SANDUR MANGANESE & IRON ORES LTD. versus STATE OF KARNATAKA & ORS.

Citation: [2010] 11 S.C.R. 240 · Decided: 13-09-2010 · Supreme Court of India · Bench: P. SATHASIVAM · Disposal: Case Partly allowed
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Judgment (excerpt)

A 
B 
\ 
[201 OJ 11 S.C.R. 240 
SAN DUR MANGANESE & IRON ORES LTD. 
v. 
STATE OF KARNATAKA & ORS. 
(Civil Appeal No. 7944 of 2010) 
SEPTEMBER 13, 2010 
[P. SATHASIVAM AND H.L. DATTU, JJ.] 
Mines and Minerals (Development and Regulation) Act, 
1957 - s. 11(1), (2), (3), (4), (5) - Mineral Concession Rules, 
C 1960 - rr. 59, 60 and 35 - Mining lease - Grant of - Renewal 
of mining lease in favour of 'S' Company but not for the entire 
area- Applications by 'S' for lease over certain area within the 
deleted area - Rejected by State Government - Notification 
ulr. 59(1) by State Government notifying large area for re-grant 
o of mining lease including area applied by 'S' - Invitation of 
applications from public - Fresh application by 'S', 'MSPL' 
and 'K' pursuant to the Notification - However, application by 
'J' made only prior to the Notification :- Recommendation by 
State Government to Central Government for approval of 
E proposed grant in favour of 'J' and 'K' which was subsequently 
approved by Central Government - Writ petition challenging 
the recommendation - Single Judge of High Court quashing 
the grant in favour of 'J' and 'K' - Division Bench setting aside 
the order - On appeal, held: State Government cannot justify 
F grant based on criteria that are de hors the MMDR Act and 
MC Rules - State Government's recommendation and the 
proceedings of Chief Minister was contrary to the provisions 
of s. 11 and rr. 59 and 60 and not valid in law - J's application 
made prior to the Notification could not be entertained along 
with the applications made pursuant to the Notification -
G Proposed investment in mines and in the industry based on 
the minerals is a relevant factor -
Criteria of captive 
consumption not a controlling factor to grant fresh lease -
State Government has no authority under the Act to make 
H 
240 
SANDUR MANGANESE & IRON ORES LTD. v. 
241 
STATE OF KARNATAKA & ORS. 
commitments to any person that it will, in future, grant a mining 
A 
/ease in the event that person makes investment in any 
project - Recommendation in favour of 'J' and 'K' cannot be 
saved by law of equity- Flaw in the recommendation of State 
Government requires re-consideration, thus, matter cannot be 
remitted to the Central Government - Order of Division Bench 
B 
as well as the decision of State Government and the Central 
Government quashed -
State Government directed to 
consider all applications afresh - Mines and minerals. 
Power of State Government under the Act and the Rules 
- Extent of - Held: State Government is denuded of all C 
legislative and executive power under Entry 23 of List-I/ read 
with Article 162 after passing of the MMDR Act -
State 
Government is purely a delegate of Parliament and a statutory 
functionary, for the purposes of s. 11 (3), hence it cannot act 
in a manner that is inconsistent with the provisions of s. 11(1) 
D 
in" the grant of mining /eases - Constitution of India, 1950 -
Article 162, List II Entry 23. 
Interpretation of statutes - Rule of construction - When 
statute vests certain power in an Authority to be exercised in 
E 
a particular manner - Held: Authoriiy has to exercise the 
power in the manner provided in the statute itself - Any 
deviation therein, cannot be sustained. 
Ex-Ruler of Sandur State (now appellant Company) 
was granted lease for 20 years for mining of Iron and 
Manganese Ores in respect of 29 sq. miles falling within 
the boundaries of the Sandur State. The appellant 
Company invested in mining of Ores. After the expiry of 
F 
20 years, the lease was not renewed for the entire area 
as given in the original lease. In 1992, 'HG' was granted 
G 
60 hectares out of the same applied area. The appellant 
Company again applied for grant of lease within the area 
deleted from its original lease but the same was rejected. 
The appellant Company filed a revision petition before the 
H 
242 
SUPREME COURT REPORTS 
[201 OJ 11 S.C.R. 
A Government of India and the matter was remanded to the 
State Government. Thereafter, 'MSPL' made an 
application to the State Government for grant of mining 
lease over an area which was previously held by Sandur 
and also sought relaxation of the conditions specified in 
B Rule 59(1) of the Mineral Concession Rules, 1960. 
Subsequently, 'J' Company also made an application for 
grant over the same area. The State Government made a. 
recommendation to the Central Government for grant of 
lease to the 'MSPL'. While the matter was under
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