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PETITIONER: V RAJLAL MANILAL & CO.

       Vs.

RESPONDENT: UNION OF INDIA AND ANR.

DATE OF JUDGMENT: 10/03/1964

BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. SHAH, J.C. SIKRI, S.M.

CITATION:  1964 AIR 1643            1964 SCR  (7)  97  CITATOR INFO :  D          1987 SC1802  (29)

ACT: Mines   and  Minerals-State  Government  refuses  to   renew Certificate   of   approval-Review   petition   to   Central Government   -Central   Government   receives   report   and information from the State Government behind the back of the appellants-Central   Government   acting   quasi-judicially- Violation of natural justice -Mines and Minerals (Regulation and  Development)  Act,  1948  (No.   XLIII  of  1948)-Mines Concession Rules, 1949 rr. 57, 59.

HEADNOTE: The  appellants constitute a partnership engaged  in  mining and they held a prospecting license as well as a certificate of  approval  from the State Government  under  the  Mineral Concessions Rules, 1949 framed under the Mines and  Minerals (Regulation  and  Development)  Act,  1948.   The   approval certificate was granted for one year and until December 1955 it  had  been  renewed  from year to  year  when  the  State Government  refused  to  renew it on  the  ground  that  the partners  composing  the firm had  changed.   Thereupon  the appellants  applied under r. 57 of the  Minerals  Concession Rules to the Union Government for the review of the order of the  State Government refusing to renew the  certificate  of approval.   While  this application Was  pending  the  Union Government  corresponded  with  the  State  Government   and gathered  information  and  received  the  latter’s  remarks -regarding  the merits of the matter behind the  appellants’ back.  The request made by the appellants for copies of  the correspondence  and  for  an opportunity  to  be  heard  was refused  by  the  Union Government.   Ultimately  the  Union Government refused the review application on the ground that there was no valid ground to interfere with the decision  of the  State  Government.   The present appeal  was  filed  on special  leave  granted by this ’Court.  On  behalf  of  the appellants it was contended that the Union Government  while disposing of an application under r. 57(2) in terms of r. 59 acts as a quasi-judicial authority and the ,order which  was

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passed  taking  into consideration the report of  the  State Government behind the appellants’ back and without affording a  reasonable  opportunity  for presenting  their  case  was contrary to natural justice and was therefore void. Held:(i)  The  Union  Government when disposing  of  an  ap- plication for review under r. 59 is functioning as a  quasi- judicial authority. Shivji  Nathubhai  v.  Union of India,  [1960]  S.C.R.  775, relied ,on. (ii)Though Shivji Nathubhai’s case was concerned with a case where  an order had been passed prejudicial to  the  respon- dents before the Central Government without affording them L/P(D)1 SCI-4.. 98 an  opportunity to meet the case of an applicant for  review the  same  principle would apply even where a  petition  for review  is rejected based on materials which were  not  made available to the applicant for review. (iii)  Applying the above principle to the present case  the order  of  the  Central  Government  is  vitiated  as  being contrary  to the principles of natural justice in  that  the decision was rendered without affording to the appellants  a reasonable  opportunity of being heard which is a  sine  qua non of a fair hearing.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 11 5 &  116 of  1963.   Appeals by special leave from the  judgment  and orders  dated July 9, 1958, September 24, 1958 of the  Union of India (Ministry of Steel, Mines and Fuel, New Delhi)  and the Punjab High Court (Circuit Bench) at Delhi respectively. G.S.  Pathak,  Rameshwar  Nath and S. N.  Andley,  for  the. appellant (in both the appeals). S. G. Patwardhan and B. R. K. G. Achar, for respondent No. 1 (in both the appeals). I. N. Shroff, for respondent No. 2 (in C.A. No. 116/1963). March 10, 1964.  The Judgment of the Court was delivered by AYYANGAR,  J.-Civil  Appeal  No. 115  is  by  special  leave granted by this Court under Art. 136 of the Constitution and is  against  an  order of the Union of  India  (Ministry  of Steel,  Mines  and  Fuel) dated July 9,  1958  rejecting  an application  filed  by the appellants under rule 57  of  the Mineral Concession Rules, 1949 to review an order passed  by the Government of Madhya Pradesh rejecting their application for  the renewal of the Certificate of Approval  granted  to them.   The  appellants filed a petition to the  High  Court Punjab under Art. 226 of the Constitution praying for a writ of  certiorari  to  quash the above order of  the  Union  of India.   This  petition was dismissed by the High  Court  in limine and Civil Appeal No. 116 of 1963 is by special  leave of this Court against this order of the High Court,  Punjab. It would thus be seen that both the appeals are directed  to challenge  the  validity  of the same  order  and  we  shall therefore deal with them together. The  appellants, who constitute a partnership,  are  engaged inter  alia  in  the  business of mining  and  they  held  a prospecting  licence in the State of Madhya  Pradesh.   They hold  concessions  in  regard  to  prospecting  and  working minerals  in  several areas of the State to the  details  of which it is not necessary to refer.  Under the scheme of the Mines  and Minerals (Regulation and Development)  Act,  1948 (Act  No. XLIII of 1948) and the Mineral  Concession  Rules, 1949 framed thereunder, in order that a prospecting  licence

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may be granted to a person he has 99 to hold a certificate of approval from the State  Government concerned  and  similarly the rules provide that  no  mining lease  shall  be  granted to any person  unless  he  held  a similar  certificate of approval.  To enable them to do  the prospecting  in  lands in which they  had  obtained  mineral concessions,  the appellants applied for and  obtained  from the  Government of Madhya Pradesh a certificate of  approval under  the Mineral Concession Rules from 1952 onwards.   The duration  of  the certificate is one calendar year  and  the same has to be renewed every year, if it is to be in  force. The  original certificate granted to the appellants for  the year  1952  was  being renewed from year to year  and  as  a result  they held a valid certificate of approval up to  the period  ending  on  December 31, 1955.   Being  desirous  of having the same renewed for the following calendar year 1956 they made an application to the Government of Madhya Pradesh on November 22, 1955.  The information required by the  form of application prescribed by the rules was furnished and the necessary  documents  were filed and  this  application  was recommended  by the District Officer, Bhandara.   The  State Government,  however, by an order dated September  21,  1956 rejected  the application, the reason given being  that  the partners  composing  the firm had changed.  This  order  was communicated  to  the  appellants on  October  6,  1956  and thereupon the appellants made an application on November 15, 1956  to the Union Government for a review of the  order  of the State Government under rule 57 of the Mineral Concession Rules.   Rule  57(2)  which was invoked  by  the  appellants provides:               "Where  a  State  Government  has  failed   to               dispose of an application for grant of renewal               of  a certificate of approval  or  prospecting               licence  or a mining lease within  the  period               prescribed  therefor  in  these  Rules,   such               failure shall, for the purpose of these rules,               be  deemed to be a refusal to grant  or  renew               such  certificate,  licence or lease,  as  the               case may be, and any person aggrieved by  such               failure  may, within two months of the  expiry               of the period aforesaid, apply to the  Central               Government for reviewing the case."               The procedure for review is laid down by  rule               59 which ,reads:               ,,Review-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  or               revise  the order of the State Government,  or               pass such order as the Central Government  may               deem just and proper." L/P(D)1SCI---4(a) 100 Thereafter  correspondence seems to have ensued between  the Central  Government and the Government of Madhya Pradesh  in regard  to  the propriety of granting  the  application  for review.   The appellants having come to know from  a  letter addressed to them by the Government of India that the  State Government  had  been  required to send a  report  of  their remarks in connection with their application for review made enquiries  as to what had happened and also  requested  that they  might  be  informed  as  to  the  progress  of   their

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application and that they might be given an opportunity of a personal hearing at which they would be able to satisfy  the Government  about  the  genuineness  of  their  case.   Some portions  of this correspondence between the  Government  of India.  and the Government of the State as to the merits  of the  appellants’  application are now on record  but  it  is common ground that the appellants were not informed of these documents  prior  to the order now  impugned  rejecting  the application  for  review was passed.  On July  9,  1958  the application  of  the appellants was rejected  by  the  Union Government, the order stating:               "The  Central  Government  have  come  to  the               conclusion  that there is no valid ground  for               interfering   with   the   decision   of   the               Government  of Madhya Pradesh  rejecting  your               application  for renewal of a  certificate  of               approval for the year 1956." The appellants thereafter applied to the Government of India requesting for a copy of the report of the State  Government on  the  basis of which the application was  rejected.   The reply  that the appellants received was that the  Government of  India  regretted  their inability  to  accede  to  their request.   It  is the validity of this order dated  July  9, 1958 that is challenged in appeal No. 115 of 1963. Mr.  Pathak, learned Counsel for the  appellants,  submitted that  the Union Government when disposing of an  application under  s.  57(2) in terms of rule 59 is acting as  a  quasi- judicial  authority  and the order which was  passed  taking into  consideration the report of the State  Government  and without their knowing the contents of the report and without affording them a reasonable opportunity of presenting  their case was contrary to natural justice and was therefore void. In this connection learned Counsel relied on the decision of this Court: Shivji Nathubhai v. The Union of India(1).   Mr. Pathak is well-founded in his submission as to the nature of the  jurisdiction  exercised by the  Union  Government  when disposing of an application for review under Rule 59 and the decision referred to does (1)  [1960] 2 S.C.R. 775. 101 support  him  that the Central Government acting  under  the rule   referred  to  is  functioning  as  a   quasi-judicial authority.  It does follow therefore that they could not act on the basis of material as regards which the appellants had no opportunity to make their representation.  No doubt,  the decision  in  Shivji  Nathubhai v The  Union  of  India  and Ors.(1)  was concerned with a case where an order  had  been passed  prejudicial  to the respondents before  the  Central Government without affording them an opportunity to meet the case  of  an  applicant for review but  the  same  principle would,  in  our  opinion, apply even where  a  petition  for review  is rejected based on materials which were  not  made available to the applicant for review. As  we  have  already indicated, the  State  Government  had refused renewal of the certificate of approval because  they considered  that there had been a change in the  composition of  the  firm which destroyed its identity.   On  the  other hand,  the case of the appellants was that the terms of  the partnership deed made express provisions for the continuance of the identity of the firm, notwithstanding changes in  the persons  composing the firm by death, retirement or  because of  the  accession  of new members to  replace  deceased  or retiring  partners or even otherwise.  If the report of  the State Government made any points against the representations made  by  the appellants, and these were  being  taken  into

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consideration  by the Union Government, in common  fairness, the appellants were entitled to be informed as to what these were and an opportunity to point out how far they  militated against the contentions raised by them. Learned  Counsel for the respondent-Union of India, did  not seek to support the position taken by the Central Government that  they were justified in refusing to disclose  the  con- tents of the report they obtained from the State  Government which afforded them the factual basis on which they rejected the application for review.  We have therefore no hesitation in  holding  that the order of the  Central  Government  now under appeal is vitiated as being contrary to the principles of  natural  justice,  in that  the  decision  was  rendered without affording to the appellants a reasonable opportunity of being heard which is a sine qua non of a fair hearing. The  learned Judges of the Punjab High Court  dismissed  the petition  filed before them under Art. 226,  apparently  be- cause  they  proceeded  on the view  that  the  exercise  of jurisdiction of the Central Government under rules 57 and 59 of the Mineral Concession Rules was really administrative in character  so  that the reasonable opportunity  that  is  an essential  requisite  of quasi-judicial  procedure  was  not attracted to the (1)  1960 2 S.C.R. 775. 102 case.  That was the view taken by that Court in  the  Shivji Nathubhai  v. The Union of India and Ors.(1) which  decision was reversed by this Court.  It might be mentioned that  the decision  of  this Court was rendered  subsequent  to  their judgment  now under appeal and therefore the learned  Judges had not the advantage of the pronouncement of this Court. The result is that the appeals are allowed and order of  the Central Government dated July 9, 1958 and of the High  Court dated September 24, 1958 are set aside.  The Central Govern- ment will consider the review application afresh and dispose of  the same in accordance with law and in the light of  the observations contained in this judgment.  The appellants are entitled to their costs in this Court (Hearing fee one set). Appeals allowed. (1) [1960] 2 S.C.R. 775. 103