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Monday, December 19, 2016

BHUSHAN POWER AND STEEL LTD. Vs. S. L. SEAL & ORS.


                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                         CIVIL ORIGINAL JURISDICTION

                  CONTEMPT PETITION (CIVIL) NO. 275 OF 2016
                                     IN
                  CONTEMPT PETITION (CIVIL) NO. 374 OF 2012
                                     IN
                        CIVIL APPEAL NO. 2790 OF 2012

|BHUSHAN POWER & STEEL LIMITED              |.....PETITIONER(S)           |
|VERSUS                                     |                             |
|MR. S.L. SEAL                              |                             |
|ADDL. SECRETARY (STEEL & MINES)            |                             |
|GOVERNMENT OF ODISHA & ORS.                |.....RESPONDENT(S)           |


                               J U D G M E N T

A.K. SIKRI, J.
                 The erstwhile Bhushan Ltd. (predecessor-in-interest of  the
petitioner) had proposed setting up of plant in some identified villages  in
the district of Sambalpur, Odisha. For this purpose, it had made  a  request
for acquisition of land,  measuring  1250  acres,  which  was  acquired  for
Bhushan Ltd.  It had also applied for grant of lease of mining of  iron  ore
for  use  in  the  proposed  plant.  These  applications   were   favourably
considered by the State of Odisha (hereinafter referred  to  as  the  'State
Government') which agreed to accord due priority to Bhushan Ltd.  for  grant
of suitable iron ore areas and also agreed to recommend the proposal to  the
Government of India for grant of a coal block. Even a MoU was  entered  into
between the State Government and Bhushan Ltd. containing the  commitment  of
the State Government to recommend to the Central Government, grant  of  iron
ore mines for its use  in  the  proposed  plant.   For  this  purpose,  area
earmarked for recommendation were Thakurani  area  with  96  million  tonnes
iron ore reserves and Keora area, District  Sundargarh  for  additional  128
million tonnes of iron ore; both for 50 years'  requirement  of  the  plant.
Though various statutory and other permissions required for  setting  up  of
the plant were granted and the plant was also set up, but due  to  some  in-
fight  between  the  family  members  who  owned  Bhushan  Ltd.,  it   faced
difficulties in getting the grant of iron ore lease.

Insofar as granting of mining lease of iron ore reserves  in  the  aforesaid
areas is concerned, it fell into rough  weather.   It  resulted  into  show-
cause notice dated January 18, 2006 by the State  Government  which  led  to
the decision that mining lease over the Thakurani area could not be  allowed
on various grounds and the application made by Bhushan Ltd.  was  premature.
Thereafter, the Government of Orissa made a recommendation  to  the  Central
Government on February 09, 2006 to grant mining lease in favour of  one  M/s
Neepaz Metallics (P) Ltd. in relaxation of Rule 59(1) of the  Mining  Rules,
for a period of 30 years. Challenging these orders, Bhushan Ltd. filed  Writ
Petition (Civil) No. 6646 of 2006 in the High Court on May  08,  2006.  This
writ petition was dismissed by the High  Court  on  December  14,  2007  and
challenging this decision a special leave petition was filed in which  leave
was granted, thereby  converting  the  special  leave  petition  into  Civil
Appeal No. 2790 of 2012.   This  appeal  was  allowed  by  this  Court  vide
judgment dated March 14, 2012, which was reported as Bhushan Power  &  Steel
Ltd. v. State of Orissa[1], with the  following  directions:  (SCC  p.  256,
paras 41-42)
“41...Accordingly, we allow the appeal and set aside the judgment and  order
of the High Court of Orissa and also the decision of  the  State  Government
dated 9-2-2006, rejecting the appellant's claim for grant of mining lease.

42. During the course of hearing,  we  have  been  informed  that  Thakurani
Block A has large reserves of iron ore, in which the appellants can also  be
accommodated.  We,  accordingly,  direct  the  State  of  Orissa   to   take
appropriate steps to act in terms of the MoU dated 15-5-2002,  as  also  its
earlier commitments to recommend the case of the appellants to  the  Central
Government for grant of adequate iron ore reserves to meet the  requirements
of the appellants in their steel plant at Lapanga.”

It would be pertinent to mention that  the  State  of  Odisha  had  filed  a
review petition seeking review of this judgment but the  same  was  rejected
vide order dated September 11, 2012.  Pursuant to the aforesaid  directions,
though Bhushan Power & Steel Ltd. has been  given  Thakurani  Block  A,  the
order was not implemented qua Keora, District  Sundargarh.   The  petitioner
treated the aforesaid inaction on  the  part  of  the  State  Government  as
contemptuous and filed Contempt Petition (Civil) No. 374 of  2012[2].   This
petition  was  contested  by  the  respondents  on  various  grounds.   Main
contention raised was  that  the  direction  given  by  this  Court  in  its
judgment dated March 14,  2012  was  incapable  of  enforcement.   For  this
purpose, the State  Government  had  placed  reliance  upon  the  subsequent
judgment of this Court in Sandur Manganese and Iron Ores  Limited  v.  State
of Karnataka & Ors.[3] and submitted that in view of the law  laid  down  in
the said  judgment,  it  was  not  possible  to  carry  out  the  directions
contained in the judgment rendered on March 14, 2012 passed in the  case  of
the petitioner herein.

Without going into the niceties by stating the basis of the said plea  taken
by the State Government, suffice is to state that the  aforesaid  stand  did
not   find   favour   with   this   Court.    It   was   found   that    the
contemnors/officials of the State Government were in contempt of the  orders
dated March 14, 2012.  In these  circumstances,  one  more  opportunity  was
given to the State  Government  to  send  requisite  recommendation  to  the
Central Government.  However, for a better understanding of  the  nature  of
directions which were  given,  we  reproduce  following  extracts  from  the
judgment dated April 22, 2014 in the said Contempt Petition:
“21.  We cannot lose sight of the fact  that  there  is  a  judgment,  inter
parties, which has become final.  Even  when  the  civil  appeal  was  being
heard, certain other parties claiming their interest  in  these  very  lands
had moved intervention applications which were dismissed. At that time  also
it was mentioned that there are  195  applicants.  However,  notwithstanding
the same, this Court issued firm  directions  to  the  State  Government  to
recommend the case of the petitioners for mining lease in  both  the  areas.
In view  of  such  categorical  and  unambiguous  directions  given  in  the
judgment which has attained finality, merely because  another  judgment  has
been delivered by this Court in Sandur Manganese case, cannot  be  a  ground
to undo the directions contained in the judgment  dated  14-3-2012.  Insofar
as law laid down in Sandur Manganese is concerned, that may be  applied  and
followed by the State Government in respect of other applications which  are
still pending.  However,  that  cannot  be  pressed  into  service  qua  the
petitioner whose rights have been crystallised by the judgment  rendered  in
its favour. It cannot be reopened, that too at the stage  of  implementation
of the said judgment.

22.  We would like to place on record the arguments of  the  learned  Senior
Counsel for the petitioner that the total area under notification is  731.67
sq km and out of this 406 sq km is yet to be allotted. The area which  comes
to the share of the petitioner under MoU is 13.91 sq km which is  barely  3%
of 406 sq km and,  therefore  recommendation  by  the  State  Government  in
favour of the petitioner cannot be stalled or put  to  naught  only  on  the
basis of inchoate applications, fate whereof is yet to  be  decided.  It  is
also pointed out that insofar as the petitioners  in  other  writ  petitions
are concerned area claimed by them is not overlapping with the  petitioner's
area. However, it may not even be necessary to go into these contentions  in
detail. Once we hold  that  the  respondents  are  bound  to  implement  the
direction contained in the judgment dated 14-3-2012, insofar  as  the  State
Government is  concerned,  it  is  obliged  to  comply  therewith  and  such
matters, along with other  relevant  considerations,  can  be  left  to  the
wisdom  of  the  Central  Government  while  taking  a   decision   on   the
recommendation of the State Government.

                          xx          xx         xx

24.  As a consequence,  we  hold  that  the  respondents/contemnors  are  in
contempt of orders dated 14-3-2012 passed by this  Court  in  not  complying
with the directions in respect of Keora area. However,  we  are  giving  one
final opportunity to them to purge the contempt  by  transmitting  requisite
recommendations to the Central Government.  It  would  be  for  the  Central
Government to consider the said recommendations on its  own  merits  and  in
accordance with law. In case the recommendation is  sent  within  one  month
from the date of copy of receipt of this order, we propose not to  take  any
further action and the respondents/contemnors shall  stand  discharged  from
this contempt petition. However, in case the respondents  do  not  purge  in
the manner mentioned above, it would be open to  the  petitioners  to  point
out the same to this Court by moving appropriate  application  and  in  that
event the contemnors shall be proceeded against.”

According to the petitioner, the respondent State Government has not  purged
the contempt and, therefore, in view  of  the  opportunity  granted  in  the
judgment dated April 22,  2014,  as  contained  in  paragraph  24  extracted
above, the petitioner has moved the instant Contempt Petition  in  which  we
have heard M/s. Kapil Sibal and P. Chidambaram, learned senior  counsel  for
the  petitioner,  and  Mr.  Maninder  Singh,  learned  Additional  Solicitor
General for the Union of India, and Mr. Ashish  Kumar  Sinha,  Advocate  for
the State Government.

We may mention at the outset that it is not disputed by the petitioner  that
after the directions dated April 22, 2014  given  in  the  earlier  Contempt
Petition, the State Government had  sent  requisite  recommendation  to  the
Central Government for grant of mining lease in the area in  question.   The
Central Government has, however, taken the view that having  regard  to  the
amendments in the Mines and Minerals (Development and Regulation) Act,  1957
(for short, the 'Act'), vide Mine and Minerals (Development and  Regulation)
Amendment Act, 2015 (hereinafter referred to as  the  Amendment  Act,  2015)
dated March 26, 2015, the grant of mining lease has  to  be  dealt  with  in
accordance with the new provisions introduced by  the  Amendment  Act,  2015
and  under  the  new  scheme,  the  petitioner's  earlier   request   stands
invalidated. This view  of  the  Central  Government  is  contained  in  its
letters dated May  13,  2015  and  May  29,  2015  addressed  to  the  State
Government, with copies to the petitioner.   The  State  Government  has  in
turn written to the petitioner vide letter dated July 09, 2016 on  the  same
lines. The petitioner has, however, taken  the  position  that  the  amended
sections have a  saving  provision,  in  which  category  the  case  of  the
petitioner  falls,  and  in  view  thereof  the  approval  of  the   Central
Government is not even required and, therefore,  the  State  Government  was
competent to grant the mining lease itself.   It  is  for  this  reason  the
petitioner has impleaded Union of  India  as  well,  as  respondent  in  the
present proceedings and one of the prayers is to  quash  the  letters  dated
May 13, 2015 and May 29, 2015 issued by the Central Government, as  well  as
the communication dated July 09, 2015 issued by the State Government.

At this stage, we may reproduce the exact prayers made by the petitioner  in
this Contempt Petition:
“(a)    Initiate    contempt    of    court    proceedings    against    the
Respondents/Contemnors and after hearing them,  punish  them  for  willfully
flouting  and  deliberately  disobeying  the  judgments  and  orders   dated
14.3.2012 and 22.4.2014 passed by this Hon'ble Court  in  Civil  Appeal  No.
2790 of 2012 and Contempt Petition (Civil) No. 374/2012 respectively.

(b)  Hold that the letters dated 13/05/2015 and  29/05/2015  issued  by  the
Central Government (Annexure 9 & 10) and letter dated  09/07/2015  (Annexure
12) issued by the State Government are in breach and contempt  of  Judgments
and Orders of this Hon'ble Court and are thus of no  legal  consequence  and
effect.

(c)  Pass appropriate directions, directing the Respondents to  comply  with
and implement the judgments  of  this  Hon'ble  Court  dated  14.3.2012  and
22.4.2014 passed by this Hon'ble Court in Civil Appeal No. 2790 of 2012  and
Contempt Petition (Civil) No. 374/2012 respectively and within two weeks  of
receipt of notice, to execute mining leases as recommended in Annexure  Nos.
P-5 and P-6.

(d)  Pass such other or further orders as this Hon'ble Court may  deem  fit,
just and proper in the facts and circumstances of the case.”

As pointed out above,  the  petitioner  accepts  the  fact  that  the  State
Government had in fact made the recommendation dated May  24,  2014  to  the
Central Government for grant of  mining  lease  over  an  area  of  1063.633
hectares in village Rakma, Marsuan,  Tibira  and  in  Khajurdihi  RF  (Keora
Sector) in the districts of Keonjhar and Sundergarh.  It is  further  stated
that despite this recommendation, the Central Government did  not  take  any
action to grant the approval.  In the meantime, on  January  12,  2015,  the
Central Government promulgated an Ordinance amending the Mines and  Minerals
(Development and Regulation) Act, 1957.  This Ordinance  was  made  into  an
Act of Parliament on March 26, 2015 with effect from January 12,  2015.   On
May 13, 2015, the Central Government  has  issued  a  letter  to  the  State
Government, a copy whereof was also marked to the petitioner, stating that:
“3.  As per details available with the Ministry, this  proposal  for  accord
of prior approval for grant of mineral concession becomes ineligible as  per
the provisions of Section 10A(1) of the  Amendment  Act.   Accordingly,  the
proposal should be treated as closed and necessary order may be isued.   The
State Government may also ascertain  whether  the  proposal  is  saved  from
ineligibility under the provisions of Section  10A  of  the  Amendment  Act,
2015 before communicating the same  to  the  applicant  and  take  following
action in this matter:

(i)  if the proposal  is  ineligible,  it  may  be  treated  as  closed  and
necessary order may be issued; and

(ii)  if the proposal remain eligible, the State Government (sic)  bring  it
to the notice of the Ministry so that necessary action as per provisions  of
the Amended Act may be taken.”

A few days later, the Central Government wrote another letter dated May  29,
2015 regarding proposal for grant of  ML  for  iron  ore  over  an  area  of
1390.663 hectares in village Rakma, Marsuan and Triba of  Keonjhar  district
and Khajuridihi of Sundargah district stating as follows:
“As per details available with the Ministry, this  proposal  for  accord  of
prior approval for grant of mineral concession  becomes  ineligible  as  per
the provisions of Section 10A(1) of the Amendment Act.  The  matter  may  be
treated as closed.  However, the State Government is advised to examine  the
proposal and in case there is strong case for the  concession  to  be  saved
from ineligibility under the provision of Section  10(a)  of  the  Amendment
Act then this Ministry may be informed  accordingly  for  further  necessary
action.”

Letter dated July 09, 2015 sent by the State Government  to  the  petitioner
rejecting the application of the petitioner for grant of mining lease  reads
as under:
“And whereas, as  per  section-10A(1)  of  MMDR  Amendment  Act,  2015,  all
applications received prior to the date of commencement  of  the  Mines  and
Minerals (Development and Regulation)  Amendment  Act,  2015,  shall  become
ineligible.

And whereas, both the  ML  application  No.  775  dated  04.12.2001  and  ML
application No. 780 dated 01.03.2002 of the applicant company are the  fresh
applications seeking grant of mining leases, which have been recommended  to
Government of India prior to the date  of  commencement  of  the  Mines  and
Minerals (Development and Regulation) Amendment Act, 2015.

Therefore, after careful consideration of  the  facts  &  circumstances  and
materials on record, the State  Government  is  pleased  to  reject  the  ML
application No. 775 dated 04.12.2001  and  ML  application  No.  780,  dated
01.03.2002 of the applicant company being ineligible as per  the  provisions
of section-10A(1) of the Amendment Act, 2015.”

It is in the aforesaid background, learned senior counsel appearing for  the
petitioner argued that the aforesaid approach of the Central  Government  as
well as the State Government contained in  their  respective  communications
is totally misconceived inasmuch as direction of this Court, which is  inter
parties, still remain binding, notwithstanding the introduction  of  Section
10A by the Amendment Act, 2015.  It is also argued that  even  if  the  said
Amendment Act applies, case of the petitioner  is  preserved  and  protected
under Section  10A(2)(c)  of  the  Act.  Section  10A  makes  the  following
reading:
“10A.  Rights of existing concession-holders  and  applicants.  –  (1)   All
applications received prior to the date of commencement  of  the  Mines  and
Minerals (Development and Regulation)  Amendment  Act,  2015,  shall  become
ineligible.

(2)  Without  prejudice  to  sub-secion  (1),  the  following  shall  remain
eligible on and from the date of commencement  of  the  Mines  and  Minerals
(Development and Regulation) Amendment Act, 2015 –

(a)  applications received under section 11A of this Act;

(b)  where before the commencement of the Mines  and  Minerals  (Development
and Regulation) Amendment Act, 2015 a reconnaissance permit  or  prospecting
licence has been granted in respect of any land for any mineral, the  permit
holder or the licensee shall  have  a  right  for  obtaining  a  prospecting
licence followed by a mining lease, or a mining lease, as the case  may  be,
in respect of that  mineral  in  that  land,  if  the  State  Government  is
satisfied that the permit-holder or the licensee, as the case may be, –

(i)  has undertaken reconnaissance operations or prospecting operations,  as
the case may be, to establish the existence  of  mineral  contents  in  such
land in accordance with such parameters as may be prescribed by the  Central
Government;

(ii)  has not committed any breach  of  the  terms  and  conditions  of  the
reconnaissance permit or the prospecting licence;

(iii)  has not become ineligible under the provisions of this Act; and

(iv)  has not failed to apply for grant of  prospecting  licence  or  mining
lease, as the case may be, within a period of three months after the  expiry
of reconnaissance permit or prospecting licence, as  the  case  may  be,  or
within such further period not exceeding six months as may  be  extended  by
the State Government.

(c)  where the Central Government  has  communicated  previous  approval  as
required under sub-section (1) of section 5 for grant of a mining lease,  or
if a letter of intent (by whatever name  called)  has  been  issued  by  the
State Government to grant a mining lease, before  the  commencement  of  the
Mines and Minerals (Development and Regulation)  Amendment  Act,  2015,  the
mining lease shall be granted subject to fulfilment  of  the  conditions  of
the previous approval or of the letter of intent  within  a  period  of  two
years from the date of commencement of the said Act:

Provided that in respect of any mineral specified in the First Schedule,  no
prospecting licence or mining lease shall be granted  under  clause  (b)  of
this  sub-section  except  with  the  previous  approval  of   the   Central
Government.”

It was argued with  vehemence  that  even  when  under  sub-section  (1)  of
Section 10A, all applications received prior to the date of commencement  of
the Amendment Act, 2015  have  been  rendered  ineligible,  sub-section  (2)
saves certain kinds of applications.  Clause (c) thereof is invoked  by  the
petitioner to submit that in the instant case since 'Letter of  Intent'  had
been  issued  by  the  State  Government  to  grant  a  mining  lease,   the
petitioner's   application   stands   protected.     For    this    purpose,
recommendation dated May 24, 2014 is treated as  Letter  of  Intent  by  the
petitioner, laying emphasis on the words  'letter  of  intent  (by  whatever
name called)'.  It was, thus, argued that form of Letter of  Intent  is  not
necessary and the substance of the letter had to be  seen.   It  was  argued
that since the letter dated May 24, 2014 of the State Government is  in  the
nature of recommendation for grant  of  lease,  it  signifies  intention  to
grant the mining lease insofar as the State  Government  is  concerned  and,
therefore, in substance, it is the Letter of Intent.  It was,  thus,  argued
that under the new regime contained in Section 10A, approval of the  Central
Government was not  even  required  and  the  State  Government  could  have
proceeded further and granted the lease.

Mr. Maninder Singh, learned Additional Solicitor General, submitted, on  the
other  hand,  that  the  view  taken  by  the  Central  Government  in   its
communications dated May 24, 2014 and May 29, 2015  is  in  accordance  with
the provisions of Section 10A of the Act.  It was argued that  letter  dated
May 24, 2014 cannot be treated as  Letter  of  Intent  as  on  the  date  of
writing this letter, the State Government had no such power to  give  Letter
of Intent without the prior approval of the Central Government.   Therefore,
it was only a request to the Central Government for considering the case  of
the petitioner favourably.  It is further submitted that  Letter  of  Intent
mentioned in clause (c) deals with the situations where  sanction  from  the
Central Government is received and Letter of Intent is issued but no  formal
lease executed.  Only those  cases  are  protected  with.   It  was  further
submitted that after coming into effect  the  amended  provision,  the  very
methodology of grant of mining lease  has  undergone  a  significant  change
inasmuch as now the leases are to be granted through auction,  which  is  so
specifically provided in the amended Section 11 of the Amendment Act,  2015.
 It is for this  reason,  requirement  of  prior  approval  of  the  Central
Government is dispensed with.  Learned Additional Solicitor General  further
submitted that there is no contempt of the orders of this Court inasmuch  as
the only direction given in the impugned judgment dated March 14,  2012  was
to the State Government to send  the  recommendation,  which  direction  was
reiterated in the judgment dated April  22,  2014  passed  in  the  Contempt
Petition as well.  The State Government  complied  with  this  direction  by
sending such a recommendation to the  Central  Government.   Therefore,  the
present contempt petition was not even maintainable.  Counsel for the  State
Government supported the aforesaid stand taken  by  the  learned  Additional
Solicitor General.

We have to bear in mind that the matter is being dealt with  in  a  Contempt
Petition.  Therefore, what is  to  be  seen  is  as  to  whether  directions
contained in the judgment are complied with or  not.   In  the  main  appeal
which was filed by the petitioner against the judgment of  the  Orissa  High
Court, it was allowed vide judgment dated March  14,  2012.   Direction  was
given to the State Government  to  send  the  recommendation  for  grant  of
mining lease to the petitioner.  As per the law  prevailing  at  that  time,
the role of the State Government was only to send the recommendation to  the
Central Government for allotting  mining  areas.   Ultimate  authority/power
was vested with the Central Government  to  take  a  decision  on  the  said
request of the State  Government.   Since  the  State  Government  had  even
refused to send such a request, this Court was of the view that the  act  of
the State Government in refusing to send recommendation was contrary to  the
MoU dated May 15, 2002 and direction was issued to do the needful.   In  the
order dated April 22, 2014, passed in Contempt Petition (Civil) No.  374  of
2012, this was made clear by observing that insofar as the State  Government
is concerned, it is obliged to comply  therewith  and  such  matters,  along
with other relevant considerations, can be left to  the  Central  Government
while taking a decision on the recommendation of the State  Government.   We
state at the cost of repetition that since the Union  of  India  was  not  a
party, no direction was given to it.  On the contrary, it was  left  to  the
Central Government to take an appropriate decision on the recommendation  of
the State Government.  This was made clear in para 24 of the judgment  dated
April 22, 2014 by observing that it would be for the Central  Government  to
consider the said recommendations on its own merits and in  accordance  with
law.

Since the State Government had sent the necessary letter of request  to  the
Central Government, direction contained in  the  judgment  dated  March  14,
2012  stands  complied  with.   The  issue  now  raised,  as  reflected  and
discussed  in  the  earlier  portion  of  this  judgment,  is  whether   the
application of the petitioner is rendered ineligible in view of Section  10A
of the Act or whether it still survives.   We are examining  this  issue  as
the petitioner's counsel have argued that the petitioner is eligible  to  be
considered as its application falls in the category  carved  out  by  clause
(c) of Section 10A(2) and further that since  no  approval  of  the  Central
Government is required now, the State  Government  could  itself  grant  the
lease.  It is argued  that  failure  of  the  State  Government  amounts  to
contempt of the orders of this Court.

Undoubtedly, as  per  sub-section  (1)  of  Section  10A,  all  applications
received prior to coming into force  of  the  Amendment  Act,  2015,  become
ineligible.  Reason for interpreting such a provision is not  far  to  seek.
Before  the  passing  of  the  Amendment  Act,  2015,  it  was  the  Central
Government which had  the  ultimate  control  over  the  grant  of  licenses
insofar as mining of major minerals is  concerned.   As  per  the  procedure
then existing, State Government could recommend  the  application  submitted
by any applicant for grant of mining lease to  the  Central  Government  and
the Central Government was given the power to grant or refuse to  grant  the
approval.   Thus,  'previous  approval'  from  the  Central  Government  was
essential for grant of lease, without which the State Government  could  not
enter into any such lease agreement with  the  applicant.   Shortcomings  of
this procedure were noticed by  this  Court  in  its  judgment  rendered  in
Centre for Public Interest Litigation Vs.  Union  of  India[4]  (for  short,
'CPIL case') and also in  Re.:  Spl.  Ref.  No.  1  of  2012[5].   In  these
judgments, this Court expressed that allocation of natural resources  should
normally be by auction.  Judgment in CPIL case had  a  direct  relevance  to
the grant of mineral  concessions  as  the  Government  found  that  it  was
resulting in multipurpose litigation which was becoming counter  productive.
Mining Ordinance, 2015 was passed on January 12, 2015 which  was  ultimately
replaced when the Parliament enacted the Amendment Act, 2015.

The exhaustive Statement of Objects and Reasons reveals that  the  extensive
amendment in  the  Act  were  effected  after  extensive  consultations  and
intensive scrutiny by the Standing Committee on Coal  and  Steel,  who  gave
their  Report  in  May,  2013.  As  is  evident  from  the  Statement   that
difficulties were experienced because the existing Act does not  permit  the
auctioning of mineral concessions. It was observed that with  auctioning  of
mineral concessions, transparency in  allocation  will  improve;  Government
will get an increased share of the value of mineral resources; and  that  it
will alleviate the procedural delay, which  in  turn  would  check  slowdown
which adversely affected the growth of mining sector.

The Amendment Act, 2015, as is  evident  from  the  objects,  aims  at:  (i)
eliminating discretion; (ii) improving transparency  in  the  allocation  of
mineral resources; (iii) simplifying procedures; (iv) eliminating  delay  on
administration, so as to enable expeditious and optimum development  of  the
mineral resources of the  country;  (v)  obtaining  for  the  Government  an
enhanced share of the value of the mineral resources;  and  (vi)  attracting
private investment and the latest technology.

The Amendment Act, 2015 ushered in the amendment of Sections 3,  4,  4A,  5,
6, 13, 15, 21 and First Schedule; substitution of new sections for  Sections
8, 11 and 13; and, insertion of new sections 8A,  9B,  9C,  10A,  10C,  11B,
11C, 12A, 15A, 17A, 20A, 30B, 30C and Fourth Schedule.

These amendments brought in vogue: (i) auction to  be  the  sole  method  of
allotment; (ii) extension of tenure of  existing  lease  from  the  date  of
their last renewal to March 31, 2030 (in the  case  of  captive  mines)  and
till March 31, 2020 (for the merchant miners)  or  till  the  completion  of
renewal already granted, if any, or a period of 50 years from  the  date  of
grant of such lease; (iii) establishment of District Mineral Foundation  for
safeguarding interest of persons  affected  by  mining  related  activities;
(iv) setting up of a National  Mineral  Exploration  Trust  created  out  of
contributions from the mining lease holders, in order to  have  a  dedicated
fund  for  encouraging  exploration  and  investment;  (v)  removal  of  the
provisions requiring 'previous approval' from  the  Central  Government  for
grant of mineral concessions in case of important minerals  like  iron  ore,
bauxite, manganese etc. thereby making  the  process  simpler  and  quicker;
(vi) introduction of stringent penal  provisions  to  check  illegal  mining
prescribing higher penalties up to ?5 lakhs per hectare and imprisonment  up
to 5 years; and (vii) further empowering the  State  Government  to  set  up
Special Courts for trial of offences under the Act.

Newly inserted provisions of the Amendment Act, 2015 are to be examined  and
interpreted keeping in view the aforesaid method of  allocation  of  mineral
resources through auctioning, that has  been  introduced  by  the  Amendment
Act, 2015.  Amended Section 11 now makes it clear  that  the  mining  leases
are to be granted by auction.  It is for this reason  that  sub-section  (1)
of Section 10A mandates that all applications received prior to January  12,
2015 shall become  ineligible.   Notwithstanding,  sub-section  (2)  thereof
carves out exceptions by saving  certain  categories  of  applications  even
filed before the Amendment Act, 2015 came into  operation.  Three  kinds  of
applications are saved.
            First, applications received  under  Section  11A  of  the  Act.
Section 11A, under new avatar is an exception to Section 11  which  mandates
grant of prospecting license combining lease through auction in  respect  of
minerals, other than notified minerals.  Section 11A  empowers  the  Central
Government to select certain  kinds  of  companies  mentioned  in  the  said
Section,  through  auction  by  competitive  bidding  on  such   terms   and
conditions,  as  may  be   prescribed,   for   the   purpose   of   granting
reconnaissance permit, prospecting license or mining  lease  in  respect  of
any area containing coal  or  lignite.   Unamended  provision  was  also  of
similar nature except that the companies which can be selected now for  this
purpose under the new provision are different from the companies which  were
mentioned in the old provision.  It is  for  this  reason,  if  applications
were  received  even  under  unamended  Section  11A,  they  are  saved  and
protected, which means  that  these  applications  can  be  processed  under
Section 11A of the Act.
            Second category of applications, which are kept  eligible  under
the  new  provision,  are  those  where  the   reconnaissance,   permit   or
prospecting license had been granted and the permit holder or the  licensee,
as the case may be, had undertaken reconnaissance operations or  prospecting
operations.   The  reason  for  protecting  this  class  of  applicants,  it
appears, is that such applicants, with hope to get the license, had  altered
their position by spending lot of  money  on  reconnaissance  operations  or
prospecting operations.  This category, therefore,  respects  the  principle
of legitimate expectation.

Third category is that category of applicants where the  Central  Government
had already communicated previous approval under Section  5(1)  of  the  Act
for grant of mining lease or the  State  Government  had  issued  Letter  of
Intent to grant a mining lease before coming into  force  of  the  Amendment
Act, 2015.  Here again, the raison d'etre is that certain right had  accrued
to  these  applicants  inasmuch  as  all  the   necessary   procedures   and
formalities were complied with  under  the  unamended  provisions  and  only
formal lease deed remained to be executed.
      It would, thus, be seen that in all the  three  cases,  some  kind  of
right, in law, came to be vested in these categories of cases which led  the
Parliament to make such a provision saving those rights, and  understandably
so.

Here, the petitioner seeks to cover its case under the third  category  with
the plea that insofar as the State Government is concerned,  it  had  issued
'Letter of Intent'.  The petitioner is treating letter dated May  24,  2014,
which was sent by the State Government to  the  Central  Government  with  a
request to the Central Government to give its approval for grant of  mineral
concessions, as the 'Letter of Intent'.    It is in this hue, submission  is
that the intention behind the said letter is to be seen even if  it  is  not
termed as 'Letter of Intent' and this argument is predicated on   the  words
'by whatever name called'.

No doubt, having  regard  to  the  words  'by  whatever  name  called',  the
expression 'Letter of Intent' is to be given wider  connotation.   It  means
that nomenclature of the letter would not be the determinative  factor.   It
is the substantive nature of the letter in question that would determine  as
to whether it can be treated as the Letter of Intent.  For this purpose,  it
is first necessary to find the meaning that has  to  be  attributed  to  the
term 'Letter of Intent'.  As per the legal dictionary, Letter of  Intent  is
a document that described the preliminary understanding between the  parties
who intend to make a contract or join  together  in  another  action.   This
term has come up for interpretation on few occasions before this Court.   In
Rishi Kiran Logistics Private Limited v. Board of Trustees  of  Kandla  Port
Trust and Others[6], relying upon an earlier decision, this Court held  that
a Letter of Intent merely indicates a party's  intention  to  enter  into  a
contract with other party in future, as can be seen from the following  para
43 thereof, which reads as under:
“43. At this juncture, while keeping the  aforesaid  pertinent  features  of
the case in mind, we would  take  note  of  “the  Rules  and  Procedure  for
Allotment of Plots” in question issued by Kandla Port Trust. As  per  Clause
12 thereof the Port Trust had reserved with itself right  of  acceptance  or
rejection of any bid with specific stipulation that mere payment of EMD  and
offering of premium will not confer any right or interest in favour  of  the
bidder for allotment of land. Such a  right  to  reject  the  bid  could  be
exercised “at any time without assigning any  reasons  thereto”.  Clause  13
relates  to  “approvals  from  statutory  authorities”,   with   unequivocal
assertion therein that the allottees will have to obtain all approvals  from
different authorities and these included approvals from CRZ as well. As  per
Clause 16, the allotment was to be made subject to the  approval  of  Kandla
Port Trust Board/competent authority. In view of  this  material  on  record
and factual position noted in earlier paragraphs we are of the opinion  that
observations in Dresser Rand  S.A.  v.  Bindal  Agro  Chem  Ltd.   would  be
squarely available in the present case, wherein the Court  held  that:  (SCC
p. 773, paras 39-40)

“39...a letter of intent merely indicates a party's intention to enter  into
a contract with the other party  in  future.  A  letter  of  intent  is  not
intended to bind either party ultimately to enter into any contract. …

40. It is no doubt true that a letter  of  intent  may  be  construed  as  a
letter of acceptance if such intention is evident from its terms. It is  not
uncommon in contracts involving detailed procedure, in order to  save  time,
to issue a letter of intent communicating the acceptance of  the  offer  and
asking the contractor  to  start  the  work  with  a  stipulation  that  the
detailed contract would be drawn up later. If such a  letter  is  issued  to
the contractor, though it may be termed  as  a  letter  of  intent,  it  may
amount to acceptance of the offer resulting in a concluded contract  between
the parties. But the question whether the letter  of  intent  is  merely  an
expression of an intention to place an order in future or whether  it  is  a
final acceptance of the offer thereby leading to a  contract,  is  a  matter
that has to be decided with reference to the terms of the letter.”

When the LoI is itself hedged with the condition that  the  final  allotment
would be made later after obtaining CRZ and other clearances, it may  depict
an intention to enter into contract at a later stage. Thus, we find that  on
the facts of this case it appears that a  letter  with  intention  to  enter
into a contract which could take  place  after  all  other  formalities  are
completed. However, when the  completion  of  these  formalities  had  taken
undue long time and  the  prices  of  land,  in  the  interregnum,  shot  up
sharply, the respondent had a right to cancel  the  process  which  had  not
resulted in a concluded contract.”

      {See also Rajasthan Cooperative Dairy Federation Ltd.  v.  Maha  Laxmi
Mingrate Marketing Service Pvt. Ltd. and Ors.[7]}.

Applying the aforesaid meaning, can it be said that  letter  dated  May  24,
2014 of the State Government would constitute a Letter of  Intent?   We  are
afraid, answer has to be in the negative. Reason is  simple.   As  mentioned
above, in order to enable the State  Government  to  enter  into  any  lease
agreement/contract with the prospecting  licensee,  'previous  approval'  of
the Central Government was essential.  Unless such approval came, the  State
Government could not communicate  to  the  prospecting  licensee/lessee  its
intention to enter into any contract as  the  pre-requisite  prior  approval
would be lacking.   Therefore,  no  promise  could  be  held  by  the  State
Government to any applicant showing its intention to enter into  a  contract
in the future.  Position would have been different had letter dated May  24,
2014  been  issued  after  receiving  previous  approval  of   the   Central
Government.   However,  that  is  not  so.   This  letter  to  the   Central
Government was only recommendatory in nature and  ultimate  decision  rested
with the Central Government.   It  is  a  different  thing  if  the  Central
Government refuses to give its approval on any extraneous  reasons  or  mala
fides or does not take into consideration  relevant  factors/material  while
rejecting the application, which may form a different cause  of  action  and
may become a reason to  challenge  the  action  of  the  Central  Government
rejecting the application on the grounds that are available in law  to  seek
judicial review of such an action.  However, we are not  dealing  with  that
situation in the instant case.  Our  discussion  is  confined  to  the  plea
raised before us, viz., whether letter dated May 24, 2014 can be  termed  as
'Letter of Intent'.  For the reasons stated above, we are of the  view  that
it  was  not  a  Letter  of  Intent.  The  application  of  the  petitioner,
therefore, would not be covered by clause (c) of Section 10A of the Act.

We are conscious of the fact  that  the  petitioner  herein  had  originally
succeeded in the appeal inasmuch  as  judgment  dated  March  14,  2012  was
rendered giving direction to the State Government to recommend the  case  of
the petitioner, in terms of the MoU entered into  between  the  parties,  to
the Central Government.  This was not done and the decision  was  reiterated
in orders dated April 22, 2014 passed in Contempt Petition (Civil)  No.  374
of 2012.  It is possible that had the State Government  acted  promptly  and
sent  the  recommendations  earlier,  the  Central  Government  might   have
accorded its approval.  However, whether it could have done so or not  would
be in the realm of  conjectures.   Insofar  as  the  Central  Government  is
concerned, no direction was ever given by this Court.  On the  contrary,  it
was categorically observed in the order dated April  22,  2014  in  Contempt
Petition (Civil)  No.  374  of  2012  that  it  would  be  for  the  Central
Government to consider the recommendations of the State  Government  on  its
own merits and in accordance with law.  If that has not  been  done  by  the
Central Government, it cannot be the  subject  matter  of  present  Contempt
Petition.

This  Contempt  Petition,   thus,   stands   closed   with   the   aforesaid
observations.

                             .............................................J.
                                                                (A.K. SIKRI)



                             .............................................J.
                                                       (ABHAY MANOHAR SAPRE)
NEW DELHI;
DECEMBER 15, 2016.
-----------------------
[1]   (2012) 4 SCC 246
[2]   Bhushan Power and Steel Limited & Ors. v. Rajesh Verma & Ors., (2014)
5 SCC 551
[3]   (2010) 13 SCC 1
[4]   (2012) 3 SCC 1
[5]       (2012) 10 SCC 1
[6]   (2015) 13 SCC 233
[7]   (1996) 10 SCC 405

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