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PETITIONER: AMRITLAL NATHUBHAI SHAH AND OTHERS

       Vs.

RESPONDENT: UNION GOVERNMENT OF INDIA AND ANOTHER

DATE OF JUDGMENT24/08/1976

BENCH: SHINGAL, P.N. BENCH: SHINGAL, P.N. RAY, A.N. (CJ) UNTWALIA, N.L.

CITATION:  1976 AIR 2591            1977 SCR  (1) 372  1976 SCC  (4) 108  CITATOR INFO :  D          1991 SC 818  (21)

ACT:             Mines  and  Minerals (Regulation and  Development)  Act,         1957--State  Government reserved certain areas for exploita-         tion  of minerals in public  sector--if had the power to  do         so--State  Government---If could reject application of  pri-         vate persons.

HEADNOTE:             The appellants’ applications for grant of mining  leases         were rejected by the State Government on the ground that the         areas for exploitation of which they had . applied, had been         reserved  for  exploitation in  the   public   sector.   The         Central  Government  dismissed  the  revision   applications         pointing  out  that since the minerals vested in  the  State         Government  it had inherent right to reserve any  particular         area for exploitation in the public sector.             In  writ petitions challenging the orders of  the  State         Government   the appellants contended before the High  Court         that  the State Government had no authority to  reserve  any         area  for exploitation of minerals in the public sector  and         its  action  had  no support under the  Mines  and  Minerals         (Regulation  and   Development) Act, 1957.  The  High  Court         dismissed the petitions.         Dismissing the appeals,             HELD: The State Government was well within its rights in         rejecting  the applications of the appellants under r.60  as         premature  and  the  Central  Government  was  justified  in         rejecting the revision applications. [376 B]             (i) ,The 1957-Act declared that it. was expedient in the         public interest that the Union should take under its control         the  regulation  of mines and the development  of  minerals.         The State Legislature’s power under Entry 23 of List II  was         thus  taken  away .so that regulation of mines  and  mineral         development  had to be  in accordance with the Act  and  the         Rules. [374 C]             (ii)  The State Government is the owner of the  minerals         within  its  territory, and the minerals vest in it, and  no         person  has  any  right to exploit them  otherwise  than  in         accordance  with  the provisions of the Act and  the  Rules.

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       [374- D]             (iii)  There is nothing in the Act or the Rules  to  re-         quire  that the restrictions imposed by the Rules  would  be         applicable  even if the  State  Government itself wanted  to         exploit  the  minerals.  There is no reason  why  the  State         Government  could  not reserve any land for itself  for  any         purpose  and such reserved land would then not be  available         for the grant of prospecting licence or a mining lease. [374         H]             (iv) The State Government’s power under s. 10 of the Act         to  entertain applications includes the power to  refuse  to         grant  a licence or a lease on the ground that land was  not         available  for such grant by reason of its having  been  re-         served by the State Government for any purposes. [375 B]             (v)  The authority to order reservation flows  from  the         fact that the State is the owner of the mines and the miner-         als  within  its territory.  Rule 59   clearly  contemplates         reservation by an order of the State Government. [375 E]             (vi)  Under rr. 58, 59 and 60 it is not permissible  for         any  person to apply for a licence or lease in respect of  a         reserved  area  until after it becomes  available  for  such         grant and the availability is notified by the State  Govern-         ment.   The  State Government in the present  case  reserved         the  areas for the purpose stated in  the notifications  and         as these lands did not become available again for grant of a         prospecting  licence or a mining lease, it was  well  within         its  rights in rejecting the applications of the  appellants         under r. 60 as premature. [375 H; 376 A]             State   of  Orissa (1) v. Union of  India,  A.I.R.  1972         Orissa  68  and M/s. S. Lal and Co. Ltd. v.  TIre  Union  of         India and others A.I.R. 1975 Patna 44 held inapplicable.         373

JUDGMENT:         CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1554-64/72.             (From  the  Judgment and Order dated  4-5-1972  of   the         Gujarat  High Court in Special Civil Appln. Nos.  1018   and         1045-1054/68 respectively).             A.K.  Sen, Bishamber Lal Khanna and E.C.  Aggrawala  for         the Appellants.             L.N. Sinha, Sol. Genl. of India and Mr. Girish  Chandra,         for’ the Respondents.         The Judgment of the Court was delivered by             SHINGHAL J.,---These appeals by certificate are directed         against a common judgment of the High Court of Gujarat dated         May  4, 1972. We have heard them together and  will  dispose         them of by a common judgment.  The facts giving rise to  the         appeals are similar in essential respects and may be shortly         stated.                      There are large deposits of bauxite in  Gujarat                  State.  The State Government issued a  notification                  on  December 31,1963, intimating that the lands  in                  all the talukas of Kutch district and  in Kalyanpur                  taIuka  of Jamnagar district had been reserved  for                  exploitation  of bauxite in the public  sector.   A                  similar  notification  was issued on  February  26,                  1964,  in  respect  of all areas  of  Jamnagar  and                  Junagarh  districts. Even so, the  appellants  made                  applications to. the State  Government for grant of                  mining  leases for bauxite in the ’reserved  areas.                  There  were no other applications to  that  effect,                  but  the  State  Government rejected  the  applica-                  tions of the appellants on the ground that, as  had

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                been  notified, it had reserved the areas  for  the                  public  sector.  The appellants felt aggrieved  and                  applied to the Central Government flor revision  of                  the State Government’s orders.  The revision appli-                  cations were dismissed after obtaining the comments                  of the State Government and the orders of rejection                  were upheld.  In doing so,  the Central  Government                  referred to the fact that the minerals "vested"  in                  the State Government which was "owner of  minerals"                  and  that  the State Government had  the  "inherent                  right" to reserve any particular area  for  exploi-                  tation  in the public sector.  It also pointed  out                  that  once  a notification had been issued  by  the                  State Government for the reservation of any partic-                  ular  area, no party could, as of right, claim  any                  mineral  concession  in the reserved  area.   While                  making its orders of rejection, the Central Govern-                  ment  explained the circumstances in which  mineral                  leases  were  granted  to   Carborundum   Universal                  Limited  and the Gujarat Mineral Development Corpo-                  ration.  The appellants felt aggrieved,  and  chal-                  lenged  the orders of the State Government and  the                  Central Government by writ petitions to the Gujarat                  High  Court.  It  was urged that the State  Govern-                  ment  had no authority to reserve any area of  land                  for  exploitation of bauxite in the public  sector,                  and that the refusal to grant mining leases to  the                  appellants  was based on a ground which  was  alto-                  gether  extraneous and irrelevant and could not  be                  supported with reference to the Mines and  Minerals                  (Regulation and Development) Act, 1957. hereinafter                  referred to as the Act, and the rules made thereun-                  der.  It appears that although the writ  petitions         374         were based on that short ground, the Controversy in the High         Court  ranged over a wider field including that relating  to         the scope of the executive power of the State Government  in         respect of the impugned reservations.  The High Court there-         fore  examined  the  controversy with reference to  articles         162 and 298 of the Constitution, and the relevant entries in         the Lists in the Seventh Schedule, but we are not  concerned         with  that aspect of the matter as the arguments  before  us         have  been confined to the provisions of the Act and to  the         Mineral  Concession Rules, 1960, hereinafter referred to  as         the Rules, made thereunder.             It  may be mentioned that in pursuance of its  exclusive         power to make laws with respect to the matters enumerated in         entry  54  of  List I in the  Seventh  Schedule,  Parliament         specifically  declared in section 2 of the Act that  it  was         expedient in the public interest that the Union should  take         under  its control the regulation of mines and the  develop-         ment  of  minerals to the extent provided in the  Act.   The         State Legislature’s power under entry 23 of List II was thus         taken away, and it is not disputed before us that regulation         of  mines  and mineral development had therefore  to  be  in         accordance  with  the Act and the Rules. The mines  and  the         minerals in question (bauxite) were however in  the territo-         ry of the State of Gujarat and, as was stated in the  orders         which were passed by the Central Government on the  revision         applications of the appellants, the State Government is  the         "owner of  minerals" within its territory, and the  minerals         "vest"  in it.  There is nothing in the Act or the Rules  to         detract  from  this  basic fact. That was  why  the  Central         Government stated further in its revisional orders that  the         State  Government  had the "inherent right  to  reserve  any

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       particular area for exploitation in the public sector".   It         is therefore quite clear that, in the absence of any law  or         contract  etc. to  the  contrary, bauxite, as a mineral, and         the  mines  thereof, vest  in  the State of Gujarat  and  no         person has any right to exploit it otherwise than in accord-         ance with the provisions of the Act and the Rules.   Section         10 of the Act and Chapters II, III and IV of the Rules, deal         with the grant of prospecting licences and mining leases  in         the  land in which the minerals vest in the Government of  a         State.  That was why  the appellants made their applications         to the State Government.             Section  4  of  the Act provides that  no  person  shall         undertake any prospecting or mining operations in any  area,         except  under  and  in accordance with the terms and  condi-         tions  of  a prospecting licence or, as the case may  be,  a         mining  lease,  granted  under the Act and  the  rules  made         thereunder,  and  that no such licence or  lease  shall   be         granted "otherwise than in accordance with the provisions of         the  Act and the rules." But there is nothing in the Act  or         the Rules to require that the restrictions imposed by  Chap-         ters II, III or IV of the Rules would be applicable even  if         the State Government itself wanted to exploit a mineral for,         as has been stated, it was its own property. There is there-         fore no reason why the State Government could not, if it  so         desired, "reserve" any land for itself, for any purpose, and         such reserved land would then not be available for the grant         of a prospecting licence or a mining lease to any person.         375              Section 10 of the Act in fact provides that in  respect         of  minerals which vest in the State, it is exclusively  for         the State Government to entertain applications for the grant         of  prospecting  licences or mining leases and to  grant  or         refuse the same.  The section is therefore indicative of the         power of the State Government to take a decision, one way or         the  other,  in such matters, and it does not  require  much         argument  to hold that  power included the power  to  refuse         the  grant  of a licence or a lease on the ground  that  the         land .in question was not available for such grant by reason         of its having been reserved by the State Government for  any         purpose.             We have gone through sub-sections (2) and (4) of section         17 of the Act to which our attention has been invited by Mr.         Sen  on behalf of the appellants for the argument that  they         are the only provisions for specifying the boundaries of the         reserved areas, and as they relate to prospecting or  mining         operations to be undertaken by the Central Government,  they         are  enough  to show that the Act does  not  contemplate  or         provide for reservation by any other authority  or  for  any         other  purpose.  The argument is however  untenable  because         the  aforesaid sub-sections of section 17 do not  cover  the         entire  field of the authority of refusing to grant a  pros-         pecting  licence or a mining lease to any one else,  and  do         not  deal with the State Government’s authority  to  reserve         any  area for itself.  As has been stated, the authority  to         order  reservation . flows from the fact that the  State  is         the owner of the mines and the minerals within its  territo-         ry,  which vest in it.  But quite apart from that,  we  find         that  rule 59 of the Rules, which have been made under  sec-         tions  13 of the Act, clearly contemplates such  reservation         by  an order of the State Government.  That rule deals  with         the  availability of areas  for the grant of  a  prospecting         licence  or  a mining lease in such cases, and  provides  as         follows:                        "59. Availability of certain areas for  grant                  to  be notified --In the case of any land which  is

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                otherwise available for the grant of a  prospecting                  licence  or a mining lease but in respect of  which                  the  State Government has refused to grant a  pros-                  pecting  licence  or a mining lease on  the  ground                  that  the land should be reserved for any  purpose,                  the  State Government shall, as soon as  such  land                  becomes  again available for the grant of  a  pros-                  pecting or mining lease, grant the licence or lease                  after  following  the procedure laid down  in  rule                  58."             Mr. Sen has conceded that it is a valid rule.  It clear-         ly contemplates reservation of land for any purpose, by  the         State  Government, and its consequent  non-availability  for         the  grant of a prospecting licence or mining  lease  during         the  period it remains under reservation by an order of  the         State Government.  A reading of rules 58, 59 and 60 makes it         quite  clear  that it is not permissible for any  person  to         apply  for a licence or lease in respect of a reserved  area         until  after  it becomes available for such grant,  and  the         availability  is  notified by the State  Government  in  the         Official Gazette.  Rule 60 provides that an application  for         the  grant  of a prospecting, licence or a mining  lease  in         respect  of an area for which no such notification has  been         issued, inter alia, 8--1104SCI/76         376         under rule 59, for making the area available for grant of  a         licence  or a lease, would be premature, and "shall  not  be         entertained and the fee. if any, paid in respect of any such         application  shah  be refunded." It would  therefore  follow         that  as  the  areas which are the  subject  matter  of  the         present  appeals had been reserved by the  State  Government         for  the purpose stated in its notifications, and  as  those         lands  did  not become available again for the  grant  of  a         prospecting licence or a mining lease, the State  Government         was well within its rights in rejecting the applications  of         the  appellants  under rule 60 as  premature.   The  Central         Government  was  thus justified in  rejecting  the  revision         applications  which were filed against the orders of  rejec-         tion passed by the State Government.             We have gone through the decisions in State of Orissa V.         Union’ of India(1) and M/s S. Lal and Co. Ltd. v. The  Union         of India and others(2), on which reliance has been placed by         Mr.  Sen.  In the former case the High Court of Orissa  took         the  view  that reservation of a particular area  for  being         exploited  in the public sector  by the State could  not  be         said  to be a purpose for which it could be  reserved  under         rule  59.   In taking that view the High Court went  by  the         consideration that the subject of the legislation in the Act         became an "exclusive subject for legislation by  Parliament"         and  there was no residuary power of working out  mines  and         minerals without observing the conditions prescribed by  the         Act  and the Rules.  The High Court therefore went wrong  in         not appreciating that even ,though ’the field of legislation         had  been  covered by the declaration of the  Parliament  in         section  2 of the Act, that could not justify the  inference         that  the  State_ Government thereby lost its right  to  the         minerals which vested in it as a property within its  terri-         tory.  The High Court has also erred in taking the view that         the  State was required to obtain a licence or a lease  even         though  it  was itself the owner of the land and  there  was         nothing in the Act or the Rules to show that the  provisions         for  the  obtaining  of a licence or lease  would  still  be         applicable to it.             In  S.  Lai and Co. Ltd. v. Union of  India  and  others         (supra)  the  High Court noticed the decision  in  State  of

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       Orissa v. Union of India (supra) but it cannot be urged with         any justification that the view expressed in it was followed         by  the Patna High Court. On the other hand the  Patna  High         Court followed the view which was taken by the Gujarat  High         Court  in  the judgment which is the subject matter  of  the         present appeals and held that the State Government has the,,         power "to reserve certain areas. for exploitation by itself.         or  by a statutory corporation or for a company in a  public         sector." The controversy in that case was. however, examined         with  reference  to  the provisions of article  298  of  the         Constitution.  The two cases cited by Mr. Sen cannot thus be         of any avail to the appellants.             For  the, foregoing reasons there is no merit  in  these         appeals and they are dismissed with costs.         P.B.R.                                               Appeals         dismissed         (1) A.I.R 1972 Orissa 68.         (2) A.I R. 1975 Patna 44.         377