Dismissed

State v. Govt.of Ind.and Anr.

Orissa HC8 Aug 2016WP(C)/10219/2012

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition challenging a revision order that set aside a State Government directive demanding payment for alleged mining breach. The Court held the communication was an order, the revision was maintainable, and the authority correctly decided on merits after reviewing the record, upholding the finding of no violation of natural justice.

What did the court decide?

The writ petition filed by the State of Odisha challenging the revision order dismissing the Government's claim was dismissed.

State Vs Govt.of Ind.and Anr. — Writ and Judicial Review | Orissa HC (2016)

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HIGH COURT OF ORISSA : CUTTACK

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W.P.(C) No.10219 of 2012

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In the matter of an application under Articles 226 and 227 of the Constitution of India.

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AFR

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----------State of Odisha ……. Petitioner

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-Versus-

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The Government of India and another

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…… Opp.Parties

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For Petitioner : Mr. B.P. Pradhan, Addl. Govt. Advocate For Opp. Parties : M/s. A.K. Bose, Asst. Solicitor General and D.K. Sahoo, Central Govt. Counsel

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[For O.P. No.1] Mr. Gopal Subramaniam, Sr. Advocate, Mr. Ashok K. Parija, Sr. Advocate, M/s. Sarada P. Sarangi, P.K. Das, P.P. Mohanty, [For O.P. No. 2]

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P R E S E N T:

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THE HONOURABLE THE CHIEF JUSTICE MR. VINEET SARAN AND

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THE HONOURABLE DR. JUSTICE B.R. SARANGI

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DECIDED ON : 08.08.2016

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Vineet Saran, CJ. By means of this writ petition filed by the petitioner-

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State of Odisha, challenge is made to the order dated 16.01.2012 passed by the Revisional Authority under Section 30 of the Mines And Minerals (Development & Regulation) Act 1957 (for short, “Act 1957”), whereby the order/notice dated 25.11.2010 passed under Section 21(5) of the Act 1957 and under Rule 27(5) of the Mineral Concession Rules, 1960 (for short, “Rules 1960”) has been quashed, whereby direction for payment of a certain amount for alleged breach of conditions of the mining lease, had been directed by the State Government.

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Brief facts of the case are that on 05.02.1999, opp. party no.2 Smt. Indrani Patnaik was granted mining lease for a period of 30 years, i.e., from 05.02.1999 to 04.02.2029. On the allegation of certain illegal mining having been carried on by opp. party no.2, the State Government passed an order dated 25.11.2010, directing opp. party no.2 to make payment of an amount of Rs.11,31,72,22,440/-, and further directed to make good or remedy the breach of conditions, as the case may be, within 60 days from the date of receipt of the communication dated 25.11.2010. The said communication begins with the words “take notice”, but in the operative portion of the said communication, the following directions had been issued:

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“5. I am directed to hereby notice you under the provisions of sub-section (5) of Section 21 of M&M(D&R) Act, 1957) to make payment of the aforesaid amount of Rs.11,31,72,22,440.00 and the under the provision of Rule 27(5) of MC Rules, 20160 to make good or remedy the breach of conditions as the case may be within sixty days from the date of receipt of the notice, failing which the mining lease will be determined and the whole of security deposit forfeited.”

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Challenging the said order, opp. party no.2 filed a revision under Section 30 of the Act 1957 before the Central Government, wherein the State Government, after taking notice and putting in appearance, contested the case primarily on the ground that the said communication dated 25.11.2010 was merely a notice and not any order, and that opp. party no.2 had opportunity to reply to the said notice and thus, according to the State Government, the revision was not maintainable. Although objections on merits of the Revision were filed, but no para-wise reply to the averments made in the revision was given by the State Government before the Revisional Authority.

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After refusing to accept the preliminary objection of the State Government, and holding that the communication dated 25.11.2010 was an order and not a show cause notice, the Revisional Authority proceeded to take up the revision on merits, and held the order dated 25.11.2010 to be bad in law, and set aside the impugned proceeding dated 25.11.2010 of the State

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Government. Aggrieved by the said order, this writ petition has been filed.

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We have heard Shri B.P. Pradhan, learned Addl. Govt. Advocate for the petitioner-State of Odisha, as well as Shri D.K. Sahoo, learned Central Govt. Counsel for opp. party no.1-Union of India and Shri Gopal Subramaniam, learned Senior Counsel and Shri Ashok Kumar Parija, learned Senior Counsel appearing along with Shri S.P. Sarangi, learned counsel for the contesting opp. party no.2, and have perused the record.

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Section 21(5) of the Mines & Minerals (Development & Regulation) Act, 1957 and Rule 27(5) of the Mineral Concession Rules, 1960 which are relevant for the purpose of the case, are extracted hereunder:

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Sec.21(5) . “Whenever any person raises, without any lawful authority, any mineral from any land, the State Government may recover from such person the mineral so raised, or, where such mineral has already been disposed of, the price thereof, and may also recover from such person, rent, royalty or tax, as the case may be, for the period during which the land was occupied by such person without any lawful authority.”

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Rule 27(5) : If the lessee makes any default in the payment of royalty as required under section 9 or payment of dead rent as required under section 9A or commits a breach of any of the conditions specified in sub-rules (1), (2) and (3), except the condition referred to in clause (f) of sub-rule (1), the State Government shall give notice to the lessee requiring him to pay the royalty or dead rent or remedy the breach, as the case may be, within sixty days from the date of the receipt of the notice and if the royalty or dead rent is not paid or the breach is not remedied within the said period, the State Government may, without prejudice to any other proceedings that may be taken against him, determine the lease and forfeit the whole or part of the security deposit.”

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The submission of the learned counsel for the petitioner-State of Odisha primarily is, that the communication dated 25.11.2010 was a notice to opp. party no.2 to show cause. A perusal of the communication dated 25.11.2010 in totality, as well as the operative portion, would make it clear that there was no opportunity given to opp. party no.2 to show cause, as by the said order the State Government had come to a final determination, that an amount as specified therein was due to

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be paid by opp. party no.2 under Section 21(5) of the Act 1957 and further a final determination with regard to breach of conditions by opp. party no.2 had also been made, and a direction was issued to make good or remedy the same within 60 days, failing which the mining lease would be determined, and the whole of the security deposited by opp. party no.2 would be forfeited.

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Mr. B.P. Pradhan, learned Addl. Government Advocate vehemently urged before this Court that the communication dated 25.11.2010 was merely a ‘notice’ not an ‘order’ and that opposite party no.2 by receiving such notice had an opportunity to reply. Instead of replying the same, the opposite party no.2 preferred revision under Section 30 of the Act, 1957. Thereby, the order passed by the revisional authority cannot sustain in the eye of law.

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The emphasis was laid on the words “notice” and “order”. In Parasramka Commercial Company v. Union of India, AIR 1970 SC 1654, the apex Court held that reading the word “notice”, it denotes merely an intimation to the party concerned of a particular fact. It seems that the Court cannot limit the words “notice in writing” to only a letter. Notice may take several forms. It must, to be sufficient in writing and must intimate quite clearly that the award has been made and signed.

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10. Similarly in Venkateswaraloo v. Superintendent,

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Central Jail, Hyderabad State, AIR 1953 SC 49, the apex Court held that the word “order” in under section 22 of the General Clauses Act, 1897 means an order laying down directions about the manner in which things are to be done under the Act and the section does not mean that a substantive order against a particular person can be made under a provision of an Act before that Act has come into force.

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Applying the meaning attached to the words, “notice” and “order”, in our view, from the contents and language of the said communication, the same can be termed as nothing else but an order, as definite directions were given by the State Government without specifying that opp. party no.2 is required to show cause as to why such payment be not made by opp. party no.2, or why she may not be required to make good or remedy any of the conditions of the mining lease. To that extent, we have no hesitation in concurring with the view taken by the Revisional Authority that the communication dated 25.11.2010 was an order and not a show cause and, as such, the revision filed by opp. party no.2 challenging the said order was maintainable under Section 30 of the Act 1957.

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Much reliance has been placed on Sahi Ram v. Avtar Singh, AIR 1999 SC 2169 stating that instead of the petitioner

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filing reply to the communication dated 25.11.2010 could not have preferred revision under Section 30 of the Act, 1957 and more so, the revisional authority could not have exercised the powers instead of relegating the petitioner to participate in the proceedings by filing its reply to the said notice. Thereby, the revisional authority has committed gross error by entertaining such revision instead of remitting the matter back to the authority concerned for just and proper adjudication. On perusal of the facts of the said case, it appears that the mining lease was terminated for breach of terms, but without affording an opportunity of hearing and applying the principle of natural justice, the High Court, instead of remitting the matter to State Government straightway set aside termination of lease. The apex Court held that it is not proper. But the factual matrix of the case in hand is totally different from that of the case which has been cited before this Court as mentioned supra for consideration and as such, the same is distinguishable.

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Similarly, reliance has been placed on Karnataka Rare Earth and another v. Senior Geologist, Dept. of Mines

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and Geology and another, AIR 2004 SC 2915. It is urged that amount of demand raised in communication dated 25.11.2010 is not a “penalty” but a “compensation” for unauthorised extraction of the minerals. Considering the Section 21(5) of the Act, 1957,

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the apex Court held that such provision empowers the State Government to recover rent, royalty or tax, from the person who has raised the mineral from any land without any lawful authority and also empowers the State Government to recover the price thereof where such mineral has already been disposed of inasmuch as the same would not be available for seizure and confiscation. The provision as to recovery of price is in the nature of recovering the compensation and not penalty so also the power of the State Government to recover rent, royalty or tax in respect of any mineral raised without any lawful authority can also not be called a penal action. The underlying principle of sub-section(5) is that a person acting without any lawful authority must not find himself placed in a position more advantageous than a person raising minerals with lawful authority. Therefore, the marginal note “penalties” cannot be pressed into service for giving such colour to the meaning of subsection (5) as it cannot have in law. The recovery of price of the mineral is intended to compensate the State for the loss of the mineral owned by it and caused by a person who has been held to be not entitled in law to raise the same. There is no element of penalty involved and the recovery of price is not a penal action. It is just compensatory. The reliance placed on Karnataka Rare Earth (supra) is factually distinguishably to the present context

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and as such is not applicable in view of the fact that without complying the principles of natural justice the determination has been made by the communication dated 25.11.2010, by which the petitioner has been called upon to deposit the amount without quantifying the same in proper prospective. Whether it is in the nature of penalties or compensatory, before determination of the same, the authority has to comply the minimum requirement of law by following principle of natural justice. Nonadherence to such principles cannot sustain. Therefore, such communication has to be quashed.

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Natural justice is an important concept in an administrative law. It is also known as “substantial justice”, “divine justice”, “fundamental justice”, “universal justice”, “rational justice” and “fair play in action”. The rules of natural justice have been summarised in one word i.e. “fairness”. Natural justice is a great humanising principle intended to invest law with fairness to secure justice and to prevent miscarriage of justice.

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In Automotive Tyre Manufacturers Assn. V.

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Designated Authority, (2011) 2 SCC 258, the Apex Court held that the golden rule which stands firmly established is that the doctrine of natural justice is not only to secure justice but to prevent miscarriage of justice. Its essence is good conscience in a

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given situation; nothing more- but nothing less. Similar view has also been taken in Competition Commission of India v. SAIL, (2010) 10 SCC 744, Haryana Financial Corpn. V. Kailash Chandra, (2008) 9 SCC 31, Sahara India (Firm) (I) v. CIT, (2008) 14 SCC 151 and other plethora of cases.

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No provision is found in any statute requiring observance of the principles of natural justice by adjudicating authorities. The question then arises whether the adjudicating authority is bound to follow the principles of natural justice.

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In Judicial Review of Administrative Action (5^th

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Edn.) de Smith said that where a statute authorising interference with properly or civil rights was silent on the question of notice and hearing, the courts would apply the rule as it is “ of universal application and founded on the plainest principles of natural justice”.

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Lord Russell said it is to be implied unless the contrary appears, that Parliament does not authorise by the Act the exercise of powers in breach of the principles of natural justice, and that Parliament does by the Act require, in the particular procedures, compliance with those principles.

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Netheim stated Formerly the presumption had been that there was no obligation to give a hearing unless the statute itself indicated such an obligation; now the presumption is that

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there is such an obligation unless the statute clearly excludes it, notwithstanding the vesting of a power, in subjective terms, in a minister responsible to Parliament.

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It is well settled that where exercise of power results in civil consequences, unless the statute specifically rules out, the principle of natural justice would apply. This position of law no more remains as res integra in view of the catena of decisions laid down by the apex Court starting from the State of Orissa v. Dr. Binapani Dei , AIR 1967 SC 1269 and till date.

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In A.K. Kraipak v. Union of India, AIR 1970 SC 150,

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the apex Court held as follows:

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“ The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement.

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In Maneka Gandhi v. Union of India, AIR 1978 SC

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597 the apex court held as follows:

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“It is well established that even where there is no specific provision in a statute or rules made thereunder for showing cause against action proposed to be taken against an individual, which affects the rights of that individual the duty to give reasonable opportunity to be heard will be implied from the nature of the functions to be performed by the authority which has the power to take punitive or damaging actions.”

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Similarly in Mohinder Singh Gill v. Chief Election

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Commissioner, AIR 1978 SC 851, the apex court held “the silence of a statute has no exclusionary effect except where it flows from necessary implication.”

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Applying the aforementioned decisions on the

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principles of natural justice to the present context it appears that the communication dated 25.11.2010 directing to make payment of the amount determined is in gross violation of principle of natural justice.

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The next submission made by the learned counsel for the petitioner is, that the Revisional Authority ought not to have entered into the merits of the case and given its finding as to whether opp. party no.2 was liable to make payment of the amount determined by the said order dated 25.11.2010 under Section 21(5) of the Act 1957, but should have remanded the matter to the State Government to give an opportunity to the opposite party no.2 to show cause, and then pass its final order. It is not disputed that in the revision petition filed before the Revisional Authority, opp. party no.2 had taken all the grounds on merits and filed necessary documents. It is also not disputed that though the petitioner did not give para-wise reply to the averments made in the revision petition, but in its response filed on 22.07.2011, the petitioner had, in fact, taken its objections

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on merits of the case. It is also not disputed that the records pertaining to the case were placed before, and perused by, the Revisional Authority, which have been extensively discussed in detail in the impugned order passed by the Revisional Authority. The documents which were filed by opp. party no.2 along with the revision petition have also not been disputed by the petitioner before the Revisional Authority. As such, the Revisional Authority having decided the revision on merits, cannot be faulted.

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Much emphasis has been laid on the alleged admission of opp. party no.2 before the Revisional Authority, with regard to shortage of 7,479 MT of minerals. It is noteworthy that the allegation of shortage of minerals by the State Government was to the extent of over 3,00,000 MT, and it is not disputed that the mining of minerals by the petitioner for the period in question, was to the extent of over 26,00,000 MT. The Revisional Authority has considered this aspect and accepted the explanation of opp. party no.2 with regard to shortage of 7,479 MT, which was on account of ground loss, handling loss, compaction factors of the iron ore stack, irregular geometrical shape of the iron ore stack and uneven ground level on which iron had been stacked. Considering this aspect, the Revisional Authority held that the shortage was miniscule as compared to

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the overall scenario which, in our calculation, comes to 0.28%. Such finding recorded by the Revisional Authority is perfectly justified and does not call for interference.

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It was lastly contended by the Addl. Govt. Advocate appearing for the petitioner, that though the prayer in the revision petition was for quashing of the order dated 25.11.2010 passed by the State of Odisha, restraining the State or its officers from acting upon or giving effect in any way to the impugned order, the Revisional Authority has, in fact, set aside the impugned proceeding dated 25.11.2010 itself, which was beyond the prayers made in the revision petition. For proper appraisal of the same, we may reproduce the prayers made in the revision petition, which are as follows:

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“It is, therefore, most respectfully prayed that this Hon’ble Tribunal may graciously be pleased to:-

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(i) allow present Revision Application and quash/set aside the impugned orders/letter bearing number 7574/S&M /IV(AB) SM-19/10 dated 25.11.2010 passed by the Under Secretary, Department of Steel and Mines, Govt. of Orissa; (ii) pass any appropriate order(s) and/or direction to restrain the opposite party and or its officers from acting upon or giving effect, in any way to impugned orders during the pendency of present Revision;

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(iii) direct the opposite parties not to take any coercive action or to withhold the challans or transit permits in pursuance of the impugned orders;

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(iv) pass any appropriate order(s) and/or direction to in favour the petitioner as this Hon’ble Authority may deem fit in the facts and circumstances of the case and in the interest of justice.

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And for this act of kindness the petitioner shall as in duty bound ever pray.”

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The operative portion of the revisional order reads as under:

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“I set aside the impugned Proceedings dt. 25.11.10 of State Govt. of Odisha. Revision succeeds with consequential benefits.”

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All that the Revisional Authority has done is to set aside the impugned proceeding dated 25.11.2010, by which a direction for deposit of penalty amount/cost price under Section 21(5) of the Act 1957, and also a direction to make good or remedy for breach of conditions, had been given. We do not find anything wrong in the language of the operative portion of the order of the Revisional Authority while allowing the Revision. As such, we are of the view that the same cannot be said to be beyond the prayer made in the revision petition.

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In the end, the learned counsel for the petitioner again submitted, that the matter should not have been decided by the Revisional Authority on merits, and instead, ought to have been remanded back to the State for fresh decision after complying the principles of natural justice.

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In our view, since the order dated 25.11.2010 was challenged on merits and records of the case were placed before the Revisional Authority, there was nothing wrong on the part of

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the Revisional Authority to decide the same on merits, and thereafter quash the proceeding after affording opportunity of hearing to the parties.

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