Section 17A(2) of the Mines and Minerals (Regulation and Development) Act, 1957 provides an independent, overriding power to reserve mining areas for government corporations, which is not precluded by prior directions regarding private applicant preferences under Section 11, provided Central Government approval is obtained.

Headnote:(A) Mines and Minerals (Regulation and Development) Act, 1957 - Section 17A(2) - Reservation of area for Government company - Power under Section 17A is an independent, overriding statutory power and is not related to the power available under Section 11 - The State Government, with the approval of the Central Government, may reserve any area not already held under any prospecting licence or mining lease for undertaking mining operations through a Government company or corporation owned or controlled by it - The exercise of this power is not precluded by prior judicial directions relating to the distribution of the area among private applicants - A decision to retain resources with the State to ensure just and equitable distribution of minerals and for the protection of the environment constitutes a valid policy decision - Courts have limited scope to interfere with such policy decisions unless they are found to be irrational, unreasonable, or patently illegal. (Paras 15, 16, 17, 18, 19, 21)

(B) Mines and Minerals (Regulation and Development) Act, 1957 - Section 11(5) - Preferential right for grant of mining lease - While the State Government may grant a mining lease to an applicant whose application was received later in preference to an earlier applicant, such a grant must be for special reasons to be recorded - The grant of a lease to a subsequent entrant without recording special reasons to override the preference of earlier applicants is not justified, legal, or proper. (Paras 11, 28, 29)

(C) Mineral Concession Rules, 1960 - Rule 59 - Compliance with the rules for the grant of a lease is mandatory; non-compliance with the prescribed rules vitiates the proposal to lease. (Para 30)

Facts of the case:
A substantial area of land previously held under a mining lease became available for grant after a renewal was partially denied. While various private entities applied for leases, the State Government recommended the grant of a portion of the remaining area to a later applicant and the balance to a government-controlled corporation. The former was challenged as an "out-of-turn" lease, and the latter was challenged on the grounds that the State Government ignored prior judicial directions to distribute the area based on the recommendations of designated committees.

Findings of Court:
The recommendation to grant the balance area to the government corporation under statutory power is valid and not precluded by previous directions. However, the grant to the later applicant is set aside as it lacked the required recorded special reasons and violated relevant rules.

Issues: Whether the State Government could invoke its power under Section 17A(2) to reserve area for a government corporation despite prior directions regarding distribution among private applicants, and whether the grant of an "out-of-turn" lease to a later applicant without recorded special reasons was legally sustainable.

Ratio Decidendi: The power under Section 17A(2) to reserve area for a government corporation is an independent and overriding statutory power that remains available until a grant is actually made. Such power cannot be precluded by prior directions concerning the preference of private applicants under Section 11. Conversely, a grant to a later applicant under Section 11(5) requires specific recorded reasons to override earlier applicants' preference; in the absence of such reasons and compliance with applicable rules, the grant is invalid.

Result: Appeals of the State Government and the government corporation are allowed; appeals of the private entities are allowed to the extent of setting aside the grant to the subsequent entrant. Decisions of the High Court are set aside.

Legal Category Hierarchy

JUDGMENT

P.K. BALASUBRAMANYAN, J.

1. M/s Indian Charge Chrome Limited (hereinafter referred to as, "I.C.C.L.") has challenged the decision of the Orissa High Court in O.J.C. No. 1830 of 1999 in Civil Appeal Nos. 8501 and 8502 of 2002. In Transferred Case (C) No. 9 of 2002, which was withdrawn to this Court from the High Court of Delhi, the same Company had challenged by way of C.W.P. No. 4230 of 2001 the grant of approval for what it called an out of turn lease to M/s Nava Bharat Ferro Alloys Ltd. (hereinafter referred to as, "Nava Bharat"), respondent No. 3 in the Civil Appeals. Whereas, the Writ Petitions in the Orissa High Court challenged the recommendation of the State Government, the Writ Petition in the Delhi High Court challenged the grant of approval by the Central Government to the lease in favour Nava Bharat.

2. M/s GMR Technologies & Industries Limited (hereinafter referred to as, "GMR") filed O.J.C. No. 2236 of 2002 in the High Court of Orissa challenging the decision of the State Government to grant a lease of the extent of 436.295 hectares to the Orissa Mining Corporation Limited (hereinafter referred to as, "OMC") against a recommendation to grant a lease to it of an extent of 43.579 hectares out of it. The said Writ Petition was allowed by the High Court of Orissa and the said decision is challenged by OMC in C.A. No. 6787 of 2004 and in C.A. No. 6788 of 2004.

3. M/s Jindal Strips Ltd. (hereinafter referred to as, "JINDAL") challenged in the High Court of Orissa by way of Writ Petition No. 7575 of 2003 the decision of the State Government to recommend the grant of the lease in favour of OMC ignoring its own claim for a lease and the said Writ Petition was got transferred to this Court and is numbered as Transferred Case No. 21 of 2005. This case also challenges the recommendation of the State Government for grant of a lease to OMC of the remaining extent of 436.295 hectares.

4. The proposal of the State Government to grant a lease to OMC was also challenged by I.C.C.L. before the Orissa High Court in Writ Petition (C) No. 1326 of 2005 and that is sought to be got transferred to this Court by way of Transfer Petition No. 928 of 2005. Similarly, M/s Ferro Alloys Corporation Limited (hereinafter referred to as, "FACOR") also challenged the recommendation of the State Government for grant of lease to OMC by filing Writ Petition (C) No. 5960 of 2005 in the High Court of Orissa and the same is sought to be got transferred to this Court in Transfer Petition (Civil) No. 701 of 2005. Nava Bharat, in its turn, challenged the proposal to grant a lease to the OMC, in Writ Petition (Civil) No. 6459 of 2005 in the High Court of Orissa and the same is sought to be got transferred to this Court by way of Transfer Petition (Civil) No. 932 of 2005. Balasore Alloys Limited, formerly known as Ispat Alloys Limited (hereinafter referred to as, "ISPAT") filed Writ Petition (Civil) No. 3767 of 2005 in the High Court of Orissa challenging the very same proposal to grant a lease to OMC and that Writ Petition is sought to be got transferred to this Court in Transfer Petition (Civil) No. 446 of 2005.

5. Thus, the challenges in all these appeals, transferred cases and the cases covered by the transfer petitions, are to the proposal for grant of a lease of an extent of 84.881 hectares to Nava Bharat, the denial of a lease to GMR and the recommendation of the State Government to grant a lease of the entire remaining extent of 436.295 hectares (which includes the extent of 84.881 hectares proposed to be leased out to Nava Bharat) to OMC. Considering that the questions to be decided in the appeals and transferred cases by this Court are the same as the ones raised in the writ petitions in the High Court that are sought to be transferred to this Court, the transfer petitions are allowed and the cases withdrawn thereby are also disposed of by this Judgment. Arguments have been addressed in all the matters.

6. This litigation has had a