STATE OF GUJARAT & ORS. versus NIRMALABEN S. MEHTA & ANR. ETC.

Citation: [2016] 4 S.C.R. 140 · Decided: 13-07-2016 · Supreme Court of India · Bench: V. GOPALA GOWDA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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[2016] 4 S.C.R. 140 
STATE OF GUJARAT & ORS. 
v. 
NIRMALABEN S. MEHTA & ANR. ETC. 
(Civil Appeal No. 6209-6211 of2016) 
JULYl3,2016 
[V. GOPALA GOWDA AND ARUN MISHRA, JJ.] 
Mines and Minerals (Development and Regulation Act, 1957 
- s. 9(3) - Schedule Part I - Mineral Concession Rules, 1960 -
Lessor entered into lease agreement for 20 years with the State for 
mining lease for.bauxite in respect of certain lands - liy Notification 
State reserved the mining areas for public sector, however, 14 years 
later de-reserved the said areas - Thereafter, the State sought 
permission fro/i, Central Government to impose certain conditions 
upon the mining of bauxite to protect the interest of the State -
Grant of permission by Central Government for de-reservation of 
the areas ond for imposition of conditions on mining lease -
ThereaftP•; issu •.. 1ce of circular by State Government permitting sale-
export of A •n Plant Grade(NI'G) Bauxite and guidelines framed 
for computation of royalty on sale of NPG Bauxite - Respondent 
then sought permission from the State Government for sale of 11290 
metric; tones of bauxite - Rejection by State on the ground of failure 
of the respondent to establish captive plant within a period of two 
years in accordance with the prevailing policy- Challenge to, by 
the respondent -
Central Government set aside the State 
Governments rejection order - Appeal by the State - High Court 
dismissed the appeal and imposed cost of Rs. 50,0001- for non-
disclosure of writ filed by the State Government - Division Bench 
set aside the order imposing cost - On appeal, held: Fresh grant 
and' a renewal of existing lease of the mining area stands on the 
same footing - State after 16.01.1980 had the power to impose 
condition inter alia, for setting up of a captive plant for bauxite by 
the respondents at the time of renewal of their lease - It cannot be 
said that permission for inclusion of certain conditions including 
condition for setting up of a captive plant by the leaseholders u/r. 
27(3) for the de-reserved area granted by the Ce~tral Government 
vide letter dated 16. 01.1980 would not be applicable to the 
respondents' lease which was granted prior to 16. 01.1980 merely 
140 
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 
141 
ANR. ETC. 
because their mines were not affected by the notification of 
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reservation issued by the appellant-State - Orders of both the High 
Court as well as the Revisional Authority set aside. 
Allowing the appeals, the Court 
HELD: 1.1 Both the Revisional Authority as well as the 
High Court erred in coming to the conclusion that a renewal of 
leaSl' "f the mining area is not a fresh grant and that at the time of 
grant vf renewal of lease of the area, the State Government is not 
empowered to impose -or enforce condition inter-alia, of setting 
up of a captive plant by the respondents. [Para 25) [153-B) 
1.2 The High Court failed to appreciate that for imposition 
of condition in the grant of renewal of lease, inter alia, of setting 
up of a captive plant by the respondents, the appellant-State had 
sought permission_ from the Central Government vide 
communication dated 02.08.1978 and the same was granted by 
the Central Government vide its letter no.4(2)/78-NVI dated 
16.01.1980. The letter makes it clear that the Central 
Government had no objection if clauses pertaining to the 
imposition of certain conditions upon the leaseholders 11re 
included under Rule 27(3) of the Mineral Concession Rules, 1960 
with respect to the bauxite areas of Junagadh and Jamnagar 
·districts de-reserved by the State vide n_otification dated 
02.08.1978, which were earlier reserved for exploitation of 
bauxite by the public sector undertakings. [Para 26] [153-C-E] 
1.3 The'High Court erred in not noticing the well settled 
legal proposition as laid down by this Court in Gajraj Singh 's case, 
on the point that the grant of renewal of the lease in respect of 
the mining area in question is a fresh grant. The permission for 
de-reservation of bauxite areas in the said districts of the State'' 
which were earlier reserved for bauxite mining in the public 
interest as well as for imposition of condition,interalia, of setting 
up of a captive plant by the respondents the permission in this 
regard was granted by the Central Government vide letter dated 
16.01.1980, whereby the Central Government showed no 
objection for the inclusion of conditions mentioned in the l

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