Mining lease preference must follow statutory merit review before priority rules, and an illegal lease order remains open to challenge.

Competing mining lease applications must be examined under the statutory scheme on their merits before any priority based on earlier filing is applied; automatic preference for the first applicant is legally incorrect. The analysis also states that a writ challenge to the State's operative lease order is not defeated merely because the Central Government's revisional direction was not separately questioned, since an illegal administrative order does not become valid by being consequential to another erroneous order. The discussed consequence is that the lease grant is liable to be quashed and reconsidered in accordance with law.

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Issues: (i) Whether the State Government's grant of mining lease was bad in law because it treated the earlier application as automatically entitled to preference without first considering the competing applications under the governing statutory provisions; (ii) Whether the writ petition could fail merely because the petitioner did not separately challenge the Central Government's revisional direction.

Issue (i): Whether the State Government's grant of mining lease was bad in law because it treated the earlier application as automatically entitled to preference without first considering the competing applications under the governing statutory provisions.

Analysis: Where more than one application for grant of a mining lease is filed, the initial duty is to consider the applications on the footing required by the statute. Preference based on priority of filing does not arise mechanically. The statutory preference provision becomes relevant only after the applications are considered and found otherwise equal. The State Government granted the lease by applying an automatic priority approach and did not apply the correct statutory criteria. That approach was inconsistent with the governing law and could not stand.

Conclusion: The impugned lease order was illegal and liable to be quashed.

Issue (ii): Whether the writ petition could fail merely because the petitioner did not separately challenge the Central Government's revisional direction.

Analysis: The absence of a separate challenge to the Central Government's direction did not immunise the State Government's effective order from judicial review. An illegal order does not acquire validity merely because it was passed in consequence of another erroneous order. The Court therefore retained power to test the legality of the operative State action.

Conclusion: The writ petition was maintainable against the State Government's order.

Final Conclusion: The appeal succeeded, the State Government's order granting the lease was set aside, and the matter was remitted for fresh disposal in accordance with law and the controlling statutory interpretation.

Ratio Decidendi: In cases of competing mining lease applications, the authority must apply the statutory scheme by considering the applications on merits first, and preference based on earlier filing cannot be applied mechanically; an illegal administrative order remains open to judicial review even if it follows another erroneous order.

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