IMPORTANT POINT
The first set of appeals have become infractuous except to one about which govt. has to determine when consent was given to take appropriate steps. The second set of appeals are partly allowed to the extent High Court has wrongly granted the relief of extension of sub-leases subject to certain observations of the Apex court in this judgment.

Headnote:(i) Mines and Minerals (Regulation and Development) Act, 1957-Section 4-A-Mineral concession Rules, 1960-Rules 37, 37A, 57, 58 and 59(1)-In first set of appeals, appellant calling in question order of the Full Bench of AP High Court dated 2.9.1994-Validity & legality of two notifications dt.10.2.1975 and 19.3.1983 withdrawing the permission granted earlier to sub-lease the mining lands in question-During appeal, Mining leases coming to an end by offence of time except in one case-Result-Appeals have become infructuous except the one for which Govt. is to take appropriate steps-Order accordingly.
       Held : The sub-leases granted in all these cases except one in favour of the V. Ramalingaiah comprised in Survey Nos.83/1, 8 to 10, 84/2, 20 and 22, measuiing about 1 acre 89 cents, have expired either in the year 1985 or 1988 and in case of C. M. Ramanatha Reddy it had expired in the month of June, 1998 while in case of others it had expired in the month of September 1998. The relief sought for in the writ petitions is in relation to cancellation of the sub-leases. On that aspect the writ petitioners succeeded while the Government and the Corporation could not sustain the action taken by them. Now when the mining leases have come to an end by efflux of time and the term of those sub-leases have already expired, it will be an academic exercise to examine the various contentions urged in these appeals. Therefore, we are of the view that these appeals filed either by the private parties or by the Government and the Corporation have become infructuous. Thus the first set of appeals are disposed as having become infructuous, except to the extent indicated in case of Sri V. Ramalingaiah. From the facts available on record Sri V. Ramalingaiali obtained sub-lease pertaining to land comprised in Survey Nos. 83/1, 8 to 10, 84/2, 20 and 22, measuring about 1 acre 89 cents on 17.5.1991. It is not clear as to whether this lease is granted pursuant to the earlier general permission obtained from the Government in respect of all subleases under Rule 37 or any separate permission was secured from the Government and on what date. Therefore, it becomes necessary to examine as to when the consent was given in his case. Let the Government determine if the consent in this case has been given subsequent to the amendment of Rule 37 of the Rules. The sub-lease may get affected if it is later than 20.2.1991, when amended Rule 37 of the Rules came into effect, and if it is earlier than 20.2.1991, it may not, and it is open to the Government to take appropriate steps in his case. (Paras 13, 14 & 15)
       (ii) Mines and Minerals (Regulation & Development) Act, 1957-Section 4A-Minerals Concession Rules, 1960-Rule 37-Set of appeals State Govt. granting lease to A.P. Mineral Development Corporation-Sub-lease granted by corporation-No prior permission obtained from Central Govt.-Whether void abintio u/s 4A or under Rule 37-High Court Full Bench answering in negative-Whether correct ? (Yes).
       Held : Under Section 4A of the Act the restriction to grant lease without permission of the Central Government is upon the State Government and not upon the Corporation to which the State Government had already granted lease. Hence, lease being void ob initio would not arise. The consent to grant the sub-leases had been given a long before to coming into force of the amendment to Rule 37 of the Rules and inasmuch as in all sub-leases (except in the case of V. Ramalingaiah, which came into existence only in the month of May, 1991, i.e., after 20.2.1991, the date of amendment) this amended rule which required a prior approval of the Central Government is not required and, therefore, the contention that the sub-leases are void ob initio would not arise. Therefore, the view taken by the Full Bench on this aspect is correct. (Para 21)
       (iii) Constitution of India-Articles 226 & 136-Mining lease and sub-lease-Decision on validity or otherwise of the lease-Order for damages or specific performance or restoration of property whether could be granted by High Court under writ jurisdiction-Extension of sub-lease period after the expiry of original lease by High Court-Whether proper ? (No) Appeals allowed in part to that extent-For claim of damages-Proper course indicated-Order accordingly case laws referred.
       After referring case law
       Held : Where the breach of contract involves breach of statutory obligation when the order complained of was made in exercise of statutory power by a statutory authority, though cause of action arises out of or pertains to contract, brings within the sphere of public law because the power exercised is apart from contract. The freedom of the Government to enter into business with anybody it likes is subject to the condition of reasonableness and fair play as well as public interest. After entering into a contract, in canceling the contract which is subject to terms of the statutory provisions, as in the present case, it cannot be said that the matter falls purely in a contractual field. Therefore, we do not think it would be appropriate to suggest that the case on hand is a matter arising purely out of a contract and, therefore, interference under Article 226 of the Constitution is not called for. This contention also stands rejected. The fact that the cancellation of sub-leases or withdrawal of consent being void flowing from the order of the Full Bench decision of the High Court has also been noticed by this Court in its interim order dated 6.10.1994 and hence the High Court proceeding on that basis in its order is not incorrect. There was, therefore, no impediment for the High Court to find out whether there is breach of contract so as to enable the parties to claim damages or the liability of the Corporation or the Government to make good the same. For the sake of convenience, we will proceed to examine first the question as to the exercise of discretion by the High Court in extending the period of lease or sub-lease after its original period had expired.
        (Paras 22, 23, 24 & 25)
       After referring AIR 1954 SC 105
       Held : There are at least three weighty reasons as to why the period of sub-lease could not have been extended after the expiry of period of original lease and they are:-
        (i) In most of the present cases, the interruptions in respect of which the claim is made is for a period of about 10 months and in one other case an additional period of 6 ½ months. In some cases the lease having expired as early as in the year 1995 or in others in 1998, it would not be appropriate to direct the extension of lease in the year 2001 particularly when the sub-leases have expired as a result of which the parties have to re-establish their infrasructure and put in great deal of logistical support, though for a short period once over again., to work the mines which will have a pernicious effect on the mines and the parties concerned.
        (ii) The claim for renewal of leases has been refused already as the policy of the Government is not to grant lease or sub-lease in favour of private parties. Now to ask to the Government to enter into fresh contracts will be contrary to its policy.
        (iii) When several malpractices had been pointed out by House Committee, it would not be in public interest to extend the period of lease which will perpetuate the same.
       Therefore, the High Court ought not to have exercised its discretion for extension of period of sub-lease. For the reasons aforesaid, we think, it would be appropriate to set aside the order made by the High Court, and allow these appeals to the extent the High Court has granted the relief of extension of the sub-leases. (Paras 27, 28, 29)
       Held further : Insofar as claim for damages is concerned, it is unnecessary for us to decide the same inasmuch as it would be appropriate for the parties to work out their respective rights by making an appropriate claim in a civil suit to be filed by each one of them. We have refused the relief of restitution by way of extension of lease period without examining the question as to whether there is breach of contract as a consequence of which the party aggrieved is entitled to damages. That aspect is left open to be considered or be dealt with in the civil suit irrespective of and uninfluenced by the observations or findings of the High Court on this aspect. If such a civil suit is filed, the cause of action should be reckoned only from the date of this order when we finally pronounced upon the rights of the parties, which protection will adequately take care of the interests of the writ petitioners. (Para 30)
       Held finally (in second set of appeals) : Subject to the aforesaid observations, the second set of appeals shall stand partly allowed. No costs. (Para 31)

JUDGMENT

Rajendra Babu. J.-In these two sets of appeals, the appellants are calling in question two orders made by two Full Benches of the High Court - one on September 2, 1994 and the other on March 4, 1996.

Civil Appeal Nos. 6656-6657/94. 6658-6659/94. 6642-6646/94. 6647-6650/94 & 6651-6655/94.

2. The Government of Andhra Pradesh declared, on 7.1.1974, that the barytes ore bearing areas in Mangampett and Anandarajpet of Cuddapah District are reserved exclusively for exploitation in the public sector however excluding the lands that had already been leased to private persons. By two notifications issued on 10.2.1975 and 19.2.1983, the Government of Andhra Pradesh granted mining leases over an extent of different areas in favour of the Andhra Pradesh Mineral Development Corporation [hereinafter referred to as the Corporation ]. On 6.1.1991, the Government of Andhra Pradesh accorded permission for grant of sub-lease by the Corporation subject to certain terms and conditions mentioned in G.O.Ms.No. 215 dated 22.4.1980. The Government of Andhra Pradesh by different orders accorded permission for grant of sub-lease for further extent of lands in the month of May 1991. The Government of Andhra Pradesh on 1.12.1993 took decision to put an end to all the existing sub-leases in order to enable the Corporation to carry on the mining operations directly and on 7.12.1993, the Government withdrew permission granted earlier to the Corporation to grant sub-leases in respect of certain areas.

3. The appellants in the first set of appeals challenged, by way of writ petitions before the High Court on the various grounds, the validity and legality of the said notifications withdrawing the permission granted earlier to sub-lease the mining lands in question. The learned Single Judge of the High Court allowed the writ petitions on the basis that the Government had not followed due procedure as contemplated under Section 4-A of the Mines & Minerals (Regulation & Development) Act, 1957 [hereinafter referred to as the Act ] and Rule 37 of the Mineral Concession Rules, 1960 [hereinafter referred to as the Rules ], Writ appeals were preferred against the same and the Division Bench referred the matter to a Full Bench.

4. In writ appeals Nos. 131/94 to 134/94 and 169/94 to 175/94, the Pull Bench of the High Court examined the questions raised before it by an order made on 2.9.1994. The Full Bench first considered the effect of clauses 15 and 16 in the deed of sub-lease executed by the Corporation. It was observed by the Full Bench that clause 15 reserved the right of the lessee Corporation to terminate the sub-lease if there is any violation of terms and conditions of the lease or default or any breach of contract and, therefore, the High Court felt that it was nobody s case that the Corporation has taken steps to pre-maturely terminate the sub-leases because none of the conditions for exercise of that right having arisen. It was also held that Clause 16 merely provided that in the event of termination of sub -leases any damage was to arise by reason of the State Government withdrawing the permission under Rule 37A of the Rules during the tenure of the leases or on account of any other governmental action, the sub-lessee is precluded from claiming damages from the lessee Corporation. Therefore, the Full Bench felt that neither Clause 15 nor Clause 16 is attracted to the case.

5. Next the Full Bench examined as to whether the order directing the premature determination of the sub-lease without complying with Section 4A(3) of the Act or withdrawing consent for sub-lease without notice is invalid in law. On examination of the scheme of The Act, the Full Bench found that undisputedly barytes is a major mineral and Section 4A(1) of the Act is attracted only in cases of major minerals and in the present cases, the State Government could not have exercised that power as available under Section 4A of the Act because that was reserved only to the Central G

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2001 Supreme(SC) 1298

Cases Referred (8)