REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.2790 OF 2012

(Arising out of SLP(C)No.8567 of 2008)

BHUSHAN POWER & STEEL LTD. & ORS.    … APPELLANTS     Vs.

STATE OF ORISSA & ANR.     … RESPONDENTS

J U D G M E N T

ALTAMAS KABIR, J.

1. Leave granted.

2. With the intention of setting up an integrated steel  

plant in the State of Orissa, Bhushan Limited, entered into  

discussions  with  the  State  Government  in  2001  in  that

regard.   Pursuant  to  such  discussions,  Bhushan  Limited  

applied to the Industrial Development Corporation of India  

(IDCO)  for  acquisition  of  land  measuring  1250  acres,  for  

setting up the proposed plant in the identified villages of  

Thelkoloi, Dhubenchhabrar and Khariapalli (Lapanga) in the  

District  of  Sambalpur.   On  13th November,  2001,  Bhushan  

Limited applied to the Industrial Promotion and Investment  

Corporation  of  Orissa  Ltd.  (IPICOL)  for  appraisal  and  

recommendation  for  acquisition  of  land  for  the  aforesaid  

purpose to IDCO.  Bhushan Limited also addressed two letters  

to the Collector, Sundergarh and Collector, Keonjhar on 28th  

November, 2001, applying for grant of lease for mining of  

iron ore for use in the proposed plant.  The applications  

were  received  in  the  Collector’s  office  on  3rd December,  

2001, 4th December, 2001 and 1st March, 2002.  On the basis of  

such applications filed by Bhushan Limited, a meeting was  

held  on  27th March,  2002,  between  the  Chief  Secretary,  

Government  of  Orissa  and  Bhushan  Limited,  in  which  the

Government agreed to accord due priority to Bhushan Limited  

for grant of suitable iron ore areas and also agreed to  

recommend the proposal of Bhushan Limited to the Government  

of India for grant of a Coal Block.

3. Thereafter, meetings were held between Bhushan Limited  

and the representatives of the State Government and one such  

meeting was held on 24th April, 2002, under the Chairmanship  

of the Chief Minister, relating to the setting up of the  

steel plant at Lapanga.  The said meeting was confirmed by  

IDCO and the Water Resources Department and it was decided  

to prepare a Memorandum of Understanding (MOU) to be signed  

by the parties for setting up of a 1.2 million tonnes steel  

plant under Phase-I and a 2.8 million tonnes steel plant in  

Phase-II in Lapanga, in the District of Sambalpur.  The MOU  

contained  the  commitment  of  the  State  Government  to  

recommend to the Central Government grant of iron ore mines  

to the Appellant for its use in the plant to be set up at  

Lapanga.  As far as the grant of the iron ore mines is

concerned, the State Government agreed to make the following  

recommendations to the Central Government:

a) For  grant  of  96  million  tonnes  iron  ore  

reserves  in  Joda  Barbil  Sector  of  Keonjhar  

(Thakurani  area)  for  50  years  requirement  of  

the plant.

b) For additional 128 million tonnes of iron ore  

reserves in Keora, District Sundergarh, to meet  

a  requirement  of  1.6  million  tonnes  for  50  

years.

The total requirement of 200 million tonnes was split up  

into  two  parts,  i.e.,  96  million  tonnes  and  128  million  

tonnes respectively, and the same were to be met from the  

Thakurani mines situated in the Joda Barbil sector and from  

the Keora area of Sundergarh District.  

4. Pursuant  to  the  aforesaid  understanding,  on  16th May,  

2002, the Government of Orissa addressed two letters to the  

Government of India, in its Ministry of Steel and Ministry  

of Coal, for allotment of Jamkhani and Bijahan Coal Blocks  

to Bhushan Limited.  In aid of the decision to set up the  

steel plant, the Department of Energy issued a No Objection  

Certificate  (NOC)  for  setting  up  of  a  power  plant  at  

Thelkoloi in the name of Bhushan Limited and, on 5th July,  

2002,  the  State  Government  conveyed  its  approval  for  

acquisition of 632.28 acres of private land and 634.94 acres  

of  Government  land  in  identified  villages  under  Rengali  

Tehsil of Sambalpur District, for establishment of the steel  

plant.  Several meetings took place between the Principal  

Secretary and the representatives of Bhushan Limited, where  

even the Joint Secretary of Mines was present and assurances  

were given to Bhushan Limited to send the proposal for grant  

of mining lease in favour of Bhushan Limited to the State  

Government by the first week of September, 2002.  On 22nd

October, 2002, even the State Pollution Control Board gave  

its approval in principle for setting up the plant in the  

selected sites.   

5. On 8th November, 2002, the Director, Mines, furnished his  

report  on  the  application  made  by  the  Appellant  on  4th  

December, 2001, for grant of mining lease over the Thakurani  

Block  area.   In  the  said  report  it  was  recorded  that  

Thakurani  Block  A  and  Block  B  mines  had  been  leased  in  

favour of the Sharda’s in 1934, by the Ex-Ruler of Keonjhar  

and that the Thakurani Block A mines had been extensively  

mined by the original lessee from 1934 onwards.  The report  

also disclosed that in 1998, the matter was settled in this  

Court between the State, the Sharda’s and the Centre.  It  

was agreed that Thakurani Block A would be relinquished in  

favour of the State and the mining lease of Block B would be  

renewed in favour of the Sharda’s.  Accordingly, in terms of  

the settlement, the Thakurani Block A became available with  

the State.  It is on the aforesaid basis that the Appellant

had been advised to apply to the State Government for this  

area, and the same was done in December, 2001.  The report  

also indicated that a mining licence could be granted to  

Bhushan Limited in relaxation of Rule 59(2) of the Mineral  

Concession Rules, 1960, hereinafter referred to as the “MC  

Rules”, in view of the fact that the Thakurani Block A had  

been mined by the original lessee from 1934 onwards.  The  

State Government was advised to recommend to the Centre for  

grant of relaxation under Rule 59(2) of the MC Rules.

6. On 19th February, 2003, the Orissa Electricity Regulatory  

Commission (OERC) passed an order granting permission for  

installation of a Captive Power Plant by Bhushan Limited.

7. It  is  at  this  stage  that  trouble  began  to  brew.  A  

decision had been taken to merge Bhushan  Ltd. with Bhushan  

Steel and Strips Limited (BSSL) which had an identity which  

was separate from that of Bhushan Limited, though treated to  

be a family concern under the Bhushan family umbrella. On

21st February, 2003, the Government of Orissa was informed by  

Shri Brij Bhushan Singhal, Chairman of the Bhushan Group,  

that  Bhushan  Limited,  the  Appellant  herein,  would  not  be  

merging with BSSL, but that the papers were being processed  

in the name of Bhushan Limited, as a group. Accordingly, the  

State Government was requested not to process the papers for  

2-3 months. On 17th March, 2003, BSSL wrote to the Chief  

Minister, informing him of the developments which had taken  

place and that two companies had decided not to merge, with  

retrospective  effect  from  1st April,  2002,  as  had  been  

decided earlier.      

8. Thereafter, on 5th May, 2003, Shri Neeraj Singhal wrote  

to the Chief Minister on behalf of BSSL informing him that  

BSSL was unable to process the setting up of the steel plant  

at Lapanga and in order to minimize the friction between the  

two groups within the family, BSSL had decided to set up a  

separate steel plant at a different location in Mehramandali  

in the District of Dhankanal in respect whereof 1500 acres

of land had been identified.  On 17th June, 2003, the Water  

Resources Department, Government of Orissa, wrote to Bhushan  

Power & Steel Ltd. giving its approval of the layout for  

intake well for drawal of 100 cusec water for the integrated  

steel plant of the Company.  This was followed by grant of a  

certificate by IDCO on 19th July, 2003, confirming sanction  

of  land  for  lease  measuring  488.08  acres  in  favour  of  

Bhushan  Limited  comprising  Thelkoloi,  Dhubenchhapar  and  

Khadiapalli,  which  had  been  identified  in  the  MOU  for  

establishment of the steel plant by Bhushan Limited.   

9. The said sanctions were followed up by a meeting chaired  

by the Chief Minister of Orissa on 25h July, 2003, wherein  

the  progress  of  the  project  was  discussed  and  it  was  

resolved that the application of Bhushan Limited for iron  

ore deposits would be recommended to the Government of India  

and that no fresh MOU was required to be filed.  It was  

decided that the MOU executed earlier between the Bhushan  

Group  and  the  State  Government  on  15th July,  2002,  would

remain undisturbed, since, the same had already been acted  

upon  by  both  sides.   It  was  also  decided  that  the  

application of Bhushan Limited for iron ore deposits would  

be recommended to the Government of India in terms of the  

MOU,  after  the  same  was  placed  before  the  Screening  

Committee which was chaired by the Chief Secretary.

10. Further  to  the  permission  being  granted  to  Bhushan  

Limited on 21st February, 2003, for installation of a Captive  

Power Plant, OERC granted a “No Objection Certificate” to  

Bhushan Limited for setting up of a Captive Power Plant for  

increased capacity.

11. Subsequently,  various  other  steps  were  taken  for  

establishment of the power plant at Lapanga by Bhushan Power  

& Steel Ltd.  On 10th February, 2004, the State Government  

wrote to Shri Sanjay Singhal, representing Bhushan Limited,  

that in view of the reorganization and restructuring of the  

Bhushan Group, the earlier MOU ceased to exist and had lost

its force.  Accordingly, a fresh MOU was required to be  

entered into between the Appellants and the State Government  

for speedy implementation of the project which was on the  

anvil. It is the case of the Appellants that this letter was  

never  acted  upon  by  either  party,  since,  thereafter,  the  

State  allotted  and  granted  possession  of  large  tracts  of  

land to the Appellants and other agreements, such as drawal  

of  water  were  entered  into,  permission  was   given  for  

connectivity  with  the  Grid  and  other  various  other  

administrative sanctions, as also approval for acquisition  

of land, were made in favour of Bhushan Power & Steel Ltd.,  

without any insistence for the execution of a fresh MOU.  

Simultaneously,  Shri  Neeraj  Singhal  of  BSSL  was  also  

informed by the State that since they wanted to set up a  

separate steel plant at Mehramandali, a fresh MOU to this  

effect could be entered into between the State and BSSL.   

12. Responding to the letter of 10th February, 2004, Bhushan  

Limited wrote back on 21st February, 2004, stating that no

fresh MOU was required to be signed, since the earlier MOU  

was quite valid.  On 11th March, 2004, the Government of  

Orissa, in its Department of Industries, informed IDCO that  

the  Government  had  been  pleased  to  advise  for  immediate  

transfer of acquired land, both Government and private, to  

Bhushan  Limited,  after  observing  all  the  necessary  

formalities.   However,  on  17th March,  2004,  Shri  Neeraj  

Singhal, Managing Director of BSSL, wrote to the Principal  

Secretary, Department of Steel and Mines, contending that  

Bhushan Limited, as also BSSL, were entitled to the benefits  

of the MOU, which had been signed on 15th May, 2002.   

13. Within  a  week  thereafter,  on  24th March,  2004,  IDCO  

transferred the land for the project at Lapanga to Bhushan  

Limited and possession thereof was also made over on several  

dates.  On 12th May, 2004, the Ministry of Environment and  

Forest, Government of India, gave clearance to the project  

at  Rengali  in  the  name  of  Bhushan  Limited.   The  Chief  

Inspector  of  Factories  and  Boiler,  gave  approval  to  the

Steam and Feed Water pipe line drawing for Bhushan Limited  

on 2nd July, 2004. On 3rd September, 2004, the Government of  

Orissa, in its Ministry of Environment and Forest, granted  

approval to Bhushan Limited for diversion of 59.16 hectares  

of  forest  land  for  establishment  of  the  integrated  steel  

plant  and  an  agreement  was  also  drawn  up  between  the  

Government and Bhushan Limited on 17th September, 2004, for  

drawal of water from the Hirakud Reservoir for use in the  

proposed integrated steel plant at Lapanga. On 2nd February,  

2005, the State Government wrote to Bhushan Limited, seeking  

the status report of the steel plant project and on 16th  

March,  2005,  permission  was  granted  for  provisional  

energisation of 220 KV line issued by the Chief Electrical  

Inspector  in  favour  of  Bhushan  Limited.  Several  other  

approvals were granted upto 9th August, 2005, and finally in  

March, 2005, Bhushan Limited (BPSL) commenced production at  

its  steel  plant.   On  6th September,  2005,  administrative  

approval  was  given  for  acquisition  of  additional  private

land  for  Lapanga  plant,  granted  by  the  Steel  and  Mines  

Department to Bhushan Limited. Similar approval was given in  

respect  of  other  lands  on  28th September,  2005  and  6th  

February, 2006.  

14. Simultaneously, with administrative approval being given  

for acquisition of private land for the Lapanga plant on 3rd  

November, 2005, an agreement was entered into between BSSL  

and the Government of Orissa for putting up the steel plant  

at  Mehramandli.   There  was  no  mention  of  the  MOU  dated  

15th May, 2002, in the said agreement. Within a matter of 10  

days,  the  Directorate  of  Factories  and  Boilers  wrote  to  

Bhushan Limited granting permission under the Factories Act,  

1948, to construct the steel plant at Lapanga.   

15. Surprisingly, on 31st December, 2005, the Government of  

Orissa issued a letter to Bhushan Limited indicating that it  

had decided not to treat the MOU signed earlier with M/s  

Bhushan  Group  of  Companies  as  place  specific  after  the

company had been divided into Bhushan Limited (BPSL) and M/s  

Bhushan Steel and Strips Ltd. (BSSL).  The Bhushan Group was  

informed that the State Government had decided to deal with  

both  the  Companies  separately  and  to  sign  two  separate  

agreements  for  the  purpose  of  acquiring  land,  allotting  

mines and providing other facilities for establishment and  

growth of steel plants in Orissa.   

16. On  9th January,  2006,  a  letter  was  addressed  by  the  

Directorate of Factories and Boilers to Bhushan Steel Ltd.  

approving  the  draft  of  the  steam  pipe  line  and  on  13th  

January, 2006, on the recommendation of the Government of  

Orissa, the Central Government allotted Bijahan Coal Block  

in the District of Sundergarh to Bhushan Limited as per the  

MOU.

17. Even  more  surprisingly,  on  18th January,  2006,  the  

Government of Orissa issued a Show-Cause Notice to Bhushan  

Limited  to  appear  before  the  Joint  Secretary  on  17th

February, 2006, for a personal hearing. Several deficiencies  

in the application for mining lease of iron ore dated 4th  

December, 2001, in respect of the Thakurani Block A, were  

also pointed out.  Thereafter, the State Government informed  

the  Appellants  that  their  application  dated  4th December,  

2001, for mining lease over the Thakurani area could not be  

allowed on various grounds. However, the most significant  

ground  was  that  the  area  in  question  came  within  the  

relinquished area of the mining lease of M/s Sharda which  

was not thereafter thrown open for re-allotment under Rule  

59  of  the  aforesaid  Rules.   It  was  alleged  that  the  

application  made  by  Bhushan  Limited  was,  therefore,  

premature.  Having rejected the Appellants’ prayer for grant  

of mining lease, on 9th February, 2006, the Government of  

Orissa made a recommendation to the Central Government to  

grant mining lease in favour of M/s Neepaz Metallicks (P)  

Ltd. in relaxation of Rule 59(1) of the aforesaid Rules, for  

a period of 30 years.  

18. On 28th February, 2006, Bhushan Limited altered its name  

to Bhushan Power & Steel Ltd. (BPSL).   

19. On 8th May, 2006, Bhushan Limited filed Writ Petition  

No.6646 of 2006 before the Orissa High Court. On the next  

day,  the  State  Government  issued  a  reminder  to  Bhushan  

Limited in regard to its letter dated 31st December, 2005, by  

which the State Government had asked for a separate MOU from  

Bhushan Limited, inspite of the MOU already existing between  

the parties, which had also been acted upon till as late as  

26th April, 2006. On 15th May, 2006, the High Court passed an  

interim  order  granting  status-quo  with  regard  to  the  

applications for mining lease. On 5th September, 2006, an  

intervention  application  was  filed  by  BSSL,  which  was  

allowed on 6th December, 2006.

20. During the course of hearing of the Writ Petition, the  

High Court passed an interim order and directed that the  

problems  relating  to  the  Show-Cause  Notice  dated  18th

January,  2006,  should  be  resolved,  keeping  in  view  the  

commitments of the State.  On 26th June, 2007, the High Court  

directed circulation of the order dated 18th June, 2007, and  

liberty was given to Bhushan Limited to challenge the same  

by filing an affidavit in the writ proceedings.  

21. Such affidavit was duly filed on 10th July, 2007, and the  

order impugned in the present appeal came to be passed by  

the  High  Court  on  14th December,  2007,  dismissing  the  

aforesaid Writ Petition No.6646 of 2006. The substance of  

the  order  of  the  High  Court  while  dismissing  the  Writ  

Petition is :-

(a) The Court cannot set aside the communication of the  

State Government asking the Appellants to sign a fresh  

MOU with the Government as early as possible.

(b) The Appellants’ application for grant of mining lease  

dated 4th December, 2001, should be considered afresh  

by the appropriate authorities of the State Government

in  accordance  with  law,  along  with  other  similarly  

placed applicants.

(c) The Appellants would be at liberty to challenge the  

subsequent report of the Director of Mines dated 31st  

May, 2007, in the hearing which would be afforded to  

the  Appellants  by  the  appropriate  authority  of  the  

State.

(d) The Appellants would be at liberty to challenge the  

order dated 18th June, 2007, on merits, but it was also  

submitted that the application for mining lease of the  

Appellants  would  be  considered  after  it  executed  a  

fresh MOU with the State Government.   

22. As  indicated  hereinbefore,  on  21st April,  2008,  this  

Court passed an interim order in the Special Leave Petition  

filed by Bhushan Limited directing the parties to maintain  

status-quo  with  regard  to  the  lands  indicated  in  the  

application  filed  by  the  Appellants  for  grant  of  mining

lease.  However,  one  of  the  most  significant  developments  

that subsequently took place was that on 15th November, 2011,  

Shri B.B. Singhal and Shri Neeraj Singhal, Vice-Chairman and  

Managing  Director  of  Bhushan  Steel  and  Strips  Ltd.  filed  

affidavits withdrawing all their claims and rights in the  

MOU  dated  15th May,  2002,  executed  between  the  State  

Government and Bhushan Limited and declaring that the said  

MOU was and had always been in favour of Bhushan Power &  

Steel Ltd. The above-named persons also prayed for deletion  

of their names from the array of parties.  

23. Appearing for the Appellants, Mr. Mukul Rohatgi, learned  

Senior Advocate, pointed out that only two issues arise for  

the consideration of this Court in the present case, namely  

–

a) Whether the Memorandum of Understanding dated  15th May, 2002, continues to subsist in favour of the  Appellants?

b) Whether the State Government is obliged to make  recommendations for the grant of iron ore mines in

terms of the stipulations contained in the aforesaid  MOU dated 15th May, 2002, and whether in respect of  the areas which had not been notified under Rule  59(1),  the  State  Government  can  make  a  recommendation for relaxation of Rule 59(1) under  Rule 59(2)?

24. Mr.  Rohatgi  submitted  that  having  entered  into  a  

Memorandum of Understanding with the Appellant Company and  

having acted thereupon and having also caused the Appellants  

to change their position to  their detriment, it was not  

open to the State Government to call upon the Appellants to  

execute a fresh MOU, during the subsistence of the MOU dated  

15th May, 2002.

25. Mr.  Rohatgi  also  submitted  that  notwithstanding  the  

State  Government’s  requirement  that  the  Appellants  should  

enter into a fresh MOU, the State Government continued to  

act  under  the  MOU  dated  15th May,  2002.  Despite  the  

communications dated 10th February, 2004, and 31st December,  

2005, above recorded, the State Government went on further  

to  hold  that  all  the  steps  required  to  be  taken  for

installation of the steel plant at Lapanga, had been taken,  

except that it did not comply with the obligations of making  

recommendations to the Central Government for grant of iron  

ore mines.  Mr. Rohatgi urged that during the pendency of  

the  proceedings,  the  dispute  between  the  members  of  the  

Bhushan Group had been settled and the parties had mutually  

agreed to withdraw all the allegations and claims relating  

to the MOU dated 15th May, 2002.  Incidentally, by filing  

I.A.No.13, BSSL confirmed that Bhushan Power & Steel Ltd.  

was the sole beneficiary under the MOU dated 15th May, 2002,  

and withdrew all its claims under the MOU dated 15th May,  

2002.

26. Mr. L. Nageshwar Rao, learned Senior Advocate, appearing  

for the State of Orissa, has also very fairly stated that in  

view of the settlement of disputes between the members of  

the Bhushan Group, the issue relating to the MOU did not  

survive  and,  since,  the  State  Government  had  already  

performed  its  obligation  under  the  MOU,  the  only  thing

remaining to be done by the State is to make recommendations  

to the Central Government for grant of iron ore mines to the  

Bhushan Power & Steel Ltd.

27. Mr. Rohatgi submitted that in the changed circumstances,  

the question of execution of a fresh MOU loses its relevance  

and the letter dated 31st December, 2005, calling upon the  

Appellants to execute a fresh MOU, is not required to be  

given effect to. Consequently, it may be held that the MOU  

dated 15th May, 2002, continues to be valid and subsisting  

between the State of Orissa and Bhushan Power & Steel Ltd.

28. On the question of Rule 59 of the MC Rules, which formed  

the basis of the State Government’s decision to reject the  

Appellants’ application for being recommended to the Central  

Government  for  grant  of  a  mining  lease,  Mr.  Rohatgi  

submitted  that  such  recommendations  had  been  made  by  the  

State Government in favour of other applicants as well, such  

as M/s. S.M.C. Power Generation Ltd., M/s. Neepaz Metalics,

M/s. Sree Metaliks and M/s. Deepak Steel & Power. Therefore,  

there  was  no  reason  to  deny  the  same  benefits  to  the  

Appellants as well.

29. Appearing for the Intervener, M/s. Jindal Steels Ltd.,  

Mr.  K.V.  Vishwanathan,  learned  Senior  Advocate,  submitted  

that  so  long  as  any  allotment  made  in  favour  of  the  

Appellants did not impinge on the allotment made in favour  

of  M/s.  Jindal  Steels  Ltd.,  it  could  have  no  grievance  

against a separate allotment being made in favour of the  

Appellants.

30. The  mutual  settlement  of  the  disputes  between  the  

members  of  the  Bhushan  Group  has  altered  the  situation  

considerably, since BSSL has withdrawn its claim under the  

MOU dated 15th May, 2002, and has declared that the said MOU  

was and had always been executed by the State Government in  

favour of Bhushan Power & Steel Ltd., which had set up its  

steel  plant  at  Lapanga.   As  indicated  hereinbefore,

although, the MOU was entered into by the State Government  

with  the  Bhushan  Group  for  setting  up  a  steel  plant  at  

Lapanga, at a later stage, BSSL also laid claim under the  

MOU for setting up a separate steel plant at Mehramandali  

and a suggestion was also made for execution of a fresh MOU  

between the State Government and BSSL to this effect.

31. Pursuant  to  the  MOU  with  Bhushan  Limited,  the  State  

Government had not only allotted land for the setting up of  

the steel plant at Lapanga, it had even extended all help  

for  the  commissioning  of  the  plant,  which,  in  fact,  had  

already started functioning.  However, it is the claim made  

by BSSL under the MOU executed on 15th May, 2002, that had  

created obstructions in the setting up of the steel plant at  

Lapanga.  Despite having allotted land and granted sanction  

to Bhushan Limited to take steps for construction of the  

said  plant,  it  was  subsequently  contended  that  the  

application filed by Bhushan Limited was premature and could  

not, therefore, be acted upon.  Specific instances have been

mentioned  hereinabove  of  the  steps  taken  by  the  various  

departments in extending cooperation to Bhushan Limited to  

set up its steel plant at Lapanga.  To now turn around and  

take a stand that the application made by Bhushan Limited  

was  premature,  is  not  only  unreasonable,  but  completely  

unfair to Bhushan Limited, who have already invested large  

sums of money in setting up the plant. The State Government  

had, on its own volition, entered into the MOU with Bhushan  

Limited on 15th May, 2002, and had even agreed to request the  

Central Government to allot mining areas and coal blocks for  

operating the steel plant.  Whatever differences that may  

have resulted on account of the dispute within the Bhushan  

Group, which could have led to the rethinking on the part of  

the State Government, have now been laid to rest by virtue  

of  the  settlement  arrived  at  between  the  Bhushan  Limited  

(now BPSL) and BSSL.  The State Government has also accepted  

the said position.  In addition to the above, the action  

taken by the State Government appears to us to be highly

unreasonable and arbitrary and also attracts the doctrine of  

legitimate expectation.  There is no denying the fact that  

the  Appellants  have  altered  their  position  to  their  

detriment in accordance with the MOU dated 15th May, 2002.  

Whatever may have been the arrangement subsequently arrived  

at between the State Government and BSSL, the original MOU  

dated  15th May,  2002,  continued  to  be  in  existence  and  

remained operative.

32. The State Government appears to have acted arbitrarily  

in requiring Bhushan Limited to enter into a separate MOU,  

notwithstanding  the  existence  of  the  MOU  dated  15th May,  

2002, which, as mentioned hereinabove, had been acted upon  

by the parties.

33. In  the  light  of  the  above,  the  High  Court  erred  in  

holding that it could not interfere with the decision of the  

State Government calling upon the Appellants to sign a fresh  

MOU with the Government, during subsistence of the earlier

MOU.  Since the State Government has already made allotments  

in favour of others in relaxation of the Mineral Concession  

Rules, 1960, under Rule 59(2) thereof, no cogent ground had  

been  made  out  on  behalf  of  the  State  to  deny  the  said  

privilege to the Appellants as well.

34. Accordingly,  we  allow  the  appeal  and  set  aside  the  

judgment and order of the High Court of Orissa and also the  

decision of the State Government dated 9th February, 2006,  

rejecting the Appellant’s claim for grant of mining lease.  

During the course of hearing, we have been informed that  

Thakurani Block A has large reserves of iron ore, in which  

the Appellants can also be accommodated. We, accordingly,  

direct the State of Orissa to take appropriate steps to act  

in terms of the MOU dated 15th May, 2002, as also its earlier  

commitments to recommend the case of the Appellants to the  

Central Government for grant of adequate iron ore reserves  

to meet the requirements of the Appellants in their steel  

plant at Lapanga.  

35. There will be no order as to costs.  

………………………………………………………J.       (ALTAMAS KABIR)

………………………………………………………J.                  (SURINDER SINGH NIJJAR)

New Delhi Dated:14.03.2012