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PETITIONER: STATE OF HARYANA

       Vs.

RESPONDENT: RAM KISHAN & ORS.

DATE OF JUDGMENT06/05/1988

BENCH: SHARMA, L.M. (J) BENCH: SHARMA, L.M. (J) PATHAK, R.S. (CJ)

CITATION:  1988 AIR 1301            1988 SCR  (3)1013  1988 SCC  (3) 416        JT 1988 (2)   444  1988 SCALE  (1)889  CITATOR INFO :  F          1990 SC1417  (12)  RF         1991 SC 564  (4)

ACT:      Mines &  Minerals (Regulation & Development) Act, 1957- Whether a  mining lease  can be  prematurely  terminated  in purported exercise  of powers  under Section  4A  of-Without notice to  the party  affected and opportunity to that party to  place   its  view   point-Whether  such  termination  is violative of principles of natural justice.

HEADNOTE:      These appeals were directed against the common judgment of the  High Court  in Writ  applications filed by different petitioners,  challenging  the  termination  of  the  mining leases granted  to them.  The State  of  Haryana  which  had executed the mining leases in favour of the writ petitioners for ten  years under  the provisions of the Mines & Minerals (Regulation &  Development) Act  (the Act),  terminated  the said leases  prematurely in the purported exercise of powers under Section 4A of the Act without prior notice to the writ petitioners or  any opportunity  to  them  to  defend  their cases. The  leases were so terminated on the ground that the Haryana Minerals  limited-a  public  sector  undertaking-had fully equipped  itself to  undertake the  mining operations. The High  Court allowed  the writ  petitions. The  State  of Haryana and  Haryana Minerals Limited appealed to this Court by Special leave against the decision of the High Court.      According to  the appellant, the necessary consultation between the  Central Government and the State Government was held, fulfilling  the conditions under Section 4A of the Act and the decision impugned was taken. The appellant contended that the  writ petitioners-lessees  had no  locus standi  to place their view point and it was not necessary to give them notice, and that there was no violation of the principles of natural justice.      Dismissing the appeals, the Court, ^      HELD: The  language of  Section 4A  indicates that  the Section by  itself does not permaturely terminate any mining lease. A  decision in  this regard  has to  be taken  by the

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Central Government.  The question  of the  State  Government granting a fresh mining lease in favour of a 1016 Government Company  or a  Corporation arises  only after the existing mining  lease is  terminated, the  section does not direct termination  of all  mining  leases  merely  for  the reason that  a  Government  Company  or  a  Corporation  has equipped itself  for the  purpose. It  is not correct to say that an  existing mining  lease can  be terminated  for  the reason that  a Government  Company or a Corporation is ready to undertake  the work.  Viewed thus,  the section  must  be interpreted to  imply that  a person  who may be affected by such a  decision should  be afforded an opportunity to prove that the  proposed step  would not  advance the  interest of mines  and  mineral  development.  Not  to  do  so  will  be violative of  the principles of natural justice. Since there is no  suggestion in  the section  to deny  the right of the affected persons  to be  heard, the  provisions have  to  be interpreted as  implying to  preserve such  a right. A final decision to  prematurely terminate a lease can be taken only after notice to the lessee.[1019C-H;1020E]      The Writ  Petitioners-respondents before the Court were never  given   an  opportunity  to  be  heard.  If  such  an opportunity had  been afforded,  they would  have shown that their standard  of  mining  operations  was  very  high  and favourably measured  against the  expected standard  and was superior to that of the Haryana Minerals Limited. [1021G]      There was  no effective  consultation between the Union of  India   and  the   State  Government,  and  the  Central Government did  not  form  any  opinion  as  required  under Section 4A of the Act. The respondents before the Court were entitled to  be  heard  before  a  decision  to  prematurely terminate their leases was taken but they were not given any opportunity to  place  their  cases.  The  respondents  must succeed. [1022A-B]      Baldev Singh  and others  v. State  of Himachal Pradesh and others,  [1987] 2 SCC 510; Union of India and another v. Cynamide India  Ltd. and  another, AIR  1987 SC  1802; D. C. Saxena v.  State of  Haryana, AIR  1987 SC 1463 and State of Tamil Nadu  v. Hind  Stone, etc., [1981] 2 SCR 742, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeals No.1472-77 of 1987.      From the  Judgment and  Order dated  4.12.1986  of  the Delhi High  Court in  Civil Writ Petition Nos. 2148 of 1986, 2417, 2173, 2174, 2175 and 2166 of 1986. 1017      S.C. Mohanta,  Ravinder Bana  and Mahabir Singh for the Appellant.      A.K. Sen,  P.P. Rao,  Rajinder Sachhar,  K.B.  Rohatgi, S.K. Dhingra,  Praveen Jain,  Shashank Shekhar,  C.M. Nayar, P.N. Duda and Randhir Jain for the Respondents.      The Judgment of the Court was delivered by      SHARMA, J.  The present appeals by the State of Haryana and the  Haryana Minerals  Limited are  directed against the common judgment  of the Delhi High Court disposing of 6 writ applications filed  by different  petitioners  impleaded  as respondent No. 1 herein.      2. Separate  mining leases  were executed  on behalf of the State  of  Haryana  with  respect  to  Silica  sand  and ordinary sand in favour of the writ petitioners for a period

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of 10  years, in accordance with the provisions of the Mines & Minerals (Regulation & Development) Act, 1957, hereinafter referred to  as the  Act. The State of Haryana, in purported exercise of  powers under  Section 4A of the Act prematurely terminated the  leases by  its order dated 1st October, 1986 which is  quoted in  the judgment of the High Court, stating that it was proper to do so as the Haryana Minerals Limited, respondent No.  4 (appellant  No. 2  herein) a public sector undertaking had  informed that  it had fully equipped itself to  undertake   the  mining  operation  and  that  necessary permission in  terms of  the Section  had been obtained from the Central  Government to prematurely terminate the leases. Admittedly no  prior notice  to the  writ petitioners or any opportunity to them to place their case was given.      3. The  lessees contended  before the  High Court  that essential conditions  for  exercises  of  the  powers  under Section 4A  are not  satisfied  in  the  present  cases  and further,  the   impugned  decision   is  violative   of  the principles of natural justice. It was also urged that so far as the  lease in  respect of  ordinary sand which is a minor mineral under  the  Act,  is  concerned,  Section  4A  being excluded by  the provisions of Section 14 is not applicable. It was  also averred  that forcible possession of the mining areas was  taken  even  before  communicating  the  impugned order. The  High Court  agreed with  these  contentions  and allowed the  writ petitions.  The State  of Haryana  and the Haryana  Minerals   Limited,  respondents   No.  2   and  4, respectively, in  the writ  cases were allowed special leave to appeal under Article 136. Hence these appeals. 1018      4. Section  4A as it stood at the relevant time read as follows:                "4A.(1) Where  the Central  Government, after           consultation with  the  State  Government,  is  of           opinion that  it is  expedient in  the interest of           regulation of  mines and mineral development so to           do, it  may request the State Government to make a           premature termination of a mining lease in respect           of any  mineral, other than minor mineral, and, on           receipt of  such  request,  the  State  Government           shall make an order making a premature termination           of such  mining lease  and granting a fresh mining           lease in  favour of  such  Government  company  or           corporation owned  or controlled  by Government as           it may think fit.                (2)  Where   the  State   Government,   after           consultation with  the Central  Government, is  of           opinion that  it is  expedient in  the interest of           regulation of  mines and mineral development so to           do,  it   may,  by   an  order,   make   premature           termination of  a mining  lease in  respect of any           minor mineral  and grant  a fresh lease in respect           of such  mineral  in  favour  of  such  Government           company or  corporation  owned  or  controlled  by           Government as it may think fit."      5. Silica  sand being  a major  mineral is  governed by Sub-section (1)  of Section  4A and  ordinary sand  by  Sub- section (2).  According to the appellant, full and necessary consultation between  the two  Governments i.e.  the Central Government and  the State  Government was  held and  it  was considered expedient  in the interest of regulation of mines and mineral  development  to  take  the  impugned  decision. Reference in  this regard was made by the learned counsel to the report  of the Indian Bureau of Mines referred to in the letters  of  the  Director,  Department  of  Mines,  Central

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Government to  the Chief  Secretary, Government  of Haryana, dated 20th  April, 1985,  8th July, 1985 and 10th July, 1985 and  the   State’s  letters  dated  14th  July,  1986,  17th September, 1986  and  29th  September,  1986.  It  has  been contended that since a decision was jointly taken by the two Governments to  grant mining lease of the entire area to the Haryana Minerals  Limited,  this  by  itself  fulfilled  the necessary conditions  under  Section  4A  and  as  the  writ petitioners-lessees had no locus standi to place their point of view with respect to this aspect, it was not necessary to give  them   a  notice.   The  argument   is  that   in  the circumstances  there   is  no   question  of   violation  of principles of  natural justice. It was also claimed that the State was  the final  authority to  take  a  decision  under Section 4A with respect to both major and minor minerals. 1019      6. Mr.  B. Datta,  Additional Solicitor General, stated on behalf  of the  Union of India, respondent No. 2 that the respondent is  ready to  reconsider the matter after hearing the parties concerned. He refuted the claim of the appellant that the  State is the ultimate authority to take a decision under Section  4A with  respect to  major  minerals  and  he appears to  be right. Sub-section (1) which deals with major minerals empowers  the Central  Government to  consider  the matter  and,   after  having  consultation  with  the  State Government, to  take a  decision in  this regard and once it does so  and makes  a request  to the  State Government  for prematurely terminating  a lease, the State Government shall be under  an obligation  to act.  The use of "shall" in this context indicates the binding nature of the request.      7. The  language of  Section 4A  clearly indicates that the Section  by itself  does not  prematurely terminate  any mining lease.  A decision  in this regard has to be taken by the Central  Government after  considering the circumstances of each  case  separately.  For  exercise  of  power  it  is necessary that  the essential condition mentioned therein is fulfilled, namely,  that the proposed action would be in the interest of regulation of mines and mineral development. The question of  the State  Government granting  a fresh  mining lease in  favour of  a Government  Company or  a Corporation arises only  after a  decision  to  terminate  the  existing mining lease  is arrived at and given effect to. The Section does not direct termination of all mining leases, merely for the reason  that a  Government Company  or  Corporation  has equipped itself  for the  purpose. The  Section was  enacted with a  view to  improve the  efficiency in  this regard and with this  view  directs  consulation  between  the  Central Government and  the State  Government to  be held.  The  two Governments have  to consider  whether premature termination of a  particulare mining  lease shall  advance the object or not,  and   must,   therefore,   take   into   account   all considerations relevant  to the issue, with reference to the lease in question. It is not correct to say that an existing mining lease  can be terminated merely for the reason that a Government Company  or Corporation is ready to undertake the work.      8. Considered  in  this  light,  the  Section  must  be interpreted to  imply that the person who may be affected by such a  decision should  be afforded an opportunity to prove that the  proposed step  would not  advance the  interest of mines  and  mineral  development.  Not  to  do  so  will  be violative of  the principles of natural justice. Since there is no  suggestion in  the Section  to deny  the right of the affected persons  to be  heard, the  provisions have  to  be interpreted as  implying to preserve such a right. Reference

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may be made to the observations of this Court 1020 in Baldev  Singh and others v. State of Himachal Pradesh and others, [1987]  2 SCC  510, that  where exercise  of a power results  in  civil  consequences  to  citizens,  unless  the statute specifically out the application of natural justice, such rules  would apply.  The  cases,  Union  of  India  and another v.  Cynamide India  Ltd. and  another, AIR  1987  SC 1802; D.C.  Saxena v.  State of  Haryana, AIR  1987 1463 and State of  Tamil Nadu  v. Hind  Stone etc., [1981] 2 SCR 742, relied upon  by Mr.  Mohanta do  not help the appellant. The learned counsel  placed  reliance  on  the  observations  in paragraphs 5  to 7  of the  judgment in  Union of  India  v. Cynamide Ltd. which were made in connection with legislative activity which  is not  subject to  the rule of audi alteram partem.  The   principles  of   natural  justice   have   no application to  legislative activities,  but that is not the position here.  It has already been pointed out earlier that the existing  mining leases  were not  brought to  their and directly by  Section 4A itself. They had to be terminated by the  exercise  of  the  executive  authority  of  the  State Government. Somewhat  similar was  the situation with regard to Section 4A of Haryana Board of School Education Act, 1969 which was  under Consideration  in D.  C. Saxena v. State of Haryana, AIR  1987 SC  1463. A  matter of policy was adopted and included  by the  legislature in  the impugned  section. Besides, the validity of the Section was not under challenge there, as  was  expressly  stated  in  paragraph  6  of  the judgment. So  far as  the case,  State of Tamil Nadu v. Hind Stone is  concerned, the  learned counsel  for the appellant cited it only with a view to emphasise the importance of the mineral wealth  of  the  nation  which  nobody  denies.  We, therefore,  held   that  a  final  decision  to  prematurely terminate a  lease can  be taken  only after  notice to  the leassee.      9. Coming  to the  facts of the present case it will be observed that  the question of terminating the mining leases in question  before us  was introduced  for the  first  time under the  letter dated  14.7.1986 (page 80) of the State of Haryana. The earlier letter dated 20.4.1985 and 8.7.1985, of the Department  of Mines,  Union of  India sent to the State Government discussed  the general question about the desired improvement in  the mining  field and referred to the report of the  Indian Bureau  of Mines  on silica  sand  mining  in Haryana. The  report  had  highlighted  various  aspects  of silica sand  mining in  the State  and made several positive suggestions. It  was stated  in the letter dated 20th April, 1985  that   if  the   lessees  did   not  comply  with  the requirements mentioned  therein, their leases "deserve to be terminated in  accordance  with  the  procedure  established under law."  In the  letter dated  8th July,  1985,  further emphasis was  laid on  ensuring scientific mining of optimum utilisation  of   natural  resources,   ensuring  safety  in operation 1021 and ensuring  payment of  fair wages to the mine workers. In this letter the desirability of entrusting mining operations to the  public sector  was mentioned  but it was also stated that the representatives of the Government of Haryana had in the earlier  meetings expressed  their inability  to entrust the Haryana  Minerals Ltd.  (appellant No. 2 before us) with the mining  operations  in  the  entire  State  immediately. Additional terms  and conditions  were also  suggested to be imposed in  the future mining leases to be granted in favour of private  parties. Later  on, it  appears that the Haryana

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Minerals  Ltd.   became  ready   to  take  over  the  mining operations and  intimated its  preparedness by  letter dated 10.7.1986 and  thereupon  the  State  of  Haryana  wrote  on 14.7.1986 to  the Union  of India that it was appropriate to prematurely terminate  the 6  leases mentioned in the letter of the  date. It  will be significant to note that the State Government did  not take  a decision  to terminate  all  the mining leases;  on the  countrary, fresh  mining  leases  in favour of  private individuals  were in contemplation of the State  authorities,   as  indicated  by  the  aforementioned letters and  by Annexure P-5 (page 273) to the Writ Petition of Ram  Kishan in  the High  Court. The State’s letter dated the 14th  July, 1986  was followed  by another  letter dated 5.9.1986 and  in reply  to it,  the Central Government asked for a  report on  several specific points mentioned in their letter which  is at  page 85  of the paper-book. In place of sending the  required information,  the State Government, in its letter  dated 17.9.1986,  took the  erroneous stand that the information  sought for  was not  relevant.  Instead  of pointing  out   that  the   information  demanded  was  very pertinent in  the context of the proposed termination of the mining lease,  the Central  Government by  its letter  dated 26th November, 1986 agreed to the proposal, but took care to advice  that   while  taking   any  action   for   premature termination of  the leases the authority should "ensure that the provisions  of Section 4A of the Act are complied with". As has  been mentioned  earlier, the Union of India does not deny the  right of  hearing to  the affected  lessees and is ready, even now, to give an opportunity to them. Admittedly, the writ  petitioners who  are respondents  before  us  were never given  any such  opportunity and  according  to  their assertion if  such an  opportunity had  been afforded,  they would have shown that the standard of their mining operation was very  high and  favourably measured against the expected standard suggested  in the  report of  the Indian  Bureau of Mines and mentioned in the letter of the Mines Department of the Central  Government and  that it was definitely superior to that of Haryana Minerals Limited.      10. On  a consideration  of the facts and circumstances of the 1022 present case,  we are  of the  opinion  that  there  was  no effective consultation  between the  Union of  India and the State Government,  and the  Central Government  did not form any opinion  as required under Section 4A of the Act. We are further of the view that the lessees, the respondents before us,  were   entitled  to  be  heard  before  a  decision  to prematurely terminate  their leases  was taken but they were not given any opportunity to place their case.      11. Mr.  Sen, the  learned counsel for the respondents, very fairly  stated that  he could not support the plea that leases in  respect of  minor minerals  are  saved  from  the application of  Section 4A  altogether by  reason of Section 14. This  Court in State of Tamil Nadu v. Hind Stone, [1981] 2 SCR  742 (at pages 746H and 747A) pointed out that perhaps since  Section  4A(1)  is  inapplicable  to  minor  minerals because of  the provisions  of Section 14, Section 4A(2) has been specially enacted making somewhat similar provision. It must, therefore,  be held  that leases  in respect  of minor minerals also  can be  prematurely terminated in appropriate cases.  However,   in  view   of  our  earlier  finding  the respondents  must  succeed.  We  accordingly  dismiss  these appeals with costs. S.L.                                 Appeals dismissed. 1023

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