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CASE NO.: Special Leave Petition (civil)  23678 of 2004

PETITIONER: M/s.Oriental Select Granite Pvt. Ltd

RESPONDENT: State of Karnataka & Ors

DATE OF JUDGMENT: 11/12/2007

BENCH: G.P.Mathur & Aftab Alam

JUDGMENT: J U D G M E N T

SPECIAL LEAVE PETITION (C) No.23678 of 2004 W I T H S.L.P.(C) Nos.23686 of 2004, 24313-24314 of 2004, 19352-19354 of 2004,  25275 of 2004 and 21130 of 2005.

Aftab Alam,J.

       In all the six petitions for Special Leave to Appeal,  challenge is made to  the same demand notice (of course with varying amounts in regard to different  petitions).  In all cases the challenge to the demand notice is on the same grounds.   Hence, all the six cases were heard together and are being disposed of by this  common order.         By the impugned demand notice, the petitioners were asked to pay the  value of the granite excavated and transported by them during the period August  27, 1993 to January 18, 1996.  The demand is raised on the basis that though the  grant of quarrying leases by the State Government (in all 302 in number,  including those in favour of the petitioners), was eventually held to be bad and  illegal by the Karnataka High Court and the Supreme Court (vide judgment and  order in Alankar Granites Industries & Ors. vs. P.G.R. Scindia, MLA & Ors.  [(1996) 7 SCC 416],  nonetheless, the lessees, including the petitioners, were able  to carry on quarrying operations on the basis of the interim order passed in the  case by this  Court on August 27, 1993 till the appeals were finally dismissed on  January 18, 1996.  Here it may also be noted that the question regarding the  grantees’ liability to make good to the State the value of granite excavated by  them during the aforesaid period has been settled by the Supreme Court in the  decision in Karnataka Rare Earth & Anr. Vs. Senior Geologist, Department of  Mines & Geology & Anr. [(2004) 2 SCC 783].  But on behalf of the six  petitioners, presently before this Court, it is contended that during the period in  question they carried on the excavation of granite not on the basis of the interim  order passed by this Court in Alanakar Granites but on the basis of certain orders  passed by the High Court.  The ground on which the impugned notice is based,  therefore, does not apply to them and as a matter of fact the petitioners are  protected in view of some observations made in the decisions in Alankar Granites  and Karnataka Rare Earth.  In our view the contention is not sustainable either on  facts or in law.  This would be evident if the relevant facts are put in proper  sequence. The facts of the case are taken from Special Leave Petition (Civil)  No.23678 of 2004 (M/s.Oriental Select Granite Pvt. Ltd. Vs. State of Karnataka &  Ors.) which was argued as the lead case in the batch.   Prior to 1990 the petitioner held a mining lease for granite.  On expiry of  the lease period, sometime in the year 1990 its request for renewal of the lease  was not allowed by the concerned authority in view of the bar created by Rule     3-A that was introduced in the Karnataka Minor Mineral Concession Rules, 1969.   At that stage the petitioner went to the Karnataka High Court in Writ Petition  No.20939 of 1990 questioning the constitutional validity of Rule 3-A and seeking  appropriate directions to the concerned authority for renewal of the quarrying

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lease granted in its favour, besides some other incidental reliefs.  On October 24,  1990, a learned Single Judge of the Court passed an interim order in the writ  petition in the following terms : "Pending disposal of the aforesaid Writ Petition it is hereby  ordered by this Court on 24.10.90, the operation of Rule 3-A of  K.M.M.C.Rules insofar as the petitioner is concerned, be and the  same is hereby stayed.

Further, that the Respondents be and are hereby restrained from  interfering with the petitioner’s right to carry on quarry operation  in the schedule land on payment of royalty and transportation of  the granite."

                   (portions in italics indicate emphasis laid on behalf of the petitioner)

       The writ petition lay pending in the High Court for over 3-1/2 years.  In  the meanwhile Karnataka Minor Mineral Concession Rules, 1969 that contained  Rule 3-A was replaced by Karnataka Minor Mineral Concession Rules, 1994  w.e.f. May 23, 1994.  Taking note of the legislative development the writ petition  was finally disposed of by order, dated June 24, 1994.  The relevant extract from  this order is as follows : "The Respondents have refused to grant the renewal sought for on  the basis of the said Rule as it stood at the relevant time.  The said  Rule 3A has undergone several changes and it has also been  interpreted by this Court on several occasions.  In the meanwhile  the respondents have repealed the old Rules and have introduced  new Rules i.e. Karnataka Minor Mineral Concession Rules, 1994  replacing the Rules of the year 1969 in which Rule 3A occurs.  In  the light of the later developments the respondents have to consider  the application filed by the petitioner for renewal of the licence in  the light of the law laid down by this Court and in the light of the  Rules.  Until then status quo shall be maintained, subject to  relevant Rules.  On this basis several petitions have been disposed  off.

Learned counsel however submits under the new Rules renewal is  not automatic and therefore the position as regards status quo  should not be continued.  But I do not think that I should detract  from the earlier position now unless respondents themselves take  appropriate action in that regard.  Petition shall stand disposed off  accordingly."                             (words in italics indicate emphasis laid on behalf of the petitioners)

       Mr.Altaf Ahmad, Senior Advocate, appearing on behalf of the petitioner  strongly argued that the petitioner carried on the excavation and transport/export  of granite on the basis of the interim order passed by the High Court on October  24, 1990, long before the interim direction given by the Supreme Court on August  27, 1993 in Alankar Granites.  Further, the petitioner was able to continue the  operations on the basis of the direction of the High Court to maintain  status quo  by its order dated June 24, 1994 while Alankar Granites remained pending in the  Supreme Court.  The petitioner was allowed to carry on excavation and  transport/export of granite till January 18, 1996 when the Supreme Court  pronounced  judgment in Alankar Granites and all operations were then stopped  by the State authorities.  It was thus wrong to club the petitioner along with the  lessees who were in operation on the basis of the interim direction given by the  Supreme Court on August 27, 1993 in Alankar Granites and the respondents- authorities had wrongly raised the demand against the petitioner along with the  demand notices issued to the other lessees.  Mr.Ahmad further submitted that in  the case of the petitioner the interim direction of this Court was not to simply  allow him to continue quarrying but the operation of Rule 3-A itself was stayed  and that brought about a material difference in the case of the petitioner.   Learned  counsel submitted that on June 24, 1994 when the writ petition came up for final  disposal before the High Court the interim direction staying  operation of Rule 3-

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A had lost relevance but the other interim direction whereby the respondents were  restrained from interfering with the petitioners right to carry on quarrying  operation was extended by directing to the parties to maintain status quo.  He  went so far as to say that on the basis of the status quo order,  it was still open to  the petitioner to carry on quarrying operation in case the respondents had not so  far considered its application for renewal of the licence.  Learned counsel also  referred to certain observations made in paragraph 8 of the decision in Alankar  Granites and in paragraph 17 in Karnataka Rare Earth and submitted that the two  decisions of this Court had made a distinction in case of grantees who carried on  operations on a basis other than the interim order passed by this Court and in their  case some room was allowed for concession.         The submission appears to be devoid of merit.  One or two sentences  picked up from here and there from the decisions in Alankar Granites and  Karnataka Rare Earth referred to by Mr.Ahmad in no way support or protect the  petitioners.  Most importantly, the reliance placed on the two orders passed by the  High Court would appear to be wholly misconceived and unfounded when viewed  in  the totality of relevant facts and circumstances.         It is noted above that the petitioner filed Writ Petition No.20929 of 1990  seeking directions to the concerned authority for renewal of the quarrying licence  granted in its favour.  The High Court passed certain interim orders in the case on  October 24, 1990 that are reproduced above.  On June 18, 1991, while this writ  petition was pending the State Government granted/renewed 203 mining leases  for granite to different parties, including the six petitioners presently before this  Court.  The action of the State Government in granting/renewing the leases (203  in number) came under challenge before the High Court in several writ petitions  filed by way of Public Interest Litigation.  All the writ petitions were allowed by a  learned Single Judge of the Court and all the leases granted/renewed by the State  Government were set aside.  Some of the lessees aggrieved by the judgment of the  Single Judge took the matter in appeal in W.A.Nos.538-539 of 1993 and  connected matters.  A Division Bench of the High Court dismissed all the appeals  and confirmed the judgment of the learned Single Judge by order dated June 25,  1993.   Against the decision of the Division Bench appeals were taken to this  Court.  All those appeals were put together and were referred to by the title of the  leading case, Alankar Granites.  It is an admitted position that the six petitioners  presently before this Court had also filed appeals against the decision of the  Karnataka High Court and their appeals too were part of the batch of Alankar  Granites.  In Alankar Granites this Court passed the following order on August  27, 1993 : "Issue Notice. Renewals of existing grants in favour of the petitioners shall  continue till further orders of the Court."

Finally, however, all the appeals were dismissed by judgment and order dated  January 18, 1996 and this Court held  that the decision of the High Court striking  down the grant of 203 leases (including those in favour of the petitioners) did not  suffer from any infirmity.            The matter did not stop there.  After all the appeals were dismissed by this  Court on January 18, 1996, two of the lessees covered by the decision, namely,  M/s.God Granites and Karnataka Rare Earth applied before the concerned   authorities of the State Government for transport permits for transportation of  granites quarried  before the dismissal of the appeals by the Supreme Court and   permits were granted to them under the relevant Rules.  Later on, the authorities  issued notice asking the two lessees to make good the value of granite that was  transported after dismissal of the appeals.  The demand notice was sought to be  challenged before the High Court in W.P.Nos.5392-5394/1996.  The two writ  petitions were dismissed by a learned Single Judge by order dated March 4, 1996.   The matter was taken in appeal before the Division Bench.   The Division Bench,  while dismissing the appeal made the observation that the concerned authorities  ’could have directed the recovery of the whole of the granite excavated during the  period of its stay or its price’.  Against the order of the Division Bench, Karnataka  Rare Earth & Anr. came in appeal before this Court in Civil Appeal Nos.3618- 3619 of 1999.  The appeals were finally dismissed by judgment and order dated  January 23, 2004.         The demand notices that are sought to be challenged in this round on  behalf of the six petitioners were issued in light of the observation made by the

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Division Bench of Karnataka High Court and upheld in appeal by this Court in  Karnataka Rare Earth.         In view of the facts and circumstances noted above, the very premise on  which the case of the petitioners’ is based appears to be quite unfounded and  unacceptable.  It is wrong and incorrect to say that the petitioners carried on  quarrying operations on the basis of the interim order and the final order of status  quo passed by the High Court in their writ petitions.  On June 18, 1991, when the  State Government renewed the petitioners’ leases (besides many others), the writ  petitions seeking direction to the concerned authorities in the State Government  for renewal of their quarrying leases were rendered infructuous.  The renewal of  lease by the State Government opened up a new chapter in the controversy.  The  leases granted/renewed by the State Government on June 18, 1991, were struck  down by a learned Single Judge of the Court and the judgment was affirmed in  appeal by the Division  Bench.  In view of this development it cannot be said that  the petitioners carried on their quarrying operations on the basis of the interim  order passed by the High  Court on October 24, 1990.  In appeals from the  decision of the High Court this Court in Alankar Granites passed the interim  order on August 27, 1993.  It is thus evident that the six petitioners, like all others  covered by the decision in Alankar Granites, were able to carry on their quarrying  operations on the basis of the interim order of this Court dated August 27, 1993  and not on the basis of any other order passed by the High Court.  When the writ  petition (W.P.No.20939/1990) came up for final disposal the Court was not  informed that it was infructuous.  The Court was also not informed about the  developments taking place during its pendency and the matter of grant of lease  being pending before this Court.  The High Court, thus unaware of those  developments, passed the final order, without any adjudication on the issues  involved in the case, directing the parties to maintain status quo.   It is thus to be seen that the petitioners’ contention that they carried on  quarrying operations on the basis of the interim order of the High Court dated  October 24, 1990 coupled with the final order of status quo dated June 24, 1994 is  untenable for more reasons than one.  First, the writ petition was rendered  infructuous on June 18, 1991 when the petitioners’ leases were renewed by the  State Government.  The interim order dated October 24, 1990 became ineffective   with the renewal of the leases and it lost all force when the grant/renewal of leases  by the State Government was struck down by the High Court.  No reliance can  also be placed on the final order in the writ petition as it was passed in a petition  that was infructuous.   Secondly, it was passed without any adjudication on the  issues involved in the case and without determining the rights and liabilities of the  parties.  Thirdly, it was passed without the Court being informed about the  developments that took place during the pendency of the case and the matter  being pending before this Court.  Most importantly, it is basic and elementary that  once the same issues between the same or similarly placed parties are decided by  this Court no order or direction passed by the High Court contrary to or at  variance with the decision of this Court would survive.     I have, therefore, no manner of doubt that the petitioners, like all other  lessees in Alankar Granites, carried on their quarrying operations on the basis of  the interim order dated August 27, 1993 passed by this Court and the petitioners  are fully covered by the decisions in Alankar Granites and Karnataka Rare Earth. This finding rejects the petitioners’ plea that they carried on quarrying  operations under the interim order and the order of status quo passed by the High  Court and, therefore, no demand could be raised against them and they were   protected by certain observations made in the decisions in Alankar Granites and  Karnataka Rare Earth.   But in fairness to Mr.Ahmad a reference may also be  made to his submissions based on the two decisions.  Mr.Ahmad submitted that in  paragraph 8 of the decision in Alankar Granites this Court had observed that no  benefit accrued to any lessee by virtue of the stay orders passed by the High Court  because the operation of Rule 3-A was neither suspended nor struck down.  The  counsel pointed out that in the case of the petitioners the operation of Rule 3-A  was, as a matter of fact, stayed by the High Court by interim order dated October  24, 1990 and, therefore, the petitioners were not liable to pay the value of the  granite.   Paragraph 8 of the decision from which the two sentences are picked up  reads as follows : "Shri Soli Sorabjee, the learned counsel for some of the  appellants, advanced another argument to support these

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grants. He submitted that by virtue of the said order of the  High Court in the earlier writ petitions challenging the  further amendments made in Rule 3-A, the power under  Rule 3(1) was available for making these grants with the  prior approval of the Government which was given by the  order dated 18-6-1991.  We are unable to accept this  submission.  The said order in the earlier writ petitions  merely had the effect of requiring the applications of the  petitioners in those writ petitions to be disposed of without  reference to rule 3-A but the validity of the grant made to  those petitioners had to be adjudicated with reference to  Rule 3-A unless Rule 3-A was struck down leading to its  obliteration.  Admittedly, Rule 3-A was not struck down  and, therefore, the validity of the grant, if any, made even  in favour of those petitioners had to be decided with  reference to Rule 3-A.  This being so, no benefit accrued to  any other person by virtue of those stay orders.  It is clear  that the operation of Rule 3-A was not suspended and Rule  3-A has not been struck down.  The prohibition contained   in Rule 3-A against making any such grant, therefore,  continued to operate."     From the passage quoted above, it is evident that the leases  granted/renewed by the State Government were sought to be defended on the plea  that in some earlier cases filed before the High Court (like the ones filed by the  petitioners) the High Court had stayed the operation of Rule 3-A and  consequently it was open to the State Government to grant/renew the leases in  exercise of its power under Rule 3(1). The submission was turned down by this  Court, holding that the validity of the grant had to be judged with reference to  Rule 3-A, unless Rule 3-A was struck down leading to its obliteration. The  observation relied upon by Mr.Ahmad was made in that context.  Placed in  context the reliance on the two sentences in the judgment appears to be quite  misplaced.   Mr.Ahmad also referred to paragraph 17 of the decision in Karnataka  Rare Earth where this Court observed as follows : "Neither the appellants prayed for such relief nor the Court passed  any such order.  What this Court had not done, could not obviously  have been done by the High Court in exercise of its writ  jurisdiction in view of the earlier judgment of this Court having  achieved a finality."

The counsel submitted that the petitioners had no occasion to make the prayer  because they were already protected by the interim order of the High Court.  It is  already seen that that was not the position and hence, the submission is quite  unacceptable.  Mr.Hegde in support of the demand relied upon two decisions of this  Court, one in Kanoria Chemicals and Industries Ltd. & Ors. Vs. U.P.State  Electricity Board & Ors. [(1997) 5 SCC 772] and the other in  South Eastern  Coalfields Ltd. Vs. State of M.P.& Ors. [(2003) 8 SCC 648].  The reliance is well  placed but in light of the discussions made above the case of the petitioners is  quite untenable even without adverting to those decisions.         In view of the discussions made above we find no merit or substance in  these petitions for special leave.  All the Special Leave Petitions are accordingly  dismissed.   There shall be no order as to costs.