BHUSHAN POWER AND STEEL LTD. AND ORS. versus STATE OF ORISSA AND ANR.

Citation: [2012] 5 S.C.R. 16 · Decided: 14-03-2012 · Supreme Court of India · Bench: ALTAMAS KABIR · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
[2012] 5 S.C.R. 16 
BHUSHAN POWER AND STEEL LTD. AND ORS. 
v. 
STATE OF ORISSA AND ANR. 
(Civil Appeal No. 2790 of 2012) 
MARCH 14, 2012 
[ALTAMAS KABIR AND SURINDER SINGH NIJJAR, JJ.] 
Mines and Minerals - Mineral Concession Rules, 1960 
- Rule 59 - Proposed integrated steel plant - Application for 
C grant of lease for mining of iron ore for use in the plant -
Hejection of, by the State Government - Validity - Appellant-
company with the intention of setting up an integrated steel 
plant, entered into discussions with respondent-State 
Government and inter alia applied for grant of lease for mining 
D of iron ore for use in the proposed plant - Memorandum of 
Understanding (MOU) dated 15th May, 2002 entered into 
between the parties wherein respondent· State Government 
agreed to recommend to Central Government grant of iron 
ore mines to appe/f ant for its use in the proposed plant -
E However, upon subsequent re-organisation and restructuring 
of the Bhushan group (of which appellant-company was a 
member), respondent-State Government informed appellant 
company that the earlier MOU dated 15th May, 2002 had 
ceased to exist and that a fresh MOU was required to be 
F entered into between the appellants and the State 
Government - Application of appellant company for mining 
lease in respect of iron ore rejected on various grounds - most 
significantly on the ground that the area in question came 
within the relinquished area of a mining lease which was not 
thereafter thrown open for re-allotment under Rule 59 of the 
G Mineral Concession Rules and the application of appellant 
was therefore premature - Writ petition filed by appellant 
dismissed by High Court - Whether the MOU dated 15th May, 
2002, continued to subsist in favour of the appellants; whether 
H 
16 
BHUSHAN POWER AND STEEL LTD. v. STATE OF 
17 
ORISSA AND ANR. 
the State Government was obliged to make recommendations 
/'-, 
for the grant of iron ore mines in terms of the stipulations 
contained in the MOU dated 15th May, 2002,and whether in 
respect of the areas which had not been notified under Rule 
59(1), the State Government could make a recommendation 
for relaxation of Rule 59(1)under Rule 59(2) - Held: Despite 
B 
having allotted land and granted sanction to appellant 
company to take steps for construction of the said plant, to 
now tum around and take a stand that the application made 
by appellant company was premature, is not only 
unreasonable, but completely unfair to appellant company, c 
who have already invested large sums of money in setting up 
the plant - The State Government had, on its own volition, 
entered into the MOU with appellant company on 15th May, 
2002 - Whatever differences that may have resulted on 
account of the dispute within the Bhushan Group, which could D 
have led to rethinking on the part of the State Government, 
have now been laid to rest by virtue of a settlement - The 
action taken by the State Government appears to be highly 
unreasonable and arbitrary and also attracts the doctrine of 
legitimate expectation - Appellants have altered their position 
E 
to their detriment in accordance with the MOU dated 15th 
May,2002 which continued to be in existence and remained 
operative - The State Government appears to have acted 
arbitrarily in requiring appellant company to enter into a 
separate MOU, notwithstanding the existence of the MOU 
dated 15th May, 2002, which had been acted upon by the 
F 
parties - Since the State Government has already made 
allotments in favour of others in relaxation of the Mineral 
Concession Rules, under Rule 59(2) thereof, no cogent 
ground made out on behalf of the State to deny the said 
privilege to the appellants as well - Judgment of the High 
G 
Court and also the decision of the State Government rejecting 
the appellant's claim for grant of mining lease set aside -
State Government directed to take appropriate steps to act in 
terms of the MOU dated 15th May, 2002, as also its earlier 
commitments to recommend the case of the appellants to the 
H 
18 
SUPREME COURT REPORTS 
[2012) 5 S.C.R. 
A Central Government for grant of adequate iron ore reserves 
to meet the requirements of the appellants in their steel plant 
- Doctrines - Doctrine of legitimate expectation. 
Appellant-company 
[Bhushan 
Limited 
(now 
B Bhushan Power & Steel Ltd. - BPSL)], with the intention 
of setting up an integrated steel plant in the State of 
Orissa, entered into discussions with the

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