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Friday, March 13, 2015

when once M.L. No.2010 had come to an end by virtue of the surrender effected by M/s. Dalmia and accepted by the State Government, there was no legal right or power with the State Government or any authority acting on behalf of the State Government to consider the very application for transfer made at the instance of M/s. Dalmia on 4.2.2002 and for passing the order of transfer dated 16.3.2002. It can only be stated that such a decision taken and passed in the order dated 16.3.2002 was in total violation of the provisions of the MMDR Act and the Mineral Concession Rules. - the mines and mineral being national wealth, dealing with the same as the largesse of the State by way of grant of lease or in the form of any other right in favour of any party can only be resorted to strictly in accordance with the provisions governing disposal of such largesse and could not have been resorted to as has been done by the State Government and the Director of Mines and Geology of the State of Karnataka by passing the order of transfer dated 16.3.2002. Such a conduct of the State and its authorities are highly condemnable and, therefore, calls for stringent action against them.

                                                                  Reportable


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                      CIVIL APPEAL NO(S). 2818 OF 2015
                       (@ SLP (C) NO(S).32226 OF 2009)


M/s. Muneer Enterprises                                  ....Appellant


                                   VERSUS


M/s Ramgad Minerals and Mining Ltd. & Ors.        ....Respondents


                               J U D G M E N T


Fakkir Mohamed Ibrahim Kalifulla, J.

Leave granted.

This appeal is  directed  against  the  common  judgment  dated  26.08.2009,
passed in W.A.No.5377 of 2004 and W.P.No.23782 of 2005.

The writ appeal was preferred by the first  respondent  herein  against  the
judgment  in  W.P.No.31690  of  2003  of  the  learned  Single  Judge  dated
10.11.2004 in and by which the order of transfer of mining  lease  from  the
original licencee M/s. Dalmia Cements (Bharat) Limited  (hereinafter  called
"M/s. Dalmia") to and in favour of  the  first  respondent  herein  was  set
aside.

Writ petition in W.P.No.23782 of 2005 was filed by one Dinesh Kumar  Singhi,
a mine operator praying for a  direction  to  the  State  of  Karnataka  and
Director  of  Mines  and  Geology  to  dispose  of  his  application   dated
03.05.2001 for grant of licence  to  operate  819.20  acres  of  the  forest
mining area in Jaisinghpur village covered by  the  erstwhile  mining  lease
No.M.L.No.2010 of M/s. Dalmia.  We are not  concerned  with  the  said  writ
petition, as the said writ petitioner has not challenged the  order  of  the
Division Bench by which his  writ  petition  was  dismissed.   We  are  only
concerned with the judgment in W.A.No.5377 of 2004.

Having regard to the chequered history of  this  case,  the  detailed  facts
pertaining to the grant of mining lease with reference to  M.L.No.2010  over
an extent of 331.50 hectares (819.20 acres) of forest  area  in  Jaisinghpur
village, R.M.Block, Sandur Taluk, Bellary District  has  to  be  necessarily
stated. The said mining lease was  originally  granted  in  favour  of  M/s.
Dalmia on 25.11.1953.  The said lease expired on 24.11.1983.  Based  on  the
application of M/s.Dalmia Cements, the  mining  lease  was  renewed  for  20
years  with  retrospective  effect  from  25.11.1983  by  an   order   dated
07.03.1986.  It is required to be noted that  though  Forest  (Conservation)
Act, 1980, hereinafter called "The Forest Act, 1980" came into force  w.e.f.
from  25.10.1980,  the  requirement  of  prior  approval  of   the   Central
Government as prescribed in Section 2 of the said Act was not taken  at  the
time of first renewal.

Be that as it may, the effect of non-compliance of approval under Section  2
of the Forest Act, 1980 was the subject  matter  of  consideration  of  this
Court in the decision reported in T.N. Godavarman Thirumulkpad v.  Union  of
India & Ors.- (1997) 2 SCC  267  (Godavarman  I).  By  virtue  of  the  said
judgment, the Director of Mines and Geology,  the  third  respondent  herein
directed M/s.Dalmia to  stop  all  mining  activities  by  its  order  dated
25.01.1997.  M/s.Dalmia stopped its mining  activities  from  January  1997.
Based  on  the  subsequent  judgment  of  this  Court  in  T.N.   Godavarman
Thirumulkpad v. Union of India & Ors. - (1997) 3 SCC  312  (Godavarman  II),
the Ministry of  Environment  and  Forest  (MOEF)  granted  conditional  in-
principle (Stage-I) approval for renewal of M/s. Dalmia's mining lease  over
201.50 hectares of forest land out of 331.50  hectares  by  an  order  dated
24.12.1997.

By its letter dated 16.04.1999, M/s. Dalmia surrendered 196.58  hectares  of
land out of the leased area of 331.50 hectares to the Forest  Department  of
the  State  Government.  Subsequently,  M/s.  Dalmia  in  its  letter  dated
27.03.2001, expressed its desire to surrender the remaining area held by  it
indicating that such notice being given for determination of  the  lease  as
required under the terms of the mining lease deed and that the  lease  would
expire after 12 months notice period from 01.04.2001 or any time earlier  if
permitted by the State Government. In response to M/s.Dalmia's letter  dated
27.03.2001  by letter dated 25.05.2001, the office of the Director of  Mines
while communicating to one of its officers  marked  a  copy  of  its  letter
dated 25.05.2001 calling upon M/s.Dalmia to surrender its  lease  deed  book
and mining plan.  By letter  dated  16.06.2001  M/s.Dalmia  surrendered  the
lease deed book and informed that its mining plan was missing.

Subsequently, one M.S.P.L.  Limited,  through  its  Executive  Director  Mr.
Rahul Baldota applied for  grant  of  mining  lease  of  the  area  held  by
M/s.Dalmia through its application dated 21.07.2001.  It is necessary to  be
noted that the said Rahul Baldota is the husband of Mrs. Lavine  R.  Baldota
the Executive Director of the first respondent herein.  In  the  application
of M/s M.S.P.L. limited dated 21.07.2001  it was noted by  the  Director  of
Mines and Geology, namely, one Dr.Reddy on 25.08.2001, stating  among  other
things that  grant  of  mining  lease  of  surrendered  lands  can  only  be
considered as specified in Rule 59(1) of the Mineral Concession Rules.

Pursuant to such steps taken by M/s.Dalmia in its letter  dated  27.03.2001,
the suit bearing O.S.No.53  of  1993  filed  against  the  appellant  herein
relating to boundary dispute of the mines held by it was dismissed for  non-
prosecution on 26.09.2001.  By letter dated 09.01.2002  ,  the  Director  of
Mines and Geology directed its Deputy Director, Hospet to survey and  demark
the area covered by lease deed of the appellant  specifically  pointing  out
the dismissal of O.S.No.53 of 1993  by M/s.Dalmia.

On 30.01.2002, M/s.Dalmia made a payment of Rs.22,332/-  stated  to  be  the
arrears  in  respect  of  mining  lease  held  by  it  in  M.L.No.2010.   On
31.01.2002, the Director of Mines and Geology issued a  no  due  certificate
to M/s.Dalmia confirming the receipt of a  sum  of  Rs.22,332/-  by  way  of
Demand Draft from M/s.Dalmia.  However on 04.02.2002, M/s.Dalmia applied  to
the  State  Government  for  permission  to  transfer   its   mining   lease
M.L.No.2010 of  2010  including  the  196.58  hectares  said  to  have  been
surrendered by it in 1999 to the first  respondent  herein.   On  06.02.2002
the Director  of  Mines  and  Geology  viz.  Dr.Reddy  who  in  his  earlier
communication dated 25.08.2001 to M/s.M.S.P.L. Limited  informed  that  Rule
59(1) of Mineral Concession Rules  would  apply  for  grant  of  licence  in
M.L.No.1020,  this  time  recommended  for  the  transfer  of  licence  from
M/s.Dalmia to  the  first  respondent  herein.   On  16.03.2002,  the  State
Government passed orders allowing the application  for  transfer  of  mining
lease as applied for by M/s Dalmia in favour of the first respondent.

It was in the above stated background at the instance of the appellant,  the
order  dated  16.03.2002,  of  the  State  Government  was   challenged   in
W.P.No.31690 of 2003 in the High Court  of  Karnataka.  The  learned  Single
Judge of the Karnataka High Court allowed the said writ petition,  by  order
dated 10.11.2004.  Challenging the  same,  the  first  respondent  preferred
writ appeal  in  W.A.No.5377  of  2004.   By  the  order  impugned  in  this
petition, the Division Bench having set  aside  the  order  of  the  learned
Single Judge and restored  the  order  of  transfer  dated  16.03.2002,  the
appellant has come forward with this appeal.

When the writ appeal was pending, based  on  the  oral  application  of  the
first respondent herein, the Division Bench directed  the  State  Government
and the Director of  Mines  and  Geology  to  process  its  application  for
transfer of the renewal of the lease  in  favour  of  the  first  respondent
under the Forest Act, 1980 within two months and forward its report  to  the
Central Government with a further direction to  the  Central  Government  to
decide the same within three  months.  The  appellant  challenged  the  said
order dated 19.04.2006  in  S.L.P.No.11508  of  2006.   By  an  order  dated
26.10.2007, this Court directed the Division Bench of Karnataka  High  Court
to dispose of Writ Appeal No.5377 of 2004 and that the order of the  Central
Government dated 13.09.2006 granting its  in-principle  (Stage  I)  ex  post
facto approval granted in favour of the first respondent  would  not  create
right/equity in favour of the  first  respondent.   By  the  impugned  order
dated 26.08.2009, the Division Bench  held  that  renewal  of  mining  lease
without obtaining prior approval under Section 2 of  the  Forest  Act,  1980
would not render such renewal void ab initio and any such illegality can  be
cured or regularized by the Central Government by  passing  an  order  under
Section 2 of the Forest Act, 1980 ex post facto.

When this  Special  Leave  Petition  was  entertained,  by  an  order  dated
16.12.2009, it was  directed  that  processing  of  Stage  II  clearance  be
continued with a further direction to maintain status  quo  as  regards  the
mining activities. By order dated 09.09.2010, Stage II  clearance  has  also
been granted in favour of the  first  respondent  and  by  subsequent  order
dated 23.09.2010, this Court has directed that the status quo should  remain
operative pending the Special Leave Petition.

In the above stated background, we  heard  Mr.Kapil  Sibal,  learned  senior
counsel for  the  appellant,  Mr.K.K.Venugopal  and  Mr.Krishnan  Venugopal,
learned senior counsel for the first respondent, Dr.Abhishek  Manu  Singhvi,
learned senior counsel for the fifth respondent in the writ appeal  who  was
not added  as  a  party  respondent  in  this  Special  Leave  Petition  and
Ms.Anitha Shenoy, Advocate-on-Record for the  State  of  Karnataka  and  the
Director of Mines and Geology.  Mr.J.S. Attri, learned  senior  counsel  who
appeared for the Union of India, the fourth respondent.

Mr.Kapil  Sibal,  learned  senior  counsel  appearing  for   the   appellant
contended  that  once  M/s.Dalmia  surrendered  its  lease  in  respect   of
M.L.2010, which surrender has become final  and  conclusive,  there  was  no
scope for transfer of such surrendered mining lease in favour of  the  first
respondent herein.  The learned senior counsel then contended that  assuming
the surrender has not come into effect, at the time of  first  renewal  when
in-principle stage-I approval was granted by the Central Government  through
MOEF in its order dated 24.12.1997, imposing very many conditions and  since
M/s.Dalmia failed to comply with those conditions within five years  of  the
said order viz., 23.12.2002 and that  the  first  renewal  so  granted  also
expired in November 2003, by which time also the conditions imposed  in  the
in-principle stage-I approval was not complied with, there was factually  no
renewal of the mining lease which  stood  expired  initially  on  24.11.1983
and in any event after the expiry of the first renewal viz., 24.11.2002.

The learned senior counsel further contended that there should have been  no
second renewal or grant of in-principle stage-I clearance  after  23.12.2002
as well as by the  present  order  dated  13.09.2006.   The  learned  senior
counsel contended that under Rule 59 of Mineral Concession Rules, when  once
the mining lease was surrendered by M/s.Dalmia and when surrender  has  come
into effect thereafter, for subsequent grant of mining lease, the  procedure
prescribed in the said Rule has to be followed and the order  of  the  State
Government in having passed its  order  dated  16.03.2002  transferring  the
mining lease from M/s.Dalmia to the first respondent was wholly illegal  and
void ab initio.

The learned senior counsel by referring to  Rule  37  and  Rule  29  of  the
Mineral Concession Rules, submitted that in the light of  the  surrender  of
the mining lease by M/s.Dalmia, there was no right in  M/s.Dalmia  to  apply
for transfer in favour of the first respondent.  He further  contended  that
by virtue of the provision contained in Rule 29 of  the  Mineral  Concession
Rules,  the  mining  lease  was  determined  by  M/s.Dalmia  and   in   such
circumstances by virtue of Section 19 of the Mines and Minerals  Development
and Regulations Act any mining lease in contravention of the Act  and  Rules
would be  void  ab  initio.  The  learned  senior  counsel  contended  that,
therefore, the so-called acquisition of mining lease of  M/s.Dalmia  by  the
first respondent was void.

Dr. Abhishek  Manu  Singhvi,  learned  senior  counsel  for  the  intervenor
submitted that since the said applicant was added as  the  fifth  respondent
before the Division Bench by order dated 08.06.2007, it was entitled to  get
intervened in this appeal.  Though  the  application  for  intervention  was
stoutly opposed on behalf of the first respondent by  referring  to  certain
earlier orders of this Court in the S.L.Ps. filed by the  intervenor,  since
the said  intervenor  was  added  as  the  fifth  respondent  by  the  first
respondent itself in the writ appeal, which was pending before the  Division
Bench, we are of the view that due  to  failure  of  the  appellant  in  not
impleading the intervenor as a party respondent in this  appeal,  it  should
not be deprived of its  right  to  be  heard  in  this  appeal.   Therefore,
without any scope for anyone to quote as a binding precedent  in  any  other
case, having regard to the peculiar facts of this case where the  intervenor
was a party respondent before the Division Bench in  the  Writ  Appeal,  the
order of which is the subject matter of challenge in this appeal, we are  of
the view that the intervenor can be permitted to make  its  submissions  and
the I.A. for intervention stands allowed.

Dr. Abhishek  Manu  Singhvi,  learned  senior  counsel  in  his  submissions
contended that by virtue of Rule 29 read  along  with  Rule  59  of  Mineral
Concessions Rules  the  determination  of  the  lease  at  the  instance  of
M/s.Dalmia having  come  into  effect,  nothing  would  survive  thereafter.
According to the  learned  senior  counsel,  the  period  of  twelve  months
prescribed in Rule 29 cannot enure to the benefit of  the  lessee  and  that
such time period was meant for the benefit of the State Government.

The learned senior counsel by referring to  various  dates  from  27.03.2001
upto  31.01.2002  submitted  that  the  State  Government   understood   the
determination  of  the  lease  correctly  as  intended  by  M/s.Dalmia  and,
therefore, when once the mining  lease  got  terminated  by  virtue  of  the
complete  surrender  nothing  would  survive  thereafter.  Dr.Singhvi   thus
contended that if the sequence of  events  after  the  surrender  had  taken
place are noted, viz., the application made by  M/s.M.S.P.L.  on  21.07.2001
at  the  instance  of  Mr.Rahul  Baldota   as  the  Executive  Director   of
M/s.M.S.P.L. which was rejected by the Director  of  Mines  and  Geology  by
order dated 25.08.2001,  the  signatory  of  which  was  one  Dr.Reddy,  the
subsequent application at the instance of M/s.Dalmia for transfer in  favour
of the first respondent  who  was  represented  by  its  Executive  Director
Mrs.Baldota  who was none other than the  wife  of  Mr.Rahul  Baldota  whose
earlier application for grant of mining lease was rejected,  it  would  show
that all was not well  in  the  passing  of  the  order  of  transfer  dated
16.03.2002.  In this connection, the  learned  senior  counsel  pointed  out
that the very same Director of Mines and Geology, Dr.Reddy who by his  order
dated 25.08.2001 rejected the  application  of  M/s.M.S.P.L.  for  grant  of
mining licence on the ground that such  grant  can  be  considered  only  by
following Rule 59, took a diametrically opposite stand when  he  recommended
for transfer of surrendered mining lease in favour of the  first  respondent
and thereby serious fraud has been committed  by  the  first  respondent  in
connivance with M/s.Dalmia, the first respondent and  the  officers  of  the
State Government. The learned senior counsel  would  contend  that  such  an
action  of  the  parties  would  amount  to  collusion  between  the   first
respondent and the officials of the State Government  which  should  not  be
allowed to remain.

Dr.Singhvi, learned senior counsel then contended that  there  were  serious
violations of Forest Act of 1980 on  which  ground  as  well  the  order  of
transfer dated 16.03.2002 cannot be sustained.  The learned  senior  counsel
pointed out that the first renewal of the mining  lease  in  M.L.No.2010  of
2010 was for the period between 25.11.1983 to 24.11.2003, which was  granted
on 07.03.1986 retrospectively from 25.11.1983 and that no prior approval  as
prescribed in Section 2 of the Forest Act, 1980 was  obtained.  The  learned
senior counsel further contended that the said violation of the Forest  Act,
1980 would strike at the root of the case  and  in  effect  the  very  first
renewal was void.

The learned senior counsel  then  contended  that  out  of  331.50  hectares
M/s.Dalmia surrendered 196.58 hectares of land as  early  as  on  16.04.1999
and that what remained was only 134.92 hectares for which there  was  no  ex
post facto  approval.   The  learned  senior  counsel  then  contended  that
subsequently by an order dated 24.12.1997, MOEF granted in-principle  stage-
I approval imposing conditions in respect of 201.50 hectares  to  M/s.Dalmia
and the conditions not having been complied with by M/s.Dalmia, the  licence
could not have remained in force any further.

The learned senior counsel then  contended  that  grant  of  ex  post  facto
approval by the Central Government as per the direction  of  this  Court  in
Godavarman judgments cannot be granted on every occasion when the  violation
had taken place.  According to the learned  senior  counsel,  the  grant  of
such ex post facto approval as per the directions of this Court having  been
already  considered  and  granted  on  24.12.1997  and  due  to  failure  of
compliance of the conditions imposed  in  the  said  order,  the  lease  had
become inoperative, there was no scope for grant  of  any  further  ex  post
facto approval after the expiry of the first renewal viz., 23.11.2003.

The learned senior counsel placed reliance upon the  decisions  reported  in
A. Chowgule and Company Limited v. Goa Foundation & Ors.  -  (2008)  12  SCC
646, Nature Lovers Movement v. State of Kerala and Ors. - (2009) 5  SCC  373
and K. Balakrishnan Nambiar v. State of Karnataka and Ors. -  (2011)  5  SCC
353 in support of his submissions.

On Rule 59, according to the learned senior counsel the said  Rule  provides
for common  hotchpot  for  the  Government  and  that  once  the  lease  was
surrendered by M/s.Dalmia, the State had become the owner of  the  land  and
any further grant of mining lease can only be in accordance with Rule  59(1)
by way of public auction and, therefore,  the  acceptance  of  the  transfer
applied for by M/s .Dalmia in favour of the first respondent  in  the  order
dated 16.03.2002 cannot  be  approved.   The  learned  senior  counsel  also
relied upon the decisions reported in Janak Lal v. State  of  Maharashtra  &
Ors. - (1989) 4 SCC 121, Bangalore Development Authority v.  Vijaya  Leasing
Limited & Ors. - (2013) 14 SCC 737, Ram Preeti Yadav v. U.P. Board  of  High
School and Intermediate Education and Ors. - (2003) 8 SCC  311  and  Bhaurao
Dagdu Paralkar v. State of Maharashtra & Ors. - (2005) 7 SCC 605 in  support
of his submissions.

As against the above submissions, on behalf  of  the  first  respondent  Mr.
K.K. Venugopal and Mr.  Krishnan  Venugopal,  learned  senior  counsel  made
their submissions. The  submission  of  Mr.  K.K.  Venugopal  was  that  the
appellant  had  committed  serious  violation  of  the  Mines  and  Minerals
Development and Regulations Act and its Rules as well as the  provisions  of
the Forest Act by indulging in encroachment of forest land as  well  as  the
lands originally held by M/s.Dalmia now held by the first  respondent  which
amounted to looting of the wealth of the nation and  consequently  they  had
no locus to challenge the order of transfer dated 16.03.2002.

As far as the  intervenor  is  concerned,  the  learned  senior  counsel  by
referring to some of the earlier orders of  this  Court  passed  in  S.L.Ps.
preferred by the intervenor himself submitted  that  having  failed  in  its
attempt to get  impleaded,  he  has  come  forward  with  this  intervention
application and, therefore, he should not be heard.

As  far  as  the  question  of  surrender  was   concerned,   according   to
Mr.K.K.Venugopal, it was a mixed question of fact  and  law.   According  to
him,  even  while  examining  the  factual  surrender  at  the  instance  of
M/s.Dalmia, when the  provisions  of  Mines  and  Minerals  Development  and
Regulations Act and the Mineral Concession  Rules,  in  particular  Rule  29
read along with the terms and conditions in the mining lease  are  examined,
it would show that such prescriptions were  mandatory;  negatively  couched,
and, therefore, unless twelve  months  notice  period  is  completed,  there
would have been no scope for anyone to contend that the lease  had  come  to
an end.  The learned senior counsel contended that if the  licencee  intends
to surrender the mining lease, they  should  have  submitted  to  the  State
Government or such officer or specified authority competent to  accept  such
surrender and when any third party alleges the surrender to have  come  into
effect, the burden was heavily upon the said third party to prove the  same.
In so far as the alleged surrender of M/s.Dalmia is concerned,  the  learned
senior counsel contended that no surrender had taken place  in  the  eye  of
law, in as much as,  such  surrender  was  not  carried  out  by  M/s.Dalmia
strictly in accordance with Rule 29 of Mineral Concession Rules and that  12
months period has also not expired before the transfer in  favour  of  first
respondent was effected.

Mr.Krishnan Venugopal, learned senior  counsel  in  his  submissions  stated
that the Director of Mines and Geology had no power to accept the  surrender
and, therefore, there was  no  scope  to  contend  that  the  surrender  was
accepted before the expiry of 12 months.  After referring  to  the  relevant
Notifications  passed  under  Section  26(2)  of  the  Mines  and   Minerals
Development and Regulation Act, the learned senior counsel pointed out  that
there was no delegation of power made in favour of  the  Director  of  Mines
and Geology in contemplation of Rule 29 of the Mineral Concession Rules  and
therefore he was not the competent authority.  It was contended that  if  at
all the surrender could  have  been  effected,  the  same  could  have  been
effected only with the State Government and that too by passing  a  positive
order by the State accepting such  surrender.  The  learned  senior  counsel
contended that the letter dated 25.05.2001 can never be taken  as  an  order
of acceptance of surrender. The  learned  senior  counsel  relied  upon  the
decisions reported in Sandur Manganese and Iron Ores  Limited  v.  State  of
Karnatala and Ors. - (2010) 13 SCC 1, Sethi Auto Service  Station  and  Anr.
v. Delhi Development Authority & Ors. - (2009) 1 SCC 180 and  Shanti  Sports
Club & Anr. v. Union of India & Ors. - (2009) 15 SCC 705 in support  of  his
submissions.

He also contended that after the Forest Conversion (Amendment)  Rules,  2014
in particular Rule 8(3)(a) & (d)  old Rules 6 and 7   were  substituted  and
new Rules 6, 7 and 8 were brought in and by  virtue  of  the  newly  amended
Rules, the consequence of non-compliance of Section 2  of  the  Forest  Act,
1980 would not ipso facto make the lease void  ab  initio  except  that  the
mining operation will have to  be  stopped  and  after  complying  with  the
conditions, the lessee will have to start afresh by  getting  the  clearance
under Section 2 of the Forest Act, 1980.  The learned  senior  counsel  also
contended that under the MMDR Act, the only provision under which the  lease
will become  void  is  Section  19  and  therefore  the  contention  of  the
appellant that non-compliance of Section 2 of the  Forest  Conservation  Act
would render  the  lease  void  ab  initio  cannot  be  accepted.   He  also
contended that with the first  renewal  of  the  lease  by  an  order  dated
07.03.1986 the lease was renewed from  25.11.1983  to  24.11.2003,  that  on
04.02.2002, itself i.e., long before 12 months prior to the  expiry  of  the
renewed lease, application for transfer was made, that on 16.03.2002  itself
the State Government passed an order of transfer of the  lease  and  in  the
circumstances by virtue of Rule 24(A)(1) read along with Rule 26(1)  of  the
Mineral Concessions Rules, the right for  renewal  continued  to  exist  and
that no order of rejection of renewal under Rule  26(1)   was  ever  passed.
It was, therefore, contended that as  on  date  the  right  of  renewal  was
subsisting and it continue to subsist.

The learned senior counsel contended that MMDR  Act  and  Forest  Conversion
Act, 1980 function in two different fields in the sense that  the  existence
and continuance of the lease and right of renewal  are  independent  of  the
approval to be received under the Forest Act, 1980, that the consequence  of
violation of Section  2  of  the  Forest  Act,  1980  will  not  ipso  facto
determine the lease and make it void and that only other  consequence  would
be as provided under Section 3(A) of  the  Forest  Act,  1980.   As  far  as
renewal of the lease is concerned, according to the learned senior  counsel,
the same is exclusively under MMDR Act and once  the  lessee  complies  with
the requirements under the Forest Act, 1980 the  right  of  renewal  of  the
lease would get automatically revived.

On the question of voidness, the learned senior counsel by referring to  the
decisions in Smt. Lila Gupta v. Laxmi Narain & Ors. - (1978) 3 SCC  258  and
Pankaj Mehra & Anr. v. State of Maharashtra  &  Ors.  -  (2000)  2  SCC  756
contended that equity is in favour of the first respondent  to  sustain  the
lease and this is a fit case to affirm the Section 2  approval  and  in  the
alternative to permit the first respondent to  apply  under  Section  2  for
compliance.

By referring to Rule 29 of the Mineral Concession Rules, the learned  senior
counsel would contend that the prescription of 12 months  notice  period  in
the said Rules is mandatory and has got a purpose and intent  and  therefore
unless the 12 months period expires, after the lessee expressed  its  desire
to surrender the lease and that too such notice of termination is  submitted
before the competent authority as prescribed under Rule  29,  it  cannot  be
held that surrender would take effect the moment such a notice is  submitted
by the lessee to some incompetent authority.

The learned senior counsel summarized his submissions  on  the  question  of
surrender by contending that the return of the Lease Book  by  itself  would
not confirm the case  of  surrender  unless  the  period  of  12  months  as
prescribed under Rule 29 expired, that even if it is to be stated  that  the
State Government waived the 12 months period, unless  there  is  a  specific
order accepting the surrender, it cannot be  held  that  the  surrender  had
come into effect.  The learned senior counsel also submitted that there  was
no evidence to show that such acceptance of surrender  in  the  form  of  an
order of the State Government was issued.  It was therefore  contended  that
there is no  scope  for  inferring  any  such  surrender  based  on  certain
communications addressed to the authorities and the  copies  marked  to  the
lessee.  As far as the no due certificate was concerned, the learned  senior
counsel contended that the same was made four days prior to the  application
of transfer and the payment was meant  for  the  purpose  of  effecting  the
transfer.

Countering the submissions of the  learned  senior  counsel  for  the  first
respondent Mr.Kapil  Sibal  submitted  that  in  the  decision  reported  in
Basheshar Nath v. Commissioner of Income Tax, Delhi and Rajasthan &  Anr.  -
AIR 1959 SC 149, the Constitutional Bench has held that the right of  waiver
can be exercised by the State and submitted that reading the  said  judgment
in the light of  Rule  29  read  along  with  paragraph  4  of  the  licence
conditions contained  in  Form  K.  Waiver  exercised  by  the  State  while
accepting the surrender before 12 months under Rule 29  was  valid  in  law.
The learned counsel also relied upon the decisions reported in  Commissioner
of Customs, Mumbai v. Virgo Steels, Bombay & Anr. - (2002)  4  SCC  316  and
Vasu P. Shetty v. Hotel Vandana Palace & Ors. - (2014) 5 SCC 660.

As against the arguments  of  the  learned  senior  counsel  for  the  first
respondent that any surrender should be made to the concerned authority  and
should be accepted only by the competent authority, Mr.Sibal submitted  that
surrender was made to the State Government as disclosed in the statement  of
objections  submitted  on  behalf  of  the  State  Government,  wherein,  in
paragraph 5 the State Government itself has accepted that M/s.  Dalmia  made
its application dated 27.03.2001   to  the  State  Government  proposing  to
surrender the lease held  by  it  w.e.f  01.04.2001  and  also  subsequently
surrendered the Mining Lease Book  to  the  State  Government.  The  learned
counsel however pointed out that though in the  said  paragraph  5,  it  was
stated  that  the  said  application  was  not  considered  and  the   State
Government did not pass any orders accepting the  surrender  of  the  mining
lease, the learned senior counsel pointed out that the grant  of  lease  was
by the Director of Mines as disclosed in Form K of the  mining  lease  which
states that the term lessor included its successors/assignees  and  also  in
the condition for the determination of lease, it was the Director  of  Mines
who has affixed his signature. The learned  senior  counsel  contended  that
going by the opening set of expressions in  Form  K  deeming  fiction  would
operate and the Director of Mines was the authority  who  was  competent  to
accept the surrender.  The learned senior counsel also contended  that  this
question was never raised at the instance of the  first  respondent  and  in
the absence of proper pleading before the High Court, the  first  respondent
cannot be permitted to raise the said issue which is  a  mixed  question  of
fact and law.

As regards the argument that surrender, whether it  was  accepted  and  that
too  by  a  written  order,  the  learned  senior  counsel  contended   that
acceptance of such surrender before expiry of  twelve  months  can  also  be
gathered from the conduct  of  the  parties  unless  there  is  a  statutory
requirement.  The learned senior counsel after referring to the sequence  of
correspondence which emanated from  M/s.Dalmia's  letter  dated  27.03.2001,
the reply from the office  of  the  Director  of  Mines  and  Geology  dated
25.05.2001, M/s.Dalmia's letter dated 16.06.2001, the dismissal of the  suit
by M/s.Dalmia dated 26.09.2001 and the no dues  certificate  issued  by  the
State  Government  on  31.01.2002  contended  that  the  same   sufficiently
disclosed that the lease was not only surrendered it was also acted upon  by
the concerned authority.

As regards the contention of the first  respondent  that  non-compliance  of
Section 2 of the Forest Act, 1980 can have  no  implication  insofar  as  it
related to the validity of the lease granted under the  Mines  and  Minerals
(Development and Regulations) Act, Mr.Sibal, learned  senior  counsel  would
contend that the said submission  cannot  be  accepted.   According  to  the
learned senior counsel, even before coming into force  of  the  Forest  Act,
1980 under the proviso to Section 5 of the Mines and  Minerals  (Development
and Regulations) Act the requirement of Central  Government's  approval  was
mandatory which came to be imposed as a statutory condition  in  respect  of
the forest land under Section 2  of  the  Forest  Act,  1980.   The  learned
senior counsel therefore contended that the requirements of approval  to  be
granted by the Central Government being a statutory  requirement,  one  made
under the Mines and Minerals (Development and Regulations) Act  as  well  as
under the Forest Act, 1980, the operation of  the  mining  lease  cannot  be
carried out without the prior approval of the Central Government  under  the
Forest Act, 1980.  In other words, according to the learned senior  counsel,
the requirement of approval under the Forest Act, 1980  has  to  synchronize
with the mining lease if the leaseholder wants to carry on mining  operation
in respect of the minerals specified in the first schedule of the Mines  and
Minerals (Development and Regulations)  Act.   The  learned  senior  counsel
contended that the only exception provided was under the judgments  of  this
Court in Godavarman I and II (cited  supra)  which  was  by  virtue  of  the
extraordinary Constitutional power vested in this Court  under  Article  142
and under no other circumstance the mining operation can be carried on  even
if  one  were  to  possess  the  licence  under  the  Mines   and   Minerals
(Development and Regulations) Act.

The learned senior counsel pointed out that after the  in-principle  Stage-I
approval granted on 24.12.1997, when M/s.Dalmia failed to  comply  with  the
conditions imposed till the expiry of the first renewal  which  occurred  on
24.11.2003, any attempt on  behalf  of  the  first  respondent  through  its
communication dated  11.05.2004,  based  on  the  order  of  transfer  dated
16.03.2002, could not have validated the lease which already got  lapsed  on
its own.

Mr.Sibal, learned senior counsel then contended that when the writ  petition
was pending before the High Court, on  behalf  of  the  Central  Government,
Ministry of Environment and Forest raised its  objections  as  disclosed  in
its objections dated  03.02.2004,  for  granting  any  approval,  after  the
expiry of the  first  renewal,  due  to  non-compliance  of  the  conditions
imposed in the in-principle stage-I approval which weighed with the  learned
Judge of the High Court when the renewal itself was quashed by  the  learned
Judge in the order  dated  10.11.2004.   The  learned  senior  counsel  then
referred to the judgment of the Division Bench in W.A.No.5377 of  2004,  the
second  renewal  application   and   the   in-principle   stage-I   approval
subsequently granted on 13.09.2006 and also the order of  this  Court  dated
26.10.2007 which made it clear that the first respondent  cannot  claim  any
equity based on the order  dated  13.09.2006.  The  learned  senior  counsel
submitted that, therefore, both  the  in-principle  stage-I  approval  dated
13.09.2006 as well as the final approval dated  09.09.2010  will  be  of  no
avail to the first respondent for getting  the  surrendered  lease  revived.
The learned senior counsel, therefore,  contended  that  the  claim  of  the
first respondent that the mining lease would be unaffected by the non  grant
of approval under Section 2 of the Forest  Act,  1980  cannot  be  accepted.
The learned senior counsel relied upon  the  decisions  reported  in  Ambica
Quarry Works v. State of Gujarat & Ors. - (1987) 1 SCC 213.

Mr. Sibal, learned senior counsel lastly contended that  Section  10(1)  and
the second proviso to Section 11 of the Mines and Minerals (Development  and
Regulations) Act has to be read along with Rules 37  and 59   and  contended
that the application for transfer under Rules 37(1)(a)  or  1(A)  cannot  be
automatically granted.  The learned senior counsel submitted  that  whatever
would apply to a fresh application  as  provided  under  Section  10(1)  and
second proviso to Section 11 would equally apply even to  the  transfer  and
the application for transfer cannot be granted just for  mere  asking.   The
learned senior counsel would therefore  contend  that  under  Rule  59,  the
necessity to notify before the grant of lease is mandatory and there  is  no
question of subverting  the  said  Rule  in  a  case  where  the  lease  was
surrendered.  According to the learned senior counsel in  such  a  case  for
applying Rule  59,  there  must  be  a  notification  to  enable  all  those
interested to stake their claim, which would enable the State to derive  the
maximum benefit while permitting mining of minerals,  which  is  a  national
wealth.

Ms. Anitha Shenoy, Advocate-on-Record appearing for the State  of  Karnataka
submitted that the requirement of  12  months  notice  for  determining  the
lease at the instance of a  lessee  is  mandatory.   By  referring  to  Rule
27(2)(l), the learned counsel submitted  that  the  said  sub-Rule  mandates
delivery of possession of land and mines on surrender of the lease and  that
Clause 4 of Part VIII of Form-K viz., the  lease  deed  specifically  states
that such determination will take effect after the expiry  of  such  notice.
By  referring  to  the  communication  dated  27.03.2001   of   M/s.Dalmia's
application for surrender, letter of the Director of  Mines  to  the  Senior
Geologist dated 25.05.2001,  the  M/s.  Dalmia's  letter  dated  16.06.2001,
surrendering the lease deed book as well as no  due  certificate  issued  by
the Department of Mines on 31.01.2002, the learned counsel  submitted  that,
in spite of all these communications  a  specific  order  of  acceptance  of
surrender was still required which was never issued.  To  support  the  said
submission,  the  learned  counsel  placed   reliance   upon   the   earlier
communications in the office of the Mining Department pertaining to  various
other mining lease  viz.,  those  dated  12.03.1965,  certain  other  orders
passed  in  December,  1988  and  11.04.1989  and  the  Notification   dated
19.06.1965 and contended that those communications disclosed specific  order
of acceptance of surrender issued by  the  State  Government.   The  learned
counsel would therefore contend that in the  case  on  hand,  since  such  a
specific order of acceptance of surrender  was  not  issued,  it  cannot  be
stated that the surrender as applied for by M/s.Dalmia had taken place.

In his reply, Mr.Krishnan Venugopal, learned senior counsel  for  the  first
respondent contended that going by the letter  of  the  State  of  Karnataka
dated 21.02.1986, no lease could have been granted or renewed except by  the
State and not by the Director of Mines. By referring to  Section  5  of  the
Mines and Minerals (Development and Regulations)  Act,  the  learned  senior
counsel reiterated that the power is vested only with the State and  in  the
absence of any delegation, the Director of Mines will have  no  jurisdiction
or power to issue the lease or determine  the  lease.   The  learned  senior
counsel further contended that by virtue of the Constitutional  prescription
as contained in the Entries found in List I and  List  II  read  along  with
Section 2 of the Mines and Minerals (Development and Regulations)  Act,  the
subject being  controlled  by  the  Parliament,  strict  compliance  of  the
provisions of the Act  is  warranted  and,  therefore,  in  the  absence  of
delegation of power with the Director of Mines, it cannot be contended  that
the exercise of such power by the Director would validate the  surrender  as
claimed by the  appellant.   The  learned  senior  counsel  would  therefore
contend that the period of 12 months required for determining the  lease  by
the lessee is mandatory and unless and until the said period  expires  which
is for the benefit of the State, it cannot be held that  the  surrender  had
come to an end even before the expiry of the 12 months period.

In this context, the learned senior counsel referred to  the  Government  of
India/Ministry of Environment and Forest  letter  dated  14.09.2001  to  the
Secretary (Forest) of all the States and  Union  Territories,  wherein,  the
Central Government after making reference to various  cases  where  the  in-
principle stage-I clearance was  granted  by  imposing  conditions  and  the
failure of the States and the user agencies in  reporting  compliance  after
lapse of five years and in some cases after more than  10  years,  the  MOEF
stated that the  Central  Government  in  respect  of  those  cases  took  a
decision to the effect that in all those cases  the  in-principle  approvals
though stood revoked summarily, depending upon the  interest  shown  by  the
State or the user agency in the project, they would be required to submit  a
fresh proposal which would  be  considered  de  novo.   The  learned  senior
counsel further contended that even the Central  Government  has  understood
as to the manner in which any fresh proposal to be considered in respect  of
cases where the user agencies failed to comply with the  conditions  imposed
in the in-principle stage-I approval  granted.  According  to  him,  such  a
decision of the Central Government/MOEF  was  subsequently  incorporated  in
the Forest Conservation Rules by way of amendment to Rules 6,  7  and  8  in
the year 2014 and therefore it cannot be held  that  the  non-compliance  of
the conditions imposed while granting in-principle  stage-I  approval  would
in any manner efface the lease  granted  under  the  MMDR  Act  and  Mineral
Concession Rules.

Mr. Kapil Sibal, learned senior counsel while responding to the  submissions
of Ms. Anitha Shenoy, Advocate-on-Record for the State of Karnataka  pointed
out that in the documents now produced by the learned counsel for the  State
which pertained to the years 1965, 1988   and  1989,  those  documents  were
signed by the  Director  while  accepting  the  surrender  proposed  by  the
lessees and that such acceptance had been made not after the expiry  of  the
12 months period from the date of application but before the expiry of  such
12 months period.  The learned senior counsel also submitted that the  State
Government has not come  forward  with  any  affidavit  by  any  responsible
officer that surrender was  not  accepted  by  the  State  Government.   The
learned counsel also contended that the lessee viz., M/s. Dalmia  wanted  to
surrender and the fact remains that  the  lease  had  been  determined.   As
regards the reference to Rule 27(2)(l) the learned senior counsel  contended
that  though  the  Rule  states  that  on  surrender  possession  should  be
delivered, there is no specific expression to the effect that such  delivery
of possession should be by way of handing over.

Two questions that arise for consideration:
Whether M/s. Dalmia surrendered its mining licence No.M.L. 2010?
If it was not surrendered, whether violation of conditions  of  in-principle
stage-I approval  dated  24.12.1997  would  ipso  facto  render  the  mining
licence invalid and inoperative in law?

While attempting  to  find  an  answer  to  the  above  two  questions,  the
submissions of counsel for both sides  necessarily  postulate  consideration
and examination of the following factors:
Mining lease in  M.L.  No.2010  of  M/s.  Dalmia  was  initially  issued  on
25.11.1953 which expired on 24.11.1983.

First renewal of M.L. No.2010 was by order dated  07.03.1986  for  20  years
with effect from 25.11.1983 ending with  24.11.2003  without  any  statutory
approval of the Central Government and in particular the prior  approval  of
Central Government under Section 2 of the Forest Act, 1980.

After the judgment of this Court in Godavarman I  &  II,  mining  operations
under M.L. 2010 were suspended in January, 1997 and thereafter  in-principle
Stage-I approval was granted in favour of M/s. Dalmia on 24.12.1997  by  the
Central Government imposing conditions to  be  complied  within  five  years
i.e. on or before 23.12.2002.

By letter dated 16.04.1999 M/s. Dalmia surrendered 196.58 Hectares  of  land
out of 331.50 Hectares to the Forest Department of State Government.

On 27.03.2001 M/s.  Dalmia  wrote  to  Director  of  Mines  and  Geology  to
determine the lease as it wanted to surrender.  M/s. Dalmia gave  12  months
notice from 01.04.2001 or earlier if permitted by State Government.

On 25.05.2001, the Director of Mines while marking  a  copy  of  its  letter
addressed to the senior Geologist to M/s. Dalmia  simultaneously  instructed
to surrender the lease book in  respect  of  M.L.  No.2010  along  with  the
Mining Plan.

In the order dated 26.06.2001 passed in W.P. No.6304 of 1998 learned  Single
Judge of Karnataka High Court noted the stand of M/s. Dalmia with  reference
to M.L. No.2010 that M/s. Dalmia was no  longer  interested  in  working  of
said mines which was adjoining the mines of the appellant. In fact the  said
writ petition was disposed of by noting the said factor also.

On 25.08.2001, the Director of Mines made a  note  in  the  application  No.
84AML 2001 and 92AML 2001 for grant of mining lease over an area covered  by
M.L. No.2010 to the effect that  the  said  area  was  surrendered  by  M/s.
Dalmia, that two applications had been  received  in  respect  of  the  said
area,  that  Rule  59(1)  of  MCR  Rule  was  attracted  and  therefore  the
applications were not considered. The  said  endorsement  was  made  by  Mr.
Reddy, the then Director of Mines and Geology.

On 26.09.2001, the suit filed by M/s. Dalmia against the appellant  in  O.S.
No.53 of 1993 on the file of Civil Judge, Hospet in respect of the  boundary
dispute was dismissed for non-prosecution.

On 09.01.2002, the Director of Mines ordered the Deputy Director, Hospet  to
survey and demark the area covered by  the  appellant's  lease,  since  O.S.
No.53 of 1993 was dismissed and M/s. Dalmia surrendered its lease.

On 30.01.2002 M/s. Dalmia paid a sum of  Rs.22,332.00/-  stated  to  be  the
arrears in respect of M.L. NO.2010 and obtained  no  due  certificate  dated
31.02.2002.

On 04.02.2002 M/s. Dalmia applied to the State  Government  the  application
for transfer of M.L. No.2010 to the first Respondent.

On 06.02.2002, the Director of Mines and Geologist namely the same  Mr.Reddy
recommended the application for transfer.

On 16.03.2002, the State Government allowed the application of  M/s.  Dalmia
in favour of the first Respondent.

On 21.07.2002, the Principal Chief Conservation of Forest,  Bangalore  wrote
to the Principal Secretary, Department of Commerce and  Industries  pointing
out the failure of M/s. Dalmia to fulfill the conditions  of    in-principle
stage-I approval dated 24.12.1997 and  requested  the  State  Government  to
withdraw the order dated 16.03.2002.

In the Order dated 10.11.2004, learned Single Judge of  the  Karnataka  High
Court set aside the order of transfer dated 16.03.2002.

Pending first Respondent's W.A. No.5377  of  2004,  the  Central  Government
granted in-principle stage-I ex post facto approval to the first  Respondent
on 13.09.2006.

During the pendency of Special Leave Petition,  by  order  dated  09.09.2010
stage II clearance in favour of the first Respondent was  granted.   But  by
the  Supreme  Court's  order  dated  23.09.2010  the  first  Respondent  was
directed to maintain status quo.

For transfer of M.L. No.2010 in favour of first Respondent M/s.  Dalmia  has
received a sum of Rs.74,11,559/-.

After the order of transfer,  the  first  respondent  paid  Rs.2,18,42,600/-
amount on 11.05.2004 to comply with the condition imposed in the earlier in-
principle stage I clearance of 1997 pursuant to order dated 16.03.2002.

Having considered the rival  submissions  of  the  respective  counsel,  the
following questions arise for consideration:
Whether M/s. Dalmia surrendered the mining  lease  bearing  No.M.L.2010  and
whether such surrender has become final leaving no scope for M/s. Dalmia  to
transfer it in favour of the first respondent?

Whether for the purpose of surrender of a mining lease to come  into  effect
the  expiry of the period of 12 months from the alleged  date  of  surrender
is mandatory or not?

Whether there was surrender of 196.58 hectares of forest land made  by  M/s.
Dalmia on 16.04.1999 out of the total extent of 331.50 hectares and  thereby
what remained with M/s. Dalmia was  only  134.92  hectares  for  which  also
there was no ex post facto approval by the MOEF?

Whether the act of surrender in order to become complete  should  have  been
accepted by the State?

Whether pursuant  to  the  act  of  surrender,  delivery  of  possession  is
mandatory under Rule 27(2)(l) of the Mineral Concession Rules?

Even if surrender has not taken place by reason of the non-compliance of in-
principle stage-I approval granted in the  order  dated  24.12.1997  whether
the mining lease stood automatically expired on 24.11.2003?

Whether by virtue of Rules 29 and 37 of the  Mining  Concession  Rules  read
with Section 19 of the MMDR Act any mining lease  in  contravention  of  the
Act become void ab initio?

Whether after the coming into force of the Forest Act of 1980 when  approval
under Section 2 of the said Act is mandatory, can  it  be  said  that  there
could be any scope for ex post facto  approval  in  violation  of  the  said
provision. Whether the order of Godavarman  case  can  be  relied  upon  for
subsequent renewals?

Whether after the newly amended Forest Conservation Rules 6, 7  and  8  non-
compliance of Section 2 of the Forest Act would still make  the  lease  void
ab initio?

Whether right of renewal of the lease under  MMDR  Act  and  the  action  of
grant of approval under the Forest Act are  independent  and  one  does  not
affect the other?

Whether based on  the  requirement  of  Central  Government  approval  under
Section 5 of the MMDR Act which was existing prior to the coming into  force
of the Forest Act, 1980, can it be said that such a requirement is now  made
as a mandatory one under Section 2 of the Forest Act for a mining  lease  to
remain valid?

Whether Section 10(1) and the second proviso to Section 11 of the  MMDR  Act
as well as Rule 37 and 59 of the Mineral Concession Rule  mandatory  to  the
effect that any transfer applied for  under  Section  37  (1)(a)  cannot  be
automatically granted?

Whether the order of transfer dated  16.03.2002  was  bonafide  taking  into
account the sequence of events?

Whether the transfer of lease by order dated 16.03.2002 can be  held  to  be
valid since such transfer order came to be passed before the expiry  of  the
first renewal, namely, before 24.11.2003?

Whether the stage-I approval dated 13.09.2006 and the final  approval  dated
09.09.2010 can be held to be valid in the light of the order of  this  Court
dated 26.10.2005?

In  order  to  consider  the  first  question  as  to  whether  M/s.  Dalmia
surrendered the mining lease M.L. No.2010 and  whether  such  surrender  has
become final and conclusive, we have to  recapitulate  certain  basic  facts
relating to the said lease. The said  lease  M.L.  No.2010  was  granted  on
25.11.1953 for 30 years and the extent of land was 331.50 hectares  covering
819.20 acres of forest  land  in  Jaisinghpur  village  R.N.  Block,  Sandur
Taluk,  Bellary  District.  The  said  initial  lease  period   expired   on
24.11.1983 and by order dated 07.03.1986 the lease was renewed  for  another
20  years  retrospectively  from  25.11.1983,  which  was   to   expire   by
24.11.2003. The relevant fact to be noted is that  by  the  time  the  lease
expired on 24.11.1983, the Forest Act 1980 had come  into  force  and  under
Section 2 of the Forest  Act  in  order  to  carry  on  any  further  mining
activity in the entirety of the 331.50 hectares of land covered  by  M.L.No.
2010, the prior  approval  of  the  Central  Government  was  necessary  and
required. It is not in dispute that when the mining  lease  was  renewed  by
order dated 07.03.1986 by the Department of Mines of the  State  Government,
Section 2 of the Forest Act of 1980  was  not  complied  with.  It  remained
unnoticed till the issue  came  to  be  considered  by  this  Court  in  the
judgment concerned in   Godavarman-I. By virtue of the direction  issued  by
this Court all the mines, which did  not  comply  with  the  requirement  of
Section 2 of  the  Forest  Act  were  directed  to  stop  all  their  mining
activities. Consequently by order dated  25.01.1997  the  second  respondent
herein namely Director of Mines and Geology called upon M/s. Dalmia to  stop
all mining activities pertaining to M.L. No.2010 and the  mining  activities
were stopped by M/s. Dalmia.  Thereafter,  by  the  Godavarman-II  judgment,
which is reported in (1997) 3 SCC 312, the MOEF  was  directed  to  consider
those applications  for  ex  post  facto  approval.  Pursuant  to  the  said
direction  of  this  Court,  by  order  dated   24.12.1997,   MOEF   granted
conditional in-principle stage-I approval for the renewal of  M/s.  Dalmia's
mining lease for an extent of 201.50  hectares  of  forest  land.  The  said
stage-I approval was subject to fulfillment of  specific  conditions  within
six months from the date of the order. It was  also  specifically  mentioned
that only after receipt of compliance report of  the  conditions  stipulated
in the stage-I approval, consideration for grant  of  final  approval  under
Section 2 of the Forest Conservation Act would be  made  and  issued.  After
the receipt of the order dated 24.12.1997  M/s.  Dalmia  surrendered  196.58
hectares of land out of 331.50 hectares to  the  forest  department  of  the
State Government through their letter dated 16.04.1999.  By  virtue  of  the
said surrender made by M/s. Dalmia out of 331.50 hectares  the  M/s.  Dalmia
can  be  said  to  have  retained  only  134.92  hectares  for  its   mining
operations. Be that as it may,  on  27.03.2001  M/s.  Dalmia  wrote  to  the
Directors of Mines and Geology expressing  its  decision  to  determine  the
lease and surrender the remaining area and gave  notice  as  required  under
the terms of the mining lease deed for determination of the  lease.  In  the
said letter M/s. Dalmia mentioned that such  determination  of  lease  would
take effect upon expiry of  12  months  notice  period  from  01.04.2001  or
earlier if permitted by the State Government.

In response to the said communication of M/s. Dalmia, the  State  Government
through the office of the Director of Mines and Geology in its letter  dated
25.05.2001 addressed to the Senior Geologist of the State Government  stated
that M/s. Dalmia has stopped all its mining activities from  1997  and  that
it has now expressed in its letter dated 27.03.2001 to surrender the  lease,
namely, M.L.No. 2010 even earlier than the 12 months period and called  upon
the said officer to intimate as to whether any arrears were due and  payable
by M/s. Dalmia for taking further action. Copy  of  the  said  communication
dated 25.05.2001 was also sent to M/s. Dalmia for information  and  also  by
way of instructions to surrender the lease deed book in respect  of  M.L.No.
2010 along  with  the  mining  plan  approved  by  Indian  Bureau  of  Mines
immediately for taking further action. In response to  the  said  letter  of
Director of Mines  and  Geology  M/s.  Dalmia  forwarded  its  letter  dated
16.06.2001  directly  addressed  to  the  Director  of  Mines  and   Geology
mentioning that as instructed by the  said  authority,  they  surrender  the
lease deed book, namely, M.L.No. 2010. The said letter further  stated  that
the mining plan was not available with them. It was  specifically  mentioned
at the bottom of the said letter that  mining  lease  deed  book  was  being
enclosed along with the said letter.

When we make a reference to M/s. Dalmia's earlier letter  dated  16.04.1999,
the intention of M/s. Dalmia of its decision to  surrender  196.58  hectares
out of 331.50 hectares was explicitly stated. If the said decision taken  by
M/s. Dalmia is accepted which decision was clearly spelt  out  in  the  said
communication dated 16.04.1999 what was really retained by it subsequent  to
the stage-I in-principle approval of MOEF dated 24.12.1997 was  only  134.92
hectares. In fact, it is mentioned therein that originally an  area  of  130
(331.50 - 130 = 201.50) hectares was already  surrendered  by  it  prior  to
16.04.1999, that virgin area not broken up in an extent  of  66.58  hectares
was being surrendered as  disclosed  in  the  letter  dated  16.04.1999  and
consequently what was practically retained by it was only  134.92  hectares.
It was also stated in the said  letter  that  when  such  was  the  position
relating to the actual land area retained by M/s. Dalmia with  reference  to
which any demand by way of penal compensation aforestation charges could  be
claimed, the same could  not  have  been  claimed  for  201.50  hectares  as
mentioned in the stage-I in-principle approval granted in  the  order  dated
24.12.1997. Though the said communication dated 16.04.1999 at  the  instance
of M/s. Dalmia was addressed to the forest department, in that  context,  it
was very clearly stated that what was retained by it as  on  that  date  was
only 134.92 hectares, out of the total extent  of  331.50  hectares.  It  is
necessary to keep the said  factor  in  mind  while  considering  the  issue
relating to the surrender raised in these proceedings.

Apart from the above factors, certain other factors relating to  the  factum
of surrender are  also  required  to  be  noted.  At  the  instance  of  the
appellant herein a writ petition came to be filed in Writ  Petition  No.6304
of 1998 in the High Court of Karnataka as against the Mine  Authorities  and
Chief Conservator of Forest as well as M/s. Dalmia. In that  writ  petition,
the issue pertained to a boundary dispute as between the appellant and  M/s.
Dalmia. But the said Writ Petition came to be disposed of by learned  Single
Judge by order dated 26.06.2001 by stating as under:
"7. A subsequent development requires to be noticed at this stage  when  the
matter came up for consideration on the  last  date  of  hearing  Shri  B.T.
Parthasarthy appearing for 3rd respondent stated that the 3rd respondent  is
no longer interested in working in the mine situated in the  land  adjoining
the petitioner's land therefore at  present  no  boundary  dispute  as  such
exists between the petitioner and the 3rd respondent. This  will  have  some
bearing on the validity of  the  impugned  order  dated  06.11.1997  as  the
entire order is on the assumption that a  boundary  dispute  exists  between
the petitioner and the neighboring owner. Be that as it may."
                                                            (Emphasis added)



The said stand of M/s. Dalmia which was the third respondent  in  that  writ
petition also disclosed that M/s. Dalmia categorically made  it  clear  that
it was not operating the mines covered by M.L.No. 2010. After the letter  of
M/s. Dalmia dated 27.03.2001 expressing its decision to surrender the  lease
and determine the same, the Director of Mines sent its  communication  dated
25.05.2001 pursuant to which M/s. Dalmia surrendered the lease deed book  of
M.L.No.  2010  along  with  its  letter  dated  16.06.2001.  Thereafter,  an
application came to be filed at the instance of a company  called  'M.S.P.L.
Limited' through its Executive Directed Mr. Rahul Baldota on 21.07.2001  for
the grant of mining lease which  was  held  by  M/s.  Dalmia  and  shown  as
government land in its application. In the said application  an  endorsement
was made on 25.08.2001 by the Director of Mines to the effect that the  area
applied for fell within the area surrendered by M/s. Dalmia,  that  a  prior
application was also made for mining lease  over  the  same  area  by  third
parties, that under Rule 59(1) of the  Mineral  Concession  Rules  grant  of
mining lease can be only by way of a notification in  the  official  gazette
and  therefore  such  grant  cannot  be  considered  based   on   individual
applications.  In  this  context  it  is  also  relevant  to  note  that  on
30.01.2002 M/s.  Dalmia  made  a  payment  of  Rs.22,332/-  towards  arrears
payable by it in respect of M.L.No. 2010,  which  was  acknowledged  by  the
Deputy Director of Department of Mines  and  Geology  in  its  letter  dated
31.01.2002. The said letter specifically stated  that  as  per  the  revised
audit report the arrears were determined in a  sum  of  Rs.22332/-  and  the
same was paid by M/s.  Dalmia  through  DD  No.88545  dated  30.01.2002  and
thereby no due certificate was being issued. One other relevant document  of
the office of the  Director  of  Mines  and  Geology  is  the  letter  dated
09.01.2002 addressed to its own Deputy  Director  wherein  the  Director  of
Mines while calling upon the  Deputy  Director  to  demarcate  the  area  of
mining lease No.2151 of  the  appellant  mentioned  therein  that  the  said
survey is required to be made for the purpose of  renewal  of  M.L.No.  2151
inasmuch as the boundary dispute as between the appellant  and  M/s.  Dalmia
which was pending in the Civil Court in O.S. No.53  of  1993  was  dismissed
for non-prosecution on 26.09.2001 and the  further  fact  that  M/s.  Dalmia
surrendered their lease as  on  that  date  and  therefore  the  dispute  as
between appellant and M/s. Dalmia did not survive.

Keeping the above material  facts  relating  to  the  alleged  surrender  of
mining lease in  M.L.No.  2010  by  M/s.  Dalmia,  the  various  submissions
relating to the said surrender by the  respective  counsel  requires  to  be
dealt with.

While considering the various questions on  surrender,  the  first  question
that arise for consideration relates to the surrender of 196.58 hectares  of
forest land which was made by M/s. Dalmia on 16.04.1999  out  of  the  total
extent of 331.50 hectares and that what remained with  it  was  only  131.44
hectares. To show that M/s. Dalmia earlier surrendered 196.58 hectares,  its
own letter dated 16.04.1999 was  placed  before  us.  When  we  perused  the
letter dated 16.04.1999 of M/s. Dalmia which was addressed to the  Principal
Chief Conservator of Forest, Bangalore, it is mentioned  therein  that  they
have already surrendered 130.1 hectares  out  of  331.50  hectares  and  the
balance area in their possession was only 201.50 hectares. Even out  of  the
remaining 201.50 hectares, according to M/s. Dalmia, 110 hectare was  broken
up for mining, 5.75 hectare was used for roads, dams, stores,  office  etc.,
19.17 hectares was broken up but unusable virgin area  used  for  roads  and
that it was non ore-bearing area and the remaining  virgin  area  which  was
not yet broken and which was being surrendered was  66.58  hectares.  It  is
also further stated therein that the management decided  to  surrender  even
the virgin area of 66.58 hectares  and  ultimately  wanted  to  retain  only
134.92 hectares.

In fact this letter, dated 16.04.1999 apparently appeared to have been  sent
in response to the in-principle stage-I approval granted by  the  Government
of India in its letter dated  24.12.1997  wherein  certain  conditions  were
imposed. While responding to the said  order,  M/s.  Dalmia  in  its  letter
dated 16.04.1999 mentioned that as far as conditions (i)  and  (ii)  of  the
Government of India dated 24.12.1997, no  action  need  be  taken  since  it
decided to surrender nearly 196.58  hectares and what  was  to  be  retained
was only 134.92 hectares. As regards condition No.(iii),  namely,  the  cost
of penal compensatory aforestation charges was  concerned,  while  referring
to the demand, twice the  area  of  201.50  hectares  i.e.  403  hectares  @
Rs.40,700/- per hectare, M/s. Dalmia pointed out  that  there  cannot  be  a
demand by Government of India to that extent and  at  best  the  demand  can
only be raised in respect of the broken up area of 134.92 hectares.  It  was
further contended that since M/s.  Dalmia  was  carrying  mining  operations
even in that 134.92 hectares with the permission  of  the  State  Government
Authorities from time to time, no penal  compensatory  aforestation  charges
can be claimed over that area.

When we consider the said letter of M/s. Dalmia what transpires  is  that  a
conscious decision was taken by M/s. Dalmia  to  surrender  196.58  hectares
and its further decision to retain only 134.92 hectares  in  the  year  1999
after the earlier  surrender  of  130  hectares  prior  to  1999.  The  said
decision of M/s.  Dalmia,  which  was  consciously  taken  as  early  as  on
16.04.1999 disclose that it possessed as on that date only  134.92  hectares
out of 331.50  hectares, which it was holding earlier under M.L. No.2010  of
2010. When the said factual position cannot be controverted,  having  regard
to the document which was addressed by M/s. Dalmia to  the  Principal  Chief
Conservator of Forest,  Bangalore  with  a  copy  marked  to  the  Inspector
General of Forest, Ministry of Environment and Forest  Government  of  India
and other State Level Officers of the Forest Department, M/s. Dalmia  cannot
later on turn around and state that it  continued  to  retain  with  it  the
whole extent of 331.50 hectares covered by M.L. No.2010.

Keeping the said  aspect  in  mind  relating  to  the  action  of  surrender
effected by M/s. Dalmia, when we proceed to examine the further  development
that had taken place after 16.04.1999, what comes next is the  letter  dated
27.03.2001 which was again a communication written by  M/s.  Dalmia  to  the
Director of Mines and Geology of its decision to determine the lease in  its
favour and to surrender the remaining area under the  terms  of  the  mining
lease deed.  It will be necessary  to  make  a  detailed  reference  to  the
contents of the said communication dated 27.03.2001.

Before referring to the contents of the said letter,  it  will  have  to  be
kept in mind that pursuant to the general directions issued  by  this  Court
in  Godavarman-I,  all  mining  operations  through  out  the  country  were
directed to be stopped for violation of Section 2 of the Forest  Act,  1980.
By virtue of the  general  directions  issued  by  this  Court,  the  mining
operations in respect of M.L.No. 2010 also came to a grinding halt from  the
last week of January 1997. Thereafter, by virtue  of  the  order  passed  in
Godavarman-II, ex post facto approval under Section 2 of the Forest Act  was
considered and by order dated 24.12.1997 the in-principle stage-I  clearance
was granted by imposing three conditions for M/s. Dalmia to comply.  In  the
said letter dated 24.12.1997 also, it was specifically mentioned  that  such
approval for renewal of mining lease was  granted  for  an  extent  of  only
201.50 hectares of forest land and thereby affirming the  earlier  surrender
of 130.11 hectares of land long prior to 16.4.1999. Condition No.(i)  stated
that immediate action should be taken for  transfer  and  mutation  of  non-
forest land equivalent in extent to the forest area to be broken  up  afresh
and condition No.(ii) mentioned that user agency will transfer the costs  of
compensatory aforestation over non-forest land in  favour  of  State  Forest
Department.  Condition No.(iii) further directed  that  user  agency  should
transfer the cost of penal compensatory aforestation raised as on that  date
to incorporate existing structure over double the degraded  forest  land  in
favour of the state forest department.

We have  earlier  noticed  that  as  a  sequel  to  the  said  letter  dated
24.12.1997, when M/s. Dalmia was faced with the  requirement  of  compliance
of  those  three  onerous  conditions,  M/s.  Dalmia  in  its  letter  dated
16.4.1999, took the  stand  that  it  has  decided  to  retain  only  134.92
hectares  and  that  since  even  in  respect  of  134.92  hectares,  mining
operations were carried on with  the  permission  of  the  State  Government
authorities, even condition No.(iii) need not be complied with.

In that background, when we now refer to the present letter of  M/s.  Dalmia
dated 27.3.2001 addressed to the Director of Mines  and  Geology,  we  find,
that, in the said letter M/s. Dalmia  expressed  its  proposed  decision  to
determine the lease and surrender the same.  It also mentioned that  it  was
giving twelve months' notice as required under paragraph 4 of Part  VIII  of
the mining lease  deed  executed  between  M/s.  Dalmia  and  Government  of
Karnataka through the Director of Mines and Geology, that  the  Director  of
Mines and Geology should determine the lease on expiration of twelve  months
period i.e. from 01.04.2001 or earlier if the Director of Mines and  Geology
permit to do so.  In the last para of the said letter, it was reiterated  on
behalf  of  M/s.  Dalmia  that  out  of  331.50  hectares  it  had   already
surrendered an area of 196.58 hectares to the Forest Department through  its
letter dated 16.4.1999 which should also be kept in mind by the Director  of
Mines and Geology.

A cumulative consideration of the letter dated 16.4.1999 along with  the  ex
post facto approval order dated 24.12.1997 and the  letter  dated  27.3.2001
of M/s. Dalmia, it transpires that  as  on  27.3.2001  M/s.  Dalmia  was  in
possession of only 134.92 hectares of the  total  area  of  331.50  hectares
covered by mining lease No.2010.   As  noted  by  us  in  the  letter  dated
27.3.2001,  M/s.  Dalmia  wanted  the  Director  of  Mines  and  Geology  to
determine the lease even in respect of 134.92  hectares  which  was  in  its
physical possession, either on expiry of the twelve months'  period  or  any
earlier date which the concerned authority may permit. To be  more  precise,
M/s.Dalmia surrendered 130 hectares of  land  prior  to  16.04.1999.   Along
with its letter dated 16.04.1999 surrender of 196.58 hectares was  effected.
 The remaining 134.92 hectares was  surrendered  through  its  letter  dated
27.03.2001.

In response to the said letter dated 27.3.2001, the office of  the  Director
of Mines and Geology in  their  letter  dated  25.5.2001  addressed  to  the
Senior Geologist of the State Government, Department of  Mines  and  Geology
instructed him by stating that M/s. Dalmia had stopped mining operations  in
the area covered by M.L. No.2010 since 1997, that they wanted  to  surrender
the lease with the Department of Mines and Geology and, therefore,  intimate
as to whether any arrears were due from M/s. Dalmia.  A  copy  of  the  said
letter dated 25.5.2001 was marked to M/s. Dalmia.  While  marking  the  said
communication, it was stated that it was  being  forwarded  for  information
and with an instruction to surrender the lease deed book in respect of  M.L.
No.2010 along with the mining  plan  approved  by  Indian  Bureau  of  Mines
immediately for taking further action.

In response to the copy of the letter dated 25.5.2001  of  the  Director  of
Mines and Geology, M/s. Dalmia along with  its  letter  dated  16.6.2001  by
referring to the  instructions  mentioned  in  the  letter  dated  25.5.2001
stated that it was surrendering the lease  deed  book  in  respect  of  M.L.
No.2010 and that the approved mining plan was not  available  with  it.   At
the bottom of the said letter, it was stated that  mining  lease  deed  book
was being enclosed along with the said communication.

That apart, in the Writ Petition which was pending before the High Court  of
Karnataka in WP 6304 of  1998  as  between  the  first  respondent  and  the
Director of Mines, as well  as,  Chief  Conservator  of  Forest  where  M/s.
Dalmia was also a party respondent, namely, third respondent, on its  behalf
its counsel represented before the  High  Court  that  M/s.  Dalmia  was  no
longer interested  in  the  working  of  the  mines  situated  in  the  land
adjoining the writ appellant, namely,  the  first  respondent  therein  and,
therefore, as on that date, no boundary  dispute  was  existing  as  between
them.  The said stand of M/s. Dalmia was the main ground which weighed  with
the learned Single Judge for setting aside the order dated 16.11.1997  which
was impugned before it in the said Writ Petition  at  the  instance  of  the
first respondent. The said stand of M/s. Dalmia  was  clearly  reflected  in
the order of the Learned Single Judge dated 26.6.2001.

Apart from the above facts,  after  the  forwarding  of  the  letters  dated
16.4.1999, 27.3.2001 and 16.6.2001 by M/s. Dalmia whereby the  surrender  of
the lands in its entirety, as  well  as,  the  mining  lease  itself,  third
parties were aspiring to get the mining lease in respect of the  surrendered
lands held by M/s. Dalmia. One such application was taken out  by  one  M/s.
M.S.P.L. Ltd. through its Executive Director, Mr. Rahul Baldota.   The  said
application was made on 21.7.2001 for grant of mining lease in  its  favour.
The said application  was  considered  by  the  Director  of  Mines  and  an
endorsement was made on the said application by the  Director  of  Mines  on
25.8.2001 which has been placed before this Court. On a perusal of the  said
document, we find the following endorsements made by the Director  of  Mines
viz:

"the area in respect of which mining lease is sought for  by  the  applicant
in the present application had been already  granted  by  ML  2010  to  M/s.
Dalmia Cements (Bharat) Ltd. The area applied falls within  the  surrendered
area by them (M/s. Dalmia Cements). Two applications 84 AML 2001 and 92  AML
2001 seeking mining lease have been received in respect of this area.   Rule
59(1)  of  MCR  Rules  is  attracted.   At  present  consideration  of   the
application is not possible as the area is not available.

                                                            Sd/- 25.8.2001."

The Director of Mines while referring to the surrender of  M.L.  No.2010  by
M/s. Dalmia noted that the said area  falls  within  the  surrendered  area,
that two applications 84AML 2001 and 92AML 2001 seeking  mining  lease  were
received in respect of that area but since  Rule  59(1)  of  MCR  Rules  was
attracted, consideration of application for grant of lease was not  possible
and that the area was not available for such a grant.

A cumulative consideration of all the  above  sequence  of  events  disclose
that right  from  1999  in  fact  even  prior  to  that  date,  M/s.  Dalmia
surrendered major part of the land covered by M.L. No.2010 and that  by  its
letter dated 27.3.2001, it expressed its decision to determine the lease  of
the remaining area of 134.92 hectares and wanted the Director  of  Mines  to
accept such surrender either after the expiry of twelve  months'  period  or
even earlier.  By 25.5.2001, the Director  of  Mines  in  response  to  M/s.
Dalmia's desire to determine the lease, directed it to surrender  the  lease
book of M.L. No.2010 as well as  the  mining  plan,  and  that  M/s.  Dalmia
surrendered the lease book while stating that mining plan was not  available
with it at that point of time. Closely followed by that, when third  parties
applied for grant of lease, the Director of Mines  stated  in  no  uncertain
terms that those lands were surrendered by M/s. Dalmia but lease  cannot  be
granted based on applications and that Rule 59 (1) of MCR  Rules  will  have
to be followed for grant of such lease.  In fact, subsequent  to  the  above
development on 26.9.2001, the  suit  filed  by  M/s.  Dalmia  against  first
respondent relating to the boundary dispute  was  also  dismissed  for  non-
prosecution.  Yet another factor to be borne in mind is that  on  30.1.2002,
M/s. Dalmia paid a sum of Rs.22,332/- towards the arrears in respect of  its
mining lease and claimed that no further  amount  was  due  and  payable  in
respect of M.L. No.2010.  By a letter dated 31.1.2002,  the  office  of  the
Deputy  Director,  Department  of  Mines  and  Geology  issued  a  no   dues
certificate to M/s. Dalmia  by  acknowledging  the  receipt  of  Rs.22,332/-
based on the revised audit report and  that  no  other  amount  was  due  in
respect of the said mining lease.

If we consider the above material evidence  placed  before  us,  it  can  be
stated that as on 27.3.2001 M/s. Dalmia tacitly  decided  to  surrender  its
mining lease M.L. No.2010 and that in pursuance of  the  said  decision,  it
informed the Director of Mines and Geology to determine the lease either  on
expiry of twelve months or on any day earlier to that  and  in  response  to
the said desire expressed by M/s. Dalmia, the Director of Mines and  Geology
also responded by directing M/s. Dalmia to surrender the lease book as  well
as the mining plan and then subsequently  also  collected  whatever  arrears
which were due and payable by  M/s.  Dalmia  as  on  31.01.2002.   It  must,
therefore, be held that in effect the leasehold rights of  M/s.  Dalmia  had
come to an end by 31.1.2002.

Keeping the said factual scenario in mind, when we consider the  contentions
made on behalf of the respective parties according to the  appellants,  M/s.
Dalmia had surrendered the entirety of the lands held by  it  under  M.L.No.
2010 which surrender had come into  effect  pursuant  to  its  letter  dated
27.03.2001 accepted and acknowledged by the Department of Mines and  Geology
in their letter dated 31.01.2002. We have also  noted  the  various  factual
aspects of the development that had  taken  place  in  regard  to  the  said
surrender of M/s. Dalmia and noted that a conscious decision  was  taken  by
M/s. Dalmia to surrender its  mining  lease  in  M.L.No.  2010  and  factual
surrender was also effected in writing to the Director of Mines and  Geology
and that the Office of Director of Mines and Geology also acknowledged  such
surrender. However, not to accept the plea of  surrender  as  projected,  on
behalf of the appellants Mr. K.K.Venugopal and Mr.Krishnan Venugopal  relied
upon various statutory prescriptions and contended that in  reality  if  the
case of  surrender  pleaded  by  the  appellants  is  to  be  accepted,  the
compliance of such statutory requirements have to be fulfilled.

In  furtherance  of  such  contention  in  the  first  place  Mr.   Krishnan
Venugopal, learned senior counsel contended that as  prescribed  under  Rule
29 of M.C.R. Rules completion of 12 months  period  from  the  date  of  the
intimation of the surrender should have been completed  which  is  mandatory
for the surrender to come into effect. In other words,  the  contention  was
that in law for the surrender to take place the mandatory requirement of  12
months period was necessarily to be fulfilled. It was  also  contended  that
under Rule 29, which is negatively coached  and  it  is  mandatory  for  the
surrender to come into effect 12 months period should  lapse.  It  was  also
contended that under the  said  Rule  surrender  has  to  be  to  the  State
Government or such other officer or  specified  authority.  It  was  further
contended that if a third party come forward with a  case  of  surrender,  a
duty is cast on the third party to satisfy  that  letter  of  surrender  was
sent to such authority and the burden is heavily upon such  third  party  to
establish  the  said  fact.  In  order  to  give  a  thrust  to  the   above
submissions, namely, the satisfaction of the  compliance  of  the  mandatory
prescription contained in Rule 29 reliance  was  also  placed  upon  Section
11(A) as well as the schedule and contended that the  philosophy  underlying
the MMDR Act was  that  every  single  requirement  of  Rule  29  should  be
satisfied in order to accept the theory of surrender pleaded  on  behalf  of
the appellants. It  was  also  contended  that  minerals  other  than  minor
minerals are controlled by the Central Government, power is vested with  the
Central Government to make rules and the State Government are bound  by  the
rules of the Center and case of surrender cannot  come  into  effect  unless
the statutory prescriptions contained in the Rules are strictly adhered  to.


In support of the above submissions reliance was also placed upon the  terms
of the lease as specified in Form 'K' in  particular  paragraph  4  of  Part
VIII of Form 'K'  to contend that notice of termination should be  for  full
12  calendar  months  and  that  too  on  ratification   of   the   required
formalities. It was contended that there was no power with the  delegate  of
State Government to accept or determine the lease instantaneously.

The sum and substance of the  contention  on  this  aspect  by  the  learned
counsel for the first respondent was that  major  mineral  being  under  the
exclusive control of  the  Government  of  India,  there  should  be  strict
compliance of the statutory requirements both in respect of grant  of  lease
as well as  the  termination  of  it  either  by  surrender  or  by  way  of
termination at the instance of  the  State  and  that  such  requirement  is
contained in Rule 29 which is negatively couched and, therefore,  when  such
prescription for the purpose of surrender  to  come  into  effect  has  been
specifically spelt out in the statutory rule read along with para 4 of  Part
VIII of the lease document, such  surrender  propounded  on  behalf  of  the
appellant can be accepted only if it was  satisfactorily  demonstrated  that
those statutory prescriptions were strictly applied and followed.

As against the above submissions, on  behalf  of  the  appellant  Mr.  Kapil
Sibal, learned senior  counsel  contended  that  there  was  no  lacunae  in
accepting the surrender offered by M/s.  Dalmia,  that  such  surrender  had
really taken place by virtue of the conduct of  the  parties,  namely,  M/s.
Dalmia as well  as  the  Department  of  Mines  and  Geology  of  the  State
Government and, therefore, it  was  too  late  in  the  day  for  the  first
respondent to contend that the surrender made by M/s. Dalmia had  not  taken
place.

Having considered the respective submissions on this question, there can  be
no two opinions that when the grant, operation  and  termination  of  mining
lease is governed by the MMDR Act and the Mineral Concession  Rules,  anyone
of those factors viz., either grant of lease, operation of the  mines  based
on such grant and the termination of it either by way of  surrender  at  the
instance of the lessee or by way of  termination  at  the  instance  of  the
State should be carried out  strictly  in  accordance  with  the  prescribed
stipulations of the provisions of the above Act and the Rules.

Keeping the said legal principles in mind, when we refer  to  Rule  29,  the
caption of the said Rule reads as "restriction on determination  of  lease".
The relevant part of the said Rule can  be  extracted  while  analyzing  its
implications which reads as under :

"29. Restrictions on  determination  of  lease.-(1)  The  lessee  shall  not
determine the lease except after notice in writing of not less  than  twelve
calendar months to the State Government or to such officer, or authority  as
the State Government may specify in this behalf."

Sub-Rule (1) states that the lessee shall  not  determine  the  lease  after
notice in writing  of  not  less  than  12  calendar  months  to  the  State
Government or to such officer or  authority  as  the  State  Government  may
specify in this  behalf.  While  referring  to  sub-Rule  (1),  it  will  be
necessary to refer to Form 'K' which is  the  model  form  of  mining  lease
deed. As per M.L.No. 2010, which has been drawn as per Form 'K', it  is  not
in dispute that the said lease deed was  as  between  the  State  Government
which expression should be deemed to include the successors and assigns  who
would be the first party as the lessor. Paragraph 4 of Part VIII,  which  is
the provision for  determination  of  the  lease  by  way  of  surrender  as
prescribed under Rule 29,  stipulates  that  the  lessee  may  at  any  time
determine the lease by giving not less than 12 calendar  months'  notice  in
writing to the State Government  to  such  office  or  to  such  officer  or
authority as the State Government may specify in that behalf  and  the  rest
of the stipulation contained therein refers to the payment of  rents,  water
rates, royalties, compensation for  damages  etc.  Therefore,  reading  Rule
29(1) what is provided is that not  less  than  12  calendar  months  notice
should be issued by the lessee for determining the  lease  and  such  notice
should be issued to the State Government or to such officer or authority  as
the State Government may specify in that behalf.

In fact, Xerox copy of the mining lease M.L.No. 2010 referring to  the  date
of  grant  as  07.03.1986  providing  for  20  years  from  25.11.1983  duly
registered as document No.28 of 1986-87 has been  placed  before  us.  On  a
reference to the said document,  we  find  that  while  on  behalf  of  M/s.
Dalmia, one P.M. Balasubramaniam has affixed his signatures,  on  behalf  of
the Governor of Karnataka, the Director of Mines and  Geology  has  put  his
signature along with one K.R.Nirmala, Superintendant of DMG, Bangalore.  One
other relevant fact to be noted from the said document  is  para  5  falling
under Part VIII which reads as under:
"5. On such date as the  State  Government  may  elect  within  12  calendar
months after the determination of this lease or of any renewal thereof,  the
amount of the refund of security deposit paid in respect of this  lease  and
then remaining in deposit with the State Government and not required  to  be
applied to any of the purposes mentioned in this lease shall be refunded  to
the lessee/lessees. No interest shall run on the security deposit.
                                                       (underlining is ours)


When we examine the contention made on behalf of the first respondent  about
the statutory requirement to be satisfied under  Rule  29  read  along  with
para 4 and 5 of Part VIII of the lease deed, it is clear that on  behalf  of
the lessor, namely, the State Government, the signatory to  the  lease  deed
was  the  Director  of  Mines  and  Geology.  Therefore,  there  can  be  no
controversy as to who  can  validly  represent  the  State  Government  with
reference  to  the  grant  of  lease,  operation  of  it  as  well  as   its
determination who is none other than the  Director  of  Mines  and  Geology.
When the Director of Mines and Geology was  authorized  to  sign  the  lease
deed on behalf of the Governor of the State of Karnataka, it must  be  taken
to mean that he was the authority who was validly authorized  by  the  State
Government as stipulated in Rule 29(1) of the Rules for the purpose  of  the
lessee to inform about its decision to determine the lease while  giving  12
months' notice. It must be stated that the very fact that  the  Director  of
Mines and Geology was authorized to sign the lease deed  on  behalf  of  the
Governor of State of Karnataka, it was quite explicit that he was  the  only
authority who was competent to authenticate the grant of the lease  as  well
as for its determination. Unless there was any  other  Authority  prescribed
to carryout the said task as a statutory requirement.

Once we steer clear of  the  said  position  as  to  who  is  the  competent
authority for the purpose of operating Rule 29(1), any  amount  of  reliance
placed upon the Notification No.CI3MMM95, Bangalore dated 27.05.1995  issued
by the Commerce and Industries Department of the State of Karnataka will  be
of no avail. The said notification was relied upon  to  contend  that  while
specific direction was issued to the effect that the powers  exercisable  by
the State Government in  relation  to  matters  with  reference  to  various
provisions as conferred by sub-section (2) of Section 26  of  the  MMDR  Act
vested with the Director of Mines  and  Geology,  Government  of  Karnataka,
there was no reference to the powers exercisable by  the  State  under  Rule
29. When the State of Karnataka had authorized the  Director  of  Mines  and
Geology to sign the very mining lease deed itself on behalf of the  Governor
of State as disclosed in the Xerox copy of the mining  lease  M.L.No.  2010,
it is futile on the part of the first respondent to  contend  that  for  the
purpose of determination of that very lease, a  different  Authority  should
be preferred.  In fact, M/s. Dalmia itself having understood the  prescribed
Authority, sent its letter of determination of the  lease  dated  27.03.2001
only to the  Director  of  Mines  and  Geology.   The  said  Authority  also
responded to the letter of determination  in  its  letter  dated  25.05.2001
addressed  to  its  subordinate  officer  marking  a  copy  to   M/s.Dalmia.
Therefore, the said contention raised on  behalf  of  the  first  respondent
that the surrender of the lease not having been forwarded to the  authorized
officer of the State Government by M/s.  Dalmia,  the  so-called  letter  of
surrender dated 16.04.1999 and 27.03.2001 cannot  be  validly  construed  as
the act of M/s. Dalmia to determine the lease is to be  stated  only  to  be
rejected. We are afraid that it is  too  late  in  the  day  for  the  first
respondent to come forward with such a contention when  M/s.  Dalmia  having
entered into lease deed with the State of Karnataka duly represented by  the
Director of Mines and Geology exercised its right to determine the lease  by
addressing its communication on 27.03.2001 to the very same  Authority.   It
must be stated that such a decision taken and communicated  by  M/s.  Dalmia
to the Director of Mines and Geology was valid in law and was in  consonance
with the prescription contained in sub-Rule (1) of Rule 29.

What remains to be considered is the question whether one  should  wait  for
the expiry of  the  12  months  period  to  lapse  from  27.3.2001  for  the
surrender to come into effect by relying upon para 4 of  Part  VIII  of  the
lease deed.  In the first place, even according  to  M/s.  Dalmia  in  their
letter dated 27.3.2001 M/s. Dalmia themselves while giving 12 months  notice
as required under para 4 of Part VIII of the mining lease deed  also  stated
that it may be determined on any earlier date i.e. prior to 1.4.2001 if  the
Director of Mines and Geology so permit.  When such a categorical stand  was
made on behalf of M/s. Dalmia, acting upon it, the  office  of  Director  of
Mines and Geology in their letter dated 25.5.2001 addressed  to  the  Senior
Geologist while marking its copy to M/s. Dalmia  directed  it  to  surrender
the lease deed book along with the mining plan  immediately  to  enable  its
office to take  further  action.   In  fact,  in  the  body  of  the  letter
addressed  to  Senior  Geologist,  the  Director  of   Mines   and   Geology
specifically mentioned that M/s. Dalmia wanted to surrender the  lease  M.L.
No.2010  earlier  than  12  months  period.   Apart   from   such   specific
instructions issued, M/s. Dalmia themselves in their reply  dated  16.6.2001
to the Director of Mines and Geology surrendered  the  lease  deed  book  of
M.L. No.2010 and as regards the mining plan it stated that the same was  not
available with it.  Thereafter, as was noticed earlier, on  30.1.2002,  M/s.
Dalmia paid a sum of Rs.22,332/- towards arrears in respect  of  the  mining
lease which was also acknowledged by  the  Director  of  Mines  and  Geology
which was duly communicated to M/s. Dalmia by stating that by  issuing  such
no due certificate, no further amount was due  and  payable  in  respect  of
said mining lease.

When we consider the above correspondence exchanged between M/s. Dalmia  and
the office of the Director of Mines and Geology, there is no room for  doubt
for anyone to still contend that the surrender had not come into effect.  On
the other hand, we find that there was due compliance  of  Rule  29(1)  when
M/s. Dalmia expressed its desire to determine the lease in its letter  dated
27.3.2001 addressed to Director of Mines and Geology.  Then by  specifically
stating in  the  said  communication  that  it  may  even  be  permitted  to
determine the lease prior to  12  months  period  and  that  based  on  such
specific plea made on behalf of M/s.  Dalmia,  the  Director  of  Mines  and
Geology also decided to determine the lease without waiting for  the  expiry
of 12 months period by calling upon M/s. Dalmia to surrender the lease  book
which was also duly surrendered by M/s. Dalmia on 16.06.2001 and  thereafter
by issuing a no due certificate on 31.2.2002, the said  sequence  of  events
had put an end to the operation  of  the  lease  in  M.L.No.  2010  by  duly
accepting the surrender made on behalf of M/s. Dalmia.  The contention  that
there was no scope for such surrender to come into effect before the  expiry
of twelve months is concerned, it will also be relevant to make a  reference
to para 5 of the lease deed  M.L.No.  2010  in  Part  VIII  which  has  been
extracted above. The said paragraph  5  empowers  the  State  Government  to
elect within 12 calendar months after the determination  of  lease  for  the
purpose of refunding the security deposit made by the  lessee.   We  do  not
find any specific bar in para 4 of Part VIII that while on the one hand  the
lessee has to give not less than twelve calendar months notice,  on  receipt
of such notice the state government  should  wait  for  the  expiry  of  the
twelve months period.

The contention that  only  on  expiry  of  the  twelve  months  period,  the
surrender will come into effect does not stand to reason also. In  fact,  we
do not see any sound basis in making such a  contention  on  behalf  of  the
first respondent.  On the other hand, para 5 of the lease deed itself  gives
ample right to the lessor, namely the  Director  of  Mines  and  Geology  to
refund the security deposit, if any, to  make  the  determination  of  lease
within the 12 months period of  notice.   The  said  clause  provides  clear
indication for such earlier acceptance of the determination  of  the  lease.
We have noted extensively that long prior to  16.04.1999  as  well  as  from
16.4.1999 onwards till M/s. Dalmia  by  its  communication  dated  27.3.2001
positively expressed its  decision  to  determine  the  lease,  M/s.  Dalmia
themselves were only referring to the mining operations  to  the  extent  of
130.4 hectares which remained with them as on 27.03.2001.  Even  in  respect
of the said extent of lands by virtue of the general  directions  issued  by
this Court in Godavarman I no mining operation was  being  carried  on  from
January 1997.  Subsequently, based on Godavarman II  order  of  this  Court,
when the Ministry  of  Environment  and  Forest  was  directed  to  consider
issuance of ex post facto approval, one such order was issued in  favour  of
M/s. Dalmia on 24.12.1997  by  way  of  in  principle  stage-I  approval  by
imposing three conditions. Even as on  16.4.1999,  M/s.  Dalmia  in  writing
categorically stated and took the stand that it need  not  comply  with  the
conditions imposed in the order dated 24.12.1997.   In  effect  M/s.  Dalmia
was not operating its right of carrying out any mining activity  in  respect
of the entirety of 334.40 hectares after the first renewal effected  in  the
year 1983. Ultimately, in its letter dated 27.03.2001,  it  made  explicitly
clear that it was not operating the  mines  and,  therefore,  it  wanted  to
surrender either after expiry of twelve  months  period  from  the  date  of
issuance of such notice or any day earlier that may  be  acceptable  to  the
State Government.

In the light of such a clear stand disclosed by  M/s.  Dalmia,  we  fail  to
understand as to for what reason the State Government should  wait  for  the
expiry of the twelve months period for the surrender to  come  into  effect.
On the other hand, the decision made by the Director of  Mines  and  Geology
in its communication dated 25.5.2001 addressed to the Senior Geologist  with
a copy marked to M/s. Dalmia to determine the lease  earlier  and  for  that
purpose directed M/s. Dalmia to surrender mining lease  book,  namely,  M.L.
No.2010 along with the mining plan was a pointer  to  the  effect  that  the
surrender was decided to be accepted  on  behalf  of  the  State  Government
instantaneously which was also not prohibited  either  under  the  Rules  or
under the terms of the lease deed or under any other statutory provision.

In this context, the reliance placed upon some  of  the  decisions  of  this
Court  by  Mr.  Kapil  Sibal,  learned  senior  counsel  appearing  for  the
appellant needs to be considered.  The learned senior  counsel  relied  upon
the earliest judgment of this Court reported as Basheshar Nath  (supra)  for
the proposition that the principle of  waiver  will  have  different  shades
when it comes to the question of such waiver being opted depending upon  the
nature of right as to whether it would be for the benefit of  individual  or
for the general public.  This Court has held as under in paragraph 66:

"66.........I may refer in this connection to the provisions  in  Part  XIII
which relate to trade, commerce and  intercourse  within  the  territory  of
India. These provisions also impose certain restrictions on the  legislative
powers of the Union and of the States with regard to trade and commerce.  As
these provisions are for the benefit of the general public and not  for  any
particular individual, they can not be waived, even though they do not  find
place in Part III of the Constitution. Therefore, the  crucial  question  is
not whether the rights or restrictions occur in one part  or  other  of  the
Constitution. The crucial question is the nature of the right given:  is  it
for the benefit of individuals or is it for the general public?"



The said well settled principle of law set down  by  this  Court  will  have
universal application. When such principle is applied to the case  on  hand,
as rightly pointed out by Mr.Sibal, learned senior counsel  when  the  State
of Karnataka chose to accept the  surrender  made  by  M/s.  Dalmia  in  its
letter dated 27.03.2001, immediately thereafter by directing M/s. Dalmia  to
surrender the lease book of M.L.2010 along with mining plan such  action  of
the State Government for the purpose of  ensuring  the  effective  surrender
offered by M/s.Dalmia having been made in the general  public  interest,  as
the leasehold rights  of  the  mining  activities  would  be  in  the  lands
belonging to the State and that too  Forest  Lands,  such  action  taken  in
accepting the surrender by waiving the 12 months period should be  taken  as
having come into effect. We  find  force  in  the  said  submission  of  the
learned senior counsel for the appellant.

In this context, the various orders  relied  upon  and  placed  before  this
Court by Mrs. Anitha Shenoy, Advocate-on-Record appearing on behalf  of  the
State  Government,  namely,  the  orders  dated  December  1988,  11.4.1989,
Notification dated 12.3.1965 and Notification dated 19.6.1965 require to  be
examined. The order dated December, 1988 relates to the acceptance  of  full
surrender of M.L. No.994 in  Sankalapuram  village,  Hospet  Taluk,  Bellary
district. The said document has been signed by the  Director  of  Mines  and
Geology, Bangalore on behalf of Government of Karnataka  stating  that  full
surrender of mining lease No.994 was accepted  with  effect  from  1.7.1986.
The order dated 11.4.1989 is  another  order  in  respect  of  mining  lease
No.1759.  Here again the said order was signed  by  Director  of  Mines  and
Geology, Bangalore on behalf of  the  State  Government  for  accepting  the
surrender.   The  earlier  notification  dated  12.3.1965  states  that   as
provided under proviso to Rule 29, one Shri G.R. Thiruvengadam  Chetty,  the
lessee of M.L. No.419 was permitted to surrender  some  part  of  the  lease
hold lands which was notified  in  the  name  of  the  Governor  of  Mysore.
Similar is the Notification dated  19.6.1965  in  respect  of  mining  lease
No.414 held by one Shri M.B. Jhaveri.  While  those  notifications  were  of
the years 1965, 1988 and 1989, we find that surrender of  mining  lease  was
duly acknowledged by the Director of Mines and  Geology  on  behalf  of  the
state  of  Karnataka.    Therefore,  even  going  by  the   earlier   orders
pertaining to acceptance of surrender issued by the State of Karnataka  read
along with the orders dated 25.5.2001 and 31.1.2002 issued in  the  case  of
M/s. Dalmia and for the various reasons referred  to  above,  we  hold  that
M/s. Dalmia surrendered its mining lease M.L.  No.2010  in  respect  of  the
entire extent of 331.50 hectares in Jaisinghpur village, R.M. Block,  Sandur
Taluk, Bellary, State of Karnataka which surrender was duly accepted by  and
on  behalf  of  State  of  Karnataka  which  had   come   into   effect   on
acknowledgment of the receipt of the sum of Rs.22,332/- towards  arrears  in
respect of  the  said  mining  lease  in  the  acknowledgment  letter  dated
31.1.2002.

When once such surrender had come into effect, it must be stated that  there
was no scope for M/s. Dalmia to resile from the said surrender  and  contend
that it still had a right to transact with the said  M.L.  No.2010  for  any
other purpose including for effecting any transfer in favour of anyone  much
less in favour of the first respondent.

In this context, the reliance placed upon some  of  the  decisions  of  this
Court by Mr. Krishnan Venugopal learned senior  counsel  appearing  for  the
first respondent needs to be considered. The learned senior counsel for  the
first respondent relied upon the decisions reported in  Sethi  Auto  Service
Station (supra) and Shanti Sports Club  (supra)  for  the  proposition  that
'noting' in the department files do not  have  sanction  of  law  to  be  an
effective order unless it culminate into an executable order  affecting  the
rights of the parties and only when it reaches  the  final  decision  making
authority in the  department  get  his  approval  and  the  final  order  is
communicated to the person concerned. There can be no  dispute  with  regard
to the said principle stated in the above referred to two decisions. But  in
the case on hand, we have extensively noted the various sequence  of  events
relating to the factum of surrender effected by M/s. Dalmia  to  the  extent
of 130 hectares long prior to 16.04.1999 and an extent  of  196.58  hectares
in its letter dated 16.04.1999 itself and subsequently by its  letter  dated
27.03.2001, its desire to sanction the whole of the mining lease covered  by
M.L.No.2010. We also referred to various communications which emanated  from
the office of the Director of Mines and  Geology  confirming  acceptance  of
surrender proposed by M/s. Dalmia which came to an end  on  31.01.2002.   In
the light of the said voluminous correspondence between M/s. Dalmia and  the
Department of Mines and Geology of the State Government available on  record
the reference to file noting dated 28.05.2001, by the Director of Mines  and
Geology, was only an additional supporting material to confirm  the  act  of
surrender effected by M/s. Dalmia and its final conclusions as  recorded  in
the proceedings of the Director of Mines and Geology.  We therefore  do  not
find any support for the first respondent by  referring  to  the  above  two
decisions.

Mr. Krishnan Venugopal, learned  senior  counsel  further  relied  upon  the
decisions  in  Lila  Gupta  (supra)  and  Pankaj  Mehra  (supra)   for   the
proposition that all acts in violation of the lease  which  do  not  provide
for consequence of the breach would be void.

In the decision reported in Lila Gupta (supra), the said principle has  been
set out in paragraph 10 and while stating so, this Court  has  explained  as
to how such a principle  would  vary  when  it  comes  to  the  question  of
affecting the public at large.  In that case, it was stated so in  paragraph
10 while dealing with the claim of a woman while ascertaining her status  as
the wife and it was in that context, the principle was stated.   This  Court
further in paragraph 11 explained as to how the said principle  cannot  have
universal application.

As far as the decision reported in Pankaj Mehra (supra)  is  concerned,  the
statement of law set out in paragraph 14 itself is clear  in  its  term  and
states that the word 'void' has different nuances in  different  connotation
and one of them is to the effect that it should be construed  as  having  no
legal force or binding effect while in another circumstances, it  should  be
construed as 'unable in  law  to  support  the  purpose  for  which  it  was
intended'.  The relevant paragraph for our purpose reads as follows:

"14..............The word 'void' in its strictest sense,  means  that  which
has no force and effect, is without legal efficacy, is  incapable  of  being
enforced by law, or has no legal or binding force, but frequently  the  word
is used and construed as having the more liberal meaning of 'voidable.

The word 'void' is used in statutes in the sense of utterly void  so  as  to
be incapable of ratification, and also in the sense of voidable  and  resort
must be had to the rules of construction  in  many  cases  to  determine  in
which sense the Legislature intended to use it. An act or  contract  neither
wrong in itself nor against public policy, which has been declared  void  by
statute for the protection or benefit  of  a  certain  party,  or  class  of
parties, is voidable only."

                                                       (underlining is ours)



Therefore, if such a different connotation is followed  for  the  expression
'void' and when we apply the  said  principle  to  the  case  on  hand  with
particular reference to Rule 37(1A) we have explained in detail  as  to  how
the voidness of the leasehold  right  would  result  in  by  virtue  of  the
serious violations committed by M/s. Dalmia while dealing  with  the  mining
lease in M.L.No.2010 while carrying out the first renewal in the  year  1983
when the violation of Section  2  of  the  Forest  Act,  1980  occurred  and
subsequently when Stage I ex post facto approval was granted  on  24.12.1997
by imposing conditions which were flagrantly violated  by  M/s.  Dalmia  and
thereby made the lease void ab initio.

In the light of the above circumstances, pertaining to the case on hand,  we
do not find any scope to apply  the  above  decisions  relied  upon  by  the
learned senior counsel for the first respondent.

It will be useful to refer to paragraphs 10 and 11 of the decision  reported
in Lila Gupta (supra) to highlight the distinctions stated above as  to  how
those decisions can be of no application to the facts of this case.

"(10) .............the interdict of law is that it shall not be  lawful  for
a certain party to do a certain thing which would mean that if that  act  is
done it would be unlawful. But whenever a statute prohibits a certain  thing
being done thereby making it unlawful  without  providing  for   consequence
of the breach, it is not legitimate to say that such a thing  when  done  is
void because that would tantamount  to saying that  every  unlawful  act  is
void. ..........

(11) Undoubtedly, where a prohibition is enacted  in  public  interest,  its
violation should not be treated lightly................"

(Emphasis added)


Our above conclusion as  regards  the  surrender  effected  by  M/s.  Dalmia
answers question Nos.(i) to (iii) framed in paragraph 48. With that we  come
to the next question as to whether the act of surrender in order  to  become
complete should have been accepted by the State.  It  must  be  stated  that
acceptance by the State though not a statutory requirement,  the  provisions
contained in the mining lease, in particular, Part VIII paragraphs 4  and  5
impliedly require such  acceptance.  While  answering  question  Nos.(i)  to
(iii), we have elaborately noted as to the manner  in  which  M/s.  Dalmia's
proposal to determine the lease as  initiated  in  its  communication  dated
27.3.2001  ultimately  resulted  in  the   surrender   of   the   lease   by
acknowledging the sum of Rs.22,332/- towards final dues payable by it  under
the said lease.  We have also held that the Director of  Mines  and  Geology
was the competent authority to  receive  a  proposal  for  determination  of
lease by M/s. Dalmia. The subsequent correspondence exchanged  between  M/s.
Dalmia and the Director of Mines and Geology also confirm that the  proposal
of M/s. Dalmia was considered and subsequent directions were issued for  the
purpose of accepting the surrender proposed and ultimately by  acknowledging
the payment of arrears and issuance of no due certificate the surrender  was
finally accepted on behalf of the State Government by the Director of  Mines
and Geology. Therefore,  while  holding  that  acceptance  of  surrender  is
impliedly mandated under Rule 29 read along with paragraphs 4 and 5 of  Part
VIII of the mining lease, there was a factual acceptance on  behalf  of  the
State of Karnataka of the mining lease M.L. No.2010.

 Reliance was placed upon the decision reported  as  Bhagwati  Prasad  Pawan
Kumar v. Union of India - (2006) 5 SCC 311 wherein this Court held that  the
Courts must examine the evidence to  find  out  whether  in  the  facts  and
circumstances of the case the conduct of the "offeree" was such as  amounted
to an  unequivocal  acceptance  of  the  offer  made.   Paragraph  No.19  is
relevant for our purpose which reads as under:

"19. It is well settled that an  offer  may  be  accepted  by  conduct.  But
conduct would only amount to acceptance if it is clear that the offeree  did
the act with the intention (actual or apparent) of accepting the offer.  The
decisions which we have noticed above also proceed on this  principle.  Each
case must rest on its own facts. The courts must  examine  the  evidence  to
find out whether in the facts and circumstances of the case the  conduct  of
the "offeree" was such as amounted  to  an  unequivocal  acceptance  of  the
offer made. If the facts of the case disclose that there was no  reservation
in signifying acceptance by conduct, it must follow that the offer has  been
accepted by conduct. On the other hand, if the evidence  disclose  that  the
"offeree" had reservation in  accepting  the  offer,  his  conduct  may  not
amount to acceptance of the offer in terms of  Section  8  of  the  Contract
Act."

                                                       (underlining is ours)

In the case on  hand,  we  have  considered  various  documents  by  way  of
correspondence exchanged between M/s.Dalmia and the said  authorities  prior
to 1999 and after 16.04.1999, ending with 31.01.2002 to hold that there  was
an unequitable acceptance of the surrender  offered  by  M/s.Dalmia.  Having
regard to our said conclusions, it is no longer open for anyone  to  contend
that the surrender had not come into effect.

Having answered the said question, when we come to the next question  as  to
whether pursuant to  the  act  of  surrender,  delivery  of  possession  was
mandatory under Rule 27 (2) (l) of the Mineral Concession  Rules,  it  would
be necessary to make a reference to the said Rule which reads as under:
"(l) The delivery  of  possession  of  lands  and  mines  on  the  surrender
expiration or determination of the lease;"


Under Rule 27, it is stated that every mining  lease  shall  be  subject  to
certain conditions. Sub-Rule (2) states that  a  mining  lease  may  contain
such other conditions as the State Government may deem necessary  in  regard
to conditions (a) to (o).  Under the said sub-Rule (2) in clause (l), it  is
provided that delivery of possession of lands and mines  on  the  surrender,
expiration or determination of lease.  What is required under  Rule  (2)  of
Rule 27 was that a mining lease may contain many conditions  including  what
is specified in Clause (l).  The reference to  Rule  27  (2)(l)  was  relied
upon by learned counsel for the State. Except merely drawing  our  attention
to the said sub-clause (l) of Rule 27 (2), we were not drawn to any  of  the
clause contained in the mining lease in M.L. No.2010 to state  that  such  a
condition was specifically incorporated in the  mining  lease.   It  is  not
even the case of the first respondent or the respondent State  that  such  a
condition for physical possession of the lands on  surrender  was  specified
in the mining lease.

In such circumstances, we do not find any need or necessity  to  delve  deep
into the said contention in  order  to  find  out  whether  or  not  such  a
condition should have  been  fulfilled  by  M/s.  Dalmia  or  by  the  State
Government  for  the  purpose  of  surrender  to  come  into  effect.    We,
therefore, hold that insofar M.L. No.2010  was  concerned,  there  being  no
specific provision as specified in Clause (l) of Rule 27 (2)  there  was  no
mandatory requirement of delivery of possession as stipulated therein.

When we come to question Nos.(vi), (vii), (viii),  (ix)  and  (x)  the  said
questions would arise if at all  the  surrender  had  not  taken  place  and
thereby assuming the lease continued for non-compliance  of  the  conditions
imposed in the in principle stage-I approval in the order dated  24.12.1997,
did the mining lease stood automatically expired  on  24.11.2003.   Question
No.(vii) again pertains to the lease becoming void ab initio  by  virtue  of
contravention of Rules 29 and  37  of  Mining  Concession  Rules  read  with
Section 19 of the MMDR  Act.   The  next  question  pertains  to  the  prior
approval for any mining lease  to  come  into  operation  as  stipulated  in
Section 2 of the Forest Act  of  1980.   In  fact,  the  said  question  was
required to be considered in the light of the contention  raised  on  behalf
of the appellants that ex post facto approval is not provided for under  the
Forest Act of 1980 and that such a course was adopted only by this Court  in
Godavarman I and II as a one time measure.  Whereas on behalf of  the  first
respondent, it was contended that there was a clear distinction  as  regards
the grant of mining lease on the one hand under the provisions of  MMDR  Act
and the Mining Concession  Rules  and  the  requirement  of  approval  under
Section 2 of the Forest Act 1980 and the one does not overlap the other.  In
the first instance, in support of the said  stand  made  on  behalf  of  the
first respondent, reliance  was  placed  upon  amended  Forest  Conservation
Rules, in particular Rules 6, 7 and  8  and  state  that  non-compliance  of
Section 2 of the Forest Act will not ipso  facto  make  the  lease  void  ab
initio.  The consideration of the said questions would become  relevant  for
the purpose of considering the subsequent claim of M/s. Dalmia  as  well  as
the first respondent that mining lease M.L.  No.2010  stood  transferred  by
M/s. Dalmia in favour of the first respondent pursuant  to  the  application
of transfer  dated  4.2.2002  made  by  M/s.  Dalmia  and  the  order  dated
16.3.2002 of the State Government by which such a transfer of lease of  M.L.
No. 2010 was granted in favour of the first respondent.

When we consider question Nos.(vi), (vii), (viii), (ix) and (x)  as  far  as
question No.(vi) is concerned, we have found that when during the  operation
of the first renewal viz., between 25.11.1983 and 24.11.2003,  there  was  a
statutory violation in as much as  the  mandatory  requirement  of  approval
under Section 2 of the Forest Act, 1980 was not secured  on  the  date  when
the first renewal was granted viz.,  07.06.1986.  However,  fortunately  for
M/s.Dalmia, Godavarman I and Godavarman II judgments of this Court came  for
its rescue by way of a general direction while all  mining  operations  were
directed to be stopped  in  Godavarman  I,  subsequently  in  Godavarman  II
direction was issued to the Central Government to  consider  ex  post  facto
approval under Section 2 of the Act as a one time measure.  Pursuant to  the
said direction, in the case of M/s.Dalmia, an order came  to  be  passed  on
24.12.1997, granting in-principle first stage  approval  by  imposing  three
conditions.  The  said  order  further  directed  that  while  granting  in-
principle first stage approval, to enable M/s.Dalmia to carry on its  mining
operations,  the  requirement  of  fulfillment  of  three  conditions   were
mandated to be complied within a period of five years from the date  of  the
said order i.e. on or before 24.12.2002.   Admittedly,  M/s.Dalmia  did  not
comply with those conditions.  The stand of M/s.Dalmia was that as  on  that
date it was in possession of only 134.92 hectares and that even  in  respect
of those  areas  since  it  was  carrying  on  mining  operations  with  the
permission of the Forest Department of  the  State  Government,  no  further
compliance was required.

As  far  as  the  surrender  of  land  and  afforestation  compensation  was
concerned, M/s. Dalmia took a categorical stand that it was  not  liable  to
comply with those directions.  Therefore, the outcome of such a stand  taken
on by M/s.Dalmia was to  the  effect  that  in-principle  stage  I  approval
granted by MOEF was not carried  out.   Of  course,  Mr.Krishnan  Venugopal,
learned senior counsel in his submissions contended that  having  regard  to
the subsequent amendment of the Forest (Conservation)  Rules  in  particular
Rules 6, 7 and 8 and also a communication of the MOEF dated  14.9.2001,  the
non-compliance of the conditions will not have any impact  on  the  validity
of the lease as the amended Rules and the communication of the MOEF made  it
clear that the compliance of such conditions imposed can always  be  carried
out even after the expiry of the initial period of five years and  the  MOEF
came  forward  to  give  extension  of  time  for  compliance  of   whatever
conditions which were imposed at the time of grant of the first  renewal  to
enable the lessee to continue to retain its mining lease  and  thereby  seek
for further renewal.

It is true that a reference to the amended Rules 6, 7 and 8 as well  as  the
earlier communication of MOEF did to some extent support the  stand  of  the
learned senior counsel for the first respondent.  However,  persuasive  such
a contention may be as raised on behalf of the first respondent, we find  it
extremely difficult to accept such a contention.  As rightly pointed out  by
Mr.Kapil Sibal, learned senior counsel when we construe Rules 29 and  37(1A)
read along with Section 19 of the MMDR Act, de  hors  any  liberal  approach
offered by the authorities of MOEF under the provisions of the  Forest  Act,
such relaxation in the matter of compliance of conditions of prior  approval
would always be subject to the mining lease granted under the provisions  of
MMDR Act and the Mineral Concession Rules is in  a  live  stage.   In  other
words, unless the mining lease granted under the provisions of the MMDR  Act
read along with the provisions contained in  the  Mineral  Concession  Rules
continue to remain valid and operative, the question of  compliance  of  the
conditions for prior approval under Section 2 of the Forest  Act  even  with
whatever relaxation granted by the authorities under the said  Act  will  be
of no use.  In this context, when we apply  Section  19  of  the  MMDR  Act.
Section 19 of the MMDR Act reads as follows:

"19. Prospecting licences and mining leases to be void if  in  contravention
of Act:- Any reconnaissance permit,  prospecting  licence  or  mining  lease
granted, renewed or acquired in contravention of the provisions of this  Act
or any rules or orders made thereunder shall be void and of no effect.

Explanation:- Where a person  has  acquired  more  than  one  reconnaissance
permit, prospecting licence or mining lease and the aggregate  area  covered
by such permits, licences or  leases,  as  the  case  may  be,  exceeds  the
maximum area permissible under section 6, only that  reconnaissance  permit,
prospecting licence or mining lease the acquisition of  which  has  resulted
in such maximum area being exceeded shall be deemed to be void."



Thus, Section 19 makes the position clear  that  any  mining  lease  granted
originally or renewed subsequently in contravention  of  the  provisions  of
the MMDR Act or any Rules or any Order made thereunder to be void and of  no
effect.  The expression used in Section 19 is  mandatory  and  therefore  if
any contravention of the provisions of MMDR Act or Rules or Orders found  in
respect of a mining lease originally granted or  subsequently  renewed  such
mining lease should be treated to be void and inoperative for operating  the
said mining lease.  It must also be kept in mind that carrying on  any  non-
forest activity in a Forest Land can only be with the prior approval of  the
Central Government under Section 2 of the Forest  Act  of  1980.  Therefore,
for a mining lease to remain valid, twin requirements  of  the  approval  of
the Central Government under the proviso to Section 5(1)  of  MMDR  Act  and
Section 2 of the Forest Act of 1980 have  to  be  fulfilled.   Therefore,  a
lessee cannot be heard to contend that such statutory  requirements  are  to
be thrown overboard and permitted to  seek  for  such  approvals  after  the
expiry of the lease at its own sweet will and pleasure and the  time  to  be
fixed on its own and that the  operation  of  the  mining  lease  should  be
allowed ignoring such mandatory prescription.

Keeping the above said mandatory prescription in Section 19  in  mind,  when
we analysis the case on hand, in  the  first  place,  admittedly  after  the
first renewal, there was a serious violation of failure  to  get  the  prior
approval under Section 2 of the Forest  Act,  1980  i.e.  when  the  renewal
order was passed on 07.03.1986.  Therefore, if  we  strictly  apply  Section
19, it must be stated that even as on 07.03.1986, for violation  of  Section
2 of the Forest Act, 1980 it must be stated  that,  in  law,  there  was  no
mining lease at all in existence as it became void  on  the  expiry  of  the
initial period of the original lease granted in 1953.  It may  be  contended
that such violation get cured by virtue of the  judgments  in  Godavarman  I
and Godavarman II, though for argument sake, such a contention put forth  on
behalf of M/s.Dalmia and the first respondent can be taken to be  available,
as pointed out by us earlier, based on the  said  judgments  of  this  Court
when  the  in-principle  first  stage  approval  was  granted  by   imposing
conditions in the order dated 24.12.1997,  such  conditions  were  blatantly
violated by M/s.Dalmia by taking a stand that it was  not  bound  to  comply
with those conditions.   The  reply  of  M/s.Dalmia  dated  16.04.1999,  was
sufficient to confirm the  said  stand  of  M/s.Dalmia.   Therefore,  as  on
16.04.1999, since the lessee viz., M/s.Dalmia refused  to  comply  with  the
conditions imposed in the in-principle first stage approval, it  cannot  lie
in the mouth of either M/s.Dalmia or anyone who  seek  to  claim  any  right
through M/s.Dalmia by contending that any violation of Section  19  of  MMDR
Act or any of the  Rules  of  Mineral  (Concession)  Rules  or  orders  made
therein  or Section 2 of the Forest Act of 1980 should  be ignored  and  the
plea made on behalf of M/s.Dalmia as well as the first respondent should  be
accepted.

We are unable to accept such an extreme proposition canvassed on  behalf  of
M/s.Dalmia and the first respondent,  as  in  our  considered  opinion,  the
violation had occurred at the time of  the  order  of  first  renewal  viz.,
07.03.1986 itself, striking at the very root of the validity of  the  lease,
as it must be held that it was void at  that  very  stage  itself  for  non-
compliance of the prior approval under Section 2 of  the  Forest  Act,  1980
and in any case, on the  blatant  refusal  to  comply  with  the  conditions
imposed in the  in-principle  first  stage  approval  granted  in  the  year
24.12.1997.  Once we are able to come to the said conclusion, we  hold  that
the mining lease which was held by M/s.Dalmia  in  M.L.No.2010  became  void
and  inoperative  for  violation  of  the  mandatory  requirements  of   the
conditions.  In this context, it will also be  relevant  to  refer  to  Rule
37(1A).  The said Rule reads as under:

"Rule 37(1A): The State Government shall not give its  consent  to  transfer
of mining lease unless the transferee has accepted all  the  conditions  and
liabilities which the transferor  was  having  in  respect  of  such  mining
lease."



      A reading of the said sub-Rule which was introduced by G.S.R.  724(E),
dated 27.09.1994, a substantive condition is imposed  while  considering  an
application for consent for transfer of mining lease.

In the first blush it may appear that what all required  is  the  acceptance
by the transferee to comply with all the conditions  and  liabilities  which
the transferor was obliged to fulfill in respect of the mining  lease.   But
on a deeper scrutiny of the said Rule, it will have to  be  stated  that  if
there was a total violation of  mandatory  statutory  conditions  under  the
MMDR Act and by virtue of the requirements in this case of  the  fulfillment
of Section 2 of the Forest Act, 1980 as well as the proviso to Section 5  of
the MMDR Act, the question of considering the very application  for  consent
to transfer should be held to be not available at all.  As we have  held  in
the earlier part of this order that M/s.Dalmia committed  serious  violation
in regard to the compliance of Section 2 of the  Forest  Act,  1980  at  the
time of first renewal in the year  1983/86  itself  and  in  any  event,  by
refusing  to  comply  with  the  conditions  imposed  in  the  order   dated
24.12.1997, the said violation would strike at the very root  of  the  claim
for transfer of the dead lease as stipulated in Section 19 of the MMDR  Act.
 Therefore, on this ground as well, it must be held that there was no  scope
at all for  the  State  Government  to  consider  the  application  made  by
M/s.Dalmia for transferring of its mining  lease  in  favour  of  the  first
respondent.  When we go little further and examine Rule 29, as we have  held
that M/s.Dalmia had surrendered its mining lease M.L.No.2010  once  and  for
all, based on its proposal made on 27.03.2001 and accepted by  the  Director
of Mines and  Geology  on  behalf  of  the  State  Government  which  became
conclusive as on 31.01.2002, there was no live  lease  for  the  purpose  of
considering any application for  transfer  under  Rule  37  of  the  Mineral
(Concession) Rules.  When that be the legal consequence in  respect  of  the
lease, which was void and inoperative, it must be held  that  there  was  no
scope for holding that there was a valid  transfer  made  by  M/s.Dalmia  in
favour of the first respondent on 16.03.2002.

We find that the  reliance  placed  upon  by  Dr.  Singhvi,  learned  senior
counsel on the decisions of this Court needs to be  mentioned,  which  fully
supports his submissions. He placed reliance upon the decision  reported  in
A. Chowgule (supra) for the proposition that  the  requirement  of  approval
under Section 2 of the Forest Act has got greater significance and that non-
compliance of the said provision would result in serious  consequences.   In
the said decision, this Court while referring to Rules 4, 6, 2A and  5  read
along with Section 2 of the Forest Act held that prior  approval  cannot  be
granted unless  the  procedure  prescribed  in  the  said  Rules  were  duly
complied with and that such approval under Section 2 is  sine  qua  non  for
the State Government and the other authorities before taking  any  steps  in
respect of the Forest  land.  The  relevant  paragraph  No.18  of  the  said
decision reads as under:

"18............... A bare perusal of the  aforesaid  provisions  would  show
that prior approval is required for the diversion of  any  forest  land  and
its use for some other purpose. This is further fortified by a look at  Rule
4 which provides that every State  Government  or  other  authority  seeking
prior approval under Section 2 of the Act shall submit  a  proposal  to  the
Central Government in the prescribed form and Rule  6  stipulates  that  the
proposals would be examined by a committee appointed under Rule  2-A  within
the     parameters     and      guidelines      postulated      in      Rule
5..................................."

                                                       (Underlining is ours)



Similar view has been expressed in the decision reported  in  Nature  Lovers
Movement (supra). Paragraph Nos. 47 and 48  are  relevant  for  our  purpose
which read as under:

"47. The ratio of the  above  noted  judgments  is  that  the  1980  Act  is
applicable to all forests irrespective of the  ownership  or  classification
thereof and after 25.10.1980, i.e., date of enforcement of the 1980 Act,  no
State Government or other authority can pass an order or  give  a  direction
for de-reservation of reserved forest or any portion thereof or  permit  use
of any forest land or any portion thereof  for  any  non-forest  purpose  or
grant any lease, etc. in respect of forest land to  any  private  person  or
any authority, corporation, agency  or  organization  which  is  not  owned,
managed or controlled by the Government.

48. Another principle which emerges from these judgments  is  that  even  if
any forest land  or  any  portion  thereof  has  been  used  for  non-forest
purpose, like undertaking of mining activity  for  a  particular  length  of
time, prior to the enforcement of the 1980 Act, the tenure of such  activity
cannot be extended by way of renewal of lease or otherwise after  25.10.1980
without obtaining prior approval of the Central Government."



It is relevant to note that to the same effect is the decision  reported  in
Rural Litigation and Entitlement Kendra vs. State of U.P. - 1989  Supl.  (1)
SCC 504.

Mr. Sibal, learned senior counsel then relied upon the decision reported  in
Ambica Quarry Works (supra) to repel the submission made on  behalf  of  the
first respondent that the non-grant of  approval  under  Section  2  of  the
Forest Act, 1980 will be of no consequence as  the  continued  existence  of
the lease which was granted prior to coming into force of  the  Forest  Act,
1980 and it came to be renewed in the year 1983 after the  Forest  Act  came
into force.  In the said decision in paragraph 15 is  relevant  which  reads
as under:

"15. The rules dealt with a situation prior to the coming into operation  of
1980 Act. '1980 Act' was  an  Act  in  recognition  of  the  awareness  that
deforestation and ecological imbalances as a result  of  deforestation  have
become social menaces and further deforestation  and  ecological  imbalances
should be prevented. That was the primary purpose writ large in the  Act  of
1980. Therefore the concept that power coupled with the duty  enjoined  upon
the respondents to renew the lease stands  eroded  by  the  mandate  of  the
legislation as manifest in 1980 Act in the facts and circumstances of  these
cases. The primary duty was to the community and that duty took  precedence,
in our  opinion,  in  these  cases.  The  obligation  to  the  society  must
predominate     over     the     obligation     to     the     individuals."


                                                       (underlining is ours)



      Consequently, the question Nos.vi, vii, viii, ix and  x  are  answered
to the said effect.

With  that  when  we  come  to  the  next  question  No.(xi),  namely,   the
requirement of Central Government under Section 5 of MMDR Act for  grant  of
approval which was again stipulated in Section  2  of  the  Forest  Act  and
whether compliance of the said provision are mandatory for  a  mining  lease
to remain valid.  Similarly, question No.(xii) whether Section  10  (1)  and
the second proviso to Section 11 of the MMDR Act as well as Rules 37 and  59
of Mineral Concession Rules mandate to the effect that any transfer  applied
for under Rule 37 (1)(a) cannot be  automatically  granted.   That  question
would arise only if the lease hold right of M/s. Dalmia under  M.L.  No.2010
was available with it for the purpose of effecting any  transfer.   Inasmuch
as we have held that the said lease was duly surrendered by M/s. Dalmia  and
accepted by the State Government, we do not find any  necessity  to  examine
those questions and we leave it open for consideration as and when any  need
arises for deciding those questions.

As far as the question Nos.(xiii) and (xiv) are  concerned,  as  to  whether
the order of transfer dated 16.3.2002 was bona fide taking into account  the
sequence of events and whether the transfer of lease dated 16.3.2002 can  be
held to be valid, we wish to recapitulate the various sequence of events  as
from 16.4.1999 till 30.1.2002 pertaining to the surrender of lease  made  by
M/s. Dalmia.  Since we have extensively dealt with the  said  issue  in  the
earlier part of our order, we merely state that our  conclusion  as  regards
the coming into force of the surrender made on behalf  of  the  M/s.  Dalmia
and its  acceptance  by  the  State  Government  from  31.01.2002  would  be
sufficient to hold that there was total lack of bona fides on  the  part  of
the State government in taking a sudden U-turn  for  passing  the  order  of
transfer dated 16.3.2002  in  favour  of  the  first  respondent.   In  this
context, as rightly contended on behalf of the  appellant,  the  conduct  of
the Director of Mines  and  Geology,  one  Dr.  Reddy  who  dealt  with  the
applications made by one M.S.P.L. Ltd. through its  Executive  Director  Mr.
Rahul Baldota on 21.7.2001 and another applicant  with  reference  to  which
Dr. Reddy made an endorsement in  the  office  note  dated  25.8.2001  which
stated that the land  covered  by  M.L.  No.2010  was  surrendered  by  M/s.
Dalmia, that certain other applications were  also  received  for  grant  of
lease in respect of those lands apart from M.S.P.L. Ltd. and that there  was
no scope  to  consider  any  of  those  applications  since  in  respect  of
surrendered land Rule 59(1) of Mineral Concession Rules would  automatically
come into play and any future grant of lease can only be done  as  specified
under the said Rule.  When such a clear stand was  spelt  out  by  the  said
officer, namely, Dr. Reddy while making the  endorsement  on  25.8.2001,  we
fail to see any justifiable reason as to how the very same  officer  in  his
capacity as Director of Mines and  Geology  could  be  a  signatory  to  its
recommendation dated 6.2.2002 for effecting the transfer and  based  on  his
recommendation the State Government allowed the application for transfer  of
M.L. No. 2010.

Reliance was placed upon the  decision  reported  in  Bangalore  Development
Authority (supra), certain facts noted in that judgment in paragraph 15  and
based on such facts the  order  passed  by  the  learned  Single  Judge  and
reversal of the order of the learned Single  Judge  by  the  Division  Bench
which was found to be correct have been  stated  in  paragraphs  15  and  18
which are relevant for our purpose and the said paragraph reads as under:

"15. We are of the view that the above principles when applied to  the  case
on hand, it can be safely concluded that the order  of  the  learned  Single
Judge in the light of the peculiar facts noted therein  cannot  be  faulted.
We also wonder as to why the Hon'ble Minister concerned  should  have  taken
upon himself the extraordinary effort of making an inspection for  which  no
special reasons were adduced in the report. That apart none of  the  reasons
which weighed in the report of  the  Hon'ble  Minister  reflected  the  true
facts. The conclusion of the Hon'ble Minister that the possession  continued
to remain with the owner was contrary to what  was  found  on  records.  The
Mahazar dated 09.12.1983 as noted by learned Single Judge from the  original
file reveal that the  conclusion  of  the  Hon'ble  Minister  was  ex  facie
illegal and untrue. The said conclusion  obviously  appeared  to  have  been
made with some ulterior motive and purpose and with  a  view  to  show  some
undue favour to the first respondent herein. The  acquisition  became  final
and conclusive as far back as on 15.7.1971 when Section 6  declaration  came
to be issued. At no  point  of  time  was  there  any  challenge  to  either
preliminary notification dated 21.9.1967 or the final  declaration  notified
on 15.7.1971. Even the award dated 21.11.1983  approved  on  29.11.1983  was
not the subject matter of challenge in any proceedings.



      16. xxx xxx      xxx



      17. xxx xxx xxx

18. In our considered opinion, the Division Bench failed  to  take  note  of
the  above  gross  illegality  committed  by  the  Hon'ble  Minister   while
directing the issuance of the de-notification dated 05.10.1999 in  spite  of
the fact that possession had already been handed over to the State as  early
as on 09.12.1983 and that the decree of the Civil Court did not in  any  way
create  any  fetters  on  the  authorities  concerned  to  take  steps   for
possession  by  resorting  to  appropriate  legal  means.  At  the  risk  of
repetition, it will have to be stated that the Civil Court  decree  to  that
effect was dated 15.12.1981 and that the  possession  was  taken  by  taking
necessary steps under the provisions of the Land Acquisition Act  under  the
Mahazar dated 09.12.1983 which was never challenged by any party  much  less
the first respondent herein. The  Division  Bench  unfortunately  completely
omitted to take note of the relevant facts while interfering with the  order
of the learned Single Judge. The  appeals,  therefore,  stand  allowed.  The
order of the Division Bench is set  aside  and  the  order  of  the  learned
Single Judge dated 26.8.2002 passed in  Vijaya  Leasing  Ltd.  v.  State  of
Karnataka stands restored by this common judgment."

                                                       (underlining is ours)



The above judgment throws some light as to how certain  excess  role  played
on behalf of the State without any justifiable reasons were brought  to  the
notice of the Court, the Court should not hesitate to set aside such  orders
in the interest of Rule of Law.  When  we  compare  the  facts  set  out  in
paragraph 15 of the said judgment, when we refer to the facts dealt with  by
us in this case, we have noted as to how after surrender made by  M/s.Dalmia
had become conclusive as on 31.01.2002, on behalf of  the  State  Government
the very same officer who held the post of Director of Mines and Geology  as
on 25.08.2001 came forward to recommend for  the  transfer  applied  for  by
M/s.Dalmia on 04.02.2002, in the recommendation order dated  06.02.2002  and
by simply glossing over the gross violations of the Forest  Act,  1980,  the
order came to be passed on 16.03.2002 approving of the transfer applied  for
by M/s.Dalmia in favour of the first respondent. In the said  circumstances,
the order of the learned Single Judge in setting aside the said order  dated
16.03.2002, was perfectly justified and the interference with  the  same  by
the Division Bench by the order impugned is required to  be  set  aside,  in
view of the various incongruities which were prevalent in the case on  hand.


We are, therefore, convinced that when once M.L. No.2010 had come to an  end
by virtue of the surrender effected by  M/s.  Dalmia  and  accepted  by  the
State Government,  there  was  no  legal  right  or  power  with  the  State
Government or any authority acting on behalf  of  the  State  Government  to
consider the very application for transfer made  at  the  instance  of  M/s.
Dalmia on 4.2.2002 and for passing the order of  transfer  dated  16.3.2002.
It can only be stated that such a decision taken and  passed  in  the  order
dated 16.3.2002 was in total violation of the provisions  of  the  MMDR  Act
and the Mineral Concession Rules.  It will  have  to  be  stated  that  once
surrender of M.L. No.2010 had come into effect the only  other  course  open
to the State Government was to invoke Rule 59 by throwing open  those  lands
by way of public auction in order to get the  maximum  revenue  by  granting
any lease hold rights.  Here again, it must be stated that  apart  from  the
act of surrender made by M/s.Dalmia which became final  and  conclusive  due
to non-compliance of the conditions imposed  in  the  in-principle  Stage  I
clearance dated 24.12.1997, M/s.Dalmia lost its right to  retain  the  lease
and the consequence of it rendered the lease itself void as per Rule  37(1A)
and on this ground as well, there was no scope for the State  Government  or
any other Authority acting on its behalf to  have  considered  the  transfer
application of M/s.Dalmia with reference to a lease which  ceased  to  exist
as from 31.01.2002 due to  the  act  of  surrender  and  in  any  case  from
24.12.2002 when the 5 year period to comply with the conditions  imposed  in
the order dated 24.12.1997 expired.



In this context, it will be more relevant to state that  mines  and  mineral
being national wealth, dealing with the same as the largesse  of  the  State
by way of grant of lease or in the form of any other right in favour of  any
party can only be resorted to strictly in  accordance  with  the  provisions
governing disposal of such largesse and could not have been resorted  to  as
has been done by the State Government and the Director of Mines and  Geology
of the State of Karnataka by passing the order of transfer dated  16.3.2002.
 Such a conduct of the State and  its  authorities  are  highly  condemnable
and, therefore, calls for stringent action against them.



In the light of our  above  answers  to  the  various  questions  posed  for
consideration, we hold that the  subsequent  stage-I  in-principle  approval
dated 13.09.2006 and the  final  approval  dated  09.09.2010  based  on  the
acceptance of the transfer of lease in the  order  dated  16.03.2002  cannot
survive and the same are set aside. As we have set  aside  the  stage-I  in-
principle approval dated 13.09.2006 and the final approval dated  09.09.2010
which were not allowed  to  operate,  we  observe  that  whatever  statutory
payments made in compliance of the said orders are refundable to  the  party
who made the payments. We, however, make it clear that the payments made  in
pursuance of the in-principle stage-I approval  or  final  approval  of  the
first renewal granted ex post facto, covering the period from 1983  to  2003
shall not be refundable. Further, as  serious  allegations  were  raised  by
M/s. Dalmia when the lease was in force that there were  encroachments  into
the lands held by it, at the instance of the  first  respondent,  we  direct
the Mining as well as Forest Authorities to ensure that  the  entire  extent
of 331.44 hectares of land covered by M.L. No.2010 is  surveyed,  demarcated
and its physical possession by the State/Forest Authorities  be  ensured  by
removing whatever encroachments, if any, exist in the  said  land.  We  also
direct that in order to ensure that  no  further  encroachments  take  place
into the said land, necessary steps as required under  Rule  59  of  Mineral
Concession Rules are taken for leasing out the lands in accordance with  law
and by following the required statutory procedure.  The  appeal  is  allowed
and the order of the Division Bench is set aside with the above  directions.
No costs.


                     .....................................................J.
                                          [Fakkir Mohamed Ibrahim Kalifulla]



                     .....................................................J.
                                                         [Shiva Kirti Singh]

New Delhi;
March 12, 2015

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