M/S. KABINI MINERALS PVT. LTD. AND ANR. versus STATE OF ORISSA AND ORS.

Citation: [2005] SUPP. 5 S.C.R. 341 · Decided: 18-11-2005 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Dismissed

Judgment (excerpt)

M/S. KABINI MINERALS PVT. LTD. AND ANR. 
A 
v. 
ST A TE OF ORIS SA AND ORS. 
NOVEMBER 18, 2005 
(ARIJIT PASAYAT AND R.V. RAVEENDRAN, JJ.) 
B 
Mines and Minerals: 
Orissa Minor Mineral Concession Rules, 1990-Rule 6 (6-a)(i)-Quarry 
lease for Decorative stones-Preference given to second applicant for grant C 
over the first applicant-Validity of-Held, valid as the second applicant had 
already set up an industry for processing of minor mineral-Question of giving 
preference to be adjudged only at the time of considering application and not 
at the time of making of application-Non-recording of reasons by the 
authorities while giving preference to second applicant-Not necessary since D 
it has already set up similar industry which itself is a reason for giving 
preference under sub-rule (6-a). 
Words & Phrases-'Setting up'-Meaning of 
Appellant no. 1 had applied for quarry lease to the Government of 
Orissa Steel and Mines Department for 'decorative stones' for a period E 
of 10 years. For setting up of the unit, appellant no. 1 had entered into an 
agreement to purchase land and had also ordered for machineries. 
Subsequently, respondent no. 4 also applied for the quarry lease. 
Thereafter, respondent no. 4 wrote letter to the Government informing 
that it had purchased a sick unit "Valley Granites Pvt. Ltd." which was F 
engaged in the processing of the concerned minor mineral and requested 
for consideration of its application for quarry lease. The lease was granted 
to respondent no. 4. Appellant challenged the same by way of Writ 
Petition. High Court dismissed the same holding that the case of 
respondent no. 4 was covered by Rule 6(6-a)(i) of the Orissa Minor 
Mineral Concession Rules, 1990 and it had priority over appellant No. 1. G 
Hence the present appeal. 
Dismissing the appeal, the Court 
HELD: 1.1. On a reading of the language of Rule 6 of Orissa Minor 
341 
H 
342 
SUPREME COURT REPORTS (2005] SUPP. 5 S.C.R. 
A Mineral Concession Rules, 1990, it is clear that three types of precedence/ 
priority are embodied in the provision. First is a normal case where the 
application which has been received earlier is given precedence over the 
latter application. An exception is carved out in sub-rule (5-a) to the effect 
that if the State Government is of the opinion that in the interest of mineral 
department it is necessary to do so it may for reasons to be recorded in 
B writing, grant quarry lease in preference to the applications made earlier. 
(347-A, BJ 
1.2. Sub-rule (6-a) carves out a category of applicants who have 
applied for minor minerals of the enumerated categories i.e. all types of 
C rocks used for decorative, industrial or export purpose including 
dimension stories. The present case relates to priority as provided in the 
said Sub-rule. It provides for priority to a person who has already set up 
an industry for processing of such minor minerals. From the documents 
placed on record, it is clear that Mis Valley Granites (P) Ltd~ was operating 
a running unit and that possession of the same was handed over to 
D respondent No.4, and it is being run by the said Company. (347-B, C, DJ 
2.1. Appellant No.I had merely entered into an agreement for. 
purchasing the land and placed orders for the machineries and had not 
set up an industry. (347-Fl 
E 
2.2. The expression "setting up" means, as is defined in the Oxford 
F 
English Dictionary, 'to place on foot' or 'to establish', and is 
contradistinction to 'commence'. The distinction is this that when a 
business is established and is ready to commence business, and then it can 
be said of that business that it is set up. But before it is ready to commence 
business it is not set up. (347-GJ 
Commissioner of Wealth Tax, Madras v. Ramaraju Surgical Cotton Mills 
Ltd, (1967) 1 SCR 761, relied on. 
3. The question of priority is to be adjudged only at the time of 
consideration of the applications. Undisputedly, respondent No.4 had taken 
G over the unit on the date the applications were considered. Therefore, the 
stand of the appellants that at the time the applicatioas were made by 
respondent No.4 it had not set up an industry is realiy without substance. 
(348-BI 
Indian Metals & Ferro Alloys Ltd. v. Union of India and Ors. AIR 
H (1991) SC 818, referred to. 
--1 
KABINIMINERALSPVT.LTD.v. STATEOFORISSA[PASAYAT. J.] 343 
4. In a case covered by sub-rule (5-a) the State Government has to A 
objectively assess as to whether in the interest of mineral 

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