1. Mining lease granted by State Government — Review application to Central Government under Mineral Concession Rules, 1949 — Cancellation of lease without hearing the grantee. (Para 1 , 2 )
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1960 Supreme(SC) 11
SUPREME COURT OF INDIA
19th January, 1960.
B.P. SINHA, C.J.I., P.B. GAJENDRAGADKAR, K.N. WANCHOO, K.C. DAS GUPTA AND J.C. SHAH, JJ.
Shivji Nathubhai, Appellant
Versus
Union of India and others, Respondents.
Civil Appeal No. 428 of 1959.
Advocates appeared
Mr. N. C. Chatterjee, Senior Advocate, (M/s. J. B. Dadachanji, S. N. Andley, Rameshwar Nath and P. L. Vohra, Advocates of M/s. Rajinder Narain and Co., with him), for Appellant; Mr. C. K. Daphtary, Solicitor-General of India, (M/s. R. Ganapathi Iyer, R. H. Dhebar and T. M. Sen, Advocates, with him), for Respondents Nos. 1 and 2; Mr. G. S. Pathak, Senior Advocate, (Mr. S. S. Shukla and Mrs. E. Udayaratnam, Advocates, with him), for Respondent No. 3.
Advocates:
C.K.DAFTARY, E.UDAYARATHNAM, G.S.PATHAK, J.B.DADACHAN, N.C.CHATTERJI, P.L.VOHRA, R.Ganapathy Iyer, R.H.Dhebar, RAJINDAR NARAIN, RAMESHWAR NATH ROY, S.N.ANDLEY, S.S.SHUKLA, T.M.SEN
C.K.DAFTARY, E.UDAYARATHNAM, G.S.PATHAK, J.B.DADACHAN, N.C.CHATTERJI, P.L.VOHRA, R.Ganapathy Iyer, R.H.Dhebar, RAJINDAR NARAIN, RAMESHWAR NATH ROY, S.N.ANDLEY, S.S.SHUKLA, T.M.SEN
An order passed by a statutory authority reviewing a grant made to one party upon the application of an aggrieved party is quasi-judicial. Such authority must adhere to the principles of natural justice and provide the affected party a reasonable opportunity to be heard.
Headnote:(A) Mines and Minerals (Regulation and Development) Act, 1948 - Section 6 - Mineral Concession Rules, 1949 - Rules 52, 53, 54 and 55 - Order of Central Government on review application - Nature of order - Whether quasi-judicial or administrative - When a statutory rule allows an aggrieved party to apply for review of a grant made to another, a lis is created - In the absence of anything in the statute to the contrary, the authority is duty-bound to act judicially - Decision of such authority is a quasi-judicial act to which principles of natural justice apply. (Paras 8, 9)
(B) Quasi-judicial body - Definition - A body of persons having legal authority to determine questions affecting rights of subjects and having the duty to act judicially. (Para 6)
Facts of the case:
A party was granted mining leases for certain areas by the State Government. A competing applicant, aggrieved by the refusal of the lease, applied for review to the Central Government. The Central Government allowed the review and directed the State Government to grant leases for some of those areas to the review applicant, thereby cancelling the original grantee's rights. The original grantee was not given an opportunity to be heard before the review order was passed.
Findings of Court:
The order passed by the Central Government under the relevant rules was quasi-judicial in nature. Consequently, the failure to provide a reasonable opportunity to the affected party to represent their case constituted a violation of the principles of natural justice.
Issues: Whether an order passed by the Central Government under Rule 54 of the Mineral Concession Rules, 1949, while deciding a review application, is a quasi-judicial order or a mere administrative order.
Ratio Decidendi: A lis arises when a statutory provision allows an aggrieved party to seek review of an order granting a benefit to another. Unless the statute explicitly excludes the duty to act judicially, the reviewing authority must follow the principles of natural justice, including the right of the affected party to be heard. The power to act as the authority deems "just and proper" does not negate the duty to act judicially.
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether the Central Government's order on review of a mining lease is quasi-judicial, requiring adherence to natural justice, or merely administrative. (Para 3 , 4 )
3. A review application creates a lis between the grantee and the aggrieved party, necessitating a judicial approach unless the statute explicitly provides otherwise. (Para 5 , 6 , 7 , 8 , 9 )
4. An authority determining questions affecting the rights of subjects where a lis exists must act judicially, ensuring a reasonable opportunity for affected parties to be heard. (Para 6 , 8 , 9 )
5. Appeal allowed — Order of Central Government quashed — Remanded for fresh decision after providing the appellant a reasonable opportunity to be heard. (Para 10 )
6. What constitutes a quasi-judicial act?
A quasi-judicial act requires that the body has legal authority to determine questions affecting the rights of subjects and a duty to act judicially. If a statute empowers an authority to decide disputes between contesting parties, it is prima facie a quasi-judicial act. (Para 6 )
7. When is a lis created in the context of a statutory review of a government grant?
A lis is created when a statutory rule allows an aggrieved party to apply for review of a grant made to another person, as the decision directly affects the rights of the original grantee. (Para 8 )
8. Does the power to act as the authority deems just and proper negate the duty to act judicially?
No. Requiring an authority to act justly and properly is consistent with the duty to act judicially. The discretion to decide without calling for records does not remove the obligation to follow principles of natural justice. (Para 9 )
Judgment
WANCHOO, J. : This appeal upon a certificate granted by the Punjab High Court raises the question whether an order of the Central Government under R. 54 of the Mineral Concession Rules, 1949, (hereinafter called the Rules) framed under S. 6 of the Mines and Minerals (Regulation and Development) Act, No. 53 of 1948, (hereinafter called the Act) is quasi judicial or administrative. The brief facts necessary for this purpose are these. The appellant was granted a mining lease by the then Ruler of Gangapur State on 30-12-1947, shortly before the merger of that State with the State of Orissa on 1-1-1948. This leave was annulled on 29-6-1949. Thereafter the appellant was granted certificates of approval in respect of prospecting licences and mining leases. Eventually, the appellant applied on 19-12-1949, for mining leases for manganese in respect of five areas in the district of Sundergarh (Orissa). He was asked on 4-7-1950, to submit a separate application for each area which he did on July 27, 1950. Some defects were pointed out in these applications and therefore the appellant submitted fresh applications on 6-9-1950, after removing the defects. In the meantime, the third respondent also made applications for mining leases for manganese for the same area on 10-7-1950. These applications were not accompanied by the deposit required under R. 29 of the Rules. Consequently, the third respondent was asked on 24-7-1950, to deposit a sum of Rs. 500, which he did on 3-8-1950. It was then found that the third respondent s applications were defective. It was therefore asked on 5-9-1950, to send a separate application in the prescribed form for each block and thereupon it submitted fresh applications on 6-9-1950. Eventually. On 22-12-1952, the State of Orissa granted the mining leases of the five areas to the appellant taking into account R. 32 of the Rules, which prescribed priority. It was held that the appellant s applications were prior and therefore the leases were granted to him. Thereafter on 21-4-1953, possession of the areas leased was delivered to the appellant. It seems however, that the third respondent had applied for review to the Central Government under R. 52 of the Rules. This review application was allowed by the Central Government on 28-1-1954, and the Government of Orissa was directed to grant a mining lease to the third respondent with respect to two out of the five areas.
2. The appellant s complaint is that he came to know in February, 1954, that the third respondent had applied to the Central Government under R. 52 for review. He thereupon addressed a letter to the Central Government praying that he might be given a hearing before any order was passed on the review application. He was, however, informed on 5-7-1955, by Government of Orissa of the order passed by the Central Government on 28-1-1954, by which the lease granted to him by the State of Orissa with respect to two areas was cancelled. Consequently, he made an application under Art. 226 of the Constitution to the Punjab High Court praying for quashing the order of January 28, 1954, on the ground that it was a quasi-judicial order and the rules of natural justice had not been followed inasmuch as he had not bee given a hearing before the review application was allowed by the Central Government, thus affecting his rights to the least granted by the State of Orissa. The writ petition was heard by a learned Single Judge of the High Court and it was held that the order was not a quasi-judicial order but merely an administrative one and that there being no lis, the appellant was not entitled to a hearing. In the result, the writ petition failed. The appellant went up in Letters Patent Appeal to a Division Bench of the High Court, which upheld the order of the learned Single Judge. The appellant then applied for a certificate to permit him to appeal to this Court which was granted; and that is how the matter has come up before us.
