{"id":195190,"date":"2005-11-18T00:00:00","date_gmt":"2005-11-17T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-kabini-minerals-pvt-ltd-and-vs-state-of-orissa-and-ors-on-18-november-2005"},"modified":"2015-10-11T17:39:12","modified_gmt":"2015-10-11T12:09:12","slug":"ms-kabini-minerals-pvt-ltd-and-vs-state-of-orissa-and-ors-on-18-november-2005","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-kabini-minerals-pvt-ltd-and-vs-state-of-orissa-and-ors-on-18-november-2005","title":{"rendered":"M\/S Kabini Minerals Pvt. Ltd. And … vs State Of Orissa And Ors on 18 November, 2005"},"content":{"rendered":"
Supreme Court of India<\/div>\n
M\/S Kabini Minerals Pvt. Ltd. And … vs State Of Orissa And Ors on 18 November, 2005<\/div>\n
Author: A Pasayat<\/div>\n
Bench: Arijit Pasayat, R.V. Raveendran<\/div>\n
           CASE NO.:\nAppeal (civil)  8078 of 2004\n\nPETITIONER:\nM\/s Kabini Minerals Pvt. Ltd. and Anr. \t\t\n\nRESPONDENT:\nState of Orissa and Ors. \t\t\t\t\t\n\nDATE OF JUDGMENT: 18\/11\/2005\n\nBENCH:\nARIJIT PASAYAT & R.V. RAVEENDRAN\n\nJUDGMENT:\n<\/pre>\n
J U D G M E N T<\/p>\n
ARIJIT PASAYAT, J.\n<\/p>\n
\tAppellants call in question legality of the judgment
\nrendered by a Division Bench of the Orissa High Court
\ndismissing their challenge to the decision of the State of
\nOrissa in the Department of Steel and Mines, granting lease
\nover an area of 6.90 acres in the villages Bada Dalma and
\nJangia in Mayurbhanj District in favour of respondent No.4
\nand consequentially rejecting appellant’s No.1 application
\ndated 7th October, 2002.\n<\/p>\n
\tFactual position in a nutshell is as follows:\n<\/p>\n
\tAppellant No.1 applied for quarry lease to the
\nSecretary,  Government of Orissa Steel and Mines Department,
\nin Form A of the Orissa Minor Mineral Concession Rules, 1990
\n(in short the ‘Rules’) for “decorative stone” for a period
\nof 10 years. On 25.10.2002, the Managing Director of the
\nappellant No.1-Company entered into an agreement with one R.
\nNarayan Swami for purchase of land measuring 1.134 acres in
\nvillage Ambagan in the District of Ganjam to set up a
\ncutting and polishing unit for decorative stones. On
\n26.10.2002 the Mining Officer, Baripada Circle, Baripada
\nissued Form B to appellant No.1 and confirmed the receipt of
\nits quarry lease application dated 7.10.2002. On 2.12.2002
\nappellant No.1 placed orders with Metcons Engineering Pvt.
\nLtd. for supply of machineries for setting up the cutting
\nand polishing unit for decorative stones. On 5.12.2002
\nrespondent No.4 applied for a quarry lease in Form A for
\ndecorative stones for a period of 10 years over an area of
\n6.90 acres. On 28.1.2003 respondent NO.4 wrote a letter to
\nthe Director of Mines regarding purchase of sick unit i.e.
\nM\/s Valley Granites (P) Ltd. from the Orissa State Financial
\nCorporation (in short the ‘Corporation’) and requested
\nconsideration of its quarry lease application dated
\n5.12.2002. On 7.2.2003 appellant No.1 vide its letter of
\neven date wrote to the Principal Secretary to the
\nGovernment, Department of Steel and Mines informing him
\nregarding the agreement to purchase land and placement of
\norders for machineries of proposed unit. On 4.6.2003 the
\nState Government took a decision to grant the quarry lease
\nin question in favour of respondent No.4. Writ Petition
\nNo.5994 of 2003 was filed by the appellants before the
\nOrissa High Court questioning the decision of the Government
\nto grant quarry lease in favour of respondent No.4. By the
\nimpugned judgment dated 10.2.2004 the writ petition was
\ndismissed. The High Court held that the case of respondent
\nNo.4 was covered by Rule 6(6-a)(i) of the Rules and it had
\npriority over the appellant No.1. Said judgment as noted
\nabove is the subject matter of challenge in this appeal.\n<\/p>\n
\tAccording to learned counsel for the appellant, the
\nview of the High Court is clearly erroneous. Undisputedly,
\nthe appellant No.1 had filed the application for the quarry
\nlease earlier and his case was to have precedence over that
\nof respondent NO.4. Merely because the respondent No.4 had
\npurchased a sick unit which was not functional, priority
\nunder Rule 6 (6-a)(i) was not available to it. It was
\nsubmitted that no reasons were indicated as to why and under
\nwhat circumstances respondent No.4 could have priority vis-
\na-vis appellant No.1.\n<\/p>\n
\tIn response, learned counsel for the State and
\nrespondent No.4 submitted that the crucial expression in
\nsub-rule (6-a)(i) of Rule 6 is “who has already set up an
\nindustry”. Undisputedly, the unit which was taken over by
\nrespondent No.4 was engaged in the processing of the
\nconcerned minor mineral. Therefore, rightly the Government
\ndecided to give priority to respondent NO.4.  It was further
\nsubmitted that appellant No.1 has not even established that
\nit was covered by Rule 6(6-a)(ii) and, therefore, was
\nconsidered to be a person who belonged to the residual
\ncategory i.e. Rule 6 (6-a)(iv).\n<\/p>\n
\tIn order to resolve the controversy it would be
\nappropriate to take note of Rule 6 of the Rules which reads
\nas follows:\n<\/p>\n
“6. Disposal of the application- (1) All
\napplications received by the competent
\nauthority shall be entered in the Register of
\nApplications for quarry leases which shall be
\nmaintained in Form ‘C’ appended to these
\nrules;\n<\/p>\n
(2)\tAs soon as an application is received,
\nit shall be acknowledged to the applicant in
\nForm ‘B’. If the application is refused, an
\nintimation which would contain the reasons
\nfor refusal, shall be sent to the applicant;\n<\/p>\n
(3) \tx\t\tx\t\tx\t\tx\t\t<\/p>\n
(4)\tNo application shall be granted unless
\nthe applicant submits the income-tax and
\nSales Tax clearance certificates in original
\nor non-assessment certificates in original;\n<\/p>\n
(5)\tSubject to the provisions of sub-rules
\n(6) and (6-a), where two or more persons have
\napplied for a quarry lease in respect of same
\nland or area, the applicant whose application
\nwas received earlier shall take precedence in
\nconsideration for the grant over an applicant
\nwhose application was received later.\n<\/p>\n
(5-a)\tNotwithstanding anything contained
\nin sub-rule (5), if the State Government is
\nof the opinion that in the interest of
\nmineral development, it is necessary to do
\nso, it may for the reasons to be recorded in
\nwriting grant quarry lease in preference to
\nthe applications made earlier.\n<\/p>\n
(6)   Priority shall be given to the
\napplicants in the following order, namely:\n<\/p>\n
(i)\tco-operatives of artisans using the
\nminor mineral as raw material;\n<\/p>\n
(ii) a person who has been operating an
\nindustry based on the minor mineral
\napplied for or, having completed
\nall other formalities, would be
\nable to operate it if the lease is
\ngranted;\n<\/p>\n
(iii)a person who is the raiyat of the
\nland;\n<\/p>\n
(iv)\tany other category.\n<\/p>\n
(6-a)\tNotwithstanding anything contained
\nin sub-rule (6), in respect of all types of
\nrocks used for decorative, industrial or
\nexport purpose including dimension stones the
\npriority shall be in the following order,
\nnamely:\n<\/p>\n
(i)\ta person who has already set up an
\nindustry for processing of such
\nminor minerals in the State;\n<\/p>\n
(ii)\ta person who has a definite plan
\nfor setting up of an industry in
\nthe State processing of such minor
\nminerals if he has furnished a copy
\nof his project report on the
\nproposed processing industry and
\nalso a letter from the financing
\ninstitution, issued by the Chief
\nExecutive of such institution to
\nthe effect that his project report
\nis being appraised by such
\nfinancing institution;\n<\/p>\n
\t\tProvided that in case of an
\napplicant under category (ii), the initial
\nlease shall be granted up to fifty hectares
\nand a letter of assurance can be issued for
\ngrant of lease beyond fifty hectares before
\ncommencement of production on confirmation
\nreceived from the financing institution or
\nthe Deputy Director of Mines or the Mining
\nOfficer.\n<\/p>\n
\t(iii)\ta person who is a raiyat of
\nthe land;\n<\/p>\n
\t(iv)\tany other category;\n<\/p>\n
\t\tProvided that in the case of an
\napplicant under category (iii) or (iv) the
\nlease may be granted by the competent
\nauthority on being satisfied that the
\napplicant shall be able to invest or arrange
\nsufficient funds to carry on his quarrying
\nactivity in a proper, skilful and workmen-
\nlike manner.\n<\/p>\n
(7)\tNo quarry lease\/permit\/auction for road
\nmetals including ballas and ordinary boulders
\nshall be granted within the area for which a
\nlease has been granted for quarrying rocks
\nused for decorative, industrial and export
\npurposes including dimension stones.”\n<\/p>\n
\tOn a reading of the language of Rule 6 it is clear that
\nthree types of precedence\/priority are embodied in the
\nprovision. First is a normal case where the application
\nwhich has been received earlier is given precedence over the
\nlatter application. An exception is carved out in sub-rule
\n(5-a) to the effect that if the State Government is of the
\nopinion that in the interest of mineral department it is
\nnecessary to do so it may for reasons to be recorded in
\nwriting grant quarry lease in preference to the applications
\nmade earlier. Sub-rule (6) deals with another category of
\npriority. In the present case Sub-rule (6) does not have
\nmuch relevance. Sub-rule (6-a) carves out a category of
\napplicants who have applied for minor minerals of the
\nenumerated categories  i.e. all types of rocks used for
\ndecorative, industrial or export purpose including dimension
\nstones. The present case relates to priority as provided in
\nthe said Sub-rule. It provides for priority to a person who
\nhas already set up an industry for processing of such minor
\nminerals. From the documents placed on record more
\nparticularly the letter of the Corporation dated 23.5.2003
\nit is clear that M\/s Valley Granites (P) Ltd. was operating
\na running unit. The letter in clear terms states that
\npossession of the unit was handed over to respondent No.4
\nand the unit is being run by the said Company.\n<\/p>\n
\tLearned counsel for appellant No.1 submitted that in
\nfact the unit taken over by respondent No.4 was not
\nfunctional and it had applied for permanent registration
\ncertificate which was under process as is evident from the
\nletter of the District Industrial Centre, Mayurbhanj.\n<\/p>\n
\tThe question really is whether the unit had been set up
\nand not whether it was running. Undisputedly, prior to its
\ntake over by respondent No.4 the industry had been set up
\nand used for processing of decorative stones. Though, it was
\ncontended by learned counsel for appellants that by the time
\nthe applications were made the respondent No.4 had not taken
\nover the unit yet that really is of consequence.\n<\/p>\n
\tAppellant No.1 had also not set up an industry. It had
\nmerely entered into an agreement for purchasing the land and
\nplaced orders for the machineries. The expression ‘set up’
\nhas a definite connotation of its own.\n<\/p>\n
The expression “setting up” means, as is defined in
\nthe Oxford English Dictionary, ‘to place on foot’ or ‘to
\nestablish’, and is contradistinction to ‘commence’. The
\ndistinction is this that when a business is established and
\nis ready to commence business, and then it can be said of
\nthat business that it is set up. But before it is ready to
\ncommence business it is not set up. (See Commissioner of
\nWealth Tax, Madras v. Ramaraju Surgical Cotton Mills Ltd.<\/a>
\n(1967 (1) SCR 761).\n<\/p>\n
In the said case, it was further held that the word
\n“set up” is equivalent to the word established but
\noperations for establishment cannot be equated with the
\nestablishment of the unit itself of its setting up.\n<\/p>\n
\tThe question of priority is to be adjudged only at the
\ntime of consideration of the applications. Undisputedly,
\nrespondent No.4 had taken over the unit on the date the
\napplications were considered. Therefore, the stand of the
\nappellants that at the time the applications were made by
\nrespondent No.4 it had not set up an industry is really
\nwithout substance.  As was observed by this Court in Indian
\nMetals & Ferro Alloys Ltd. v. Union of India and Ors. (AIR<\/a>
\n1991 SC 818), since the applicant had already set up an
\nindustry for processing minor minerals on the date of
\nconsideration of the application its claim for priority was
\nto be judged on the basis of the factual position  on the
\ndate of consideration of the applications.\n<\/p>\n
\tIt was submitted by learned counsel for the appellants
\nthat no reasons were indicated by the authorities as to why
\nthe respondent No.4 was to have priority over the
\nappellants. Reference in this context is made to sub-rule
\n(5-a) of Rule 6.\n<\/p>\n
\t It is to be noted that in a case covered by sub-rule
\n(5-a) the State Government has to objectively assess as to
\nwhether in the interest of mineral development preference is
\ngiven to a person though he made the application later. In
\nsuch a case the Government’s opinion that in the interest of
\nmineral development it is necessary to do so obviously has
\nan objective angle involved and, therefore, there is
\nnecessity to record reasons. So far as Sub-rule (6-a) is
\nconcerned, there is no requirement indicated to record
\nreasons.  The fact that priority is given to a person who
\nhas already set up an industry is itself the reason for
\ngiving priority. Therefore, the enumeration of the order of
\npriority is itself the reason inbuilt in the process of
\nconsideration of the applications. That itself is the
\nfoundation and forms the rational for the priority given.
\nIt is not the case of the appellant that the order of
\npriority is irrational.  That being so, stand of learned
\ncounsel for the appellants that reasons were not recorded
\nand, therefore, the action is vitiated is really of no
\nconsequence.\n<\/p>\n
\t Looked at from any angle, the appellants have not made
\nout any case for interference with the judgment of the High
\nCourt. The appeal fails and is dismissed. Costs made easy.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India M\/S Kabini Minerals Pvt. Ltd. And … vs State Of Orissa And Ors on 18 November, 2005 Author: A Pasayat Bench: Arijit Pasayat, R.V. Raveendran CASE NO.: Appeal (civil) 8078 of 2004 PETITIONER: M\/s Kabini Minerals Pvt. Ltd. and Anr. RESPONDENT: State of Orissa and Ors. DATE OF JUDGMENT: 18\/11\/2005 BENCH: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-195190","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nM\/S Kabini Minerals Pvt. Ltd. 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