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Barium Chemicals Ltd. vs Government Of India And Ors. on 6 February, 1987

Andhra High Court

Barium Chemicals Ltd. vs Government Of India And Ors. on 6 February, 1987

Equivalent citations: AIR 1987 AP 267

Author: Amareswari

Bench: Amareswari, S Reddy, B Rao

JUDGMENT Amareswari, J.

1. An extent of 110 acres in Survey Nos. 57 and 58 of Pocharam Village, Yellanud Taluk, Khammam District was notified by the Government of Andhra Pradesh on 31-7-1972 as available for granting a mining lease for Barytes.

2. On the same day, i.e. 31-7-1972, the 4th respondent M/s. Expo Chemicals, Kothagudem applied for the lease. The petitioner M/s. Berium Chemicals Ltd., Ramavaram, Khammam District also applied for a mining lease over the same area on 2-8-1972 i.e., two days later.

3. The State Government by its order in G. O. Ms. No. 232, dated 6-4-1973 granted the lease to M/s. Expo Chemicals, the 4th respondent on the sole ground that their application was received earlier than that of the petitioner and as such they have a preferential right under S. 11(2), Mines and Minerals (Regulation and Development) Act, 1957, hereinafter called the Act.

4. The petitioner carried the matter in revision under S. 30 read with R. 54, Minerals Concession Rules, 1960. The Central Government by its order dated 18-11-1975 affirmed the order of the State Government on the same reasons and dismissed the revision petition.

5. The validity of these two orders is challenged in this writ petition which came up for hearing before Justice Chinnappa Reddy, as he then was. The main contention urged by the petitioner was that neither the State Government nor the Central Government considered the applications on merits. They were blindly led away by the fact that the 4th respondent’s application was received earlier and as per S. 11(2) lease has to be granted to the earliest applicant. It was urged that all applications have to be considered on merits and preference be given to the first application only when the claims are equal. In support of this contention, reliance was placed on a decision of the Division Bench of this Court in Writ Appeals Nos. 600 and 601 of 1960 dated 1-4-1971. The learned Single Judge expressed the view that the ratio of the Division Bench decision is opposed to the plain meaning and content of S. 11. According to the learned Judge, S. 11 envisages preference in favour of a prospecting licensee for the same land first and next to the person whose application is received earliest, and in a case where several applications are received on the same day, lease has to be granted after considering the matters mentioned in S. 11(3) and that the view of the Division bench that the claims of all the applicants must be evaluated and preference be given only when other things are equal requires reconsideration and referred the matter to a Full Bench. That is how the matter is now before us.

6. The main submission of Mr. K. Srinivasa Murthy the learned Counsel for the petitioner is that when more than one application is filed for a mining lease all the applications should be considered with reference to the matters mentioned in S. 11(3) and preference can be given to an earlier applicant under S. 11(2) only when their claims are equal. Section 11(2) does not create any special right in favour of a prior applicant, eliminating the others from consideration. All applicants must be treated equally and their applications must be considered and claims evaluated, preference being given only when they are otherwise equal.

7. This is countered by Mr. K. Jagannadha Rao and Mr. N. V. Suryanarayana Murthy, the learned counsel for the Central Government and the State Government respectively that S. 11(3) has no application to cases falling under the main limb of S. 11(2) and it applies only to a situation where several applications are received on the same day. In other words, S. 11(3) must be confined in its operation to the proviso and not to the main limb of sub-s. (2). It is urged that if the application of a prior applicant is a valid one in that it is accompanied by the requisite fee and the required certificates, he should be given the lease and the question of inter se merits does not arise.

8. Thus the main controversy relates to the scope and ambit of S. 11 of the Act and the interpretation of S. 11(2) in particular. To decide this question, it is necessary to ascertain the scheme and object of the Act with reference to the relevant provisions.

9. The Mines and Minerals (Regulation and Development) Act is a legislation enacted by the Parliament in 1957. It is an Act to provide for regulation of mines and development of minerals as indicated in the preamble. Ss. 4 to 9 deal with general restriction on prospecting and mining operations. Section 4 says that no person shall take any prospecting or mining operation in any area except under and in accordance with the terms and conditions of a licence or lease as the case may be under the Act and the Rules made thereunder. Section 5 enumerates the conditions for a valid application. It insists on a certificate of approval from the State Government, an Income-tax clearance certificate in the prescribed form and such other conditions as may be prescribed. Section 10 deals with grant of prospecting licences or mining leases. Clause (1) of S. 10 provides that the application shall be made to the State Government in the prescribed form accompanied by the prescribed fee. Section 10(2) insists on an acknowledgment of the receipt of the application to be sent to the applicant. Section 10(3) vests the State Government with the power to refuse or grant licence or lease having regard to the provisions of the Act and the Rules. Section 18 deals with development of minerals. It enjoins on the Central Government to take all steps necessary for conservation of development of minerals and for that purpose to make Rules. This in effect is the scheme and object of the Act.

10. Rule 22 of the Rules says that the application shall be in Form 1. Rule 22(3) deals with the fee and the other certificates which have to be enclosed with the application. Rule 23 deals with acknowlegement of application. Rule 24 provides that the application for grant of a mining lease should be disposed of within 12 months from the date of its receipt. Form I mentions the requisite particulars to be furnished by the applicants while applying for a mining lease.

11. Next we come to S. 11 which is the bone of contention in this case. It is as follows :-

“11. Preferential right of certain persons:-

(1) Where a prospecting licence has been granted in respect of any land, the licensee shall have a preferential right for obtaining a mining lease in respect of that land over any other person:

Provided that the State Government is satisfied that the licensee has not committed any breach of the terms and conditions of the prospecting license and is otherwise a fit person for being granted the mining lease.

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

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

(3) The matters referred to in sub-s. (2), are the following :

(a) any special knowledge of, or experience in, prospecting operations or mining operations, as the case may be, possessed by the applicant;

(b) the financial resources of the applicant;

(c) the nature and quality of the technical staff employed or to be employed by the applicant;

(d) such other matters as may be prescribed.

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

From a plain reading of S. 11 it is evident that it prescribes the procedure and the matters to be taken into consideration in granting leases or licenses and also preferential rights of certain persons to obtain a mining lease or a prospecting license. Every activity of Government has a public element in it and it must therefore be guided by reasons and public interest. When the Government leases or otherwise deals with its property, it is liable to be tested on the touchstone of reasonableness and public interest. If it fails that test it would be unconstitutional and invalid. Vide Kasturi Lal v. State of J. & K., . This test is applicable to both executive action and legislative provision. Section 11(1) relates to grant of a mining lease. It expressly states that for a mining lease, a prospecting licencee is entitled to preference over any other person provided he satisfies two conditions namely, that he has not violated any terms and conditions of the prospecting licence and he is otherwise a fit person. Thus it is seen that S. 11 (1) treats the prospecting licensee as a different class from other applicants. The object underlying this S. 11(1) is clear. A prospecting licensee spends his money, time and energy in exploring, locating and providing mineral in the very land. He possesses experience of the very same land, whereas the other applicants are new to the area. A prospective licensee and other applicants are not situated in similar circumstances. Therefore, a preference in favour of a prospecting licensee is based on a reasonable classification founded on an intelligible differentia having a nexus to the object sought to be achieved. Even the preference contemplated is not an absolute one. It is subject to two conditions of the prospecting licence at any time and he is otherwise a fit person. Who is a fit person has again to be judged with reference to the provisions of the Act and the Rules including S. 11(3) of the Act.

12. Then we come to S. 11(2) which deals with prospective licensees as well as mining leases. It says where two or more persons apply for a licence, the person whose application is received earlier has a preferential right over a person whose application is received later. Evidently this preference is between the other class of applicants, i.e., persons other than the prospecting licensees. This section prima facie gives a preference to the first applicant among persons who apply on different dates. But the question is whether such preference is based on any intelligible differentia as in the case of a prospective licensee. The validity of this section was challenged in writ petition No. 5363 of 1968 as ultra vires of Art. 14 and a learned Single Judge of this Court while upholding the validity of S. 11(1) struck down sub-s. (2) as arbitrary and unreasonable. But the later Division Bench in writ appeals Nos. 600, 601 and 602 of 1969 dated 1-4-1971 upheld that provision by interpreting the section to mean that what is contemplated is only a preference when other things between the applicants are equal, and so interpreted, the provision does not suffer from the vires of Art. 14. The learned counsel has commented this view for our acceptance. In my considered opinion, S. 11(2) stands on a different footing from S. 11(1). Just because a person files an application a day or two earlier than the other, he cannot enjoy such high right so as to exclude others from consideration. His is not an indefeasible right. The object of the Act is to develop mineral wealth and this purpose would be defeated if the applications are not considered on merits with reference to the Act and the Rules including S. 11(3) which mentions very relevant matters. It is only after consideration of all the applications, when the merits are equal or approximately equal a preference can be given to a prior applicant. It is a limited preference that is contemplated under S. 11(2). Any other interpretation would lead to an absurdity and an anomaly defeating the very purpose of the Act. The principle of first come first served is wholly irrelevant in the context of regulation and distribution of National Wealth. Minerals are a part of National Wealth. They yield considerable revenue to the State exchequer in the form of royalties, rents and cesses. Therefore, whenever there are more applicants than one, the claims of all the applicants must be evaluated and lease should be granted to the deserving. Every citizen has a right to be treated equally and a discrimination can be made only on the basis of a reasonable classification founded on intelligible differentia and the differentia must have a rational relation to the object sought to be achieved by the statute. A person who applies earlier cannot be treated as belonging to a different class from a person who applies later.

13. The learned counsel for the respondents reading the proviso conceded that in a case where two applications are received on the same day, the inter se merits of the applicants should be considered with reference to the matters mentioned in S. 11(3). Then I fail to see how a person who happens to be the only applicant on any one day stands on a different footing enjoying such an overriding preference over others. I find no rationale in this view.

14. The learned counsel for the respondents submitted that it is only the proviso to sub-s. (2) that refers to sub-s. (3) while the main limb of sub-section is subject to S. 11(1), and hence sub-s. (3) must be limited in its operation to the proviso only. The entire sub-s. (2) is clumsily drafted. It must be remembered that a proviso is a part of the main section and it does not have any independent existence. Section 11(3) expressly refers to S. 11(2) which includes the proviso. Otherwise, sub-s. (3) would have said “the matters referred in proviso to sub-s (2)”. It would have been more appropriate if the words “after taking into consideration the matters specified in sub-s. (3)” had occurred at the end of sub-s. (2) after the proviso in which case there would not have been any ambiguity. Since these words occur in the middle of the proviso an argument was advanced that sub-s. (3) applies to a situation covered by the proviso and not the main limb of sub-s. (2). On a first impression, this argument appears to be sound. But first impressions are not always the best impressions. Reading Ss. 11(1) and 11(2), I am of the view that a prospecting licensee has an overriding preferential right over others subject to the tests mentioned therein. All other applications have to be considered on merits with reference to the matters mentioned in sub-s. (3) and a preference can be given to a prior applicant only when their claims are equal or approximately equal or there is nothing to choose between the two. Even this preference has no application to persons where applications are received on the same day. The State Government has discretion to choose one among them. If the interpretation sought to be placed in S. 11(2) by the learned counsel for the respondents is accepted, no regard need be had to the provisions of the Act or the Rules and an automatic preference would follow. It is difficult to postulate that the Parliament intended to produce such erratic results.

15. The learned counsel invited my attention to a decision of the Delhi High Court in Kangra Valley State Co. v. Union of India, upholding the validity of S. 11(1) and S. 11(2). I entirely agree with the interpretation placed on S. 11(1) that a prospecting licensee enjoys an overriding preference over others subject to the two conditions mentioned therein and no question of comparison of merits arises. But with great respect to the learned Judges, I cannot approve of their reasoning in regard to S. 11(2) of the Act when they say that if the applicant is fit even though not equally fit, he is entitled to the lease by virtue of the preference clause. While it is true that the Government cannot afford to wait any length of time for a person to start operations once he obtained a lease or a licence, it cannot be said the same thing when the difference in point of time is at the time of making applications. So long as the applications are not disposed of and the land is available, all applicants have to be treated on the same footing. Let us take the case where a notification fixes the last date for receipt of application and one person applies on the date of the notification itself and another some time and the 3rd on the last date prescribed for receipt of applications can a distinction be made between them on the ground of priority of application. I do not think it can be done. Such procedure would be opposed to reason. The same position obtains where no time is fixed for receipt of applications. For instance, in the present case, the land was notified for regrand on 31-7-72. The 4th respondent applied on 31-7-72, whereas, the petitioner applied on 2-8-1982 i.e., two days later. Can it be said that the petitioner is not keen or so keen as the 4th respondent to undertake the mining operations? At best, this factor can only tilt the balance, but the claims must be balanced.

16. The matter has also be looked at from the angle of S. 11(4). This sub-section says that notwithstanding anything contained in sub-s. (2) but subject to sub-s. (1) lease or licence can be granted to a later applicant in preference to the earlier one, for special reasons to be recorded and after obtaining the previous approval of the Central Government. This power to overlook the priority is coupled with a duty to exercise it. Therefore, all applications must be considered so as to see whether there are any special reasons in favour of a later applicant to grant the lease.

17. In State Govt. of Mysore v. Union of India, , it was held that the right conferred under S. 11(4) cannot be “negated” by even refusing to consider the case of a later applicant.

18. In S. Khaitan (P.) Ltd. v. Govt. of India, , the same learned Judge who referred the question in the present case, held that the matters mentioned in sub-s. (3) of S. 11 cannot be limited only to the proviso, but also applies to S. 11(4). The relevant observations at p. 413 are as follows :

“I do not agree with………….that the matters mentioned in sub-s. (3) of S. 11 can be considered only when dealing with applications received on the same day and cannot be considered when the Government acts under sub-s. (4) of S. 11. The special reasons contemplated under sub-s. (4) may include the matters in sub-s (3), among other matters.”

19. The argument that where lease is granted to a first applicant under S. 11(2) no further question arises was rejected by the learned Judge holding that it is open to a later applicant to show that he is better from the viewpoint of S. 11(3). The learned Judge quashed the order of the Central Government and remanded for fresh consideration.

20. The facts of this case are identical to the present case. Prior applicant was granted the lease on the sole ground that his application was received earlier. The case of the petitioner therein, was not considered and lease was granted under S. 11(2). If S. 11(2) is interpreted to mean such high preference, there is no necessity to quash the order and send it back for reconsideration. Hence this decision lends support to the contention that all applications must be considered.

21. A similar view is taken in State Govt. of Mysore v. Union of India, .

22. Consideration is not an empty formality. It is an effective consideration with a view to grant the lease to the deserving. If that is the position, there is no escape from the contention that all the applications must be considered with reference to the matters mentioned in sub-s. (3) of S. 11 in order to see whether any preference can be given to prior applicant or the same can be overlooked and lease can be granted to the later applicant. Hence I am unable to accept the contention that a prior applicant is automatically entitled to the lease just because his application is in order and he is eligible. Obviously, all the applicants though equally placed cannot be favoured with the grant of lease or licence. Only one among them can be granted and it is for that purpose sub-s. (2) gives legislative direction. It is for the purpose of taking a final decision, a test is evolved in S. 11(2) and not for any other purpose.

23. I am therefore of the view that sub-s. (2) of S. 11 contemplates a preference being given only after considering all the applications with reference to the matters mentioned in sub-s. (3) and when the claims are equal or approximately equal.

24. The next question is whether the order is in conformity with S. 11(2). Since the entire matter is referred to the Full Bench, both sides have argued on the merits of the case. The order of the State Government discloses that the lease was granted solely on the ground of priority. It does not disclose that the application of the respondent is considered. The order of the Central Government also suffers from the same infirmity. After referring to the contentions, the Central Government states that in view of the priority under S. 11(2) lease is given to the 4th respondent. I have no doubt in my mind that both the orders are in contravention of S. 11 of the Act. However, I do not think that this is a case for interference at this stage. The lease was granted as long back as April, 1973, for a period of 20 years. More than 13 years have elapsed and the 4th respondent has been carrying on the mining operations incurring a huge expenditure. Even if the writ petition is allowed the matter has to be sent back for consideration on merits. Naturally it will take some time and with all the remedies of revision, the lease period may come to an end. I, therefore, do not propose to interfere at this stage.

25. In the result, the writ petition is dismissed. No costs. Advocate’s fee Rs. 500/-

Seetharama Reddy, J.

26. The lengthy debate for about four days on the point raised herein could not bring about unanimity in judgment of the same. We have gone through the opinion expressed by my learned sister Amareswari J. and we regret that we are not able to persuade ourselves to be in line with the same and so our opinion.

27. The writ petition comes up before this Full Bench on a reference made by Chinnappa Reddy, J., (as he then was) by his order dated 21-2-1978, involving interpretation of S. 11, Mines and Minerals (Regulation and Development) Act (67 of 1957) (hereinafter referred to as ‘the Act’).

28. The learned Judge while disagreeing with the conclusions of a Division Bench of this Court in W. A. Nos. 600 etc. of 1969 viz., the question of giving preference under S. 11(1) or S. 11(2) of the Act would arise only if other things were equal, which interpretation said to be in the teeth of the languages of S. 11 of the Act, made a reference to a Full Bench for reconsideration.

29. It is agreed by all the parties that the entire case has been referred to the Full Bench and therefore the writ petition itself could be disposed of on merits.

30. The factual matrix need not be drawn up at length as it has been comprehensively adverted to by the learned Presiding Judge. However few material particulars relevant may be stated.

31. The Barium Chemicals Limited, Ramavaram, Khammam District, State of Andhra Pradesh, the petitioner herein, is the manufacturer of barium salts for which raw material is barytes which is available in Khammam district as well as in Cuddapah district. Messrs. Viswabharathi Mining Corporation, the holder of a mining lease in the vicinity, has been supplying barytes to the factory of the petitioner under the permission from the State Government. The Andhra Pradesh Mining Corporation which was having a lease for mining barytes adjoining the land of the said Messrs. Viswabharathi Mining Corporation surrendered their lease and the same was subsequently notified on 12-6-1972 making it available for lease. The petitioner sent an application on 2-8-1972 for grant of lease whereas Messrs Expo Chemicals, composed of unemployed graduate engineers, the 4th respondent herein, applied for granting of lease on 31-7-1972. The State Government granted mining lease in favour of the 4th respondent in the exercise of its powers under sub-s. (2) of S. 11 of the Act, being prior applicant, in point of time, to the petitioner. On revision against the said order, the Central Government confirmed the same. Hence this writ petition.

32. The points that arise out of the arguments and counter arguments for adjudication are:

(1) While considering the application for grant of mining lease, whether an applicant who already had prospecting licence will have to be granted lease, if he is otherwise found fit, notwithstanding the fact that the other applicants for granting of lease are superior when considered with reference to the factors enumerated in sub-s. (3) of S. 11 within the meaning of sub-s. (1).

(2) Whether an applicant first in point of time under sub-s. (2) will have to be granted mining lease if he is otherwise found fit within the meaning of sub-s. (1), even though the other applicants later applied in point of time are found superior with reference to the factors enumerated in sub-s. (3)?

(3) Notwithstanding the rule of priority mentioned in sub-s. (2), whether an applicant later in point of time can be granted mining lease?

(4) Under what circumstances, the factors enumerated under sub-s. (3) will have to be taken into consideration for granting of mining lease?

33. The answers to the aforesaid four points turn upon the interpretation of sub-ss. (1) to (4) of S. 11 of the Act. So the provisions be noticed.

“11. Preferential right of certain persons :-

(1) Where a prospecting licence has been granted in respect of any land, the licensee shall have a preferential right for obtaining a mining lease in respect of that land over any other person;

Provided that the State Government is satisfied that the licensee has not committed any breach of the terms and conditions of the prospecting license and is otherwise a fit person for being granted the mining lease.

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

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

(3) The matters referred to in sub-s. (2) are the following :-

(a) any special knowledge of, or experience in, prospecting operations or mining operations, as the case may be, possessed by the applicant;

(b) the financial resources of the applicant;

(c) the nature and quality of the technical staff employed or to be employed by the applicant;

(d) such other matters as may be prescribed.

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

34. Before analysis, the case law cited also be referred to:

35. A Division Bench of the Andhra Pradesh High Court in Sudha v. State, held thus :

“Against the learned single Judge’s decision given in W.P. No. 5363 of 1968 (Andh Pra) appeals were preferred. It was held by the Bench that S. 11(2) is not ultra vires. It was decided that all the applications filed for the grant of mining lease will have to be considered under S. 10(3) of the Act. On such consideration, if it is found that all the applications are otherwise equal it is only then that the question of preference under S. 11(2) may arise. The present position therefore is that wherever more than one application for grant of a mining lease are filed, the first step for the State Government or for the Central Government is to consider all these applications under S. 10(3). In case the Government comes to the conclusion that all the applications stand on an equal footing it is only then that the question of preference under S. 11(2) would be attracted and not otherwise. The use of S. 11(2) is not mechanical.”

36. In W.P. No. 5363 of 1968, dated 27-11-1970 Obul Reddi, J. of Andhra Pradesh High Court held thus:

“I fail to understand how this classification between a person who gives his application one day and a person who gives his application the next day can be justified merely on the ground of priority. The scheme and object of the Act is for development of the mineral industry and exploitation of mineral wealth of the country and the preferential right given to a person in my opinion is absolutely unrelated; in other words, it has no nexus at all to the object sought to be achieved by the Act. Whether, one applies today or one applies a day after they will belong to the same class or category and are similarly circumstanced.

….. ….. …..

Therefore, the preferential right given to a person who makes an application on an earlier date is not founded on any intelligible differentia having any nexus or relation to the object sought to be achieved by the Act and therefore sub-s. (2) of S. 11 of the Act must be struck down as ultra vires of Art. 14 of the Constitution.”

37. A Division Bench of the Andhra Pradesh High Court in Writ Appeals Nos. 600 to 602 of 1969 and 11 of 1970 and Writ Petition No. 3056 of 1987 dated 1-4-1971 held thus :

“Now the word ‘preference’ ordinarily means the act of preferring one thing above another eliminating of one thing more than another; choice of one thing rather than another; it is an expression of a motive of desire on the part of the legislature to give preference to one rather than the other. In other words, to put one ahead in the race for granting a lease or licence. And therefore preference also must mean of giving, receiving preference. This word does not necessarily exclude the consideration of the other applications before one is selected to be preferred to others. All the cases shall have to be estimated or considered, and if the authority reaches the conclusion that all the applicants are otherwise equal, it is only then that the question of preference may arise, and it is only in such a case that S. 11 would be operative. Section 11 nowhere expressly or by implication says that all the applications filed after the first in point of time need not be considered at all. Any such construction of S. 11 would be repugnant to S. 10 which directs all the applications to be considered. Once it is realised that all applications have to be weighed and considered, then it will not be difficult to understand the exact scope of S. 11.”

38. The Supreme Court in Kasturi Lal v. State of J. & K., held:

“So far as the first limitation is concerned, it flows directly from the thesis that, unlike a private individual, the State cannot act as it pleases in the matter of giving largess. Though ordinarily a private individual would be guided by economic considerations of self-gain in any action taken by him, it is always open to him under the law to act contrary to his self-interest or to oblige another in entering into a contract or dealing with his property. But the Government is not free to act as it likes in granting largess such as awarding a contract or selling or leasing out its property whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the Government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be exercised for the public good. Every activity of the Government has a public element in it and it must, therefore, be informed with reason and guided by public interest. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. If the Government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid.”

39. The Supreme Court in Rukmani Bai v. State of M. P., also held:

“The appellant then contended that the order dated 19th May, 1972 sanctioning lease in favour of respondent 5 was invalid since it proceeded on a wrong hypothesis that the application of respondent 5 was the only valid application for a quarry lease for this area before the State Government. There was also before the State Government, pointed out the appellant, the application made by her for grant of a fresh lease and though this application was later in point of time than the application of respondent No. 5, the State Government was bound to consider it as the State Government could under R. 12(2), for special reason to be recorded, grant “quarry lease” to an applicant whose application was received later in preference to an applicant whose application was received earlier. Now there can be no doubt that on 19th May, 1972, when the State Government sanctioned grant of quarry lease in favour of respondent 5 the application of the appellant for grant of a fresh lease was before the State Government and, therefore, it would seem that the State Government ought to have considered that application along with the application of respondent 5 for the purpose of deciding whether quarry lease should be granted to the appellant in preference to respondent 5 even though the application of the appellant was received late than the application of respondent 5. Prima facie the State Government was in error in sanctioning grant of lease in favour of respondent 5 ignoring the application of the appellant. But we do not think we would be justified in interfering with the order of the State Government on this ground because we do not find that this contention was at any time raised by the appellant before the State Government or even before the High Court. The appellant could have raised this contention in the application for review preferred by her against the deemed refusal of her application for grant of a fresh lease and even if it was not raised at that stage, the appellant had another opportunity to raise it and that was in either of the two petitions filed by her in the High Court. But the appellant did not avail herself of this opportunity and it was only at the hearing of this appeal before us that she for the first time sought to raise this contention. We cannot permit that to be done and we accordingly do not propose to entertain this contention and interfere with the order of the Govt. on this ground.”

40. The Delhi High Court in State Govt. of Mysore v. Union of India, held thus :

“Though S. 11(2) gives preference to an applicant who had applied earlier in point of time, this preference is liable to be defeated under sub-s. (4) of S. 11 if there are special reasons and the previous approval of the Central Government is obtained.

Where the appellant had raised the points relevant for S. 11(4) of the Act, the same at lease should have been considered. But the application was rejected merely on the ground of the existing of the earlier application by other person which being premature could not have had any preferential claim. In such a case the applicant’s complaint is justified and even assuming that there was an earlier application by other person, the appellant’s case should have been considered in terms of S. 11(4).

The very purpose of S. 11(4) is that notwithstanding anything contained in sub-s. (2) the State Government may for any special reason to be recorded and with the previous approval of the Central Government grant a prospecting licence or a mining lease to an applicant whose application was received later in preference to an applicant whose application was received earlier. This right cannot be negated by permitting the State Government to act arbitrarily in even refusing to consider the case of an applicant under S. 11(4) of the Act on merits. Such a position would be destructive of the very concept of rule of law.

Hence the appellant is justified in making a grievance that his case has not been considered in terms of S. 11(4) and that he is entitled for the same.”

Case law cited by respondents :

41. In S. Khaitan Ltd. v. Govt. of India, , Chinnappa Reddy, J. (as he then was) held as under :

“In my opinion the several sub-sections of S. 11 must be read together. Section 11(1) provides that person who has a prospecting licence should be preferred in the matter of granting of mining lease subject to his not having committed any breach of the conditions of the prospecting licence and his being a fit person for being granted a mining lease. The preference to be shown to him is not therefore absolute and it is open to a rival applicant to show that he is not a fit person for being granted a mining lease. Similarly, sub-s. (2) provides for preference being shown to a person whose application is received first. But it is open to any applicant who has applied late to point out any special reasons why the lease should not be granted to the earliest applicant, but should be granted to him. In such a case the State Government may act under sub-s. (4) and grant the lease to the later applicant after obtaining the previous approval of the Central Government.

In order to prevent arbitrary action on the part of the State Government, sub-s. (4) provides that the State Government must record the special reasons and obtain the previous approval of the Central Govt. This does not mean that where the State Government does not consider that there are any special reasons the Central Government is precluded from considering the question whether there are any special reasons for preferring a later applicant to an earlier applicant. The Central Government acting in revision under Rr. 54 and 55, Mineral Concession Rules, will naturally have and can excise all the powers that the State Government had and could have exercised in dealing with applications for mining leases. Rule 55(4) is couched in sufficiently wide terms to enable the Central Government to do so. It is as follows :-

“After considering the matters referred to in sub-rule (3) the Central Government may confirm, modify or set aside the order or pass such other order in relation thereto as the Central Government may deem just and proper.”

I do not also agree with Sri Ramachandra Reddy that the matters mentioned in sub-s. (3) of S. 11 can be considered only when dealing with applications received on the same day and cannot be considered when the Government acts under sub-s. (4) of S. 11. The special reasons contemplated by sub-s. (4) may include the matters mentioned in sub-s. (3) along with other matters. I am therefore of the view that the right of revision given to a party under R. 54, Mineral Concession Rules in not mere nothing in cases where the State Government professes to act under S. 11(2) of the Act. If that be so, the Central Government cannot avoid stating its reasons for rejecting the revision and if it does not State its reasons it is the duty of the High Court to quash the order. I cannot also agree with the contention of Sri Manohar that it is only in cases where the reasons given by the State Government are vague or obscure that the Central Government must state its reasons. In dealing with a revision the Central Government must consider not merely the reasons given by the State Government but the attack upon those reasons by the revision petitioners.”

42. In Kangra Valley Slate Co. Ltd. v. Union of India, the Delhi High Court held:

“Held that there is no justification for the view that, even for the preferential right conferred by sub-s. (1) of S. 11 Mines and Minerals (Regulations and Development) Act, 1957 equality of merit is a prerequisite.

(Rejecting the contention that the preferential rights granted by sub-s. (2) of S. 11 only on the ground of the applicant being the first to make the application is not founded on any intelligible differentia having any nexus with the object sought to be achieved by the Act and the classification contemplated by it is not founded on any rational basis to distinguish persons and groups) held that a prospecting licence or a mining lease is a grant by the Government for the purpose of mineral development in its land. The Act and the Rules have prescribed conditions of eligibility. If a person fulfils these conditions, he can be said to be capable or fit to undertake mineral development. In the very nature of things equality of merit is difficult if not impossible, of determination in the case of various applicants because licences and leases are granted in respect of land which are spread throughout the length and breadth of this country. A sole applicant has only to show his eligibility according to the Act and the Rules for the grant of a prospecting licence or mining lease. In a case where there are several applicants who are all eligible in the aforesaid sense for such grant, the interests of mineral development require a speedy disposal of the applications, so that development can take place without loss of time for determining as expeditiously as possible the person to whom a grant is to be made, preferential rights have been given. The principle first come first served is not unknown. There is no reason why the Government or the legislature cannot say that it will make a grant in favour of a person who comes to it first if he is otherwise eligible. Coming first in the field may show great keenness for the work to be undertaken and in that way be taken to be qualification for the objective to be achieved i.e., mineral development. From that point of view a preferential right based on priority of time in making the application cannot be said to suffer from the absence of intelligible differentia having no nexus with the object of the Act. Held, therefore, that priority in time has a nexus with the object of the Act, namely interest of mineral development and the provisions of this section are not violative of Art. 14 of the Constitution. Section 11 contains a practical solution to the problem as to whom to grant a prospecting licence or mining lease and so long as the applicants are fit, even though not equally fit, the grant of preferential rights cannot be held to be violative of Art. 14 of the Constitution.

Held, however, that the Central Government had a duty to determine the rights of the petitioner-company claimed under sub-ss. (1) and (4) of S. 11 of the said Act, but it failed to do so in the instant case. The impugned order, therefore, has to be set aside and the rights of the petitioner company under sub-ss. (1) and (4) of S. 11 of the said Act have to be determined by the Central Government.

If words used in the statute are prima facie enabling the Court will readily infer a duty to exercise power which is invested in aid of enforcement of a right public or private of a citizen. So where the petitioner company had invited the State Government, as also the Central Government, to determine its rights under sub-s. (1) and sub-s. (4) of S. 11 but no findings have been given on these questions either by the State Government or by the Central Government.

Held that though sub-s. (4) uses the word ‘may’ yet the Central Government had a duty to determine the rights of the petitioner-company claimed under sub-ss. (1) and (4) of S. 11 of the said Act.

43. The impugned order in the instant case was accordingly set aside, as the rights of the petitioner had to be determined by the Central Government.

44. In Ravjibhai Jivabhai v. State, the Gujarat High Court held :

“An applicant for mining lease is entitled to a priority over the other applicants whose applications have been received subsequently by virtue of sub-s. (2) of S. 11 of the Act. This conferment of priority under sub-s. (2) of S. 11 can, however, be by-passed by the State Government under sub-s. (4) of S. 11. That sub-section begins with a non obstante clause and overrides the priority conferred by sub-s. (2) of S. 11. In order that a State Government may overlook or by-pass the priority conferred by sub-s. (2) of S. 11, two conditions have to be satisfied, namely, (i) special reasons must exist for so doing; and (ii) the previous approval of the Central Government must be obtained in that behalf. It is, therefore, clear on a plain reading of sub-s. (4) of S. 11 that the power granted to the State Government is not absolute but is circumscribed by two conditions, namely, the application and the requirement to record reasons in writing for overriding the priority of an applicant who has made the application earlier on point of time and the requirement of previous approval of the Central Government in that behalf. It is needless to say that the Central Government would grant approval only if it is satisfied that there are sound reasons for overriding the priority of an applicant who has made the application for the grant of a mining lease earliest in point of time. The special reasons which have to be recorded in writing is an additional check on the exercise of power by the State Government under sub-s. (4) of S. 11. The proposal to by-pass the priority must be supported by special reasons, meaning thereby, reasons which are sound and logical and germane to the question at issue. If either of these conditions is not satisfied the exercise of power under sub-s. (4) of S. 11 would clearly be bad in law and unsustainable.

In any system based on the rule of law such as our constitutional system, the conferment of absolute discretionary power on the executive must be frowned upon unless the discretion is confirmed to well defined limits. In all cases where the statute confers a discretion on the executive, it would not be correct to brand it as discriminatory. If the legislative policy and object sought to be achieved are clearly defined by the statute and discretion is vested in the executive to effectuate the same, the provision cannot be condemned as constitutionally invalid in addition to these two checks found in sub-s. (4) of S. 11, there is the further check that any order passed in exercise of power conferred upon the State Government by sub-s. (4) of S. 11 is open to judicial scrutiny.”

45. In Durga Prasad v. State, AIR 1956 Nag 101 the Nagpur High Court held thus :

“So far as the grant of the mining lease is concerned the case is governed by R. 32, Mineral Concession Rules 1949, which were framed by the Central Government in exercise of the powers conferred on it by S. 5, Mines and Minerals (Regulation and Development) Act, 1948.

The said rule determines the question of priority when more than one application for a mining lease is received for the same area and is reproduced below :

32. Priority:- If more than one application regarding the same land is received, preference shall be given to the application received first, unless the State Government, for any special reasons, and with the prior approval of the Central Government decides to the contrary.”

This rule does not violate the fundamental right of the Indian citizens to equality before the law or the equal protection of the laws under Art. 14 of the Constitution. The rule doubtless admits of exceptions when the first application, for any special reason, may be postponed by the State Government with the prior approval of the Central Government. Reservation of such a right by the owner of the property, however, does not attract Art. 14.”

46. In Bhagat Raja v. Union of India, the Supreme Court of India held as under:

“Under S. 10(1) an application for a mining lease has to be made to the State Government concerned in the prescribed form. Sub-s. (3) of S. 10 runs as follows:

On receipt of an application, under this section, the State Government may, having regard to the provisions of this Act and any rules made thereunder grant or refuse to grant the licence or lease.

Under sub-s. (2) of S. 11 a person whose application for a licence is received earlier than those of other shall have a preferential right for the grant thereof over the others. The proviso to this sub-section enacts that where applications are received on the same day and the State Government, after taking into consideration the matters specified in sub-s. (3) may grant the mining lease to such one of the applicants as it may deem fit. Sub-s. (3) specifies the matters referred to in sub-s. (2) and they are as follows:-

Rules were made by the Central Government under S. 13 of the Act known as the Mineral Concession Rules, 1960. R. 22 prescribes that an application for the grant of a mining lease must be made to the State Government in form ‘I’ accompanied by a fee of Rs. 200/- a deposit of Rs. 500/- and an income-tax clearance certificate. Under R. 26 the State Government is obliged to give reasons for refusal to grant mining lease. Any person aggrieved by an order made by the State Government may prefer an application for revision under R. 54 in form ‘N’. In every such application against the order of the State Government refusing to grant a mining lease, a person to whom a lease has been granted must be impleaded as a party. R. 55 originally framed in 1960 was amended in July, 1965. Under the amended R. 55 the position is as follows:-

(1) On receipt of an application for revision under R. 54 copies thereof shall be sent to the State Government and to all the impleaded parties calling upon them to make such comments as they may like to make within three months of the date of issue of the communication and if no comments are received within that period, it is to be presumed that the party omitting to make such comments has none to make.

(2) On receipt of the comments from any party under sub-rule (1), copies thereof have to be sent to the other parties calling upon them to make further comments as they may like to make within one month from the date of the issue of the communication.

(3) The revision application, the communications containing comments and counter comments referred to sub-rules (1) and (2) shall constitute the record of the case.

(4) After considering the records referred to in sub-rule (3), the Central Government may confirm, modify or set aside the order or pass such other order in relation thereto as the Central Government may deem just and proper.”

From the above, it will be amply clear that in exercising its powers of revision under R. 5 the Central Government must take into consideration not only the material which was before the State Government but comments and counter comments, if any, which the parties may make regarding the order of the State Government. In other words, it is open to the parties to show how and where the State Government had gone wrong or, why the order of the State Government should be confirmed. A party whose application for a mining lease is turned down by the State Government is therefore given an opportunity of showing that the State Government had taken into consideration irrelevant matters or based its decision on grounds which were not justified. At the time when applications for a licence are made by different parties to the State Government, they are not given an opportunity of showing any defects or demerits in the applications of the others or why their applications should be preferred to others. The State Government has to make up its mind by considering the application before it as to which party is to be preferred to the other or others. S. 11(3) as already noted, prescribes the matters which the State Government must consider before selecting one out of the numerous applicants.

But the possibility of the State Government being misled in its consideration of the matters cannot be ruled out. It may be that a party to whom a lease is directed to be granted has in fact no special knowledge or experience requisite for the mining operations or it may be that his financial resources have not been properly disclosed. It may also be that the nature and quality of the technical staff employed or to be employed by him is not of the requisite standard. In an application for revision under R. 55 it will be open to an aggrieved party to contend that the matters covered by sub-sec. (3) of Sec. 11 were not properly examined by the State Government, or that the State Government had not before it all the available material to make up its mind with respect thereto before granting a licence. In a case where complaints of this nature are made, of necessity, the Central Government has to scrutinise matters which were not canvassed before the State Government. A question may arise in such cases as to whether the order of the Central Government in the form in which it was made in this case would be sufficient specially in view of the fact that the correctness thereof may be tested in appeal to this Court.”

47. In Dastgir Saheb v. Union of India, AIR 1964 Punj 432 the Punjab High Court (at Delhi) held :

“It is not every error that calls for correction in writ proceedings. The formal or technical errors, even though of law, will not be sufficient to attract the extraordinary jurisdiction.

Held that in the matter of the revision under R. 54 or the Mineral Concession Rules of 1960 the Government of India had jurisdiction to decide the matter of priority under S. 11 of the Mines and Minerals (Regulation and Development) Act, 1957 and if an erroneous view was taken of the principles of ‘first come first serve’ embodied in that section and in the Mineral Concession Rules it was not such a patent error which would call for interference of the High Court.”

48. The question in the main that falls for determination is whether under sub-sec. (2) of Sec. 11 of the Act where two or more persons have applied for mining lease, the applicant whose application is received at the earliest shall be entitled to the grant of lease in preference to others whose applications were received later provided however such applicant is a fit person for the grant of the mining lease; and it is not necessary to examine all the applications at first with reference to matters specified in sub-sec. (3) or whether in case all the applicants are found equal, then alone the first applicant should be preferred.

49. It is settled principle that where the Legislature in the same sentence uses different words, it should be presumed that they were used in order to express different ideas. (Vide R. v. Inhabitants of Great Bolton (1823) 8 B & C 71 at p. 74 per Lord Tenterden C.J.) Further, from the general presumption that the same expression is presumed to be used in the same sense through an Act or a series of cognate Acts, there follows the further presumption that a change of wording denotes a change in meaning. (vide Evans v. Evans, (1948) 1 KB 175). Also, the main part of a section must not be construed in such a way as to render a proviso to the section redundant (Vide (1964) 2 QB 625).

50. The statutory provision under which an application for mining lease to be granted is under S. 10 which reads thus :

“10. Application for prospecting Licences or Mining Leases :

(1) An application for a prospecting licence or a mining lease in respect of any land in which the minerals vest in the Government shall be made to the State Government concerned in the prescribed form and shall be accompanied by the prescribed fee.

(2) Where an application is received under sub-sec. (1) there shall be sent to the applicant an acknowledgment of its receipt within the prescribed time and in the prescribed form.

(3) On receipt of an application under this section, the State Government may, having regard to the provisions of this Act and any rules made thereunder grant or refuse to grant the licence or lease.”

51. So the State Government under Sec. 10(3) of the Act will have a right to grant or refuse to grant the lease, having regard to the provisions of the Act and the Rules made thereunder.

52. Now the statutory provisions which are to be borne in mind while granting or refusing to grant the lease are Ss. 4, 5, 13(2) and 19 of the Act which read thus :

“4. Prospecting or mining operations to be under licence or lease :- (1) No person shall undertake any prospecting or mining operations in any area, except under and in accordance with the terms and conditions of a prospecting licence or, as the case may be, a mining lease, granted under this Act and the rules made thereunder.

Provided that nothing in this sub-section shall affect any prospecting or mining operations undertaken in any area in accordance with the terms and conditions of a prospecting licence or mining lease granted before the commencement of this Act which is in force at such commencement.

(2) No prospecting licence or mining lease shall be granted otherwise than in accordance with the provisions of this Act and the rules made thereunder.

5. Restrictions on the grant of prospecting licences or mining leases :-

(1) No prospecting licence or mining lease shall be granted by a State Government to any person unless he-

(a) holds a certificate of approval in the prescribed form from the State Government.

(b) produces from the Income-tax Officer concerned an income-tax clearance certificate in the prescribed form; and

(c) satisfies such other conditions as may be prescribed.

Explanation :- For the purpose of this sub-section, a person shall be deemed to hold a certificate of approval notwithstanding that at the relevant time his certificate of approval has expired if an application for its renewal is pending at that time.

(2) Except with the previous approval of the Central Government, no prospecting licence or mining lease shall be granted

(a) as respects any mineral specified in the First Schedule, or

(b) to any person who is not an Indian National.

Explanation :- For the purposes of this sub-section, a person shall be deemed to be an Indian national :-

(a) in the case of a public company as defined in the Companies Act, 1956 (1 of 1956) only if a majority of the directors of the company are citizens of India and not less than fifty one per cent of the share capital thereof is held by persons who are either citizens of India or companies as defined in the said Act :

(b) in the case of a private company as defined in the said Act, only if all the members of the company are citizens of India,

(c) in the case of a firm or other associations of individuals, only if all the partners of the firm or members of the association are citizens of India; and

(d) in the case of an individual only if he is a citizen of India.

13(2). In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely :-

(a) the person by whom, and the manner in which, applications for prospecting licences or mining leases in respect of land in which the minerals vest in the Government may be made and the fees to be paid therefor :

(b) the time within which, and the form in which, acknowledgment of the receipt of any such application may be sent :

(c) the matters which may be considered where applications in respect of the same land are received on the same day :

(d) the persons to whom certificates of approval may be granted, the form of such certificates and the fees payable for the grant or renewal thereof :

(e) the authority by which prospecting licences or mining leases in respect of land in which the minerals vest in the Government may be granted :

(f) the procedure for obtaining a prospecting licence or a mining lease in respect of any land in which the minerals vest in a person other than the Government and the terms on which, and the conditions subject to which, such a licence or lease may be granted or renewed :

(g) the terms on which, and the conditions subject to which, any other prospecting licence or mining lease may be granted or renewed :

(h) the facilities to be afforded by holders of mining leases to persons deputed by the Government for the purpose of undertaking research or training in matters to mining operations :

(i) the fixing and collection of dead rent, fines, fees or other charges and the collection of royalties in respect of –

(i) prospecting licences,

(ii) mining leases,

(iii) minerals mined, quarried, excavated or collected.

(j) the manner in which rights of third parties may be protected (whether by payment of compensation or otherwise) in cases where any such party may be prejudicially affected by reason of any prospecting or mining operations :

(k) the group of associated minerals for the purposes of section 6 :

(l) the manner in which, and the conditions subject to which a prospecting licence or a mining lease may be transferred :

(m) the construction, maintenance and use of roads, power transmission lines, tramways railways, railways serial ropeways, pipelines and the making of passages for water for mining purposes on any land comprised in a mining lease :

(n) the form or registers to be maintained under this Act :

(o) the disposal or discharge of any tailings, slime or other waste products arising from any mining or metallurgical operations carried out in a mine :

(p) the reports and statements to be submitted by holders of prospecting licences or owners of mines and the authority to which such reports and statements shall be submitted.

(q) the period within which applications for revision of any order passed by a State Government or other authority in exercise of any power conferred by or under this Act, may be made and the manner in which such application shall be disposed of : and

(r) any other matter which is to be or may be prescribed under this Act.

19. Prospecting licences and mining leases to be void if in contravention of Act : Any 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 prospecting licence or mining lease in any State and the aggregate area covered by such licences or leases, as the case may be, exceeds the maximum area permissible under Section 6, only that prospecting licence or mining lease the acquisition of which has resulted in such maximum area being exceeded shall be deemed to be void.”

53. Now the relevant rules viz., Rules 22, 23 and 24 of the Mineral Concession Rules, 1960 read thus :

“22. Applications for grant of mining leases. – (1) An application for the grant of mining lease in respect of land in which the minerals vest in the Government shall be made to the State Government in form I through such officer or authority as the State Government may specify in this behalf.

(2) Omitted.

(3) (i) Every application for the grant or renewal of a mining lease shall be accompanied by –

(a) a fee of two hundred rupees;

(b) an income-tax clearance certificate in Form-C from the Income-tax Officer concerned; and

(c) a certificate of approval in Form-A or if the certificate of approval has expired, a copy of application made to the State Government for its renewal.

(d) a valid clearance certificate, in the form prescribed by the State Government, on payment of mining dues, such as royalty or dead rent and surface rent payable under the Act or the rules made thereunder from that Government or any officer or authority authorised by that Government in this behalf :

Provided that where any injunction has been issued by a court of law of any other competent authority staying the recovery of any such mining dues, the non-payment thereof shall not be treated as a disqualification for the purpose of granting or renewing the said mining lease :

Provided further that where a person has furnished an affidavit to the satisfaction of the State Government stating that he does not hold and has not held a mining lease, it shall not be necessary for him to produce the said valid clearance certificate :

Provided also that grant of clearance certificate under sub-clause (d) shall not discharge the holder of such certificate from the liability to pay the mining dues which may subsequently be found to be payable by him under the Act or rules made thereunder.

(i) The State Government may for reasons to be recorded in writing relax the provision of sub-clause (d) of Clause (i)

(ii) Every application for the grant of a mining lease shall in addition to those specified in clause (i) be accompanied by a deposit of five hundred rupees for meeting the preliminary expenses in connection with the grant of mining lease.

Provided that the applicant shall deposit such further deposit as may be asked for by the State Government within one month from the date of demand of such deposit.

Provided that a property sworn affidavit stating that no dues are outstanding shall suffice subject to the condition that the certificate required as above shall be furnished within ninety days of the date of application and the application shall become invalid if the party fails to file the certificate within the said ninety days.

23. Acknowledgment of application :

(1) Where an application for the grant or renewal of a mining lease is delivered personally, its receipt shall be acknowledged forthwith.

(2) Where such application is received by registered post, its receipt shall be acknowledged on the same day.

(3) In any other case, the receipt of such application shall be acknowledged within three days of the receipt.

(4) The receipt of every such application shall be acknowledged in Form-D.

24. Disposal of application for mining lease :

(1) An application for the grant of mining lease shall be disposed of within twelve months from the date of its receipt.

(2) An application for the renewal of mining lease shall be disposed of within six months from the date of its receipt.

(3) If any application is not disposed of within the period specified in sub-rule (1) it shall be deemed to have been refused.

(4) Where an application is for a mining lease for a mineral or minerals not specified in the existing mining lease or mining leases is made for the whole or part of the area held under mining lease by a person other than the lessee, the State Government shall notify that fact by Registered Post-Acknowledgment Due to the person who already holds mining leases for another mineral in the land applied for.

(5)(a) If on receipt of the information referred to in sub-rule (4), from the State Government the lessee applies either for prospecting licence or mining lease for newly discovered mineral or minerals within six months from the date of communication of the information by the State Government the lessee shall be preferred in respect of such grant.

(b) If the lessee fails to apply for prospecting licence or mining lease within six months, then this fact will be intimated to the applicant by the State Government and the State Government will consider the original application in accordance with the rules.

(6) The period of twelve months referred to in sub-rule (1) from the date of applications received under sub-rule (4) shall be from date of communication to the applicant of the information regarding the failure of the lessee to apply for prospecting licence or mining lease within the period of six months mentioned in sub-rule (5).”

Form I also may be noticed :

FORM – I.

(to be submitted in triplicate) Government of Application for mining lease (See Rule 22(1).) Received…

at…(place) on……(date) Initial of Receiving Officer.

Dated day of 19 To Through Sir, I/we request that a mining lease under the Mineral Concession Rules, 1960 may be granted to me/us

2. A sum of Rs. 200 and Rs. 500 respectively being the fees in respect of this application and the preliminary expenses payable under sub-rule (2) of rule 22 of the said rules have been deposited.

(3) The required particulars are given below :

(i) Name of the applicant with complete address :

(ii) Is the applicant a private individual/private/public     company/firm        or association?

(iii) In case applicant is : 

(a) an individual, his nationality

(b) a private company, the nationality of all members of the company along with place of registration.

(c) a public company, the nationality of directors, the percentage of share capital held by Indian national along with place of incorporation.

(d) firm or association, the nationality of all the partners of the firm or members of the association. 

(iv) Profession or nature of business of applicant.

(v) No. and date of the certificate of approval (copy attached)

(vi) If on the date of application, certificate of approval has expired, full particulars of the application for its renewal;

(via) No. and date of the valid clearance certificate of payment of mining dues (copy enclosed)

(vib) If on the date of application, the applicant does not hold a mining lease, it should be stated whether an affidavit to this effect has been furnished to the satisfaction of the State Government.

(vii) Mineral or minerals which the applicant intends to mine.

(viii) Period for which mining lease is required.

(ix) Extent of the area the applicant wants to mine

(x) Details of the area in respect of which mining lease is required.

…………………..

District.  Taluq Village Khasra No. Plot No. Area. …………….

(xi) Brief description of the area with particulars reference to the following :

(a) the situation of the area in respect of natural features such as streamset.

(b) in the case of village areas, the name of the village and if only a part of the village is applied for, the Khasra number, the area in hectares of each field or part thereof applied for.

(c) In case of forest areas, the name of the working circle, the range and the felling series should be indicated.

(d) For areas where no forest maps or cadestral maps are available, a sketch plan should be submitted on scale showing the area applied for together with boundary, if any, of any other existing mining lease or prospecting licence area if the area applied for has any common point or line with the boundaries of existing prospecting licence or mining lease areas.

(xii) The area applied for should be marked on plans as detailed below :

(a) In case a cadestral map of the area is available, the area on this map should be marked showing the name of the village, Khasra number, and area in hectares of each field and part thereof;

(b) In the case of forest maps, the area should be marked on the map showing the range and felling series;

(c) In case neither cadastral nor forest maps are available, the area should be marked on a sketch plan drawn to scale showing on this plan all important surface and natural features, the dimensions of the lines forming the boundary of the area and the bearing and distance of all corner points from any important, prominent and fixed point or points.

(xiii) No. and date of Income-tax clearance certificate from the Income-tax Officer (attached).

(xiv) Particulars of the areas mineralwise within the jurisdiction of the State Government for which the applicant or any person joint in interest with him.

(a) already holds under mining lease;

(b) has already applied for simultaneously

(c) being applied for simultaneously

(xv) Nature of joint in interest, if any, (xvi) (a) Do you hold a prospecting licence over the area mentioned at (x) above? If so, give its No. and date of grant and the date when it is due to expire?

(b) Have you carried out the prospecting operations over the area held under prospecting licence and sent your report to the State Government, as required by rule 16 of the Mineral Concession Rules, 1960? If not, state your reasons for not doing so.

(xvii) Approximate quantity of mineral/minerals expected to be raised during the first year and phased programme of output until fully developed. The estimated quantity of reserves quality-wise may also be indicated.

(xviii) Means by which the mineral/minerals is/are to be raised i.e. by hand labour or mechanical or electrical power, in the case, of coal the manner in which coal is proposed to be raised i.e., whether by quarrying or by driving inclines or by sinking of pits should be indicated.

(xix) Manner in which the mineral raised is to be utilised :

(a) for manufacture in India –

(b) for exports to foreign countries; in the former case the industries in connection with which it is required should be specified. It should also be stated whether the applicant has set up a beneficial plant or if he intends to do so within three years of the grant of the lease. In the latter case, the countries to which the mineral will be exported after processing or in raw form should be stated.

(c) in case of coal, details of existing railway transport facility available and additional transport facility, if any, required.

(xx) If the applicant intends to supervise the works, his previous experience of prospecting and mining should be explained if he intends to appoint a manager, the name of such manager, his qualifications, nature and extent of his previous experience should be specified and his consent letter should be attached.

(xxi) Financial resources of the applicant.

(xxii) Particulars of receipt of treasury challan etc. attached for the amount referred to at 2 above.

(xxiii) Any other particulars or sketch map which the applicant wishes to furnish.

54. It may be noticed that Sec. 11 of the Act in its present form has been brought in by virtue of the amendment in the year 1957. The position that obtained till then was being regulated under the Mines and Minerals (Regulation and Development) Act, (Act 53 of 1948). Rule 32 framed under the said Act was the relevant provision. The said Rule was framed under Sec. 5 of the said Act, which reads :

“R. 32 Priority : If more than one application regarding the same land is received, preference shall be given to the application received first unless the State Government for may special reason and with the prior approval of the Central Government decides to the contrary.”

So Sec. 11 has been enacted amplifying with greater comprehension the provision that was hitherto obtaining under Rule 32 aforesaid, in particular proviso to sub-sec. (2) and also the proviso under sub-sec. (3) brought in for the first time. Therefore, while analysing Sec. 11, this background if borne in mind, would also assist in arriving at a proper conclusion. Section 11 postulates four distinct situations. Sub-sec. (1) deals with a situation where a prospecting licence holder applies for a mining lease will be entitled to a preference or priority over any other applicant provided he satisfies two conditions namely (i) that he has not committed any breach of the terms and conditions of the prospecting licence and (ii) that he is otherwise a fit person for being granted the mining lease.

55. In order to judge, whether a prospecting licensee is a fit person within the meaning of proviso to sub-sec. (1) his application submitted in form I as prescribed under Rule 22 read with Sec. 10 will have to be examined. Form-I deals with number of particulars to be furnished by the applicant. It deals not only with the four enumerated matters under sub-sec. (3) of Sec. 11 but also some more factors other than those under sub-sec. (3). Therefore, the prospecting licensee under sub-sec. (1) must pass through that test of fitness to be judged with reference to the particulars laid down in Form-I, either with reference to the factors enumerated under sub-sec. (3) or otherwise.

56. Sub-section (2) postulates a situation where two or more persons apply for the licence of the same land, the applicant whose application is received earlier shall have a preferential right for the grant of lease over an applicant whose application has been received later, provided he is a fit person within the meaning of proviso to sub-sec. (1) The words used in sub-sec. (2) do not suffer from any ambiguity. They are plain and convey the explicit and positive meaning, both contextually or otherwise. Centextually because the proviso to sub-sec. (2) deals with a situation where two or more applications are received on the same day in which case the authority concerned after taking into consideration the matters specified in sub-sec. (3) may grant lease to such of the applicants as it may deem fit. Therefore, sub-sec. (2) distinctly deals with a position where two or more persons applied for lease or licence on different dates whereas under proviso to the said sub-section such applications are received on the same day. Since two different situations are visualised clearly and unequivocally, two different considerations must be followed in granting the lease. In case of sub-sec. (2), the earliest applicant in point of time will have to be preferred in granting the lease if he satisfies that he is a fit person. Therefore notwithstanding the fact that the applicant whose application received later than the first applicant, being superior, judging with reference to the material furnished in Form-I, he cannot be preferred. It is only in a contingency where the first applicant fails to qualify himself as a fit person, then the next one in point of time will have the priority for the grant of lease, provided he proves to be a fit person. If, on the other hand, where more applications are received on the same day, then the discretionary right has been conferred upon the authority to compare and select with reference to matters enumerated in sub-sec. (3) and choose one of them as the authority may deem fit.

57. The fourth situation under Sec. 11 is by way of exception to sub-sec. (2) where two or more persons applied for a licence or lease and the applicant whose application is received earlier has to be given the lease provided he is a fit person. Sub-sec. (4) which has the overriding effect over sub-sec. (2) carves out an exception by which the preferential right in favour of the applicant, who applies earlier can be given a go-by and a lease could be granted in favour of a person, who applies later than the first applicant, provided the authority gives special reasons which have to be recorded and then obtains previous approval of the Central Government, provided of course he is a fit person. The flow is imperative from the explicit language of the said sub-section coupled with its non obstante clause.

58. The argument of Sri K. Srinivasamurthy, learned counsel for the petitioner is that bearing in mind the object of the Act and also the principle that the Government cannot distribute the largess arbitrarily to the parties whom they liked, while judging the applications under sub-sec. (2), blindly the principle of first come first served cannot be adopted without examining all the applications received, in the light of the guidelines laid down under sub-sec. (3). Whether it is with reference to proviso to sub-sec. (2) or sub-sec. (2) itself or even with reference to sub-sec. (1); the factors laid down in sub-sec. (3) must at first be taken into consideration and, in case, all the applicants are found equal on merits, then alone preference will have to be given to the one whose application has been received at the earliest. Therefore, the word “preference” employed in the section has to be given only the limited meaning to that extent.

59. Conversely, Sri K. Jagannadha Rao, learned Standing Counsel for the Central Government and also Sri N. V. Suryanarayana Murthy, learned Government Pleader for the State Government canvassed that the situations contemplated by Sec. 11 under sub-secs. (1), (2) and Proviso to sub-sec. (2) are distinct and independent. There is no overlapping. The words which are clear must be given their meaning. There is no equivocality and it is not known that a preference could be given on the principle of first come first served. It is not also peculiar as even in services, promotions can be effected on the principle of simple seniority and it is only in the matter of selection on the basis of merit the question of overlooking seniority does arise. Therefore, there is no scope for the argument that the authority concerned has exercised its discretion arbitrarily in the case, and there is no escape, further argued that the authority, if it found fit the 4th respondent herein whose application is the earliest in point of time, has to grant the lease; even if it finds that the other applications received later in point of time are superior to the first one, because the question of selection by comparison does not arise.

60. I have no hesitation in seconding the argument advanced on behalf of the respondents.

61. The argument of the learned counsel for the petitioner while relying on decisions of this Court in W.A. No. 600 etc., of 1969 Sudha v. State, to the effect that the question of giving preference under S. 11(1) or Sec. 11(2) would arise only if other things were equal is, to borrow the observations of Chinnappa Reddi, J. (as he then was) in the order of reference, in the teeth of the language of Sec. 11.

62. Judging with historical background, these sub-sections of Sec. 11 were enacted by Amendment Act of 1957 and till then Rule 32 framed under the Mines and Minerals (Regulation and Development) Act, 1948 was holding the field where in the provision which is now specifically brought in under proviso to sub-sec. (2) of Sec. 11 was absent so also the matters specified under sub-sec. (3) were wanting. So, while providing a clue to the intention of the Legislature that only in case of all the applicants applying on the same day alone will have to be decided for granting of lease with reference to matters specified in sub-sec. (3) and not otherwise; and also with reference to the explicit language employed in those sub-sections of Sec. 11, it will amply bear out the object and intendment of the Legislature viz., development of minerals is to lay down the principle ‘first come first served’ in sub-sec. (2). The interests of minerals development require a speedy disposal of the applications so that development can take place without loss of time and, therefore, the person to whom a grant of lease is to be made preferential rights have to be given. The principle of ‘first come first served’ is not unknown. There is no reason why the Government or the Legislature cannot say that it will make a grant in favour of a person who comes to it first if he is otherwise eligible. Coming first in the field may show greater keenness for the work to be undertaken without loss of time in achieving the object of the Act viz., mineral development. From that standpoint also, a preferential right based on priority of time in making the application, cannot be said to suffer from the absence of intelligible differentia having no nexus with the object of the Act (vide Kangra Valley Slate Co. Ltd. v. Union of India, (supra).)

63. If the construction sought to be adopted by the petitioner is to be acceded to then it not only is opposed to the language which in terms is explicit and unequivocal but also would render otiose the proviso to sub-sec. (2) which provides for a definite situation namely, all the persons submitting applications on the same day. A deliberate departure has been made by adding a proviso for the first time to sub-sec. (2) which postulates a different situation altogether and, therefore, different treatment has to be given. If the interpretation that all such applications whether they are made on different dates or on the same day, will have to be judged in the light of matters specified under sub-sec. (3), then that construction of a statute is forbidden. The words used in the statute will have to be given their due meaning unless the intendment of the Legislature is ambiguous (vide (1828) 8 BC 71 at 74), per Lord Tenterden C.J. and Maxwell on the Interpretation of Statutes – twelfth Edition at page 282).

64. The learned counsel for the petitioner advances his argument that should any such intendment namely first come first served as said to be envisaged under sub-sec. (2), be thought of, it would tantamount to attempting classification without any reason or object as there is no rational nexus between the object sought to be achieved by this classification and thereby it would give rise to the distribution of largess at the whim and fancy of the authority is without any substance. Once it is kept in mind that the object behind the Act is mineral development and in order to get it exploited as early as possible the Government can as well invite the applications and it is for those who are vigilant enough to apply for grant of lease and it is not as though by mere asking for it one would get the lease if he rushes and submits first, in point of time, for he has to comply with the provisions of the Act namely, the fitness test as discussed above. Form-I contemplates several important material which will have to be furnished by the applicant. Therefore, once he qualifies the Standards laid down, which standards have been conceived of by the statute and framed in the best interests of mineral development by the Legislature, before aspiring to get a ming lease, that applicant has to specify the material called for in Form I. Therefore it is futile for the learned counsel for the petitioner to contend that one would be getting the licence for mere asking for it, as it were therefore, the question of distribution of largess is not only misplaced, but is also ill-conceived. Indeed, the Legislature once again provided for a position wherein for special reasons a person who has applied first in point of time can as well be overlooked if the applicant later in point of time has to be granted the lease notwithstanding the provisions of sub-sec. (2), provided the authority satisfies two conditions (i) special reasons will have to be given, and (ii) prior approval of the Central Government will have to be obtained. Therefore, it is not as though a blanket power is conferred under sub-sec. (2). In fact, procedurally it is now well-settled by a catena of cases that all the applications submitted under sub-sec. (2) though on different dates will have to be considered and it is not as though only the application of a person who has applied first in point of time to be considered and granted lease if he satisfies the conditions envisaged under the proviso to sub-sec. (1); for, the other applications later in point of time, also will have to be considered in order to see whether they deserve attraction of the provisions of sub-sec. (4). Only, for that purpose, the consideration referred to above is to be made and not whether they are superior while considering with reference to matters specified under sub-sec. (3) and therefore to be granted in preference to the applicant first in point of time. Mere superiority will not confer right on the applicant for deviating the principle laid down under sub-sec. (2) unless that could be established as amounting to special reasons within the meaning of sub-sec. (4). Illustratively, a person applied first in point of time sought for the grant of mining lease for the purpose of exporting the mineral after winning the same; whereas the latter applicant applied for the lease in respect of the same land for captive consumption in the manufacture of certain commodity but not for exporting the same; the latter can as well say that this might be the special reason either with reference to the policy if adopted already or even otherwise for the purpose of encouraging the indigenous production the applicant first in point of time will have to be overlooked and the latter one will have to be preferred within the meaning of sub-sec. (4).

65. In my judgment, therefore, three distinct positions have been conceived of by the Legislature in Sec. 11. First, under sub-sec. (1) where a prospecting licensee applies for grant of lease even if his application is later in point of time, has to be preferred and given the lease provided;

(i) he has not committed any breach of the terms and conditions of the prospecting licence;

(ii) he is otherwise a fit person for being granted mining lease.

66. Second, under sub-sec. (2) where two or more persons applied for a prospecting licence or mining lease in respect of the same mine, the applicant whose application has been received earlier shall have to be granted the licence or lease provided he proves to be the fit person within the meaning of the provisions of the Act as envisaged under the proviso to sub-sec. (1).

67. Third, under proviso to sub-sec. (2) where two or more applications for licence or lease are received on the same day, they will have to be considered with reference to matters specified in sub-sec. (3) and the authority concerned may, in its discretion, which is justifiable, grant lease to a person who is however ‘a fit person.’

68. Four, under sub-sec. (4) which is an exception to sub-sec. (2) where notwithstanding the fact that two or more persons applied on different dates, the latter applicant can be preferred for granting of lease or licence provided :

(i) the authority concerned assigns special reasons for preferring such an applicant;

(ii) prior approval of the Central Government is obtained; and

(iii) he is a fit person.

69. If this interpretation is not accorded and applications received, whether on the same day or on different dates, will have to be considered with reference to matters enumerated in sub-sec. (3), as sought to be canvassed for the petitioner, the statutory provisions will be rendered redundant, which is forbidden, as redundancy should not lightly be attributed to the language of the Legislature.

70. Yet another argument was advanced. The word ‘preference’ employed in the provisions at various stages including sub-sec. (2) indicates selection on the basis of comparative merits, and therefore cannot be straigtway conferred the right or privilage of being granted lease or licence on the mere fact that the applicant has applied first in point of time. It connotes that all things being equal, then only first in point of time will have to be preferred.

71. This obviously overlooks the positive and explicit language used in various sub-sections. The word ‘preference’ according to Chambers’s Twentieth Century Dictionary, means ‘the act of choosing; favouring or liking one above another; estimation above another; the state of being preferred; that which is preferred priority; an advantage given to one over another.’ Even bearing in mind the above meaning of ‘preference’. If we construe the language, for instance, of sub-sec. (2) viz. where there are two or more applicants for grant of lease or licence, one, who applied first in point of time, will have to be given preference. So construed, it is inescapable that it emphasises not any selection but a right or privilege to be conferred without any process of selection and also so construed it does not militate against either the language or intendment of the Legislature. On the contrary, it purports to bring out harmony between the various objectives envisaged by various sub-sections and avoiding thereby any overlapping. Hence, the contention is devoid of merit and substance.

72. One more attempt, feeble though has been made by the learned counsel for the petitioner referring to the provisions of sub-sec. (3), that sub-sec. (3) has a reference to sub-sec. (2) as it reads “The matters referred to in sub-sec. (2) are the following” and, therefore it is not restricted only to proviso to sub-sec. (2) but to the entire sub-section, and therefore the matters enumerated under sub-sec. (3) will have to be taken into consideration while considering the applications under sub-sec. (2). This too, I apprehend lacks substance. If one reads carefully the words ‘matters specified in sub-section (3)’ are found only in the proviso to sub-sec. (2) and, therefore, inferentially it is irresistible. The matters referred to in sub-sec. (3) will be applicable to the cases contemplated under Proviso to sub-sec. (2) viz., where two or more applications are received on the same day, the matters enumerated in sub-sec. (3) will have to be taken into consideration for deciding the claims inter se between such applicants and not to the applications referred to in sub-sec. (2). Neither the language nor the intendment of it supports the attraction of matters specified under sub-sec. (2). In view of the above, the ruling in Sudha v. State (supra) is overruled.

73. In the light of the above, if we examine the orders passed by the original authority as well as revisional authority by granting lease to the 4th respondent, we do not find any contravention of the provisions of the Act much less the provisions enacted under sub-sec. (2) of Sec. 11 of the Act. The original authority has granted the lease on 6.4.1973 under G. O. Ms. No. 232, dated 6-4-1973 which reads thus :

O R D E R “The following applications were received by the Collector, Khammam for grant of Mines lease for barytes over 110.00 acres in S. Nos. 57 and 58 of Pocharam Village, Yellandu Taluk, Khammam District.

S. Name of the Dt. of receipt Nos. Extent No. of No. Applicant of application years

1. M/s. Expo Chemicals 31-7-72 57 & 58 110.00 acres 20 yrs.

Industrial Estate Kothagudem.

2. M/s. Barium Chemicals 2-8-72 57 & 58 110.00 acres 10 years.

Ltd. Ramavaram Khammam. Dist.

The Government have considered the application and reject the application of M/s. Barium Chemicals Limited under Section 11(2) of the Mines and Mineral (Regulation & Development) Act, 1957 as they have no priority. The application fee and preliminary deposit paid by the company be refunded after deducting the expenses, if any, incurred in their behalf.

3. The Government hereby sanction to M/s. Expo Chemicals, Kothagudem the grant of Mining lease for barytes for 20 years over an extent of 100 acres in S. Nos. 57 and 58 of Pocharam Village, Yellandu taluk, Khammam District subject to the provisions of Mines and Minerals (Regulation and Development) Act, 1957 and the rules made thereunder in general subject also to the conditions in Form K. prescribed under the Mineral Concession Rules, 1960 and to the additional conditions specified in the appendix to this order.

4. The rate of royalty dead rent and surface rent shall be collectable as follows :-

Royalty :

(a) White including snow white Seven rupees and fifty paise per tonne.

(b) Buff Five rupees per tonne.

Dead Rent

1. 1st year Nil

2. 2nd year to 5th year Rs. 12.50 per hectare

3. 6th year to 10th year Rs. 25.00 “

4. 11th year onwards Rs. 37.50 “

Surface rent and water charges At such rate as the land revenue and cesses assessable on the land are paid.

5. The grantee should pay a deposit of Rs. 1,000/- prescribed in Rule 32 of the Mineral Concession Rules, 1960 before the lease is actually executed.

6. The grantee should execute the lease deed within the time limit specified in Rule 31 of Mineral Concession Rules 1960.

7. The terms and conditions referred to in para 1 of the order are subject to such further modifications, additions and alterations as may be ordered before the lease deed is executed.

8. The Collector Khammam is requested to take necessary further action for the execution of the lease deed after satisfying himself that the grantee possess valid certificate of approval and income-tax clearance certificate. As soon as the deed is executed the date of such execution should be reported to the Government and Director of Mines and Geology, Hyderabad.

Note : The grant is liable to the cancellation should it be found it was grossly inequitable or was made under a mistake of facts or owing to misrepresentation, fraud or in excess of authority.

(By order and in the name of the Governor of Andhra Pradesh).

74. The petitioner’s application has been rejected stating, that it has no priority whereas the 4th respondent has been granted lease as it has been received earlier in point of time and being satisfied that it is in compliance with the provisions of the Act. Rightly, the revisional authority by its order dated 18-11-1976, held as under :

“No. A(281) FINAL ORDER NO. 727/76 73-MTV Dated : 18-11-1976.

Petitioners : M/s. Barium Chemicals Limited Respondent : Government of Andhra Pradesh Impleaded Party : M/s. Expo Chemicals.

O R D E R (Under Section 30 of the N. M. (R & D) Act of 1957) The petitioner sought a mining lease for Barytes over 110 acres in village Pocharam of Yellandu Taluk in Khammam district. The impleaded party also sought a lease over the same area. By their order of 6-4-1973 the State Government granted the lease to the impleaded party on the ground that party had applied earlier. The petitioner has challenged this order in the present revision.

2. The petitioner’s case is that they are manufacturers of barium salts, and due to their export commitments, their requirements barytes are very large. They need a regular supply of the mineral which can only be ensued if they have their own mine. They claim that the requirements of the impleaded party are much smaller. They contend that the mere facts that one applies first should not be a reason for being entitled to a priority in the matter of grant of a mining lease; and that the factors set out in Sec. 11(3) of this Act should have been taken into consideration and their claim preferred.

3. The State Government have pointed out that the petitioner has been getting and can continue to get his requirements from other suppliers of barytes; so that it is not essential for them to have their own mine. The impleaded party had applied for the lease on 31-7-72. Whereas the petitioner had done so on 2-8-1972. In view of the earlier application, the impleaded party had to be granted priority under Sec. 11(2) of the Act. While granting the lease apart from priority of application other relevant factors were also taken into consideration. The impleaded party have supported the orders of the State Government and said that they are also manufacturers of barium chemicals. Besides they had applied earlier and have a right to priority. In their counter/comments, the petitioner have sought to make out that the impleaded party is not in a position to carry out the mining operation. They have also pointed out the limited requirements of the impleaded party.

4. It is not necessary for the purposes of the present revision to go into the requirements of the two parties or their comparative merits and demerits. Section 11(2) of the Act clearly says that the subject to provisions of Sec. 11(1) where two or more persons have applied for a mining lease or prospecting licence over the same land the earlier applicant shall have a preferential right. It is no one’s case that there was any previous prospecting licence over the land. Hence the case is not covered by Sec. 11(1). The proviso to sub-sec. (2) of Sec. 11 comes into operation only if two or more applications are received on the same day. The petitioner’s claim that matters specified in sub-sec. (3) of Sec. 11 should have been taken into account is therefore untenable. The State Government were therefore quite correct in granting the lease to the impleaded party who had applied earlier.

5. The Central Government therefore in exercise of their powers under Sec. 30 of the NM (R & D) Act and Rule 55 of the Mineral Concession Rules dismisses the revision application.

Sd/-                             

K. Sivaramakrishnaiah                   Sd/-                             

Joint Secretary (Mines) B. S. Sekhon      Joint Secretary                      (Law) ”                          

75. Indeed, it goes a step further and discusses as to whether the petitioner has made out a special case for grant of lease under sub-sec. (4) of Sec. 11 of the Act. The case of the petitioner was that they are manufacturers of barium salts and due to their export commitments their requirements of barytes are very large and they need a regular supply of ore which can only be ensued if they have their own mine. They claimed that the requirements of the impleaded party are much smaller. Dealing with that aspect, it is stated by the revisional authority that the State Government had pointed out that the petitioner has been getting and can continue to get his requirements from other suppliers of barytes; so that it is not essential for them to have their own mine. The impleaded party had applied for a lease on 31-7-1972 whereas the petitioner had done so on 2-8-1972. In view of the earlier application, the 4th respondent had to be given priority under S. 11(2) of the Act. It was further noticed that while granting the lease apart from priority of applications, the other relevant factors also were taken into consideration by the State Government. The 4th respondent also are manufacturers of barium chemicals. Therefore, there was no special reason for overlooking the case of the 4th respondent. Indeed nowhere in the affidavit filed in support of the writ petition it is stated that the 4th respondent is not a fit person within the meaning of the Act.

76. On the contrary, the 4th respondent in its affidavit stated that they constitute a partnership firm, started by unemployed graduate engineers which set up a small scale industry under the Technocrat scheme. It was securing raw material (barytes) from Cuddapah District. It is averred in the affidavit that in Khammam District where barytes are available, a lease of an area of 359 acres was granted to Messrs. Viswabharathi Mining Corporation. After the petitioner company was set up, the Government passed orders on 7-6-1968 making available to the petitioner all the barytes mined in that area. The said area of 339 acres is rich in barytes and is quite capable of meeting the entire requirements of the petitioner. The petitioner itself is conducting the actual mining operation under an arrangement with Messrs. Viswabharathi Mining Corporation and there is no impediment to their mining and it is quite capable of meeting the entire requirements of the petitioner. When the 4th respondent came to know that an area of 106 acres is available for grant of mining lease, it filed an application on 31-7-1972. As the petitioner’s requirements of raw material were more than amply provided, the petitioner did not initially bother to apply for mining lease. However, when it came to know that the 4th respondent had applied for the lease, it has tendered to file an application so as to eliminate the 4th respondent from the competition. If the mining lease is not granted in its favour, it cannot conduct its operations economically as it has to get ore from far off Cuddapah district which is 300 miles away.

77. In view of the above material, even on merits there does not appear to be any case made out in favour of the petitioners. No special case can be said to have been made out for grant of lease in favour of the petitioner within the meaning of sub-sec. (4) of Sec. 11. True, the consideration of application under any one of the sub-sections of Sec. 11 of the Act is justifiable and since, as we said, no case has been made out and it is perhaps on the contrary the authorities have taken a proper decision to encourage the unemployed graduate engineers in their venture to set up independent industry. Viewed from any angle therefore, legally or equitably, the impugned order cannot be said to suffer from the vice of improper consideration of the application of the petitioner for grant of a mining lease in preferring the 4th respondent for the grant of the said lease. Since the entire case has been referred to the Full Bench, it must be held that there are no merits in this writ petition and it is accordingly dismissed. In the circumstances of the case, there shall be no order as to costs.

78. In the result, though on different grounds, the writ petition is dismissed. No costs. Advocate’s fee : Rs. 500/-.

79. Petition dismissed.

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