Holding

The Rao report constitutes a decision of the Central Government under Section 30 of the Mines and Minerals Act and is binding; the leases to IMFA, FACOR and Aikath are upheld, while the rejections of OCL and ORIND are set aside and their applications must be reconsidered.

Summary

The Supreme Court examined applications for mining leases of chromite in Orissa, focusing on the Rao report prepared by the Secretary of the Ministry of Mines. It held that the Rao report is a decision of the Central Government under Section 30 of the Mines and Minerals (Development and Regulation) Act, 1957, and therefore binding. The Court upheld the leases already granted to Indian Metals and Ferro‑Alloys Ltd. (IMFA), Ferro Alloys Corporation Ltd. (FACOR) and individual Aikath, confirming they were valid relaxations of the reservation rule. It set aside Rao's rejection of Orissa Cement Ltd. (OCL) and Orissa Industries Ltd. (ORIND), directing the State Government to reconsider their applications afresh. The judgment also clarified that reservation of mineral areas for the public sector is permissible but may be relaxed by the Central Government, and rejected the pleas of promissory estoppel and arbitrariness raised by the private applicants.

Issues considered

The legal character and binding effect of the Rao report
Whether the reservation of chromite areas for public‑sector undertakings is obligatory
Interpretation of Section 11(2) and 11(4) of the Mines and Minerals Act regarding preferential rights
Whether the State Government may grant mining leases to private parties despite a reservation
The applicability of promissory estoppel to the State's earlier representations
The validity of the State's changing reservation policy and alleged arbitrariness

Legislation cited

Constitution of Indias. Article 297, s. Article 298
Mineral Concessions Rules, 1960s. Rule 22, s. Rule 24, s. Rule 26, s. Rule 31, s. Rule 54, s. Rule 55, s. Rule 58, s. Rule 59, s. Rule 60
Mines and Minerals (Development and Regulation) Act, 1957s. 10, s. 11, s. 17A, s. 19, s. 2, s. 30, s. 3(j), s. 4, s. 5A

Subjects

mining leasechromitereservation policypublic sector undertakingMines and Minerals Actpreferential rightpromissory estoppelcentral governmentstate governmentRule 58Rule 59Rule 60revisionstatutory interpretation

Judgment

INDIAN METALS AND FERRO ALLOYS LTD. A
v.
UNION OF INDIA AND ORS.

SEPTEMBER 21, 1990
B
[S. RANGANATHAN AND M. FATHIMA BEEVl, JJ.]

Mines and Minerals (Development and Regulation) Act, 1957-
Sections 3(j), 5A, JO, 11, 17A & First and Second Schedules-'Minor
Minera/'-Chrome ore-Grant of mining lease-Reservation in favour
of Public Sector Undertakings-Whether obligatory-Consideration of
applications-Directions issued to Government-Appropriate statutory c
amendments suggested.

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 individual sought clarifications and
D
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(1) of the Mines and Minerals (Development
and Regulation) Act, 1957, the right to grant the mining right in respect E
of this mineral is vested in the State Government subject to the control
by Union of India, and as such they are respondents 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 F
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 G
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.
H

27
28 SUPREME. COURT REPORTS [1990] Supp. 2 S.C.R. .
In his report dated l.2.J\188 Rao accepted the clahn of reservation
A
.made by the two Public Sector Undertakings, viz., Orissa Mining
Corporation (OMC) and Industrial Development Corporation of~
.ttd. (IDCOL). He also partially accepted the claims of the three private
parties. viz., Indian Metals and Ferro-Alloys Limited (L\iFA); F'1TO
Alloys Corporation Limited (FACOR); and Aikath and rejected the
B claims of the other two private parties viz., Orissa Cements Ltd. (OCL)
and Orissa Industries Ltd. (ORIND). Though be accepted the claim of
the two public sector undertakings, he recommended for them leases in
respect of only the balance of the lauds left, after fulfilling the claim of
the others which he had accepted.

peti1ions inter alia sought directions on the repo'i of
c .Rao. ItThewasprese!ff.
contended that Rao was nothing more than a Commissioner
appointed by this Court to examine the various parties and hence this
· Court should pass .appropriate orders on his report. Various conten-
· ·tions<were advanced by the petitioners as well as respondents as regards
the legal character of the Rao Report and of giving effect to it either in
0 toto or with modifications in certain respects. 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
petitioners.
~

Disposing of the matters, this Court,
J;:
HELD: 1. The sfatute must lay down clearer guidelines and proce-
dure. 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
F 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
G 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 applications. These are aspects ...
which call for careful consideration and appropriate amendments to the
H Mines and Minerals (Development and Regulation) Act, .1957 and the
Rules made thereunder. [72D·GJ
INDIAN METALS v. U.0.1. 29

2. Chromite ore is an Important major mineral and the impor-
A
tance 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. 1n
February 1974 the State Government was in favour of freer issue of
mining leases but gave up this policy in pursuance of t!ie Central
Government's letter of 15.5.74. Reservation was, therefore, clamped in B
1977. again. Applications could still be considered to see how far a
relaxation was permissible having regard to the nature of the appli-
cant's needs, the purpose for which the lease was asked for, the
nature of the ore songht to be exploited, the relative needs of the
State, the availability of a public undertaking to carry out the min-
ing more efficiently and other relevant considerations. There is no
material on record to substantiate the plea that the State Govern- c
ment has been acting arbitrarily• or ma/a fide in its policy formula-
tions in this regard. [82C-E]

Venkataraman v. Union, [1979] 2 SCR 202, referred to.

3. Rao's decision, thatthe leases that have been granted already
in favour of IMFA, FACOR be confirmed, should be upheld. These
shonld 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 E
light of the affidavits and counter affidavits 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 11!1 the basis of which the leases have been decided upon and are
adequate to justify the·mining leases actually granted. [89B-D]
F
4• The claims of OCL and ORIND have been rejected summarily
by Rao without an advertence to the various consideration 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 at"resh by the Central Government. It wouljl be
more expedient if the Claims of OCL and ORIND are restored, for G
detailed consideration in all their several aspects, before the State
Government, as the State Government has had no oppol'.lunity to con-
sider the various aspeetS 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 consider
whether, despite the reservation, some relaxation can be made also in H
30 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A favour of these two companies. The State Government has to take into
account various factors and aspects before granting a mining lease to an
individual concern carving out an exception to its reservation policy. It
has done this in respect of !MFA and FACOR for certain special
reasons recorded 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
B 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] ·

S. The State Government has rejected ORIND's application,
inter alia, on the ground that, in view of the pendency of the Writ
Petition before this Court, it could not at that stage pass any order on
C 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 appli-
cation afresh in the light of this judgment. [95A-B]
D
6. So far as OMC and IDCOL are concerned, Rao has recom-
mended that the areas left aftet 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
E claim a right to the extent the State Government is willing to relax the
rule of reservation. This Court does uot 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 in the
hands of the State Government and the allocation of mining leases to
F these organisations is a matter of discretion 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
considered 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-E]
G
7. When the State Government agreed to lease out the areas to
IMFA 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
H given within the particular time limit set out therein. It cannot be
INDIAN METALS v. U.0.1. 31

construed, reasonably, as a direction compelling the Central Govern-
A
ment 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 B
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 chro-
c
mite 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 D
t.5.53. His original grant had been approved before the areas was
reserved on 3. 7.62. If the State Government 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 High Court,
these are no grounds to interfere with that decision of the State Govern-
ment. [89D-F] · _,. ·. E

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 j>erhaps 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 F
the formal approval of the Central Government therefore. The decision
of Rao itself can be taken as contalping the approval of the Central
• 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 compromise dated 4.12.1984. [90G-H; 91A] G

9. Although Rao has approved the grants made in favour of IMFA
and FACOR by the State Government (which, he remarks, 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 justifying the grants of IMFA and FACOR. It is also clear that H
32 SUPREME COUR'LREPORTS [ 1990] Supp. 2 S.C.R.

A there were no Court orders that could have influenced his decisions on
the claims of the other parties. I 87F-G]

IO.I 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,
B as the State Government's order of 29.IO.I973 has been set aside,
ORIND's application should he restored for reconsideration on the
basis of the situation that prevailed as on 29.10.I973 and that, therefore,
it has to be straightaw•1y granted as lliere was no other application pend-
ing on that date before the State Government. In mattersc like this, sub-
sequent applications cannot be ignored and a rule of thumb applied. [74C-E]
I
c
10.2 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 I971 has been under con-
sideration before varioiis authorities and ill· the writ petition filed in the
0 High Court, several other competitors have come into the picture. The
statutory provision .is not clear as to which o(ibe applications in respect
·of any piirticular area, are to be considered together. If ORIND's appli-
cation of I97I 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 resl!lt would follow; if, on the other hand, all the applications
E pending for disposal at the time ORIND's application is to be granted or
rejected are to be considered,. 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 therefor 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
F only reasonable ahd practical procedure. That is why this Court, in its
order dated 30.4.87, laid down that all applications pending for consi-
deration as on 30.4.87 should be considered by Rao. [71G-H; 72A-B]

Ferro Alloys Corporation of India v. Union, ILR. I977 Delhi I89
and Mysore Cements Ltd. v. Union, AIR I972 Mysore I49, distinguished.
G
I I. I Previously, rule 58 did not enable the State Government to
reserve any area in the State for exploitation in the pubiic sector. The
existence and validity of.such a power of reservation was upheld by this
Court. Rule 58 has been amended in I980 to confer such a power on the
State Government. lt .is also not in dispute that a notification of reserva-
H tion was made on 3.8,77. The State Government, OMC and IDCOL are,
INDIAN METALS v. U.OJ. 33

therefore, right in contending that, ex facie, the areas in question are
A
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 accordance with law (rule 59(l)(e) or the Central Govern·
ment decides to relax the provisions of rule 59(1). [79D-F]

Amritlal Nathubhai Shah and Ors. v. Union of India and Anr. B
[1977] l SCR372, relied on.

Kotiah Naidu v. Sta.te of A.P., AIR 1959 AP 185 and Amrit/al
Nathubhai Shah v. Union, AIR 1973 Guj'!rat 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
c
State Government 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 Central Government to relax the
rigid requirements of reservation in individnal cases after recording
special reasons. Such exceptional and isolated instances of lease are not D
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 exploitation does not, however, E
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 Govern-
ment 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 confe'r any rights on the Public F
Sector Undertakings. This reservation is of two types. Under s. 17A(l),
inserted in 1986, the Central Government may after consulting the
State Government just reserve any area-not covered by a Private Lease
or a Mining Lease-with a view to conserving 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 G
second type of reservation was provided for in role 58 and such reserva-
tion could have been made by the State Government (without any neces-
sity for approval by the Central 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 H
,

A
34 SUPREME COURT REPORTS [ 1990) Supp. 2 S.C.R.

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
-1
Company or are to he exploited hy 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 fu insist
that the leases should be given only to them and to no one else in the
B !JUblic sector. There are no competitive applications 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 Government 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 Goverment •. Both the Corporations are admittedly ~

instrumentalities of the State Government and the decision of the State '
c Government is bindin1! 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
D 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 he 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
E public sector, has to be answered in the negative in view of the statutory
provisions. For the State Government could always denotify the reser-
vation and make the areas available for grant to private parties. Or,
short of actually deserving a notified area, persuade the Central
government to relax t.he restrictions of rule 59(1) in any particular case.
It is, therefore, open to the State Government to grant private leases
F even in respect of arE:as covered by a notification of the State Govern-
ment 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
G had to be approved by the Central Government. The Central Govern-
ment never approved of it. The mere fact that the State Government, at
one stage, recommended 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-FJ ·~

H Kanai Lal Sur v. Paramnidhi Sadhukhan, (1958] 2 SCR 366; Mis
INDIAN METALS v. U.0.1. 35

Motilal Padampat Sugar Mills Co. (P) Ltd. v. State of Uttar Pradesh
A
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 SCR 605;
Union of India & Ors. v. 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. B

[This Court directed that it would be open to 811 the parties to
place their claims, or further Claims, as the case may he, in regard to
the areas applied for by them on or before 30.4.1987, backed by sup-
porting reasons, before the State Government in the form of represen-
tations within four weeks from the date of this order; that the State
Government would dispose of these appljcations within the statutory
c
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 discussions and findings of the Rao Report in the light of this judg-
ment; that the State Government should also keep In mind that no leases D
to any of the parties (other than OMC and IDCOL) could be granted
unless either the areas so proposed to be leased out are dereserved 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] E

CIVIL APPELLATE JURISDICTION: Civil Miscellaneous
Petition Nos. 16435-37 of 1987.
JN
) Writ Petition No. 14116 of 1984. F

(Under Article 32 of the Constitution of India).

WITH
Special Leave Petition (C) Nos. 5163/88 with 8574 of 1989 read with
G
I.A. No. 1/89.

K. Parsaran, Dr. L.M. Singhvi, G. Ramaswamy, V.C. Mahajan,
Harish N. Salve, Rajan Mahapatra, Ms. Lira Goswami, S. Suku-
~'
maran, C. Mukhopadhyay, A. Subba Rao, A.D.N. Rao, P.K. Mehta,
Ms. Mona Mehta, Girish Chandra, S.C. Patel, T. Srikumar, P. H
36 .. SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A 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.
B
The Judgment of the Court was delivered by

RANGANATIIAN,J. THE "DRAMATIS PERSONAE"

All these matters are in the nature of off shoots of a basic con-
troversy raised in W.P. No. 14116/84 which was "disposed of" by the
C 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
0
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
E
applications for grant of rights for the mining of chrome ore or Chro-
mite in the State of Orissa. Chrome ore is one of the minerals specified
in the First and Second Schedules 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
F
see later, on control by the Union oflndia. 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 of applicants
for the mining rights we have referred to above. These are:

(1) Indian Metals and Ferro-Alloys Limited (IMFA);
G
(2) Ferro Alloys Corporation Limited (FACOR);

(3) Orissa Cements Limited (OCL);

H
(4) Orissa Industries Limited (ORIND); ·-
INDIAN METALS v. U.0.1. IRANGANATHAN, J.] 37

(5) Orissa Mining Corporation (OMC); A

(6) Industrial Development Corporation of Orissa Ltd.
(IDCOL); and

(7) Shri Mantosh Aikath;
B
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
c
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 D
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 E
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 which was confirmed by the C.G.

As already mentioned, this Court 'disposed' of W.P. No. 14116/ F
1984 by its order of 30.4.87. We shall have to consider this and several
other orders passed by this Court in the course cf 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 G
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 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

put forward claims that the public sector units in the State of Orissa
A
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 proceedings.
B 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 !st
February, 1988. In his report, Rao accepted the claim of reservation
made on behalf of the OMC and the IDCOL. Nevertheless it appears
C that, bearing in mind certain interim orders passed by this Court in the
various applications made to it during the pendency of the writ peti-
tions, Rao came to the conclusion 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 !MFA, FACOR and AIKATH. He rejected the claims
D 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 a/ia, seek
E 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 nothiµg more than a comm is·
sioner 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
F may consider appropriate. A second approach suggested is that the
Rao report should be taken to be the decision of the Central Govern-
ment, which it is now for the State Government 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 find-
ings reached by Rao. A third line of argument which has been addres-
G sed 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 and should have simply left it to the State to exploit the mines
H in public sector, including inter alia, the OMC and IDCOL. A fourth
INDIAN METALS v. U.0.1. {RANGANATHAN, J.l 39

stance taken up by the State Government may also be mentioned here.
A
The learned Advocate General for the State made a statement before
us that, without prejudice to a contention 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. B
On the other hand they have got several objections 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 Govern-
ment, without prejudice to its contentions in relation to the Rao
report, is prepared to abide by it. However, the learned Advocate-
c
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 D
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 under-
standably, is not acceptable to OCL and ORIND or, indeed, even to
OMC and IDCOL who have got nothing at the hands of Rao. !MFA
and FACOR are substantially satisfied with the report given by Dr.
Rao (except for certain minor contentions which they are prepared to E
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 F
) as well as on merits. AIKA TH's submission is that he is a small
operator 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 G
have to determine the legal character of the Rao report and decide
whether the findings of Rao are to be given effect to in toto or are to be
modified and, if so, in what respects.

-~ Before dealing with these questions and even setting out the
de.tails of the claims of the various parties and the material they placed H
40 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

before Rao to substantiate their claims, it will be useful to survey the
A
relevant statutory provisions relating to the grant of mineral conces-
sions of the nature we are concerned with here. This we shall at once
proceed to do.

THE RELEVANT STATUTORY PROVISIONS
B
(a) Constitution: Article 297 of the Constitution of India unequi-
vocally declares that 'all lands, minerals and other things of value
underiying the ocean ..... shall vest in the Union and be held for the
purposes of the Union'. Article 298 defines the extent of the executive
power of the Union and of each State thus:
c "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:
D
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
E 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."
F
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:

G List I, 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.
H
INDIAN METALS v. U.0.1. [RANGANATHAN, J.] . 41

List II, Entry 23
A
Regulation of mines and mineral development subject to
the provisions of List I with respect to regulation and de-
velopment under the control of the Union.

(b) Act: In exercise of the above powers, the Union legislature has B
enacted the Mines and Minerals (Development & Regulation) Act,
1957 (hereinafter referred to as 'the Act'). The Act has been substan-
tially 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. c

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 D
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 E
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 mi.nerals like "chrome ore", which
may be described, for convenience, as "major minerals".

S. 4 of the Act provides as follows:- F

:'No person shall undertake any prospecting or mmmg
operation 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. G

(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 H
42 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

licence (PL) or a mining lease (ML). They read thus:
A
"10. Application for prospecting licences or mining leases:
(I) 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-
B cerned in the prescribed form and shall be accompanied by
the prescribed fee.

(2) Where an application is received under sub-section
there shall be sent to applicant an acknowledgement of its
receipt within the prescribed time and in the prescribed
form.
c
(3) On receipt of an application under this section, the
State Government may, havhJg regard to the provisions of
this Act and any rules made thereunder, grant or refuse to
grant the licence or lease."
D
11. Preferential right of certain person: (I) Where a
prospecting 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
person:
E
xxx xxx xxx

(2) Subject to the provisions of sub-section (I), where two
or more persons have applied for a prospecting licence or a
mining lease in respect of the same land, the applicant
F whpse application was received earlier shall have a prefe-
rential right for the grant of the lieence or lease as the case
may be over an applicant whose application was received
later:

Provided that where any such applications are
G received on the same day, the State Government, after
taking into consideration the matters specified in sub-
section (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.

H (3) The matters referred to in sub-section (2) are the
following:
INDIAN METALS v. U.0.1. lRANGANATHAN, J.I 43

(a) any special knowledge of, on experience in, prospect-
ing operations or mining operations as the case may be
A
possessed by the applicant;

(b) the financial resources of the applicant;

(c) the nature and quality of the technical staff employed B
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 c
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."
D
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 conservmg
any mineral and after consultation with the State Govern· E
ment 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 .
-' F
(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 under-
taking prospecting or mining operations through a Govern-
ment company or corporation owned or controlled by it or
by the Central Go'vernment and where it proposes to do so, G
it shall by 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 exer.:ise of the powers conferred by sub-
section (2) the State Government undertakes prospecting H·
,,_.....

44 SUPREME COURT REPORTS [1990] Supp. 2 S.C.R.

or mining operations in any area in which the minerals vest
A
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 opera·
tions had been undertaken by a private person under
B prospecting licence or mining lease.

S. 19 of the Act decla,res that any prospecting licence or mining lease
granted, renewed or aiquired in contravention of the provisions of this
I
~
Act or any rules or orders made 'th.ifeunder shall be void and of no
effect. S. 30 confers revisional powers on the C.G. It reads:
c "The Central Government may, of its own motion or on
I
'
application made within the prescribed time by an aggr1e·
ved 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." ·
D
These are the provisions of the Act relevant for our purposes.

( 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
E the grant of mining leases in respect of land the minerals in which vest
the Government. Rule 22 outlines the procedure in respect of applica·
lions for MLs. It requires the application to be made in a prescribed
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
F present purposes and are extracted below:

"24. Disposal of application for mznzng lease:-(!) An
application for the grant of a mining lease shall be disposed
of within twelve months from the date of its receipt.

G 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. · '-

H xxx xxx xxx
INDIAN METALS v. U.0.1. {RANGANATHAN, J.] 45

Under rule 26, the S.G. may, after giving an opportunity of being
A
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 B
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:
c
"54. Application for revision:-(!) 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 rules may, within three months of the date of D
communication of the order to him, apply to the Central
Government in triplicate in Form N, for revision of the
order. The application should be accompanied by a trea-
-~
sury receipt showing that a fee of Rs.500 has been paid into
a Government treasury or in any branch of the State Bank
of India doing the treasury business to the credit of Central E
Government under the head of account '128-Mines and
Minerals-Mines Department-Minerals Concession Fees
and Royalty':
.. Provided that any such application may be entertained
after tlje said period of three months, if the applicant satis- F
fies 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, G
the Central Government shall send a copy of the applica-
tion to each of the parties impleaded under sub-rule (2),
specifying a date on or before which he may make his re-
presentations, if any, against the revision application.

Explanation:-For the purposes of this rule, where a State
46 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

Government has failed to dispose of an application for the
A
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.
B
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
c 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
D 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
( l) of rule 31, shall be available for grant unless-
( 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
E 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 re-
..
F
corded in writing, relax the provision of sub-rule (1) in any
special case.

59. Availability of certain a regs for grant to be notified-in
the case of any land which is otherwise available for the
G 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 Govern-
ment, shall, as soon as such land becomes again available
for the grant of prospecting licence or mining lease, grant .........
H the licence or lease after following the procedure laid down
in rule 58.
INDIAN METALS v. U.O.I. (RANGANATHAN, J.l 47

60. Premature applications-Applications for the grant of
A
a prospecting licence or a mining lease in respect of the
areas in which-

(a) no notification has been issued under rule 58 or rule 59;
or
B
(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 c
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 D
by the Government, a Corporation established by any
Central, State or Provincial Act or a Government company
within the meaning of Section 617 of the Companies Act,
1956 (!of 1956)".

Rule 59 is relevant only in part. It reads: E

"59. Availability of area for regrant to be notified:(!) No
area-

xxx xxx xxx
F
(e) which has been [reserved by the State Government]
Substituted 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-
G
(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 H
48 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A 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
B
(2) The Central Government may, for reasons to be recorded
in writing relax the provisions of sub-rule (I) in any special
case.

Rule 60 deals with "premature applications". It reads:
,.
c I 60. Premature applications: Applications for the grant of
a prospecting licence or mining lease in resl'ect 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
D
'. (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.
E 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.
F 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:
G
I. IMFA

(a) Previous History: JMFA made five applications for grant of mining
lease in respect of five blocks of la.nd as per the following details
(which are hereinafter referred to as items 1to5 respectively):
H
. INDIAN METALS v. U.0.1. [RANGANATHAN, J.I 49

Area Date of Area Village & District
No. A
App Iica- applied for
ti on
I. 1.7.1981 634.359 Ghotarangia and other villages
8.7.1981 beets. (Dhankanal Dist!.)
2. 23.6.1981 142.000 Ostapal Village, Sukhinda Tehsil B
beets. (Cuttack Dist!.)
3. 6.7.1981 108.860 Kamarada and padar villages
beets. (Cu~tack Dist!.)

4. 9.9.1981 37.008 Ostapal and Gurjang villages, Sukhinda
• 10.9.1981 beets . Tehsil (Cuttack Dist!.)
c
5. 24.11.1981 147.693 Ostapal and Gurjang villages, Sukhinda
beets. Tehsil (Cuttack Distt.)
The s'.G. did not dispose of these applications within the pre-
scribed period of twelve months. They were, therefore, deemed to
have been rejected under rule 24(3). IMFA applied to the C. G. for the D
revision of these deemed rejection orders of the S.G. The C.G. set
aside the deemed rejection orders and directed the S.G. to dispose
of the matter on merits within a period of 200 days. However, the
r S.G. did not take any action on the applications of the !MFA within
the period of 200 days. !MFA made a representation to the Central
Government but the Central Government gave no relief on the ground E
that it had become functus officio and had no jurisdiction to issue
further directions to the State Government. Thereupon !MFA filed
Writ Petition No. 14116 of 1984 in this Court. !MFA alleged, that
while its applications were kept pending, the S.G. had granted leases
in favour of FACOR and thus discriminated against !MFA. It prayed
for the·issue of a writ of mandamus to the S.G. to grant leases to !MFA F
:. also.
(b) Subsequent developments: This Court, on 27.9.84 passed an
order (extracted later) directing the S.G. to consider IMFA's applica-
tions 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 interim order on 18. 10.84 holding over the implementation G
of the earlier order in regard to grant of lease to IMFA and calling 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 H
50 SUPREME COURT REPORTS ( 1990] Supp. 2 S.C.R.

A areas for the public sector and (b) that except item 1, the areas covered
b' the other applications overlapped areas covered by earlier applica-
tions 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 tentatively decided to grant a ML to !MFA in respect of 634.359
hectares in item 1. On 27. 11.84, IMFA stated that it was not interested
B
in item 1 which. according to it, contained only low grade ore and was
not commercially viable unless !MFA 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. l.85. the S.G.
passed formal orders rejecting IMFA's application in respect of items 2
c 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 l to !MFA. On 15.2.85, the
S.G. informed !MFA that, on reconsideration it had recommended
grant ofMLs to it in respect of 139.37 hectares (out of 142 hectares of
D
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
AIKA TH 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
E
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 application) had been filed in the
Or.issa High Court only on 18.2.85. The validity of these allotments
was challenged by !MFA before this Court. Without going into the
merits of this controversy, this Court on 28.2.85, passed an order
F
directing the S. G. to grant a lease to IMF A 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). !MFA 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
G applied for by !MFA: (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 !MFA of item 3; (iv) in item 4,
this Court has directed the grant to !MFA of 26.62 out of 37.008
hectares of item 4: and (v) In item 5, the S.G. has agreed to lease ou,
H 140 acres to AIKATH and 180 acres to FACOR.
. INDIAN METALS v. U.0.1. [RANGANATHAN, J.J 51

2. FACOR A

(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:
B

SJ. Village Extent Date of Date of final order Particulars of
No. applica- of disposal of revi- the proceedings
ti on sion applications in High Court

!. Ostapal 142.000 8.7.74 29:76- 12.3.76 OJC67of79 c
Distt. hects. or 315/78- 3.7.78 12. 1. 79
Cuttack 359 acres
2. Chingudi- 749.32 8.7.74 21/76-21.4.76 OJC 66of79
pal Dist!. beets. or 278/78-30.5.78 12.1. 79
1888 acres D
3. Samofe 248.447 6.8.74 182;77-29.8.77 OJC 72of79
Distt. beets. 15.1.79
Dhankanal( 618 acres)

r 4. Bangur 40.47
Distt. hects.
22.6.77 432 78- 17.8.78 OJC 1309 of 80
21. 1.80 E
Keonjhar ( 100 acres)
5. Ostapal & 312.42 7.6.78 528,79-21.9.79 OJC 2036 of 81
Gurjang hects. 579;80-26.9.80 31.8.81
Distt.
Cuttack
F
6. Kamarda 108 6.10.78 17;80- I. 1.80 OJC 1028 of 83
~- Dist!. hects. 5131Kl - 29.10.82 11.5.83
Cuttack

All the six applications made by FACOR were rejected by the S.G.
Against the revision orders of the C.G. affirming the orders of the G
S.G .. FACOR filed writ petitions in the High Court of Orissa and
these writ petitions are pending disposal 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 applica-
. ' tions of F ACOR were alive and awaiting disposal when !MFA filed
W.P. 14116of 1984inthisCourt. H
52 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A (bi Subsequent developmenrs: As we shall mention later.
FACOR had obtained leases over 486 acres at Barna 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
B
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 applications. It may be added that on 18.5.85 this Court
passed an interim order directing that FACOR be given a lease in
c 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 relaxation under rule 59(1) of the Rules. The net result, there-
fore, is that, though FACOR made six applications, it had agreed to
D 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. MANTOSHAIKATH
E (a) Previous Hisrory: This gentleman had obtained a lease from
1
the Raja Sri Pitamber Bhupati Harichandan Mahapatra, the pro-
prietor of Sukhinda Estate on 17.10.52 (registered 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
F 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
G 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.
H
INDIAN METALS v. U.0.l. [RANGANATHAN, J.] 53

AIKATH'S application afresh. The C.G., in turn, set aside the order A
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. How·
ever, no orders were passed by the S.G. The petitioner, therefore.
again filed a revision application before the C.G. which passed orders
B
on 12.12.79 directing the State Government to 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 !MFA.

(b) Subsequent aevelopment: On 21.11.84, AIKATH and the c
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
D
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

r of the areas applied for by !MFA on 24. I J.81 covered the area which.
according to AIKATH, had been in his possession all along.
E
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.'.'5
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
F
on the ground that the area was reserved for exploitation in the public
sector. It is stated that subsequently on a representation made bv
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 recommendation was
withdrawn (as will be discussed later). The C.G., by an order dated
G
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, there-
fore, filed writ petition. 0.J .C. 1585/1981 in the High Court of Orissa.
This writ petition was pending when W.P. 14116/84 was filed here.

It may be here mentioned that one ot'the contentions of OR!ND
H
54 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

hefore us is that it hadalso applied on 5.1.71 tor a lease of minini;
A
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. \\hile
sending its comments on 26.2,74 to the C.G. on the ORli'iD's revision
B petition. had reiterated that their revision petition may be rejected&~
the S.G. had already decided to grant ORii'iD a lease of 744.82 out of
the area of 1129.25 hectares applied for hy it.

(b) Subsequent developments: It is stated that the S.G. has suh·
sequently withdrawn its recommendations for the area of 7-19.Xc
C hectares. The S.G. rejected ORIND's application fer 1129.25 hectare'
b,y an order dated 7.4.89. The contents of the ord<r are discussed later.
It concludes:

'"In view of the above facts ·and pendency of Writ Petition
D No. 14116 of 198.J 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.'"

E ORIND has preferred S.L.P. No. 8574189 from this order of the S.G .
. So far as the other application of ORIND is concerned, 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 subse-
quently.
F
5. ORISSACEMENT
.. - - Ll!\llTED (OCLJ .
----
(a) Pre.-ious Histo~:

G 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 Govern-
ment on the plea that the areas applied for had been reserved for
exploitation in the public sector. Further applications were made hy
OCL in respect of following areas:- ·
H
INDIAN METALS v. U.0.1. (RANGANATHAN, J.J. 55

<\I. Date Area Date of Orders Orders Remarks A
No.of and Revis- passed passed
Appeal Village sion of by the by the
appli- State Central
cation, Govt. Govt.,
ifany. if any;
B
I. 2. 3. 4. 5.. 6. 7.
I. 1 L5)0 354,505 3.5.71 5.2.71 3.6.72 This area was
Hectare, The area free, previously
Gurjang is reser· held by Aikath
&Tel- vedby for 320 Acrs.
angi, P.S. the State The State Govt. c
Sukinda Govt. for · has now granted
Dist!. exploita- i.e. in the year
Cuttack tion in 1985 as per com-
public promise petition
sector. filed before
High Court D
Orissa. Mis
Aikath-J40Acs.
Factor-180Acs.
Same application fil~d again
E
2. 8.5. 74 . 354:505 Deemed 23.277 Rejected Although M/s
Hectares Rejec- Facor's applica-
Gurjang ti on ti on on 7 .6. 78
& was much after
Ostopal our application,
Distt. they were gran-
..
'-~-"'·--
F
Cuttack ---= -- '"-- tedM/LbyS.G .
vide No. 6844
dated 24.5.85.
In fairness SJG
should have
given us this
G·
area. As per de-·
·· · cision taken by
them earlier, .
50% of the area
should be re lea-
sed to us keep- H
56 SUPREME COURT REPORTS [1990] Supp. 2 S.C.R.
..
ing in view the
A
principles of
natural justice,
as recommen-
ded by State
Govt. vide in
B their letter No.
17410 dated
26.2.74, to
centre for 142
Acrs. to Orissa
Cement.
c 3. 15.5.70 226.22 1.5.72 10.2.71 1.6.72 Although Ferro
Hectares on the same Alloys Corpora-
Boula& plea, reserved tion have no unit
Soso for State in Orissa but
Distt. exploitation have a manufac-
D Keonjher turing unit in
Andhra, the
Central Govt.
passed orders as
under in 1971-72
1
over an area of
E 187.03 hects.
against strong
opposition by
State Govt.:
"Whereas the
Central Govt. in ~

f •
exercise of the
powers confer·
red by Rule
58(2) of the
N.C. Rules,
1960 relaxed the
G
provision of
rule 58( I) as a
special case for
the reason that
the applicants '·
having establis-
H
INDIAN METALS v. u.o.r. IRANGANATHAN, J.] 57-

hed a big factory
A
for manufactur-
ing Ferro
Chrome ore.
provision has to
bemade for
procurement of B
raw materials

I for the proper
running of the
factory ...
__, Based on the
said decision a c
fresh revision
petition was
filed on 6.4. 7J
but the C.G. it
rejected on
D
30.11. 74.
although the
S.G. recomnien-
ded:
vi de letter No.
17410-NG dated
E
26.2.1974 for
approval for
grant of 142
Acrs. to O.C.L.

Same application .flied again
-> F
4. 10.4. 74 221>.22 No 6.6.75 29.8.75 The Please see re-
Hectares Orders Central Govt. marks in SI. (3 ).
Bou la were set aside the 142 Ac. could
Keonjhar passed deemed rejec-have been gran-
as requi- tion and ted. This appli-
red by remanded the cation was filed
G
statute. matter back pursuant to the
to the S.G. - Notification
for considera- issued hy the
,.,.. tion. S.G. throwing
open for regrant
H
A
58 SUPREME COURT REPORTS

The State
[ 1990] Supp. 2 S.C.R.

-vide No. 38173
...
Govt. on dated 5.3.74.
25.9.1975 rejec- The State Govt.
ted the appl n. latter changed
on the plea their decision for
that the area working in pub-
B over-laps lie sector, cont-
other lease rary to the deci-
area. Our
earlier appln.
sion pronounced
by Supreme
dt. 15.3.70 was Court as refer-
rejected but red to in AIR.
I
c was granted to 1976 Delhi. ·-
some other
party i.e. Keeping in view
Ferro-Alloys principle of jus-
Corporation tice, 50% of this
for a reduced area should be
D area. released to
Orissa Cement.

5. l l.5.70 388.498 22.10.70 23.10.70 7.4.72 CG.rejected
'. · Hectares as above the application
.Shrhranqi on the plea they
E •& ·did not like to
Tailangi, interfere with
P.S. the decision
Sukinda. taken by the
' District S.G. for keeping
Cuttack. the area reser-
F ved for exploi-
.~
tation in public
sector.

Same application filed again
I

G 6. 8.5.74 388.498 Deemed23.2.77 3.6.77The Mis Sira judin
Hectares rejection delay was ex- was holding the
Sukrangi plained but area of JOO Ac.
& rejected under M.L. for
Tailangi because of 20 years from
Distt. delay 8.8.85 which ex- '",
H Cuttack pired in 1975.
ii\DIAi\ METALS'· L.0.1. [RANGANATHAN. J.] 59

Renewal has
been refused,
A
Sira judin being
a trader
(However M/s
Sirajudin &
Co., has gone in B
writ to Orissa
High Court,
I which is still
pending) OMC
has been
granted lease
c
----~

over 382. 709
Heels.

7. 8.5. 74 7 Sq. Deemed 6.6. 75 8.6. 76 The This could have
miles rejection Central Govt. been granted to
kalaran- set aside the us but M/s. D

I gista &
Kaliapani
deemed rejec-OMC is working
tion and which can be
Distt. remanded to taken out from
Cuttack. S.G. The S.G.them to grant
rejected our the property to
appln. but us. OMC was E
granted a free just permitted
area of 3 sq. to work on ad
Km. to OMC,hoc basis.
who are
holding a
lease from F
more than 70
sq. Kms.
approx. and
hardly working
15/20sq.
Kms. in G
different ML
areas granted
.to'M/s. OMC.
8. 23.10.82 20.072 Deemed 14.11.83 The.C.G. set
hectares rejection aside the
H
area order of
60 SUPREME COURT REPORTS [ 1990) Supp. 2 S.C.R. "'-.-
Bangura deemed re-
A
etc. jection on
Distt. 23.12.83.
Keonjhar No final
order has
been passed
B by the S.G.

9. 23. IO.S::' 549.1098 Deemed 14.11.83 29.12.83 as
Hectares rejecrion
Kaliapani
above
This has been
granted to
M/sOMC.
I
& Gm-
,_
Jang, etc.
c
IO. 23.10.82 365.467 Deemed 14. 11.82 19.12.83 This area per-
Hectares rejection as above tains to SL 1 & 2
Ostopal therefore the
& Gur- remarks stated
D jang, etc. therein stand.
Distt.
Cuttack.

11. 23.10.82 16.087 Deemed 14.11.83 19.12.83 As
Hectares rejec- above. The S.G. re-
E Bangura, tion. jected it on
P.S. Soso· 27-6-1985 on
Distt. the ground
Keonjhar that the area
overlaps in
full with the
F area previous- r
ly held by
Sirajudin&
Co. Renewal
was refused
by State Govt.
G
12. 21.1.83 29.477 Deemed 28.3.84 Against tl\is
Hectares rejection TheC.G. rejection we
of72.64 reman- filed revision
Acs. ded the on 2.9.85
Sajana- matter before C.G.
H garb P.S. back to
____,.., ll'DIA~ ~IETAI.S '. L'.0.1. /RAMiANATHAN, J.J 61

Nilgiri S.G. Therefore it is
A
Distt. free. It should
Balascre. No be granted to
orders us. On similar
have grounds the
been S.G. has
passed. granted. B

I 13. 28.6.85 558.74
acres or
226. 14
No orders
passed by
S.G. despite
----",
hectares- C.G.'sorders
Asur- on
bandha, revision c
Distt.
Ohan-
kanal

14. 27. 1.86 356.70 No orders 0
hecattes passed by
in Namla- S.G. Revision
bhanga petition filed
in Kar- before C.G.
makhya- on 18.3.87
nagar E
Distt.
Ohan-
kanal

The previous history as well as the latter developments are indi-
...~ cated in the above columns. It will be seen. therefrom that the first F
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 !MFA,
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 thir-
teenth and fourteenth applications are pending before the S.G. and G
C.G. respectively.

6. ORISSA MINING CORPORATION LIMITED (OMC)

OMC is a State Government undertaking. It submitted an appli-
cation for an area of 725.21 hectares in village Chingripal on 30.6.82. H
62 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A Though this area was within the area of 1460 sq. kms. reserved for
exploitation of chromium ore in public sector as per the State Govern-
ment 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.
B 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
1
within the area applied for by OMC. OMC has also made an applica-
tion for mining rights regarding 108.86 hectares in Kamrarda-Balipada .
villages and 220. 15 hectare·s in Gurjang village which has not been
granted. In the result, th•e OMC has not been granted by mining lease ,_,_
C despite its claim that the area in question has been reserved for exploi-
tation in public sector though !MFA 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. j
D Kms. in other areas. · ,
~
7. INDUSTRIAL DEVELOPMENT CORPORATION OF
ORISSA LIMITED (IDCOL)

.This company submitted two applications on I 1. 1.83 before the
E 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 dispute
F 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
G 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, !MFA 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
H respondents 1to6 in the Writ Petition with FACOR as the 7th respon-
63
J 11'-DIA!\ METALS'· L.0.1. [RANGANATHAN. J.l

dent. In the writ petition IMFA referred to its applications in respect
A
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 referred 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 B
allegation, this Court passed a detailed and stiff interim order on
27.9.84 in the following words after hearing the counsel for the peti-
tioners 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 upon him as Standing Counsel for those respon- c
dents, 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, ad-
journ the Writ Petition to 30. 10.84. But in the meanwhile
we would direct respondents Nos. 4 to 6 not to grant to D
anyone else other than the petitioners mining lease for chro-
mite ore in respect of the areas applied for by the petitioners
and forming 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 E
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 con-
siderable foreign exchange for the country and provide em-
ployment to a large number of workmen, we would direct
the 4th respondent to consider and decide the application of F
the petitioners set out in paragraph 8 of the Writ Petition on
or before 23.10.84 after giving an opportunity to the peti-
tioners of being heard in the matter. We have no doubt that
the 4th respondent will keep in view the nature and im-
portance of the project and its foreign exchange earning
capacity, as also its potential for providing job employment G
to a large number of workmen in the State of Orissa while
considering and deciding the applications of the peti-
tioners. 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 H
A
64 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

otherwise the action of the 4th respondent may be liable to
be condemned as discriminatory and arbitrary and more-
J
'

over 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
B matters where national interest alone must count. It is in-

I
deed surprising that though the Central Govt. directed the
4th respondent to dispose of the application of the peti-
tioners 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 dispose of the applications of the-,petitioners in the
c light of the observations contained "ln this order on or
before 23.10.84. The decision taken by the State Govt. on
the application shall contain the reasonf and will be
communicated to the petitioners and also placed before this
Court along with the Counter affidavit. The previous order
D 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.

E On coming to know of this order, FACOR had the matter mentioned
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
F 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 relat-
ing to the applications of the petitioner and the 7th respon-
dent for mining leases in respect of chromite ore shall be
G sent to the Registry of this Court forthwith in a sealed
' cover along with a responsible officer of the State Govern-
ment so as to reach the Registry of this Court by 2 p.m. on
Saturday, 20th October, 1984."

A little later, Mr. Aikath was impleaded as respondent no. 8 and,
H pending the filing of a counter affidavit by him, the Court passed the
following order on 28.2.1985:
11'DIA1' METALS r. u.Q.1. iRAl'GANATHAN. J.I 65

" ..... We would direct the State Government to give to the A
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 ol,ll 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."
B
..... 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 C
and was ordered to be made respondent no. 9 in the writ petition.
Pending further affidavits by the parties, the. Court gave another direc-
tion in the following terms:

" ... , .... the State Government will give to respondent no.
7 within 3 weeks from today /ease in respect of 180 acres in D
item no. 5 set out in paragraph 8 of the writ petition exclud-
ing the area which the State Government propose to give to
respondent no. 8. This order ... is without prejudice 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 E
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 petition was
disposed of. It needs to be set out in full:
F
"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 Mine'
and Steel, Department of Mines, Government of India
within ten days from today setting out their cl.aims in G
respect of the areas covered by their respective; applica-
tions. We direct that the Secretary, Department of Mines
shall consider the claims of the various parties in respect of
the areas covered 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 H
A
66 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

8th May, 1985 after duly taking into consideration the re-
quirements of tile 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
B 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 Govern-
'
i. ment and the whole question will be treated as being fully
open for fresh consideration and determination by the Sec-
retary Department of Mines, Government of India. The
c status quo as obtaining at present with regard to the earring
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 the Secretary and the orders passed by
D 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
E 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:
F ••
I:."'
"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
G V. Balakrishna Eradi, J. directed the State Government to
give to the petitioners M/S Indian Metal & Ferro Alloys
Ltd. within 15 days from today the leases in respect of the
1. full areas of Item No. 3 and 26.62 hectares area out of Item
No. 4 as set out in paragraph 8 of the Writ Petition. This
Court further directed so far as the remaining controversy ,.. ""'
H was concerned that the same shall be disposed of later on
INDIAN METALS 1·. U.0.1. [RANGANATHAN. J.l (-,7

by giving certain other conseque.ntial directions as the
petitioners might seek, which jt is not necessary to refer A
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 arid which should grant approval within
ten days therefrom. B

Thereafter it appears that on 8.5.85 another order
was passed by·the same bench of this Court wherein it was
directed 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 c
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 pro- D
posed to give to respondent No. 8." It was stated that this
order was made without prejudice to the rights and conten-
tions of the parties directions were given for hearing of the
writ petitions.

Finally the order with which we are directly concer- E
ned 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 F
to direct the parties who had 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 that date setting out their claims
in respect of the areas covered by their respective applica-
tions. This Court directed the Secretary Department of G
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 faking into consideration
the requirements of the manufacturing Industries cancer- H
68 Sl}_PREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

ned and decide about the question of grant of Mining
A Leases after gi~ing an opportunity of being heard io the
parties concerned. Thereafter. the present applications
have been made by different claimants seeking for direc-
tions for being added for consideration by the Secretary
subject to their existing rights under the existing leases and
B grant of future leases. Mr. Kapil Sibbal, counsel appearing
for the respondent No. 7 and Dr. Gauri Shankar counsel
appearing for tht! applicant submitted that there are exist-
ing leases in their favour which cannot be entertained (sic)
by any order passed by the Secretary and they are entitled \ -
'
to wdrk out their full rights. On the other hand the Orissa
Mining Corporation as well as Industrial Development
c Corporation Orissa are also claiming for grant of Mining
leases including respondent No. 8 who is alleged to have
found out the mines. In our opinion the proper order would
be to pass order in tenns of the order passed by this Court
on 30.4.87. The claims of the.different claimants including
D Mr. Sibal's clients as well as.Or. Gauri Shankar's should be
considered in accordance with law by the Secretary in mak-
ing his considerations. 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 in-
E terest 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 fort-
night from today. The Secretary should only consider the
F 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.·· ·

G 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 groi.nd, to refer to a number of applica-
H · tions made by the various parties subsequent to the order of this Court
dated 30.5.87: .
INDIAN METALS 1. U.0.1. [RANGANATHAN. J.) 69

(i) .By C.M.P. No. 13347/87, FACOR pointed out that.a lease in
A
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 B
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. Thal it.is submitted that the order dated 30.4.87 does c
'no(make it clear as to under what statutory authority the
Secre!ary·to the.Government of India shall dispose of the
representations made by the various parties to the writ peti-
tion. This matter requires to be clarified by this Hon'ble
Court". D

This application was opposed by the OMC and the IDCOL. The
,,,j; Court, by its order ·dated 6.10.87, rejected the first request and
allowed OMC and IDCOL to participate in the proceedings 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, E
however, clarified that in arriving at his conclusions, the Secretary
should bear in mind the previous orders made in favour of !MFA and
FACOR, the previous leases and rights granted to them and their
consequences. The second aspect to which the application referred
was, however, not clarifkd.
F
(ii) A second application of FACOR (C.M.P. 22588/77) was
directe.d primarily at the !MFA. It was submitted here that the order
dated 28/2/85 needed to be recalled and FACOR allowed to pui for-
ward claims in respect of the areas directed 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 onits G
whereas FACOR was the one that was operating an EOU and needed
all the ore it could get. No notice was issued on this application appa-
rently 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 H
70 SUPREME COURT REPORTS I 1990] Supp. 2 S.C.R.
application also prayed that the consideration before the Rao Commi-
A
ttee should be confined to the parties to the writ petition. !MFA 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 de.cided on by Rao. FACOR
filed a reply. No orJers have, however. been passed on the petition,
B again. apparently since all the claims were before Rao.

(iv) C.MP. 9284/88 was filed by OCL to quash the "order" of
1.c.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
C 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 correctness of
Rao's findings and praying that, pending disposal of W.P. 14116/84-
which according to it stands undisposed of despite the orders dated
D 30/4/87 and 6/ 10/87-the S.G., OMC. Tisco, Sirajuddin & Co. and
Mysore Minerals (the respondents to the application) should be di-
rected to supply to ORIND 3000 MIT of crome 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.
E
STATUTORY INADEQUACIES

( l) 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 procedure followed under the Act in
F 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 possi-
bility, the rules provide that, if an application is n@t disposed of within
G the statutory period, it shall be deemed to have been refused. So far so
good, as at least, the applicant can, on the expiry of 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,
H modify or set aside the order or pass such other order in relation to
·'
li\DIAN METALS'· L.0.1. iRANGANATHAN. j_) 71

thereto as the Central Government m.ay deem just and proper". A
A
note under rule 55 also says that "during the pendency of a revision
application the State Governmeni 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 applica-
tion on merits, either granting the lease in whole or in part or rejecting B
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 c
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 appli- D
cation 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 jurisdic-
tion 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 extremely cumbrous and ineffec- E
tive 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 rec_eived from the S.G. and after
hearing concerned parties. F

(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 princi-
ple 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 G
instance; during the period ORIND's application of 1971 bas been
under consideration before various authorities and in the writ petition
filed in Orissa High Court; several other competitors ha.ve 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 ORIN'D's application of 1971; for example; were to be H
72 SUPREME COURT REPORTS [ 1990) Supp. 2 S.C.R.

considered only on the basis of the persons who had made applications
A 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 application is to be granted or rejected are to be consi-
dered. the result would be totally different. Since the interests of the
nation require that no lease for mining rights should be granted with-
B out all applications therefor at any point of time being considered and
the best "among them chosen or the areas distributed among such of
then) as are most efficient 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 applications pending for
consideration as on 30.4.87 should be considered by Rao.

C ( 3) Procedure for consideration of applications: A further confusion
created iii this case is due to the fact that leases of different areas in
different villages and districts 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
D 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 proce-
,; durc. Having regard to the new avenues for vast industrial develop-
ment in the country, the more workable procedure would be for the
S. G. to call for applications in respect of specified blocks by a particu-
E lar date and deal with them together, other later entrants not being
permitted in the field. Otherwise only confusion will resYlt. as here .
.There was a time when the S.G. looked to private enterprises for
mineral development 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.
F 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 applica-
G tions or make a routine grant of leases in order of priority of applica-
tions. These are aspects which call for careful consideration and ap-
. propriate statutory amendments.

IS S. 11(2) CONCLUSIVE?
~· ..
H No~, to tum to tire contentions urged before us: Dr. Singhvi, who
INDIA!\ METALS v. U.0.L [RANGANATHAN. J.) 73

appeared for ORIND, vehemently contended that the rejection of the
A
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 preferential right for the grant of a lease; and that a consid-
eration of the comparitive merits of other applicants can arise only in a
case where applications have been received on the same day. It is no B
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 impression 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 over-
ride 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
c
conditions: (aJ recording 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 clearly require in the case of major D
minerals. that the mining lease should be given to that applicant who
can exploit it most efficiently. Agrant 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 E
the decisions reported as Ferro Alloys Corporation of India v. Union.
I.LR. 1977 Delhi 189 at p. 196 and as Mysore Cements Ltd. v. Union,
A.LR. 1972 Mysore 149 at p. 151. 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 re- F
fused 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 em-
bodies the general principle of "fist come, first served" and an out-of-
turn consideration under S. 11(4) was an exception for which a strong G
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 con-
sideration 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 H
74 SUPREME COURT REPORTS [ 1990) Supp. 2 S.C.R.

and cannot wait for other applications and consider them all together
A
and grant a later one if the circumstances set out in rule 11(4) are
fulfilled. That apart it has to be remembered that the S.G. did reject
ORIN D'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
B · 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 ORIN D'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 OR!ND to have its application reconsidered for grant
c along with such other applications as may be pending as on the date of
'uch 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
o aside ORIND's application should be restored for reconsideration on
the basis of the situation that prevailed as on 29. IO. 1973 and that
therefore it has to be straightaway granted as there was no other
application pending on that elate 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
E the application of ORIND being the earliest in point of time should
have been accepted and that we should direct accordingly. As to how
far the.requirements of S. 11(4) are fulfilled in the present case that is
an aspect which will be considered later.

F
PROMISSORY ESTOPPEL
-'
It will be convenient here also to deal with another argument
raised by Dr. Singhvi based on grounds of promissory 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:
G
"2. 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 size-
H able value ·of about Rs.2 crores received from National
INDIAN METALS v. U.0.1. [RANGANATHAN, J.l 75

Iranian Steel Mills, Teheran. Chromite, being essential raw
A
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 B
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 Gov-
ernment 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 notifi- C
cation 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 D
also be necessary for not throwing open the area in the
relaxation 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 E
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
Limited. As such the net area available for grant of mining
lease is therefore, 749.32 hectares.
F
5. The State Government having rejected the appli-
cation of the party in Government Proceeding No. !CB I
dated 23. 10. 1973 are got obtain to revise their own order
by granting Mineral Concession as instructed in your
department letter No. MV-1(445)/61 dated 5.1.72. The
case is therefore recommended to Government of India G
for grant of Mining Lease over an area of 749.32 hccts. 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 spe·cified mineral under the first scljedule of
the Act, approval of Government of India is also requested H
u/s 5(2) of the Act.
76 SUPREME COURT REPQR'C\ [ 1990] Supp. 2 S.C.R.
• 6. I would therefore, request you to kindly obtain
A
and communicate orders of Government of India on revi-
sion u/s 30 of Mines & Minerals (Regulation & Develop-
ment) 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
B .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 hectares in village Sukrangi of Cuttack District, had
c this to say:

"Recently in State Government letter No. 1747MG
dated 26.2. 74 chromite bearing area to the extent of 749.32
hectares in Cuttack district has been recommended to
D Government of India for grant in favour of M/s Ori~sa
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 Govern-
ment cannot take such responsibility as contended by the
petitioner. The party is at liberty to purchase the chrome
E 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
F 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 Govern-
ment. Hence the question of granting this area to M;s
G Orissa Industries Ltd. does not arise."

Also, on 5.3.74 the S.G. published a notification dereserving the said
749.32 hectares (said to have been earlier reserved for exploitation in
the public sector by a notification of 3. 7. 1962). Dr. Singh vi submitted
on the strength of this correspondence and notification that the S.G.
H having sought to justify its rejection of ORIND's application for
/
JNDIAN METALS "· L.0.1. [RANGANATHAN. J.l 77

446.38 acres on the ground that the company's application for 749.32
A
hectares was being recommended after dereservation, it was not open
to the S.G. now to take up a different .stand and that ORIND's appli-
cation for 1129.25 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 B
counsel relied on the observations made in a series of decisions of this
Court: Kanai Lal Sur v. Paramnidhi Sadhukhan, [1958] 2 SCR 366;
MJs Moti/al Padampat Sugar Mills Co. (P) Ltd. v. State of Uttar
Pradesh and Ors .. [1979] 2 SCR 641; Gujarat State Financial Corpora-
tion v. M/s'Lotus Hotels Pvt. Ltd., [1983] 3 SCC 379; Surya Narain
Yadav & Ors. v. Bihar State Electricity Board & Ors., [1985] Suppl. I
S.C.R. 605; Union of India & Ors. v. Godfrey Philips India Ltd.; c
[ 1985] Suppl. 3 SCR 123 and Mahabir Auto Stores & Ors. v. Indian Oil
Corporation & Ors., [1990] J.T. 1S.C. 363.

This argument is interesting but overlooks certain very important
relevant circumstances. As mentioned earlier, ORIND's revision peti- D
ti on 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 ORlND's representation to it dated E
15.12.73, although it does suggest that the C.G. could set aside the
order of 23. IO. 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 F
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 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 G
entrusted to the public sector. Accepting this suggestion, the letter
proceeded 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, therefore, is that the C.G.
did not accept the S.G. 's recommendations regarding the grant of a
leas to ORIND in respect of 749.32 hectares out of the '1129.25 H
78 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A hectares applie.d for. There was, however, delay in the dsposal 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 ihat
B "no lease of lumpy ore for metallurgical and refractory 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 OR IND was for
lumpy chromite ore;

(ii) Two notifications had been issued on 28.4.77 and 3.8.77 re-
c serving certain areas for exploitation by the public sector. The
former dealt specifically with the 749.32 hectares 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;
D
(iii). The claims of all applicants had been considered by Rao and
Rao had come to the conclusion that no \nining leases need be
given to ORIND.

We shall consider later the claim of ORIND on merits. But, for the
E 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 s.tage, 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
F 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, OR!ND has not
placed before us any information as to what happened to the revision
petition filed by it against the rejection of the application in respect of
G 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
application in case it does not succeed in its claim here in resprct 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.
H
INDIAN METALS v. U.0.I. [RANGANATHAN, J.l 79

THE RESERVATION POLICY
A
The principal obstacle in the way of ORI ND 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 consi-
deration is reserved for exploitation in the public sector by the notifi- B
cation dated 3.8.77 earlier referred to. All the private parties have
therefore joined hands to fight the case of 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 entered caveat here and claimed that as public sector corpora-
tions they could claim, independently of the S.G.'s stand, that the
c
leases should be given only to them and that the Rao report recom-
mending leases to !MFA, FACOR and AIKATH should not be
accepted by us.

The relevant provisions of the Act and the rules have been ex- D
tracted by us earlier. Pre·viously, rule 58 did not enable the S.G. 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 in
Kotiah Naidu v. State of A.P., A.LR. 1959 A.P. 185 and Amritlal
Nathubhai Shah v. Union, A.LR. 1973 Guj. 117, the latter of which
was approved by this Court in [1977] 1 S.C.R. 372. (As pointed out E
earlier, rule 58 bas 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 corporation
[rule 59(1), proviso] unless the availability for grant is renotified in F
·~ .. accordance with law [rule 59(l)(e) I 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.; OMCandIDCOL.
G
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 H
80 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

m this grievance. The ob1ection regarding reservation was raised by
A
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 counter-
affidavit 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
B 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 ORlND 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 furher counter-affidavit dated
c 24. I J.89 filed "in reply to the additional 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 !MFA and FACOR were considered by this
D Court and certain interim orders passed, they approached Rao to con-
sider their applications as well. This request was opposed by the other
parties whereon OMC and !DCOL sought and obtained the directions
of this Court that their applications should also be considered by Rao.
Before Rao, they supported the S.G. plea. of reservation. In the
circumstances set out above, it is difficult to accept the contention of
E the various private applicants that the plea as to reservation should not
be entertained at all on the ground of delay and !aches.

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 applications for leases. In support of
F this contention, reliance is placed on the following circumstances:

(a) On 26.2. 74, the S.G. has clearly expressed its willing-
ness to dereserve the area of 749.32 acres and, indeed, followed
it up o.n 5.3. 74 with a notification of dereservation.

G (b) Though the S.G. claims that reservation is necessary 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
H private parties: (i) The S.G. has granted leases to FACOR on
INDIAN METALS >. U.0.1. [RANGANATHAN, J.I 81

9.2.72, 7.10.72 and 12.11.76 in respect of 157.05 hects .. 133.:11
A
hects. and 72.84 heels. respectively in Bokhla, Kathpal and
Ostapal villages. (ii) it has entered into an agreement with
.AIKA TH 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 !MFA; (iv) it agreed to
lease out 180 acres in item 5 in favour of FACOR. B

(d) Even at thidinal 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 !MFA, FACOR and AIKATH but not to OCC or
ORIND. This is patently discriminatory.
c
We do not, however. think that these circumstances estahlish
that the State is not serious about its plea of reservation. So far as
item (a) is concerned. we have already 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 D
revision application. The S.G. itself had, in fact, withdrawn the recom-
mendations 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 notification 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 E
details of which are not available before us) are stated to have been
granted after obtaining C.G. ·s order for relaxation. The full circumst-
ances in which the lease in favour of TISCO was renewed are not
before us but perhaps such ren~wal 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 F
leases to !MFA 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 recom-
mending grant of leases to IMFA and FACOR is only giving effect to a
fail l'Ccompli in pursuance of the interim directions of this Court, they G
are willing to abide by it. It will therefore be 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 recording special reasons. We are H
82 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A
not here c&J1ed upon to decide whether the relaxations made in the 1
above cases 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
reservation is merely being raised as a formal defence and has never
been seriously implemented by the S.G.
B
Dr. Singhvi also raised a plea of arbitrariness and ma/a fide to
challenge the reservation policy. He urges on the first count that it was
not open to the S,G. to go on shifting its reservation policy from time
to time without adequate reasons. Suen conduct was also vitiated, he
said, as amountinwto malice in law and referred in this context to the
observations of this Court in Venkawrarnan v. Union, [ 1979] 2 SCR
c 202. We do not think this contention has any substance. Ch:omite 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
D favour of freer issue of mining leases but gave up this policy in
pursuance of the C.G.'s letter of 15.5.74. Reservation was, therefore.
clamped in 1977 again. Applications could still be considerd to see how
far a rlaxation was pe.rmissible having regard to the nature of the
applicant's needs, the purpose for which the lease was asked for, the
riature of the ore sought to be exploited, the relative needs of the
E State, the availability of a public sector undert.akings 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
.' rbitrarily or rnalafide in its policy f~rmulations in this regard.

Our conclusion that the areas in question before us were all dulv
F 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, a?C:Ontended
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
G a general nature and does not directly confer any rights on OMC or
IDCOL. This reservation is of two types. Under S. 17A(l), 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 minerals in this
area will not be exploited at all, neither by private parties nor in the
H public sector. It is not necessary to consider whether any area so
, INDIAN METALS v. U.0.1. !RANGANATHAN, J.]

reserved can be exploited in the public sector as we are not here
concerned with the scope of such reservation, there having been no
83

A
notification under S. !7A(l) after 1986 and after consultation with the
S.G. The second type of reservation was provided for in rule 58 of the
. rules which have already been extracted earlier in this judgment. This
reservation could have been made by the S.G. (without any necessity
for approval by the C. G.) and was intended to reserve areas for exploi- B
tation, 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 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 c
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 D
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, therefore the claim of reservation in 1977 in E
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 portiom of the land thus reserved should be given by it to these two
_corporations. Here, of course, there are no competitive applications
from organisations in the public sector controlled either by the S.G. or F
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 Corpora-
tions are admittedly instrumentalities 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 G
instrumentality 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
instrumentality whose application is rejected may be aggrieved .by the H
SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A
choice of another for the lease. In particular, where there is competition
1
between an instrumentality of the C.G. and one of the S.G. or bet-
ween instrumentalities of the C.G. inter se or between the instru-
mentalities of the S.G. inter se, a question may well arise how far an
unsuccessful instrumentality can challenge the choice made by the
S.G. But we need not enter into these controversies here. The ques-
B 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 reserva-
tion 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 avail-
able for grant to private parties. Or, short of actually derescrving a
notified area, persuade the C.G. to relax the restrictions of rule 59( I J
c in any particular case. It is. therefore. open to the S.G. to graPt private
leases even m respect of areas covered bv a notification of the S.G.
and this cannot be challenged by am instrumentality in the public
sector.

D Before leaving this point, we may onlv refer to the position after
1986. Central Act 37 of 1986 inserted sub-section (2) which empowers
the State Government to reserve areas for exploitation in the public
sector. This provision differ~ trom that in rule 51'1 in some important
respects-

E (i) the reservation requires the apprO\ al 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 Govern-
F ment company or a public sector corporation (owned or control-
led by the S.G. or C.G.J but not for exploitation by the Govern-
n1ent 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 approval of the C.G. while
G 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 reserva-
tion 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
H Government" were substituted for the words "reserved by the
'. • I.

··INDIAN METALS v. U.O.l. [RANGANATHAN, J.I . - 85
---~---...--~ --.
Governmen't" in rule 59( I)( e). Later. rule 59( I) has been amencle:d by A
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 th'e second proviso.
\ -
The result appears to be this:
! .
(i) After 13.4.88, certainly, the S.G. cannot notify any re- B
.servations without the approval of the C.G., as rule 58 has been
deleted. Presumably, the position ·i, 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 reserva-
tion made by it under rule 58 or S. 17A. Presumably, dereserva-
tion of an area reserved by the S.G. after the 1986 amendment c
can be done only with the approval of the C.G. for it would be
anomalous to bold 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
bytheC.G. ' D

(iii) It is only the C.G. that can make a reservation with a
view to conserve minerals generally but this has io be done with
the concurrence of the S.G.

We are concerned in this case with reservations made by the S.G. E
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.noi necessarily F
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 oth~r . G
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 e.arlier, the various parties came up before H ·
A
86 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

this Court one after the other and some of them. had their writ petitions
,
I

pending in the Orissa High Court. This Court, therefore, decided that
the best course would be to consolidate all the applications that were
pending on 30.4.87 for the consideration of the C.G. so that a
satisfactory decision .could be arrived at after an examination of the
relative merits of the various applicants. This Court did not specify the
B statutory provision under which this was to be done bul it is apparent
that it was intended to be an exercise of the power of the C.G. under
S. 30, though this aspect was not clarified when FACOR draw atten-
tion 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
C 6.10.87, it has been styled as a report. The objections to this conclu-
sion 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
D the rules. It is only a forum cmtlined 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 constitutes three Single Bench
Tribunals each consisting of a designated Joint Secretary in the
Department of Mines and three Divisional Bench Tribunals each com-
prising of a designated Joint Secretary in the Department of Mines and
E a designated Joint Secretary in the Department of Legal Affairs 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
F 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
G himself or whether the hearing should be held by Division
Bench Tribunal."

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
I
Mines unless he considers it necessary, either because a personal hear-
H ing is asked for or because some complicated legal issue is involved, to
, INDIAN METALS v. U.0.1. [RANGANATHAN. J.[

invoke the aid of a Joint Secretary in the Law Ministry. Here, there is
87

A
no regular revision petition except perhaps in one case; the disposal is
by the Secretary to the Department of Mines; he 'has been specially
authorised to deal with the matter by this Court; a~d~~ legal iss~ed at
all are mvolved. We, therefore, see no megulanty .or\·defect m !ht
procedure forged by this Court for a speedy and effecti~e disposal of
the claims before the Court. B

Secondly, it is said that though the order of 30.4.1987 directs the
secretary to dispose of the representations by a reaooned final order,
the subsequent order of 6. 10.87 asks him to sent a report io 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, ·c
equitable and objective decision. He has been asked to send a report
of his decision to the Court, with copies to the parties, only in order
that, if any of the parties are aggrieved by his decision, their grievances
may be considered by this Court in this W.P. itself, instead of driving
the parties to a fresh course of litigation.
D
Thirdly, is 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 conclusions 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 E
AIKA TH 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 [!MFA and
FACOR] favour and the previous 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 F
the proper exploitation of the m_ines. In fact also we find that although
Rao has approved the grants made in favour of !MFA and FACORby
the S.G. (which, he remarks, were perhaps based on the observations
made by this Court), he has clearly reached his conclusions on these
independantly. 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 G
could have influenced his decisions on the claims of the other parties.
This objection is, therefore, not at all tenable.

OMC, IDCOL, OCL and ORIND complain, indeed, that Rao
has been completely overwhelme<! by the weight of the observations
and the leases· granted by the S.G. pursuant to interim orders of this H
88 SUPREME COURT REPORTS I 1990] Supp. 2 S.C.R.

Court. They have gone to the length of criticising, and, indeed, chal-
A
lenging, 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
B 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 although 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 Al KATH
and FACOR and that it was willing to grant a ML in respect of item 3
c and 26.62 acres out of item 4 to !MFA. 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
D 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
E 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 of a decision of the
C.G. on the claims of the various parties. We, therefore, proceed to
F 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
G think we can consider the Rao report in two parts:

(a) his endorsement of the S.G.'s decision to ·grant ML to
!MFA, FACOR andAIKATH:

(b) the rejection by him of the claims put forward by the above
H three parties for leases in respect or areas over the above what
r INDIAN METALS v. U.O.L [RANGANATHAN, J.] 89

has been allotted to them as well as the rejection of the claims of
the other parties.
A

So far as the first aspect is concerned, we think that Rao's deci-
sion, th'llt the leases that have been granted already in favour of !MFA,
FACOR be confirmed, should be upheld. In our view, these should be
B
treated as leases legitimately granted to them in exercise of the po~ers
of relaxation under rul<! 59(2). It is true that the orders granting tlie
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 c
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.
D
(a) ML to AIKATH, !MFA, FACOR

1. AIKATH is admittedly an individual who discovered chro-
mite 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
E
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 con-
siderations 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
F
are no grounds to interfere with the decision of the S.G .
•
2. So far as FACOR is concerned, the requirements for theif
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
G
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. H
90 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A 3. !MFA needs 50,000 tons per annum for their plant at
Therbauli and 1,20,000 tons in respect of a plant at Chandwar run by a
subsidiary. While the reserve potential of 26.62 hectares allotted to
I MFA 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 District given for the plant of the subsidiary were yet to be
B assessed. Nevertheless. it was expected that they would cater to the
needs of !MFA more or less to the same extent that the ML in favour
' of F ACOR 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
c approval not after applying its mind to the matter bur 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
e.ffect to without the C.G.'s approval. This Court thereupon directed
D 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
compelling 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 !MFA and FACOR as made in exercise of the
E power of relaxation uis 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 compromise, it is a fair inference
that the compromise proposals were prompted by the, at least partial,
F 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 mav be confirmed deserves acceptance.

We have to add a few words in respect of AIKATH. Though the
G 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
H the C.G. in this regard. We would, therefore, uphold Rao's decision
, INDIAN METALS v. U.0.1. IRANGANATHAN. J.I

and direct the S.G. to execute, at as early a date as possible, a ML in
favour of AIKA TH in respect of the 140 acs. agreed to be leased to
91

A
him under the compromise dated 4.12.84.

(b) OTHER CLATMS

It is asserted on behalf of OCL and ORIND that, if there are B
factors justifying the relaxation of reservation in favour of !MFA and
FACOR, there are equally valid factors justifying a like relaxation in
favour of these two companies as well. The operative part of the Rao
reportin regard to the claims of these two parties reads thus:

"For the requirement of the other parties viz. M/s
Orissa Industries Ltd., Mis Orissa Cements Ltd .. manu-
c
factuirng 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 D
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 E
and in varying proportion. The refractory manufacturers
requirements ar 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 F
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 require-
ments, including the Orissa Mining Corporation and no
captive mining leases need be given to them, in the areas G
· under consideration."

xxx xxx xxx
'-'.
The Refractory industries viz. the Orissa Industries Ltd.
and· M/s Orissa Cements Ltd. for their level of production H
A
92 SUPREME COURT REPORTS I 1990] Supp. 2 S.C.R.
and their need for hard lumpy ore, captive mines in the
areas under consideration do not optimally meet their
,
requirements and there is enough lumpy ore in the State
from other sources."
'
Rao's line of reasoning is criticised by OCL and ORIND. Sri
B 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 aswerked
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
c 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 fur which it had bee.n
applying from 1961 to 1986 whereas traders like Mohanty and
D Sirajuddin have been granted leases.

(c) Besides supply of refractories for dome~ti~ consump-
tion OCL has also a vast export market and has earned huge
foreign exchange by exports to countries like _Pakistan, Bang-
ladesh, Korea, Kenya, etc. -
.E
(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.
F 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 toQCL
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·
(g) It is also stated that in certain informal meetings held
recently, the S.G. has expressed itself in favour of granting ML
in favourof the OCL.

Likewise, on behalf of ORIND, it has been urged that Rao has
H erred. in thinking that the need of the company was of lumpy ore which
r INDIAN METALS v. U.0.I. IRANGANATHAN, .I.)

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
rquirements. It is submitted, in particular, that-
93

A

(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 ferro- B
alloys plant for which steps are being taken;

(ii) the reasoning that ORIND has been functioning with-
out 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 obtaining even 8,000
to 10,000 MT (about one half of its needs) in driblets from
c
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 ~gains! its present requirements of D
20,000MT.

(iii) the assumption that ORIND needs only lumpy ore is
not correct. Actually more than 60 to 65% of the ore u·sed by
ORIND is friable ore. I'
E
(iv) ORIND also/deserves grant of ML on other grounds
of national and public significance. It supplies basic refractories
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 poportionately less consumption of
ore, earn much more foreign exchange than the exports of!MFA F
& 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 AlKATH, IMFA, FACOR, G
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 H
94 SUPREME COURT REPORTS I 1990] Supp. 2 S.C.R.

by ORIND should be allotted to it.
A
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 advertencc to the various considerations
B 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 conclu-
sion, 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
c 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 indus-
D tries set up in the State, even of FACOR and !MFA, 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 concessions,
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
E 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 exception to its
reservation policy. This it has done in respect of IMFA and FACOR
for .certain special reasons which have been elaborated upon earlier.
f 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
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.
G
The learned Advocate General of Orissa also submitted that
Special Leave Petiton 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 functioning as "tribunal" and he cited the
decisions in Shivji v. Union, [1960] 2 SCR 775 and Inda-China Steam
H Navigation Co. v. Jasjit Singh, [ 1964] 6 SCR 594 in support. We do not
INDIAI' METALS v. U.0.1. [RANGANATHAI'. J.] 95

consider it necessary to go into this issue. The S.G. bas, by the
A
impugned order, rejected ORIND's application, inter a!ia, 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
applic&tion in the light of our present order. We ·see no necessity for
insisting on such a formal request and would, therefore, direct the B
S.G. to consider ORIND's application afresh in the light of this
judgment.

So far as OMC & !DCOL are concerned, Rao has "recom-
mended" that the areas of items I & 2, left after the grants to !MFA
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 c
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 D
any private party. The interests of these corporations are safe in the
hands of 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 hy the S.G. and, on
revision by the C.G. as a matter of form. To this extent, they have a E
statutory remedy but, beyond this. we think they cannot go. We arc of
opinion that their interests are safe \\'ith the S.G. and need no direc-
tions from us.

Ewn IMFA and FACOR urge that their claims to further leases
deserve consideration. Rao has alreaJv ad.iudicated upon their claims F
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
\.vhether they deserve any further lL'.ascs anci. if so, to \.vhat extent.
more reserved areas could be released in their favour.

The learned Advocate General for the State emphasised that the G
State is also interested in its industrial development 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 H
96 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.

A 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 remanded to it by us.

In the circumstances, we accept and confirm Rae's recommenda-
B
tion for grant of MLs to !MFA, FACOR and A!KATH, 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
c 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 discus-
sions and findings of the Rao report in the light of this judgment. The
D 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 applica-
tions from the public or unless the C.G., after considering the recom-
mendations of the S.G., for reasons to be recorded in writing, con-
siders a relaxation in· favour of any of the parties necessary and
·justified.
E
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
F 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 decisionsnot 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.
G
W.P. No. 14116/87 and the other applications are disposed of in
the above terms. There will be no order as to costs.

G.N. Petitions disposed of.