Dismissed

Mineral Enterprises Limited v. State of Karnataka

Karnataka HC7 Jan 2021WP/24316/2019

Case brief

AI extract

What is this about?

High Court of Karnataka disposed of a writ petition filed by a mining company challenging notifications regarding lease extension. The Court discovered gross suppression of material facts and false claims by the petitioner regarding prior litigation and lease terms. The petition was unconditionally withdrawn. The Court imposed exemplary costs of Rs. 5 lakhs as a signal against such conduct.

What did the court decide?

Petition dismissed unconditionally; petitioner ordered to pay Rs. 5 lakhs costs to Chief Minister's Relief Fund; petitioner disentitled to initiate proceedings on the lease.

Mineral Enterprises Limited Vs State of Karnataka — Company and Corporate | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 07^th DAY OF JANUARY, 2021

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PRESENT

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THE HON’BLE MR.ABHAY S. OKA, CHIEF JUSTICE

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AND

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THE HON’BLE MR.JUSTICE SACHIN SHANKAR MAGADUM

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WRIT PETITION NO.24316 OF 2019 (GM-MM-S)

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BETWEEN:

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MINERAL ENTERPRISES LIMITED A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956

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HAVING ITS REGISTERED OFFICE AT KHANIJA BHAVAN, 3^RD FLOOR WEST WING No.49, RACE COURSE ROAD BANGALORE-560 001

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REPRESENTED HEREIN BY ITS AUTHORISED SIGNATORY MR.M.S.SRINIVASA RAGHAVAN

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... PETITIONER

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(BY SRI.K.G.RAGHAVAN, SR. ADVOCATE FOR SRI.ADITYA NARAYAN, ADVOCATE)

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AND:

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STATE OF KARNATAKA MINISTRY OF COMMERCE AND INDUSTRY 3^RD FLOOR, KHANIJA BHAVAN (EAST WING) No.49, RACE COURSE ROAD BENGALURU-560 001 REPRESENTED BY ITS SECRETARY

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DEPARTMENT OF MINES AND GEOLOGY No.49, KHANIJA BHAVAN RACE COURSE ROAD

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BENGALURU-560 001 REPRESENTED BY ITS DIRECTOR

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JSW STEEL LIMITED JSW CENTRE BANDRA KURLA COMPLEX BANDRA EAST MUMBAI-400 051

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... RESPONDENTS

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(BY SRI.TARANATH POOJARY, AGA FOR R1 & R2 SMT.S.R.ANURADHA, ADV. FOR R3)

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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH NOTIFICATION DTD:08.03.2019 ISSUED BY THE R-2 (ANNEXURE-A) AND THE AMENDMENT TO THE NOTIFICATION DTD: 01.04.2019 (ANNEX-B) CORRIGENDUM No.2 TO THE IMPUGNED NOTIFICATION DTD: 02.05.2019 (ANNEX-C) CORRIGENDUM No.3 TO THE IMPUGNED NOTIFICATION DTD: 03.05.2019 (ANNEX-D) AND CORRIGENDUM No.4 TO THE IMPUGNED NOTIFICATION DTD: 22.05.2019 (ANNEXURE-E) AND ETC.

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THIS PETITION COMING ON FOR ORDERS THIS DAY, CHIEF JUSTICE MADE THE FOLLOWING:

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ORDER

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Hearing of this writ petition was given out of turn priority in view of the order of the Apex Court dated 17^th August, 2020 passed in Writ Petition (Civil) No.800/2020. In terms of the said order of the Apex Court, application for amendment of the petition was allowed earlier and yesterday, we commenced the final hearing of the petition. Out of turn priority was given to

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hearing only in view of the decision of the Apex Court under the aforesaid order.

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To put it mildly, this is a classic case of a party indulging in suppression of material facts. Before we refer to the facts of the case, we may hasten to add that the learned Senior Counsel representing the petitioner appeared and stated before the Court today that he, as a Senior Counsel of this Court, will never tolerate such conduct on the part of a party and therefore, he has advised the petitioner to immediately withdraw the petition. He also stated on instructions that apart from the fact that the petitioner wants to unconditionally withdraw this petition, the petitioner will not press IA.No.58584/2019 filed before the Apex Court seeking a direction for extension of mining lease subject matter of this petition. A memo for withdrawal of this petition has been accordingly filed by the learned counsel for the petitioner in which a prayer is made for permitting unconditional withdrawal of this petition.

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Considering the extent of suppression of facts indulged by the petitioner, notwithstanding the fact that the

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petitioner has agreed to withdraw the petition, it is necessary for us to pass an order regarding payment of costs. Therefore, a brief reference to the facts of the case is necessary.

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The subject matter of this petition under Article 226 of the Constitution of India is the mining lease granted to the predecessor of the petitioner under the provisions of the Mines and Minerals (Development and Regulation) Act, 1957 (for short ‘the said Act of 1957’). The mining lease was in respect of Iron Ore and Manganese. In paragraph 3 of the petition it is claimed by the petitioner that it is a ‘model Miner’ and has adopted best practices in mining activities. The petitioner is relying upon mining lease No.2346 (for short ‘the said lease’), a copy of which is annexed as Anneuxre-K. The said mining lease was originally granted to Sri Y.Hanumanthappa by the erstwhile Government of Mysore on 7^th October, 1952. The lease was transferred to M/s. Jyothi Brothers on 22^nd February, 1956 and on 9^th September, 1969, the lease was transferred to the present petitioner.

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On 7^th October, 1952 the lease was granted for a period of 20 years till 6^th October, 1972. The further extension

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from 7^th October 1992 was granted in respect of a part of the area of the original lease as per the Government Notification dated 8^th April, 2001. The renewal of lease granted for 20 years was in respect of 103.81 Hectares from 7^th October, 1992. Thus, the renewal was granted till 6^th October 2012. An application for further renewal dated 26^th February 2009 was actually filed on 7^th March 2009. The said application is at Annexure-K1 which seeks extension of lease for a period of 20 years.

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In the petition as originally filed, the challenge is to the Notifications issued by the State Government inviting bids for grant of mining lease in respect of the area of the lease earlier granted to the petitioner. The objection of the petitioner to the impugned notifications inviting bids was essentially on the ground that the petitioner is entitled to extension of lease till 6^th October, 2032.

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There are some developments which took place before filing of the petition. In Writ Petition (Civil) No.562/2009, on 29^th July, 2011, the Apex Court passed an order prohibiting Iron Ore and other mining activities in Bellary District. A similar

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order was passed on 26^th August, 2011 in respect of Iron Ore and mining activities in Chitradurga and Tumakur Districts. As the mining lease subject matter of this petition was categorized as ‘A’ Category, by the order dated 3^rd September, 2012, the Apex Court permitted the mining activity. The petitioner is relying upon the orders passed by the Apex Court on 2^nd November, 2012 and 18^th April, 2013, by which assurance of the State Government was noted regarding disposing of the pending renewal applications within a period of one month.

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Now comes the crucial part of this petition and especially the amended petition. In paragraph 8 of the amended petition, reliance is placed on the application for renewal which was filed on 2^nd March, 2009 and it is contended that the petitioner was legally entitled to the renewal of the said lease.

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What is material is paragraph 9 of the petition, which reads thus:

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“9. Despite the fact that the petitioner had filed its application well before the expiry of the then current lease term, the respondents failed to consider the

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same, until after the amendment to the MMDR Act, 1956, in 2015, whereunder all existing leases were automatically extended until at least 31.03.2020. The Respondents also caused delays in processing the forest clearance in favour of the petitioner. As a result, the lease deed came to be executed in favour of the petitioner only on 05.12.2016. The same was done by misapplying Section 8A of the MMDR Act, 1956, as amended and taking advantage of the delay in processing the pending renewal application of the petitioner. The sole reason for the delay and the resulting execution of extension lease deed was that the State government did not process the application filed by the petitioner and, instead, kept the same pending.

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(Amended by insertion vide Order dated 13.10.2020) .”

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(underlines supplied)

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Thereafter, there is a reference to the orders

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passed in Writ Petition (Civil) No.562/2009, which we have already referred earlier. In paragraph 9, a grievance has been made that the State Government has not processed the application filed by the petitioner on 2^nd March, 2009. Paragraph 9I refers to the amendment made to the said Act of 1957 with effect from 12^th January, 2015 by which Section 8A

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was incorporated. In paragraph 9I, a specific reliance has been placed perhaps on Section 8A of the said Act of 1957.

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In paragraph 9J, a specific contention has been raised that the petitioner was entitled to extension of lease for a period of 20 years from 7^th October, 2012 (i.e., up to 6^th October, 2032).

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Now we come to paragraph 9K which must be quoted. Paragraph 9K reads thus:

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“9K. However, more than six years after the renewal application was filed, the respondent No.1-State of Karnataka finally executed the Supplementary Lease Deed dated 05.12.2016 in favour of the petitioner (produced as Annexure K hereto), only until 30.03.2020. The State, thereby, unlawfully took advantage of its own inexcusable delays, and misapplied the amended provisions.

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(Amended by insertion vide Order dated 13.10.2020).”

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(underlines supplied)

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Paragraph 9K suggests that the first respondent

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on its own executed Supplementary Lease Deed dated 5^th December, 2016 in favour of the petitioner which was valid till 30^th March, 2020. The further allegation is that the State

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Government unlawfully took advantage of its own inexcusable

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delays and misapplied the amended provisions.

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Paragraph 9M alleges that the State’s inaction is unlawful in the light of final judgment of the Apex court dated 18^th April, 2013.

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“9M. It is submitted that the delay in renewal was, itself wholly inexcusable and unlawful. Most egregiously, the State’s inaction was in the teeth of both the Order dated 02.11.2012 and the final judgment of the Hon’ble Supreme Court dated 18.04.2013, wherein express directions were issued to the State Government to process the pending applications.

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(Amended by insertion vide Order dated 13.10.2020).”

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Paragraph 9Q is also relevant, which reads thus:

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“9Q. As is clear from the aforesaid provisions,

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the petitioner was entitled to consideration of its renewal application and grant of renewal lease term from 07.10.2012 to 06.10.2032, and, consequently, the Petitioner was also entitled to extension of the lease until 06.10.2032, under Section 8A(6). However, taking advantage of its own wrongful and contumacious delays, the Respondent No.1 – State of Karnataka chose to curtail the period of extension only until 30.03.2020 in the Supplementary Lease Deed dated 05.12.2016, by wholly misapplying the

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provisions of Section 8A of the MMDR Act, 1957 (Amended by insertion vide Order dated 13.10.2020).”

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(underlines supplied)

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As a specific reliance was placed yesterday by the learned Senior counsel for the petitioner on paragraph 9H, we are quoting the same, which reads thus:

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“9H. The petitioner had, right from 08.10.2012, fervently followed up with the State Government, requesting it to take steps in accordance with its legal obligations, and process and grant the Petitioner’s renewal application.

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(Amended by insertion vide Order dated 13.10.2020.)”

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(underlines supplied)

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Yesterday, when the hearing was about to

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conclude, the learned Additional Government Advocate invited our attention to order dated 17^th August, 2016 passed by a Division Bench of this Court in Writ Petition No.31404/2016 filed by the petitioner. Therefore, we called for the file of the said writ petition. First thing which must be noted here is that there is a complete suppression by the petitioner of filing of the said writ petition in the present writ petition either in the original petition or in the amended version. We find from the perusal of

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the said Writ Petition No.31404/2016 that it was filed on 30^th May, 2016. The substantive prayer made in the said petition is in terms of prayer (a) which reads thus:

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“a. To direct the respondents to execute supplementary lease deed in accordance with MMDR (Amendment) Act, 2015, extending the period of ML No.2346 in favour of the petitioner and permit the petitioner to conduct mining operations.”

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18. We have carefully perused the said petition. In the

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petition, there is a specific reference in the synopsis to the application filed for renewal on 2^nd March, 2009. However, the specific contention raised in the petition as can be seen from various paragraphs including paragraph-7 is that by virtue of provisions of sub-section (6) of Section 8A of the said Act of 1957, the lease stood extended up to 31^st March 2020. It is not even a case made out in the said petition that in terms of the application for renewal filed on 2^nd March 2009, the petitioner was entitled to renewal of lease for a period of 20 years from 7^th October 2012 till 6^th October, 2032. In fact, in paragraph 16 it is reiterated that period of lease granted as per the amendment to the said Act of 1957 would come to an end on 31^st March, 2020. It is alleged that on account of the inaction

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on the part of the respondents, the petitioner has not been permitted to work in the mines even from the date of the amendment i.e., 12^th January, 2015. Thus, the petitioner after referring to the application filed for renewal on 2^nd March, 2009 claimed a writ of mandamus in the said petition filed on 30^th May, 2016 for grant of deemed extension till 31^st March, 2020 specifically in terms of sub-section (6) of Section 8A of the said Act of 1957 which was added by the amendment effected with effect from 12^th January, 2015. The writ petition was disposed of by order dated 17^th August, 2016, recording the statement of the learned Additional Government Advocate that lease will be executed within four weeks and that is how on 5^th December, 2016, the State Government executed renewal lease providing for a term up to 30^th March, 2020. The petitioner never made any grievance about the term of the lease in the renewal lease dated 5^th December, 2016. Thus, the petitioner accepted the fact that notwithstanding the application filed on 2^nd March, 2009, it is entitled to extension of lease only up to 30^th March, 2020. Thus, the petitioner filed the said petition in May, 2016 claiming extension of lease in terms of sub-section (6) of Section 8A of the said Act of 1957

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only till the end of March, 2020. The petitioner accepted the said supplementary lease extending the lease up to 30^th March 2020 and signed it without making any grievance. Thus, the suppression by the petitioner of filing of earlier Writ Petition No.31404/2016 is very crucial. Not only that filing of the petition and the order passed thereon which was invited by the petitioner itself was suppressed, the averments made in the amended petition and in particular, in paragraph 9 seem to indicate that the grievance of the petitioner is that a lease was executed valid only up to 30th March, 2020 by applying Section 8A of the said Act of 1957. The averments made in the amended petition give an impression that the State on its own executed a lease on 5^th December, 2016, extending the period of lease up to the end of March, 2020, by ignoring the pending application. It was the bounden duty of the petitioner to have disclosed that in May, 2016 the petitioner itself filed the aforesaid writ petition claiming extension of lease till the end of March, 2020 by specifically relying upon sub-section (6) of Section 8A of the said Act of 1957. In terms of the order passed in the said petition, the petitioner voluntarily executed a lease which was valid up to 30^th March 2020 without any

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protest. This is, therefore, a gross case of suppression of material facts.

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The matter does not rest here. In the petition, even as originally filed, reliance was placed on IA filed by the petitioner being IA.No.58584/2019 in Writ Petition (Civil) No.562/2009. A copy of the said application is annexed as Annexure-L, which we have carefully perused. The IA appears to have been filed on 6^th April, 2019 in which it is stated that the application filed for renewal on 2^nd March, 2009 was kept pending and various averments have been made in the said IA regarding delay on the part of the State Government in granting forest and other clearances and the delay in execution of supplementary lease deed. Those averments are found at pages 13 and 14 of the IA. Even in the said application, the petitioner seems to have suppressed filing of Writ Petition No.31404/2016 and the order passed thereon. In any case, the IA proceeds on the footing that the petitioner was entitled to renewal of lease up to the end of March, 2020. The prayer in the IA was that on account of the delay in execution of the lease, petitioner be granted extension up to 31^st March, 2025. Thus, even the said application filed before the Apex Court

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proceeds on the footing that the petitioner was entitled to extension of lease till the end of March, 2020, but due to the delay on the part of the authorities of the State Government, considering the huge investment allegedly made by the petitioner that the lease should be extended up to 31^st March, 2025. Thus, even the said application proceeds on the footing that the entitlement of the petitioner to the renewal was up to the end of March, 2020. Not even a whisper in the said application filed before the Apex Court as late as on 6^th April, 2019 that under the application for renewal filed on 2^nd March, 2009, the petitioner was entitled to extension of lease for 20 years from 7^th October, 2012. Perhaps only after 30^th March 2020 that the petitioner invented a theory that it is entitled to extension till 6^th October 2032.

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Yesterday, before the fact of filing of the earlier petition was disclosed by the learned Additional Government Advocate, we made a query to the learned Senior Counsel appearing for the petitioner, whether any grievance was made in writing by the petitioner at any time about the failure of the State Government to grant lease for a period of 30 years on the basis of the application filed on 2^nd March, 2009. His only

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answer was paragraph-9H of the amended petition, which we have quoted earlier. In fact, Writ Petition No.31404/2016 filed by the petitioner and I.A. filed by the petitioner before the Apex Court in April, 2019 clearly indicate that the petitioner never made out a case that it is entitled to extension of lease for a period of 20 years from 7^th October, 2012 on the basis of the application dated 2^nd March, 2009. Thus, the bald averment made in paragraph-9H of the petition is obviously false. We had also made a query to the learned Senior Counsel appearing for the petitioner that when for the first time the petitioner made a grievance regarding the failure to grant lease for a period of 20 years on the basis of the application dated 2^nd March, 2009, he stated that the said grievance was made for the first time in July, 2020 by filing Writ Petition (Civil) No.800/2020 before the Apex Court. Though a copy of the said writ petition is not placed on record, we can safely infer that the petitioner must not have disclosed to the Apex Court the fact of filing of Writ Petition No.31404/2016, the order passed thereon and the voluntary execution of the supplementary lease on 5^th December, 2016 by the petitioner till 30^th March, 2020. It appears from the order dated 17^th

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August, 2020 passed in Writ Petition (Civil) No.800/2020 that the petitioner persuaded the Apex Court to pass an order permitting the petitioner to raise the contentions which were raised in the writ petition filed before the Apex Court in the present petition. In fact, the Apex Court granted leave to amend this petition. The petitioner also persuaded the Apex Court to pass an order directing this Court to dispose of the petition within a period of six months from the date of communication of the order.

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Even after the said order, the conduct of the petitioner, which is reflected from the orders passed by this Court is very peculiar. The conduct of the petitioner is noted while passing the order dated 18^th November, 2020. The said order has been passed on the interlocutory application being I.A.No.3/2020. The applicant in I.A.No.3/2020 was declared as successful bidder on 26^th July, 2019. The said successful bidder was made a party in Writ Petition (Civil) No.800/2020 filed by the petitioner before the Apex Court. Though the petitioner was fully aware of the successful bidder as the petitioner itself had made him a party in the writ petition filed before the Apex Court, while carrying out amendment in terms

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of the order of the Apex Court, the petitioner deliberately omitted to implead the said successful bidder. Paragraphs-4 and 5 of the order dated 18^th November, 2020 read thus:

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“4. In terms of the liberty granted by the Apex Court, an application for amendment of this writ petition was made by the petitioner. That application was allowed by order dated 13^th October 2020. Today, learned counsel appearing for the petitioner states that, she has no objection for allowing the present application. But, there is no explanation coming from her for not impleading the successful bidder, though the petitioners were aware that the applicant is a successful bidder. In fact, the petitioners applied for extensive amendment by filing IA No.2/2019. However, there is no explanation why the petitioners omitted to implead the present applicant though in their own petition filed before the Apex Court, the present applicant was a party respondent. On the request made by the petitioners, the Apex Court has fixed a time bound schedule. The order of the Apex Court has been passed more than three months back. Still the petitioners have not chosen to apply for impleading the applicant, though the applicant appears to be a necessary party. While we are allowing the application, we direct the petitioner to file an affidavit explaining their conduct of not impleading the necessary party for a period of three months after the order of the Apex Court. Such an affidavit shall be filed within a period of two weeks from today.

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5. Perusal of the amended petition shows that in Paragraph 34(A), it is specifically mentioned that the present applicant has been declared as a preferred bidder. In fact, it refers to a letter dated 13^th August, 2019 issued to the applicant in the present application. Though today the learned counsel appearing for the petitioner stated that the petitioner has no objection for impleading the applicant, the petitioner owes an explanation to the Court why the applicant in the present application was not impleaded as a partyrespondent while seeking amendment of the petition.”

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(underlines supplied)

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As far as the conduct of the petitioner is concerned, paragraphs 2 and 3 of the order dated 2^nd December 2020 are material which read thus:

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“On 17^th August, 2020, when an order was passed by the Apex Court, the petitioner was aware of the requirement of impleading the applicant in I.A. No.1 of 2020. The petitioner did not take any steps for nearly two months. This becomes relevant as the petitioner persuaded the Apex Court to pass an order fixing a time bound schedule for the disposal of the petition.

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Though we are not satisfied with the explanation offered by the petitioner, the issue regarding the conduct of the petitioner must rest here. The learned counsel appearing for the added respondent states that a copy of the amended petition was served in the

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last week. Therefore, she seeks time of three weeks to file the statement of objections. Accordingly, we grant three weeks time to file the statement of objections.”

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We have already noted that the petitioner in paragraph 3 of this petition has made a tall claim that it is a ‘model miner’ and has adopted best practices in mining activities. As noted earlier, this is a gross case of suppression of material facts by the petitioner. This is a gross case of making false statements in the petition. This is a gross case where not only this Court but also the Apex Court was taken on ride by a company which makes a tall claim of being a model miner.

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Writ jurisdiction under Article 226 of the Constitution of India is always discretionary and equitable. Such equitable and discretionary jurisdiction is not meant to litigants like the petitioner who have brazenly Indulged in suppression of material facts, making false statements and taking the highest Court in the nation as well as this Court for a ride. All this was unearthed only when we called for the papers of the Writ Petition No.31404/2016 filed by the petitioner. Now, the learned senior counsel appearing for the petitioner has

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taken a fair stand and has advised the petitioner to withdraw the petition.

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Not only that the petitioner has indulged in suppression of material facts and has taken the Courts for a ride, the petitioner has consumed very important and precious time of this Court when there are large number of old matters waiting in a queue for disposal. It is only because the petitioner persuaded the Apex Court to pass an order directing disposal of the petition in six months that an out of turn priority was given to the hearing of this petition.

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Time has come to give a clear signal to the litigants that no one will be allowed to abuse the writ jurisdiction of this Court in this manner. The petitioner is not an innocent litigant. It is a limited company doing business in mining. Moreover, in this case, we are dealing with a company which boldly claims to be a ‘model miner’ and is claiming that it is following the best practices. The other practice which the petitioner has followed is of suppressing material facts while filing proceedings before the Court. Therefore, the petitioner will have to be saddled with exemplary costs which will be payable to the Chief Minister’s Relief Fund. We quantify the

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amount of costs at Rs.5 lakhs which will be payable by the petitioner to the Chief Minister’s Relief Fund within a period of six weeks from today.

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We may note here that the learned senior counsel appearing for the petitioner, on instructions, stated that the pending IA.No.58584/2019 filed before the Apex Court will not be pressed. From the facts which we have stated above and considering the conduct of the petitioner, it is obvious that now the petitioner is disentitled to initiate any proceedings on the basis of the mining lease which is the subject matter of this petition.

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28. Accordingly, we pass the following:

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ORDER

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(i) The memo for withdrawal of the writ petition is taken on record and the petition is dismissed as unconditionally withdrawn;

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(ii) The petitioner shall pay costs quantified at Rs.5 lakhs to the Chief Minister’s Relief Fund within a period of six weeks from today;

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(iii) A compliance report shall be filed by the petitioner enclosing a copy of the receipt;

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(iv) We record the solemn assurance given by the learned senior counsel appearing for the petitioner, on instructions, that IA.No.58584/2019 pending before the Apex Court will not be prosecuted;

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(v) We also make it clear that the petitioner will not be entitled to initiate any proceedings on the basis of the mining lease subject matter of this petition bearing ML No.2346;

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(vi) Though the petition is disposed of, place the petition for orders on 23^rd February, 2021 for reporting compliance regarding order of payment of costs.

Sd/CHIEF JUSTICE

Sd/-

JUDGE

TL/nd

Mineral Enterprises Limited v. State of Karnataka

Case brief

What is this about?

What did the court decide?

Mineral Enterprises Limited v. State of Karnataka

Case brief

What is this about?

What did the court decide?

What the court decided

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