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PETITIONER: INDIAN METALS AND FERRO ALLOYS LTD.

       Vs.

RESPONDENT: UNION OF INDIA AND ORS.

DATE OF JUDGMENT21/09/1990

BENCH: RANGNATHAN, S. BENCH: RANGNATHAN, S. FATHIMA BEEVI, M. (J)

CITATION:  1991 AIR  818            1990 SCR  Supl. (2)  27  1992 SCC  Supl.  (1)  91 JT 1991 (5)   236  1990 SCALE  (2)634

ACT:     Mines  and  Minerals (Development and  Regulation)  Act, 1957--Sections  3(f),  5A, 10, 11, 17A &  First  and  Second Schedules--’Minor  Mineral’--Chrome  ore--Grant  of   mining lease--Reservation  in favour of    Public Sector  Undertak- ings--Whether    obligatory--Consideration    of    applica- tions--Directions issued to Government--Appropriate statuto- ry amendments suggested.

HEADNOTE:     In  these matters, the petitioners viz., four  companies in the private sector, two public sector corporations  owned substantially by a State Government, and a private individu- al  sought clarifications and directions in relation to  the orders  passed by this Hon’ble Court on 30.4.87 and  6.10.87 on  the  Writ  Petition. All these petitions  arose  out  of applications for grant of right for the mining of chrome ore or chromite in the State of Orissa. Since chrome ore is  one of the minerals specified in the first and second  schedules to, and not a ’minor mineral’ within the meaning of  Section 3(f) of the Mines and Minerals (Development and  Regulation) Act, 1957, the right to grant the mining right in respect of this  mineral is vested in the State Government  subject  to the control by Union of India, and as such they are respond- ents in these matters.     While disposing of the matters, this Court referred  the entire  controversy to the Secretary to Government of  India in  the  Ministry of Mines, viz., Mr. Rao,  for  a  detailed consideration of the claims made by the parties.     Before Mr. Rao, the two public sector undertakings  also put forward their claims that the public sector units in the State  were  entitled to the grant of mining rights  in  the State to the exclusion of all private parties in as much  as there  was a reservation in their favour by  an  appropriate notification  issued  by  the State  Government.  The  other parties raised objection on the ground that the claims  were made at a belated stage of the proceedings. On  applications made by the Public Sector Undertakings, this Court  directed that their claims would also be examined by Rao. 28     In  his report dated 1.2.1988 Rao accepted the claim  of

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reservation  made  by the two  Public  Sector  Undertakings, viz., Orissa Mining Corporation (OMC) and Industrial  Devel- opment Corporation of Orissa Ltd. (IDCOL). He also partially accepted  the  claims of the three  private  parties.  viz., Indian Metals and Ferro-Alloys Limited (IMFA); Ferro  Alloys Corporation  Limited  (FACOR); and Aikath and  rejected  the claims of the other two private parties viz., Orissa Cements Ltd.  (OCL)  and Orissa Industries Ltd. (ORIND).  Though  he accepted the claim of the two public sector undertakings, he recommended  for them leases in respect of only the  balance of the lands left, after fulfilling the claim of the  others which he had accepted.     The  present petitions biter alia sought  directions  on the  report  of Rao. It was contended that Rao  was  nothing more than a Commissioner appointed by this Court to  examine the various parties and hence this Court should pass  appro- priate  orders on his report. Various contentions  were  ad- vanced by the petitioners as well as respondents as  regards the  legal character of the Rao Report and of giving  effect to  it either in toto or with modifications in  certain  re- spects. Reservation in favour of Public Sector  Undertakings was  challenged by the private parties. Plea  of  Promissory Estoppel was also raised on behalf of some of the  petition- ers. Disposing of the matters, this Court,     HELD:  1. The statute must lay down  clearer  guidelines and  procedure.  Having regard to the new avenues  for  vast industrial  development  in  the country,  a  more  workable procedure  would  be for the State Government  to  call  for applications in respect of specified blocks by a  particular date  and deal with them together, other later entrants  not being permitted in the field. Otherwise only confusion  will result, as here. There was a time when the State  Government looked to private enterprises for mineral development in its territory.  Of late, however, competition has crept in.  The State Government has its own public sector corporations  and various enterpreneurs are interested in having mining leases for  their  purposes.  It is, therefore,  vital  that  there should be a better and detailed analysis, district-wise  and area-wise and that a schedule for consideration of  applica- tions  in respect of define areas should be drawn up with  a strict time frame so that the State is no longer constrained to  deal with sporadic applications or make a routine  grant of  leases in order of priority of applications.  These  are aspects which call for careful consideration and appropriate amendments to the Mines and Minerals (Development and  Regu- lation) Act, 1957 and the Rules made thereunder. [72D-G] 29     2.  Chromite ore is an important major mineral  and  the importance  of its conservation and proper  utilisation  for our  country’s  development cannot be  gainsaid.  The  State Government  rightly decided upon a policy of reservation  in 1967  and this was kept up till 1974. In February  1974  the State  Government  was  in favour of free  issue  of  mining leases  but gave up this policy in pursuance of the  Central Government’s letter of 15.5.74. Reservation was,  therefore, clamped  in 1977 again. Applications could still be  consid- ered  to  see how far a relaxation  was  permissible  having regard  to the nature of the applicant’s needs, the  purpose for  which  the lease was asked for, the nature of  the  ore sought to be exploited, the relative needs of the State, the availability of a public undertaking to carry out the mining more efficiently and other relevant considerations. There is no  material  on record to substantiate the  plea  that  the State Government has been acting arbitrarily or mala fide in

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its policy formulations in this regard. [82C-E] Venkataraman v. Union, [1979] 2 SCR 202, referred to.     3. Rao’s decision, that the leases that have been grant- ed already in favour of IMFA, FACOR be confirmed, should  be upheld.  These  should  be treated  as  leases  legitimately granted  to  them in exercise of the  powers  of  relaxation under  rule 59(2). It is true that the orders  granting  the leases  do not elaborately record the reasons but they  were passed  in  the context of this litigation and  have  to  be considered in the light of the affidavits and counter  affi- davits filed herein. Rao’s decision regarding the grant of a lease to AIKATH (not yet implemented) should also be upheld. In these three cases, the records disclose sufficiently  the reasons  on the basis of which the leases have been  decided upon and are adequate to justify the mining leases  actually granted. ]89B-D]     4.  The claims of OCL and ORIND have been rejected  sum- marily by Rao without an advertence to the various consider- ation  urged by them. This part of Rao’s decision has to  be set  aside as being too cryptic and unsustainable.  Pursuant to  this  conclusion, it is directed that  these  claims  be considered  afresh  by the Central Government. It  would  be more expedient if the claims of OCL and ORIND are  restored, for  detailed  consideration in all their  several  aspects, before the State Government, as the State Government has had no  opportunity to consider the various aspects pointed  out and  as this course will also provide an opportunity to  the claimants  to  approach  the Central  Government  again,  if dissatisfied with the State Government’s decision to consid- er whether, despite the reservation, some relaxation can  be made also in 30 Favour  of these two companies- The State Government has  to take into account various factors and aspects before  grant- ing  a mining lease to an individual concern carving out  an exception  to  its reservation policy. It has done  this  in respect  of IMFA and FACOR for certain special  reasons  re- corded  by it. Whether it would do so also in favour of  OCL and ORIND is for the State to consider. It would be  noticed that  the applications of these two companies have not  been considered  in this light earlier- The applications  of  OCL and  ORIND are restored for the consideration of  the  State Government. [94B-G]     5.  The State Government has rejected  ORIND’s  applica- tion, inter alia, on the ground that, in view of the penden- cy  of the Writ Petition before this Court, it could not  at that  stage  pass any order on the  application.  It  would, therefore,  be open to ORIND to ask the State Government  to reconsider  the  application  in the light  of  the  present order. There is no necessity for insisting on such a  formal request  and therefore, the State Government is directed  to consider  ORIND’s  application afresh in the light  of  this judgment. [95A-B]      6.  So  far  as OMC and IDCOL are  concerned,  Rao  has recomamended  that the areas left after the grants  to  IMFA and  FACOR, be given on lease to OMC. There were huge  areas of  mineral bearing lands which have been reserved  for  the public  sector.  Its  interests do not clash  or  come  into conflict  with  those of private applicants which  can  only claim a right to the extent the State Government is  willing to relax the rule of reservation. This Court does not  think OMC  or  IDCOL have any voice in requiring  that  the  State Government  should keep certain extent of land reserved  and should  not grant any mining lease at all in favour  of  any private party. The interests of these corporations are  safe

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in  the hands of the State Government and the allocation  of mining leases to these organisations is a matter of  discre- tion with the State Government strictly speaking, therefore, no question of any application by them for mining lease need arise at all. But, when made, their applications are consid- ered by the State Government and, on revision by the Central Government as a matter of form. To this extent, they have  a statutory remedy. [95C-El 7.  When the State Government agreed to lease out the  areas to  MFA and FACOR it was pointed out that this could not  be given  effect to without the Central Government’s  approval. This  Court  thereupon directed that  the  State  Government should  seek  such approval. The direction  to  the  Central Government is only that its approval should be given  within the particular time limit set out therein- It cannot be 31 construed, reasonably, as a direction compelling the Central Government  to  grant approval whether it  agreed  with  the State Government’s decision or not. Thus the grant of mining leases  to IMFA and FACOR are to be treated as  having  been made  in  exercise  of the power of  relaxation  under  Rule 59(2).  Though there is no specific recording of reasons  by the State Government or Central Government inasmuch as these leases came to be granted by way of compromise, it is a fair inference  that  the compromise proposals were  prompted  by the,  at least partial, acceptance of the claim put  forward by these parties. Since the grant of leases to these parties can be attributed to the relaxation of the reservation  rule in  particular cases, the finding of Rao that  these  leases may be confirmed deserves acceptance. [90C-F]     8.1  AIKATH is admittedly an individual  who  discovered chromite  ore in the State. He had secured a lease as  early as in 1952 though that lease was annulled by the State  when it  took over. Again, as against a lease of 640 acres  which he  had once obtained and started operating upon, the  State Government  has  finally approved of a lease in  respect  of only 140 acres. AIKATH had been actually working some  mines from 1.5.53. His original grant had been approved before the areas  was reserved on 3.7.62. If the State Government  con- siders these to be weighty considerations and entered into a compromise  with him for a lease of 140 acres and  this  has also  been recorded by the High Court, these are no  grounds to  interfere  with that decision of the  State  Government. [89D-F]     8.2  Though the State Government and AIKATH had  entered into  a compromise as early as 4.12.1984, no lease  has  yet been granted in his favour perhaps as the Central Government has had no occasion to consider the matter earlier. However, no  useful purpose would be served by remitting  the  matter and asking the State Government to seek the formal  approval of  the  Central Government therefore. The decision  of  Rao itself  can be taken as containing the approval of the  Cen- tral Government in this regard and is thus upheld. The State Government  is’ directed to execute, at as early a  date  as possible,  a mining lease in Favour of AIKATH in respect  of the  140 acres agreed to be leased to him under the  compro- mise dated 4.12.1984. [90G-H; 91A]     9.  Although Rao has approved the grants made in  favour of  IMFA  and FACOR by the State Government (which,  he  re- marks,  were perhaps based on the observations made by  this Court),  he  has clearly reached his  conclusions  on  these independently. In fact, he has set out a basis for  justify- ing the grants of IMFA and FACOR. It is also clear that 32 there  were no Court orders that could have  influenced  his

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decisions on the claims of the other parties. [87F-G]     10.1  In  the context of the scheme of the Act  and  the importance  of a lease being granted to one or more  of  the better  qualified  candidates where there are  a  number  of them,  it  would not be correct to say that,  as  the  State Government’s order of 29.10.1973 has been set aside, ORIND’s application  should be restored for reconsideration  on  the basis  of the situation that prevailed as on 29.10.1973  and that, therefore, it has to be straightaway granted as  there was  no  other application pending on that date  before  the State Government. In matters ,like this, subsequent applica- tions cannot be ignored and a rule of thumb applied. [74C-E]     10.2  Though S. 11 tries to enunciate a  simple  general principle of "first come, first served", in practice, prior- ity of an application in point of time does not conclude the issue. In this case itself, for instance, during the  period ORIND’s  application  of 1971 has been  under  consideration before various authorities and in the writ petition filed in the High Court, several other competitors have come into the picture. The statutory provision is not clear as to which of the  applications in respect of any particular area, are  to be considered together. If ORIND’s application of 1971  were to  be considered only on the basis of the persons  who  had made  applications  at that time or a short time  before  or after,  one result would follow; if, on the other hand,  all the  applications pending for disposal at the  time  ORIND’s application  is to be granted or rejected are to be  consid- ered,  the  result  would be totally  different.  Since  the interest  of  the nation require that no  lease  for  mining rights should be granted without all applicants therefore at any  point of time being considered and the best among  them chosen  or  the area distributed among such of them  as  are most efficient and capable, the latter is the only  reasona- ble and practical procedure. That is why this Court, in  its order dated 30.4.87, laid down that all applications pending for consideration as on 30.4.87 should be considered by Rao. [71G-H; 72A-B]     Ferro  Alloys  Corporation of India v. Union,  ILR  1977 Delhi 189 and Mysore Cements Ltd. v. Union, AIR 1972  Mysore 149, distinguished.     11.1  Previously, rule 58 did not enable the State  Gov- ernment to reserve any area in the State for exploitation in the  public  sector. The existence and validity  of  such  a power  of reservation was upheld by this Court. Rule 58  has been  amended  in 1980 to confer such a power on  the  State Government. It is also not in dispute that a notification of reservation  was made on 3.8.77. The State  Government,  OMC and IDCOL are, 33 therefore, right in contending that, ex facie, the areas  in question  are  not available for grant to any  person  other than  the  State Government or a public  sector  corporation unless  the availability for grant is renotified in  accord- ance  with  law  (rule 59(1)(e) or  the  Central  Government decides to relax the provisions of rule 59(1). [79D-F]     Amritlal  Nathubhai Shah and Ors. v. Union of India  and Anr. [1977] 1 SCR 372, relied on.     Kotiah  Naidu  v.  State of A.P., AIR 1959  AP  185  and Amritlal  Nathubhai  Shah v. Union, AIR  1973  Gujarat  117, referred to.     11.2  In  the present matters, except for two  or  three instances.  where  leases  have been granted  by  the  State Government  on its own, the State Government  has  generally and  consistently  adhered to its stand  that  the  chromite bearing  lands are reserved for exploitation in  the  public

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sector. The rules permit the Central Government to relax the rigid requirements of reservation in individual cases  after recording  special  reasons. Such exceptional  and  isolated instances of lease are not sufficient to sustain the plea of the  parties that the policy of reservation is merely  being raised  as  a formal defence and has  never  been  seriously implemented by the State Government. [81G-H; 82A-B]     11.3  The conclusion that the areas in  question  before this Court were all duly reserved for public sector  exploi- tation  does not, however, mean that private parties  cannot be  granted any lease at all in respect of these areas  for, as pointed out earlier, it is open to the Central Government to relax the reservation for recorded reasons. Nor does this mean  that  the public sector undertakings  should  get  the leases asked for by them. This is so for two reasons. In the first place, the reservation is of a general nature and does not  directly confer any rights on the Public Sector  Under- takings. This reservation is of two types. Under s.  17A(1), inserted in 1986, the Central Government may after  consult- ing the State Government just reserve any area--not  covered by a Private Lease or a Mining Lease-with a view to conserv- ing  any mineral. Apparently, the idea of such  reservations is  that the minerals in this area will not be exploited  at all,  neither by private parties nor in the  public  sector. The  second type of reservation was provided for in rule  58 and  such  reservation  could have been made  by  the  State Government  (without any necessity for approval by the  Cen- tral  Government)  and  was intended to  reserve  areas  for exploitation,  broadly speaking, in the public  sector.  The notification itself might specify the Government Corporation or  Company  that was to exploit the areas or  may  be  just general, on the 34 lines  of  the  rule itself. Whether such areas  are  to  be leased  out  to  OMC or IDCOL or some  other  public  sector corporation  or a Government Company or are to be  exploited by the government itself is for the Government to  determine de  hors  the  statute and the rules. There  is  nothing  in either of them which gives a right to OMC or IDCOL to insist that  the leases should be given only to them and to no  one else in the public sector. There are no competitive applica- tions  from  organisations in the public  sector  controlled either  by the State Government or the  Central  Government, but  even if there were, it would be open to the State  Gov- ernment  to decide how far the lands or any portion of  them should  be exploited by each of such Corporations or by  the Central  Government or State Government., Both the  Corpora- tions are admittedly instrumentalities of the State  Govern- ment and the decision of the State Government is binding  on them.  If the State Government decides not to grant a  lease in respect of the reserved area to an instrumentality of the State  Government,  that  instrumentality has  no  right  to insist  that a Mining Lease should be granted to it.  It  is open  to  the State Government to exercise at  any  time,  a choice  of  the State or any one  of  the  instrumentalities specified  in the rule. It is true that if, eventually,  the State Government decides to grant a lease to one or other of them  in  respect of such land,  the  instrumentality  whose application  is rejected may be aggrieved by the  choice  of another for the lease. The question whether OMC or IDCOL can object  to  the grant to any of the private parties  on  the ground  that  a reservation has been made in favour  of  the public sector, has to be answered in the negative in view of the  statutory  provisions. For the State  Government  could always denotify the reservation and make the areas available

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for grant to private parties. Or, short of actually  deserv- ing  a  notified area, persuade the  Central  government  to relax the restrictions of rule 59(1) in any particular case. It  is,  therefore, open to the State  Government  to  grant private leases even in respect of areas covered by a notifi- cation of the State Government and this cannot be challenged by any instrumentality in the public sector. [82F-H;  83A-H; 84A-C]     12.  In  these matters, no grounds have  been  made  out which could support a plea of promissory estoppel. The grant of  a lease to ORIND had to be approved by the Central  Gov- ernment.  The Central Government never approved of  it.  The mere  fact that the State Government, at one  stage,  recom- mended the grant cannot stand in the way of their  disposing of  the  application of ORIND in the light  of  the  Central Government’s directives. [78E-F] Kanai Lal Sur v. Paramnidhi Sadhukhan, [1958] 2 SCR 366; M/s 35 Motilal Padampat Sugar Mills Co. (P) Ltd. v. State of  Uttar Pradesh and Ors., [1979] 2 SCR 641; Gujarat State  Financial Corporation v. M/s Lotus Hotels Pvt. Ltd., [1983] 3 SCC 379; Surya Narain Yadav & Or,5. v. Bihar State Electricity  Board JUDGMENT: Godfrey  Philips  India Ltd., [1985] Suppl. 3  SCR  123  and Mahabir  Auto Stores & Ors. v. Indian Oil Corporation  Ors., [1990] JT I SC 363, referred to.     [This  Court directed that it would be open to  all  the parties  to  place their claims, or further claims,  as  the case  may be, in regard to the areas applied for by them  on or  before 30.4.1987, hacked by supporting  reasons,  before the  State Government in the form of representations  within four  weeks  from  the date of this order;  that  the  State Government  would dispose of these applications  within  the statutory  period failing which the parties will have  their remedy  under the statute by way of revision to the  Central Government;  that in arriving at its decisions, it  will  be open  to the State Government to take into account the  dis- cussions and findings of the Rao Report in the light of this judgment; that the State Government should also keep in mind that  no  leases to any of the parties (other than  OMC  and IDCOL) could be granted unless either the areas so  proposed to be leased out are deserved and thrown open to  appellants from  the  public or unless the  Central  Government,  after considering the recommendations of the State Government, for reasons to be recorded in writing considers a relaxation  in favour of any of the parties necessary and justified.  [96B- E]

&     CIVIL APPELLATE JURISDICTION: Civil Miscellaneous  Peti- tion Nos. 16435-37 of 1987.                                    IN Writ Petition No. 14116 of 1984. (Under Article 32 of the Constitution of India).                 WITH Special  Leave Petition (C) Nos. 5163/88 with 8574  of  1989 read with I.A. No. 1/89.     K. Parsaran, Dr. L.M. Singhvi, G. Ramaswamy, V.C.  Maha- jan, Harish N. Salve, Rajan Mahapatra, Ms. Lira Goswami,  S. Sukumaran,  C. Mukhopadhyay, A. Subba Rao, A.D.N. Rao,  P.K. Mehta, Ms. Mona Mehta, Girish Chandra, S.C. Patel, T. Sriku- mar, p. 36

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Parmeshwaran, Bishamber Lal Khanna and M.C. Bhandare for the appearing parties.     S.C. Roy, Advocate General and A.K. Panda for the  State of Orissa. The Judgment of the Court was delivered by RANGANATHAN, J. THE "DRAMATIS PERSONAE"     All  these matters are in the nature of off shoots of  a basic  controversy  raised in W.P. No.  14116/84  which  was "disposed of" by the orders of this Court dated 30.4.87  and 6.10.87. The parties are now seeking certain  clarifications and  directions  in relation to the orders  passed  by  this Court  in the above writ petition. There have  been  several subsequent developments having an impact on the issue origi- nally brought to this Court in the Writ Petition (W.P.) and, at  present,  the  matter has become  very  complicated  and involves the interests of a large number of parties. To give a  cogent  narration of the necessary facts, it is  best  to start  with an enumeration of the various parties with  whom we are concerned in the matters which are being disposed  of by this judgment.     The writ petition as well as the connected matters arise out  of applications for grant of rights for the  mining  of chrome ore or Chromite in the State of Orissa. Chrome ore is one of the minerals specified in the First and Second Sched- ules to, and not a "minor mineral" within the meaning of  s. 3(f) of, the Mines and Minerals (Development and Regulation) Act,  1957. The right to grant mining rights in  respect  of this mineral is vested in the State Government, subject,  as we  shall see later, on control by the Union of  India.  The State  of Orissa (S.G.) and the Union of India  (C.G.)  are, therefore,  the primary respondents in this  litigation.  On the  other  side are ranged a number o[ applicants  for  the mining rights we have referred to above. These are: (1) Indian Metals and Ferro-Alloys Limited (IMFA); (2) Ferro Alloys Corporation Limited (FACOR); (3) Orissa Cements Limited (OCL); (4) Orissa Industries Limited (ORIND); 37 (5) Orissa Mining Corporation (OMC); (6)  Industrial  Development  Corporation  of  Orissa   Ltd. (IDCOL); and (7) Shri Mantosh Aikath. Of  the above, the first four are companies in  the  private sector,  the next two are public sector  corporations  owned substantially by the State of Orissa and the last, a private individual. THE PRESENT CONTROVERSY     The  principal question for decision before us is as  to whether all or any of the various parties referred to  above are  entitled to obtain leases for the mining of chrome  ore (hereinafter referred to as MLs) and, if so, to what extent. In  particular, we are concerned with an area consisting  of five  blocks  referred  to in para 8 of the  W.P.  to  which reference  will  be made later.  The  controversy  primarily turns round applications made in respect of these blocks  by IMFA, FACOR, AIKAT and OCL. ORIND also lays claim to  mining rights in respect of a portion of these blocks. It has filed a  special  leave petition which is separately  numbered  as S.L.P.  No.  8574 of 1989 and is directed against  an  order dated  7.4.89 passed by the Orissa Government  rejecting  an application made by the company on 5th July, 1971. FACOR has also preferred S.L.P. No. 5163 of 1988 from an order of  the High  Court  of Orissa dated 11.11.1987  dismissing  a  writ petition filed against an order of rejection by the S.G.  of an  application  made by it on 18.7.1977 for grant of  a  ML

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which was confirmed by the C.G. As  already  mentioned, this Court ’disposed’  of  W.P.  No. 14116/  1984 by its order of 30.4.87. We shall have to  con- sider this and several other orders passed by this Court  in the course of the hearing more closely but a brief reference may be made here to the resultant effect thereof. When  this Court  found that there were a large number of  applications for  MLs over varying extents of land in the areas in  ques- tion,  this Court decided that the respective merits of  the applications’ could not be gone into by this Court but  that they  should be considered by a responsible officer  of  the C.G.  Accordingly,  by the orders above  referred  to,  this Court  referred the entire controversy to the  Secretary  to the Government of India in the Ministry of Mines (Shri  B.K. Rao,  "Rao", for short) for a detailed consideration of  the claims of the various parties. When the matter went to  Rao, OMC and IDCOL also 38 put forward claims that the public sector units in the State of Orissa were entitled to the grant of mining rights in the State  to the exclusion of all private parties  inasmuch  as there  was a reservation in their favour by  an  appropriate notification  issued  by  the State  Government.  The  other parties  objected to the intervention of the OMC  and  IDCOL at,  what they alleged was, a belated stage of the  proceed- ings.  However, on applications made by OMC and IDCOL,  this Court  directed that the claims of these two  public  sector undertakings would also be examined by Rao. Eventually  Rao, after  considering  the claims of all parties,  reduced  his conclusions  in  the form of a report  dated  1st  February, 1988.  in his report, Rao accepted the claim of  reservation made  on  behalf of the OMC and the IDCOL.  Nevertheless  it appears that, bearing in mind certain interim orders  passed by this Court in the various applications made to it  during the pendency of the writ petitions, Rao came to the  conclu- sion  that  only  three of the parties other  than  the  two public  sector undertakings should be granted leases to  the extent  mentioned  by him. Broadly  speaking,  Rao  accepted partially the claims of IMFA, FACOR and AIKATH. He  rejected the  claims made by ORIND and OCL. He accepted the claim  of the  public sector undertakings but he recommended for  them leases  in  respect of only the balance of the  lands  left, after  fulfilling  the  claims of the others  which  he  had accepted.     Applications have now been filed before us which,  inter alia, seek directions on Rao’s report. There has been a good deal of contest before us as to the precise legal  character of  the report submitted by Rao. One suggestion is that  Rao was nothing more than a commissioner appointed by the  Court to examine the claims of the various parties and to submit a detailed  report thereon. It is submitted that  this  report having  been received we should pass such orders thereon  as we may consider appropriate. A second approach suggested  is that  the Rao report should be taken to be the  decision  of the  Central Government, which it is now for the State  Gov- ernment to implement, leaving it open to any aggrieved party to take such appropriate proceedings as may be available  to them  in  law  for  successfully  challenging  the  findings reached  by  Rao. A third line of argument  which  has  been addressed  before us, particularly by the State  of  Orissa, the OMC and the IDCOL, is that Dr. Rao’s report suffers from a  fundamental defect in that he has completely ignored  the reservation  made by the State Government in favour  of  the public  sector.  According  to them, Rao was  not  right  in suggesting  the grant of leases to any of the other  parties

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and  should have simply left it to the State to exploit  the mines  in public sector, including inter alia, the  OMC  and IDCOL. A fourth 39 stance  taken  up by the State Government may also  be  men- tioned here, The learned Advocate General for the State made a  statement before us that, without prejudice to a  conten- tion  that  the  Rao report suffered  from  the  fundamental defect referred to above, the State Government was  prepared to abide by the findings of Rao provided this Court  decides to  accept  the same in toto without any  modifications.  He clarified that this is not because they think the Rao report is’ correct. On the other hand they have got several  objec- tions  to the validity and correctness of Dr. Rao’s  report. However, having regard to the interim orders passed by  this Court  and having regard to the fact that what Rao has  done is  virtually  to implement various orders  passed  by  this Court  during the pendency of the writ petition,  the  State Government, without prejudice to its contentions in relation to the Rao report, is prepared to abide by it. However,  the learned Advocate General said, the State Government wish  to make it clear that if, for some reason, this Court does  not accept  the  Rao Report in toto, then the  State  Government would  like  to put forward their  contentions  against  the report of Dr. Rao. In that event the State Government should be given the liberty to attack Dr. Rao’s report and urge all contentions  that are open to it in respect of the grant  of mining leases relating to chrome ore in the State of Orissa. The  above stance understandably, is not acceptable  to  OCL and  ORIND  or, indeed, even to OMC and IDCOL who  have  got nothing at the hands of Rao. IMFA and FACOR are substantial- ly  satisfied with the report given by Dr. Rao  (except  for certain minor contentions which they are prepared to give up for the present, with liberty to make representations to the State Government) but they also wish to make it clear  that, in case the Rao report is not to be accepted by this  Court, they would also like to put forward all their contentions so that  their  case may not go by default. In that  event,  in particular,  they would like to attack the reservation  plea urged by the S.G., OMC and IDCOL both as belated as well  as on merits. AIKATH’s submission is that he is a small  opera- tor  who discovered the mines and that Rao’s  recommendation for  the grant of a ML in his favour in respect of  a  small extent  of land should not be disturbed by us. We have  only broadly set out here the attitudes of the various parties to the Rao report and shall discuss their contentions later  in detail.  In the light of these various contentions, we  have to  determine  the  legal character of the  Rao  report  and decide whether the findings of Rao are to be given effect to in toro or are to be modified and, if so, in what respects.     Before dealing with these questions and even setting out the  details  of the claims of the various parties  and  the material they placed 40 before  Rao to substantiate their claims, it will be  useful to survey the relevant statutory provisions relating to  the grant of mineral concessions of the nature we are  concerned with here. This we shall at once proceed to do. THE RELEVANT STATUTORY PROVISIONS (a)  Constitution: Article 297 of the Constitution of  India unequivocally  declares that ’all lands, minerals and  other things  of value underlying the ocean  .....  shall vest  in the Union and be held for the purposes of the Union’.  Arti- cle  298  defines the extent of the executive power  of  the Union and of each State thus:

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"298. Power to carry on trade, etc.--The executive power  of the Union and of each State shall extend to the carrying  on of any trade or business and to the acquisition, holding and disposal  of  property and the making of contracts  for  any purpose: Provided that-- (a)  the said executive power of the Union shall, in so  far as  such trade or business or such purpose is not  one  with respect  to  which Parliament may make laws, be  subject  in each State to legislation by the State; and (b) the said executive power of each State shall, in so  far as  such trade or business or such purpose is not  one  with respect  to  which the State Legislature may make  laws,  be subject to legislation by Parliament."     The  Union  and the States have both  been  vested  with powers  to legislate in respect of mining rights  under  the Seventh Schedule to the Constitution. The respective  rights of the Union and the States in this regard are contained  in the following entries in the said Schedule: List 1, Entry 54 Regulation of mines and mineral development to the extent to which  such regulation and development under the control  of the  Union is declared by Parliament by law to be  expedient in public interest. 41 List H, Entry 23 Regulation  of mines and mineral development subject to  the provisions of List I with respect to regulation and develop- ment under the control of the Union. (b) Act: In exercise of the above powers, the Union legisla- ture  has  enacted  the Mines and  Minerals  (Development  & Regulation)  Act,  1957  (hereinafter referred  to  as  ’the Act’).  The Act has been substantially amended  and  several drastic changes introduced in 1986 with a view, inter  alia, to  prevent  unscientific mining,  remove  bottle-necks  and promote  speedy development of mineral based industries.  We are concerned only with the provisions relating to the grant of mining leases and we may proceed to consider the same.     S. 2 of the Act contains the declaration referred to  in Entry 54 referred to above. It reads: "2.  Declaration  as to expediency of Union  control--It  is hereby declared that it is expedient in the public  interest that the Union should take under its control the  regulation of  mines  and  the development of minerals  to  the  extent hereinafter provided." With this declaration, the Act proceeds to circumscribe  the extent  to  which  the regulation of mining  rights  in  the States should be subject to the control of the Union. We may now  proceed to refer to the relevant provisions of the  Act in  relation  to minerals like "chrome ore",  which  may  be described, for convenience, as "major minerals". S. 4 of the Act provides as follows:- "No person shall undertake any prospecting or mining  opera- tion  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. (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." Sections  10  and 11 outline the procedure for  obtaining  a prospecting 42 licence (PL) or a mining lease (ML). They read thus: "10. Application for prospecting licences or mining  leases:

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(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  con- cerned  in the prescribed form and shall be  accompanied  by the prescribed fee. (2)  Where  an application is received under  sub-section  1 there shall be sent to applicant an acknowledgement of its 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." 11.  Preferential right of certain person: (1)Where a  pros- pecting licence has been granted in respect of any land, the licensee  shall have a preferential right for obtaining  the mining lease in respect of the said land over any other per- son: XXX                                                      XXX XXX (2) Subject to the provisions of sub-section (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  prefer- ential  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 subsection  (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-section  (2)  are  the following: 43 (a) any special knowledge of, on 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-section  (2) but subject to the provisions of sub-section (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." We  may next to refer to S. 17A which has been  inserted  in the Act by the 1986 amendment. It reads thus: S.  17-A: Reservation of area for purposes  of  conservation --(1) The Central Government, with a view to conserving  any mineral and after consultation with the State Government may reserve  any  area not already held  under  any  prospecting licence or mining lease and, where it proposes to do so,  it shall, by notification in the Official Gazette. specify  the boundaries  of  such  area and the mineral  or  minerals  in respect of which such area will be reserved. (2)  The  State  Government may, with the  approval  of  the Central Government, reserve any area not already held  under any  prospecting  licence or mining lease,  for  undertaking prospecting or mining operations through a Government compa- ny  or corporation owned or controlled by it or by the  Cen- tral Government and where it proposes to do so, it shall  by

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notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such areas will be reserved. (3) Where in exercise of the powers conferred by  subsection (2) the State Government undertakes prospecting 44 or mining operations in any area in which the minerals  vest in  a private person, it shall be liable to pay  prospecting fee, royalty, surface rent or dead rent, as the case may be, from  time to time at the same rate at which it  would  have been  payable under this Act if such prospecting  or  mining operations  had  been undertaken by a private  person  under prospecting licence or mining lease. S.  19 of the Act declares that 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. S.  30  confers revisional powers on the C.G. It reads: "The Central Government may, of its own motion or on  appli- cation  made  within  the prescribed time  by  an  aggrieved party,  revise  any order made by the  State  Government  or other authority in exercise of the powers conferred on it by or under this Act." These  are the provisions of the Act relevant for  our  pur- poses. (c)  Rules:  Turning now to the rules framed under  the  Act which  also have a material bearing on the  present  issues, they are contained in Chapter IV of the Mineral  Concessions Rules,  1960 which deals with the grant of mining leases  in respect  of land the minerals in which vest the  Government. Rule  22 outlines the procedure in respect  of  applications for  MLs. It requires the application to be made in  a  pre- scribed form and accompanied by a fee of Rs.500 and  certain documents  and particulars. Rules 24 and 26’  prescribe  the procedure  for disposal of such applications. Sub-rules  (1) and (3) of rule 24 are relevant for our present purposes and are extracted below: "24. Disposal of application for mining lease:-(1) An appli- cation for the grant of a mining lease shall be disposed within twelve months from the date of its receipt. XXX                                                      XXX XXX (3) If any application is not disposed of within the  period specified  in sub-rule (1), it shall be deemed to have  been refused. XXX                                                      XXX XXX 45 Under rule 26, the S.G. may, after giving an opportunity  of being  heard and for reasons to be recorded in  writing  and communicated  to the applicant, refuse to grant or  renew  a mining lease over the whole or part of the area applied for.     Rule  31 prescribes that where an order for grant  of  a lease  is  made, a lease deed has to be  executed  within  a period of six months of the order or such further period  as the  S.G. may allow in this behalf. Failure to do  this,  if attributable  to any default on the part of  the  appellant, could  entail the revocation of the lease. The  lease  shall commence from the date of the lease deed.     We  next turn to rule 54 which deals  with  applications for revision to the C.G. It reads, in so far as is  relevant for our purposes: "54.  Application for revision:-(1) Any person aggrieved  by any order made by the State Government or other authority in exercise  of the powers conferred on it by the Act or  these

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rules may, within three months of the date of  communication of  the  order to him, apply to the  Central  Government  in triplicate in Form N, for revision of the order. The  appli- cation  should be accompanied by a treasury receipt  showing that a fee or’ Rs.500 has been paid into a Government treas- ury  or in any branch of the State Bank of India  doing  the treasury business to the credit of Central Government  under the  head of account ’128-Mines and  Minerals-Mines  Depart- ment-Minerals Concession Fees and Royalty’: Provided that any such application may be entertained  after the said period of three months, if the applicant  satisfies the Central Government that he had sufficient cause for  not making the application within time. xxx                                                      xxx xxx (4)  On receipt of the application and the  copies  thereof, the Central Government shall send a copy of the  application to each of the parties impleaded under sub-rule (2),  speci- fying a date on or before’ which he may make his representa- tions, if any, against the revision application. Explanation:-For the purposes of this rule, where a State 46 Government  has failed to dispose of an application for  the grant of renewal of a prospecting licence or a mining  lease within  the  period specified in respect  thereof  in  these rules, the State Government shall be deemed to have made  an order refusing the grant or renewal of such licence or lease on the date on which such period expires. Rule  55 provides that the C.G., after getting the  comments of  the S.G. and other parties on the application and  after giving  each  of them an opportunity to  put  forward  their comments  on  the stand taken by the others,  "may  confirm, modify  or  set aside the order (of the S.G.) or  pass  such other  order in relation thereto" as it "may deem  just  and proper". Three more rules need to be set out which deal with the topic of reservation. Rules 58, 59 and 60, before  1980, were in the following terms: "58.  Availability of areas for regrant to be  notified--(1) No  area  which was previously held or which is  being  held under prospecting licence or a mining lease so the case  may be  or  in respect of which the order  granting  licence  or lease has been revoked under sub-rule (1) of the rule 15  or sub-rule  (1) of rule 31, shall be available for  grant  un- less- (a) an entry to the effect is made in the register  referred to in sub-rule (2) of rule 21 or sub-rule (2) of rule 40, as the case may be, in ink; and (b)  the  date from which the area shall  be  available  for grant  is notified in the Official Gazette at  least  thirty days in advance. (2)  The Central Government may, for reasons to be  recorded in  writing,  relax  the provision of sub-rule  (1)  in  any special case. 59.   Availability  of  certain  areas  for  grant   to   be notified--In the case of any land which is otherwise  avail- able for the grant of a prospecting licencor a mining  lease but in respect of which the State Government has refused  to grant a prospecting 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 avail- able  for the grant of prospecting licence or mining  lease, grant  the  licence or lease after following  the  procedure laid down in rule 58. 47 60. Premature applications--Applications for the grant of  a

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prospecting  licence  or a mining lease in  respect  of  the areas in which-- (a) no notification has been issued under rule58 or  rule59; or (b)  if  any such notification has been  issued  the  period specified  in  the notification has not  expired.  Shall  be deemed to be premature and shall not be entertained and  the fee,  if any, paid in respect of any such application  shall be refunded." G.S.R.  146 dated 16th January, 1980  substantially  amended these rules. After this amendment, Rule 58 reads: "58.  Reservation  of areas for exploitation in  the  public sector,  etc.: The State Government may, by notification  in the  Official Gazette, reserve any area for exploitation  by the  Government, a Corporation established by  any  Central, State  or Provincial Act or a Government company within  the meaning  of Section 6 17 of the Companies Act, 1956 (  1  of 1956)". Rule 59 is relevant only in part. It reads: "59. Availability of area for regrant to be notified: (1) No area-- XXX                                                      XXX XXX (e)  which has been [reserved by the State Government]  Sub- stituted  for  the  words "reserved by  the  Government"  by G.S.R.  86(E)  w.e.f. 10.2.87 under Rule 58,  [or  u/s  17A) These  words  were inserted by G.S.R. 146(E)  dated  16.1.80 w.e.f. 2.2.80 shall be available for grant unless-- (i)  an entry to the effect that the area is  available  for grant is made in the register referred to in sub-rule (2) of Rule  21 or sub-rule (2) of Rule 40 as the case may  be,  in ink; and (ii)  the availability of the area for grant is notified  in the Official Gazette and specifying a date (being a date not 48 earlier than thirty days from the date of the publication of such  notification in the Official Gazette) from which  such area shall be available for grant: XXX                                                      XXX XXX (2)  The Central Government may, for reasons to be  recorded in  writing  relax  the provisions of sub-rule  (1)  in  any special case. Rule 60 deals with "premature applications". It reads: 60. Premature applications: Applications for the grant of  a prospecting  licence  or mining lease in  respect  of  areas whose  availability  for grant is required  to  be  notified under Rule 59 shall if,- (a) no notification has been issued under that rule: or (b) where any such notification has been issued, the  period specified  in  the notification has not  expired,  shall  be deemed to be premature and shall not be entertained, and the application fee thereon, if any paid, shall be refunded. The above are the relevant rules governing application  for, and grant of, leases, revision petitions and reservation  of areas  in the light of which the issues in the present  case have  to  be considered. We shall now proceed  to  give  the details of the various applications for MLs preferred by the parties before us. ML APPLICATIONS OF THE PARTIES     Though  it was the IMFA which came to this Court with  a writ petition, there were a number of other applications for grant of MLs pending before the State Government. The  broad details of these applications are set out below: 1. IMFA

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(a) Previous Histor),: IMFA made five applications for grant of mining lease in respect of five blocks of land as per the following  details  (which are hereinafter  referred  to  as items 1 to 5 respectively): 49 Area Date of  Area          Village & District No.   Applica- applied for     tion 1.  1.7.1981  634.359   Ghotarangia and other villages     8.7.1981  hects.    (Dhankanal Distt.) 2.  23.6.1981  142.000   Ostapal Village, SukhindaTehsil                hects.    (Cuttack Distt. ) 3.  6.7.1981  108.860   Kamarada and padar villages                hects.    (Cuttack Distt. ) 4.  9.9.1981  37.008       Ostapal and Gurjang villages,                              Sukhinda     10.9.1981  hects.       Tehsil (Cuttack Distt.) 5.  24.11. 1981 147.693   Ostapal and Gurjang villages,                              Sukhinda             hects.           Tehsil (Cuttack Distt. )     The  S.G. did not dispose of these  applications  within the  prescribed period of twelve months. They  were,  there- fore,  deemed to have been rejected under rule  24(3).  IMFA applied to the C.G. for the revision of these deemed  rejec- tion orders of the S.G. The C.G. set aside the deemed rejec- tion  orders and directed the S.G. to dispose of the  matter on merits within a period of 200 days. However, the S.G. did not  take any action on the applications of the IMFA  within the  period of 200 days. IMFA made a representation  to  the Central Government but the Central Government gave no relief on the ground that it had become functus officio and had  no jurisdiction  to issue further directions to the State  Gov- ernment. Thereupon IMFA filed Writ Petition No.14116 of 1984 in  this  Court. IMFA alleged, that while  its  applications were kept pending, the S.G. had granted leases in favour  of FACOR and thus discriminated against IMFA. It prayed for the issue  of a writ of mandamus to the S.G. to grant leases  to IMFA also.     (b)  Subsequent  developments: This  Court,  on  27.9.84 passed  an  order (extracted later) directing  the  S.G.  to consider IMFA’s applications by 23.10.84 and restraining  it from  granting MLS to any one else in the  meanwhile.  FACOR moved for a recall of this order. The Court passed an inter- im order on 18.10.84 holding over the implementation of  the earlier order in regard to grant of lease to IMFA and  call- ing  for the records. However, it appears, on 21.11.84,  the S.G. had agreed to grant a ML in favour of AIKATH in respect of  140 acres out of 147.69 hectares covered by item  No.  5 above.  On  26.12.84,  the S.G. filed  a  counter  affidavit pointing out: (a) that there was a reservation of the 50 areas for the public sector and (b) that except item 1,  the areas  covered  by the other applications  overlapped  areas covered  by  earlier applications of OMC IDCOL  and  others. Nevertheless,  it  was stated, on due consideration  in  the light of the observations of this Court, the S.G. had tenta- tively  decided to grant a ML to IMFA in respect of  634.359 hectares in item 1. On 27.11.84, IMFA stated that it was not interested  in item 1 which, according to it contained  only low  grade ore and was not commercially viable  unless  IMFA was given, at the same time, areas bearing high quality  ore which  could  be blended with the low grade ore.  It  stated that it was willing to accept M.L. in respect of items 2,  3 and  either  item 4 or half of item 5. On 2.1.85.  the  S.G. passed formal orders rejecting IMFA’s application in respect

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of items 2 to 5 of the list. This was on the ground, so  far as  item  2  was concerned, that the area  fell  within  the reserved areas, that there were prior applications of OMC  & FACOR in respect of the areas and that the S.G. had  already agreed  to  lease out item 1 to IMFA. On 15.2.85,  the  S.G. informed  IMFA that, on reconsideration it  had  recommended grant of MLs to it in respect of 139.37 hectares (out of 142 hectares  of  item  2) and the entire area  of  item  3.  On 18.2.85,  the  S.G. submitted in court that it  had  already agreed  to grant 140 acres in item 5 to AIKATH and the  rest to FACOR as per compromises in the writ proceedings  pending in  the  Orissa High Court. The compromise with  AIKATH  had been placed before. and accepted by the Orissa High Court on 4.12.84 but the final terms and conditions were proposed  on 18.2.85 and, accepted on 19.2.85. In respect of FACOR  also, the  compromise  agreeing to lease to it 596 acres  (out  of which  180 acres were covered by item 5 of  IMFA’s  applica- tion)  had  been  filed in the Orissa  High  Court  only  on 18.2.85. The validity of these allotments was challenged  by IMFA  before this Court. Without going into the  merits  or’ this  controversy,  this Court on 28.2.85. passed  an  order directing  the S.G. to grant a lease to IMFA in  respect  of item 3 in full and 26.62 hectares in item 4. (This order was objected to by FACOR and on 8.5.85 the Court passed an order directing  the grant of a lease to FACOR over 180  acres  in item  5).  IMFA  says that it has not  been  given  physical possession of the areas granted to it except to an extent of a  small area of 2 hectares. The net result is that  out  of the  five  items applied for by IMFA: (i) item  1  has  been given  but surrendered, (ii) the S.G. is agreeable  to  give 139.37  acres out of 142 acres of item 2; (iii)  this  Court has  directed the grant to IMFA of item 3; (iv) in  item  4, this  Court has directed the grant to IMFA of 26.62  out  of 37.008  hectares of item 4: and (v) In item 5, the S.G.  has agreed  to  lease our 140 acres to AIKATH and 180  acres  to FACOR. 51                       2. FACOR     (a)Earlier  History:  FACOR’S  applications  for  mining leases  for  chrome ore were made on various  dates  between 1974  and 1978. Relevant particulars in respect of the  said applications are set out in the following table: Sl.  Village    Extent  Date of  Date of final  Particulars No.                     appli-   final order of of the pro-                         cation   disposal of    ceedings in                                  revision app-  High Court 1.  Ostapal   142,000  8.7.74    29/76-12.3.76  OJC 67 of 79     Distt.    hects.            315/78- 3.7.78  12.1.79     Cuttack   or 359               acres 2. Chingudi-  749.32   8.7.74    21/76-21.4.76  OJC 66 of 79    pal Distt. hects.            278/78-30.5.78  12.1.79 3. Samole     248.447  6.8.74   182/77-29.8.77  OJC 72 of 79    Distt.     hects.                            15.1.79    Dhankanal  (618 acres) 4. Bangur     40.47   22.6.77   432/78-17.8.78  OJC 1309 of    Distt.     hects.                            80  21.1.80    Keonjhar   (100 acres) 5. Ostapal &  312.42   7.6.78   528/79-21.9.79  OJC 2036 of    Gurjang    hects.            579/80-26.9.80  31.8.81    Distt.    Cuttack 6. Kamarda    108     6.10.78    17/80- 1.1.80  OJC 1028 of    Distt.     hects.            513/82-29.10.82 11.5.83 All the six applications made by FACOR were rejected by  the

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S.G.  Against the revision orders of the C.G. affirming  the orders  of the S.G.. FACOR filed writ petitions in the  High Court of Orissa and these writ petitions are pending dispos- al  there [except the one re: item 4 which was dismissed  by the  High  Court on 11.11.87 and is the  subject  matter  of S.L.P. (C) 5163 of 1988 before us. In this sense, the appli- cations of FACOR were alive and awaiting disposal when  IMFA filed W. P. 14 116 of 1984 in this Court. 52     (b)  Subsequent  developments:  As  we  shall    mention later. FACOR had obtained leases over 486 acres at Barua  in Keonjhar  district and 280 acres at Kathpal  over  Dhankanal district  in 1971-72. The above applications  were  rejected and  the  writ petitions filed against the  rejections  were pending in the Orissa High Court when the writ petition  was filed.  It has been stated that the S.G. had entered into  a compromise with FACOR on 18.2.85 agreeing to grant a  mining lease in its favour in respect of 596 acres out of 772 acres applied under item no. 5 above on condition that FACOR  gave up  its claim in respect of the balance of the area  of  702 acres  as well as the claim made in the other five  applica- tions. It may be added that on 18.5.85 this Court passed  an interim  order  directing  that FACOR be given  a  lease  in respect  of  180 acres out of the 596 acres covered  by  the compromise  dated 18.2.85. A lease was accordingly  executed by  the S.G. in favour of FACOR on 16.8.85  after  obtaining the  approval of the C.G. to the lease under s. 5(2) of  the Act (before its amendment in 1986) as well as to the relaxa- tion  under rule 59(1) of the Rules. The net result,  there- fore.  is that, though FACOR made six applications,  it  had agreed to give up all of them in lieu of a ML for 596  acres out  of item 5 out of which a lease in respect of 180  acres has already been obtained and is being exploited by FACOR.                        3. MANTOSH AIKATH     (a)  Previous  History: This gentleman  had  obtained  a lease from the Raja Sri Pitamber Bhupati Harichandan Mohapa- tra,  the proprietor of Sukhinda Estate on 17.10.52  (regis- tered  on 28.10.52) for a period of 20 years in  respect  of 640  acres situated in village Gurjang in Cuttack  District. On  12.1.53 the State Government (in whom the estate of  the former  Zamindar had come to vest w.e.f. 27.11.52 under  the Orissa  Estates Abolition Act) issued a  notice  terminating the  lease.  Mr.  AIKATH made  representations  against  the termination.  It is said that, ultimately, a compromise  was reached  between him and the S.G. whereunder it  was  agreed that  a lease in respect of half of the area covered by  the original  lease deed on the southern side could be  retained by him. Thereupon, it is said, he filed a formal application on  25.5.54 for a mining lease in respect of 320 acres.  But this  was rejected on the ground that the S.G. preferred  to exploit  the area in public sector. A revision  petition  to the  C.G.  was rejected on 9.2.72. Mr. AIKATH filed  a  writ petition in the High Court of Orissa impleading the C.G. and the S.G. as parties. The Orissa High Court on 18.4.1984  set aside the order of the C.G. and directed the C.G. to dispose of Mr. 53 AIKATH’S  application afresh. The C.G., in turn,  set  aside the  order  of the S.G. on 3.8.78 and directed the  S.G.  to decide  the  application of the party afresh,  after  taking into  account the plea of the party that the area could  not be reserved for exploitation in the public sector.  However, no orders were passed by the S.G. The petitioner, therefore. again  filed  a revision application before the  C.G.  which passed orders on 12.12.79 directing the State Government  to

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pass  a  speaking order and dispose of  the  application  on merits.  The  S.G. by an order dated 17.1.80,  rejected  the application.  Mr. AIKATH filed a writ petition in  the  High Court and this was pending when W.P. 14116/84 was filed here by IMFA.     (b) Subsequent Development: On 21.11.84, AIKATH and ’the S.G. entered into a compromise under which the former was to be  granted a lease in respect of 140 acres situated on  the eastern  side  of the 320 acres referred  to  earlier.  This compromise  was  accepted  by the High Court  of  Orissa  on 4.12.84. Thereafter the S.G. offered a lease of 140 acres on certain  terms  and conditions and these  were  accepted  by AIKATH  on  19.2.85. This was reported by the S.G.  to  this Court but no orders were passed by this Court, and no ML has been executed, in favour of AIKATH. It may be mentioned that one of the areas applied for by IMFA on 24.11.81 covered the area which. according to AIKATH, had been in his  possession all along. 4. ORISSA INDUSTRIES LIMITED (ORIND)     (a)  Previous  History.’ ORIND made an  application  for mining lease on 5.7.71. It applied for mining leases over an area of 1129.25 hectares in the villages of Telangi,  Patna. Ostapal,  and Gurjang in District Cuttack. This  application was rejected by the S.G. on 23.10.73 on the ground that  the area was reserved for exploitation in the public sector.  It is  stated  that subsequently on a  representation  made  by ORIND  on 15.12.73, the S.G. recommended to the C.G. that  a lease in favour of ORIND may be granted in respect of 749.82 out of 1129.25 hectares applied for. However. this recommen- dation was withdrawn (as will be discussed later). The C.G., by  an  order  dated 23.2.77, directed the S.G.  to  pass  a speaking  order  on  the application but the  S.G.  did  not comply  with this direction. The company,  therefore,  filed writ petition. O.J.C. 1585/198 1 in the High Court of  Oris- sa.  This writ petition was pending when W.P.  14116/84  was filed here. It  may  be here mentioned that one of  the  contentions  of ORIND 54 before us is that it had also applied on 5.7.71 lot a  lease of  mining  rights in respect of 446.38 hectares in  village Sukrangi  in  Distt. Cuttack. That had been rejected  but  a revision petition had been filed before the C.G. against the said  rejection.  The S.G.. it is said.  while  Lending  its comments  on  26.2.74 to the C.G. on  the  ORIND’s  revision petition. had reiterated that their revision petition may be rejected as  S.G. had already decided to grant ORIND a lease of 749.82 out of the area of 1129.25 hectares applied for by it.     (b) Subsequent developments: It is stated that the  S.G. has subsequently withdrawn its recommendations for the  area of  hectares.  The  S.G. rejected  ORIND’s  application  for 1129.25  hectares by an order dated 7.4.89. The contents  of the order are discussed later It concludes: In view of the above facts and pendency of Writ Petition No. 14116 of 1984 before the Hon’ble Supreme Court of India.  it is not possible for the S.G. at this stage to pass any order on  the  mining lease application dated 5.7. 1971  of  ORIND and. accordingly the said application is disposed of. ORIND  has preferred S.L.P. No. 8574/89 from this  order  of the  S.G. So far as the other application of ORIND  is  con- cerned.  no  information  has been given to us  as  to  what orders.  if any. the C.G. has passed on ORIND’S revision  or as to what steps the applicant has taken subsequently. 5. ORISSA CEMENT LIMITED (OCL)

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(a) Previous History:     The  company’s  grievance  is that it  has  been  filing applications  for  mining rights in respect  of  chrome  ore right  from the year 1961 but none of the applications  have been considered by the State Government on the plea that the areas applied for had been reserved for exploitation in  the public  sector.  Further applications were made  by  OCL  in respect of following areas:- 55 SI.   Date    Area      Date of Orders  Orders    Remarks No.   of      and       Revis-  passed  passed       Appeal  Village   sion of by the  by the                         appli-  State   Central                         cation, Govt.   Govt.,                         if any.         if any. 1.     2.       3.        4.      5.      6.         7. 1.  11.5.70  354,505   3.5.71  5.2.71   3.6.72   This area              Hectare,          The area          was free,              Gurjang           is reser-         previously              & Telan-          ved by            held by              gi, P.S.          the State         Aikath for              Sukinda           Govt. for         320 Acrs.              Distt.            exploita-         The State              Cuttack           tion in           Govt. has                                public            now gran-                                sector.           ted i.e.                                                  in the year                                                  1985 as per                                                  compromise                                                  petition                                                  filed be-                                                  fore High                                                  Court Ori-                                                  ssa. M/s.                                                  Aikath-140                                                  Acs. Factor                                                  -180 Acs. Same application filed again 2. 8.5.74  354,505  Deemed  23,277   Rejected  Although            Hectares Rejec-                     M/s.Facor’s            Gurjang  tion                       application            &                                   on 7.6.78            Ostapal                             was much            Distt.                              after our            Cuttack                             application                                                they were                                                granted M/L                                                by S.G.vide                                                No.6844                                                dated 24.5.85                                                In fairness                                                S/G should                                                have given                                                us this area.                                                As per deci-                                                sion taken by                                                them earlier,                                                50% of the                                                area should                                                be released                                                to us keep- 56                                               ing in view                                               the principles                                               of natural

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                                             justice, as                                               recommended by                                               State Govt.                                               vide in their                                               letter No17410                                               dated 26.2.74,                                               to centre for                                               142 Acrs. to                                               Orissa Cement. 3.  15.5.70  226.22  1.5.72  10.2.71  1.6.72  Although Ferro              Hecta-                   on the  Alloys Corpo-              res                      same    ration have no              Boula                    plea,   unit in Orissa              & Soso                   reser-  but have a            Distt.                   ved     manufacturing           Keonjher                 for state  unitin Andhra                                   exploita-  the Central                                   tion        Govt. passed                                               orders as un-                                               der in 1971-72                                               over an area                                               of 187.03                                               hects. against                                               strong opposi-                                               tion by State                                               Govt.:                                               "Whereas the                                               Central Govt.                                               in exercise                                               of the powers                                               conferred by                                               Rule 58(2) of                                               the N.C. Rules                                               1960 relaxed                                               the provision                                               of rule 58(1)                                               as a special                                               case for the                                               reason that                                               the appli-                                               cants having                                               establis 57                                               hed a big fac-                                               tory for manu-                                               facturing Fer-                                               ro Chrome ore,                                               provision has                                               to be made for                                               procurement of                                               raw materials                                               for the proper                                               running of the                                               factory".                                               Based on the                                               said decision                                               a fresh revi-                                               sion petition                                               was filed on                                               6.4.73 but the                                               C.G. it rejec-                                               ted on30.11.74                                               although the                                               S.G.recommen-                                               ded:

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                                             vide letter                                               No.17410-NG                                               dated26.2.1974                                               for approval                                               for grant of                                               142 Acrs. to                                               O.C.L. Same application filed again 4. 10.4.74  226.22   No    6.6.75 29.8.75 The Please see re-             Hectares Orders       Central     marks in Sl(3)             Boula    were         Govt. set   142 Ac. could             Keonjhar passed       aside the   have been gra-                      as re-       the deemed  nted.  This                      quired       rejection   application                      by sta-      and reman-  was filed pur-                      tute.        ded the     suant to the                                   matter back Notification                                   to the S.G. issued by the                                   for consi-  S.G. throwing                                   deration.   open for re-                                               grant 58                                   The State   -vide No.38/73                                   Govt. on    dated 5.3.74.                                   25.9.1975   The State Govt                                   rejected    latter changed                                   the appln.  their decision                                   on the plea for working in                                   that the    public sector,                                   area over-  contrary to                                   laps other  the decision                                   lease area. pronounced by                                   Our earlier Supreme Court                                   appln. dt.  as referred to                                   15.3.70     in AIR. 1976                                   was rejec-  Delhi.                                   ted but was                                   granted to  Keeping in                                   some other  view principle                                   party i.e.  of justice,                                   FerroAlloys 50% of this                                   Corporation area should be                                   for a redu- released to                                   ced area.   Orissa Cement. 5. 11.5.70 388.498 22.10.70 23.10.70  7.4.72  C.G. rejected            Hectares as above                  the applica-            Shrhranqi                          tion on the            &                                  plea they did            Tailangi,                          not like to            P.S.                               interfere with            Sukinda.                           the decision            District                           taken by the            Cuttack.                           S.G. for keep-                                               ing the area                                               reserved for                                               exploitation                                               in public                                               sector. Same application filed again 6. 8.5.74  388.498 Deemed 23.2.77 3.6.77 The  M/s Sirajudin            Hectares rej-          delay was   was holding            Sukrangi ection        explained   the area of            &                      but rejec-  100 Ac. under            Tailangi               ted becau-  M.L. for 20            Distt.                 se of delay years from

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          cuttack.                           8.8.85 which                                               expired in                                               1975. 59                                               Renewal has                                               been refused,                                               Sirajudin                                               being a trader                                               (However M/s                                               Sirajudin &                                               Co., has gone                                               in writ to                                               Orissa High                                               Court, which                                               is still pen-                                               ding) OMC has                                               been granted                                               lease over                                               382.709 Hects. 7. 8.5.74  7 Sq.  Deemed 6.6.75  8.6.76 The   This could            miles  rejec-         Central Govt.have been            Kala-  tion           set aside    granted to us            ran-                  the deemed   but M/s.OMS is            gista                 rejection    working which            & Ka-                 and reman-   can be taken            liapani               ded to S.G.  out from them            Distt.                The S.G.     to grant the            Cuttack.              rejected our property to us                                  appln. but   OMC was just                                  granted a    permitted to                                  free area    work on ad hoc                                  of 3 sq.km.  basis.                                  to OMC, who                                  are holding a                                  lease from                                  more than 70                                  sq Kms. approx.                                  and hardly                                  working 15/20                                  sq. Kms. in                                  different ML                                  areas granted                                  to M/s. OMC. 8. 23.10.82 20.072 Dee- 14.11.83 The C.G. set             hec-   med           aside the             tares  re-           order of             area   jec-                    tion 60            Bangura               deemed rejec-            etc.                  tion on            Distt.                23.12.83. No            Keonjhar              final order                                  has been                                  passed by the                                  S.G. 9. 23.10.82 549,1098 Dee- 14.11.83 29.12.83 as   This has             Hectares med           above         been gran-             Kalia-   rej-                        ted to M/s.             pani &   ec-                         OMC.             Gurjang  tion             etc. 10. 23.10.82 365.467 Dee- 14.11.82 19.12.83       This area              Hecta-  med           as above       pertains              res     re-                          to Sl.1&2

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            Ostopal jec-                         therefore              & Gur-  tion                         the              jang,                                remarks              etc.                                 stated              Distt.                               therein              Cuttack.                             stand. 11. 23.10.82 16.087  Dee- 14.11.83 19.12.83 As    The S.G.              Hecta-  med           above.         rejected              res     rej-                         it on              Bangu-  ec-                          27-6-1985              ra,     tion.                        on the              P.S.                                 ground              Soso                                 that the              Distt.                               area over-              Keonjhar                             laps in                                                   full with                                                   the area                                                   previously                                                   held by                                                   Sirajudin                                                   & Co. Re-                                                   newal was                                                   refused by                                                   StateGovt. 12. 21.1.83 29.477     Deemed           28.3.84   Against             Hectares   rejec-           The C.G.  this rejec             of 72.64   tion             remanded  tion we             Acs.                        the mat-  filed re-             Sajana-                     ter back  vision on             garh P.S.                   to        2.9.85                                                   before C.G 61             Nilgiri    S.G.          Therefore it             Distt.                   is free.  It             Balascre.  No            should be                        orders        granted to us                        have          On similar                        been          grounds the                        passed.       S.G. has                                      granted. 13. 28.6.85 558.74                   No orders             acres or                 passed by             226.14                   S.G. des-             hectares-                pite C.G.’s             Asurbandha               orders on             Distt.                   revision             kanal 14. 27.1.86 356.70                   No orders             hectares                 passed by             in Namla-                S.G. Revi-             bhanga                   sion peti-             in Karma-                tion filed             khya nagar               before C.G.             Distt.                   on 18.3.87             Dhankanal     The previous history as well as the latter  developments are indicated in the above columns. It will be seen, there from  that the first seven and the eleventh applications  of OCL  were  duly disposed of before  the  present  litigation started  and  the party’s grievance is that, in  respect  of some of them, leases have been granted to others like  IMFA, FACOR, AIKATH & OMC. The others are pending before the  S.G. after a remand by the C.G. or, in revision, before the  C.G. The  thirteenth  and  fourteenth  applications  are  pending before the S.G. and C.G. respectively.

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6. ORISSA MINING CORPORATION LIMITED (OMC)     OMC  is a State Government undertaking. It submitted  an application for an area of 725.21 hectares in village  Chin- gripal on 30.6.82. 62 Though  this area was within the area of 1460 sq.  kms.  re- served for exploitation of chromium ore in public sector  as per  the  State Government notification  dated  3.8.77,  its application  remained  un-disposed of and was deemed  to  be rejected on the expiry of the statutory period of one  year. The C.G., by an order dated 10.10.83, on a revision filed by OMC, directed the S.G. to dispose of the application  within 200  days.  The S.G., however, did not grant OMC  any  lease but,  instead, granted ML to IMFA on 14.3.85 in  respect  of 26.62 hectares which was well within the area applied for by OMC.  OMC  has also made an application  for  mining  rights regarding 108.86 hectares in Kamrarda--Balipada villages and 220.15 hectares in Gurjang village which has not been grant- ed.  In the result, the OMC has not been granted  by  mining lease  despite its claim that the area in question has  been reserved  for exploitation in public sector though IMFA  has been  given  ML in respect of 26.62 acres out  of  the  area covered  by  these applications. However. from  the  details given  earlier pertaining to OCL, it will be seen  that  OMC has been permitted to exploit about 382.709 Hectares in  one area  on  an ad hoc basis and has leases over about  70  sq. Kms. and 3 sq. Kms. in other areas.   7. INDUSTRIAL DEVELOPMENT CORPORATION OF            ORISSA LIMITED (IDCOL)     This  company  submitted  two  applications  on  11.1.83 before the S.G. for grant of mining leases for chromium  ore over an area of 740.67 hectares in village Patna-Chingiripal and  171.73  hectares in village Gurjang.  The  applications were not disposed of by the S.G. within the specified  time. The  C.G.  set  aside the deemed refusal  and  directed  the application to be disposed of but no decision has been taken by  the S.G., apparently on the ground that the entire  dis- pute  regarding grant of mining rights for chromium  ore  is pending in this Court in W.P. 14116/84.               ORDERS PASSED BY THIS COURT     It  is  now necessary to refer to  the  various  interim orders  passed by this Court in this matter because some  of the parties have made a grievance that, though their  claims for  leases were pending at various levels, IMFA  and  FACOR have  been able to obtain from this Court  orders  directing the  grant  of leases to them and that  this  procedure  was wholly unjustified. To start with, it must be mentioned, the C.G.,  the  S.G. and certain officers of the C.G.  and  S.G. were  impleaded as respondents 1 to 6 in the  Writ  Petition with FACOR as the 7th respon- 63 dent. In the writ petition IMFA referred to its applications in respect of five blocks of land detailed in para 8 of  the writ  petition  and  alleged that,  while  the  petitioner’s application  for a lease in respect of the five  blocks  re- ferred to earlier remained pending for more than a year  for consideration in pursuance of the C.G. ’s directions for its disposal, the S.G. had granted mining leases for chrome  ore in  favour of FACOR which, according to the petitioner,  was similarly  placed.  In view of this allegation,  this  Court passed a detailed and stiff interim order on 27.9.84 in  the following words after hearing the counsel for the  petition- ers and the standing counsel to the S.G.:         "Mr.  R.K. Mehta, learned counsel appears on  behalf of  Respondents  Nos. 4 to 6 pursuant to the  notice  served

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upon  him as Standing Counsel for those respondents, and  he asks for time in order to enable him to obtain  instructions from  those respondents and to file a counter affidavit  for these  respondents.  We would, therefore, adjourn  the  Writ Petition  to 30.10.84. But in the meanwhile we would  direct respondents  Nos. 4 to 6 not to grant to anyone  else  other than  the petitioners mining lease for chromite ore  in  re- spect of the areas applied for by the petitioners and  form- ing  the subject matter of applications made by them as  set out  in paragraph 8 of the Writ Petition. Since the  project which is being set up by the petitioners is a very important export-oriented  project for which the necessary  permission has  already  been  granted by the Govt. of  India  and  the Consortium  of Foreign Banks has already agreed  to  finance the Project and it is a project which will earn considerable foreign exchange for the country and provide employment to a large number of workmen, we would direct the 4th  respondent to  consider and decide the application of  the  petitioners set out in paragraph 8 of the Writ Petition on or before 23. 10.84  after  giving an opportunity to  the  petitioners  of being  heard  in the matter. We have no doubt that  the  4th respondent  will keep in view the nature and  importance  of the  project and its foreign exchange earning  capacity,  as also  its potential for providing job employment to a  large number  of workmen in the State of Orissa while  considering and  deciding the applications of the petitioners.  The  4th respondent will also take into account the fact that similar mining  leases  have been given to the  7th  respondent  and prima  facie  there  does not appear to be  any  reason  for denying the same facility to the petitioners, for 64 otherwise the action of the 4th respondent may be liable  to be  condemned as discriminatory and arbitrary  and  moreover the 4th respondent cannot over-look the fact that if  mining lease  as applied for are not granted, the petitioners  will have  to  import chromite and that will be a  drain  on  the foreign exchange resources of the country. There are matters where  national  interest  alone must count.  It  is  indeed surprising  that though the Central Govt. directed  the  4th respondent to dispose of the application of the  petitioners more than a year ago, the 4th respondent has not yet  chosen to  dispose  of the applications. We would  direct  the  4th respondent  to carry out the direction given by us and  dis- pose of the applications of I.the.,petitioners in the  light of  the  observations contained in this order on  or  before 23.10.84.  The  decision  taken by the State  Govt.  on  the application  shall contain the reasons and will be  communi- cated  to the petitioners and also placed before this  Court along with the Counter affidavit. The previous order made by us  in regard to the production of files will stand and  the files  shall  be produced at the next hearing  of  the  Writ Petition. The Writ Petition stands adjourned to 30/10/84. On  coming to know of this order, FACOR had the matter  men- tioned and, after hearing the arguments of its counsel,  the Court  passed an order on 18.10.84, the material portion  of which reads as under:           "On  the application of Mr. Kapil Sibbal,  learned counsel appearing on behalf of the 7th respondent, we direct that  no decision shall be taken on the applications of  the petitioner until 30.10.84 unless a decision has already been taken.  In the event the decision has already been taken  it shall  not be implemented until then. The files relating  to the  applications of the petitioner and the  7th  respondent for  mining leases in respect of chromite ore shall be  sent

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to  the Registry of this Court forthwith in a  sealed  cover along with a responsible officer of the State Government  so as  to reach the Registry of this Court by 2 p.m. on  Satur- day, 20th October, 1984." A little later, Mr. Aikath was impleaded as respondent no. 8 and,  pending the filing of a counter affidavit by him,  the Court passed the following order on 28.2. 1985: 65 "   .....  We would direct the State Government to  give  to the  petitioners  within 15 days from today  the  leases  in respect  of the areas of item No. 3 and 26.62 hectares  area out  of  item  no.  4  set  out  in  para  8  of  the   writ petition   ......   so far as the remaining  controversy  is concerned,  we shall dispose it of on 2.4.85  after  hearing the parties." The  State Government will make an application to the  Union of  India within 5 days from today for the approval  of  the leases  and the Union of India shall grant approval to  them within 10 days". By the next date of hearing viz. 8/5/85,  ORIND entered into the fray and was ordered to be made respondent no. 9 in  the writ  petition. Pending further affidavits by  the  parties, the Court gave another direction in the following terms: "   ........  the State Government will give  to  respondent no.  7  within 3 weeks from today lease in  respect  of  180 acres in item no. 5set out in paragraph 8 of the writ  peti- tion  excluding the area which the State Government  propose to give to respondent no. 8. This order... is without preju- dice    to    the   rights   and    contentions    of    the parties  ............  The State will make an application to the Union of India within a week from today for the approval of the lease and the Union of India will grant its  approval within a period of 2 weeks from that date". Then  comes the order dated 30.4.87 by which the writ  peti- tion was disposed of. It needs to be set out in full:          "After hearing counsel appearing for the parties we consider that the proper order to be passed is to direct the parties who have applied for grant of mining leases to  file representations  before the Secretary Ministry of Mines  and Steel,  Department of Mines, Government of India within  ten days  from today setting out their claims in respect of  the areas  covered by their respective applications.  We  direct that  the Secretary; Department of Mines shall consider  the claims  of the various parties in respect of the areas  cov- ered  by their application in the light of the  observations contained in the orders already passed by the Court; namely; the Order dated 27th September, 1984 and 66 8th  May 1985 after duly taking into consideration  the  re- quirements  of  the manufacturing industries  concerned  and decide  about the question of grant of mining  leases  after giving  an  opportunity of being heard to the  parties  con- cerned. Final orders in the matters should be passed by  the Secretary  within  a period of six weeks from today.  It  is made  clear  that the memoranda of compromise said  to  have been  filed in the High.Court of Orissa will be  treated  as not binding either on the parties or on the State Government and  the whole question will be treated as being fully  open for  fresh consideration and determination by the  Secretary Department of Mines, Government of India. The status quo  as obtaining  at present with regard to the carting out of  the mining  operations  over the areas will continue  until  the representations are disposed of by the Secretary pursuant to this order within six weeks from today. As already indicated the  entire matter will be fully open for  consideration  by

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the Secretary and the orders passed by this Court should not be treated as final in regard to the allocation of the areas to  the  different  claimants. The fact  that  certain  writ petitions  are pending before the High Court of Orissa  will not  in  any way hamper the effective carrying out  of  this order. It is needless to add that the disposal of the matter by  the  Secretary should be by a reasoned order.  The  writ petition is disposed of on the above terms." Sometime later, IMFA moved an application for  clarification of  the Court’s order dated 30.4.87. On this  the  following order was passed on 6.10. 1987:          "There  are  several  claimants for  the  grant  of mining  leases in different parts of Orissa.  This  question has  come up from time to time before this Court. The  first relevant  order was the one dated the 28th  February,  1985. Therein a bench consisting of P.N. Bhagwati, J. (as he  then was) and V. Balakrishna Eradi, J. directed the State Govern- ment  to  give to the petitioners M/S Indian Metal  &  Ferro Alloys Ltd. within 15 days from today the leases in  respect of the full areas of Item No. 3 and 26.62 hectares area  out or’  Item No. 4 as set out in paragraph 8 of the Writ  Peti- tion.  This Court further directed so far as  the  remaining controversy was concerned that the same shall be disposed of later on 67 by  giving  certain other consequential  directions  as  the petitioners  might seek which it is not necessary to  refer’ here. It was directed that the State Government was to  make an application to the Union of India within 5 days from  the date  of  the order for the approval of the  leases  by  the Union  of India and which should grant approval  within  ten days therefrom.     Thereafter  it appears that on 8.5.85 another order  was passed  by the same bench of this Court wherein it  was  di- rected  that the Orissa Industries Ltd. should be joined  as respondent  No. 9 in the Writ Petition and respondent No.  9 would file counter affidavit and directions were also  given for filing rejoinder, if any. It was directed that  "pending hearing  and final disposal of the writ petition  the  State Government  would give to the respondent No. 7 within  three weeks from today, lease in respect of 180 acres in Item  No. 5,  set  out in paragraph 8 of the writ petition  the  State excluding  the area which the State Government  proposed  to give to respondent No. 8." It was stated that this order was made without prejudice to the rights and contentions of  the parties directions were given for hearing of the writ  peti- tions.     Finally  the order with which we are directly  concerned with  is  the  order dated the 30th April,  1987  which  was passed  by  a  bench consisting of  Hon’ble  V.  Balakrishna Eradi,  J. and one of us G.L. Oza, J. The said order is  set out in paragraph 2 of the C.M.P. Nos. 16435-37/87. It is not necessary  to set out in detail the order. It may  be  noted that  the Court directed that the proper order to be  passed was  to  direct  the parties who had applied  for  grant  of mining |eases to file representations before the  Secretary, Ministry of Mines and Steel, Department of Mines; Government of  India within ten days from that date setting  out  their claims  in respect of the areas covered by their  respective applications.  This Court directed the Secretary  Department of  Mines  to consider the claim of the various  parties  in respect  of the areas covered by their applications  in  the light  of the observations contained in the  orders  already passed  by  this Court, namely, the orders  dated  the  22nd September, 1984 and the 8th May, 1985 after duly taking into

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consideration  the requirements of the manufacturing  Indus- tries concer- 68 ned and decide about the question of grant of Mining  Leases after  giving an opportunity of being heard to  the  parties concerned.  Thereafter, the present applications  have  been made by different claimants seeking for directions for being added  for consideration by the Secretary subject  to  their existing  rights  under  the existing leases  and  grant  of future  leases. Mr. Kapil Sibbal, counsel appearing for  the respondent No. 7 and Dr. Gauri Shankar counsel appearing for the  applicant submitted that there are existing  leases  in their favour which cannot be entertained (sic) by any  order passed  by the Secretary and they are entitled to  work  out their  full  rights.  On the other hand  the  Orissa  Mining Corporation  as well as Industrial  Development  Corporation Orissa are also claiming for grant of Mining leases  includ- ing  respondent No. 8 who is alleged to have found  out  the mines.  In  our opinion the proper order would  be  to  pass order in terms of the order passed by this Court on 30.4.87. The claims of the.different claimants including Mr.  Sibal’s clients as well as Dr. Gauri Shankar’s should be  considered in  accordance with law by the Secretary in making his  con- siderations. The Secretary should bear in mind the  previous orders made in their favour and the previous leases and  the rights,  if any, granted therefrom and  their  consequences. Similarly  the public benefit and public  interest  involved and  proper  exploitation of the mines should  be  borne  in mind. Bearing these facts it is directed that the  Secretary should  arrive at a just, equitable and  objective  decision and  send  a  report to this Court within  three  months  on receipt  of  the copy of the order within a  fortnight  from today.  The Secretary should only consider the  applications of  those who had existing leases applications at  the  time when the order of 30.4.87 was made and not of those who  had no existing leases applications on 30.4.87. The copy of  the report to be made shall be supplied to the parties." It  is in pursuance of this order Rao has heard the  parties and submitted the report which has now been placed before us for further directions. OTHER PENDING APPLICATIONS     It  is  necessary, to clear the ground, to  refer  to  a number  of applications made by the various  parties  subse- quent to the order of this Court dated 30.5.87: 69      (i)  By C.M.P. No. 13347/87, FACOR pointed out  that  a lease  in  respect of 180 acres (being part of item  5)  had been  granted to it by the S.G. on 13.8.85 in  pursuance  of this Court’s order dated 8/5/85. It claimed that it had made substantial  investments,  engaged a huge labour  force  and started  mining in this area. It was disturbed by  the  fact that OMC and IDCOL had suddenly entered into the picture and claimed before Rao that they were entitled to leases on  the basis of reservations. According to the applicant, only  the parties  to the writ petition could be heard by Rao and  OMC and  IDCOL should not be permitted to join  the  proceedings before Rao and allowed to disturb the leases directed to the given to it and IMFA by the orders dated 28.2.85 and 8.5.85. A second point taken in the application was this: "13. That it is submitted that the order dated 30.4.87  does not  make it clear as to under what statutory authority  the Secretary  to the,Government of India shall dispose  of  the representations  made  by the various parties  to  the  writ petition.  This  matter  requires to be  clarified  by  this Hon’ble Court".

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This  application was opposed by the OMC and the IDCOL.  The Court,  by its order dated 6.10.87, rejected the  first  re- quest  and allowed OMC and IDCOL to participate in the  pro- ceedings before Rao; it was directed that the claims of  all parties  whose  applications for lease  were  subsisting  on 30.4.87  should be heard by Rao. It was, however,  clarified that  in arriving at his conclusions, the  Secretary  should bear in mind the previous orders made in favour of IMFA  and FACOR,  the previous leases and rights granted to  them  and their consequences. The second aspect to which the  applica- tion referred was, however, not clarified.     (ii) A second application of FACOR (C.M.P. 22588/77) was directed  primarily at the IMFA. It was submitted here  that the  order  dated 28/2/85 needed to be  recalled  and  FACOR allowed  to put forward claims in respect of the  areas  di- rected to be leased out to IMFA as IMFA had not at all  been operating its export-oriented unit (EOU) since 1984 and  was attempting  to divert the ore to its domestic units  whereas FACOR  was the one that was operating an EOU and needed  all the ore it could get. No notice was issued on this  applica- tion apparently as all the claims had already been  referred to Rao.     (iii) In August 1987, IMFA moved C.M.P. 21578/1987. This was  in the nature of a counter to C.M.P. 13347/87 moved  by FACOR. This 70 application  also prayed that the consideration  before  the Rao Committee should be confined to the parties to the  writ petition.  IMFA also took this occasion to request that  the area of 180 hectares leased out to FACOR by the order  dated 3/5/85  should  be  treated as provisional  and  taken  into account  in  the allotment to be decided on  by  Rao.  FACOR tiled  a reply. No orders have, however, been passed on  the petition. again. apparently since all the claims were before Rao. (iv)C.MP.  9284/88 was filed by OCL to quash the "order"  of 1.2.88  passed by Rao which has totally rejected the  claims of  OCL. No orders on this petition have been passed so  far but this will now have to be disposed of in the light of the conclusions  we may reach in regard to OCL’s claims  on  the merits and no separate orders need to be passed thereon.     (v)  I.A. 1/89 was filed by ORIND challenging  the  cor- rectness of Rao’s findings and praying that, pending dispos- al of W.P. 14116/84 which according to it stands  undisposed of  despite the orders dated 30/4/87 and 6/10/87--the  S.G., OMC,  Tisco. Sirajuddin & Co. and Mysore Minerals  (the  re- spondents  to the application) should be directed to  supply to  ORIND 3000 M/T of chrome ore per month. No  orders  have been  passed on this application so far but, since the  writ petition itself is now being disposed of, no interim  orders as prayed for in this application are at all called for. STATUTORY INADEQUACIES     1)  Delay and Ineffectiveness: Now the first thing  that strikes one on perusing the course of the proceedings in the case is the extremely unsatisfactory and impractical  proce- dure followed under the Act in regard to the grant of mining leases  for important minerals like chrome ore. The  statute envisages  that the application should be made to  the  S.G. and  disposed of by it within a prescribed period.  But  the course  of events in the case and other reported cases  show that  this  time limit is observed more in  breach  than  in observance. Anticipating this possibility, the rules provide that, if an application is not disposed of within the statu- tory period, it shall be deemed to have been refused. So far so  good, as at least, the applicant can, on the  expiry  of

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the period, have recourse to a higher authority. The  remedy provided  to the aggrieved applicant is to file  a  revision application  before  the  C.G. under S. 30 of  the  Act  for revision  of the order within three months thereafter.  Rule 55 enables the C.G., after hearing all necessary parties, to "confirm,  modify or set aside the order or pass such  other order in relation to 71 thereto as the Central Government may deem just and proper". A note under rule 55 also says that "during the pendency  of a revision application the State Government should not  take any  action  in respect of the area, which  is  the  subject matter  of the revision petition as the matter  becomes  sub judice".  Having regard to the wide powers  thus  conferred. one  would except the C.G. to dispose of the application  on merits,  either  granting the lease in whole or in  part  or rejecting  it.  But, curiously, in most of the  cases  which come  up before Courts as also in this case, the C.G.  seems reluctant to pass any order except to set aside the  "deemed refusal"  and direct the S.G. to dispose of the  application afresh within a specified period. That was the order passed, for  example, in IMFA’s case the time given being 200  days. But the S.G. does not seem to pay any heed to this direction and no order is passed within a reasonable period. Well, one would  think a second approach to the C.G. may  be  helpful. IMFA tried it but got back a reply to say that the C.G.  was helpless  in the matter. The original order in revision  has stated:  "should the State Government fail to pass order  on the  petitioner’s  application  he may seek  redress  in  an appropriate Court of Law, if so advised" and the  subsequent application was rejected by the C.G. on the ground that  the C.G.  becomes  functus officio when it passes the  order  in revision  and has no jurisdiction to revise it. So all  that the applicant can do is to wait for some time and then  file a writ petition. Even if the writ petition were to be  heard quickly  all that the Court can do is to direct the S.G.  to dispose  of  the application expeditiously. This is  an  ex- tremely cumbrous and ineffective procedure in which  several years pass but the application stands still. Thus, for e.g., ORIND  made an application in 1971 and is yet to  know  what the fate of its application would be. It puzzles ’us why the C.S.,  even in the first instance, could not dispose of  the application  on merits in the light of the  report  received from the S.G. and after hearing concerned parties. (2)  Proliferation of applications: Another problem  created by  the passage of time is the entry of new parties  in  the fray.  We shall later point out that, though S. 11 tries  to enunciate  a simple general principle of "first come;  first served" in practice, priority of an application in point  of time  does not conclude the issue. In this case itself.  for instance: during the period ORIND’s application of 1971  has been  under consideration before various authorities and  in the writ petition filed in Orissa High Court, several  other competitors have come into the picture. The statutory provi- sion is not clear as to which of the applications in respect of  any particular area, are to be considered  together.  If ORIND’s application of 1971 for example: were to be 72 considered  only  on the basis of the persons who  had  made applications  at that time or a short time before or  after, one  result would follow; if, on the other hand: if all  the applications pending for disposal at the time ORIND’s appli- cation  is to be granted or rejected are to  be  considered. the  result would be totally different. Since the  interests of the nation require that no lease for mining rights should

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be  granted without all applications therefore at any  point of  time being considered and the best among them chosen  or the  areas distributed among such of them as are most  effi- cient  and  capable; the latter is the only  reasonable  and practical  procedure. That is why this Court, in  its  order dated 30.4.87: laid down--we think rightly--that all  appli- cations  pending for consideration as on 30.4.87  should  be considered by Rao. (3)  Procedure for consideration of applications: A  further confusion  created  in  this case is due to  the  fact  that leases  of  different areas in different villages  and  dis- tricts  have been applied for. No attempt has been  made  to locate,  with  reference to any compact block of  land;  who exactly  are the competitors and whether there are areas  in respect of which there is no competition at all. It will  be seen  later  how this has caused difficulty in  the  present case. But what we wish to point out here is that the statute must  lay  down  clearer guidelines  and  procedure.  Having regard to the new avenues for vast industrial development in the  country, the more workable procedure would be  for  the S.G. to call for applications in respect of specified blocks by  a  particular date and deal with  them  together:  other later  entrants not being permitted in the field.  Otherwise only  confusion will result, as here. There was a time  when the S.G. looked to private enterprises for mineral  develop- ment in its territory. Even now, it has been stated that 87% of the State territory containing chromite is under lease to one  industrial  house. Of late,  however,  competition  has crept  in. The S.G. has its own public  sector  corporations and  various entrepreneurs are interested in  having  mining leases  for  their purposes. It is,  therefore:  vital  that there  should be a better and detailed  analysis,  district- wise and area-wise and that a schedule for consideration  of applications in respect of definite areas should be drawn up with  a  strict time frame so that the State  is  no  longer constrained  to  deal with sporadic applications or  make  a routine  grant  of leases in order of priority  of  applica- tions.  These are aspects which call for careful  considera- tion and appropriate statutory amendments. IS S. 11(2) CONCLUSIVE? Now,  to  turn  to  the contentions  urged  before  us:  Dr. Singhvi, who 73 appeared for ORIND, vehemently contended that the  rejection of the application of ORIND for a mining lease was  contrary to the statutory mandate in S. 11 (2); that, subject only to the provision contained in S. 11(1) which had no application here, the earliest applicant was entitled to have a  prefer- ential right for the grant of a lease; and that a considera- tion of the comparative merits of other applicants can arise only in a case where applications have been received on  the same day. It is no doubt true that S. 11(2) of the Act  read in isolation gives such an impression which, in reality,  is a  misleading one. We think that the sooner such an  impres- sion  is  corrected by a statutory amendment the  better  it would be for all concerned. On a reading of S. 11 as a whole one  will  realise  that the  provisions  of  sub-section(4) completely  override  those of sub-section  (2).  This  sub- section preserves to the S.G. a right to grant a lease to an applicant out of turn subject to two conditions: (a) record- ing of special reasons and (b) previous approval of the C.G. It  is  manifest, therefore, that the S.G. is not  bound  to dispose of applications only on a "first come, first served" basis. It will be easily appreciated that this should indeed be  so  for the interests of  national  mineral  development

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clearly  require  in the case of major  minerals.  that  the mining  lease  should  be given to that  applicant  who  can exploit it most efficiently. A grant of ML in order of time- will not achieve this result.     In  the context of his submission pleading for  priority on  the basis of the time sequence- Dr. Singhvi referred  to certain  observations  in the decisions  reported  as  Ferro Alloys Corporation of India v. Union, I.L.R. 1977 Delhi  189 at  p. 196 and as Mysore Cements Ltd. v. Union, A.I.R.  1972 Mysore 149 at p. 15 1. we do not think these decisions  help him. In the former case; an application by FACOR for a lease was  rejected on the ground that an earlier application  was being  accepted.  FACOR contended this was wrong-  that  the S.G.  could  not have refused to look into  its  application merely  because another applicant had a  preferential  right under  S. 11(2) and that its application as well as that  of the earlier applicant should have been considered  together. It is in the situation that the Court observed that rule  11 primarily  embodies  the general principle  of  "fist  come- first  served"  and  an out-ofturn  consideration  under  S. 11(4.)  was an exception for which a strong case had  to  be made  out. The petitioner could not have a grievance if  the general principle was followed. So also, in the latter  case an  earlier  application having been accepted  and  a  lease granted,  the consideration of a later application was  held to  be  uncalled for. These decisions cannot be  treated  as authorities  for the proposition that the S.G. is  bound  to grant an earlier application as soon as it is received 74 and cannot wait for other applications and consider them all together and grant a later one ’if the circumstances set out in rule 11(4) are fulfilled. That apart it has to be  remem- bered  that  the S.G. did reject ORIND’s application  by  an order  dated  23.10. 1973. This order was set aside  in  the C.G.  on  20.2. 1977 and the S.G. directed  to  consider  it afresh.  The  S.G. did not comply with this order and  so  a writ petition was filed by ORIND which was pending when this writ  petition  was" filed. Subsequently the High  Court  on 9.2.89 directed the S.G. to consider and ,dispose of ORIND’s application on merits. The S.G. on’ 7.4.89 dismissed ORIND’s application  on the ground that the issue is before  us  and hence the S.L.P. against the order of rejection of the  S.G. Even assuming that we accept the S.L.P. filed by ORIND  that will only entitle ORIND to have its application reconsidered for  grant  along  with such other applications  as  may  be pending  as  on  the date of such  reconsideration.  In  the context  of  the scheme of the Act and the importance  of  a lease  being granted to one or more of the better  qualified candidates where there are a number of them it would not  be correct  to say that as the S.G.’s order of  29.10.1973  has been  set aside ORIND’s application should be  restored  for reconsideration on the basis of the situation that prevailed as on 29.10. 1973 and that therefore it has to be  straight- away  granted as there was no other application  pending  on that  date before the S.G. In matters like  this  subsequent applications cannot be ignored and a rule of thumb  applied. We  are unable to accept the submission of Dr. Singhvi  that the application of ORIND being the earliest in point of time should have been accepted and that we should direct  accord- ingly.  As to how far the requirements of S. 11(4) are  ful- filled  in the present case that is an aspect which will  be considered later. PROMISSORY ESTOPPEL     It  will  be convenient here also to deal  with  another argument raised by Dr. Singhvi based on grounds of promisso-

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ry estoppel. Dr. Singhvi points out that when ORIND  applied to  the C.G. for revision of the order of rejection  of  its application  on  23.10.73 the S.G. on 26.2.74 wrote  to  the C.G. as follows:           M/s Orissa Industries Limited made ’representation to  the State Government on’ 15.12. 1973  for  reconsidering grant  of lease to serve the captive requirements  of  their refractory  plant.  They also brought to the notice  of  the State Government an export order of refractories of sizeable value of about Rs.2 crores received from National 75 Iranian  Steel Mills. Teheran Chromite, being essential  raw material  for manufacture of refractories they  pressed  for grant  of Mining Lease. After careful consideration  of  the representation, the State Government have revised the policy of  reserving  the chromite area only  for  exploitation  in public  sector  and have decided for grant  of  chromite  to serve the captive requirements of industry within the  State should be given first priority. Accordingly, it is  proposed to  grant the mining lease for chromite over  the  available areas subject to revision of the previous order of the State Government  by  Government of India u/s 30 of  the  Mines  & Minerals  (Regulation & Development) Act, 1957 and u/s  5(2) of the said Act. Steps are being separately taken to exclude this area from the operation of reservation notification for exploitation of chromite in the public sector.     3.  In the interest of the local industries.  the  State Govt.  do not intend to throw open the area after  releasing from reservation. Approval of Government of India would also be  necessary for not throwing open the area in the  relaxa- tion of the rule 58 of the Mineral Concession Rules 1960.     4.  Out  of  1129.25 hectares applied for,  an  area  of 379.93 hectares is covered by overlapping of applied  leases or applications including an area of 142 hectares- which  is being  separately  recommended to Government  of  India  for grant of Mining lease in favour of M/s Orissa Cement  Limit- ed. As such the net area available for grant of mining lease is therefore. 749.32 hectares.     5. The State Government having rejected the  application of the party in Government Proceeding No. 1043 dated  23.10. 1973  are got obtain to revise their own order  by  granting Mineral  Concession as instructed in your department  letter No. MV-I(445)/61 dated 5.1.72. The case is therefore. recom- mended to Government of India for grant of Mining Lease over an area of 749.32 hects. in favour of M/s Orissa  Industries Limited revising the above order of the State Government u/s 30  of the Mines and Minerals (Regulation  and  Development) Act,  1957. As chromite ore is specified mineral  under  the first  schedule of the Act- approval of Government of  India is also requested u/s 5(2) of the Act. 76          6. I would therefore, request you to kindly  obtain and  communicate orders of Government of India  on  revision u/s  30 of Mines & Minerals (Regulation & Development)  Act, 1957 and approval u/s 5(2) of the said Act and in relaxation of  Rule 58 of the Mineral Concession Rules. 1960 for  grant of Mining Lease for chromite over an area of 749.32 hectares in Cuttack District in favour of Orissa Industries Limited." Simultaneously,  it is pointed out, the S.G., while  sending its comments to the C.G. on the contents of another revision application  filed  by ORIND against the  rejection  of  its application  (also dated 5.7.71) for a lease of 446.38  hec- tares  in village Sukrangi of Cuttack District, had this  to say:          "Recently  in  State Government letter  No.  1747MG

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dated 26.2.74 chromite bearing area to the extent of  749.32 hectares in Cuttack district has been recommended to Govern- ment  of India for grant in favour of M/s Orissa  Industries Ltd. The need of M/s Orissa Industries Ltd. will be met from this.  It is the responsibility of the party to  obtain  raw materials  for its factory and the State  Government  cannot take such responsibility as contended by the petitioner. The party  is at liberty to purchase the chrome ore from  Orissa Mining Corporation. XXX                                                      XXX XXX          The  State Government have already  recommended  an area in favour of M/s Orissa Industries Ltd. to the Govt. of India to meet the requirements of their industry. The  State Government  have already decided to grant the  area  applied for by M/s Orissa Industries Ltd. in their M.L.  application under revision to M/s Orissa Mining Corporation Ltd. who are now  working the area as an agent of the  State  Government. Hence  the  question  of granting this area  to  M/s  Orissa Industries Ltd. does not arise." Also, on 5.3.74 the S.G. published a notification  dereserv- ing  the  said 749.32 hectares (said to  have  been  earlier reserved for exploitation in the public sector by a  notifi- cation of 3.7. 1962). Dr. Singhvi submitted on the  strength of this correspondence and notification that the S.G. having sought to justify its rejection of ORIND’s application for 77 446.38  acres on the ground that the  company’s  application for  749.32 hectares was being recommended after  dereserva- tion, it was not open to the S.G. now to take up a different stand and that ORIND’s application for 1229.25 hectares  now under consideration should have been granted at least to the extent  of  744.32 hectares the dereservation and  lease  in favour  of ORIND, of which had been recommended by the  S.G. itself  as  early as 1974. In support  of  this  contention, learned counsel relied on the observations made in a  series of  decisions  of this Court: Kanai Lal  Sur  v.  Paramnidhi Sadhukhan,  [1958]  2 SCR 366; M/s  Motilal  Padampat  Sugar Mills  Co.  (P)  Ltd. v. State of Uttar  Pradesh  and  Ors., [1979] 2 SCR 641; Gujarat State Financial Corporation v. M/s Lotus Hotels Pvt. Ltd., [1983] 3 SCC 379; Surya Narain Yadav &  Ors.  v.  Bihar State Electricity Board  &  Ors.,  [1985] Suppl.  1 S.C.R. 605; Union of India & Ors. v. Godfrey  Phi- lips  India Ltd., [1985] Suppl. 3 SCR 123 and  Mahabir  Auto Stores & Ors. v. Indian Oil Corporation & Ors., [1990]  J.T. 1 S.C. 363.     This argument is interesting but overlooks certain  very important  relevant  circumstances.  As  mentioned  earlier, ORIND’s  revision  petition was disposed of by the  C.G.  on 23.2.  1977. This order contains no reference to the  S.G.’s letter  of  26.2.74;  on the contrary, it  proceeds  on  the footing  that  no comments had been received from  the  S.G. Possibly  this is because the letter of 26.2.74 was  not  in the form of comments on the ORIND’s revision application but was  in  the form of the S.G.’s recommendations  on  ORIND’s representation  to it dated 15.12.73, although it does  sug- gest that the C.G. could set aside the order of 23.10.73 and direct  the grant of a lease to ORIND in respect  of  749.32 hectares.  Be  that as it may, the C.G. did not  accept  the recommendation  of the S.G. Indeed, we find on record  that, having  regard  to a letter of the C.G. dated  15.5.74,  the S.G.  sent  a letter dated 17.7.74 withdrawing  the  earlier recommendation  made by it on 26.2.74 for the  allotment  of 749.32  acres  to ORIND. In view of this  letter,  the  C.G. simply set aside the order of 23.10.73 on the ground that it

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was not a speaking order and directed the S.G. to dispose of ORIND’s  application  within 100 days in the  light  of  the letter of the C.G. dated 15.5.74. Interestingly, this letter had  been written in reply to a proposal from the S.G.  that the  exploitation  of chromite had to be  entrusted  to  the public  sector. Accepting this suggestion, the  letter  pro- ceeded to lay down certain broad priorities on the basis  of which  leases could be granted and certain other  directions in respect of research and development. The position, there- fore, is that the C.G. did not accept the S.G.’s recommenda- tions regarding the grant of a lease to ORIND in respect  of 749.32 hectares out of the 1129.25 78 hectares  applied  for.  There was, however,  delay  in  the disposal  of the application by the S.G. When the S.G.  took up  consideration of the matter once again it took  note  of three  circumstances  to reject the  application  of  ORIND. These were: (i)  One of the directions in the C.G.’s letter  of  15.5.74 was  that "no lease of lumpy ore for metallurgical  and  re- fractory  grade be granted to private sector  unless  mining undertakings  of  the State or Central  Government  are  not interested  in the exploitation of ore in these  leaseholds" and the requirement of ORIND was for lumpy chromite ore; (ii) Two notifications had been issued on 28.4.77 and 3.8.77 reserving  certain  areas  for exploitation  by  the  public sector.  The former dealt specifically with the 749.32  hec- tares which had been proposed for allocation to ORIND in the letter of the S.G. dated 26.2.74. The latter covered a  huge area of 1460 sq. km. in various districts of the State; (iii)  The claims of all applicants had been  considered  by Rao and Rao had come to the conclusion that no mining leases need be given to ORIND. We  shall consider later the claim of ORIND on merits.  But, for  the present, we only wish to point out that no  grounds have been made out which could support a plea of  promissory estoppel.  The grant of a lease to ORIND had to be  approved by  the  C.G. The C.G. never approved of it. The  mere  fact that  the S.G., at one stage, recommended the  grant  cannot stand  in the way of their disposing of the  application  of ORIND  in the light of the C.G.’s directives.  Perhaps,  the highest  that ORIND can claim is that, since this  lease  of 749.32 acres has not come through, the SG’s order  rejecting its application in respect of 446.38 hectares deserves to be considered.  But that area is not the subject matter of  the present  S.L.P.  by ORIND. Moreover, ORIND  has  not  placed before  us any information as to what happened to the  revi- sion  petition  filed  by it against the  rejection  of  the application  in  respect of 446.38 hectares of  the  further proceedings,  if  any, in relation thereto.  We  express  no opinion as to ORIND’s entitlement to a lease on that  appli- cation  in  case it does not succeed in its  claim  here  in respect  of  749.32 hectares. It will be open  to  ORIND  to pursue such remedies in respect thereof as it may be advised and as may be available to it in law. 79 THE RESERVATION POLICY     The  principal obstacle in the way of ORIND as  well  as the  other private parties getting any leases was put up  by the  S.G.,  OMC  and IDCOL. They claimed that  none  of  the private applications could at all be considered because  the entire  area  in all the districts  under  consideration  is reserved for exploitation in the public sector by the  noti- fication  dated 3.8.77 earlier referred to. All the  private parties  have  therefore joined hands to fight the  case  of

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reservation  claimed  by the S.G., OMC and  IDCOL.  We  have indicated  earlier that the S.G. expressed its  preparedness to accept the Rao report and to this extent waive the  claim of  reservation. Interestingly, the OMC and IDCOL  have  en- tered caveat here and claimed that as public sector corpora- tions  they could claim, independently of the S.G.’s  stand, that  the leases should be given only to them and  that  the Rao  report  recommending leases to IMFA, FACOR  and  AIKATH should not be accepted by us.     The  relevant provisions of the Act and the  rules  have been  extracted by us earlier. Previously, rule 58  did  not enable the S.G. to reserve any area in the State for exploi- tation  in the public sector. The existence and validity  of such  a power of reservation was upheld in Kotiah  Naidu  v. State  of A.P., A.I.R. 1959 A.P. 185 and Amritlal  Nathubhai Shah v. Union, A.I.R. 1973 Guj. 117, the latter of which was approved  by this Court in [1977] 1 S.C.R. 372. (As  pointed out earlier, rule 58 has been amended in 1980 to confer such a  power  on  the S.G.). It is also not in  dispute  that  a notification  of reservation was made on 3.8.77.  The  S.G., OMC  and IDCOL are, therefore, right in contending that,  ex facie, the areas in question are not available for grant  to any  person other than the S.G. or a public sector  corpora- tion [rule 59(1), proviso] unless the availability for grant is renotified in accordance with law [rule 59(1)(e)] or  the C.G.  decides  to relax the provisions of rule  59(1)  [rule 59(2)  ].  None of those contingencies have  occurred  since except  as  is indicated later in this judgment.  There  is, therefore, no answer to the plea of reservation put  forward by the S.G., OMC and IDCOL.     The private applicants seek to get over this  difficulty in  several ways. In the first place, they all  vociferously urge  that this plea has been taken by the  S.G.  belatedly, that the OMC and IDCOL have come into the picture very  late and  that  this plea should not be allowed to be  raised  at this  stage. The learned Advocate General for the  State  of Orissa  has pointed out, we think rightly, that there is  no substance 80     this grievance. The objection regarding reservation  was raised by the S.G. at the very first opportunity it had,  in a  preliminary  counter affidavit filed by it  in  the  writ petition  dated 29.10.1984. The  counteraffidavit  mentioned about  the reservation in no uncertain terms and a  copy  of the relevant page of the Orissa Gazette dated 12.8.77  which contained the reservation notification dated 3.8.77 was also annexed to the counter affidavit. Reference was also made to the  statutory provisions and judicial decisions. The  claim was  reiterated,  when ORIND joined the  proceedings,  in  a reply  filed by the State to the counter affidavit filed  by ORIND on 22.8.85; this reply affidavit refers to the  letter of  the C.G. dated 15.5.74 and the notification of  reserva- tion dated 28.4.77 pertaining to the 749.32 acres in respect of  which ORIND had made an application. In a further  coun- ter-affidavit  dated 24.11.89 filed "in reply to  the  addi- tional submissions dated 17.10.89 filed on behalf of ORIND", the notification of 3.8. 1977 has also been referred to. OMC and IDCOL had submitted their applications for lease but  no orders had been passed thereon. When they came to know  that the  applications of IMFA and FACOR were considered by  this Court and certain interim orders passed, they approached Rao to  consider  their applications as well. This  request  was opposed  by the other parties whereon OMC and  IDCOL  sought and obtained the directions of this Court that their  appli- cations  should also be considered by Rao. Before Rao,  they

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supported the S.G. plea of reservation. In the circumstances Set  out above, it is difficult to accept the contention  of the various private applicants that the plea as to  reserva- tion should not be entertained at all on the ground of delay and 1aches.     It is then argued that though the S.G. may have formally notified  a reservation, it has not been very serious  about this and has always been willing to consider private  appli- cations for leases. In support of this contention,  reliance is placed on the following circumstances:        (a)  On 26.2.74, the S.G. has clearly  expressed  its willingness  to  dereserve  the area of  749.32  acres  and, indeed,  followed  it up on 5.3.74 with  a  notification  of dereservation.        (b) Though the S.G. claims that reservation is neces- sary to meet the S.G.’s requirements because 81% of chromite ore  rich lands already stand leased out to a private  party (TISCO), the S.G. proceeded to renew the grant in favour  of that party.        (c)  The  S.G. has been willing enough to  lease  out lands to private parties: (i) The S.G. has granted leases to FACOR on 81 9.2.72,  7.10.72 and 12.11.76 in respect of  157.05  hects.. 133.31  hects.  and  72.84 hects.  respectively  in  Bokhla, Kathpal  and Ostapal villages. (ii) it has entered  into  an agreement with AIKATH to grant a lease in respect of a  part of  the  land  applied for by him in item 8;  (iii)  it  has agreed to lease out item 3 and 26.62 hectares out of item  4 in favour of IMFA; (iv) it agreed to lease out 180 acres  in item 5 in favour of I-FACOR.        (d)  Even at this final stage of hearing of the  writ petition.  the  Advocate General of the State  has  conceded that  the S.G. is prepared to abide by the Rao  report  i.e. the  S.G.  is  willing to grant leases to  IMFA,  FACOR  and AIKATH but not to OCC or ORIND. This is patently discrimina- tory.     We  do  not,  however, think  that  these  circumstances establish  that the State is not serious about its  plea  of reservation.  So far as item (a) is concerned. we  have  al- ready pointed out that this was the initial attitude of  the Government  but this policy was changed in pursuance of  the C.G.’s  letter dated 15.5.74 and its order on ORIND’s  revi- sion  application. The S.G. itself had, in  fact,  withdrawn the  recommendations  made  on  26.2.74  by  its  letter  of 17.7.74.  The  thought of dereservation had  therefore  been given up by the S.G. in July’74 itself though the  notifica- tion of dereservation was superseded only in 1977. In regard to  items (b) & (c), the position is that the lease of  1976 was  after the dereservation of 5.3.74. The leases to  FACOR in  1972 (the details of which are not available before  us) are stated to have been granted after obtaining C.G.’s order for relaxation. The full circumstances in which the lease in favour  of TISCO was renewed are not before us  but  perhaps such renewal was dictated by the nature of the industry  run by TISCO and its importance for the economy of the State and the country. These apart, the Court approved of the grant of leases  to IMFA and FACOR. So far as (d) is  concerned,  the learned  Advocate General of Orissa has made it  clear  that the  S.G.  does not accept the Rao report in so  far  as  it ignores  its claim of reservation. The concession made  only is  that since the Rao Committee, in recommending  grant  of leases  to  IMFA and FACOR is only giving effect to  a  fait accompli  in  pursuance of the interim  directions  of  this Court, they are willing to abide by it. It will therefore be

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clear that, except for two or three instances, where  leases have  been  granted  by the S.G. on its own,  the  S.G.  has generally  and  consistently adhered to its stand  that  the chromite bearing lands are reserved for exploitation in  the public sector. The rules permit the C.G. to relax the  rigid requirements  of reservation in individual cases  after  re- cording special reasons. We are 82 not here called upon to decide whether the relaxations  made in the above eases were in accordance with the rules or not. It  is  sufficient to say here that  these  exceptional  and isolated  instances of lease are not sufficient  to  sustain the plea of the parties before us that the policy of  reser- vation  is merely being raised as a formal defence  and  has never been seriously implemented by the S.G.     Dr. Singhvi also raised a plea of arbitrariness and mala fide  to challenge the reservation policy. He urges  on  the first count that it was not open to the S.G. to go on shift- ing  its reservation policy from time to time  without  ade- quate  reasons, Such conduct was also vitiated, he said,  as amounting  to malice in law and referred in this context  to the  observations  of this Court in Venkataraman  v.  Union, [1979]  2 SCR 202. We do not think this contention  has  any substance.  Chromite ore is an important major  mineral  and the  importance of its conservation and  proper  utilisation for  our country’s development cannot be gainsaid. The  S.G. rightly  decided  upon a policy of reservation in  1967  and this was kept up till 1974. In February 1974 the S.G. was in favour  of  freer issue of mining leases but  gave  up  this policy in pursuance of the C.G.’s letter of 15.5.74.  Reser- vation  was, therefore, clamped in 1977 again.  Applications could  still be considered to see how far a  relaxation  was permissible  having regard to the nature of the  applicant’s needs,  the purpose for which the lease was asked  for,  the nature of the ore sought to be exploited, the relative needs of the State, the availability of a public sector  undertak- ings  to  carry out the mining more  efficiently  and  other relevant  considerations. There is no material on record  to substantiate a plea that the S.G. has been acting arbitrari- ly or mala fide in its policy formulations in this regard.     Our conclusion that the areas in question before us were all  duly reserved for public sector exploitation does  not, however,  mean  that private parties cannot be  granted  any lease  at all in respect of these areas for, as pointed  out earlier, it is open to the C.G. to relax the reservation for recorded  reasons. Nor does this mean, as contended  for  by OMC and IDCOL, that they should get the leases asked for  by them.  This is so for two reasons. In the first  place,  the reservation  is  of a general nature and does  not  directly confer  any rights on OMC or IDCOL. This reservation  is  of two  types. Under S. 17A(1), inserted in 1986, the C.G.  may after consulting the S.G. just reserve any area-not  covered by  a  PL or a ML--with a view to  conserving  any  mineral. Apparently, the idea of such reservation is that the  miner- als  in this area will not be exploited at all,  neither  by private  parties nor in the public sector. It is not  neces- sary to consider whether any area so 83 reserved can be exploited in the public sector as we are not here  concerned  with the scope of such  reservation,  there having  been no notification under S. 17A(1) after 1986  and after consultation with the S.G. The second type of reserva- tion  was  provided for in rule 58 of the rules  which  have already been extracted earlier in this judgment. This reser- vation could have been made by the S.G. (without any  neces-

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sity for approval by the C.G. ) and was intended to  reserve areas  for  exploitation, broadly speaking,  in  the  public sector.  The notification itself might specify  the  Govern- ment,  Corporation or Company that was to exploit the  areas or  may  be just general, on the lines of the  rule  itself. Under rule 59(1), once a notification under rule 58 is made, the area so reserved shall not be available for grant unless the two requirements of sub-rule (e) are satisfied: viz.  an entry in a register and a Gazette notification that the area is  available for grant. It is not quite clear  whether  the notification of 5.3.74 complied with these requirements  but it  is perhaps unnecessary to go into this question  because the  reservation  of the areas was again notified  in  1977. These  notifications  are general. They only  say  that  the areas  are reserved for exploitation in the  public  sector. Whether  such areas are to be leased out to OMC or IDCOL  or some other public sector corporation or a Government Company or  are to be exploited by the Government itself is for  the Government  to determine de hors the statute and the  rules. There  is nothing in either of them which gives a  right  to OMC or IDCOL to insist that the leases should be given  only to them and to no one else in the public sector. If,  there- fore  the  claim  of reservation in 1977 in  favour  of  the public  sector is upheld absolutely, and if we do not  agree with the findings of Rao that neither OMC nor IDCOL  deserve any grant, all that we can do is to leave it to the S.G.  to consider  whether  any  portion of the  land  thus  reserved should  be given by it to these two corporations.  Here;  of course, there are no competitive applications from organisa- tions in the public sector controlled either by the S.G.  or the  C.G., but even if there were, it would be open  to  the S.G.  to  decide how far the lands or any  portion  of  them should  be exploited by each of such Corporations or by  the C.G. or S.G. Both the Corporations are admittedly instrumen- talities of the S.G. and the decision of the S.G. is binding on them. We are of the view that, if the S.G. decides not to grant a lease in respect of the reserved area to an  instru- mentality of the S.G., that instrumentality has no right  to insist that a ML should be granted to it. It is open to  the S.G.  to exercise at any time, a choice of the State or  any one  of the instrumentalities specified in the rule.  It  is true that if, eventually, the S.G. decides to grant a  lease to one or other of them in respect of such land, the instru- mentality whose application is rejected may be aggrieved .by the 84 choice of another for the lease. In particular, where  there is  competition between an instrumentality of the  C.G.  and one  of  the S.G. or between instrumentalities of  the  C.G. inter se or between the instrumentalities of the S.G.  inter se,  a question may well arise how far an  unsuccessful  in- strumentality can challenge the choice made by the S.G.  But we  need not enter into these controversies here. The  ques- tion we are concerned with here is whether OMC or IDCOL car, object  to  the grant to any of the private parties  on  the ground  that  a reservation has been made in favour  of  the public  sector. We think the answer must be in the  negative in  view  of the statutory provisions. For  the  S.G.  could always denotify the reservation and make the area  available for  grant to private parties. Or, short of  actually  dere- serving  a  notified area, persuade the C.G.  to  relax  the restrictions  of rule 59(1) in any particular case.  It  is. therefore. open to the S.G. to grant private leases even  in respect  of areas covered by a notification of the S.G.  and this  cannot  be challenged by any  instrumentality  in  the

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public sector.     Before  leaving  this point, we may only  refer  to  the position  after 1986. Central Act 37 of 1986  inserted  sub- section  (2) which empowers the State Government to  reserve ureas for exploitation in the public sector. This  provision differs from that in rule 5,’, in some important respects-- (i) the reservation requires the approval of the C.G.; (ii) the reservation can only be of areas not actually  held under a PL or ML; (iii)  the  reservation can only be for  exploitation  by  a Government company or a public sector corporation (owned  or controlled by the S.G. or C.G. ) but not for exploitation by the Government as such. Obviously,  S. 17A(2) and rules 58 could not stand  together as S. 17A empowers the S.G. to reserve only with the approv- al of the C.G. while rule 58 contained no such  restriction. There was also a slight difference in their wording. Perhaps because of this rule 58 has been omitted by an amendment  of 1988 (G.S.R. 449E of 1988) made effective from 13.4.88. Rule 59,  however, contemplates a relaxation of  the  reservation only by the C.G. By an amendment of 1987 effective on  10.2. 1987,  (G.S.R. 86-E of 87) the words "reserved by the  State Government" were substituted-for the words "reserved by the 85 Government"  in  rule 59(1(e). Later, rule  59(1)  has  been amended the insertion of the words "or under section 17-A of the  Act" after the words "under rule 58" in clause  (e)  as well as in the second proviso. The result appears to be this’        (i) After 13.4.88, certainly, the S.G. cannot  notify any  reservations without the approval of the C.G., as  rule 58  has been deleted. Presumably, the position is  the  same even  before  this date and as soon as Act 37 of  1986  came into force.        (ii)  However, it is open to the S.G. to  denotify  a reservation made by it under rule 58 or S. 17A.  Presumably, dereservation of an area reserved by the S.G. after the 1986 amendment  can be done only with the approval of  ,the  C.G. for it would be anomalous to hold that a reservation by  the S.G.  needs the C.G.’s approval but not  the  dereservation. Anyhow,  it is clear that relaxation in respect of  reserved areas can be permitted only by the C.G.        (iii) It is only the C.G. that can make a reservation with  a view to conserve minerals generally but this has  to be done with the concurrence of the S.G.     We are concerned in this case with reservations made  by the S.G. under rule 58 before 1986 which, there is no reason to  doubt, continue in force even after the introduction  of S. 17A. These, as pointed out above, can be dereserved by th S.G. but a relaxation can be done by the C.G. only. We shall consider later whether this power of the C.G. can be or  has been  or should be exercised in this case. It is  sufficient to  observe here that the reservations notified in  1977  do not  necessarily  vitiate  the grant of  leases  to  private parties. STATUS OF RAO REPORT     We now come to the question regarding the status of, and the  weight  to  be attached to, the Rao  report.  The  writ petition  and  other  proceedings before  us  were  directed against the S.G.’s failure to pass favourable orders on  the applications  of various parties. Normally, in such a  case, this  Court would either have directed the S.G. to  consider the applications afresh and pass appropriate orders or  left it to the parties to file revision petitions before the C.G. against  the S.G.’s orders. Here, as described earlier,  the

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various parties came up before 86 this  Court one after the other and some of them  had  their writ petitions pending in the Orissa High Court. This Court, therefore, decided that the best course would be to consoli- date  all the applications that were pending on 30.4.87  for the  consideration of the C.G. so that a satisfactory  deci- sion  could be arrived at after an examination of the  rela- tive  merits of the various applicants. This Court  did  not specify  the statutory provision under which this was to  be done but it is apparent that it was intended to be an  exer- cise  of  the  power of the C.G. under S.  30,  though  this aspect was not clarified when FACOR draw attention to it  in C.M.P. 13347/87. We have no difficulty in construing the Rao report  as a decision on the claims of the  various  parties before  it, though, having regard to the terms of the  order of this Court dated 6.10.87, it has been styled as a report. The  objections to this conclusion are three-fold  and  they are dealt with below:     First,  it  is pointed out that revisions  to  the  C.G. under  S. 30 can be validly dealt with only by a  "tribunal" and  not  by a single officer. We find  that  the  procedure indicated is not dictated by the statute or the rules. It is only a forum outlined in an office order more as a matter of internal  regulation than as a rigid rule of  procedure.  We have  seen one of these orders dated 10.7. 1987. It  consti- tutes  three  Single Bench Tribunals each  consisting  of  a designated  Joint Secretary in the Department of  Mines  and three Divisional Bench Tribunals each comprising of a desig- nated  Joint  Secretary  in the Department of  Mines  and  a designated  Joint Secretary in the Department of  Legal  Af- fairs  in the Ministry of Law and Justice. The  instructions are:          "To  the  extent possible, cases in  which  parties have not asked for personal hearing should be disposed of by Single  Bench  Tribunals unless the member feels  that  some complicated legal issue is involved requiring advice of  the member from the Law Ministry.          The cases where personal hearing has been requested by parties, the Single Member Tribunals will decide  whether to dispose of the cases after grant of hearing by himself or whether the hearing should be held by Division Bench  Tribu- nal." It  will thus be seen that even regular  revision  petitions under  S.  30 can be validly disposed of solely by  a  Joint Secretary in the Department of Mines unless he considers  it necessary, either because a personal hearing is asked for or because some complicated legal issue is involved, to 87 invoke  the  aid of a Joint Secretary in the  Law  Ministry. Here,  there is no regular revision petition except  perhaps in one case; the disposal is by the Secretary to the Depart- ment of Mines; he has been specially authorised to deal with the  matter  by this Court; and no legal issued at  all  are involved.  We, therefore, see nO irregularity or  defect  in the  procedure forged by this Court for a speedy and  effec- tive disposal of the claims before the Court.     Secondly, it is said that though the order of  30.4.1987 directs the secretary to dispose of the representations by a reasoned  final order, the subsequent order of 6.10.87  asks him to sent a report to this Court. We do not think there is any inconsistency between the two orders. Even the order  of 6.10.87 requires the Secretary to arrive at a just,  equita- ble  and  objective decision. He has been asked  to  send  a report  of  his decision to the Court, with  copies  to  the

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parties,  only  in  order that, if any of  the  parties  are aggrieved  by his decision, their grievances may be  consid- ered  by this Court in this W.P. itself, instead of  driving the parties to a fresh course of litigation.     Thirdly,  it is submitted that Rao’s hands were more  or less tied by the various observations and directions of this Court thus preventing him from coming to independant conclu- sions  of  his  own. This criticism is  unfounded  and  also belied by the contents of the report. This Court had made it clear  that  Rao should not consider himself  bound  by  the memoranda  of compromise filed in the High Court of  Orissa- (with  AIKATH and FACOR) or the orders passed by this  Court in  regard  to the allocation of areas (to IMFA  and  FACOR) though  necessarily  he had to "bear in  mind  the  previous orders made in their [IMFA and FACOR] favour and the  previ- ous  leases  and the rights, if any, granted  therefrom  and their  consequences". He was also asked to bear in mind  the public  benefit  and public interest involved and  also  the need for the proper exploitation of the mines. In fact  also we  find that although Rao has approved the grants  made  in favour  of  IMFA and FACOR by the S.G. (which,  he  remarks, were perhaps based on the observations made by this  Court). he has clearly reached his conclusions on these independent- ly.  In  fact,  he has set out a basis  for  justifying  the grants  to IMFA and FACOR. It is also clear that there  were no Court orders that could have influenced his decisions  on the  claims of the other parties. This objection is,  there- fore, not at all tenable.     OMC, IDCOL, OCL and ORIND complain, indeed, that Rao has been  completely overwhelmed by the weight of  the  observa- tions and the leases granted by the S.G. pursuant to interim orders of this 88 Court.  They  have gone to the length of  criticising,  and, indeed,  challenging, the validity of these  interim  orders which  had been passed without notice to any of  them.  They have invoked, in support, several passages from the decision of  this  Court in Antulay v. Nayak, [1988] 2  SCC  602.  We think  these criticisms are unfounded. This Court  had  only directed  the  grant of two leases pending disposal  of  the writ petition. At the time these directions were made,  only IMFA,  FACOR  and  AIKATH were before the  Court.  IMFA  had pointed  out  that FACOR had been given certain  leases  al- though its earlier applications were pending before the C.G. The  S.G. submitted to the Court that a lease in respect  of item  1 had been granted to FACOR, that item 5  had  already been  agreed to be leased in favour of AIKATH and FACOR  and that  it was willing to grant a ML in respect of item 3  and 26.62  acres out of item 4 to IMFA. It was in view  of  this that the Court passed the order. Similarly, the ML  directed to  be granted to FACOR was also in consequence of the  S.G. ’s  acquiescence  therein. It is,  therefore,  incorrect  to characterise these orders as erroneous or unjustified.  They were  fully within the scope of the writ petition  and  were passed after hearing the parties before the Court. No doubt, OCC,  ORIND, OMC and IDCOL were not there then.  After  they put in their appearance, this Court made it clear that while the earlier orders, the observations therein and the  leases granted  in  pursuance thereof should be kept in  mind,  Rao would  not be bound by them but would be free to  arrive  at his  conclusion. We, therefore, do not see any  grounds  for the criticisms put forward by these parties in regard to the interim orders passed by the Court.     For  the above reasons, we are of opinion  that,  though styled a report, the findings given by Rao are in the nature

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of  a  decision  of the C.G. on the claims  of  the  various parties.  We, therefore, proceed to consider the Rao  report on its merits. MERITS OF THE RAO REPORT     This  takes us then to the merits of the various  claims put  forward  before Rao and his decision thereon.  For  our present purposes, we think we can consider the Rao report in two parts: (a)  his endorsement of the S.G.’s decision to grant  ML  to IMFA, FACOR and AIKATH: (b)  the rejection by him of the claims put forward  by  the above three parties for leases in respect or areas over  the above what 89 has  been allotted to them as well as the rejection  of  the claims of the other parties.     So  far as the first aspect is concerned, we think  that Rao’s  decision,  that  the leases that  have  been  granted already  in  favour of IMFA, FACOR be confirmed,  should  be upheld.  In  our  view, these should be  treated  as  leases legitimately  granted to them in exercise of the  powers  of relaxation  under  rule 59(2). It is true  that  the  orders granting  the leases do not elaborately record  the  reasons but  they were passed in the context of this litigation  and have  to  be considered in the light of the  affidavits  and counter affidavits filed herein. We are also of opinion that the Rao’s decision regarding the grant of a lease to  AIKATH (not yet implemented) should also be upheld. In these  three cases,  we  think,  the records  disclose  sufficiently  the reasons  on the basis of which the leases have been  decided upon  and are adequate to justify the MLs actually  granted. We  shall just summarise these reasons which have also  been taken note of by Rao. (a) ML to AIKATH, IMFA, FACOR     1.  AIKATH  is admittedly an individual  who  discovered chromite  ore in the State. He had secured a lease as  early as in 1952 though that lease was annulled by the State  when it  took over. Again, as against a lease of 640 acres  which he  had once obtained and started operating upon,  the  S.G. has  finally  approved  of a lease in respect  of  only  140 acres.  AIKATH  had been actually working  some  mines  from 1.5.53. His original grant had been approved before the area was  reserved on 3.7.62. If the S.G. considers these  to  be weighty  considerations and entered into a  compromise  with him for a lease of 140 acres and this has also been recorded by the Orissa High Court, there are no grounds to  interfere with the decision of the S.G.     2.  So far as FACOR is concerned, the  requirements  for their plant in Andhra Pradesh were met by the ML granted  to them in 1971-72 at Kathpal and Boula, thus recognising their claim  for a ML to meet part of their requirements  of  ore. Their  present needs were in connection with their plant  at Randia  in Balasore District which required  about  1,20,000 tons  per  annum of ore. The compromise  entered  into  with FACOR  agreeing  to grant a ML for an  area  72.84  hectares having a potential of about 2.4 million tons would cater  to 50%  of its needs on a 20 year time-frame making  allowances for wastage in recovery. 90     3.  IMFA needs 50,000 tons per annum for their plant  at Therbauli and 120,000 tons in respect of a plant at Chandwar run  by a subsidiary. While the reserve potential  of  26.62 hectares  allotted  to  IMFA out of item 4  is  roughly  0.8 million  tons the reserve potentials of 108.86  acres  given out  of  area  3 and of another 17.02  hectares  in  Balasor

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District  given for the plant of the subsidiary were yet  to be  assessed. Nevertheless. it was expected that they  would cater  to the needs of IMFA more or less to the same  extent that the ML in favour of FACOR catered to its needs.     It is true that a relaxation under rule 59(2) has to  be made by the C.G. The orders of grant do recite the  approval of the C.G. in this regard. An objection has been taken that the C.G. granted the approval not after applying its mind to the matter but merely because this Court had directed it  to do  so.  We do not think this contention  can  be  accepted. Apparently,  when the S.G. agreed to lease out the areas  to IMFA  and  FACOR it was pointed out that this could  not  be given  effect  to without the C.G.’s  approval.  This  Court thereupon directed that the S.G. should seek such  approval. The  direction to the C.G. is only that its approval  should be  given within the particular time limit set out  therein. It  cannot be construed, reasonably, as a direction  compel- ling  the C.G. to grant approval whether it agreed with  the S.G  .’s decision or not. We would. therefore,  reject  this contention  and treat the grants to IMFA anti FACOR as  made in exercise of the power of relaxation u/s 59(2 ).     Once again, we would like to observe that, though  there is  no  specific recording of reasons by the  S.G.  or  C.G. inasmuch  as these leases came to be granted by way of  com- promise, it is a fair inference that the compromise  propos- als  were prompted by the, at least partial,  acceptance  of the claims put forward by these parties. Since the grant  of leases  to  these  three parties can be  attributed  to  the relaxation of the reservation rule in particular cases,  the finding  of Rao that these leases may be confirmed  deserves acceptance.     We have to add a few words in respect of AIKATH.  Though the  S.G. and AIKATH had entered into a compromise as  early as  4.12. 1984, no lease has yet been granted in his  favour perhaps  as  the C.G. has had no occasion  to  consider  the matter earlier. We do not think that any useful purpose will be  served  by remitting the matter and asking the  S.G.  to seek the formal approval of the C.G. therefore. The decision of Rao itself can be taken as containing the approval of the C.G.  in  this  regard. We would,  therefore,  uphold  Rao’s decision 91 and direct the S.G. to execute, at as early as possible,a ML in favour of AIKATH in respect of the 140 acs. agreed to  be leased to him under the compromise dated 4.12.84. (b) OTHER CLAIMS     It is asserted on behalf of OCL and ORIND that, if there are  factors  justifying the relaxation  of  reservation  in favour  of  IMFA and FACOR there are equally  valid  factors justifying  a like relaxation in favour of these two  compa- nies as well. The operative part of the Rao report in regard to the claims of these two parties reads thus:          "For the requirement of the other parties viz.  M/s Orissa Industries Ltd., M/s Orissa Cements Ltd., manufactur- ing  refractories,  their  requirements of  chrome  ore  are relatively  less  and that too, consisting  mostly  of  hard lumpy  ore.  The potential for hard lumpy ore in  the  areas under consideration is relatively less, since most of it  is located  in the areas which have already been leased out  to TISCO who are also one of the larger producers of hard lumpy ore and are capable of meeting the needs of other industries also.          The  occurrence  of chrome ore is such.  that  hard lumpy ore, lumpy friable ore and fine ore occur together and in varying proportion. The refractory manufacturers require-

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ments are such that if they want to get hard lumpy ore  from the areas under consideration, they will have to necessarily become  traders of the other grades which will be in  higher proportion.  They have been carrying on their  business  for the past several years without any captive mines. Hence.  it is felt that their requirements can be adequately met by the other  producers  of chrome ore, including hard  lumpy  ore. Hard  lumpy  ore will be available from other  producers  of chrome ore to meet their requirements, including the  Orissa Mining  Corporation  and no captive mining  leases  need  be given to them, in the areas under consideration." XXX                                                      XXX XXX The  Refractory industries viz. the Orissa  Industries  Ltd. and M/s Orissa Cements Ltd. for their level of production 92 and  their  need for hard lumpy ore, captive  mines  in  the areas  under consideration do not optimally meet  their  re- quirements  and there is enough lumpy ore in the State  from other sources."     Rao’s line of reasoning is criticised by OCL and  ORIND. Sri Bhandare, on behalf of OCL, urges, inter alia:        (a)  The company’s refractory plant is in need of  at least 35,000 to 40,000 MT of ore per annum (not 15000 MT  as worked out by Rao) and for securing a regular  uninterrupted supply, it needs a captive mine badly; instead it is  thrown at  the mercy of traders like TISCO or Sirajuddin &  Co.  or the  OMC  who  are unable to supply the  quantities  of  ore needed by OCL.        (b)  The  company  which has  a  vital  mineral-based industry has not been granted even a single ML for which  it had  been  applying from 1961 to 1986 whereas  traders  like Mohanty and Sirajuddin have been granted leases.        (c)  Besides  supply  of  refractories  for  domestic consumption OCL has also a vast export market and has earned huge foreign exchange by exports to countries like Pakistan, Bangladesh, Korea, Kenya, etc.        (d) The company has also employed about 3000  workers who  are adivasis or who belong to the Scheduled Castes  and Scheduled Tribes.        (e) The industrial licence granted to OCL by the C.G. envisages that the OCL should secure PL and ML from the S.G. for its needs of ore.        (f)  The S.G. had made on 25.1.72 a grant of a ML  to OCL over an area of 187.02 hectares with the approval of the C.G. The S.G. had indeed recommended the grant of ML to OCL.        (g) It is also stated that in certain informal  meet- ings held recently, the S.G. has expressed itself in  favour of granting ML in favour of the OCL.     Likewise, on behalf of ORIND, it has been urged that Rao has  erred in thinking that the need of the company  was  of lumpy ore which 93 could  be adequately met by procuring the ore  from  private parties and that it would not be necessary to grant a mining lease  for  meeting its requirements. It  is  submitted,  in particular, that--       (i) ORIND’s requirements are not small as suggested by the  SG  but come to a minimum of 25,000 MT  per  annum  and would  indeed  go up to 65,000 MT with the setting up  of  a ferroalloys plant for which steps are being taken;       (ii)  the  reasoning that ORIND has  been  functioning without a captive source all along and hence could  continue to  do so is bad logic and also a misleading argument  which overlooks  that  ORIND has been put to great  difficulty  in

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obtaining  even  8,000 to 10,000 MT (about one half  of  its needs) in driblets from various sources being at their mercy in  regard to quantity, price and other vagaries.  Even  OMC has  been capricious in its supplies of ore in that  it  has agreed  to  supply 25,000 MT to OCL against their  needs  of 15,000 MT only whereas it is willing to supply only 9,000 MT only to ORIND against its present requirements of 20,000 MT.       (iii)  the assumption that ORIND needs only lumpy  ore is not correct. Actually more than 60 to 65% of the ore used by ORIND is friable ore. (iv)  ORIND  also/deserves grant of ML on other  grounds  of national and public significance. It supplies basic  refrac- tories  not only to core and strategic  domestic  industries but also exports them outside India and the exports made  by it,  being  value added and involving  proportionately  less consumption of ore, earn much more foreign exchange than the exports  of  IMFA & FACOR. The want of a captive  source  of supply  has gravely prejudiced the commissioning of  ORIND’s first benefaction plant for refractories. It also employs  a strong  labour  force and thus  provides  opportunities  for large scale employment.      (v) if MLs can be granted to AIKATH, IMFA, FACOR, ORIND also  deserves one. OMC has been allotted huge  areas  which remain idle and unexploited and a predominant portion of its ore  is supplied to the metallurgical industry  not  leaving much for the refractory industry. (vi) atleast the area marked as Area No. 7 in the plan filed 94 by ORIND should be allotted to it.     We have briefly summarised the claims of ORIND & OCL. It is unnecessary to discuss these contentions at length as  we cannot  but  help feeling that the claims of OCL  and  ORIND have been rejected summarily by Rao without an advertence to the  various considerations urged by them. In  our  opinion, this part of Rao’s decision has to be set aside as being too cryptic  and unsustainable. Pursuant to this conclusion,  it is open to us to direct these claims to be considered afresh by  the C.G. We, however, think it more expedient  that  the claims of the OCL and ORIND should be restored, for detailed consideration in all their several aspects, before the S.G., as the ’S.G. has had no opportunity to consider the  various aspects pointed out and as this course will also provide one opportunity to the claimants to approach the C.G. again,  if dissatisfied  with the S.G.’s decision to consider  whether, despite the reservation, some relaxation can be made also in favour of these two companies. The learned Advocate  General for  Orissa criticised the conclusion of Rao  conceding  the right  of industries set up in the State, even of FACOR  and IMFA,  to captive mines for meeting their  requirements.  We are  inclined  to think he is right in  saying  that  merely because an industry is allowed to be set-up in the State  by grant of an industrial licence and/or certain other  conces- sions,  it  does not follow that it becomes  entitled  to  a captive mine to cater to its needs. We, however, express  no concluded  opinion on this issue’ which does not  arise  for our  consideration. The SG has to take into account  various factors  and aspects (some of which have also been  referred to in the interim order of this Court dated 27.9.84)  before granting a ML to an individual concern carving out an excep- tion to its reservation policy. This it has done in  respect of  IMFA  and FACOR for certain special reasons  which  have been elaborated upon earlier. Whether it would do so also in favour  of  OCL and ORIND is for the State to  consider.  We express  no  opinion on these claims and leave  it  for  the consideration of the SG and C.G. It would have been  noticed

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that  the applications of these two companies have not  been considered in this light earlier. We, therefore, restore the applications  of OCL and ORIND for the consideration of  the S.G.     The  learned Advocate General of Orissa  also  submitted that Special Leave Petition No. 8574/89 filed by ORIND  from the order of the S.G. is not maintainable. He urged that the S.G., in disposing of applications for ML, is not  function- ing  as "tribunal" and he cited the decisions in  Shivji  v. Union, [1960] 2 SCR 775 and Indo-China Steam Navigation  Co. v. Jasjit Singh, [1964] 6 SCR 594 in support. We do not 95 consider  it necessary to go into this issue. The S.G.  has, by  the impugned order, rejected ORIND’s application,  inter alia,  on the ground that, in view of the pendency  of  W.P. 14116/84 before this Court, it could not at that stage  pass any  order on the application. It would, therefore, be  open to  ORIND to ask the S.G. to reconsider the  application  in the  light  of our present order. We see  no  necessity  f6r insisting  on  such a formal request and  would,  therefore, direct  the S.G. to consider ORIND’s application  afresh  in the light of this judgment.     So far as OMC & IDCOL are concerned, Rao has "recommend- ed" that the areas of items I & 2, left after the grants  to IMFA and FACOR. be given on lease to OMC. We have seen  that there  are  huge areas of mineral bearing lands  which  have been  reserved for the public sector. Its interests  do  not clash or come into conflict with those of private applicants which can only claim a right to the extent the SG is willing to relax the rule of reservation. We do not think the OMC or IDCOL  have any voice in requiring that the SG  should  keep certain extents of land reserved and should not grant any ML at  all  in favour of an), private party. The  interests  of these  corporations are safe in the hands 01’ the  S.G.  and the allocation of MLs to these organisations is a matter  of discretion  with the S.G. Strictly speaking,, therefore.  no question  of  any application by them for ML need  arise  at all.  But, when made, their applications arc  considered  by the  S.G. and, on revision by the C.G. as a matter of  form. To  this  extent, they have a statutory remedy  but,  beyond this. we think they cannot go. We are of opinion that  their interests are safe with the S.G. and need no directions from us.     Even  IMFA and FACOR urge that their claims  to  further leases  deserve consideration. Rao has  already  adjudicated upon  their claims and "recommended" leases to them  to  the extent indicated. If they apply to the S.G. for more leases. it is open to the S.G. to consider whether they deserve  any further  leases  and if so, to what  extent.  more  reserved areas could be released in their favour.     The  learned Advocate General for the  State  emphasised that the State is also interested in its industrial develop- ment  and  the national economy and  that,  while  reserving substantial areas for public sector exploitation, the  State has a well-formulated policy in respect of grant of  private leases  which  has been placed before Rao. He  also  submits that, even if grant of a ML in favour of a particular  party is not found feasible, the State will do its best to  ensure that the ore mined in the 96 State is equitably distributed so as to meet the  legitimate needs  of all industries operating in the State. We have  no doubt that the S.G. will keep. all relevant aspects urged by the  parties in reaching their decision on the  matters  re- manded to it by us.

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   In the circumstances, we accept and confirm Rao’s recom- mendation for grant of MLs to IMFA, FACOR and AIKATH, to the extent  indicated by him. We set aside his rejection of  the claims of OCL and ORIND. We leave it open to all the parties to  place their claims, or further claims, as the  case  may be, in regard to the areas applied for by them on or  before 30.4.1987, backed by supporting reasons, before the S.G.  in the form of representations within four weeks from the  date of  this  order. The S.G., we hope, will  dispose  of  these applications  within the statutory period failing which  the parties  will have their remedy under the statute by way  of revision  to the C.G. In arriving at its decisions, it  will be open to the S.G. to take into account the discussions and findings  of the Rao report in the light of  this  judgment. The  S.G. should also keep in mind that no leases to any  of the  parties (other than OMC & IDCOL) can be granted  unless either the areas so proposed to be leased out are dereserved and  thrown open to applications from the public  or  unless the C.G., after considering the recommendations of the S.G., for  reasons to be recorded in writing, considers a  relaxa- tion  in favour of any of the parties necessary  and  justi- fied.     Before  we conclude, we should like to place  on  record our appreciation of the detailed and excellent report  given by  Dr. Rao. He has brought together all the  relevant  data and  analysed the various claims put forward before  him;  a detailed  note on chromite deposits in the State  of  Orissa prepared by the Chief Mining Geologist of the Indian  Bureau of  Mines has also been made an Annexure to the report.  The report and its annexures are bound to be of immense help and value  to the S.G. and C.G. in arriving at  their  decisions not  only on the various applications but also in regard  to their  future  policy  in the matter of  grant  of  chromite leases and of the supply of chromite to the needy applicants in an equitable manner.     W.P.  No. 14116/87 and the other applications  are  dis- posed  of in the above terms. There will be no order  as  to costs. G.N.                                      Petitions disposed of. 97