Supreme Court restores State's renewal order, upholds power to relax rules in mineral development case

The Supreme Court allowed the appeal, setting aside the High Court's judgment that quashed the renewal order. The State Government's renewal order dated 22nd May 2003 was restored, with the Court finding that the State Government had the authority to treat the appellant's application as a continuation of the original applicant's and to relax the rules. The allegations of malafides were dismissed for lack of specific evidence, and the Court affirmed the State Government's power to relax rules in the interest of mineral development.

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Issues Involved:
1. Validity of the transfer of the quarry lease.
2. Compliance with Rule 9(2) and Rule 9(3) of the Orissa Minor Mineral Concessions Rules, 1990.
3. Allegations of malafides in the renewal process.
4. State Government's power to relax rules under Rule 31.

Detailed Analysis:

1. Validity of the Transfer of the Quarry Lease:
The appellant company, Medley Minerals India Private Limited, was formed by Jitendra Kumar Lohia and his family members. Jitendra Kumar Lohia initially held the quarry lease No.192, which he applied to transfer to the appellant company on 15th October 1998. The competent authority approved the transfer on 5th February 2003, for the unexpired period up to 10th February 2003. The transfer was subject to conditions, including that the controlling interest in the company could not be transferred to outsiders without prior permission. The appellant company executed a deed of indenture with the State Government and Jitendra Kumar Lohia on 7th February 2003, which included stipulations binding the transferee to the lease's original terms.

2. Compliance with Rule 9(2) and Rule 9(3) of the Orissa Minor Mineral Concessions Rules, 1990:
Jitendra Kumar Lohia applied for the renewal of the quarry lease on 11th October 2002, well before the 90-day limit required by Rule 9(2). After the lease transfer, the appellant company also applied for renewal on 7th February 2003, in continuation of Lohia's application. The State Government granted the renewal on 22nd March 2003, for a further 10 years, effective from 10th February 2003. The High Court quashed this renewal, citing non-compliance with Rule 9(2), as the appellant's application was not made at least 90 days before the lease expiry. The Supreme Court, however, found that the State Government was justified in treating the appellant's application as a continuation of Lohia's application and had the authority to relax the rules.

3. Allegations of Malafides in the Renewal Process:
The fourth respondent alleged malafides in the renewal process, claiming favoritism towards the appellant. The Supreme Court dismissed these allegations, noting that malafides must be specific and demonstrable, and the person accused of malafides must be given a chance to respond. The Court found no evidence of personal malafides, only legal malafides, which did not hold up under scrutiny.

4. State Government's Power to Relax Rules under Rule 31:
The appellant argued that the State Government had the power to relax the rules under Rule 31 "in the interest of mineral development." The Supreme Court agreed, stating that the State Government was within its rights to treat the appellant's renewal application as a continuation of Lohia's application and to relax the 90-day rule. The Court acknowledged that the State Government's order cited the wrong rule for relaxation but deemed this a minor error, as the substantive power to relax the rules existed.

Conclusion:
The Supreme Court concluded that the High Court erred in quashing the renewal order. The appeal was allowed, the High Court's judgment was set aside, and the State Government's renewal order dated 22nd May 2003 was restored. No order as to costs was made.

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