Holding

Rule 72 applies to the re‑grant of the mining lease and a fresh notice must be issued; the High Court’s direction to consider the earlier application was erroneous.

Summary

The dispute concerned the grant of a mining lease over a 10‑acre granite area in Mahoba, Uttar Pradesh. Respondent No.4 (the earlier lessee) applied for re‑grant of the lease after the area was withdrawn from an auction/tender regime (Chapter IV) and returned to the normal lease procedure (Chapter II). Rule 72 of the Uttar Pradesh Minor Minerals (Concession) Rules, 1963, requires a 30‑day notice and a 7‑day period for receipt of applications when an area becomes available for re‑grant, and the State Government granted a lease to the appellant without complying with this rule. The Supreme Court held that Rule 72 applies even when the area had previously been under Chapter IV, and that a fresh notice must be issued; the High Court was not justified in directing consideration of the application filed under the earlier notice. Consequently, the lease granted to the appellant was set aside, and the parties were directed to issue a fresh notice under Rule 72. The appeal was partly allowed.

Issues considered

The applicability of Rule 72 of the Uttar Pradesh Minor Minerals (Concession) Rules, 1963 to a lease re‑grant when the area was previously under Chapter IV (auction/tender) and later withdrawn to Chapter II.
Whether the High Court was justified in directing the District Magistrate to consider the application filed under the earlier notice dated 30 May 1995.
Whether the question of Rule 72’s applicability had been previously decided and was therefore res integra.

Legislation cited

Mines and Minerals (Development and Regulation) Act, 1957s. 17-A

Subjects

mining leaseRule 72Uttar Pradesh Minor Minerals Rulesre‑grant of leasestatutory constructionpurposive interpretationauction/tender withdrawaltransparency in mineral concessions

Judgment

y

M/S A-ONE GRANITES A
v.
STATE OF U.P. AND ORS.

FEBRUARY 16, 2001

[G.B. PATTANAIK AND B.N. AGRAWAL, JJ.] B

U. P. Minor Minerals (Concession) Rules, 1963-Rule 72-Lea~ed area-
Grant of lease to responde/1/ under Chapter If-Re-grant of lease under
Chapter 11'-Leased area again transferred ji-om Chapter IV to Chapter If of
the R11/es-lnsertion of Rule 72 under Chapter II-Requirement of 30 days C
.fi'om date of notice.for lease and further 7 days time for receipt of applications
under the Rule-Notice issued under the Rule-Lease granted to respondent
within lapse of 7 days time limit--Cancellation of notice by Stale
Government-Fresh notice issued-Application by respondent under ji-esh
notice-Writ petition before High Court against ji-esh notice was dismissed- D
Special Leave Petition before this Court-Direction to issue another fresh
notice.for grant of/ease-State Government granting mining lease to appellant
without following procedure under Rule 72-Writ Petition by respondent
before High Court allowed-Applicability of Rule 72 under Chapter II for the
leased area held by respondent under Chapter IV-Held, Rule 72 is
applicable-Rule 72 is introduced to prevent favouritism, bias and E
corruption-Direction to issue Fesh notice for mining lease under the Rule.

Interpretation of Statutes

Principle of construction-Held, the Courts must adopt a construction
which would suppress the mischief and advance the remedy-Purposive F
interpretation of the provisions should be adopted.

Respondent No. 4 was granted mining lease under Chapter II of U.P.
Minor Minerals (Concession) Rules, 1963 for a period of I 0 years initially
and was renewed for a further period of 5 years till May 1992. In 1992, a
declaration was made for the leased area un~er Chapter IV of the Rules for G
~ grant of lease by auction and/or. by under. The mining lease was granted in
May 1992 in favour of the respondent for 3 years. In March 1995, District
Magistrate, by a notification under Chapter IV of the Rules, withdrew the
leased area with effect from 1.4.1995 and made applicable the provisions
contained in Chapters II, Ill and VI of the Rules again. In the mean time, in H
1085
1086 SUPREME COURT REPORTS 1200 I J I S.C.R.

A August 1994, Rules 72 to 79 were brought into statute under Chapter II
providing a procedure of giving 30 days time for grant of mining lease and a
further 7 days time for receipt of applications. The District Magistrate issued
a notice dated 31.3.1995 under Rule 72 calling for applications for mining
leases. The respondent was granted lease by the District Magistrate. The
lease deed was not executed.
B
The respondent filed a Writ Petition before High Court for directing
the authority to execute the lease deed. The Respondent State cancelled the
notice of the District Magistrate after providing fresh guidelines for grant of
mining lease. The District Magistrate issued a fresh notice on 30.5.1995
C inviting applications for mining leases. Applying under the revised notice,
the respondent filed another Writ Petition before the High Court challenging
the fresh notice. Both the Writ Petition were dismissed by the High Court.
The respondent filed Special Leave Petitions before this Court. This Court,
disposing of the appeals, granted liberty to the authorities to issue a fresh
notice for grant of lease in accordance with law. The respondent insisted that
D the application filed pursuant to the second notice dated 30.5.1995 be
considered for grant of lease. When no reply was forthcoming, the respondent
filed an appeal before Divisional Commissioner under the Rules for directing
the District Magistrate to dispose the application on merits for grant of
lease. During the pendency of the appeal before the Divisional Commissioner,
E the District Magistrate issued a fresh notice for mining lease. The respondent
challenged the notice also before Divisional Commissioner. He allowed the
appeal of the respondent and directed the District Magistrate to decide the
application filed by the respondent on merits. Meanwhile, the Respondent-
State Government sanctioned mining lease in favour of appellant for a period
of 15 years without following the Rules prescribed. The Divisional
F Commissioner dismissed the application of the respondent expressing inability
to decide the application on merit in view of lease granted by the State
Government to appellant. The respondent filed Writ Petitions against the
orders of the State Government and the Divisional Commissioner before the
High Court, which was allowed. Hence the appeal.

G
The appellant contended that Rule 72 of the Rules had no application as
the lease was granted under Chapter IV of the Rules; that Rule 72 is available
to the area which was held under Chapter II or areas reserved under Mines
and Minerals (Development and Regulation) Act, 1957; and that the District
Magistrate was required to issue a fresh notice under Rule 72 of the Rules
H as per the directions of this Court; and that the High Court was not justified
y

A-ONE GRANITES v. STA TE OF U.P. 1087
in directing the District Magistrate to consider application of the respondent A
filed pursuant to the notice dated 30.5.1995.

The respondent contended that the applicability of Rule 72 is no lc;nger
res integra; that Rule 72 was applicable in a case of re-grant of mining lease
irrespective of the fact that mining lease was granted previously either under
Chapter II or Chapter IV of the Rules; and that the High Court was justified B
in giving a direction to consider the application.

Partly allowing the appeals, the Court

HELD : 1.1. The object of Ruic 72 in U.P. Minor Minerals (Concession) C
Rules, 1963 is to have transparency in the matter of granting mining lease
and restrict any under-hand dealing by the permit granting authority. The
.._,. object of notifying the availability through a notice by the District Officer is
to bring it to the notice of the public at large, so that an interested applicant
can make an application and such application could be considered on its own
merit, when more than one applications are received in respect of the same D
area. The area which was being operated upon on the basis of a lease obtained
under Chapter II when becomes available for re-grant if the prescribed
procedure under rule 72 is not followed, then it may lead to favouritism and
bias, ultimately resulting in corruption of the permit granting authority. It is
to prevent such abuse, the Legislature have brought into the Rules, the E
procedure prescribed under rule 72, the duty of notifying the availability of
the area by the District Officer. The procedure followed for grant of lease by
auction as provided under Rule 27 or by tender as provided under rule 27(A)
or by auction-cum-tender as provided under rule 27(8) is itself sufficient
notice to the public to enable them to participate in the auction/tender/auction-
cum-tender and question of any clandestine dealing in such case would not F
arise. But in a case when the area was held under auction/tender/auction-
cum-tender under Chapter IV and the State Government Withdraws the
area from the said procedure, whereafter provisions of Chapter II, the normal
procedure for granting lease becomes applicable, then if Rule 72 is
interpreted in the manner, then it would frustrate the purpose of transparency G
and openness engrafted in rule 72 and such an interpretation will be against
the legislative intent. Rule 72 shall have application in the case in hand and
the High Court has not committed any error in quashing the order passed by
the State Government sanctioning mining lease in favour of the appellant
without following the procedure prescribed under Rule 72 of the Rules.
11098-C;E-F;H; 1099-A-B;EI H
](J88 SUPREME COURT REPORTS 1200 I] I S.C.R.

A 1.2. A fresh notice was directed to be issued in an earlier occasion by
this Court so that all concerned persons including the appellant and the
respondent can apply for the grant of mining lease. The High Court was not
justified in quashing the order of the District Magistrate dated 4.10.1997
and giving a direction to him to consider application of the respondent. The
B authoritie~ are required to issue fresh notice in terms of Rule 72 of the
Rules and consider the ap}>lications for grant of lease filed pursuant thereto
in accordance with law and no application filed earlier either pursuant to
previous notices or otherwise shall be considered. (1099-H; 1100-A-Bf

1.3. That portion of the judgment of the high Court whereby lease
sanctioned in favour of the appellant was quashed is upheld. The other part of
C the judgment directing considerntion of the application dated 4.7.1995 of the
respo11dent and the application, if any filed, by the appellant pursuant to the
impugned judgment, is set aside. (1100-CI

2. It is a cardinal principal of construction that Courts must adopt a
construction which would suppress the mischief and advance the remedy. In
D other words, court must adopt a purposive interpretation of the provisions
under consideration. 11099-BI

3. The question regarding the applicability of Rule 72 of the Rules was
never canvassed before this Court in earlier appeals. The only question that
was considered was whether there was violation of the said rule. It cannot be
E said that the point is concluded by the same and no longer res integra.
11093-A; 1092-EI

Prem Nath Sharma v. State uf UP & Anr., 119971 4 SCC 552; Municipal
Corporation of Delhi v. Gurnam Kaur, 119891 l SCC 101; State of UP. &
Anr. v. Synthetic & Chemicals Ltd. & Anr., 1199114 SCC 139 and Arnit Das
F v. State uf Bihar, 1200015SCC488, referred to.

Lancaster Motor Co. (London) Ltd. v. Bremith Ltd .. (1941) I
KB 675, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6495 of
G 1998.
From the Judgment and Order dated 6.1 1.98 of the Allahabad High Court
in C.M.W.P. No. 34381 of 1997.

Govind Das, G.L. Sanghi, Parag P. Tripathi, Shanti Bhushan, Gopal
Subramanium, Yatish Mohan, Arjun Pant, Vishwajit Singh, Arvind Verma, Ms.
H Sangeeta Manda!, Ms. Varsha Chaudhary, Kapil K. Choudhary, Gaurab Banerjee
y

A-ONE GRANITES v. STATE OF U.P. [B.N. AGRA WAL. J.] 1089

and R.B. Misra for the appearing parties. A

The Judgment of the Court was delivered by

B.N. AG RAW AL, J. This appeal by special leave is dire.cted against
the judgment dated 6.11.1998 of the Allahabad High Court rendered in a writ
application filed by respondent no. 4 whereby the same has been allowed and B
order dated 24.9.1997 passed by the State Government sanctioning mining
lease of granite sized dimensional stone in favour of the appellant for a period
of 15 years in relation to l 0 acres of land comprising of Plot No. I situate in
Baghwa Mahoba and that dated 4.1 p.1997 passed by the District Magistrate,
Mahoba, showing inability to decide the application filed on 4.7.1995 by C
respondent no. 4 for grant of mining lease._ in view of the aforesaid order of
the State Government sanctioning mining lease in favour of the appellant
have been quashed and a direction has been given to the District Magistrate
to follow rule 72 of the Uttar Pradesh Minor Minerals (Concession) Rules,
1963 (hereinafter referred to as "the Rules") and dispose of the aforesaid
application filed by the respondent no. 4 on 4. 7.1995. D

The short facts giving rise to this appeal are that respondent no. 4
applied for grant of mining lease in plot no. l, Baghwa Mahoba measuring
10 acres and on 17.8.1977 the same was granted in his favour under Chapter
II of the Rules for a period of I 0 years w .e. f. September 17, 1977. On the expiry E
of the said period, respondent no. 4 once again applied for re-grant of the
lease which was granted this time for a period of five years, which period
expired on 1.5.1992. In the year 1992 a declaration was made under rule 23 of
the Rules which is in Chapter IV declaring the area of Bhagwa Mahoba for
grant of lease by way of auction or by tender or by auction-cum-tender and
thereby the provisions contained in Chapters II, III and VJ of the Rules were F
made inapplicable to the said area. In view of the aforesaid declaration, mining
lease was granted by auction in favour of respondent no. 4 on 22.5.1992 in
relation to the aforesaid area of JO acres for mining of minerals, viz., Khanda,
Gitty and Boulder for a period of three years. On 30.3.1995 the respondent -
District Magistrate issued a notification under rule 24 of the Rules withdrawing G
along with other areas the area which was subject matter of lease granted in
favour of respondent No. 4 from Chapter JV w.e.f. 1.4.1995 and making
provisions of Chapters II, Ill and VI of the Rules applicable to the area in
question. In the meantime, on 27.8.1994 the Rules were amended by virtue of
20th amendment inserting therein rules 72 to 79. Under rule 72 a procedure
was provided for giving 30 days notice for re- grant of mining lease which H
1090 SUPREME COURT REPORTS [2001] I S.C.R.

A rule was amended on 11.2.1995 by 21st amendment. Under the ainended rule
72 for re-grant of mining lease, apart from 30 days notice. seven working days
time for receipt of applications is required to be given and the said rule in
effect and substance does not relate to mining leases granted under Chapter
IV.

B After amendment of the said rule. the respondent-District Magistrate
issued a notice dated 31.3.1995 under rule 72 of the Rules calling for applications
for grant of mining leases after 30 days from the date of the issuance of
notice, i.e., 2.5.1995 in relation to the area which was subject matter of lease
of respondent no. 4 along with other areas. Pursuant to the said notice,
C respondent no. 4 applied for grant of lease in his favour and before completion
of period of seven days from the date specified, i.e., 2.5.1995 an order was
passed by the District Magistrate on 6.5.1995 sanctioning lease in his favour.
As pursuant to the said order no lease deed was executed, the same
necessitated respondent no. 4 to file a writ application on 24.5.1995 before the
Allahabad High Court being C.W.P. No. 15290/95 for directing the authority
D concerned to execute a lease deed in his favour. After the filing of the said
writ application, the State Government on 29 .5.1995 cancelled the said. notice
dated 31.3.1995 issued by the District Magistrate on the ground that according
to the policy decision of the State Government certain guidelines were provided
for grant of granite lease. Thereafter, the District Magistrate issued fresh
E notice on 30.5.1995 under rule 72 of the Rules inviting applications for grant
of mining lease which was challenged by respondent no. 4 in a separate writ
application filed before the Allahabad High Court being C.W.P. No.16886/95.
In view of the said notice. on 4.7.1995 respondent no. 4 applied afresh for
grant of lease in his favour. Both the writ applications were heard and
dismissed by the High Court on 24.4.1996 holding that the notice dated
F 31.3.1995 was invalid, being contrary to rule 72 of the Rules as the period of
seven days was not specified therein and, therefore. there was no illegality
in cancellation of the said notice and issuance of fresh one on 30.5.1995.
Challenging the said order respondent no. 4 filed two Special Le.ave Petitions
in which leave was granted and the Civil Appeals were disposed of by a
G common judgment rendered on 9.4.1997 whereby the appeals were dismissed,
but it was observed that the High Court was not justified in declaring that
the notice dated 31.3.1995 was invalid as in the opinion of this Court the said
notice was in accordance with the provisions of rule 72 of the Rules, but
cancellation of the same and issuance of fresh notice on 30.5.1995 was
justified as the lease was sanctioned on 6.5.1995. i.e., before the expiry of the
H period of seven days. This Court while disposing of the said appeals granted
A-ONt GRANITES v. STATE or U.P. [B.N. AGRA WAL .I J 1091

liberty to issue a fresh notice for grant of lease in accordance with law. A
Though according to the observation of this Court referred to above

- the District Magistrate was required to issue a fresh notice, but respondent
no. 4 was insisting that decision should be taken upon his application filed
on 4.7 .1995 pursuant to notice dated 30.5.1995 and as he did not take any step
the said respondent filed an appeal on 30.4.1997 before the Divisional B
Commissioner under rule 77 of the Rules making a prayer therein for directing
the District Magistrate to dispose of his aforesaid application dated 4.7.1995
for grant of mining lease on merit. During the pendency of the said appeal,
the District Magistrate on 20.8.1997 issued a fresh notice under rule 72 of the
Rules inviting applications for grant of mining lease. The said notice was C
challenged by respondent no. 4 by way of an application filed in the said
appeal before the Divisional Commissioner. On 11.9.1997 the Divisional
Commissioner decided the appeal and directed the District Magistrate to
decide the aforesaid application filed on 4.7.1995 by respondent no. 4.

Against the said order one Anil Kumar Shukla filed a revision before D
the State Government which is still pending.

Thereafter, on 24.9.1997 the State Government sanctioned a mining lease
of granite sized dimensional stone in relation to the area in question in favour
of the appellant for a period of 15 years without following the procedure
prescribed under rule 72 of the Rules. In accordance with the aforesaid order E
of the Divisional Commissioner passed on 11.9.1997 when respondent no. 4
moved the District Magistrate for considering his application dated 4.7.1995
for grant of mining lease, by order dated 4.10.1997 he expressed inability to
decide the application on merit in view of the lease granted on 24.9.1997 by
the State Government in favour of the appellant. Respondent no. 4 challenged
the aforesaid order dated 24. 9 .1997 passed by the State Government and order F
dated 4.10.1997 passed by the District Magistrate by filing a writ petition
before the Allahabad High Court being C.M.W.P. No. 34381 of 1997. One A.K.
Tripathi also filed two writ petitions. All the three writ petitions were heard
and disposed of by the High Court on 6.11.1998. The writ applications filed
by A.K. Tripathi were dismissed on the ground that he did not file any G
application pursuant to the notice. So far as the writ application filed by the
respondent No. 4 is concerned, the same was allowed, order dated 24.9.1997
passed by the State Government and that dated 4.10.1997 passed by the
District Magistrate were quashed and the District Magistrate was directed to
take a decision upon the application dated 4. 7 .1995 filed by the respondent
no. 4 in accordance with law as the lease was sanctioned on 24.9.1997 by the H
1092 SUPREME COURT REPORTS (2001) 1 S.C.R.

A State Government in favour of the appellant without following the procedure
prescribed under rule 72 of the Rules. Challenging the aforesaid decision of 'li!'
the High Court, the appellant filed Special Leave Petition before this Court in

B
which leave to appeal having been granted, the present appeal is placed
before us.

Mr. Govind Das and Mr. G.L. Sanghi, learned Senior Counsel, appearing
-
'
on behalf of the appellant, in support of the appeal submitted that rule 72 of
the Rules had no application for sanctioning lease in favour of the appellant ...
by the State Government under its order dated 24.9.1997 as earlier lease in
relation to the area in queEtion was granted under Chapter IV and not under
Chapter II inasmuch as under rule 72, as amended by the 21st amendment,
c only that area becomes available for re-grant which was held under a mining
lease under Chapter ll or was reserved under Section 17 A of the Mines and
Minerals (Development and Regulation) Act, 1957 and not the area which was
held under mining lease under Chapter IV, like the present one. It was further
submitted that in view of the observation of this Court on the earlier occasion,
D the District Magistrate was required to issue a fresh notice under rule 72 of
the Rules and, therefore, the High Court was not justified in directing him to
consider application dated 4.7.1995 filed by respondent no. 4 for grant of
lease.
~
Mr. Gaurab Banerjee, learned counsel appearing on behalf of the State
E Government, supported the stand of the appellant.

Mr. Shanti Bhushan, learned Senior Counsel, appearing on behalf of
respondent no. 4, submitted that the question regarding applicability of rule
"
72 is no longer res integra as this question is concluded by the decision of
this Court in the earlier appeals, as aforesaid. Alternatively, he submitted that ~
F rule 72 was applicable in a case of re-grant ofmininl_'. lease irrespective of the
fact that mining lease was granted previously either under Chapter 11 or
Chapter IV. He further submitted that the High Court was quite justified in
giving a direction to consider application dated 4.7.1995 filed by respondent
no. 4 as according to the earlier decision of this Court there was no illegality
G in the notice pursuant to which the said application was filed by respondent
no. 4.

The first question which falls for consideration of this Court is as to
whether the question regarding applicability of rule 72 of the Rules in relation
to the present lease is concluded by the earlier decision of this Court rendered
H in Prem Nath Sharma v. State of U.P. & Anr., (1997] 4 SCC 552. From a bare
A-ONE GRANITES v. STATE OF U.P. [B.N. AGRA WAL, .I.) 1093
perusal of the said judgment of this Court it would be clear that ·the question A
as to whether rule 72 was applicable or not was never canvassed before this
Court and the only question which was considered was whether there was
violation of the said rule.

This question was considered by the Court of Appeal in Lancaster
Motor Co. (London) ltd. v. Bremith ltd., ( 1941) I KB 675, and it was laid B
down that when no consideration was given to the question, the decision
cannot be said to be binding and precedents sub silentio and without
arguments are of no moment. Following the said decision, this Court in the
case of Municipal Corporation of Delhi v. Gurnam Kaur, [ 1989) 1 SCC I 0 I
observed thus: C
"In Gerardv. Worth of Paris ltd.(k), (1936) 2 All ER 905 (CA), the
only point argued was on the question of priority of the claimant's
debt, and, on this argument being heard, the court granted the order.
No consideration was given to the question whether a garnishee order
could properly be made on ari account standing in the name of the D
liquidator. When, therefore, this very point was argued in a subsequent
case before the Court of Appeal in Lancaster Motor Co. (London)
ltd. v. Bremith Ltd., (1941) I KB 675, the court held itself not bound
by its previous decision. Sir Wilfrid Greene, M.R., said that he could
not help thinking that the point now raised had been deliberately E
passed sub silentio by counsel in order that the point of substance
might be decided. He went on to say that the point had to be decided
by the earlier court before it could make the order which it did;
nevertheless, since it was decided "without argument, without reference
to the crucial words of the rule, and without any citation of authority",
it was not binding and would not be followed. Precedents sub silentio F
and without argument are of no moment. This rule has ever since been
followed."

In State ofU.P. & Anr. v. Synthetics and Chemicals ltd. & Anr., [1991) 4 SCC
139, reiterating the same view, this Court laid down that such a decision G
cannot be deemed to be a law declared to have binding effect as is
"f' contemplated by Artide 141 of the Constitution of India and observed thus:

"A decision which is not express and is not founded on reasons nor
it proceeds on consideration of• issue cannot be deemed to be a law
declared to have a binding effect as is contemplated by Article 141." H
1094 SUPREME COURT REPORTS [200 I] I S.C.R.

A In the case of Arnit Das v. State of Bihar, [2000] 5 SCC 488, while
examining the binding effect of such a decision, this Court observed thus:

"A decision not expressed, not accompanied by reasons and not
proceeding on a conscious consideration of an issue cannot be deemed
to be a law declared to have a binding effect as is contemplated by
B Article 141. That which has escaped in the judgment is not the ratio
decidendi. This is the rule of sub silentio, in the technical sense when
a particular point of law was not conscim;sly detennined."

Thus we have no difficulty in holding that as the question regarding
applicability of rule 72 of the Rules having not been even referred to, much
C less considered by this Court in the earlier appeals, it cannot be said that the
point is concluded by the same and no longer res integra and accordingly
this Court is called upon to decide the same.

By virtue of Entry 54 of Union List to the Seventh Schedule of the
D Constitution of India, the Parliament enacted the Mines and Minerals
(Development and Regulation) Act, 1957 (hereinafter referred to as "the Act")
to provide for the development and regulation of mines and minerals under
the control (If the Unioii Section 15 of the Act provides t.lutt the State
Government may make rules for regulating the grant of quarry leases, mining
leases or other mineral concessions in respect of minor minerals and for ~
E purposes connected therewith. In exercise of powers conferred under the
aforesaid section, the Government of Uttar Pradesh made rules called "The
Uttar Pradesh Minor Minerals (Concession) Rules, 1963" which were published
in the U.P. Gazette on 14.9.1963. Expression "Minor Minerals" was defined
under rule 2(7) of the Rules which reads thus:

F '"Minor minerals' means building stones, gravel, ordinary clay, ordinary
sand other thar: sand used for prescribed purposes, and any other
mineral which the Central Government has declared from time to time
or may declare, by notification in the official Gazette, to be a minor
mineral, under clause ( e) of Section 3 of the Mines and Minerals
G (Regulation and Development) Act, 1957 (Act No. 67 of 1957)."

Chapter lll provides for payment of royalty and dead rent. Under rule 21 of
the Rules, which is under Chapter lll, a holder of mining lease is required to
pay royalty in respect of any mineral removed by him from the leased area
at the rates for the time being specified in the First Schedule appended to the
H Rules. On 25.11.1993 an amendment was made whereby granite sized
A-ONE GRANITES v. STATE OF U.P. [B.N. AGRAWAL, J.) 1095
· dimensional stone was incorporated in item (5) of the Schedule as (v). A
-.,( Conditions of mining leases have been enumerated in Chapter V and Chapter
VI prescribes procedure for grant of mining permit.

In the original Rules there were 71 rules. Thereafter on 27.8.1994 by 20th
amendment rules 72 to 79 were inserted in Chapter VIJI of the Rules out of
which rule 72 may be referred to which reads thus:- B
"R. 72.- Availability of area for regtant to be notified.-( I) If any
area, which was held -under a mining lease or reserved under section
17-A of the Act becomes availablt. for regrant the District Officer shall
notify the availability of the area through a notice inviting applications C
for grant of mineral concessions specifying a date, which shall not be
earlier than thirty days from the date of notice and giving description
of such area and a copy of such notice shall be displayed on the
notice board of his office and shall also be sent to the Tehsildar of
such area and the Director.
D
(2) An application for grant of mining lease or mining permit for such
area which is already held under a lease cir notified under sub-rule ( l)
of rule 23 or reserved under section 17-A of the Act and whose
availability has not been notified under sub-rule (I) shall be premature
and shall not be considered and the application fee thereon if paid
shall be refunded. E
Subsequently, on 11.2.1995 by 21st amendment rule 72 was amended and
substituted as follows:-

"R. 72.-Availability of area/or regrant on mining lease to be notified.-
F
(I) If any area, which was held under a mining lease under Chapter
- JI or on reserved under section 17-A of the Act, becomes available
for regrant, the District Officer shall notify the availability of the area
through a notice on mining lease inviting for applications for grant of
mining lease specifying a date, which shall not be earlier than thirty
days from the date· of notice and giving description of such area and G
a copy of such notice shall be displayed on the notice board of his
office and shall also ·be sent to the Tehsildar of such area and the
Director.

(2) The applications for grant of mining lease under sub-rule I, shall
be received within seven working days from the date specified in the H
1096 SUPREME COURT REPORTS [2001] I S.C.R.

A notice referred to in the said sub~rule. If, however, the number of
applications received for any area is less than three, the District
Officer may further extend the period for seven more working days
and if even thereafter, the number of applications remain less than
three, the district officer shall notify the availability of the area afresh
in accordance with the said sub-rule."
B
(3) An application for grant of mining lease for such area which is
already held under a lease or notified under sub-rule 1 of rule 23 or
reserved under section 17-A of the Act and whose availability has not
been notified under sub-rule I shall be deemed to be premature and
shall not be considered and the application fee thereon if paid shall
c be refunded.

Under the Rules, mining operation in respect of any minor mineral can
be undertaken only in accordance with the terms and conditions of a mining
lease or mining pennit granted under the Rules. Such a lease could be granted
D under Chapter II, which prescribes the procedure and rule 9 provides for a
preferential right when two or more persons apply for a mining lease in
respect of the same land. The mining lease could also be granted under
Chapter IV by way of auction/tender/auction-cum-tender when State
Government by special or general order declare that the area in question could
be leased out by auction or by tender or by auction-cum-tender, as provided
E in rule 23. The procedure for grant of lease by auction is provided under rule
27. Rule 24 empowers the State Government to withdraw any area which had
been declared under sub-rule (I) of rule 23 and once the area is withdrawn
under rule 24," then the procedure prescribed in Chapter II for grant of mining
lease becomes applicable. Thus the procedure provided under Chapter II of
the Rules being the normal procedure, Chapter IV is an exception to the same.
F It may be useful to quote rules 23 and 24 hereunder which are under Chapter
IV:-

"R.23.- Declaration of area for auction/ tender/auction-cum,tender/
lease:

G (I) The State Government may by general or special order, declare the
area or areas which may be leased out by auction or by tender or by
auction-cum-tender.

(2) Subject to direction issued by the State Government from time to
time in this behalf no area or areas shall be leased out by auction or
H by tender or by auction-cum-tender for more than five years at a time:
A-ONE GRANITES v. STATE OF U.P. [B.N. AGRAWAL, J.] 1097
..... Provided that the period in respect of in siturock type mineral deposit A
"' shall be five years and in respect of river bed mineral deposit shall be
one year at a time.

(3) On the declaration of the area or areas under sub-rule ( 1) the
provisions of Chapters II, III and VI of these rules shall not apply to
the area or areas in respect of which the declaration has been issued. B
Such area or areas may be leased out according to the procedure
described in this Chapter.

(4) The District Officer shall get the area or areas declared under sub-
rule (I), evaluated for quality and quantity of mineral for fixing minimum
bid or offer by the Director, Geology and Mining, Uttar Pradesh or by C
an officer authorised by him before the date fixed for auction or tender
or auction-cum-tender, as the case may be."

"R.24.-Withdrawal of area from auction or tender or auction-cum-
/ender:- The State Government may by declaration withdraw any area D
or areas declared under sub-rule (I) of rule 23 or part thereof from any
system of lease referred to there and from the date of withdrawal
specified in the declaration which shall not be the date during the
subsistence of a lease granted under this Chapter, the provisions of
Chapter II, III and VI of these rules shall become applicable to such
area o.r areas." E
.. By 20th amendment whereby rule 72 was incorporated in the Rules
certain restrictions were put to the effect that if any area which was held
under a mining lease or reserved under Section 17A of the Act became
available for re-grant, the District Officer was required to notify its availability
through a notice inviting applications for grant specifying a date which shall F
not be earlier than 30 days from the date of the notice and the said notice
was required to be displayed on the notice board of the District Office and
was also required to be sent to Tehsildar of such area and. the Director.
According to the aforesaid rule, if an area was held under mining lease either
under Chapter II or under Chapter IV, the procedure prescribed in rule 72 was G
applicable. By 21st amendment, rule 72 was substituted which prescribes the
procedure of notifying the availability of the area through a notice, inviting
for applications for grant of mining lease, specifying the date when the said
area which was held under a mining lease under Chapter II or reserved under
Section 17-A of the Act becomes available for re-grant on mining lease.
Further amendment was made that the applications for grant of mining lease H
1098 SUPREME COURT REPORTS [2001) I S.C.R.

A were required to be received within 7 working days from the date specified
in the notice referred to in sub-rule (I) of rule 72.

The language used in rule 72( I) on a literal meaning being given, would
undoubtedly support the contention of Mr. Das and Mr. Sanghi, appearing
for the appellant that this procedure would not apply when the area in
B question had been held under a lease not under Chapter II but under Chapter
IV. But such an interpretation should be avoided inasmuch as the very
purpose for which rule 72 has been engrafted in the Rules- will totally get
frustrated. The object of having such provision is transparency in the matter
of granting mining lease and restrict any under-hand dealing with the minerals
C by the permit granting authority. The object of notifying the availability
through a notice by the District Officer is to bring it to the notice of the public
at large, so that an interested applicant can make an 1pplication and such
application could be considered on its own merit, when more than one
applications are received in respect of the same area. The lease under Chapter
II of the Rules could be granted for a period not exceeding ten years, as
D provided in sub-rule (I) of Rule 12 and under sub-rule (2) of Rule 12, if the
State Government is of the opinion that it would be necessary in the interest
of mineral development, it may grant the lease for any period exceeding ten
years but not exceeding fifteen years. The Rules also contemplate renewal of
such lease. Rule 19(2) empowers the State Government to determine any lease
E on the grounds indicated thereunder, after giving the lessee a reasonable
opportunity of stating his case. The area which was being operated upon on
the basis of a lease obtained under Chapter II when becomes available for re-
grant if the prescribed procedure under rule 72 is not followed, then it may
lead to favourtism and bias, ultimately resulting in corruption of the permit
granting authority. It is to prevent such abuse, the Legislature have brought
F into the Rules, the procedure prescribed under rule 72, the duty of notifying
the availability of the area by the District Officer. In case of auction lease, it
is not necessary, since the procedure prescribed for grant of auction lease in
rule 27 itself indicates that the District Officer or the Committee authorised is
duty bound to at least give a notice 30 days before the date of auction in
G the manner indicated under the Rules by providing the date, time and place
of auction and if for any reason, the auction is not completed on the notified
date, then a fresh auction could be held after giving a shorter notice of at least .,,.
seven days. Thus the procedure followed for grant of lease by auction as
provided under rule 27 or tender as provided under rule 27(A) or auction-cum-
tender, as provided under rule 27(8) is itself sufficient notice to the public to
H enable them to participate in the auction/tender/auction-cum-tender and
Y·

A-ONE GRANITES v. STATE OF U.P. [B.N. AGRA WAL, J.] 1099

question of any clandestine dealing in such case would not arise. But in a A
case when the area was held under auction/tender/auction-cum-tender under
Chapter IV and the State Government withdraws the area from the said
procedure, whereafter provisions of Chapter 11, the normal procedure for
granting lease becomes applicable as in the case in hand, then if Rule 72 is
interpreted in the manner, as contended by the learned counsel for the appellant, B
then it would frustrate the purpose of transparency and open-ness engrafted
in rule 72 and such an interpretation will be against the legislative intent. It
is a cardinal principle of construction that the courts must adopt a construction
which would suppress the mischief and advance the remedy. In other words,
the court must adopt a purposive interpretation of the provisions under
consideration. So construed, it is difficult for us to accept the contention of C
Mr. Das appearing for the appellant that rule 72 has no application to the case
in hand merely because the area in question had been held by the previous
lessee for some period under auction/tender basis under Chapter IV, particularly
when on 30th of March, 1995 the District Magistrate withdrew the area held
under auction/tender system to the normal procedure of grant of mining lease
under Chapter II w.e.f. 01.4.1995. D
Thus, we are of the opinion that rule 72 shall have application in the
case in hand and the High Court has not committed any error in quashing
the order passed by the State Government sanctioning mining lease in favour
of the appellant without following the procedure prescribed under rule 72 of E
the Rules.

The last question which falls for consideration is whether the High
Court was justified in giving a direction to the District Magistrate to consider
the application dated 4.7.1995 filed by the respondent no. 4 for grant of mining
lease. It is true that on the earlier occasion this Court found that the notice F
was valid, but the order for grant of mining lease being contrary to rule 72,
was held to be invalid. In the operative portion of the judgment it was
specifically directed that "the respondents will be at liberty to issue a fresh
notice for the grant of lease in accordance with law and keeping in view the
observations contained herein", which would obviously mean that a fresh G
notice for grant of lease was required to be issued in accordance with rule
72 of the Rules. As this Court observed for issuance of fresh notice, we do
not find any reason as to how the application filed on 4.7.1995 by respondent
No. 4 pursuant to notice dated 30.5. I995 could be considered. If a fresh notice
is issued, all concerned persons including the appellant and respondent no.
4 can apply for the grant. H
1100 SUPREME COURT REPORTS [200 I] I S.C.R.

A This being the position, we are of the view that the High Court was
not justified in quashing the order of the District Magistrate dated 4.10.1997 -
and giving a direction to him to consider application dated 4.7.95 filed by
respondent no. 4. In our view, the authorities are now required to issue fresh
notice in terms of rule 72 of the Rules and consider the applications for grant
B of lease filed pursuant thereto in accordance with law and no application filed
earlier either pursuant to previous notices or otherwise shall be considered.

In the result, the appeal is allowed in part. While upholding that
portion of the judgment of the High Court whereby lease sanctioned in favour
of the appellant was quashed, we set aside other part of the judgment,
C directing consideration of the application dated 4.7.1995 of the respondent
No. 4 and application, if any filed, by the appellant pursuant to the impugned
judgment. There will be no order as to costs.

B.S. Appeal partly allowed.

-