2005 Supreme(SC) 1496

2005(8) Supreme 33
Supreme Court of India
(From Orissa High Court)
Arijit Pasayat & R.V. Raveendran, JJ.
M/s. Kabini Minerals Pvt. Ltd. and Anr. —Appellants
versus
State of Orissa and Ors. —Respondents
Civil Appeal No. 8078 of 2004
Decided on 18-11-2005
Counsel for the Parties :
For the Appellants : K. Swami and Mrs. Prabha Swami, Advocates.
For the Respondent Nos. 1-3 : Mrs. Kirti Mishra, Advocate.
For the Respondent No. 4 : Jayant Das, Sr. Advocate, Ajit Pudussery, K. Vijayann and Aditya Narayan Das, Advocates.

Headnote:Orissa Minor Mineral Concession Rules, 1990—Rule 6—Grant of quarry lease for “decorative stones” in favour of respondent No.4 despite appellant also having had applied for lease earlier in time—Writ Petition challenging decision of State Government was dismissed by High Court holding that case of respondent No. 4 was covered by Rule 6(6-a)(i) and it had priority over appellant—Appeal—Contention that merely because respondent No.4 had purchased a sick unit which was not functional priority under the Rule was not available—Rule provided for priority to a person who had already set up an industry for processing of such minor minerals—Letter of Corporation showed that unit taken over by respondent No. 4 was operating i.e. running unit—Question was whether unit had been set up and not whether it was running—Expression “setting up” meant “to establish” and was contradistinction to “commence”—Impugned order suffered no illegality.

       Held : On a reading of the language of Rule 6 it is clear that three types of precedence/priority are embodied in the provision. First is a normal case where the application which has been received earlier is given precedence over the latter application. An exception is carved out in sub-rule (5-a) to the effect that if the State Government is of the opinion that in the interest of mineral department it is necessary to do so it may for reasons to be recorded in writing grant quarry lease in preference to the applications made earlier. Sub-rule (6) deals with another category of priority. In the present case Sub-rule (6) does not have much relevance. Sub-rule (6-a) carves out a category of applicants who have applied for minor minerals of the enumerated categories i.e. all types of rocks used for decorative, industrial or export purpose including dimension stones. The present case relates to priority as provided in the said Sub-rule. It provides for priority to a person who has already set up an industry for processing of such minor minerals. From the documents placed on record more particularly the letter of the Corporation dated 23.5.2003 it is clear that M/s. Valley Granites (P) Ltd. was operating a running unit. The letter in clear terms states that possession of the unit was handed over to respondent No. 4 and the unit is being run by the said Company. (Para 6)

       The question really is whether the unit had been set up and not whether it was running. Undisputedly, prior to its take over by respondent No. 4 the industry had been set up and used for processing of decorative stones. Though, it was contended by learned counsel for appellants that by the time the applications were made the respondent No. 4 had not taken over the unit yet that really is of consequence. Appellant No. 1 had also not set up an industry. It had merely entered into an agreement for purchasing the land and placed orders for the machineries. The expression ‘set up’ has a definite connotation of its own. (Paras 8 and 9)

       The question of priority is to be adjudged only at the time of consideration of the applications. Undisputedly, respondent No. 4 had taken over the unit on the date the applications were considered. Therefore, the stand of the appellants that at the time the applications were made by respondent No. 4 it had not set up an industry is really without substance. As was observed by this Court in Indian Metals & Ferro Alloys Ltd. v. Union of India and Ors. (AIR 1991 SC 818), since the applicant had already set up an industry for processing minor minerals on the date of consideration of the application its claim for priority was to be judged on the basis of the factual position on the date of consideration of the applications. (Para 12)

       It is to be noted that in a case covered by sub-rule (5-a) the State Government has to objectively assess as to whether in the interest of mineral development preference is given to a person though he made the application later. In such a case the Government’s opinion that in the interest of mineral development it is necessary to do so obviously has an objective angle involved and, therefore, there is necessity to record reasons. So far as Sub-rule (6-a) is concerned, there is no requirement indicated to record reasons. The fact that priority is given to a person who has already set up an industry is itself the reason for giving priority. Therefore, the enumeration of the order of priority is itself the reason inbuilt in the process of consideration of the applications. That itself is the foundation and forms the rational for the priority given. It is not the case of the appellant that the order of priority is irrational. That being so, stand of learned counsel for the appellants that reasons were not recorded and, therefore, the action is vitiated is really of no consequence. (Para 14)