IMPORTANT POINT
State largesse ought to be distributed by non-arbitrary method consistent with Article 14 of Constitution.

Headnote:U.P. Minor Minerals (Concession) Rules, 1963 – Chapter IV – Grant of mining lease – e-tendering – State largesse ought to be distributed by non-arbitrary method consistent with Article 14 of Constitution – High Court quashed mining lease granted in favour of appellants vide orders dated 24th May, 2014 and 26th May, 2014 on ground that leases were granted in violation of Government Order (G.O.) dated 31st May, 2012 – Plea of appellants that they had acquired vested right prior to G.O. dated 31st May, 2012 cannot be accepted – Order dated 31st May, 2012 was issued by State of U.P. to bring about transparency and to safeguard Government revenue and was consistent with decisions of Apex Court in Article 14 of Constitution – High Court upheld stand of State that pendency of application did not create any right in favour of appellants – All applications pending as on 31st May, 2012 stood rejected including application of appellants – Appellants did not make application after changed policy dated 22nd October, 2014 and said G.O. had no application to present case – Stand of State of U.P. in supporting appellants cannot be approved – Appeals dismissed. (Paras 20 and 25)
       (2012) 3 SCC 1 ; (2012) 10 SCC 1 ; (2014) 9 SCC 516 ; (2014) 6 SCC 590 ; 2013(2) ADJ 166 ; 1981 (2) SCC 205 ; 2012 (4) SCC 629 ; 2014 (11) ADJ 89 ; 2012 (11) SCC 1 – Relied.
       Facts of Case:
       Point in issue centered around as to whether High Court was justified in quashing mining lease granted in favour of appellants vide orders dated 24th May, 2014 and 26th May, 2014 on ground that leases were granted in violation of Government Order (G.O.) dated 31st May, 2012. Under this order, mining leases could only be granted under Chapter IV of the U.P. Minor Minerals (Concession) Rules, 1963 (the Rules) by way of e-tendering in interest of transparency and to safeguard public revenue.
       Findings of Court:
       High Court upheld stand of State that pendency of application did not create any right in favour of appellants. All applications pending as on 31st May, 2012 stood rejected including application of appellants. Admittedly, the appellants did not make an application after changed policy dated 22nd October, 2014 and thus the said G.O. had no application to the present case. We are not called upon to decide validity of order dated 22nd October, 2014 in cancelling order dated 31st May, 2012. This question can be gone into as and when raised.
       Accordingly, appeals are dismissed. Interim order granted by this Court stands vacated. State will assess extent of pecuniary advantage taken by appellants under interim order and recover the same from appellants.
       Result – Appeals dismissed.

Judgment :

Adarsh Kumar Goel, J.

1. These appeals by special leave have been preferred against order dated 6th February, 2015 in Civil Misc. Review Application Nos.5064 and 5065 of 2015 and order dated 15th December, 2014 in Civil Misc. Writ Petition Nos.38034, 38064, 12622 and 12663 of 2014 passed by the High Court of Judicature at Allahabad.

2. The question for consideration is whether the High Court was justified in quashing mining lease granted in favour of the appellants vide orders dated 24th May, 2014 and 26th May, 2014 on the ground that the said leases were granted in violation of the Government Order (G.O.) dated 31st May, 2012. Under this order, mining leases could only be granted under Chapter IV of the U.P. Minor Minerals (Concession) Rules, 1963 (the Rules) by way of e-tendering in the interest of transparency and to safeguard the public revenue.

3. Appellants Sulekhan Singh and company were the petitioners in the High Court in Civil Miscellaneous Writ Petition Nos. 12663 of 2014. The appellants Manoj Kumar Sood and Makhan Singh were jointly the petitioners in the High Court in Civil Miscellaneous Writ Petition Nos. 12622 of 2014. They sought direction for grant of mining lease. Upon grant of lease in pursuance of interim order in their favour, Mohammad Aakil and Masihul Khan private respondents herein, sought cancellation of mining leases granted to the appellants.

4. The Mines and Mineral (Development and Regulation) Act, 1957 (MMDR) provides for development and regulation of mines and minerals. Section 15 provides for making rules by the State Governments for regulating grant of mining leases and other matters in respect of ‘minor minerals’. The State of U. P. framed the Rules in exercise of the said power. The Rules contain two sets of procedure for grant of mining lease. Chapter IV of the Rules provides for grant of lease by auction while Chapter II provides for grant of lease otherwise than by way of auction. Prior to 31st May, 2012, the leases were being granted in the State of Uttar Pradesh under Chapter II. G.O. dated 31st May, 2012 changed this practice, providing that:-

“To bring transparency in connection of approval of mining lease in the state, the decision has been taken to grant lease through e-tendering system by inviting tenders under the provisions of chapter-4 of Uttar Pradesh Minor Minerals (Concession) Rules, 1963. By this step, by lifting the minor minerals on remission, the transparency would increase and along with that competition would take place and due to that State Government would get maximum rate.”

5. The above change of policy appears to be consistent with the position of law that State largesse ought to be distributed by non arbitrary method consistent with Article 14 of the Constitution [(2012) 3 SCC 1 Centre for Public Interest Litigation Vs. Union of India; (2012) 10 SCC 1 Natural Resources Allocation, in Re, Special Reference No.1 of 2012; (2014) 9 SCC 516 Manohar Lal Sharma Vs. Principal Secretary and (2014) 6 SCC 590 Goa Foundation Vs. Union of India].

6. It is a matter of public knowledge that the Government of India appointed a Commission of Inquiry consisting of Shri Justice M.B. Shah, a former Judge of this Court, inter alia, to enquire into the deficiencies of management and regulatory and monitoring systems on account of which illegal mining could not be tackled, vide notification dated 22nd November, 2010. The Commission was also to suggest remedial measures. The said Commission gave its reports, including report dated March, 2012 (in respect of State of Goa), June, 2013 (in respect of the State of Odisha) and October, 2013 (in relation to the State of Jharkhand). In its report for the State of Goa, the Commission found that procedure for grant of lease/renewal of lease required streamlining for transparency. It was further suggested that the authority to decide the applications should be a committee headed by Additional Chief Secretary (instead of a lower rank officer) and

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2016 Supreme(SC) 8

SUPREME COURT OF INDIAANIL R. DAVE, ADARSH KUMAR GOEL, JJ.SULEKHAN SINGH & CO. & ORS - APPELLANTSVERSUSSTATE OF U.P. & ORS. - RESPONDENTSCIVIL APPEAL NOs.4845-4846 OF 2015 WITH CIVIL APPEAL NOS.4847-4850 OF 2015Decided on : 04-01-2016

IMPORTANT POINT State largesse ought to be distributed by non-arbitrary method consistent with Article 14 of Constitution.

Cases Referred (9)

SUPREME COURT OF INDIA
ANIL R. DAVE, ADARSH KUMAR GOEL, JJ.
SULEKHAN SINGH & CO. & ORS - APPELLANTS
VERSUS
STATE OF U.P. & ORS. - RESPONDENTS
CIVIL APPEAL NOs.4845-4846 OF 2015 WITH CIVIL APPEAL NOS.4847-4850 OF 2015
Decided on : 04-01-2016

IMPORTANT POINT
State largesse ought to be distributed by non-arbitrary method consistent with Article 14 of Constitution.