TaxTMI 
TaxTMI 
1994 (9) TMI 360
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....ri-vileges claimed by the parties and the obligations and the duties cast upon the authorities in such contingencies and many other questions which may relevantly arise for consideration by the Court are of considerable significance to the public at large and they require adjudication and resolution by a larger Bench. Accordingly these appeals are posted before us. 2. To appreciate the contentions raised before us, which we shall refer to presently, it would be necessary to notice the factual background which gave rise to these appeals. There are large extents of lands bearing gray varieties of barytes in Anantarajupet village and Mangampet village-erstwhile Inam village of Cuddapah District. The Government of Andhra Pradesh issued orders in' G.O.Ms. No. 27, Industries and Commerce (Mines. III) Department dated January 7, 1974 declaring that the Barytes Ore bearing areas in the villages of Mangampet and Anantarajupet of Cuddapah District except those already leased out were reserved with immediate effect for exploitation in the public sector. In pursuance of the said orders, the Government of Andhra Pradesh (hereinafter referred to as the 'lessor-State') sanctioned t....
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.... exclusive exploitation by the lessee-Corporation and ordered cancellation of the sub-leases granted by the lessee-Corporation in favour of the pattedars-sub-lessees for mining operations of Barytes which is reflected in G.O.Ms.No. 402, Industries & Com-merce (Mines I) Department dated December 1, 1993. Further to the orders issued in the said G.O.Ms.No. 402, the Government of Andhra Pradesh withdrew, with immediate effect, the consent granted to the lessee-Corporation to enter into sub-leases of lands bearing Barytes Ore in Anantarajupet and Mangampet of Cuddapah District with the pattedars sub-lessees in G. O.Ms.No. 4^7, Industries and Commerce (Mines. I) Department dated December 7, 1993. In compliance with the said orders, the lessee-Corporation cancelled the sub-leases. The legality of the said G.O.Ms.Nos. 402 and 417 and the consequent cancellation of the sub-leases were assailed by the pattedars-sub-lessees in the above said writ petitions. 4. The learned single Judge who dealt with these writ petitions came to the conclusion that before passing the impugned orders directing cancellation of the sub-leases and withdrawal of the consent, the Government have not given an opp....
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.... In any event, submits the learned Advocate General, assuming the Court has rightly come to the conclusion that the impugned orders are bad for want of notice or for non-compliance of S. 4A of the Act, the writ petitions ought not to have been allowed as it resulted in reviving void orders and perpetuating the illegality. 6. The learned Additional Solicitor General appearing for the Union of India and the 2nd respondent in these appeals, brought to our notice the contents of para 3 of the counter-affidavit to the effect that the matter relating to sub-leases does not fall within the purview of the Central Government, but is within the purview of the State Government. However, he submits that the State Government was not competent to grant consent under R. 37 of the rules, which is not attracted where the area has been reserved for exploitation by a Public sector undertaking. He elaborated his submission with reference to R. 59 which provides, inter alia, that an area which has been reserved for exploitation by a public sector undertaking is not available for grant of leases; if a sub-lease is granted in respect of such area by the lessee-Corporation, it would be contrary to the ....
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....nd of violative of the provisions of the Act and the Rules, the learned Senior Counsel submits that the impugned orders themselves are not based on those grounds and that the impugned orders cannot now be improved or supported on grounds other than those mentioned in the orders. Referring to the clauses in the sub-lease deeds where under the sub-lessees have agreed not to claim any damages in the event of termination of subleases due to withdrawal of consent or taking of policy decision to determine sub-leases, the learned counsel argued that the clauses themselves being void cannot be given effect to and that having regard to the cases put forth by the parties before the learned single Judge no new plea can be allowed to be raised at the stage of appeal. On the question of the absence of prior consent of the Central Government in W.P.Nos. 18499 and 19537 of 1993, the learned counsel puts his case on two grounds viz., that it was not the case of the lessor-State in the impugned order and there was no plea that for want of the consent of the Central Government, the sub-leases would be void. 8. Shri J. V. Suryanarayaria Rao the learned counsel appearing for the respondents in W.A ....
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....he acquisition of all mineral bearing lands in Mangampet and neighbouring villages while taking simultaneous steps to dispose of litigation pending in the courts. The lands thus acquired may be handed over to the Andhra Pradesh Mineral Development Corporation Limited, a Public sector undertaking, to exploit the mines fully. The committee has further recommended that in view of the acquisition of the entire mineral bearing areas and entrusting them to the Corporation with powers to exploit the minerals fully, the need for tripartite agreement disappears and, therefore, the tripartite agreement which become a source of many irregularities may be cancelled immediately and that all mineral lands be entrusted to the Corporation for its exclusive exploitation. 3. Government have decided to accept the recommendations made by the House Committee and accordingly order cancellation of all existing subleases to mine barytes entered into between the Andhra Pradesh Mineral Development Corporation Limited and the sub-lessees. A.P. Mineral Development Corporation Limited is directed to take action accordingly in accordance with law and report compliance to Government. &nb....
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....indiscriminatelv. I submit that the decision of the Government was totally justified and is well within its competence. The main objective was to maximise the production in a scientific way and to go for systematic mining. Issuance of any notice in this regard-would defeat, the very purpose, assuming without admitting that the situation demands issue of notice! It may be reiterated that the sub-leases are purely contractual, without any statutory flavour and giving of notice is not only not contemplated but is also not at all necessary." It is seen that even the counter-affidavit does not refer to any specific power in the contract of sub-lease. However, the learned Advocate General has invited our attention to CIs. 15 and 16 of the deed of sub-lease executed by the'lessee-Corporation'in favour of Mr. Y.S. Raja Reddy, the petitioner in W.P. No. 18538 of 1993. It may be appropriate to read the said clauses here: "15. The lessee reserves the right to terminate this sub-lease in the event of any violation of the terms and conditions/ default/breach of contract and the sub-lessee shall be responsible for all damages that accrue. 16....
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....eed of sub-leases. 15. Now we consider it appropriate to decide the question whether on the facts and in the circumstances of the case, the judgment under appeal can be sustained, because if it can be upheld, then it would be unnecessary to go into the other aspects relating to the merits of the case. Therefore, we shall consider whether the impugned order directing premature determination of the sub-leases without complying with sub-sec. (3) of S. 4A of the Act and the order withdrawing the consent without issuing notice to the pattedars-respondents are valid in law. 16. At the outset, we would point out that the impugned order directing termination of sub-leases does not purport to be issued under Section 4A of the Act. But the fact is not determinative of source of power if such an order can be passed under that section in law. As the learned single Judge has tested the validity of the impugned order on the touchstone of S. 4A of the Act and that finding is assailed before us, we shall examine this aspect in the first instance. It will be useful to refer to S. 4A of the Act in so far as it is relevant for our purposes:-- "4A. Termination of prospectin....
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....ng of the provisions extracted above makes it clear that: subsection (1) deals with the premature termination of a prospecting licence and mining lease in respect of any mineral other than a minor mineral; (2) it is the Central Government which has to form an opinion, after consultation with the State Government, as to whether it is expedient to direct premature termination of lease; (3) the ground for such an action are: (a) in the interest of regulation of mines and mineral development; (b) preservation of natural environment; (c) control of floods; (d) prevention of pollution; or (e) to avoid danger to public health; or (f) communications, or (g) to ensure safety of buildings, monuments or other structures, or (h) for conservation of mineral resources, or (i) for maintaining safety in the mines, or (j) for such other purposes as the Central Government may deem fit; (4) On formation of such an opinion, the Central Government has to request the State Government ....
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....were illegal and void, there was no obligation on the State Government to comply with the requirements of Section 4A of the Act for premature termination of the sub-leases granted in favour of the pattedars, whereas Sri Kapil Sibal contended that the sub-leases were entered into in pursuance of the tripartite agreement under which the pattedars gave their consent for mining operations by the Corporation-Lessee on their patta lands and as a consideration thereof, the 'Lessor-State and the 'Lessee-Corporation agreed to grant sub-leases of parcels of land and accordingly sub-leases were duly granted with the consent of the State Government, therefore, the sub-leases are valid and the premature termination of the sub-leases without complying with thtre-quirements of Section 4A of the Act is wholly illegal. 19. These contentions lead us to the inquiry into the question -- Was the grant of sub-leases valid in law ? 20. Here it will be useful to refer to paragraph 3 of the impugned order of the Government dated 1-12-1993, extracted above, which shows that the Government (Lessor State) has taken a policy decision to accept the recommendations of the House-Committee and ordere....
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....." 23. Thus sub-rule (3) empowers the State Government to determine any lease in writing at any time if in its opinion the lessee has committed: (i) a breach of sub-rule (1), or sub-rule (1A), or sub-rule (IB); or (ii) has transferred any lease or any right, title or interest therein otherwise than in accordance with sub-rule (2). The proviso appended to this sub-rule enjoins that the lessee shall be given a reasonable opportunity of stating his case before determining the lease. The learned Advocate General has contended that context of Rule 37 otherwise requires so in the rule, sub-lease cannot be included within the meaning of the mining lease. Reading the rule, as a whole, we find considerable force in the submission of the learned Advocate General and we do accede to it. 24. The power under sub-rule (3) of Rule 37, in our view is available to determine only a mining lease for it is meant to be exercised when there is breach of sub-rules (1), (la) or (1B) or violation of sub-rules (2) of Rule 37 and in the instant case, the source of power to issue the impugned G. O. Ms. No. 402 is not, and in our view, rightly sought to be derived from this sub-rule obviously because the....
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....espect to the regulation and development under the control of the Union. 29. From the above discussion it follows that in view of declaration under Section 2 of the Act, the State is denuded of legislative powers to enact any law in respect of regulation of mines and mineral development, hence the State can claim to executive power touching any aspect of regulation of mines and mineral development. 30. It will be useful to refer to the judgment of the Supreme Court in State of Orissa v. M. A. Tulloch & Company, [1964] 4 SCR 461 on this aspect. In the said case, the scope of provisions of the Act vis-a-vis the provisions of the Orissa Mining Areas Development Fund Act (Act 27 of 1952) came up for consideration of the Supreme Court. By the impugned Orissa Act, the State Government was empowered to levy fees on a percentage of value of mined ore for the development of mining areas. The competence of the State Legislature to pass the Orissa Act, was questioned on the ground that the Central Act covered the entire field of mineral development and that being the 'extent' to which Parliament had declared by law that it was expedient that the Union should assume control the f....
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....sp;[1970] 2 SCR 100 , Bihar State Legislature amended the Bihar Land Reforms Act, under Entry 23 of List II of the Schedule VII of the Constitution. By virtue of the amendment, the ex-landlords ceased to have any interest and the State of Bihar became the Lessor under the State Act. The State demanded rent and royalty from the Lessees who got the land under the leases prior to coming into force of the Act. The amendment was challenged as unconstitutional. Following the judgment in State of Orissa v. M. A. Tulloch & Company (1st supra), the Supreme Court held that the Union had taken all the powers to itself and authorised the State Government to make rules for the regulation of leases and that by the declaration and the entrustment of Section 14, the whole of the field relating to the minor minerals came within the jurisdiction of Parliament and no scope was left for the enactment of the second proviso to Section 10(2) in the Bihar Land Reforms Act and therefore the said enactment was without jurisdiction. 32. We may also note here the well settled principle that under Article 162, the executive power is co-extensive with the power of the legislature to legislate and that execut....
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....p; xxx xxx xxx (3) xxx xxx xxx xxx From a perusal of the above extracted provision it is evident that it does not impojse absolute prohibition on the lessee to transfer the lease but it imposes an obligation on the lessee to obtain previous consent in writing of the State Government if it intends to assign, sub-let, mortgage or transfer in any other manner, mining lease or any right, title or interest therein or if he intends to enter into or make any arrangement contract or understanding whereby he will or may be directly or indirectly financed to a substantial extent by, or under which his operations or undertakings will or may be substantially controlled by any person or body of persons other than the lessee. We do not consider it necessary to refer to the other requirements of the rule having r....
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....ot adjudicate such causes exercising its jurisdiction under Article 226 of the Constitution and would leave the parties to work out their rights in a competent Civil Court. This is not an absolute rule of law creating bar on the exercise of jurisdiction of the High Court under Article 226 of the Constitution but a factor which the High Court takes into consideration in the exercise of its extraordinary and discretionary writ jurisdiction. On the facts ef that case, it, was held that no right or obligation of the Writ Petitioner arising out of the contract of sub-leases was sought to be enforced against the State and that what was questioned therein was the executive action of the State which interfered with the rights of the petitioner. It was also laid down therein that having regard to the facts and circumstances of that case the power of the State Government to terminate the lease under sub-rule (3) of rule 37, did not embrace the power to suspend the consent granted to the lessee to enter into sub-lease with a pattedar. 37. It is now contended by the learned Advocate-General that Section 21 of the General Clauses Act confers power on the State Government to withdraw the cons....
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....n 21 of the General Clauses Act can apply to the provisions of a Statute only where the subject-matter, context and effect of such provisions are in no way inconsistent with such application and it was held that the said section did not apply to Section 10(1) cif the Industrial Disputes Act to enable the Government to cancel or supersede the order of reference. 40. The recent judgment of the Supreme Court in State of Madhya Pradesh vijay Singh, AIR 1993 SC 825 relied upon by the learned Advocate General is of no assistance to the appellants. There, the question was whether, in exercise of the powers under S. 21 of the General Clauses Act, the government can reconstitute the Commission of Inquiry appointed under the Commissions of' lnquiry Act, 1952. It was held that the power to rescind any notification, conferred under Section 21 of the General Clauses Act was inapplicable in the scheme of the Commissions of Inquiry Act and: that it could not be invftked to enlarge the Government's power to reconstitute the Commission constituted under Section 3 of the. Act in a manner other than that expressly provided in that Act itself and that as there was no express Power given by ....
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....l is that as the sub-leases are void ab initio and of no effect, the petitioners should not, be granted any relief in the writ petitions as it would amount to perpetuating illegality. We have already referred to Mr. Kapil Sibal's contention on this aspect and that is, the plea that the sub-leases are void was neither the case to the appellants in the impugned orders nor before the learned single Judge, so they cannot defend or support the orders on the grounds other than those mentioned in the orders itself as it would amount to improving the impugned orders which is impermissible. The principle that the impugned order cannot be supported on grounds other than those mentioned in the impugned order is too well settledto admit ofany debate on it. The Constitution Bench of the Supreme Court in Mohinder Singh v. Chief Election Commissioner, [1978] 2 SCR 272 , laid down that when a statutory functionary made an order based on certain grounds, its validity must be judged by the reasons so mentioned and could not be supplemented by fresh reasons in the shape of affidavit or otherwise and that otherwise, an order made in the beginning might, by the time, it came to the Court on account....
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....without the previous consent in writing of the State Government and in the case of mining lease in respect of any mineral specified in the First Schedule to the Act, without the previous approval of the Central Government,-- (a) and (b) x x x The result of the above amendments is that in respect of Barytes bearing area, no-Iease can be granted by the State Government to any person except with the previous approval of the Central Government and no transfer of a mining lease of Barytes can be consented to by the State Government without the previous approval of the Central Government. 49. The challenge by the appellants on the validity of the sub-leases is that the area out of which the sub-leases were granted, was reserved by the State Government for exploitation by public sector undertakings under Rule 58 of the Rules in January, 1974. So, it ceased to be available for grant of leases and also'sub-leases under Rule 59, as such the consent given under Rule 37 being violative of Rules 58 and 59, is rendered void and of no effect by S. 19 of the Act. This contention is met by the sub-lessees urging that reservation of an area under....