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PETITIONER: SHIVJI NATHUBHAI

       Vs.

RESPONDENT: THE UNION OF INDIA & OTHERS

DATE OF JUDGMENT: 19/01/1960

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. SINHA, BHUVNESHWAR P.(CJ) GAJENDRAGADKAR, P.B. GUPTA, K.C. DAS SHAH, J.C.

CITATION:  1960 AIR  606            1960 SCR  (2) 775  CITATOR INFO :  RF         1961 SC1361  (8)  R          1961 SC1669  (6,34)  R          1962 SC1110  (8)  D          1962 SC1513  (7)  RF         1964 SC1140  (13)  R          1964 SC1643  (4,7)  R          1965 SC1595  (16)  RF         1966 SC 671  (5)  RF         1967 SC1507  (6)  R          1967 SC1606  (8)  APL        1970 SC1896  (18)  R          1973 SC 678  (14)  R          1974 SC  87  (11)  D          1987 SC1802  (29)  RF         1991 SC 818  (37)

ACT: Mining  Lease-Grant by  the State Government-Cancellation in review  by  the Central Government-Such  cancellation  if  a quasi-judicial  act-Mineral  Concession  Rules,  1949.   rr. 52,54.

HEADNOTE: Rule  54 of the Mineral Concession Rules, 1949, provided  as follows: "  Review.   Upon receipt of such application,  the  Central Government  may,  if it thinks fit, call  for  the  relevant records   and   other  information   from   the   Provincial Government,  and after considering any explanation that  may be offered by the Provincial Government, cancel the order of the Provincial Government or revise it in such manner as the Central Government may deem just and proper. The  appellant was granted mining leases in respect of  five areas   and  possession  was  delivered  to  him.    On   an application for review made by one of the respondents  under r.  52 of the Rules, the Central Government, without  giving the  appellant an opportunity of being heard, cancelled  the leases  with  regard to two of the areas  and  directed  the State  Government to grant leases in respect thereof to  the

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said  respondent.  The appellant applied to the  High  Court under  Art.  226 of the Constitution for quashing  the  said order.   The Single judge who heard the application as  well as  the  Division  Bench on appeal held that  the  order  of cancellation  was an administrative order and the  appellant was  not entitled to a hearing.  It was contended on  behalf of  the appellant in this Court that rr. 52-55 of the  Rules showed that the proceeding before the Central Government was a  quasijudicial proceeding and, consequently, the rules  of natural justice must apply. Held,  that  the contention must prevail and  the  order  of cancellation be quashed. In exercising its power of review under r. 54 of the Mineral Concessions  Rules,  1949,  the  Central  Government   acted judicially and not administratively. Assuming that the act of the State Government in granting  a mining  lease was an administrative act, it was not  correct to  say  that  no right of any kind  passed  to  the  lessee thereunder  untill  the review was decided  by  the  Central Government  where a review had been applied for.   Rule  52, therefore,  by  giving the aggrieved party the  right  to  a review  created  a  lis  between him  and  the  lessee  and, consequently,  in  the absence of anything to  the  contrary either in r. 54 or the statute itself, there could be no 99 776 doubt   that  the  Central  Government  was  acting   quasi- judicially under r. 54. Province   of  Bombay  v.  Kushaldas  S.    Advani.   [1950] S.C.R.621, applied. R.  v.  Electricity  Commissioner.  (1924)  I.  K.  B.  171, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 428 of 1959. Appeal from the judgment and order dated February 25,  1959, of the Punjab High Court (Circuit Bench) at Delhi in Letters Patent Appeal No. 47-D of 1955, arising out of the  judgment and order dated November 28, 1955 of the said High Court  in Writ Petition No. 306-D of 1954. N.   C.   Chatterjee,  J.  B.  Dadachanji,  S.  N.   Andley, Rameshwar Nath and P. L. Vohra, for the appellant. C.   K.  Daphtary.  Solicitor-General of India, R. Gapapathy Iyer, R. H. Dhebar and T. M. Sen, for respondents Nos.  1  & 2. G.   S.  Pathak, S. S. Shukla and Mrs. E.  Udayaratnam,  for respondent No. 3. 1960.  January 19.  The Judgment of the Court was  delivered by WANCHOO  J.-This  appeal upon a certificate granted  by  the Punjab  High Court raises the question whether an  order  of the Central Government under r. 54 of the Mineral Concession Rules, 1949, (hereinafter called the Rules) framed under  s. 6  of  the Mines and Minerals (Regulation  and  Development) Act, No. 53 of 1941, (hereinafter called the Act) is  quasi- judicial  or administrative.  The brief facts necessary  for this purpose are these.  The appellant was granted a  mining lease  by  the then Ruler of Gangpur State on  December  30, 1947, shortly before the merger of that State with the State of  Orissa on January 1, 1948.  This lease was  annulled  on June  29,  1949.   Thereafter  the  appellant  was   granted certificates of approval in respect of prospecting  licences and  mining  leases.  Eventually, the appellant  applied  on December  19,  1949,  for mining  leases  for  manganese  in

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respect  of  five  areas  in  the  district  of   Sundergarh (Orissa).   He  was  asked  on July 4,  1950,  to  submit  a separate                       777 application  for each area which he did on July 27,    1950. Some  defects  were pointed out in  these  applications  and therefore  the  appellant submitted  fresh  applications  on September  6,  1950, after removing the    defects.   In the meantime, the third respondent also    made applications for mining  leases for manganese for the same area on  July  10, 1950.   These  applications  were  not  accompanied  by  the deposit  required under r. 29 of the  Rules.   Consequently, the third respondent was asked on July 24, 1950, to  deposit a  sum of Rs. 500, which it did on August 3, 1950.   It  was then  found  that the third respondent’s  applications  were defective.  It was therefore asked on September 5, 1950,  to send a separate application in the prescribed form for  each block  and  thereupon  it submitted  fresh  applications  on September  6, 1950.  Eventually, on December 22,  1952,  the State of Orissa granted the mining leases of the five  areas to  the  appellant taking into account r. 32 of  the  Rules, which prescribed priority.  It was held that the appellant’s applications  were  prior  and  therefore  the  leases  were granted to him.  Thereafter on April 21, 1953, possession of the areas leased was delivered to the appellant.  It  seems, however, that the third respondent had applied for review to the  Central  Government  under r. 52 of  the  Rules.   This review application was allowed by the Central Government  on January 28, 1954, and the Government of Orissa was  directed to grant a mining lease to the third respondent with respect to two out of the five areas. The  appellant’s  complaint  is  that he  came  to  know  in February, 1954, that the third respondent had applied to the Central  Government  under r. 52 for review.   He  thereupon addressed a letter to the Central Government praying that he might be given a hearing before any order was passed on  the review  application.  He was, however, informed on  July  5, 1955, by the Government of Orissa of the order passed by the Central  Government on January 28, 1954, by which the  lease granted  to him by the State of Orissa with respect  to  two areas  was cancelled.  Consequently, he made an  application under Art. 226 of the 778 Constitution to the Punjab High Court praying   for quashing the order of January 28, 1954, on the   ground that it was a quasi-judicial  order and the rules of natural  justice  had not  been  followed  inasmuch as he had  not  been  given  a hearing  before  the review application was allowed  by  the Central Government, thus affecting his rights to the  -lease granted by the State of Orissa.  The writ petition was heard by a learned Single Judge of the High Court and it was  held that the order was not a quasi-judicial order but merely  an administrative  one  and  that  there  being  no  lis,   the appellant was not entitled to a hearing.  In the result, the writ  petition  failed.  The appellant went  up  in  Letters Patent  Appeal to a Division Bench of the High Court,  which upheld the order of the learned Single Judge.  The appellant then  applied for a certificate to permit him to  appeal  to this Court which was granted; and that is how the matter has come up before us. Shri  N. C. Chatterji appearing on behalf of  the  appellant contends that the Central Government was acting in a  quasi- judicial  capacity when it passed the order under r.  54  of the Rules and therefore it was incumbent upon it to hear the appellant  before  deciding  the  review  application,   and

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inasmuch  as it did not do so it contravened the  principles of natural justice which apply in such a case and the  order is  liable  to  be quashed.  In  support  of  this,  learned counsel  relies  on Nagendra Nath Bora and  another  v.  The Commissioner of Hills Division and Appeals, Assam and others (1),  and submits that rr. 52 to 55 of the Rules  which  are relevant  for the purpose clearly show that  the  proceeding before the Central Government is a quasi-judicial proceeding in view of the following circumstances appearing from  these rules:  (1)  Rule 52 gives a statutory right to  any  person aggrieved  by an order of the State Government to apply  for review  in  case of refusal of a mining lease; (2)  It  also prescribes  a period of limitation, namely, two months;  (3) Rule  53  prescribes a fee for an application under  r.  52. These  circumstances taken with the circumstance that a  lis is (1)  [1958] S.C.R. 1240. 779 created  as soon as a person aggrieved by an order is  given the right to go up in review against another person in whose favour  the order has been passed by   the  State Government show  that the proceeding before the Central  Government  at any rate at the stage Of  review is quasi-judicial  to which rules of natural   justice apply. Mr.  G. S. Pathak appearing for the third respondent on  the other hand contends that the view taken by the High Court is correct  and that the order of January 28, 1954, is  a  mere administrative order and therefore it was not necessary  for the  Central Government to hear either party before  passing that  order.   He points out that the minerals,  for  mining which the lease is granted under the Rules, are the property of the State.  No person applying for a mining lease of such minerals has any right to the grant of the lease.  According to  him, the right will only arise after the lease has  been granted by the State Government and the review  application, if  any,  has been decided by the  Central  Government.   He submits that even under r. 32, which deals with priority the State  Government  is not bound to grant the  lease  to  the person  who applies first and it can for any special  reason and with the prior approval of the Central Government  grant it to a person who applies later.  His contention further is that  as at the earlier stage when the grant is made by  the State  Government  the order granting the lease  is  a  mere administrative  order-as it must be in  these  circumstances (he  asserts)-,  the order passed on review by  the  Central Government must also partake of the same nature. In  order  to decide between these rival contentions  it  is useful   to  refer  to  rules  52  to  55  which  fall   for consideration  in  this case.  These are the rules  as  they existed up to 1953.  Since then we are told there have  been amendments  and even the Act has been replaced by the  Mines and  Minerals  (Regulation and Development) Act,  1957.   We are, however, not concerned with the Rules as modified after January  1954 or with the Act of 1957.  Rule 52  inter  alia provides that -any person aggrieved by an order of the 780 State Government refusing to grant a mining lease may within two  months of the date of such order apply to  the  Central Government  for reviewing the same.  Rule   53  prescribes a fee.  Rule 54 may be quoted in extenso, "  Upon receipt of such application, the Central  Government may,  if  it thinks fit, call for the relevant  records  and other  information  from  the  State  Government  and  after considering any explanation that may be offered by the State Government,  cancel  the order of the  State  Government  or

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revise it in such manner as the Central Government may  deem just and proper.  " Rule  55 then says that the order of the Central  Government under  r. 54, and subject only to such order, any  order  of the State Government under these rules shall be final. This  Court had occasion to consider the nature of  the  two kinds  of  acts,  namely,  judicial  which  includes  quasi- judicial and administrative, a number of times.  In Province of  Bombay  v.  Kushaldas  S. Advani  (1),  it  adopted  the celebrated  definition  of a quasi-judicial  body  given  by Atkin L. J. in R. v. Electricity Commissioners (2), which is as follows:- "  Whenever  any body of persons having legal  authority  to determine questions affecting rights of subjects, and having the  duty  to act judicially act in excess  of  their  legal authority  they are subject to the controlling  jurisdiction of the King’s Bench Division exercised in these writs.  " This  definition insists on three requisites each  of  which must be fulfilled in order that the act of the body may be a quasi-judicial  act,  namely, that the body of  persons  (1) must  have  legal  authority,  (2)  to  determine  questions affecting the rights of subjects, and (3) must have the duty to  act judicially.  After analysing the various cases,  Das J.  (as he then was) laid down the following  principles  as deducible  therefrom in Kushaldas S. Advani’s case (1)at  p. 725 :- " (i) That, if a statute empowers an authority, not being  a Court in the ordinary sense, to decide (1) [1950] S.C.R. 621. (2) [1924] 1 K.B. 171.                           781 disputes arising out of a claim made by any party under  the statute which claim is opposed by another party  and   to determine’  the respective rights of the contesting  parties who  are  opposed to each other,  there is a lis  and  prima facie  and in the absence of anything in the statute to  the contrary it is the  duty of the authority to act  judicially and the   decision of the authority is a quasi-judicial act; and  (ii) that if a statutory authority has power to do  any act  which  will  prejudicially affect  the  subject,  then, although there are not two parties apart from the  authority and the contest is between the authority proposing to do the act and the subject opposing it, the final determination  of the authority will yet be a quasi-judicial act provided  the authority is required by the statute to act judicially. " It is on these principles which are now well-settled that we have to see whether the Central Government when acting under r.  54 is acting in a quasi-judicial capacity or  otherwise. It is not necessary for present purposes to decide  -whether State  Government  when it grants a lease is  acting  merely administratively.   We  shall assume that the order  of  the State  Government  granting a lease under the  Rules  is  an administrative  order.  We have, however, to  see  what  the position  is after the State Government has granted a  lease to one of the applicants before it and has refused the lease to others. Mr. Pathak contends that even in such a situation there   is no right in favour of the person to whom the lease has  been granted by the State Government till    the          Central Government has passed an order on a     review   application if any. Rule 55, however, makes    clear  that the order  of the State Government is final subject  to any order  by  the Central Government under r. 54. Now when a lease is  granted by the State Government, it is quite possible that there may be  no  application for review by those  whose  applications

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have been refused.  In  such a case the order of  the  State Government would  be final. It would not therefore be in our opinion  right to  say that no right of any kind is  created in favour of a person to whom the lease is 782 granted  by  the  State Government.   The  matter  would  be different if the order of the State Government were    not to   be   effective  until  confirmation  by   the   Central Government; for in that case no right would arise until  the confirmation was received from the Central Government.   But r.  54  does  not provide for confirmation  by  the  Central Government.  It gives power to the Central Government to act only when there is an application for review before it under r.  54.   That  is why we have  not  accepted  Mr.  Pathak’s argument  that  in substance the  State  Government’s  order becomes effective only after it is confirmed; r. 54 does not support this.  We have not found any provision in the  Rules or  in  the  Act  which  gives  any  power  to  the  Central Government  to  review  suo  motu the  order  of  the  State Government  granting  a lease.  That some kind of  right  is created on the passing of an order granting a lease is clear from  the facts of this case also.  The order  granting  the lease  was  made  in  December  1952.   In  April  1953  the appellant was put in possession of the areas granted to  him and actually worked them thereafter.  At any rate, when  the statutory rule grants a right to any party aggrieved to make a review application to the Central Government it  certainly follows  that the person in whose favour the order  is  made has also a right to represent his case before the  authority to  whom  the  review application is made.   It  is  in  the circumstances  apparent that as soon as r. 52 gives a  right to  an aggrieved party to apply for review a lis is  created between him and the party in whose favour the grant has been made.  Unless therefore there is anything in the statute  to the  contrary  it will be the duty of the authority  to  act judicially and its decision would be a quasi-judicial act. The next question is whether there is anything in the  Rules which negatives the duty to act judicially by the  reviewing authority.  Mr. Pathak urges that r.    54 gives full  power to the Central Government to act as     it  may deem I  just and  proper’ and that it is not bound even to call  for  the relevant  records  and other information  from,,  the  State Government before deciding an application for review.   That is undoubtedly                             783 so. But that in our opinion does not show that the statutory Rules  negative the duty to act judicially. What  the  Rules require  is that the Central Government  should  act  justly and properly; and that is what an       authority  which  is required  to  act  judicially must do.  The  fact  that  the Central  Government  is not bound even to call  for  records again does not negative the   duty  cast  upon  it  to   act judicially,  for  even  courts have  the  power  to  dismiss appeals  without calling for records. Thus r. 54, lays  down nothing to the contrary. We  are therefore of  opinion  that there  is  prima  facie a lis in this case  as  between  the person to whom the  lease  has been granted and  the  person who is aggrieved    by the refusal and therefore Prima facie it is the duty of  the  authority which has  to  review  the matter to act  judicially  and there is nothing in r. 54  to the contrary.  It  must therefore be held that on the  Rules and the   Act,  as  they  stood at the  relevant  time,  the Central   Government was acting in a quasi-judicial capacity while deciding an application under r. 54. As such it    was incumbent upon it before coming to a decision to  give     a

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reasonable opportunity to the appellant, who was  the  other party in the review application whose   rights  were   being affected, to represent his case. In as  much as this was not done, the appellant is entitled to ask us to issue a writ in the nature of certiorari quashing   the  order  of   January 28,1954, passed by the   Central Government. We therefore allow the appeal and setting aside   the  order of the High Court quash the order of the Central  Government passed on January 28, 1954. It will, however, be open to the Central Government to    proceed   to  decide   the   review application afresh after giving a reasonable  opportunity to the appellant to    represent  his case. The appellant  will get his costs  throughout from the third respondent, who  is the principal contesting party. Appeal allowed. 100      784