/s. Dalmia to surrender  

196.58  hectares  and  its  further  decision  to  retain  only  134.92  

hectares in the year 1999 after the earlier surrender of 130 hectares  

prior  to  1999.  The  said  decision  of  M/s.  Dalmia,  which  was  

consciously  taken  as  early  as  on  16.04.1999  disclose  that  it  

possessed  as  on  that  date  only  134.92  hectares  out  of  331.50  

hectares, which it was holding earlier under M.L. No.2010 of 2010.  

When  the  said  factual  position  cannot  be  controverted,  having  

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regard to the document which was addressed by M/s. Dalmia to the  

Principal Chief Conservator of Forest, Bangalore with a copy marked  

to  the  Inspector  General  of  Forest,  Ministry  of  Environment  and  

Forest Government of  India and other State Level  Officers of  the  

Forest Department,  M/s.  Dalmia cannot later on turn around and  

state that it continued to retain with it the whole extent of 331.50  

hectares covered by M.L. No.2010.  

58. Keeping  the  said  aspect  in  mind  relating  to  the  action  of  

surrender effected by M/s. Dalmia, when we proceed to examine the  

further development that had taken place after 16.04.1999, what  

comes  next  is  the  letter  dated  27.03.2001  which  was  again  a  

communication written by M/s. Dalmia to the Director of Mines and  

Geology of its decision to determine the lease in its favour and to  

surrender the remaining area under the terms of the mining lease  

deed.   It  will  be  necessary  to  make a  detailed  reference  to  the  

contents of the said communication dated 27.03.2001.  

59. Before referring to the contents of the said letter, it will have to  

be kept in mind that pursuant to the general directions issued by  

this Court in Godavarman-I, all mining operations through out the  

country were directed to be stopped for violation of Section 2 of the  

Forest Act, 1980. By virtue of the general directions issued by this  

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Court, the mining operations in respect of M.L.No. 2010 also came to  

a grinding halt from the last week of January 1997. Thereafter, by  

virtue  of  the  order  passed  in  Godavarman-II,  ex  post  facto  

approval under Section 2 of the Forest Act was considered and by  

order  dated  24.12.1997  the  in-principle  stage-I  clearance  was  

granted by imposing three conditions for M/s. Dalmia to comply. In  

the said letter dated 24.12.1997 also, it was specifically mentioned  

that such approval for renewal of mining lease was granted for an  

extent of only 201.50 hectares of forest land and thereby affirming  

the  earlier  surrender  of  130.11  hectares  of  land  long  prior  to  

16.4.1999. Condition No.(i) stated that immediate action should be  

taken  for  transfer  and  mutation  of  non-forest  land  equivalent  in  

extent to the forest area to be broken up afresh and condition No.(ii)  

mentioned that user agency will transfer the costs of compensatory  

aforestation  over  non-forest  land  in  favour  of  State  Forest  

Department.   Condition  No.(iii)  further  directed that  user  agency  

should transfer the cost of penal compensatory aforestation raised  

as on that date to incorporate existing structure over double the  

degraded forest land in favour of the state forest department.   

60. We have earlier noticed that as a sequel to the said letter dated  

24.12.1997, when M/s. Dalmia was faced with the requirement of  

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compliance  of  those three onerous conditions,  M/s.  Dalmia  in  its  

letter dated 16.4.1999, took the stand that it has decided to retain  

only  134.92  hectares  and  that  since  even  in  respect  of  134.92  

hectares, mining operations were carried on with the permission of  

the State Government authorities, even condition No.(iii) need not  

be complied with.   

61. In that background, when we now refer to the present letter of  

M/s. Dalmia dated 27.3.2001 addressed to the Director of Mines and  

Geology, we find, that, in the said letter M/s. Dalmia expressed its  

proposed decision to determine the lease and surrender the same.  

It  also  mentioned  that  it  was  giving  twelve  months’  notice  as  

required under paragraph 4 of Part  VIII  of the mining lease deed  

executed  between  M/s.  Dalmia  and  Government  of  Karnataka  

through the  Director  of  Mines  and  Geology,  that  the  Director  of  

Mines  and  Geology  should  determine  the  lease  on  expiration  of  

twelve months period i.e. from 01.04.2001 or earlier if the Director  

of Mines and Geology permit to do so.  In the last para of the said  

letter, it was reiterated on behalf of M/s. Dalmia that out of 331.50  

hectares it had already surrendered an area of 196.58 hectares to  

the  Forest  Department  through  its  letter  dated  16.4.1999 which  

should also be kept in mind by the Director of Mines and Geology.  

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62. A cumulative consideration of the letter dated 16.4.1999 along  

with  the  ex post  facto approval  order dated 24.12.1997 and the  

letter  dated  27.3.2001  of  M/s.  Dalmia,  it  transpires  that  as  on  

27.3.2001 M/s. Dalmia was in possession of only 134.92 hectares of  

the total area of 331.50 hectares covered by mining lease No.2010.  

As noted by us in the letter dated 27.3.2001, M/s. Dalmia wanted  

the Director of Mines and Geology to determine the lease even in  

respect  of  134.92 hectares  which  was in  its  physical  possession,  

either on expiry of the twelve months’ period or any earlier date  

which  the  concerned  authority  may permit.  To  be more  precise,  

M/s.Dalmia surrendered 130 hectares of land prior to 16.04.1999.  

Along with its letter dated 16.04.1999 surrender of 196.58 hectares  

was  effected.   The  remaining  134.92  hectares  was  surrendered  

through its letter dated 27.03.2001.  

63. In response to the said letter dated 27.3.2001, the office of the  

Director  of  Mines  and  Geology  in  their  letter  dated  25.5.2001  

addressed  to  the  Senior  Geologist  of  the  State  Government,  

Department of  Mines and Geology instructed him by stating that  

M/s. Dalmia had stopped mining operations in the area covered by  

M.L. No.2010 since 1997, that they wanted to surrender the lease  

with the Department of Mines and Geology and, therefore, intimate  

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as to whether any arrears were due from M/s. Dalmia. A copy of the  

said  letter  dated  25.5.2001  was  marked  to  M/s.  Dalmia.  While  

marking the said communication, it  was stated that it  was being  

forwarded for information and with an instruction to surrender the  

lease deed book in respect of M.L. No.2010 along with the mining  

plan approved by Indian Bureau of  Mines  immediately  for  taking  

further action.   

64. In response to the copy of  the letter dated 25.5.2001 of  the  

Director  of  Mines  and Geology,  M/s.  Dalmia  along with  its  letter  

dated 16.6.2001 by referring to the instructions mentioned in the  

letter  dated  25.5.2001 stated that  it  was  surrendering  the  lease  

deed book in respect of M.L. No.2010 and that the approved mining  

plan was not available with it.  At the bottom of the said letter, it  

was stated that mining lease deed book was being enclosed along  

with the said communication.   

65. That apart, in the Writ Petition which was pending before the  

High Court of Karnataka in WP 6304 of 1998 as between the first  

respondent and the Director of Mines, as well as, Chief Conservator  

of Forest where M/s. Dalmia was also a party respondent, namely,  

third respondent, on its behalf its counsel represented before the  

High Court that M/s. Dalmia was no longer interested in the working  

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of  the  mines  situated  in  the  land  adjoining  the  writ  appellant,  

namely, the first respondent therein and, therefore, as on that date,  

no boundary dispute was existing as between them.  The said stand  

of M/s. Dalmia was the main ground which weighed with the learned  

Single Judge for setting aside the order dated 16.11.1997 which was  

impugned before it in the said Writ Petition at the instance of the  

first respondent. The said stand of M/s. Dalmia was clearly reflected  

in the order of the Learned Single Judge dated 26.6.2001.  

66. Apart from the above facts, after the forwarding of the letters  

dated 16.4.1999, 27.3.2001 and 16.6.2001 by M/s. Dalmia whereby  

the surrender of the lands in its entirety, as well as, the mining lease  

itself, third parties were aspiring to get the mining lease in respect  

of the surrendered lands held by M/s. Dalmia. One such application  

was  taken  out  by  one  M/s.  M.S.P.L.  Ltd.  through  its  Executive  

Director,  Mr.  Rahul  Baldota.   The  said  application  was  made  on  

21.7.2001  for  grant  of  mining  lease  in  its  favour.  The  said  

application  was  considered  by  the  Director  of  Mines  and  an  

endorsement was made on the said application by the Director of  

Mines on 25.8.2001 which has been placed before this Court. On a  

perusal of the said document, we find the following endorsements  

made by the Director of Mines viz:  

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“the area in respect of which mining lease is sought for  by the applicant  in the present application had been  already granted by ML 2010 to M/s. Dalmia Cements  (Bharat)  Ltd.  The  area  applied  falls  within  the  surrendered area by them (M/s. Dalmia Cements). Two  applications 84 AML 2001 and 92 AML 2001 seeking  mining lease have been received in respect of this area.  Rule  59(1)  of  MCR  Rules  is  attracted.   At  present  consideration of the application is not possible as the  area is not available.

Sd/- 25.8.2001.”

67. The Director of Mines while referring to the surrender of M.L.  

No.2010 by M/s.  Dalmia noted that the said area falls within the  

surrendered area,  that  two  applications  84AML 2001 and  92AML  

2001 seeking mining lease were received in respect of that area but  

since  Rule  59(1)  of  MCR  Rules  was  attracted,  consideration  of  

application for grant of lease was not possible and that the area was  

not available for such a grant.  

68. A cumulative consideration of all the above sequence of events  

disclose that right from 1999 in fact even prior to that date, M/s.  

Dalmia surrendered major part of the land covered by M.L. No.2010  

and that by its letter dated 27.3.2001, it expressed its decision to  

determine the lease of the remaining area of 134.92 hectares and  

wanted the Director of Mines to accept such surrender either after  

the expiry of twelve months’ period or even earlier.  By 25.5.2001,  

the  Director  of  Mines  in  response  to  M/s.  Dalmia’s  desire  to  

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determine the lease, directed it to surrender the lease book of M.L.  

No.2010  as  well  as  the  mining  plan,  and  that  M/s.  Dalmia  

surrendered the lease book while stating that mining plan was not  

available with it at that point of time. Closely followed by that, when  

third parties applied for grant of lease, the Director of Mines stated  

in no uncertain terms that those lands were surrendered by M/s.  

Dalmia but lease cannot be granted based on applications and that  

Rule 59 (1) of MCR Rules will have to be followed for grant of such  

lease.  In fact, subsequent to the above development on 26.9.2001,  

the suit filed by M/s. Dalmia against first respondent relating to the  

boundary  dispute  was  also  dismissed  for  non-prosecution.   Yet  

another factor to be borne in mind is that on 30.1.2002, M/s. Dalmia  

paid  a  sum  of  Rs.22,332/-  towards  the  arrears  in  respect  of  its  

mining  lease  and  claimed  that  no  further  amount  was  due  and  

payable in respect of M.L. No.2010.  By a letter dated 31.1.2002, the  

office  of  the Deputy  Director,  Department  of  Mines  and Geology  

issued a no dues certificate to M/s. Dalmia by acknowledging the  

receipt of Rs.22,332/- based on the revised audit report and that no  

other amount was due in respect of the said mining lease.   

69. If we consider the above material evidence placed before us, it  

can be stated that as on 27.3.2001 M/s. Dalmia tacitly decided to  

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surrender its mining lease M.L. No.2010 and that in pursuance of the  

said  decision,  it  informed  the  Director  of  Mines  and  Geology  to  

determine the lease either on expiry of twelve months or on any day  

earlier to that and in response to the said desire expressed by M/s.  

Dalmia,  the  Director  of  Mines  and  Geology  also  responded  by  

directing M/s.  Dalmia to surrender the lease book as well  as the  

mining plan and then subsequently also collected whatever arrears  

which were due and payable by M/s. Dalmia as on 31.01.2002.  It  

must, therefore, be held that in effect the leasehold rights of M/s.  

Dalmia had come to an end by 31.1.2002.

70. Keeping the said factual scenario in mind, when we consider the  

contentions made on behalf of the respective parties according to  

the  appellants,  M/s.  Dalmia  had  surrendered  the  entirety  of  the  

lands held by it under M.L.No. 2010 which surrender had come into  

effect  pursuant  to  its  letter  dated  27.03.2001  accepted  and  

acknowledged by the  Department  of  Mines  and Geology in  their  

letter  dated 31.01.2002.  We have also  noted the  various  factual  

aspects of the development that had taken place in regard to the  

said surrender of M/s. Dalmia and noted that a conscious decision  

was taken by M/s. Dalmia to surrender its mining lease in M.L.No.  

2010  and  factual  surrender  was  also  effected  in  writing  to  the  

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Director  of  Mines and Geology and that the Office of  Director  of  

Mines and Geology also acknowledged such surrender. However, not  

to  accept  the  plea  of  surrender  as  projected,  on  behalf  of  the  

appellants  Mr.  K.K.Venugopal  and  Mr.Krishnan  Venugopal  relied  

upon various statutory prescriptions and contended that in reality if  

the case of surrender pleaded by the appellants is to be accepted,  

the compliance of such statutory requirements have to be fulfilled.  

71. In furtherance of such contention in the first place Mr. Krishnan  

Venugopal,  learned  senior  counsel  contended  that  as  prescribed  

under Rule 29 of M.C.R. Rules completion of 12 months period from  

the  date  of  the  intimation  of  the  surrender  should  have  been  

completed which is mandatory for the surrender to come into effect.  

In other words, the contention was that in law for the surrender to  

take place the mandatory  requirement  of  12 months  period was  

necessarily to be fulfilled. It was also contended that under Rule 29,  

which is negatively coached and it is mandatory for the surrender to  

come  into  effect  12  months  period  should  lapse.  It  was  also  

contended that under the said Rule surrender has to be to the State  

Government  or  such  other  officer  or  specified  authority.  It  was  

further contended that if a third party come forward with a case of  

surrender, a duty is cast on the third party to satisfy that letter of  

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surrender was sent to such authority and the burden is heavily upon  

such third party to establish the said fact. In order to give a thrust to  

the above submissions, namely, the satisfaction of the compliance  

of the mandatory prescription contained in Rule 29 reliance was also  

placed upon Section 11(A) as well as the schedule and contended  

that the philosophy underlying the MMDR Act was that every single  

requirement of Rule 29 should be satisfied in order to accept the  

theory of surrender pleaded on behalf of the appellants. It was also  

contended that minerals other than minor minerals are controlled by  

the  Central  Government,  power  is  vested  with  the  Central  

Government to make rules and the State Government are bound by  

the rules  of  the Center  and case of  surrender cannot  come into  

effect unless the statutory prescriptions contained in the Rules are  

strictly adhered to.  

72. In support of the above submissions reliance was also placed  

upon the terms of the lease as specified in Form ‘K’ in particular  

paragraph  4  of  Part  VIII  of  Form  ‘K’   to  contend  that  notice  of  

termination should be for full 12 calendar months and that too on  

ratification of the required formalities. It was contended that there  

was no power with the delegate of State Government to accept or  

determine the lease instantaneously.  

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73. The sum and substance of the contention on this aspect by the  

learned  counsel  for  the  first  respondent  was  that  major  mineral  

being under the exclusive control of the Government of India, there  

should be strict compliance of the statutory requirements both in  

respect of grant of lease as well as the termination of it either by  

surrender or by way of termination at the instance of the State and  

that such requirement is contained in Rule 29 which is negatively  

couched and, therefore, when such prescription for the purpose of  

surrender to come into effect has been specifically spelt out in the  

statutory  rule  read  along  with  para  4  of  Part  VIII  of  the  lease  

document,  such surrender propounded on behalf  of  the appellant  

can be accepted only if it was satisfactorily demonstrated that those  

statutory prescriptions were strictly applied and followed.

74. As against the above submissions, on behalf of the appellant Mr.  

Kapil  Sibal,  learned  senior  counsel  contended  that  there  was  no  

lacunae in accepting the surrender offered by M/s. Dalmia, that such  

surrender had really  taken place by virtue of  the conduct  of  the  

parties, namely, M/s. Dalmia as well as the Department of Mines and  

Geology of the State Government and, therefore, it was too late in  

the day for the first respondent to contend that the surrender made  

by M/s. Dalmia had not taken place.  

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75. Having considered the respective submissions on this question,  

there can be no two opinions that when the grant, operation and  

termination of mining lease is governed by the MMDR Act and the  

Mineral Concession Rules, anyone of those factors viz., either grant  

of  lease,  operation  of  the  mines  based  on  such  grant  and  the  

termination of it either by way of surrender at the instance of the  

lessee or by way of termination at the instance of the State should  

be carried out strictly in accordance with the prescribed stipulations  

of the provisions of the above Act and the Rules.  

76. Keeping the said legal principles in mind, when we refer to Rule  

29,  the  caption  of  the  said  Rule  reads  as  “restriction  on  

determination of lease”. The relevant part of the said Rule can be  

extracted while analyzing its implications which reads as under :  

“29. Restrictions on determination of lease.-(1) The  lessee shall not determine the lease except after notice in  writing of not less than twelve calendar months to the  State Government or to such officer, or authority as the  State Government may specify in this behalf.”  

Sub-Rule (1) states that the lessee shall not determine the lease  

after notice in writing of not less than 12 calendar months to the  

State  Government  or  to  such  officer  or  authority  as  the  State  

Government may specify in this behalf. While referring to sub-Rule  

(1), it will be necessary to refer to Form ‘K’ which is the model form  

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of mining lease deed. As per M.L.No. 2010, which has been drawn  

as per Form ‘K’, it is not in dispute that the said lease deed was as  

between  the  State  Government  which  expression  should  be  

deemed to include the successors and assigns who would be the  

first  party  as  the  lessor.  Paragraph  4  of  Part  VIII,  which  is  the  

provision for  determination of  the lease by way of  surrender as  

prescribed under Rule 29, stipulates that the lessee may at any  

time  determine  the  lease  by  giving  not  less  than  12  calendar  

months’ notice in writing to the State Government to such office or  

to such officer or authority as the State Government may specify in  

that behalf and the rest of the stipulation contained therein refers  

to the payment of rents, water rates, royalties, compensation for  

damages etc. Therefore, reading Rule 29(1) what is provided is that  

not less than 12 calendar months notice should be issued by the  

lessee for determining the lease and such notice should be issued  

to the State Government or to such officer or authority as the State  

Government may specify in that behalf.  

77. In fact, Xerox copy of the mining lease M.L.No. 2010 referring to  

the  date  of  grant  as  07.03.1986  providing  for  20  years  from  

25.11.1983 duly registered as document No.28 of 1986-87 has been  

placed before us. On a reference to the said document, we find that  

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while  on  behalf  of  M/s.  Dalmia,  one  P.M.  Balasubramaniam  has  

affixed his signatures, on behalf of the Governor of Karnataka, the  

Director of Mines and Geology has put his signature along with one  

K.R.Nirmala, Superintendant of DMG, Bangalore. One other relevant  

fact to be noted from the said document is para 5 falling under Part  

VIII which reads as under:

“5.  On such date as the State Government may elect   within 12 calendar months after the determination of this   lease or of any renewal thereof, the amount of the refund  of security deposit paid in respect of this lease and then  remaining in deposit with the State Government and not  required to be applied to any of the purposes mentioned  in this lease shall be refunded to the lessee/lessees. No  interest shall run on the security deposit.  

(underlining is ours)

78. When we examine the contention made on behalf of the first  

respondent about the statutory requirement to be satisfied under  

Rule 29 read along with para 4 and 5 of Part VIII of the lease deed, it  

is clear that on behalf of the lessor, namely, the State Government,  

the  signatory  to  the  lease  deed  was  the  Director  of  Mines  and  

Geology.  Therefore,  there  can  be no  controversy  as  to  who  can  

validly represent the State Government with reference to the grant  

of lease, operation of it  as well  as its determination who is none  

other than the Director of Mines and Geology. When the Director of  

Mines and Geology was authorized to sign the lease deed on behalf  

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of the Governor of the State of Karnataka, it must be taken to mean  

that he was the authority who was validly authorized by the State  

Government as stipulated in Rule 29(1) of the Rules for the purpose  

of the lessee to inform about its decision to determine the lease  

while giving 12 months’ notice. It must be stated that the very fact  

that the Director of Mines and Geology was authorized to sign the  

lease deed on behalf of the Governor of State of Karnataka, it was  

quite explicit that he was the only authority who was competent to  

authenticate the grant of the lease as well as for its determination.  

Unless there was any other Authority prescribed to carryout the said  

task as a statutory requirement.

79. Once  we  steer  clear  of  the  said  position  as  to  who  is  the  

competent authority for the purpose of operating Rule 29(1), any  

amount  of  reliance  placed  upon  the  Notification  No.CI3MMM95,  

Bangalore dated 27.05.1995 issued by the Commerce and Industries  

Department of the State of Karnataka will be of no avail. The said  

notification was relied upon to contend that while specific direction  

was issued to the effect that the powers exercisable by the State  

Government  in  relation  to  matters  with  reference  to  various  

provisions  as  conferred  by  sub-section  (2)  of  Section  26  of  the  

MMDR  Act  vested  with  the  Director  of  Mines  and  Geology,  

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Government of  Karnataka, there was no reference to the powers  

exercisable by the State under Rule 29. When the State of Karnataka  

had authorized the Director of Mines and Geology to sign the very  

mining  lease  deed  itself  on  behalf  of  the  Governor  of  State  as  

disclosed in the Xerox copy of the mining lease M.L.No. 2010, it is  

futile  on the part  of  the first  respondent to contend that for the  

purpose of determination of that very lease, a different Authority  

should be preferred.  In fact, M/s. Dalmia itself having understood  

the prescribed Authority, sent its letter of determination of the lease  

dated 27.03.2001 only to the Director of Mines and Geology.  The  

said Authority also responded to the letter of determination in its  

letter dated 25.05.2001 addressed to its subordinate officer marking  

a  copy  to  M/s.Dalmia.  Therefore,  the  said  contention  raised  on  

behalf of the first respondent that the surrender of the lease not  

having  been  forwarded  to  the  authorized  officer  of  the  State  

Government by M/s. Dalmia, the so-called letter of surrender dated  

16.04.1999 and 27.03.2001 cannot be validly construed as the act  

of M/s.  Dalmia to determine the lease is to be stated only to be  

rejected. We are afraid that it  is  too late in the day for the first  

respondent  to  come  forward  with  such  a  contention  when  M/s.  

Dalmia having entered into lease deed with the State of Karnataka  

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duly represented by the Director of Mines and Geology exercised its  

right to determine the lease by addressing its  communication on  

27.03.2001 to the very same Authority.  It must be stated that such  

a decision taken and communicated by M/s. Dalmia to the Director  

of Mines and Geology was valid in law and was in consonance with  

the prescription contained in sub-Rule (1) of Rule 29.   

80. What remains  to  be considered is  the question whether  one  

should wait for the expiry of the 12 months period to lapse from  

27.3.2001 for the surrender to come into effect by relying upon para  

4 of Part VIII of the lease deed.  In the first place, even according to  

M/s. Dalmia in their letter dated 27.3.2001 M/s. Dalmia themselves  

while giving 12 months notice as required under para 4 of Part VIII of  

the mining lease deed also stated that it may be determined on any  

earlier  date  i.e.  prior  to  1.4.2001  if  the  Director  of  Mines  and  

Geology so permit.  When such a categorical stand was made on  

behalf of M/s. Dalmia, acting upon it, the office of Director of Mines  

and Geology in their letter dated 25.5.2001 addressed to the Senior  

Geologist  while  marking  its  copy  to  M/s.  Dalmia  directed  it  to  

surrender  the  lease  deed  book  along  with  the  mining  plan  

immediately to enable its office to take further action.  In fact, in the  

body of  the letter  addressed to  Senior  Geologist,  the Director  of  

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Mines and Geology specifically mentioned that M/s. Dalmia wanted  

to surrender the lease M.L. No.2010 earlier than 12 months period.  

Apart from such specific instructions issued, M/s. Dalmia themselves  

in their reply dated 16.6.2001 to the Director of Mines and Geology  

surrendered the lease deed book of M.L. No.2010 and as regards the  

mining  plan  it  stated  that  the  same  was  not  available  with  it.  

Thereafter, as was noticed earlier, on 30.1.2002, M/s. Dalmia paid a  

sum of Rs.22,332/- towards arrears in respect of the mining lease  

which was also acknowledged by the Director of Mines and Geology  

which was duly communicated to M/s.  Dalmia by stating that by  

issuing  such  no  due certificate,  no  further  amount  was  due and  

payable in respect of said mining lease.   

81. When  we  consider  the  above  correspondence  exchanged  

between M/s.  Dalmia and the office of the Director of Mines and  

Geology, there is no room for doubt for anyone to still contend that  

the surrender had not come into effect. On the other hand, we find  

that  there  was  due  compliance  of  Rule  29(1)  when  M/s.  Dalmia  

expressed  its  desire  to  determine  the  lease  in  its  letter  dated  

27.3.2001 addressed to Director of Mines and Geology.  Then by  

specifically stating in the said communication that it may even be  

permitted to determine the lease prior to 12 months period and that  

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based on such specific  plea made on behalf  of  M/s.  Dalmia,  the  

Director of Mines and Geology also decided to determine the lease  

without waiting for the expiry of 12 months period by calling upon  

M/s.  Dalmia  to  surrender  the  lease  book  which  was  also  duly  

surrendered by M/s. Dalmia on 16.06.2001 and thereafter by issuing  

a no due certificate on 31.2.2002, the said sequence of events had  

put an end to the operation of the lease in M.L.No. 2010 by duly  

accepting  the  surrender  made  on  behalf  of  M/s.  Dalmia.   The  

contention that there was no scope for such surrender to come into  

effect before the expiry of twelve months is concerned, it will also  

be relevant to make a reference to para 5 of the lease deed M.L.No.  

2010  in  Part  VIII  which  has  been  extracted  above.  The  said  

paragraph 5 empowers the State  Government  to  elect  within  12  

calendar months after the determination of lease for the purpose of  

refunding the security deposit made by the lessee.  We do not find  

any specific bar in para 4 of Part VIII that while on the one hand the  

lessee has to give not less than twelve calendar months notice, on  

receipt  of  such  notice  the  state  government  should  wait  for  the  

expiry of the twelve months period.   

82. The contention that only on expiry of the twelve months period,  

the surrender will come into effect does not stand to reason also. In  

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fact, we do not see any sound basis in making such a contention on  

behalf of the first respondent.  On the other hand, para 5 of the  

lease deed itself gives ample right to the lessor, namely the Director  

of Mines and Geology to refund the security deposit, if any, to make  

the determination of lease within the 12 months period of notice.  

The said clause provides clear indication for such earlier acceptance  

of the determination of the lease. We have noted extensively that  

long prior to 16.04.1999 as well as from 16.4.1999 onwards till M/s.  

Dalmia by its communication dated 27.3.2001 positively expressed  

its decision to determine the lease, M/s. Dalmia themselves were  

only  referring  to  the  mining  operations  to  the  extent  of  130.4  

hectares  which  remained  with  them as  on  27.03.2001.   Even in  

respect of the said extent of lands by virtue of the general directions  

issued by this  Court  in  Godavarman I no mining operation was  

being  carried  on  from  January  1997.   Subsequently,  based  on  

Godavarman  II order  of  this  Court,  when  the  Ministry  of  

Environment and Forest was directed to  consider issuance of  ex  

post facto approval,  one such order was issued in favour of  M/s.  

Dalmia on 24.12.1997 by way of  in  principle stage-I  approval  by  

imposing three conditions.  Even as on 16.4.1999, M/s.  Dalmia  in  

writing  categorically  stated  and  took  the  stand  that  it  need  not  

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comply with the conditions imposed in the order dated 24.12.1997.  

In effect M/s. Dalmia was not operating its right of carrying out any  

mining activity in respect of the entirety of 334.40 hectares after the  

first renewal effected in the year 1983. Ultimately, in its letter dated  

27.03.2001, it  made explicitly clear that it  was not operating the  

mines and, therefore, it wanted to surrender either after expiry of  

twelve months period from the date of issuance of such notice or  

any day earlier that may be acceptable to the State Government.   

83. In the light of such a clear stand disclosed by M/s. Dalmia, we  

fail  to  understand  as  to  for  what  reason  the  State  Government  

should  wait  for  the  expiry  of  the  twelve  months  period  for  the  

surrender  to  come into  effect.   On  the other  hand,  the decision  

made by the Director of Mines and Geology in its communication  

dated  25.5.2001  addressed  to  the  Senior  Geologist  with  a  copy  

marked to M/s. Dalmia to determine the lease earlier and for that  

purpose  directed  M/s.  Dalmia  to  surrender  mining  lease  book,  

namely, M.L. No.2010 along with the mining plan was a pointer to  

the effect that the surrender was decided to be accepted on behalf  

of  the  State  Government  instantaneously  which  was  also  not  

prohibited either under the Rules or under the terms of the lease  

deed or under any other statutory provision.   

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84. In this context, the reliance placed upon some of the decisions  

of this Court by Mr. Kapil Sibal, learned senior counsel appearing for  

the appellant needs to be considered.  The learned senior counsel  

relied  upon  the  earliest  judgment  of  this  Court  reported  as  

Basheshar Nath (supra)  for the proposition that the principle of  

waiver will have different shades when it comes to the question of  

such waiver being opted depending upon the nature of right as to  

whether it would be for the benefit of individual or for the general  

public.  This Court has held as under in paragraph 66:

“66……...I may refer in this connection to the provisions  in  Part  XIII  which  relate  to  trade,  commerce  and  intercourse within the territory of India. These provisions  also impose certain restrictions on the legislative powers  of the Union and of the States with regard to trade and  commerce. As these provisions are for the benefit of the  general public and not for any particular individual, they  can not be waived, even though they do not find place in  Part III of the Constitution. Therefore, the crucial question  is not whether the rights or restrictions occur in one part   or other of the Constitution. The crucial question is the   nature of the right given: is it for the benefit of individuals   or is it for the general public?”  

85. The said well settled principle of law set down by this Court will  

have universal  application.  When such principle is  applied to  the  

case  on hand,  as  rightly  pointed out  by  Mr.Sibal,  learned senior  

counsel when the State of Karnataka chose to accept the surrender  

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made by M/s.  Dalmia in its  letter dated 27.03.2001, immediately  

thereafter by directing M/s. Dalmia to surrender the lease book of  

M.L.2010  along  with  mining  plan  such  action  of  the  State  

Government  for  the  purpose  of  ensuring  the  effective  surrender  

offered  by  M/s.Dalmia  having  been  made  in  the  general  public  

interest, as the leasehold rights of the mining activities would be in  

the lands belonging to the State and that too Forest Lands, such  

action taken in accepting the surrender by waiving the 12 months  

period should be taken as having come into effect. We find force in  

the said submission of the learned senior counsel for the appellant.

86. In this context, the various orders relied upon and placed before  

this Court by Mrs. Anitha Shenoy, Advocate-on-Record appearing on  

behalf  of  the  State  Government,  namely,  the  orders  dated  

December  1988,  11.4.1989,  Notification  dated  12.3.1965  and  

Notification  dated  19.6.1965  require  to  be  examined.  The  order  

dated December, 1988 relates to the acceptance of full surrender of  

M.L. No.994 in Sankalapuram village, Hospet Taluk, Bellary district.  

The said document has been signed by the Director of Mines and  

Geology, Bangalore on behalf of Government of Karnataka stating  

that full surrender of mining lease No.994 was accepted with effect  

from  1.7.1986.   The  order  dated  11.4.1989  is  another  order  in  

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respect of mining lease No.1759.  Here again the said order was  

signed by Director of Mines and Geology, Bangalore on behalf of the  

State  Government  for  accepting  the  surrender.   The  earlier  

notification dated 12.3.1965 states that as provided under proviso to  

Rule 29, one Shri  G.R.  Thiruvengadam Chetty,  the lessee of  M.L.  

No.419 was  permitted  to  surrender  some part  of  the  lease  hold  

lands which was notified in the name of the Governor of Mysore.  

Similar is the Notification dated 19.6.1965 in respect of mining lease  

No.414 held by one Shri M.B. Jhaveri.  While those notifications were  

of the years 1965, 1988 and 1989, we find that surrender of mining  

lease was duly acknowledged by the Director of Mines and Geology  

on behalf of the state of Karnataka.   Therefore, even going by the  

earlier orders pertaining to acceptance of surrender issued by the  

State of Karnataka read along with the orders dated 25.5.2001 and  

31.1.2002 issued in  the case of  M/s.  Dalmia  and for  the various  

reasons referred to above, we hold that M/s. Dalmia surrendered its  

mining lease M.L. No.2010 in respect of the entire extent of 331.50  

hectares in Jaisinghpur village, R.M.  Block,  Sandur Taluk,  Bellary,  

State of Karnataka which surrender was duly accepted by and on  

behalf  of  State  of  Karnataka  which  had  come  into  effect  on  

acknowledgment of the receipt of the sum of Rs.22,332/- towards  

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arrears in respect of the said mining lease in the acknowledgment  

letter dated 31.1.2002.   

87. When once such surrender had come into  effect,  it  must  be  

stated that there was no scope for M/s. Dalmia to resile from the  

said surrender and contend that it still had a right to transact with  

the said M.L. No.2010 for any other purpose including for effecting  

any transfer in favour of  anyone much less in favour of  the first  

respondent.  

88. In this context, the reliance placed upon some of the decisions  

of  this  Court  by  Mr.  Krishnan  Venugopal  learned  senior  counsel  

appearing  for  the  first  respondent  needs  to  be  considered.  The  

learned  senior  counsel  for  the  first  respondent  relied  upon  the  

decisions reported in  Sethi  Auto Service  Station (supra)  and  

Shanti Sports Club (supra) for the proposition that ‘noting’ in the  

department files do not have sanction of law to be an effective order  

unless it culminate into an executable order affecting the rights of  

the  parties  and  only  when  it  reaches  the  final  decision  making  

authority in the department get his approval and the final order is  

communicated to the person concerned. There can be no dispute  

with regard to the said principle stated in the above referred to two  

decisions. But in the case on hand, we have extensively noted the  

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various  sequence  of  events  relating  to  the  factum  of  surrender  

effected by M/s. Dalmia to the extent of 130 hectares long prior to  

16.04.1999 and an extent  of  196.58 hectares  in  its  letter  dated  

16.04.1999 itself and subsequently by its letter dated 27.03.2001,  

its  desire  to  sanction  the  whole  of  the  mining lease covered  by  

M.L.No.2010.  We  also  referred  to  various  communications  which  

emanated  from the  office  of  the  Director  of  Mines  and  Geology  

confirming acceptance of surrender proposed by M/s. Dalmia which  

came to an end on 31.01.2002.  In the light of the said voluminous  

correspondence between M/s. Dalmia and the Department of Mines  

and  Geology  of  the  State  Government  available  on  record  the  

reference to file noting dated 28.05.2001, by the Director of Mines  

and Geology, was only an additional supporting material to confirm  

the act of surrender effected by M/s. Dalmia and its final conclusions  

as recorded in the proceedings of the Director of Mines and Geology.  

We therefore do not find any support for the first  respondent by  

referring to the above two decisions.   

89. Mr.  Krishnan Venugopal,  learned senior  counsel  further relied  

upon  the  decisions  in  Lila  Gupta  (supra)  and  Pankaj  Mehra  

(supra)  for the proposition that all  acts in violation of  the lease  

which do not provide for consequence of the breach would be void.  

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90. In  the  decision  reported  in  Lila  Gupta  (supra), the  said  

principle has been set out in paragraph 10 and while stating so, this  

Court has explained as to how such a principle would vary when it  

comes to the question of affecting the public at large.  In that case,  

it was stated so in paragraph 10 while dealing with the claim of a  

woman while ascertaining her status as the wife and it was in that  

context, the principle was stated.  This Court further in paragraph 11  

explained  as  to  how  the  said  principle  cannot  have  universal  

application.  

91. As far as the decision reported in  Pankaj Mehra (supra) is  

concerned, the statement of law set out in paragraph 14 itself  is  

clear  in  its  term  and  states  that  the  word  ‘void’  has  different  

nuances in different connotation and one of them is to the effect  

that it should be construed as having no legal force or binding effect  

while in another circumstances, it should be construed as ‘unable in  

law to support the purpose for which it was intended’.  The relevant  

paragraph for our purpose reads as follows:

“14.………….The word 'void' in its strictest sense, means  that  which  has  no  force  and  effect,  is  without  legal   efficacy, is incapable of being enforced by law, or has no   legal or binding force, but frequently the word is used and  construed  as  having  the  more  liberal  meaning  of   'voidable.  

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The word 'void' is used in statutes in the sense of utterly   void so as to be incapable of ratification, and also in the  sense of voidable and resort must be had to the rules of   construction in many cases to determine in which sense  the  Legislature  intended  to  use  it. An  act  or  contract   neither wrong in itself nor against public policy, which has  been  declared  void  by  statute  for  the  protection  or   benefit of a certain party, or class of parties, is voidable   only."  

(underlining is ours)

92. Therefore,  if  such  a  different  connotation  is  followed for  the  

expression ‘void’ and when we apply the said principle to the case  

on hand with particular reference to Rule 37(1A) we have explained  

in detail as to how the voidness of the leasehold right would result in  

by virtue of the serious violations committed by M/s. Dalmia while  

dealing with the mining lease in M.L.No.2010 while carrying out the  

first renewal in the year 1983 when the violation of Section 2 of the  

Forest Act, 1980 occurred and subsequently when Stage I  ex post  

facto  approval was granted on 24.12.1997 by imposing conditions  

which were flagrantly violated by M/s. Dalmia and thereby made the  

lease void ab initio.

93. In the light of the above circumstances, pertaining to the case  

on hand, we do not find any scope to apply the above decisions  

relied upon by the learned senior counsel for the first respondent.

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94. It will be useful to refer to paragraphs 10 and 11 of the decision  

reported in Lila Gupta (supra) to highlight the distinctions stated  

above as to how those decisions can be of no application to the facts  

of this case.

“(10) ………….the interdict of law is that it shall not be  lawful  for  a  certain  party  to  do  a  certain  thing  which   would mean that if that act is done it would be unlawful.   But  whenever a statute prohibits a certain thing being  done thereby  making  it  unlawful  without  providing  for   consequence  of the breach, it  is not legitimate to say   that such a thing when done is void because that would   tantamount  to saying that every unlawful  act  is  void.   ……….  

(11) Undoubtedly, where a prohibition is enacted in public  interest,  its   violation  should  not  be  treated  lightly…………….”  

(Emphasis  added)

95. Our above conclusion as regards the surrender effected by M/s.  

Dalmia answers question Nos.(i) to (iii) framed in paragraph 48. With  

that  we  come  to  the  next  question  as  to  whether  the  act  of  

surrender in order to become complete should have been accepted  

by the State.  It must be stated that acceptance by the State though  

not a statutory requirement, the provisions contained in the mining  

lease, in particular, Part VIII  paragraphs 4 and 5 impliedly require  

such acceptance. While answering question Nos.(i) to (iii), we have  

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elaborately noted as to the manner in which M/s. Dalmia’s proposal  

to  determine  the  lease  as  initiated  in  its  communication  dated  

27.3.2001  ultimately  resulted  in  the  surrender  of  the  lease  by  

acknowledging the sum of Rs.22,332/- towards final dues payable by  

it under the said lease.  We have also held that the Director of Mines  

and Geology was the competent authority to receive a proposal for  

determination  of  lease  by  M/s.  Dalmia.  The  subsequent  

correspondence exchanged between M/s. Dalmia and the Director of  

Mines and Geology also confirm that the proposal of M/s. Dalmia  

was  considered  and  subsequent  directions  were  issued  for  the  

purpose  of  accepting  the  surrender  proposed  and  ultimately  by  

acknowledging  the  payment  of  arrears  and  issuance  of  no  due  

certificate the surrender was finally accepted on behalf of the State  

Government by the Director of Mines and Geology. Therefore, while  

holding that acceptance of surrender is impliedly mandated under  

Rule 29 read along with paragraphs 4 and 5 of Part VIII of the mining  

lease,  there  was  a  factual  acceptance  on behalf  of  the  State  of  

Karnataka of the mining lease M.L. No.2010.

96.  Reliance was placed upon the decision reported as Bhagwati  

Prasad Pawan Kumar v. Union of India - (2006) 5 SCC 311  

wherein this Court held that the Courts must examine the evidence  

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to find out whether in the facts and circumstances of the case the  

conduct of the “offeree” was such as amounted to an unequivocal  

acceptance of the offer made.  Paragraph No.19 is relevant for our  

purpose which reads as under:

“19.  It is well settled that an offer may be accepted by  conduct. But conduct would only amount to acceptance if   it is clear that the offeree did the act with the intention  (actual or apparent) of accepting the offer. The decisions  which  we  have  noticed  above  also  proceed  on  this  principle.  Each  case  must  rest  on  its  own  facts.  The  courts must examine the evidence to find out whether in  the facts and circumstances of the case the conduct of   the "offeree" was such as amounted to an unequivocal   acceptance of  the offer made. If  the facts of  the case   disclose  that  there  was  no  reservation  in  signifying  acceptance by conduct, it must follow that the offer has   been  accepted  by  conduct.  On  the  other  hand,  if  the  evidence disclose that the "offeree" had reservation in   accepting  the  offer,  his  conduct  may  not  amount  to   acceptance  of  the  offer  in  terms  of  Section  8  of  the   Contract Act.”      

 (underlining is ours)  

97. In the case on hand, we have considered various documents by  

way of correspondence exchanged between M/s.Dalmia and the said  

authorities  prior  to  1999  and  after  16.04.1999,  ending  with  

31.01.2002 to hold that there was an unequitable acceptance of the  

surrender  offered  by  M/s.Dalmia.  Having  regard  to  our  said  

conclusions,  it  is  no longer open for  anyone to  contend that  the  

surrender had not come into effect.    

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98. Having answered the said question, when we come to the next  

question as to whether pursuant to the act of surrender, delivery of  

possession  was  mandatory  under  Rule  27  (2)  (l)  of  the  Mineral  

Concession Rules, it would be necessary to make a reference to the  

said Rule which reads as under:

“(l) The delivery of possession of lands and mines on the  surrender expiration or determination of the lease;”

99. Under  Rule  27,  it  is  stated that  every  mining lease shall  be  

subject to certain conditions. Sub-Rule (2) states that a mining lease  

may contain such other conditions as the State Government may  

deem necessary in regard to conditions (a) to (o).  Under the said  

sub-Rule (2) in clause (l), it is provided that delivery of possession of  

lands and mines on the surrender, expiration or determination of  

lease.  What is required under Rule (2) of Rule 27 was that a mining  

lease may contain many conditions including what is specified in  

Clause  (l).   The  reference  to  Rule  27  (2)(l)  was  relied  upon  by  

learned counsel for the State. Except merely drawing our attention  

to the said sub-clause (l) of Rule 27 (2), we were not drawn to any of  

the clause contained in the mining lease in M.L. No.2010 to state  

that such a condition was specifically  incorporated in  the mining  

lease.   It  is  not  even  the  case  of  the  first  respondent  or  the  

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respondent State that such a condition for physical possession of the  

lands on surrender was specified in the mining lease.   

100. In such circumstances, we do not find any need or necessity to  

delve deep into the said contention in order to find out whether or  

not such a condition should have been fulfilled by M/s. Dalmia or by  

the State Government for the purpose of  surrender to come into  

effect.  We, therefore, hold that insofar M.L. No.2010 was concerned,  

there being no specific provision as specified in Clause (l) of Rule 27  

(2) there was no mandatory requirement of delivery of possession  

as stipulated therein.   

101. When we come to question Nos.(vi), (vii), (viii), (ix) and (x) the  

said questions would arise if at all the surrender had not taken place  

and thereby assuming the lease continued for non-compliance of the  

conditions imposed in the in principle stage-I approval in the order  

dated 24.12.1997, did the mining lease stood automatically expired  

on  24.11.2003.   Question  No.(vii)  again  pertains  to  the  lease  

becoming void ab initio by virtue of contravention of Rules 29 and  

37 of Mining Concession Rules read with Section 19 of the MMDR  

Act.  The next question pertains to the prior approval for any mining  

lease to come into operation as stipulated in Section 2 of the Forest  

Act of 1980.  In fact, the said question was required to be considered  

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in the light of the contention raised on behalf of the appellants that  

ex post facto approval is not provided for under the Forest Act of  

1980 and that  such a course was adopted only  by this  Court  in  

Godavarman I and II as a one time measure.  Whereas on behalf of  

the  first  respondent,  it  was  contended  that  there  was  a  clear  

distinction as regards the grant of mining lease on the one hand  

under the provisions of MMDR Act and the Mining Concession Rules  

and the requirement of approval under Section 2 of the Forest Act  

1980 and the one does not overlap the other. In the first instance, in  

support of the said stand made on behalf of the first respondent,  

reliance was placed upon amended Forest Conservation Rules,  in  

particular Rules 6, 7 and 8 and state that non-compliance of Section  

2 of the Forest Act will not ipso facto make the lease void ab initio.  

The consideration of the said questions would become relevant for  

the purpose of considering the subsequent claim of M/s. Dalmia as  

well as the first respondent that mining lease M.L. No.2010 stood  

transferred by M/s. Dalmia in favour of the first respondent pursuant  

to the application of transfer dated 4.2.2002 made by M/s. Dalmia  

and the order dated 16.3.2002 of the State Government by which  

such a transfer of lease of M.L. No. 2010 was granted in favour of  

the first respondent.   

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102. When we consider question Nos.(vi), (vii), (viii), (ix) and (x) as  

far  as  question  No.(vi)  is  concerned,  we  have  found  that  when  

during the operation of the first renewal viz., between 25.11.1983  

and 24.11.2003, there was a statutory violation in as much as the  

mandatory requirement of approval under Section 2 of the Forest  

Act, 1980 was not secured on the date when the first renewal was  

granted  viz.,  07.06.1986.  However,  fortunately  for  M/s.Dalmia,  

Godavarman I and Godavarman II judgments of this Court came  

for  its  rescue  by  way  of  a  general  direction  while  all  mining  

operations  were  directed  to  be  stopped  in  Godavarman  I,  

subsequently in Godavarman II direction was issued to the Central  

Government to consider  ex post facto approval under Section 2 of  

the Act as a one time measure.  Pursuant to the said direction, in  

the case of M/s.Dalmia, an order came to be passed on 24.12.1997,  

granting  in-principle  first  stage  approval  by  imposing  three  

conditions.  The said order further directed that while granting in-

principle first stage approval, to enable M/s.Dalmia to carry on its  

mining operations, the requirement of fulfillment of three conditions  

were mandated to be complied within a period of five years from the  

date of  the said order i.e.  on or  before 24.12.2002.  Admittedly,  

M/s.Dalmia  did  not  comply  with  those  conditions.   The  stand  of  

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M/s.Dalmia was that as on that date it was in possession of only  

134.92 hectares and that even in respect of those areas since it was  

carrying  on  mining  operations  with  the  permission  of  the  Forest  

Department of the State Government,  no further compliance was  

required.   

103. As far as the surrender of land and afforestation compensation  

was concerned, M/s. Dalmia took a categorical stand that it was not  

liable to comply with those directions.  Therefore, the outcome of  

such a  stand taken on by M/s.Dalmia  was  to  the  effect  that  in-

principle stage I approval granted by MOEF was not carried out.  Of  

course,  Mr.Krishnan  Venugopal,  learned  senior  counsel  in  his  

submissions  contended  that  having  regard  to  the  subsequent  

amendment of the Forest (Conservation) Rules in particular Rules 6,  

7 and 8 and also a communication of the MOEF dated 14.9.2001, the  

non-compliance of the conditions will not have any impact on the  

validity of the lease as the amended Rules and the communication  

of the MOEF made it clear that the compliance of such conditions  

imposed can always be carried out even after the expiry of the initial  

period of five years and the MOEF came forward to give extension of  

time for compliance of whatever conditions which were imposed at  

the  time  of  grant  of  the  first  renewal  to  enable  the  lessee  to  

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continue  to  retain  its  mining  lease  and  thereby  seek  for  further  

renewal.   

104. It is true that a reference to the amended Rules 6, 7 and 8 as  

well  as  the  earlier  communication  of  MOEF  did  to  some  extent  

support  the  stand  of  the  learned  senior  counsel  for  the  first  

respondent.   However,  persuasive  such  a  contention  may  be  as  

raised on behalf of the first respondent, we find it extremely difficult  

to  accept  such a  contention.   As  rightly  pointed out  by  Mr.Kapil  

Sibal, learned senior counsel when we construe Rules 29 and 37(1A)  

read along with Section 19 of the MMDR Act,  de hors any liberal  

approach offered by the authorities of MOEF under the provisions of  

the  Forest  Act,  such  relaxation  in  the  matter  of  compliance  of  

conditions of prior approval would always be subject to the mining  

lease granted under the provisions of MMDR Act and the Mineral  

Concession  Rules  is  in  a  live  stage.   In  other  words,  unless  the  

mining lease granted under the provisions of the MMDR Act read  

along with the provisions contained in the Mineral Concession Rules  

continue to remain valid and operative, the question of compliance  

of the conditions for prior approval under Section 2 of the Forest Act  

even with whatever relaxation granted by the authorities under the  

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said Act will be of no use.  In this context, when we apply Section 19  

of the MMDR Act. Section 19 of the MMDR Act reads as follows:

“19. Prospecting licences and mining leases to be   void if in contravention of Act:-  Any reconnaissance  permit,  prospecting  licence  or  mining  lease  granted,  renewed or acquired in contravention of the provisions of   this Act or any rules or orders made thereunder shall be   void and of no effect.

Explanation:-  Where  a  person has  acquired  more  than  one reconnaissance permit, prospecting licence or mining  lease and the aggregate area covered by such permits,   licences  or  leases,  as  the  case  may  be,  exceeds  the  maximum  area  permissible  under  section  6,  only  that   reconnaissance  permit,  prospecting  licence  or  mining  lease  the  acquisition  of  which  has  resulted  in  such   maximum area being exceeded shall  be deemed to be  void.”

105. Thus, Section 19 makes the position clear that any mining lease  

granted originally or renewed subsequently in contravention of the  

provisions  of  the  MMDR  Act  or  any  Rules  or  any  Order  made  

thereunder to be void and of  no effect.   The expression used in  

Section 19 is mandatory and therefore if any contravention of the  

provisions of MMDR Act or Rules or Orders found in respect of a  

mining  lease  originally  granted  or  subsequently  renewed  such  

mining  lease  should  be  treated  to  be  void  and  inoperative  for  

operating the said mining lease.  It must also be kept in mind that  

carrying on any non-forest activity in a Forest Land can only be with  

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the prior approval of the Central Government under Section 2 of the  

Forest Act of 1980. Therefore, for a mining lease to remain valid,  

twin requirements of the approval of the Central Government under  

the proviso to Section 5(1) of MMDR Act and Section 2 of the Forest  

Act of 1980 have to be fulfilled.  Therefore, a lessee cannot be heard  

to  contend  that  such  statutory  requirements  are  to  be  thrown  

overboard and permitted to seek for such approvals after the expiry  

of the lease at its own sweet will and pleasure and the time to be  

fixed on its own and that the operation of the mining lease should be  

allowed ignoring such mandatory prescription.

106. Keeping the above said mandatory prescription in Section 19 in  

mind,  when  we  analysis  the  case  on  hand,  in  the  first  place,  

admittedly after the first renewal, there was a serious violation of  

failure to get the prior approval under Section 2 of the Forest Act,  

1980  i.e.  when  the  renewal  order  was  passed  on  07.03.1986.  

Therefore, if we strictly apply Section 19, it must be stated that even  

as on 07.03.1986, for violation of Section 2 of the Forest Act, 1980 it  

must  be stated that,  in  law,  there was no mining lease at  all  in  

existence as it became void on the expiry of the initial period of the  

original  lease  granted  in  1953.   It  may  be  contended  that  such  

violation get cured by virtue of the judgments in Godavarman I and  

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Godavarman II, though for argument sake, such a contention put  

forth on behalf of M/s.Dalmia and the first respondent can be taken  

to  be available,  as  pointed out  by  us  earlier,  based on the  said  

judgments of this Court when the in-principle first stage approval  

was granted by imposing conditions in the order dated 24.12.1997,  

such conditions were blatantly violated by M/s.Dalmia by taking a  

stand that it was not bound to comply with those conditions.  The  

reply of M/s.Dalmia dated 16.04.1999, was sufficient to confirm the  

said stand of M/s.Dalmia.  Therefore, as on 16.04.1999, since the  

lessee  viz.,  M/s.Dalmia  refused  to  comply  with  the  conditions  

imposed in the in-principle first stage approval, it cannot lie in the  

mouth of either M/s.Dalmia or anyone who seek to claim any right  

through M/s.Dalmia by contending that any violation of Section 19 of  

MMDR  Act  or  any  of  the  Rules  of  Mineral  (Concession)  Rules  or  

orders made therein  or Section 2 of the Forest Act of 1980 should  

be ignored and the plea made on behalf of M/s.Dalmia as well as the  

first respondent should be accepted.   

107. We  are  unable  to  accept  such  an  extreme  proposition  

canvassed on behalf of M/s.Dalmia and the first respondent, as in  

our considered opinion, the violation had occurred at the time of the  

order of first renewal viz., 07.03.1986 itself, striking at the very root  

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of the validity of the lease, as it must be held that it was void at that  

very  stage  itself  for  non-compliance  of  the  prior  approval  under  

Section 2 of the Forest Act, 1980 and in any case, on the blatant  

refusal to comply with the conditions imposed in the in-principle first  

stage approval granted in the year 24.12.1997.  Once we are able to  

come to the said conclusion, we hold that the mining lease which  

was held by M/s.Dalmia in M.L.No.2010 became void and inoperative  

for violation of the mandatory requirements of the conditions.  In  

this context, it will also be relevant to refer to Rule 37(1A).  The said  

Rule reads as under:

“Rule 37(1A): The State Government shall not give its  consent to transfer of mining lease unless the transferee   has accepted all the conditions and liabilities which the   transferor was having in respect of such mining lease.”

A reading of the said sub-Rule which was introduced by G.S.R.  

724(E), dated 27.09.1994, a substantive condition is imposed while  

considering an application for consent for transfer of mining lease.

108. In the first  blush it  may appear that what all  required is  the  

acceptance by the transferee to comply with all the conditions and  

liabilities which the transferor was obliged to fulfill in respect of the  

mining lease.  But on a deeper scrutiny of the said Rule, it will have  

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to  be  stated  that  if  there  was  a  total  violation  of  mandatory  

statutory  conditions  under  the  MMDR  Act  and  by  virtue  of  the  

requirements in this case of the fulfillment of Section 2 of the Forest  

Act, 1980 as well as the proviso to Section 5 of the MMDR Act, the  

question of considering the very application for consent to transfer  

should be held to be not available at all.  As we have held in the  

earlier part of this order that M/s.Dalmia committed serious violation  

in regard to the compliance of Section 2 of the Forest Act, 1980 at  

the time of first renewal in the year 1983/86 itself and in any event,  

by  refusing  to  comply  with  the  conditions  imposed  in  the  order  

dated 24.12.1997, the said violation would strike at the very root of  

the claim for transfer of the dead lease as stipulated in Section 19 of  

the MMDR Act.  Therefore, on this ground as well, it must be held  

that there was no scope at all for the State Government to consider  

the application made by M/s.Dalmia for transferring of  its mining  

lease in favour of the first respondent.  When we go little further and  

examine Rule 29, as we have held that M/s.Dalmia had surrendered  

its mining lease M.L.No.2010 once and for all, based on its proposal  

made on 27.03.2001 and accepted by the Director  of  Mines and  

Geology  on  behalf  of  the  State  Government  which  became  

conclusive as on 31.01.2002, there was no live lease for the purpose  

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of  considering  any  application  for  transfer  under  Rule  37  of  the  

Mineral (Concession) Rules.  When that be the legal consequence in  

respect of the lease, which was void and inoperative, it must be held  

that there was no scope for holding that there was a valid transfer  

made by M/s.Dalmia in favour of the first respondent on 16.03.2002.  

109. We find that the reliance placed upon by Dr. Singhvi, learned  

senior counsel on the decisions of this Court needs to be mentioned,  

which fully supports his submissions. He placed reliance upon the  

decision reported in A. Chowgule (supra) for the proposition that  

the requirement of approval under Section 2 of the Forest Act has  

got  greater  significance  and  that  non-compliance  of  the  said  

provision would result in serious consequences.  In the said decision,  

this Court while referring to Rules 4, 6, 2A and 5 read along with  

Section  2  of  the  Forest  Act  held  that  prior  approval  cannot  be  

granted unless the procedure prescribed in the said Rules were duly  

complied with and that such approval under Section 2 is  sine qua  

non for  the  State  Government  and  the  other  authorities  before  

taking  any  steps  in  respect  of  the  Forest  land.  The  relevant  

paragraph No.18 of the said decision reads as under:

“18……………  A bare perusal of the aforesaid provisions  would  show  that  prior  approval  is  required  for  the  diversion of any forest land and its use for some other   

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purpose. This is further fortified by a look at Rule 4 which  provides that every State Government or other authority  seeking prior approval under Section 2 of the Act shall   submit  a  proposal  to  the  Central  Government  in  the  prescribed form and Rule 6 stipulates that the proposals   would be examined by a committee appointed under Rule  2-A within the parameters and guidelines postulated in  Rule 5……………………………..”   

(Underlining is ours)

110. Similar  view has  been expressed in  the  decision  reported in  

Nature Lovers Movement (supra). Paragraph Nos. 47 and 48 are  

relevant for our purpose which read as under:

“47. The ratio of the above noted judgments is that the  1980 Act is applicable to all forests irrespective of the  ownership or classification thereof and after 25.10.1980,  i.e.,  date  of  enforcement  of  the  1980  Act,  no  State  Government or other authority can pass an order or give   a direction for de-reservation of reserved forest or any  portion thereof or permit use of any forest land or any   portion thereof for any non-forest purpose or grant any  lease, etc. in respect of forest land to any private person   or  any  authority,  corporation,  agency  or  organization  which  is  not  owned,  managed  or  controlled  by  the   Government.  

48.  Another  principle  which  emerges  from  these  judgments is that even if any forest land or any portion   thereof  has  been  used  for  non-forest  purpose,  like  undertaking of mining activity for a particular length of   time,  prior  to  the  enforcement  of  the  1980  Act,  the  tenure of such activity cannot be extended by way of   renewal of lease or otherwise after 25.10.1980 without  obtaining prior approval of the Central Government.”

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111. It  is  relevant to note that to the same effect  is  the decision  

reported in Rural Litigation and Entitlement Kendra vs. State  

of U.P. - 1989 Supl. (1) SCC 504.  

112. Mr. Sibal, learned senior counsel then relied upon the decision  

reported  in  Ambica  Quarry  Works (supra)  to  repel  the  

submission made on behalf  of  the first  respondent that the non-

grant of approval under Section 2 of the Forest Act, 1980 will be of  

no consequence as the continued existence of the lease which was  

granted prior to coming into force of the Forest Act, 1980 and it  

came to be renewed in the year 1983 after the Forest Act came into  

force.  In the said decision in paragraph 15 is relevant which reads  

as under:

“15. The rules dealt with a situation prior to the coming  into  operation  of  1980  Act.  '1980  Act'  was  an  Act  in   recognition  of  the  awareness  that  deforestation  and  ecological imbalances as a result of deforestation have  become  social  menaces  and  further  deforestation  and  ecological imbalances should be prevented. That was the  primary purpose writ large in the Act of 1980. Therefore  the concept that power coupled with the duty enjoined  upon the respondents to renew the lease stands eroded  by the mandate of the legislation as manifest in 1980 Act   in  the  facts  and  circumstances  of  these  cases.  The  primary     duty was to the community and that duty took    precedence, in our opinion, in these cases. The obligation  to the society must predominate over the obligation to   the individuals.”                                        

(underlining is ours)

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Consequently,  the  question  Nos.vi,  vii,  viii,  ix  and  x  are  

answered to the said effect.

113. With that when we come to the next question No.(xi), namely,  

the requirement of Central Government under Section 5 of MMDR  

Act for grant of approval which was again stipulated in Section 2 of  

the Forest Act  and whether compliance of  the said provision are  

mandatory for a mining lease to remain valid.  Similarly, question  

No.(xii) whether Section 10 (1) and the second proviso to Section 11  

of the MMDR Act as well as Rules 37 and 59 of Mineral Concession  

Rules mandate to the effect that any transfer applied for under Rule  

37 (1)(a)  cannot  be automatically  granted.   That  question would  

arise only if the lease hold right of M/s. Dalmia under M.L. No.2010  

was  available  with  it  for  the  purpose  of  effecting  any  transfer.  

Inasmuch as we have held that the said lease was duly surrendered  

by M/s. Dalmia and accepted by the State Government, we do not  

find any necessity to examine those questions and we leave it open  

for consideration as and when any need arises for deciding those  

questions.   

114. As far as the question Nos.(xiii) and (xiv) are concerned, as to  

whether the order of transfer dated 16.3.2002 was bona fide taking  

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into account the sequence of events and whether the transfer of  

lease  dated  16.3.2002  can  be  held  to  be  valid,  we  wish  to  

recapitulate the various sequence of events as from 16.4.1999 till  

30.1.2002 pertaining to the surrender of lease made by M/s. Dalmia.  

Since we have extensively dealt with the said issue in the earlier  

part of our order, we merely state that our conclusion as regards the  

coming  into  force  of  the  surrender  made  on  behalf  of  the  M/s.  

Dalmia  and  its  acceptance  by  the  State  Government  from  

31.01.2002 would be sufficient to hold that there was total lack of  

bona fides on the part of the State government in taking a sudden  

U-turn for passing the order of transfer dated 16.3.2002 in favour of  

the first respondent.  In this context, as rightly contended on behalf  

of the appellant, the conduct of the Director of Mines and Geology,  

one Dr. Reddy who dealt with the applications made by one M.S.P.L.  

Ltd. through its Executive Director Mr. Rahul Baldota on 21.7.2001  

and another applicant with reference to which Dr. Reddy made an  

endorsement in the office note dated 25.8.2001 which stated that  

the land covered by M.L. No.2010 was surrendered by M/s. Dalmia,  

that certain other applications were also received for grant of lease  

in respect of those lands apart from M.S.P.L. Ltd. and that there was  

no scope to consider any of those applications since in respect of  

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surrendered  land  Rule  59(1)  of  Mineral  Concession  Rules  would  

automatically come into play and any future grant of lease can only  

be done as specified under the said Rule.  When such a clear stand  

was spelt out by the said officer, namely, Dr. Reddy while making  

the endorsement on 25.8.2001, we fail to see any justifiable reason  

as to how the very same officer in his capacity as Director of Mines  

and  Geology  could  be  a  signatory  to  its  recommendation  dated  

6.2.2002  for  effecting  the  transfer  and  based  on  his  

recommendation the State Government allowed the application for  

transfer of M.L. No. 2010.   

115. Reliance was placed upon the decision reported in  Bangalore  

Development  Authority  (supra),  certain  facts  noted  in  that  

judgment in paragraph 15 and based on such facts the order passed  

by the learned Single Judge and reversal of the order of the learned  

Single Judge by the Division Bench which was found to be correct  

have been stated in paragraphs 15 and 18 which are relevant for our  

purpose and the said paragraph reads as under:   

“15. We are of the view that the above principles when  applied to the case on hand, it can be safely concluded  that the order of the learned Single Judge in the light of   the peculiar  facts  noted therein cannot be faulted.  We  also wonder as to why the Hon’ble Minister concerned  should have taken upon himself the extraordinary effort   of  making  an  inspection  for  which  no  special  reasons  

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were  adduced  in  the  report. That  apart  none  of  the  reasons  which  weighed  in  the  report  of  the  Hon’ble  Minister  reflected the true facts.  The conclusion of  the  Hon’ble Minister that the possession continued to remain   with  the  owner  was  contrary  to  what  was  found  on  records. The  Mahazar  dated  09.12.1983  as  noted  by  learned Single Judge from the original file reveal that the  conclusion of the Hon’ble Minister was ex facie illegal and  untrue.  The said conclusion obviously appeared to have  been made with some ulterior motive and purpose and  with  a  view  to  show  some  undue  favour  to  the  first   respondent  herein.  The  acquisition  became  final  and  conclusive as far back as on 15.7.1971  when Section 6  declaration came to be issued. At no point of time was   there  any  challenge  to  either  preliminary  notification  dated  21.9.1967  or  the  final  declaration  notified  on  15.7.1971. Even the award dated 21.11.1983 approved  on 29.11.1983 was not the subject matter of challenge in  any proceedings.

16. xxx xxx xxx

17. xxx xxx xxx

18. In our considered opinion, the Division Bench failed to   take note of the above gross illegality committed by the  Hon’ble Minister while directing the issuance of the de- notification  dated  05.10.1999 in  spite  of  the  fact  that   possession had already been handed over to the State as  early as on 09.12.1983 and that the decree of the Civil   Court  did  not  in  any  way  create  any  fetters  on  the  authorities  concerned  to  take  steps  for  possession  by  resorting  to  appropriate  legal  means.  At  the  risk  of  repetition, it will  have to be stated that the Civil  Court   decree to that effect was dated 15.12.1981 and that the  possession was taken by taking necessary steps under  the  provisions  of  the  Land  Acquisition  Act  under  the  Mahazar dated 09.12.1983 which was never challenged  by any party much less the first respondent herein.  The  Division Bench unfortunately completely omitted to take  

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note of the relevant facts while interfering with the order  of the learned Single Judge. The appeals, therefore, stand  allowed. The order of the Division Bench is set aside and   the order of  the learned Single Judge dated 26.8.2002  passed in Vijaya Leasing Ltd. v. State of Karnataka stands  restored by this common judgment.”  

(underlining is ours)

116. The above judgment throws some light as to how certain excess  

role played on behalf of the State without any justifiable reasons  

were  brought  to  the  notice  of  the  Court,  the  Court  should  not  

hesitate to  set aside such orders  in  the interest  of  Rule  of  Law.  

When we compare the facts set out in paragraph 15 of  the said  

judgment, when we refer to the facts dealt with by us in this case,  

we have noted as to how after surrender made by M/s.Dalmia had  

become  conclusive  as  on  31.01.2002,  on  behalf  of  the  State  

Government the very same officer who held the post of Director of  

Mines and Geology as on 25.08.2001 came forward to recommend  

for  the transfer  applied  for  by  M/s.Dalmia  on 04.02.2002,  in  the  

recommendation  order  dated 06.02.2002 and  by  simply  glossing  

over the gross violations of the Forest Act, 1980, the order came to  

be passed on 16.03.2002 approving of the transfer applied for by  

M/s.Dalmia  in  favour  of  the  first  respondent.  In  the  said  

circumstances, the order of the learned Single Judge in setting aside  

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the  said  order  dated 16.03.2002,  was  perfectly  justified  and the  

interference  with  the  same  by  the  Division  Bench  by  the  order  

impugned  is  required  to  be  set  aside,  in  view  of  the  various  

incongruities which were prevalent in the case on hand.  

117. We are, therefore, convinced that when once M.L. No.2010 had  

come to an end by virtue of the surrender effected by M/s. Dalmia  

and accepted by the State Government, there was no legal right or  

power with the State Government or any authority acting on behalf  

of the State Government to consider the very application for transfer  

made at the instance of M/s. Dalmia on 4.2.2002 and for passing the  

order of transfer dated 16.3.2002. It can only be stated that such a  

decision taken and passed in the order dated 16.3.2002 was in total  

violation  of  the  provisions  of  the  MMDR  Act  and  the  Mineral  

Concession Rules.  It will have to be stated that once surrender of  

M.L. No.2010 had come into effect the only other course open to the  

State Government was to invoke Rule 59 by throwing open those  

lands by way of public auction in order to get the maximum revenue  

by granting any lease hold rights.  Here again, it must be stated that  

apart from the act of surrender made by M/s.Dalmia which became  

final  and  conclusive  due  to  non-compliance  of  the  conditions  

imposed  in  the  in-principle  Stage  I  clearance  dated  24.12.1997,  

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M/s.Dalmia lost its right to retain the lease and the consequence of  

it  rendered the  lease itself  void  as  per  Rule  37(1A)  and on this  

ground as well, there was no scope for the State Government or any  

other Authority acting on its behalf to have considered the transfer  

application of M/s.Dalmia with reference to a lease which ceased to  

exist as from 31.01.2002 due to the act of surrender and in any case  

from  24.12.2002  when  the  5  year  period  to  comply  with  the  

conditions imposed in the order dated 24.12.1997 expired.

118. In this context, it will be more relevant to state that mines and  

mineral being national wealth, dealing with the same as the largesse  

of the State by way of grant of lease or in the form of any other right  

in favour of any party can only be resorted to strictly in accordance  

with the provisions governing disposal of such largesse and could  

not  have  been  resorted  to  as  has  been  done  by  the  State  

Government and the Director of Mines and Geology of the State of  

Karnataka by passing the order of transfer dated 16.3.2002.  Such a  

conduct of the State and its authorities are highly condemnable and,  

therefore, calls for stringent action against them.

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119. In the light of our above answers to the various questions posed  

for consideration, we hold that the subsequent stage-I in-principle  

approval dated 13.09.2006 and the final approval dated 09.09.2010  

based on the acceptance of the transfer of lease in the order dated  

16.03.2002 cannot survive and the same are set aside. As we have  

set aside the stage-I in-principle approval dated 13.09.2006 and the  

final approval dated 09.09.2010 which were not allowed to operate,  

we observe that whatever statutory payments made in compliance  

of  the  said  orders  are  refundable  to  the  party  who  made  the  

payments. We, however, make it clear that the payments made in  

pursuance of the in-principle stage-I approval or final approval of the  

first renewal granted ex post facto, covering the period from 1983 to  

2003 shall not be refundable. Further, as serious allegations were  

raised by M/s. Dalmia when the lease was in force that there were  

encroachments into the lands held by it, at the instance of the first  

respondent, we direct the Mining as well  as Forest Authorities to  

ensure that the entire extent of 331.44 hectares of land covered by  

M.L. No.2010 is surveyed, demarcated and its physical possession  

by the State/Forest Authorities be ensured by removing whatever  

encroachments, if any, exist in the said land. We also direct that in  

order to ensure that no further encroachments take place into the  

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said  land,  necessary  steps  as  required under  Rule  59 of  Mineral  

Concession Rules are taken for leasing out the lands in accordance  

with  law and  by  following  the  required statutory  procedure.  The  

appeal is allowed and the order of the Division Bench is set aside  

with the above directions. No costs.

….………….………………………………J.              [Fakkir Mohamed Ibrahim Kalifulla]

..……………………………………………J. [Shiva Kirti Singh]

New Delhi; March 12, 2015

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