Holding

A mining lease may be renewed under Section 8(3) only when the Central Government records sound reasons, considering the Rao Committee report, the Indian Metals precedent, captive mining needs and equitable distribution, and the High Court and Committee acted within their jurisdiction in hearing all interested parties.

Summary

Tata Iron and Steel Co. Ltd. (TISCO) sought a second renewal of its chromite mining lease under Section 8(3) of the Mines and Minerals (Regulation & Development) Act, 1957. The Central Government reduced the lease area and later further reduced it, prompting TISCO to challenge the orders, arguing that the concept of captive mining and equitable distribution were irrelevant to mineral development. The Orissa High Court struck down the renewal orders for lack of recorded reasons and for not considering the Rao Committee report and the Indian Metals precedent, and directed a fresh hearing of all interested parties. The Supreme Court held that a renewal under Section 8(3) is permissible only if the Central Government records sound reasons, taking into account the Rao Committee findings, the Indian Metals case, captive mining requirements and equitable distribution, and affirmed that the High Court and the Committee were justified in hearing prospective applicants. Consequently, the Court dismissed the appeals, upholding the Central Government’s order to renew the lease over a reduced area of 406 hectares.

Issues considered

Whether the High Court was justified in striking down the Central Government's renewal orders for failing to satisfy Section 8(3) of the Act.
Whether the Rao Committee report and the Indian Metals & Ferro Alloys Ltd. v. Union of India decision are relevant to lease renewal under Section 8(3).
Whether the High Court and the Committee were justified in hearing prospective applicants while considering TISCO's lease renewal.
Whether the concept of "mineral development" under Section 8(3) includes assessment of captive mining requirements and the principle of equitable distribution of mining leases.
Whether the Central Government correctly analysed TISCO's needs and recommended renewal over 406 hectares.

Subjects

mining lease renewalSection 8(3)captive miningequitable distributionRao Committeemineral developmentNational Mineral PolicyConstitutional articles 14 and 39(b)policy vs. adjudication

Judgment

A TATA IRON AND STEEL CO. LTD. ETC.
v.
UNION OF INDIA AND ANR.

JULY 23, 1996
B
!A.M. AHMADI, CJ.AND B.L. HANSARIA, J.]

Mines and Minerals (Regulation & Development) Act, 1957-Secrion
8-Pen·ads for ivhiciz niining leases n1ay be granted or renelred-Renewal of
C lease in interest of niineral developn1ent-Order nzust rc.:ord
reason.s-Relevance of c1iterion of captive requircn1e11t of n1i11ing industries
and principle of equitable distribution of 111ining lease-Pro.~q1cctivc a11-
plicants-Held, proper pwties.

The appellant, TISCO, a limited company claiming that it was the
D first to discover Chrome Ore in Orissa, in the year 1949, applied for a
prospecting licence and \\·as granted a inining lease over an area of 1813
hectares for chromite for a period of 20 years w.e.f. 12.1.1953. Since the
lease was to expire on 12.1.1973, TISCO sought its renewal which was duly
granted u/S 8(2) of the Mines and Minerals (Regulation & Development)
Act, 1957, for a further period of 20 years, till 11-1 1993. In 1991, a year
E prior to the date of expiry of the lease, TISCO applied for a second renewal
u/s 8(3) of the Act for a further period of 20 years. The Central Govern-
ment rene'\\'ed TISCO's lease over a reduced urea of 651 hectares and it
was decided to distribute the balance area in an equitable manner taking
into consideration the need of genuine consumers for captive ronsu1nption.
F TISCO filed a \\Tit petition in the High Court challenging the order on the
ground that the scheme of equitable distribution of mining leases on the
basis of need of an industry is extraneous to the concept of' mineral
development, which alone is relevant u/s 8(3) of the Act. The High Court
struck down the renewal of TISCO's lease granted by the Central Govern-
ment inter alia on the ground that the Central Government had not kept
G in view the recommendations made by the Rao committee and thereafter
directed the Central Government to reconsider TISCO's application for
renewal of the lease in accordance with Jaw. In 1995, the Ministry of Mines,
Government of India constituted a co1nmittee for rehearing and recon~
sidering the issue in regard to the rene'\\'al of nlining lease to TISCO. The
H Co1nn1ittce sulJmittcd a report recornmending renewal of the lease for a
808
I AT,, !RON /\N ll STEEL CO. LTD.''· lJ.O.l. 809

reduced areido TISCO. stating that Articles 39(h) & 14 orthe Constitution A
n1ust be taktn into consideration for deciding the issue of equitabJc
distribution of resources and that ~rlSCO "'01Jld not claiin to have any
legal right over tht rene\ral of its lease for the second tirne and, if the
Central (;ovcrnn1cnt "'as to rcnC\\' it, it n·ould havr to record reasons \rhy
such a 1neasure \\'Ould he in the interest of n1ineral devcloprucnt. Tht
B
Cou11nittee \.ras of the opinion that it \\ould be necessary in the interest of
n1ineral devclop1ncnt to authorise the rtne\ral of chron1ite lease to TISC()
11/s 8(3) of the Act >trictly in terms of TISC!)'s requirement and keeping
in vie\V the require111ents of needy 111a1111facturing industries. The Com1nit-
tcc approved the principle of allotting leases to different industries by
taking into consideration tht:ir re£1uire1nents for captive mining holding C
an opinion that tht• best \\-'ay of benefitting an established chro1ne based
industry with a large ore consu1nption \\'as tn provide a n1inc owner status
to the different industrial units and that TISCO should make efforts to
initiate underground 1nining on a large scale "'hich would allo"' it to better
exploit the ore within its lease hold area. In its view, the appropriate area D
catering to TISCO's requirement would total 461 hectares. The Committee
also formed an estimate of requirements of the other parties appearing
before it.

In these appeals liled against the judgn1ent of the High Court, the
issues raised for consideration were : E

(i) Whether the High Court of Orissa was justiticd in striking down
the decisions of the Central Government dated 3.6.1993 and 5.10.1993 on
the ground that the requirement of Section 8(3) of the Act had not been
met; (ii) Whether the reJJOrt of the Rao Committee and the decision of this F
Court in Indian Afetals case are relevant for the consideration of renewal
of leases under Section 8(3) of the Act; (iii) Whether the High Court and
the Comn1ittee \\'ere justified in hearing prospective applicants while con~
sidering the issue of renewal ofTISCO's lease; (iv) whether the Committee
\Vas justified in interpreting the concept of "mineral development11 under
Section 8(3) of the Act as re£1uiring the assessn1ent of the captive mining G
requirement of different industries and the application of the principle of
equitable distribution of mining leases; (v) Whether the Central Govern·
ment in its order dated August 17, 1995, had correctly analysed the needs
and ret111irements of TISCO in recommending that its lease be renewed
o\'er land measuring 406.00 hectares; H
810 SUPREME COURT REPORTS (1996] SUPP. 3 S.C.R.

A The appellant contended that the orders renewing TISCO's lease
had complied with the requirements of Section 8 of the Act; that the Rao
Couuuittee had provided incorrect i11for1nation about TISCO's 111ining
lease and the concept of captive mining was not really part of the National
Mineral Policy and, though propagated by the Rao Report, this concept
did not find support from the National Mineral Policy; that the other
B
petitioners did not have locus standi as none of the other parties could be.
regarded as aggrieved parties having any interest in these proceedings
since the State Government had neither made an entry in the concerned
register that the area was available for grant, nor had it notified its
availability in the oflicial Gazette; that none of the other parties who were
C before this Court to stake their claim for mining leases, had any industry
of their own wliere the chromite ore could be used for manufacturing
purposes and, therefore, they \\'ere not in a position to use it for captive
consumption and therefore the Committee had erred in applying the
principle of equitable distribution of mining leases as the correct principle
D is that of equitable distribution of minerals and not of mining leases.

The respondent submitted that any decision on the second renewal
of TISCO's lease was bound to affect the rights of the other parties and
that the State Government, which was duty bound to make the relevant
entry in the register and notify the area as being available for grant, had
E neglected to do so and that the applications of the petitioners would not
have been deemed to be premature under Rule 60 of the Minerals Conces-
sion Rules.

Dismissing the appeals, this Court
F
HELD : 1.1. The language of Section 8(3) of the Mines & Minerals
(Regulation & Development) Act, 1957 is quite clear in its import. Ordinari-
ly, a lease is not to be granted beyond the time and the number of periods
mentioned in clauses (1) and (2). If, however, the Central Government is of
the view that to allow a lessee's lease to be renewed further would be in the
G interest of mineral development, then, it is empo\.\'ered to do so, provided
there exist on record sound reasons for such an action and those reasons
are recorded. Since such a measure has been incorporated in the legislative
scheme as a safeguard against arbitrariness, the letter and spirit of the law
must be adhered to in a strict manner. The order orthe Central Government
H dated 3.6.1993 is a statement which declares the grant of a second renewal
TATA IRON AND STEEL CO. LTD. v. U.0.1. 811

to 'flSCO. It did not profess to give any reasons for such a decision and, for A
that reason, falls foul of the re<Juirement of Section 8(3). The order dated
5-10-1993 is rriore generous in terrns of the re<:&sons it offers; however, the
High Court was of the view that, since it did not take into account the
tinciings of the Rao Report, the decision of this Court ii! Indian Afetals case
and the National !'viineral Policy, it could not have justified its decision as
B
having been made after a proper analysis of the interest of mineral develop-
n1ent. The Rao Report had 1nade such a comprehensive study of the issue
that it merited treatment as a decision of the central Government. The
Central (iovern1nent, though not hound to follow the recommendations of
the Rao Report, was at the very least under an obligation to record reasons
why it sought to depart from the recommendations of the Report; especially C
in matters such as these where leases of considerable com1nercial value are
granted for long periods of time. Since the order dated 5·10·1993 did not
make any reference to the Rao Report or the decision of this Court the High
Court was justified in striking down for not having taken into account all
the factors relating to a proper appreciation of the concept of mineral D
development. The High Court had taken the correct step in allowing the
prospective applicants to put forth their points of view "ith regard to the
renewal of TISCO's lease. These issues involved considerably high stakes,
both in terms of commercial value and the effect that such a decision will
have on the concept of mineral development and the consequent national
interest. To that extent, those likely to be affected and indeed, those who can E
legitimately have a stake in the proper formulation of such a vital policy,
can be heard. No exception can be taken to the High Court treating them as
proper parties and directing the Committee to hear them. The captive
requirement of an industry is a factor that has to be kept in mind while
granting leases but, it is to be done on a con1parative scale. While the F
Central Government exercises its discretion in granting or rene\ol'ing a lease,
the capacity of an industry to effectively exploit the ore, will be a
predominant consideration. In order to properly appreciate the issue of
captive consumption, the Committee examined the needs of the other par-
ties before it. It stated that each of these parties had manufacturing in·
dustries which produce value-added products and earn considerable G
foreign exchange for the country, and it was therefore, of the view that an
analysis of their total requirement was necessary in the interest of mineral
development as also that of the nation. Based on the information supplied
to it, the Committee thereafter made an assessment, for a total period of SO
H
812 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R. <
;-\ iears, of the ca1ltive and net require1ncnts of ICCL, IMFA, FAC(JR and
.ISL. The Committee has also taken note of the projected captive and net
rel)uirements of lspat alloys. This being a finding of fact that has been
recorded by the Cornn1ittec, the argument of captive consu1nption did have
a basis in the facts of the present case. On the issue of the application of the
principlt! o!· et1uitable distribution, the Com1nittee had, after.having taken
B note of the prcrailing situation and the prohlen1s faced by needy n1anufac- .
turers, taken the correct rie\v in rcconuucncing its implcrnentation. [825-F-
H; 826-A-B; 827-B-U; 830-A-B; 834-B-HJ

l.2. This is a case of the type where legal issues are intertwined with
C those involving deter1nination of policy and a plethora of technical issues.
In such a situation, courts of latt' have to be vt!ry wary and n1ust exercise
their jurisdiction \\'ith circumspection for they ntust not transgress into
the realm of policy making, unless the 11olicy is inconsistent with the
Constitution and the laws. In the present n1atter, in its in1pugned judg-
ment, the High Court had directed the Central Government to set up a
D Comn1ittee to analyse the entire gan1ut of issues thrown up by the present
contrnver;y. The Central Government had consequently constituted a
Comn1ittee con1prising high level functionaries drawn from various
Ciovernrnental/institutional ngencies \\'ho \\'ere etjuipped to deal with the
entire range of technical and long-term considerations involved. This
E Committee, in reaching its decision, consulted a number of policy docu-
n1ents and approached the issue from a holistic perspective. From the
scheme of the Act it is clear that the Central Government is vested with
desecration to detern1ine the policy regarding the grant or renewal of
leases. On matters ,11Tecting policy and those that require technical exper-
tise, the recomn1endations of the Committee which is more tiualitied to
F address these issues is to lie followed. [835-F-H; 836-A·B]

Indian Metals & FcmJ Alloys Ltd. v. Union of India, AIR (1991) SC
818, referred to.

G CIVIL APPELLATE JURISDICTION Civil Appeal No. 9454 of
1996 Etc. Etc.

From the Judgment and Order dated 4.4.95 of the Orissa High Court
in 0 ..1.C. No. 7729 of 1993.

H D.P. Gupta. Solicitor Ciencral, F.S. Nariman, Kapil Sihal, Gopal
TATA IRON AND STEELCO.J:m.v. U.0.1.[AHMADI.CJ.] 813

Subramaniam, Ms. Indira .laising, Shanti Bhushan, R.K. Anand, H.N. Salve, A
AK. Ganguli, G.L. Sanghi, Y.S.N. Murty, Sr. Advs., Sunil Gupta, Ravinder
Narain, Ashok Sagar, S. Kachwah, Ms. Punita Singh, Ashok Parija, Rajan
Narain, Ms. Vijay Lakshmi Menon, Jayant Bhushan, Ms. Ritu Gupta, Y.P.
Mahajan, W.A Qadri, AK. Sharma, Gautam Mitra Rajiv La., Indira
Sawhney, K.K. Lahiri, Ejaz Maqbool, B.K. Mishra, D.A. Dave, Praveen B
Kumar, Virender Kaushal, R.K. Mehta, Indrajeet Roy, P.N. Misra, Ashok
K. Gupta and Bharat Sangal for the appearing parties.

The Judgment of the Court was delivered by

AHMADI, CJ! Special Leave granted. c
These appeals seek to challenge: (i) the common judgment and order
of the Orissa High Court dated April 4, 1995, arising out of OJC No. 7729
of 1993 and allied matters and (2) the decision of the Central Government
dated August 17, 1995 made pursuant to the said judgment of the High
Court. D

The appellants in these appeals are the Tata.Iron and Steel Com-
pany, Limited, (hereinafter called "TISCO") and the Industrial Develop-
ment Corporation of Orissa Limited (hereinafter called "IDCOL"). The
principal respondents are the Union of India, the State of Orissa, M/s.
E
Indian Charge Chrome Limited, (hereinafter called ''JCCL''), Indian Metal
& Ferro Alloys Limited (hereinafter called ''!MFA"), M/s. Jindal Strips
Limited, ( hereinafter called "JSL"), Ferro Alloys Corporation Limited
(hereinafter called "FACOR") and !spat Alloys Limited .
•
The factual matrix of the c3'6 is as follows : F

The appellant, TISCO;.is a limited company, one of whose primary
~objects has been, to carry on business as a mining industry. It claims that it
was the first to cli,covcr Chrome ore in the Sukinda Valley, Orissa, in the
year 1949. It applied to the Raja of Sukinda for a prospecting licence and G
was granted th~ sa~c in 1952. On October 22, 1952, it was granted a mining
lease over an area of 1813 hectares for chromite for a period of 20 years.
Subsequently, under the provisions of the Orissa Estates Abolition Act,
1952, on the rights of the Raja having vested in the State Government, the
latter recognised the lease of TISCO for a period of 20 years with effect
from January 12, 1953. H
814 SUPREME COURT REPORTS 11996) SUPP. 3 S.C.R.

A TISCO claims that over the years, it has spent more than Rs. 180
crores for the developn1ent of the mine, including Rs. 27 crores spent in
setting up a beneficiation plant. It utilises the Chrome ore mined by it for
the manufacture of Charge Chrome/Ferro Chrome refractories. lt also
supplies ore to forty Chrome ore based industries situated in different parts
B of the country.

In the year 1957, Parliament enacted the Mines &.Minerals (Regula-
tion & Development) Act, 1957, (hereinafter called "the Act"). Section 8
of the Act deals with the renewal of mining leases which are lo be granted
by the Central Government. Applications under this Section are to be
C made through the State Government which is to furnish all relevant infor-
mation and material to the Central Government. On October 10, 1980, the
Central Government issued a circular which laid down guidelines in this
behalf. Under the provisions of the Mineral) Conservation & Development
Rules, 1988, framed under Section 18 of the Act, the Indian Bureau of
Mines is also required lo furnish relevant information to the Central
D Government.

Since the lease was to expire on January 12, 1973, TJSCO sought its
renewal which was duly granted under Section 8(2) in respect of 1261.476
hectares for a period of 20 ye·ars i.e. till .January 11., 1.993, Subject to the
E condition that it would set up a beneliciation plant.

On October 3, 1991, more than a year prior to the date of expiry of
the lease, TJSCO applied for a second renewal under Section 8(3) of the
Act for a further period of 20 years. On NoYember 28, 1992, the Stale
Government, acting on the basis of a favourable report dated March 31,
F 1.992 submitted by the Director of Mines & Geology Orissa, recommended
to the Central Government that the entire lease of TJSCO be renewed for
a period of 10 years under Section 8(3) of the Act. On April 27, 1993, the
Indian Bureau of Mines, after analysing the mining plan submitted by
TISCO, recommended to the Central Government that TISCO's lease be
G renewed in its entirety.

On June, 3, 1993, the Central Government authorised the renewal of
the lease over the entire area of 1261.476 hectares. However, before the
formal lease could be executed, the Union Minister of State for Steel &
Mines, acting on a complaint filed by Shri G.C. Munda, Member of
H Parliament, directed that the matter be kept in abeyance. On September
•
TATA IRON AND STEEL CO. LTD. v. U.0.1. [AllMADI, CJ.] 815

27, 1993, the said Union Minister wrote a letter to the Chief Minister of A
Orissa staling that the lease area of TISCO should be reduced by half and
the balance should be distributed in an equitable manner taking into
consideration the need of genuine consumers for captive consumption.

On October 5, 1993, the Central Government superseded its earlier
approval dated June 3, 1993, and renewed TlSCO'; lease over a reduced B
area of 651 hectares. On October 19, 1993, TrSCO filed a writ petition in
the High Court, being O.TC No. 7729/93, under Article 226 of the Constitu-
tion challenging the order dated October 5, 1993, inter alia on the ground
that the scheme of equitable distribution of mining leases on the basis of
need of an industry is c>-1raneous to the concept of mineral development, c
which alone is relevant under Section 8(3) of the Act. Meanwhile, FACOR,
Ispat Alloys, JSL and Jindal Ferro Alloys Ltd. applied for mining leases of
the area held by TJSCO, but the State Government refused to entertain
them as being premature under Rules 59 and 60 of the Mineral Concession
Rules framed under the Act (hereinafter called "the Rules").
D
While TISCO's writ petition was pending, !CCL and .TSL filed writ
Petitions, being OJC No. 5422/94 and OJC No. 7054/94, challenging the
renewal of TISCO's lease by the Central Government; both the order dated
June 3, 1993 (which had authorised the renewal of the entire lease area of
1261 hectares) and the order dated October 5, 1993 (which subsequently E
reduced the authorisation lo 651 hectares) were challenged.

By its impugned order dated April 4, 1995 the High Court of Orissa
struck down the renewal of TISCO's lease granted by the Central Govern-
ment through its decisions dated June 3, 1993 and October 5, 1993.
Thereafter, it directed the Central Government to reconsider TISCO's F
application for renc\val of the lease in accordance \Vith la\v; the Central
Government was also directed to give a personal hearing to, and consiJer
the applications of, the other parties before the Court.

The High Court of Orissa after hearing lengthy arguments of counsel G
appearing for different interests including the central and the State
Governments concluded in paragraph 57 of its judgment that two courses
were open to it, namely, (i) to accept the submission of the counsel for the
State Government that all the writ petitions should be dismissed and the
parties may be asked to exhaust the alternative remedy of permitting the
State Government to take a decision as authorised by the Central Govern- H
816 SUPREME COURT REPORTS I 19%J SUPP. 3 S.C.R.

A n1ent and if any party i~ aggrieved it n1ay n1ove t.he l'.entral GovcrnnH~nL
under the Act and the Rules, or (ii) the Court may dispose of the writ
petitions giving certain specific directions in the shape of guideline~ to the
Governments as well as other authorities under Act to consider in the light
thereof if there is any necessity lo renew the lease for the whole or part of
the area covered under the lease. The High C0urt took the second course,
B
in that, it accepted the submission of counsel for the State Government
that the Central Government should hear the matter de nol'o nn TISCO's
application for renewal of the lease after hearing all parties including !CCL
and JSL. lt set aside the orders <lated June 3, 1993 and October 5, 1993,
inter alia on the ground that the Central G0Yern1ncnt had not kepi. in vie\v
C the recommendation made by the Rao Committee which was accepted by
this Court in the case of Indian Matoia/s & Fc1ro Alloys Ltd. v. Union of
India, AIR 1991SC818 = 11992] Supp. 1SCC91, and directed the Central
Government to hear the application for renewal of the lease, keeping in
view the report submitted by the Rao Committee and the decisinn or this
D Court in the aforesaid case.

After the judgment of the High Court was delivered on April 4, 1995,
a Con1mittee \Vas constituted by the Ministry of Mines, (Jovcrnmcnt of
India, under the Chairmanship of one Shri S.D. Shann<.1 for rehearing ;_ind
reconsidering the issue in regard to the renewal or mining lease tu TJSCO.
E The Committee submitted a report <lated August 16, 1995, recommending
renewal of the lease for a reduced area to TISCO. Acting on that report,
on the very next <lay, August 17, 1995, the Central Government authorised
the renewal of TISCO's lease over the reduced area of 406 hectares which,
accortling to the Central Govern1ncnt, \Vould n1cct TlSC()'s captive rc-
F quirement.s and requested the State Govcrn1nent to issue orders for the
same. At the same time, in exercise of powers conferred by Rule 59(2) of
the Rules, the· Central Government relaxed the provisions of sub-rule (J)
\Vith the objective of expediting the process uf granting chromiti.: ore and
requested the St.ate Ciovcrnn1ent to grant 1nining leases to four other
parties. namely, !CCI, JSL, !MFA and FACOR for the balance area of
G 855.476 hectares.

SLP Nos. 10838/95, 11391/95 and 11392/95 seek to challenge the
01dcr dated April 4, 1995 of the Orissa High Court and SLP Nos. 22710/95,
23131/95 and 23132/95 seek to challenge the Central Government's
H decision dated August 17, 1995, made pursuant to the High Court's order
,. TATA IRON AND STEEL CO. LTD. i·. U.0.1. [AHMADI.CJ.] 817

dated April 4, 1995. While the lirst four special leave petitions have been A
filed by TISCO, the last two have been filed by IDCOL.

Before we proceed to deal with the arguments of counsd appearing
for the different parties, \Ve must deal \vith the impugned judgn1cnt of the
Orissa High Cnurt and the report of the Committee that was set up
pursuant to its directions, in son1e detail.
B

In its impugned judgment, ihc High Court has taken the view that
Section 8(3) of the Act is applicable lo the dispute in the present case; it
further held that this provision mandatorily requires the Central Govern-
inent to giYe reasons as to \vhy it \Vas in the interest of 1nincral development C
to renew T!SCO's lease. The High Court look nt>le of the decision of this
Court in Indian A1etals case \Vhere, faced \Vi th a dispute involving the grant
of rights for the mining of chron1ite ore in the State of Orissa, this Court
had appointed a Commillee headed by the Secretary to the Government
of India in the Ministry of Mines, Mr. B.K. Rao (hereinafter called "The 0
Rao (~on1rnittee") to consider the c\ain1s of the various parties. The Rao
Committee submitted its report \Vhcrcin it studied the i.".suc of n1ining of
chromite ore in the State of ()rissa at great length and gave its specific
findings. This Court, in rendering its final decision in the Indian Afetals
case, relied on the Rao Co111mittee report and also opined that the report
was bound to be of use to the Central Government as well as the State E
Govcrnn1cnt of Orissa in regard to their future policy in the matter of grant
of chromite leases.

The High Court of ()rissa \Vas, therefore, of the vie\v that in deciding
to rcne\v TISCCJ's lease, thl: Central Government should have considered F
• the Rao Committee report as well as the decision of this Court in Indian
flletals case and for its failure to de .so, the High Court struck <lo\vn the
orders of the Central Govcrnn1cnt rene\ving TISC()'s lease. The l-ligh
Court directed the Committee that \Vas to be set up, to consider the issue
keeping in mind the Rao Con1n1ittee report, this Court's decision in Indian G
Afetals case, the National Mineral Policy and all other factors relevant
under the Act. Before the High Court, the learned counsel for T!SCO put
forth a preliminary objection; he argued that since the n1attcr concerned
the issue of renc,val of TISC()'s lease, the other parties before the High
Court had no locus stancU in vie\v of the express bar in Rules 59 and 60 of
the Rules. After considering these subn1issionsi the High Court, while 1-I
818 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A directing the constitution of a Committee lo look into the matter, made the
following observations:

"As we arc of the view that the Central Government should
consider afresh and as Mr. B.M. Patnaik has submitted that the
Central Government has no objection to consider afresh, there is
B no bar and/or impediment if the Central Government considers
the proposal of subsequent renewal of lease of TISCO by giving it
opportunity of hearing which may be effected in presence of the
other petitioners who have come to this Court. Nevertheless, it is
submitted that the Central Government has no obligation to invite
c other intending parties besides the \VTit petitioners in the case at
the time of disposal of the application for a subsequent renewal
of the lease at the instance of TISCO, this Court finds that by the
ultimate result other writ petitioners are consequently to be af-
fected by renewal, part renewal or refusal of the lease in favour of
TISCO. They may be heard by way of fair play and in compliance
D
with the principles of natural justice, and to enable them to place
on record such necessary facts for essential consideration by the
Central Government. It is made very much clear that only in the
event of availability of the area occupied by TISCO, State Govern-
ment \Vill consider their prospectiv~ applications in accordance
E with law."

The Committee which was appointed by the Central Government
pursuant to the directions of the High Court of Orissa, consisted of senior
officers from the Ministry of Mines, the Indian Bureau of Mines and the
F Geological Survey of India. Tt.e Chairman of the Committee on Sukinda
Valley Chromite Lease of Tata Iron & Steel Corporation Ltd. (hereinafter
called The Comrnittec'') \Vas Shri S.D. Sharma, Joint Secretary, Ministry
11

of mines. The Committee \Vas required to submit its report \Vithin two
weeks. In view of the express directions of the High Court, the Committee
gave a personal hearing to the advocates appearing for TISCO, FACOR,
G !CCI, !MFA, JSL and !spat Alloys and thereafter, submitted its report
which extends lo four hundred and fifty-one pages.

In its voluminous report, complete with elaborate anncxures, the
Committee has dealt with many of the legal issues that have been canvassed
H before us and also with other technical considerations involved in the
•
TATA IRON AND STEEL CO. LTD."· U.O.l. [AHMADI, CJ.] 819

mining of chrome ore in the Sukinda Valley. ll would,thercforc, be ap- A
propriate for us to cxan1ine the rcco1nmcndaLions of the Committee an<l
their basis for putting them forth.

In its <.inctlysis of lhc sub1nissions of the variou.s parties before it, the
Connnittec first dealt \Vith the issue of the relevance of the Rao Con1n1ittee
and the decision of this Court in Indian Metals case lo the present dispute. B

The learned counsel appearing for TISCO before the Committee
attacked the Rao Report on several grounds. He pointed out that the High
Court had required the Central Government only to consider the Rao
Report and not necessarily to adopt its recommendations; he submitted C
that it would be open to the Committee to examine the correctness of the
legal and Factual premises of the Rao Report. He contended that since
TlSCO was not a party before the Rao Committee, its report was not
binding for the purposes of considering TJSCO's lease. He further urged
that the Rao Report does not, in essence, uphold a principle of policy and
was superseded in many respects by this Court in the Indian Metals case. D
He contended that the Rao Committee did nol endorse the policy of
distributing leases on the basis of the captive 1nining requirc1nent of
industries and in the alternative argued that even if the Rao report \Vere
to do so, such a policy was unsustainable under the scheme of the Act and
the Rules and, at no point of time had the said principle been applied in E
determining the question of rene\va1 of lease or in <lcc;iding on whom the
right should be conferred.

The Commillce was of the firm opinion that the central Government
was required to take note of the Rao Report as it contains in1portant
findings~ guidelines and directions regarding the grant of chron1ite leases F
and supply of chromite ore to needy applicants in an equitable n1anncr.
The Con1mittec took note of the fact that, in reaching its final decision, this
Court, in the Indian /\feta/.\· case relied upon the findiQg~ of the Rao Report.
It also noted that Lhe High Court of Orissa had studied the Rao Report
and had required it to rely upon the findings therein. Finally, the Commit- G
tee took note of the observations of this Court in para 42 of the judgn1ent
of the Indian Metals case :

·· ..... the (Rao) report and its annexures arc bound to be of immense
help and value to the S.G. and C.G. in arriving at their decisions
not only on the various applications but also in regard to their H
820 SUPREME COURT REPORTS f1996] SUPP. 3 S.C.R.

A future policy in the matter of grant of chromite leases and of the
supply of chromite to the needy applicants in an equitable manner."

The Committee rejected the cont en lion of TlSCO that the Rao Report had
proviJed incorrect inforn1ation about TiSCO's 1nining lease. The Corn1nit-
tee relied upon the report of the Gopalachari Committee. which was
B constituted subsequent to the Rao Report to look into the issue of mining
leases in the entire country, to refute TISCO's contentions in this regard.
This being so, the Committee rejected the arguments put forth by TISCO
to dilute the significance of the Rao Report for the consideration of the
present dispute.
c Thereafter, the Committee analysed the National Mineral Policy,
1993 and the Industrial Policy of Orissa, 1992 lo obtain an understanding
of the concept of mineral development as envisaged by Section 8(3) of the
Act. Learned counsel for TISCO submitted that the concept of captive
mining was not really part of the National Mineral Policy and, though
D propagated by the Rao Report, this concept docs not find support from
the National Mineral Policy. The Con1111ittce ca1ne to the conclusion that
the National Mineral Policy, having been tabled before both Houses of
Parlian1ent, is a guiding factor in the decision making process of the
Government and, both in the National Mineral. Policy as well as the
E Industrial Policy of the State of Orissa, captive mining has been recognised
as a fundamental guideline in ·determining the criteria for granting mining
leases.

On the issue of equitable distribution of resources, in view of the fact
that TISCO held 55% of the total chromite resource of the country, the
F Committee was of the opinion that Article 39(b) and Article 14 of the
Constitution 1nust be taken into consideration for deciding the issue under
Section 8(3) of the Act.

Thereafter the Comn1ittec examined the requirements of Section
8(3) of the Act. The provision as it originally stood was amended in 1986
G and again in 1994. The application for renewal ofleasc was filed by TIS CO·
in the year 1991. On behalf of TISCO, a series of alternative arguments
was put forth to support TISCO's claim that it was entitled to a second
rene\val of its lease. There \Vas also an argu1nent that the la\V as it stood
after the 1994 amendment should apply to TISCO's case. However, the
H Committee took the view that the law applicable would be the law as it
TATA IRON AND STEEL CO. LTD. v. U.0.1.[AHMADI. CJ.] 821

stood between 1986 and 1994. Interpreting Section 8(3) of the Act, the A
Committee was of the view that TISCO could not claim to have any legal
right over the renewal of its lease for the second time and, if the Central
Government \Vas to rcne\V it~ it \Vould have to record reasons \vhy such a
measure \\'ould be in the interest of 111incral devclop1nent.

Moving on to the issue of \Vhether it \Vas necessary to rene\v the
B
mining lease of TISCO in the interest of mineral development, the Com-
mittee took note of the various arguments put forth by the learned counsel
appearing for TJSCO. The learned counsel submitted that TISCO had
played a pioneering role in the development of chromite and other
minerals in the area; had been doing scientific tnining in a manner that c
ensured optimum recovery; had taken steps for environmental manage-
ment; had complied with the provisions of all the relevant rules and
regulations; had n1ade massive investn1cnt in the leasehold area including
research and development efforts etc. and, are therefore, entitled lo the
rene\val of the cnti~e area in the interest of n1ineral develop111cnt. The D
learned counsel submitted technical reports to show that the technique of
mining adopted by TISCO \Vas in consonance \Vith prescribed practices.
He stressed on the fact that the Indian Bureau of Mines had sanctioned
the mining plan of TISCO and its operations had also met with the
requirements of the Gopalachari Con1mittee, set up by the Government of
India to rc\~ew mining practices across the country. To appreciate the E
technical arguments put forth by TISCO and the other parties before it,
the Committee undertook a vast examination of the technical details of the
mining of chromite ore including discussions on : mineablc reserve,
recoverable reserve and conditional reserves in the Sukinda Valley; the
status of geo-tcchnical and geo-hydrological studies; the existing status of F
1nining in the valley; infrastructural facilities; research and development
expenditure relating to mining in the valley; the relative merits and
demerits of shallow mining, open cast mining and underground mining; the
prices of chromite ore, etc.

After considering all these issues, the Con1mittee made its recon1- G
mendations. It prefaced the recommendations by stating that it was of the
firm opinion that it \vould be necessary in the interest. of mineral develop~
ment to authorise the renewal of chromite lease to TISCO under Section
8(3) of the Act strictly in terms of TISCO's requirement and keeping in
.. view the requirements of needy manufacturing industries. The Co1nmittee H
822 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
••
A was of the view that if renewal was granted to TISCO for the entire area
when they would, in effect, be needing and using only a small fraction of
the entire area, it could not be said that such a grant would be serving the
interest of mineral development or that of the national interest, particularly
when there were other needy manufacturers who had been facing serious
B problems for want of adequate raw material. The Committee felt that it
could not ignore the fact that the other parties had made huge capital
investments in establishing their industries and did not have adequate raw
materials. The Committee approved the principle of allotting leases to
different industries by laking into consideration their requirements for
captive mining and for doing so, it relied upon the Rao Report, the Ori"a
C fndustrial Policy and the National Mineral Policy. It was, therefore, of the
opinion that the best way of benefitting an established Chrome-based
industry \Vith a large ore consun1ptjon \Vas to provide a mine·o\vncr status
to the different industrial units. Thereupon, the Committee undertook an
analysis of the competing interests of the other needy manufacturers. It
D took note of the observations of the High Court of Orissa that it was not
the forum for distributing mining leases in favour of the other parties;
however, in order lo properly appreciate the issue, the Committee ex-
amined the need of the other parties as well as their problems of obtaining
raw matcria1s. While forming an cstin1ate of TISCO's requiren1ent, the
E Committee relied upon the documents submitted by TlSCO as well as
other relevant material. It noted the fact that in view of the scarcity of
chromite ore, repeated recommendations have been made that under-
ground mining must be planned and taken up for harnessing the available
chromite ore. However, over the last four decades during which TISCO
had held the lease, it had not relied upon the method of underground
F mining lo the required level. The Committee came to the conclusion that
open cast mining, which was being primarily employed by TISCO, has an
adverse effect upon the environment and the most effective way of lapping
the ore was the method of underground mining. It was, therefore, of the
view that TISCO should make efforts to initiate underground mining on a
G .large scale which would allow it to better exploit the ore within its lease-
hold area. The learned counsel for TISCO had put forth a number of
arguments expressing the difficulty of dividing or splitting its lease-hold
area. The Committee took into account these sub1nissions \vhile assessing
what it deemed should be the extent of TISCO's lease. In its view, which
H was formed after taking into account a host of technical factors, the
TATA IRON AND STEEL CO. J;fD. v. U.0.1. [AllMADl, Cl.J 823

appropriate area catering to TISCO's requirement would total 461 hec- A
tares. The Committee also formed an estimate of requirements of the other
parties appearing before it. In addition, it rt!commen<le<l the i111position of
special conditions which could be kept in mind while granting renewals or
fresh leases in future.

We may now set out the issut:s that we consider are central to the B
adjudication of the t!ispute before us :

i. Whether the High Court of Orissa was justified in striking down
the decisions of the Central Government dated June 3, 1993 and
October 5, 1993 on the ground that the requirement of Section c
8(3) of the Act had not been met;

ii. Whether the report of the Rao Committee and· that decision of
the Court in Indian Metals case are relevant for the consideration
of renewal of leases under Section 8(3) of the Act;
D
iii. Whether the High Court and the Committee were justifiet! in
hearing prospective applicants \vhile considering the issue of
renewal of TISCO's lease;

iv. Whether the Committee was justified in interpreting the concept
of "mineral t!evelopment" unt!er Section 8(3) of the Act as requir" E
ing the assessment of the captive mining requirement of different
industries and the application of the principle of equitable distribu-
tion of mining leases;

v. Whether the Central Government in its order dated August 17,
1995, had correctly analyset! the nect!s and requirements of TISCO
F
in recommending that it's lease be rene\ved over land measuring
406.00 hectares;

We will deal with them scliatwn.
G
1. Validity of the Orders of the Cencral G01•emme11t dated June 3,
1993 and October 5, 1993

The !carnet! counsel for TfSCO has contended before us that the
Court of Orissa had erred in holding the order dated June 3, 1993 as well
as the order dated October 5, 1993 which renewed TISCO's lease, as H
824 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R. •
A unsustainable in law. According to the learned counsel, both these orders
have complied with the requirements of Section 8 of the Act. Before we
analyse the provision, il must be noted Lhat this provision has undergone
several amendments. Changes \Vere \vrought into the original provision as
it stood in 1957 through amendments in 1986 and 1994. Since TISCO's
application for renewal was filed in 1991, both the High Court and the
B
Committee considered the provision as it stood prior to the 1994 amend-
ment, which is extracted as under :

'8. Periods for which mining leases may be granted or renewed-

c (l) The period for which a mining lease may be granted shall not
exceed l\venty years.

(2) A n1ining lease n1ay be rcne\vcd for l\VO periods each not
exceeding ten years :

D Provided that no mining lease granted in respect of a n1ineral
specified in the First Schedule shall be renewed except with the
previous approval of the Central Government.

(3) Notwithstanding anything contained in sub-section (2), if the
Central Govcrnn1ent is of opinion that in the interests of inineral
E dcvelopn1ent it is necessary so to do, it 1nay, for reasons to be
recorded, authorize the rene\val of a n1ining lease for a further
period or periods not exceeding in each case the period for which
the mining ]ease was originally grante<ln.

F Applying the provision to the facts of the present case, it becomes
clear that sub-section (1) would be applicable to the first application for
lease. Since TISC() already had a lease in existence \Vhen the Act can1c
into force, the first clause stood exhausted. When TISCO applied for the
renewal of its lease for the first time in 1973, sub-section (2), as it stood
prior to its amend1nent ln 1986, envisaged the gratll of a first rene\val for
G a single period of 20 years, which is why TISCO was granted a renewal till
1993. When, in 1991, TISCC) applied for the second renewal, the period of
time envisaged by sub-section (2) - which has always been of a total of
twenty years . had lapsed, and, clearly, that application would have had to
be treated as one to which sub-section (3) applied. TISCO's second
H renewal was granted by the Central Government's order dated June 3, 1993
• TAT/\ IRON AND STEEL CO. LTD. 1·. U.0.1. [Al lM/\DJ, CJ.J 825

which was limited by its subsequent order dated October 5, 1993. These A
orders conveying the acceptance of TISCC)'s lease have been analysed in
the impugned judgment. The High Court was of the opinion that they were
unsustainable since they did not meet with the requirement of Section 8(3),
which required reasons to be stated for reaching the decision that it would
he in the interest of mineral development to renew TISCO's lease. The
B
High Court noted that the Central Government had not taken into account
the National Mineral Policy and the report of the Rao Committee in
reaching its final decision. While inter 1ireting the language of Section 8(3),
ii took note of the speech delivered by the concerned Minister in Parlia-
ment who had, in defence of a motion to drop Clause 8(3), stated as under:
c
1
\Vc should an<l must envisage conditions, though very rare, in
' ......

\Vhich because of diverse circun1stances son1e rene\vals n1<:ty have
to be made beyond those specified in Clause 8."

From this, the High Court inferred that the subsequent renewal of
lease as envisaged and contemplated under Section 8(3) refers to 'very D
rare' circumstances \vhich may require rcne\vals to be n1ade. The Court,
therefore, held that the conditions \Vhich make for the rare cases and
diverse circumstances have to be clearly an<l pointedly articulated, for
\vhich the recording of proper and detailed reasons \Vas necessary.
E
It has been argued before . us that the High Court had erred in
referring to the .speech of the Minister as it \Vas made in a context other
than that which is permitted to be accepted as a tool of statutory inter-
pretation. \Ve are of the view, ho\vcver, that the issue can be decided
\Vithout locking horns with the controversy over the situations in which
utterances in the legislature are relevant for statutory interpretation. To us, F
the language of Section 8(3) is quite clear in its import. Ordinarily, a lease
is not to be granted beyond the time and the number of periods mentioned
in clauses (1) and (2). If, however, the Central Government is of the view
that to allow a iessce's lease to be renewed further would be in the interest
of mineral development, then, it is empowered to do so, provided there G
exist on record sound reasons for such an action and those reasons are
recorded. Since such a measure has been incorporated in the legislative
scheme as a safct,'llard against arbitrariness, the letter and spirit of the law
musl be adhered to in a strict n1anner.

We have studied the orders of the Central Government dated June H
SUPREME COURT RFPORTS 119'!6] SUPP. 3 S.C.R. •
A :i, 1993 and October 5, 1.993. The order dated .lune 3, 1993 is a statement
which declares the grant of a second renewal lo TJSCO. ][ does not profess
to givt.: any reasons for such a tlcci~ion and, for that reason, falls foul of
the requirement of Section 8(3), as has rightly been pointed out by the High
Court. The. order dated October 5 1993 is more generous in terms of the
1

reason~ it offers: ho,vevcr, the 1-Iigh Court \Va~ of the vie\V that, since it <lid
13
not take into account the Jindings of the Rao Report, the decision of this
Court in the lndian Metals case and the National Mineral Policy, it could
not have justified its decision as having been made after a proper analysis
of the interest of mineral development. This brings us to the consideration
of the second issue before us.
c
2. Relevance of the Rao Repmt and the decision of this Cou11 in the
Indian Metals case to the renewal of TISCO's lease.

The submissions made before us by the learned counsel for TISCO
D on this issue are a replication of those put forth before the Committee, and
need not be repeated. We may, therefore, proceed to analyse the decision
in the Indian Metals case. In that case, this Court was faced with a situation
\Vhere, through a series of Writ Petitions, the grant of rights for the mining
of chromite ore in the State of Orissa was challenged. The central issue
that arose for adjudication was whether, and to what extent, the parties
E before the Court were entitled to obtain leases for the mining of chromite
ore in the Stale of Orissa. Though the learned counsel for TISCO sought
to indicate that that case is distinguishable from the one on hand on
account of the fact that, while the former dealt with' the grant of fresh
licences, the present deals \Vith renewal of lease, \vhich involves a fun-
F damentally different assessment. We must, however, point out that, in
essence, both cases deal with the larger issue of mining of chromite ore in
the State of Orissa and, in vie\\' of this relation, it becomes necessary for
us to consider the views expressed therein.

In view of the nature of the issues before it, this Court appointed the
G Rao Committee to examine the matter. The Court then held that. the
findings of the Rao Committee would, for the purposes of the Act, be
treated as a decision of the Central Government. In paragraph 42 of its
decision, the Court expressed its appreciation for the detailed and excellent
report submitted by Dr. Rao; it further stated that he had brought together
H all the relevant data and analysed the various claims put forth before it
TATA IRON t\ND STEEL CO. LTD. v. U.0.1. !Al!Mt\DI, CJ.\ 827

\Vhilc also having ha<l a not~ on chronic <lcpo~its in Lhc State of ()risSa A
prepared by the Chief Mining Geologist of the Indian Bureau of Mines.
We have already extracted the portion of the decision where the Court had
stated th al the Rao Report \Vas bound to be of use to the State (iuvernmcnt
us \veil as the central Government in deciding grant of mining leases for
chro1nite.
B
It is clear from a study of the Indian Mewls ca.se that in the opinio;;
of this Court, the Ra0 Report had made such a comprehensive study of
the issue that it merited treatment as a decision of the Central Government.
l n our view, once this has been clearly slated by this Court, the Central
Government, though not bound to follow the recommendations of the Rao c
Report, \Va~ at the very least under an obligation to record reasons \vhy it
s011ght to depan from the recommendations of the Report; especially in
111atters such as these where leases of considerable co1nmercial value arc
granted for long periods of time.

We arc, therefore, of the view that the High Court and the Commit- D
tee \Vere justified in taking note of the findings of the Report as \Veil as the
observations of this Court in the Indian Metals case in considering the issue
of renewal of TISCO's lease.

Si!1cc the Order dated ()ctobcr 5, 1993 di<l not n1ake any reference E
Io lhe Rti.o Rcpo1t or the decision of this Court, \Ve feel that the High Court
\Vas justified in striking it do\\ n for not having taken into account al! the
1

factors relating to a proper appreciation of the concept of mineral develop-
n1cnl.

3. Locus standi of prospective applicants in proceedings co11sirie1ing F
lite renewal of TISCO's /ease.

llcforc the High Court, the learned counsel for TlSCO raised a
prelin1iuary objection as to the locus standi of the other petitioners, basing
his claim on Rules 59 and 60 of the Rules, the relevant portions of which G
are extracted as under :

''59. Availability of area for re-grant lo he notified - (1) No area-

(a) which was pre,iously held or which is being held under a
prospecting licence or a mining lease; or H
•
828 SU PR EMF COURT REPORTS 11996] SUPP. 3 S.C.R.

A (b) ............................................. .

( c) .......................... ··········· .. .

( d) .................................... .

B (c) ···············································
shall be available for grant unless -

(i) an entry to the effect tlwt the area is available for grant is
made in the register referred to in sub-rule (2) of rule 21 or
c 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 earlier than
30 Jays from the date of the publication of such notification
in the official Gazette) from which such area shall be available
D for grant:

Provided that

Provided f urthcr ......... .

E (2) The Central Government may, for reasons to be recorded in
writing relax the provisions of sub-rule (1) in any special case.

60. Premature applications. - Applications for the grant of
prospecting licence or mining lease in respect of areas whose
availability for grant is required to be notified under rule 59 shall,
F if, -

(a) no notification has been is;ued under that rule; or

(b) where any such notification has been issued, the period
specified in the nntific'-ltion has not expired;
G
be deemed to be premature and shall not be entertained, and the
application fee thereon, if any paid, shall be refunded."

The learned counsel for TISCO submitted that since, in respect of
the land that fell within TISCO's leasehold area, the State Government had
H neither m"de an entry in the concerned register that the area was available
• 41
•
• Tl>fA IRON AND STEEL CO. LTD. v. U.0.1. [AI-IMADI, CJ.] 829

for grant, nor had it notified its availability in the official Gazette, the A
applications of the other parties before this Court should be treated as
prc1nature applications· under Rule 60 and not be entertained. Hc there-
1

fore, submitted that none of the other parties could be regarded as ag-
grieved parties and, therefore, could not be said to have any interest in
these proceedings.
B
The learned counsel for .ISL countered by staling that any decision
... on the second renewal of TISCO's lease was bound lo affect the rights of

- the other parties. He argued that if the entire lease was renewed in
TISCO's favour, no part of it would be available for grant to them. He also
pointed out that TISCO's lease had expired on ,January 11, 1993 whereas c
the first order renewing TJSCO's lease was issued only on June 3, 1993.

- He contended that the State Government, which was dutybound to make
the relevant entry in the register and notify the area as being available for
grant, had neglected to do so. He then stated that, had the State Govern-
ment been mindful of its obligation, the applications of the petitioners
would not have been deemed to be premature under Rule 60 of the Rules
D
and would not have been rejected.

In its impugned judgment, the High Court adopted the view that the
other parties before it did have an interest in the proceedings regarding
renewal of TISCO's lease. Describing their interest as being of a contingent E
nature, the High Court stated that if the Central Government did not think
it fit to renew TISCO's lease, it would have to declare the area as available
for grant and would have to invite prospective applicants. In that situation,
the other parties would have a claim. The Court pointed out that, though
none of the other parties could, as a matter of right, claim to the heard
while the Central Government was considering the issue of renewal of F
TISCO's lease, since its two Orders in this regard had, in fact, adversely
affected their rights, the other parties would be entitled to challenge them.
In other words, according to the High Court, they were proper parties even
if not necessary parties.

While issuing directions to the Committee that was to be constituted
G
to ei;amine the issue at length, the High Court directed that the views of
the other parties also be taken into consideration. The other details regard-
ing this direction are mentioned in the portion of the impugned judgment
that \Ve have already extracted. The Committee, in compliance \Vith this
• direction of the High Court, heard TISCO as well as the other parties at H
830 SUPREME COURT REPORTS IJ996] SUPP. 3 S.C.R.

A length on a host of legal and technical issues.

It must also be noted that in ils order dated August 17, 1.995, the
Central Government had, in exercise of powers conferred on it by Rule
59(2) relaxed the requirement of Rule 59(1) to enable the other parties to
be granted leases.
B
We arc of the view that" the High Court had taken the correct step
in allowing the prospective applicants to put forth their points of view with
regard to the renewal of TISCO's lease. As we have already pointed out,
these issues involve considerably high stakes, both in terms of commercial ....
value and the effect that such a decision will have on the concept of mineral
c development and the consequent national interest. To that extent, those
likely to be affected and indeed, those who can legitinu1tely have a stake
in the proper formulation of such a vital policy, l:an be heard. No exception
can he taken to the High Court treating them as proper parties and
directing the Committee to hear !hem.
-
D
We, therefore, hold that both the high Court and the Committee
were justified in hearing the prospective applicants \Vhile considering the
i"uc of renewal of TISCO's lease.

4. Relevance of the c1ite1ion of captive requiren1ent of n1ining in-
E dusuies and the p1inciple of equitable distiibution of mining leases
lo the concept of mineral development under Section li(3} of the
Act.

The Con1mittec undertook a con1prehensi\'e analysis of the sub1nis~
sions n1adc by the counsel appearing for the various parties before it and
F also studied the relevant material in order to gain an understanding of the
concept of mineral development under Section 8(3) of the Act.

To this end, it analysed the entire scheme of the Act and studied
various Sections, \~Z., SccLion 3(c), Section 6, Section 8 and also the Rules
G with the benefit of the submissions of the learned counsel appearing for
the various parties. It also analysed the Rao Report, the National Mineral
Policy, 1993 and the Industrial Policy of the State of Orissa, 1992 to reach
its conclusions on this issue.

The Committee noted the following observation of the Rao Commit-
H tee:
' TATA IRON ANO STEEL CO. LTD. v. U.0.1. [AHMADI, Cl.[ 831

"The two laudable aspects of the State Government's policy in this A
regard - of reservation of the chromite areas for exploitation in the
public sector an<l provision of certain captive n1ining capacities to
the chromite based industries - need to he reconciled.'

It then noticed the observations of the 'Rao Report wherein, while
analysing the Industrial Policy Resolution, 1956, it had stated that the B
Policy envisages a predominant role for the public sector in es(ablishing
chrome ore industries, though the option of private enterprise being in-
volved in establishing new units was not closed. The Rao Report had, in
fact, observed that once an industry is established with the cooperation of
the private sector, it WOl.Jld only be fair and reasonable to make available c
to it a certain captive resource of chrome ore. To this end, the Rao Report

- had specifically recommended that the captive mmmg requirement be
provided for in the grant of the lease in question.

The Committee further noted the observations of the Rao Committee
that the cost. of production of the chro1nite ore in the case of captive mines D
is much lower than the cost of procurcn1cnt from other suppiicrs and,
therefore, dependence on others for chron1ite ore has an adverse in1pact
on the end user industry and this can be eliminated if captive mining is
promoted.

Thereafter, the Committee took note of paragraph 7.11 of the Na- E
tional Mineral Policy, 1993 where, while dealing with the strategy to be
employed for mineral development, it was clearly stated as follows :

; 11
ln case of ores \Vhose kno\vn reserves are not abundant,
preference will be given to those who propose to take up their F
mining for captive usc. 11

The Committee also recorded paragraph 15.2 of the Industrial Policy
of Orissa, 1992 where the following is stated :

"15.2. Persons who have firm proposals for setting up industries in G
the State for processing and value addition of minerals \\ill be given
priority in the grant of prospecting licenses and mining leases."

The Committee also recorded the submissions of the counsel for JSL

.. that preference for captive mines is a valid national policy, having beCn
incorporated in certain legislations such as the Coal Mines Nationalisation ,,}I
832 SUPREME COURT Rl'PORTS I19%1SUPP.3 S.C.R.

A Act, 1973, and is an important factor !o be considered in the interest of
mineral development.

Thereafter, the Committee came to the conclusion tliat the National
Mineral Policy, 1993, w!tich was tabled in both Houses of Parliament, had
resulted in amendments heihg carried out in the Act and the Rules and,
B being a policy pronounccn1ent, \Vas a guiding factor in 1he decision~n1aking
process of the Government. It further slated that both the National Mineral
Policy and the Industrial Policy of the State of Ori5'a had recognised the
fact that the captive mining requirement merited preferential treatment.

C While dealing with the applicability of the principle of equitable
distribution, the Committee took note of the observations, in parab'faphs
88 and 89 of the impugned judgment, made while a1wiysing the Rao
Committee Report. The High Court had noted that it had been in policy
of the State of Orissa to provide raw materials to those chromite based
industries \vhich \Vere O\Vnf!d by the private sector and also to cater to the
-
D requirement of nrnnufacturing industry within the State. The Rao Report
had further recommended that in doing so, the State Government should
act .iustly and equitably.

After n1aking a technical evaluation based on statistical inforn1ation,
E the Committee observed that the kaseholJ area of TISCO which was
sought to be renewed has chromite deposit of the order of atleast 102.44
million tonnes. Of this, the reserves upto a depth of JOO metres were
estimated at 39.49 million tonnes and the reserves below the depth of 100
metres \Vere esti1natcd at 62.95 n1illion tones. The total reported chromite
reserves in the country \Vere cstin1ated at 186 1nillion tonnes. Thus, the
F Committee came to the conclusion that the area in question (1261.476
hectares) held by TISCO possessed ahout 55% of the Chromite reserves
of the entire country. The Con1miltcc, therefore, posed the question
whether it would be in national interest. I.a permit a single party to per-
petuate its hold on such large reserves of this strategic mineral?
G Thereupon, the Committee analysed the provisions of Article 14 and
Article 39(b) of the Constitution which, in its view, were relevant for the
purpose of appreciating the issue under Section 8(3) of the Act. It then
ca1ne to the conclusion that, to grunt the rcnc\val of n1ining lease over an

H
area as large as that held by TISCO, in favour of a single applicant whose
O\Vn needs arc li1nitcdi \vhilc several needy tnanufacturcr!-. \Vere d-=privcd .•
, TATA IRON AND STEEL CO. LTD. v. lJ.O.L [AHMADI, CJ.] 833

of adequate sources of raw material, would be to promote 1ronopolislic A
tendencies which cannot be allowed.

For the foregoing reasons, the Committee was of the view that the
concept of "mineral development" under Section 8(3) of the Act requires
the assessment of the captive inining requirement of different industries as
also the application of the principle of equitable distribution of mining
B
leases.

The learned counsel for TJSCO sought to assail this approach of the
Committee. He began by pointing out that before the Rao Committee, the
State of Orissa had canvassed the view that the concept of an industry C
linked to captive mining is nol cm·isaged by the scheme of the Act, nor has

-
it been accepted as a matter of policy. This was for the reason that there
are n1ort.: industries than n1ines and, if every industry \Vas entitled to a mine,
1nore industries \vould be starved rather than served and such a policy
would nol be feasible. He further submitted that even the Rao Report had D
not given its enthusiastic approval to the concept of captive mining and
assuming that it had, its effect would be negatived by the fact that this
Court had in the Indian A1etals case expressly rejected the theory of captive
n1ining. Learned counsel furtht.;r subn1ittcd that the concept of captive
mining has been \Vrongly applied since no mining activity can be carried
out only for captive consumption. Different industries require varied E
grades of ore for their activities and a single mining a·rea cannot produce
a particular type of ore required by one industry alone. Consequently, he
submitted that such a condition would lead to ineffective exploitation of
the ore. TISCO's counsel further submitted that none of the other parties
who were before this Court to stake their claim for mining leases, had any F
industry of their o\vn \Vherc the chromite ore could be used for manufac-
turing purposes and, therefore 1 they were not in a position to use it for
captive consu1nption. Hence, he submitted, the argument of captive con-
sumption was wholly misplaced. He further contended that the Committee
had erred in applying the principle of equitable distribution of mining
leases; according to him the correct principle is that of equitable distribu- G
tion of mi:r..erals and not of mining leases.

We have studied the Con1mittee 1 s report on this is.sue and \Ve find
that most~ if not all, of these contentions have been dealt \Vith in the report..
We find it difficult lo accept the contention that the Rao Committee had H
,.
834 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A not endorsed the concept of captive mining because, as we have already
mentioned, it docs in fact do so. Having studied the decision in the Indian
Metals case, we find that on the issue of the requirement of captive mining,
this Court had expressly refrained from giving an opinion on the issue as
it <lid not arise for its consideration; however, it did recornn1cnd that
chromite ore be supplied to needy applicants in an equitable manner. It
B
must he pointed out that nowhere in the Rao Report not in the report of
the Committee, has the requirement of captive mining been interpreted to
mean that every industry within the State would, by reason of its existence,
he entitled to a mining lease. The captive requirement of an industry is a
factor that has to be kept in mind while granting leases but, it is to be done ,
C on a comparative scale. While the Central government exercises its discre-
tion in granting or rene\ving a lease, it is clear that the capacity of an
industry to effectively exploit the ore, will be a predominant consideration.
The submission of the learned counsel that none of the other parties before
this Court required the mineral ore for captive consumption cannot be
D accepted. This aspect has been specifically examined by the Committee al
pages 260-263 of its report. In order to properly appreciate the issue of
-
captive "consumption, the Co1n1nittec exan1incd the needs of the other
parties before it. It stated that each of these parties had manufacturing
industries which produce value-added products and earn considerable
foreign exchange for the country, and it \Vas therefore of the view that an
E analysis of their total rcquircn1ent was necessary in the interests of mineral
development as also that of the nation. Based on the information supplied
to it, the Committee thereafter made an assessment, for a Iota! period of
50 years, of the captive and net requirements of !CCL, !MFA, FACOR
and .ISL. Al page 349 of its report, the Committee has also taken note of
F the projected captive and net requirements of !spat Alloys. This being a
finding of fact that has been recorded by the Committee, we have to accept
that the argument of captive consumption does have a basis in the facts of
the present case. On the issue of the application of the principle of
equitable distribution, we are of the vie\v that the Committee had, after
having taken note of the prevailing situation and the problems faced by
G needy manufacturers, taken the correct vie\V in recommending its im-
plementation.

We are, therefore, of the view that the Committee had correctly
interpreted the relevant material available for appreciating the concept of
H "mineral development" and adopting the stance that it encompassed the
·•
TATA IRON AND STEEL CO. LTD. v. U.O.l. [AHMADI, CJ.] 835
•
concept of captive mining as well as the principle of equitable distribution. A

5. Validity of the Cc/lira/ Gove111111ent's order dated August 17, 1995
which declared that renewing TISCO's lease over an area of 406
hectares ivould satisjj.• its needs and require111e11ts.

The Committee made an estimate of the captive mining requirement B
of each of the parties appearing hefore it after coming to the conclusion
that this was a fundamental guideline to be kept in mind while renewing
TISCO's lease.- To complete this exercise, it relied upon the submissions
of coupsel, technical evidence submitted by them and the relevant technical
information available. In the case of TISCO, after taking into account all C
the technical grounds and objections put forth by the learned counsel for
TISCO, the Committee came to the conclusion that its lease should be

- granted renC\Val for a period of 20 years over a contiguous area of 461.
hectares.

By its order dated August 17, 1995, the Central Government while
endorsing the finding of the Con1mittee rccon1mendcd to the State Govcrn-
D

n1cnt that TlSCCJ's lease he rcnc\ved for 20 years over a reduced area of
406 hcctar~s. The reasons for the reduction \Vere also provided.

The decision of the Committee and the consequent order of the
Central Government have been assailed by the learned counsel for TJSCO
E
on a number of technical grounds. Many of these have already been dealt
with by the Committee.

At this juncture) \Ve think it fit to make a fe\V observations about our
general approach to the entire case. This is a case of the type where kgal F
issues are intcrt\vined with those involving determination of policy and a
plethora of technical issues. In such a situation, courts of law have to be
very \vary and 1nust exercise their jurisdiction \Vith circUTI}5pection for they
must not transgress into the realn1 of policy making, unless the policy is
inconsistent with the Constitution and the laws. ln the present matter, in G
its impugned judgment, the High Court had directed the Central Govern-
n1ent to set a Con1mittee to analyse the entire gamut of issues thrO\Vn up
by the present controversy. The Central Government had consequently
constituted a Committee comprising high level functionaries dra\vn fron1
various Governmental/institutional agencies \Vho \Vere equippc<l to deal
\Vith lhe entire range of technical and long-term considerations involved. H
836 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A This Committee, in reaching its decision, consulted a number of policy
documents and approached the issue from a holistic perspective. We have
sought to give our opinion on the legal issues that arise for our considera-
tion. From the scheme of the Act it is clear that the Central Government
is vested with discretion lo determine the policy regarding the grant or
B renewal of leases. On matters affecting policy and those that require
technical expertise, we have shown deference lo, and followed the recom-
mendations of, the Committee which is more qualified to address these
issues.

We arc, therefore, of the view that the Central Government was
C justified in issuing its order dated August 17 ,1995. •
For the foregoing reasons, we arc of the view that the High Court

D
and the Committee were justified in the view they took. Consequently the
appeals filed by TlSCO stand dismissed. IDCOL has filed the appeals on
much the same grounds a,s TISCO while additionally claiming that the
Committee should have heard its claim too while hearing the other parties.
Since \Ve have heard thc111 ut length, the grievance docs not survive. Hence
IDC()L's appeals n1ust also fail. Cost, cost in the cause.
-
R.A. Appeals dismissed.