Analyzing the CoalGate Judgment: Part 1

On 24th September, the allocation to 214 Coal Blocks out of the illegal 218 blocks are cancelled by the Hon'ble Supreme Court here. By the judgment dt. 25th August 2014, it had struck down the allocation process on grounds of (i) illegality and (ii) unconstitutionality. While the illegality part is technical in nature, it is unconstitutionality part that poses serious questions of integrity, ethics, fairness and honesty of the actors involved in the whole process (rather swindle).

The judgment is wrought with a quagmire of dates of meetings of the screening committee, names of the applicant companies involved (whether allotted or not), provisions of the statute involved, but the post attempts to be as brief as possible, and at the same not to lose any major strand of arguments that culminated into the striking down of the whole allocation process.

Part I will discuss the background of the case, relevant provisions and the issues involved. One needs to only gloss over the relevant provisions first, then proceed with reading the Contentions, after that re- read the provisions carefully.

Manohar Lal Sharma v. The Principal Secretary, 2014 (9) SCALE 693

I. Facts of the Case

The present writ petitions were filed in the nature of Public Interest Litigation, challenging the legality and constitutionality of the allocation of coal blocks made by the Central Government for the period 1993 to 2010. The judgment is presently considering the matter w.r.t. quashing the allocation of coal blocks to private companies made by the Central Government between the said period.

II. Relevant Provisions

IIa. Mines and Minerals (Development and Regulation) Act, 1957

The Introduction of the Act states that in the Seventh Schedule of the Constitution in Union List entry 54 provides for Regulation of mines and minerals development to the extent to which such Regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest. On account of this provision it became imperative to have a separate legislation. In order to provide for the Regulation of mines and the development of minerals, the Mines and Minerals (Regulation and Development) Bill was introduced in the Parliament.

Section 2- Declaration as to the expediency of Union Control- It is hereby declared that it is expedient in the public interest that the Union should take under its control the Regulation of mines and the development of minerals to the extent hereinafter provided.

Section 4 mandates that prospecting or mining operations shall be under licence or lease. Sub-section (2) provides that no reconnaissance permit, prospecting licence or mining lease shall be granted otherwise than in accordance with the provisions of the Act and the rules made thereunder.

Section 5 mandates that in respect of any mineral specified in the First Schedule, no reconnaissance permit, prospecting licence or mining lease shall be granted except with the previous approval of the Central Government. Coal and Lignite are at item No. 1 in Part A under the title "Hydro Carbons/Energy Minerals" in the First Schedule appended to the 1957 Act.

Section 10- Application for prospecting licences or mining leases (1) An application for a reconnaissance permit, prospecting licence or mining lease in respect of any land in which the minerals vest in the Government shall be made to the State Government concerned in the prescribed form and shall be accompanied by the prescribed fee.

Section 11- Preferential right of certain persons:

(1) Where a reconnaissance permit or prospecting licence has been granted in respect of any land, the permit holder or the licensee shall have a preferential right for obtaining a prospecting licence or mining lease, as the case may be, in respect of that land over any other person;

Provided that the State Government is satisfied that the permit holder or the licensee, as the case may be…

(2) Subject to the provisions of sub-section (1), where the State Government has not notified in the Official Gazette the area for grant of reconnaissance permit or prospecting licence or mining lease, as the case may be, and two or more persons have applied for a reconnaissance permit, prospecting licence or a mining lease in respect of any land in such area, the applicant whose application was received earlier, shall have the preferential right to be considered for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, over the applicant whose application was received later:

Section 13 empowers the Central Government to make rules in respect of minerals. By virtue of the power conferred upon the Central Government Under Section 13(2), the 1960 Rules have been framed for regulating the grant of, inter alia, mining leases in respect of minerals and for purposes connected therewith.

Section 19 provides that any prospecting licences and mining leases granted, renewed or acquired in contravention of the 1957 Act or any rules or orders made thereunder shall be void and of no effect.

It is important to note that the legislature inserted by the Mines and Minerals (Development and Regulation) Amendment Act 2010, Section 11A- Procedure in respect of coal or lignite- The Central Government may, for the purpose of granting reconnaissance permit, prospecting licence or mining lease in respect of an area containing coal or lignite, select, through auction by competitive bidding on such terms and conditions as may be prescribed, a company engaged in… and the State Government shall grant such reconnaissance permit, prospecting licence or mining lease in respect of coal or lignite to such company as selected through auction by competitive bidding under this section.

By exercising power u/s 13, the 1960 Rules were framed by the Central Government.

Chapter IV of 1960 Rules deals with grant of mining leases in respect of land in which the minerals vest in the Government.

Sub-rule (1) of Rule 22 provides that an application for the grant of a mining lease in respect of land in which the minerals vest in the Government shall be made to the State Government in Form I through such officer or authority as the State Government may specify in this behalf.

Rule 35 provides that where two or more persons have applied for a reconnaissance permit or a prospecting licence or a mining lease in respect of the same land, the State Government shall, for the purpose of Sub-section (2) of Section 11, consider besides the matters mentioned in Clauses (a) to (d) of Sub-section (3) of Section 11, the end use of the mineral by the applicant.

IIb. Coal Mines (Nationalisation) Act 1973

This Act was enacted to provide for the acquisition and transfer of the right, title and interest of the owners in respect of coal mines specified in the Schedule with a view to reorganizing and reconstructing any such coal mines so as to ensure the rational, coordinated and scientific development and utilisation of coal resources consistent with the growing requirements of the country, in order that the ownership and control of such resources are vested in the State and thereby so distributed as best to subserve the common good, and for matters connected therewith or incidental thereto.

Under the Coal Mines (Nationalisation) Act, 1973, coal mining is exclusively reserved for the public sector, except in case of companies engaged in the production of iron and steel, and mining in isolated small pockets not amenable to economical development and not requiring rail transport.

Section 3(1) provides that on the appointed day (i.e., 01.05.1973) the right, title and interest of the owners in relation to the coal mines specified in the Schedule shall stand transferred to, and shall vest absolutely in the Central Government free from all encumbrances.

Section 1-A was introduced when this Act was amended by Coal Mines (Nationalisation) Amendment Act 1976 by which it was declared that it was expedient in the public interest that the Union should take under its control the Regulation and development of coal mines to the extent provided in Sub-sections (3) and (4) of Section 3 and Sub-section (2) of Section 30 of the CMN Act.

Section 1-A (2)- The declaration contained in Sub-section (1) was to be in addition to and not in derogation of the declaration contained in Section 2 of the 1957 Act.

Section 3 (3) (a)- no person other than:

(i)             Central Government or a Government company or a corporation owned, managed or controlled by the Central Government, or

(ii)           a person to whom a sub-lease, referred to in the proviso to Clause (c) has been granted by any such Government, company or corporation, or

(iii)          a company engaged in the production of iron and steel,

shall carry on coal mining operation, in India in any form.

Section 3 (3) (c)- no lease for winning or mining coal shall be granted in favour of any person other than the Government, company or corporation, referred to in clause (a)…

Later, the CMN Act was further amended in 1993, considering the need to augment power generation and to create additional capacity during the eighth plan, since the Government have taken decision to allow private sector participation in the power sector. Consequently, it had become necessary to provide for coal linkages to power generating units coming up in the private sector. Therefore, in order to allow private sector participation in coal mining for captive use for purpose of power generation as well as for other captive end uses to be notified from time to time and to allow the private sector to set up coal washeries.

Therefore, in Section 3 (3) (a) (iii)- a company engaged in- (1) the production of iron and steel,

(2) generation of power, (3) washing of coal obtained from a mine, or (4) such other end use as the Central Government may, by notification, specify.

By Notifications dt. 15.03.1996 and 12.07.2007, the Central Government specified production of cement and syn-gas obtained through coal gasification (underground and surface) and coal liquefaction to be an end-use for the purposes of the CMN Act.

III. Contentions defending the Allocations

(i) Ld. Attorney General submitted that in light of the power under Entry 54, List I, Schedule 7, sections 1A and 3(3) of the CMN Act and the declaration contained in Section 2 of the 1957 Act, the Central Government is empowered to allocate coal blocks.

(ii) Moreover, after allocation, the allocatee has to make an application for grant of mining lease or prospecting licence to the State Government in accordance with the 1957 Act and the 1960 Rules. It is for these reasons, he submits, that none of the States or any private person ever challenged the grant of allocation by the Central Government on the ground that the Central Government was not empowered to allocate the coal blocks.

(iii) According to the AG, the allocation letter does not by itself confer the right to work mines and the identification of the coal block does not impinge upon the rights of the State Government under the 1957 Act.

(iv) Ld. Counsel Harish Salve, submitted that section 1A(2) of the CMN Act makes the declaration in addition to the existing declaration in Section 2 of the 1957 Act, thus doing away with any vestige of power in the State in the matter of selection of beneficiaries of the mineral.

(v) Further, that the allocation letter issued by the Central Government is the procedure which regulates the exercise Under Rule 22 of the 1960 Rules (and Section 10(3) of the 1957 Act) by the State Government and that procedure is to ensure that a lease is granted to a company engaged in stipulated permissible activities by making it a two step process, viz., the issue of letter of allotment conditional upon the end-use plant, followed by grant of a lease once end usage is achieved.

IV. Contentions against the Allocations

(i) That CMN Act does not, in any way, give the power of calling applications, selection and allocation of coal blocks to the Central Government and Section 3 of the CMN Act only provides eligibility criteria for allocation of coal mines.

(ii) The minutes of the Screening Committee meetings do not show that selection was made after proper assessment. There is no evaluation of merit and no inter se comparison of the applicants. No chart of evaluation was prepared. The determination of the Screening Committee is apparently subjective.

Ascertaining the Extent of Revisionary Power of High Courts and Variables Involved

Hindustan Petroleum Corporation Ltd v. Dilbahar Singh

[Civil Appeal No.6177 OF 2004] Constitution Bench

At the outset it is clarified that the present judgment does not have any direct political or social relevance, however, it is significant since an important issue of law has been conclusively decided by a Constitution Bench of the Hon'ble Apex Court, and at the same time has crystallized the quagmire of legal precedents on this issue in one judgment.

I. Background of the Case and Issue

The case has been referred to resolve the conflict into the two

3-Judge Bench decisions one, Rukmini and the other, Ram Dass. Ram

Dass has followed Moti Ram. At the time of hearing of Civil Appeal

No.6177 of 2004, Hindustan Petroleum Corporation Ltd. v. Dilbahar Singh,

the 2-Judge Bench, while dealing with the meaning, ambit and scope of

the words “legality and propriety” under Section 15(6) of the Haryana

Urban (Control of Rent & Eviction) Act, 1973 was confronted with the question whether the High Court (as revisional authority) under Section 15(6) could interfere with the findings of fact of the first appellate Court/first appellate authority.

II. Submissions of the Counsel

While the appellant counsel relied on the judgment in Rukmini to contend that the revisional Court is not entitled to re-appreciate evidence, the respondent Counsel pressed into service the decision of this Court in Ram Dass wherein it has been held that the expression “legality and propriety” enables the revisional Court to

reappraise the evidence while considering the findings of the first appellate

Court.

III. Precedents concerning the Issue at hand [which in the present judgment are addressed/clarified]
The idea behind citing all these judgments is to inform the readers that on the issue at hand, the present judgment is from now on the sole conclusive and reliable authority, i.e., the need of citing any of these judgments is done away with.

(a) Rukmini Amma Saradamma v. Kallyani Sulochana and others; [(1993) 1 SCC 499]

(b) Ram Dass v. Ishwar Chander and others; [AIR 1988 SC 1422]

(c) Moti Ram v. Suraj Bhan and others; [AIR 1960 SC 655]

(d) Dattonpant Gopalvarao Devakate v. Vithalrao Maruthirao Janagaval; [(1975) 2 SCC 246]

(e) M/s. Sri Raja Lakshmi Dyeing Works and others v. Rangaswamy Chettiar; [(1980) 4 SCC 259]

(f) P.R Krishnamachari v. Lalitha Ammal; [1987 (Supp) SCC 250]

(g) H.V. Mathai v. Subordinate Judge, Kottayam; [(1969) 2 SCC 194]

(h) Rai Chand Jain v. Miss Chandra Kanta Khosla; [(1991) 1 SCC 422]

(i) Dr. D. Sankaranarayanan v. Punjab National Bank; [1995 Supp. (4) SCC 675]

(j) Shiv Sarup Gupta v. Dr. Mahesh Chand Gupta; [(1999) 6 SCC 222]

(k) Ram Narain Arora v. Asha Rani and Ors.; [(1999) 1 SCC 141]

(l) M.S. Zahed v. K. Raghavan; [(1999) 1 SCC 439]

(m) Central Tobacco Company v. Chandra Prakash; [1969 UJ 432]

(n) Bhoolchand and Anr. v. Kay Pee Cee Investments and Anr.; [(1991) 1 SCC 343]

(o) Ubaiba v. Damodaran; [(1999) 5 SCC 645]

(p) T. Sivasubramaniam and Ors. v. Kasinath Pujari and Ors.; [(1999) 7 SCC 275]

(q) Ramdoss v. K. Thangavelu; [(2000) 2 SCC 135]

(r) Shaw Wallace & Co. Ltd. v. Govindas Purushothamdas and Anr.; [(2001) 3 SCC 445]

(s) V.M. Mohan v. Prabha Rajan Dwarka and Ors.; [(2006) 9 SCC 606]

(t) Olympic Industries v. Mulla Hussainy Bhai Mulla Akberally and Ors.; [(2009) 15 SCC 528]

IV. Provisions to be Interpreted

(a) Haryana Rent Control Act, Section 15- Appellate and revisional authorities: (6) The High Court as revisional authority, may at any time, on its own motion or on the application of any aggrieved party, made within a period of ninety days, call for and examine the record relating to any order passed or proceedings taken under this Act for the purpose of satisfying itself as to the legality or propriety of such order or proceedings and may pass such order in relation thereto as it may deem fit. In computing the period of ninety days the time taken to obtain a certified copy of the order shall be excluded.

(b) Tamil Nadu Rent Control Act, Section 23- Appellate and Section 25- Revision: (1) The High Court may, on the application of any person aggrieved by an order of the Appellate Authority, call for and examine the record of the Appellate Authority, to satisfy itself as to the regularity of such proceeding or the correctness, legality or propriety of any decision or order passed therein and if, in any case, it appears to the High Court that any such decision or order should be modified, annulled, reversed or remitted for reconsideration, it may pass orders accordingly.

(c) Kerala Rent Control Act, Section 18- Appeal and Section 20- Revision: (1) In cases where the appellate authority empowered under section 18 is a Subordinate judge, the District Court, and in other cases the High Court, may, at any time, on the application of any aggrieved party, call for and examine the records relating to any order passed or proceedings taken under this Act by such authority for the purpose of satisfying itself as to the legality, regularity or propriety of such order or proceedings, and may pass such order in reference thereto as it thinks fit. 

Provision interpreted in Moti Ram case

(d) East Punjab Urban Rent Restriction Act, 1949 (3 of 1949), Section 15- Revision: (5)…The High Court may, at any time, on the application of any aggrieved party or on its own motion, call for and examine the records relating to any order passed or proceedings taken under this Act for the purpose of satisfying itself as to the legality or propriety of such order or proceedings and may pass such order in relation thereto as it may deem fit.

In other words, all the provisions allow the Court in revisionary jurisdiction to satisfy itself of "Legality or propriety", with the sole major difference of Court's power to revise suo motu given in some provisions above.

V. Ratio

Va. Three Clarifications by the Court on the Issue

(a) Ordinarily, appellate jurisdiction involves a re-hearing while it is not so in the case of revisional jurisdiction when the same statute provides the remedy by way of an ‘appeal’ and so also of a ‘revision’. Generally, Revisional power is not and cannot be equated with the power of reconsideration of all questions of fact as a court of first appeal.

(b) Therefore, whenever there is usage of two expressions “appeal” and “revision” in one statute conferring appellate power and revisional power, for Interpretation purposes, such usage is not without purpose and significance.

(c) However, with respect to the extent of appellate or revisional jurisdiction, much would, however, depend on the language employed by the statute conferring appellate jurisdiction and revisional jurisdiction.

In other words, the Court recognized that revisional power is subject to well-known limitations inherent in all revisional jurisdictions and the matter essentially turns on the language of the statute investing the jurisdiction.

Vb. Decision on the Significance of the Expression 'legality' and 'propriety'

The Court clarified the observation in the case of Ram Dass, where it stated, 

"that jurisdiction enables the Court of revision, in appropriate cases, to examine the correctness of the findings of facts also...”.

and held that it only means that the power of revision vested in the High Court in the statute is wider than the power conferred on it under Section 115 of the Code of Civil Procedure, it is not confined to the jurisdictional error alone and in dealing with the findings of fact, the examination of findings of fact by the High Court is limited to satisfy itself that the decision is “according to law".

Vc. Ratio in the present case

The Court held that whenever words 'legality' or 'propriety' or 'regularity' are used, the High Court while dealing with the findings of fact, can examine the findings of fact to the limited extent of satisfying itself that the decision is “according to law".

"According to Law" means whether such finding of fact is based on some legal evidence or it suffers from any illegality like misreading of the evidence or overlooking and ignoring the material evidence altogether or suffers from perversity or any such illegality or such finding has resulted in gross miscarriage of justice. The said power is restricted in order to find out that the finding of facts are based on firm legal basis and are not given on a wrong premise of law. The word “propriety” does not confer power upon the High Court to re-appreciate evidence to come to a different conclusion.

In conclusion, Court reiterates that revisional power is not wide enough to make the High Court a second court of first appeal. The consideration or examination of the evidence by the High Court in revisional jurisdiction under these Acts is confined to find out that finding of facts recorded by the Court/Authority below is according to law and does not suffer from any error of law.

Power to Make another Official Language

U.P. Hindi Sahitya Sammelan v. State of U.P. [ CIVIL APPEAL NO.459 OF 1997] Constitution Bench

I. Facts 

The Hon'ble Supreme Court was approached to decide the challenge put forth against the U.P. Government's Uttar Pradesh Official Language (Amendment) Act, 1989 (U.P. Act No.28 of 1989) seeking to amend the Uttar Pradesh Official Language Act, 1951 (U.P. Act No.XXVI of 1951). While the 1951 Act provided for adoption of Hindi as the language to be used for the official purposes and other matters of the State of U.P., whereas the Amendment seeks to provide for Urdu language as second official language for such purposes as may be notified by the State Government from time to time. IN pursuance thereof, the State Government issued a notification on 07.10.1989

notifying use of Urdu language as second official language for the following

seven purposes: (i) Entertaining petitions and applications in Urdu and replies

thereof in Urdu, (ii) receiving documents written in Urdu by the Registration

office, (iii) publication of important Government Rules, Regulations

and Notifications in Urdu also, (iv) issuing Government orders and circulars of public importance in Urdu also, (v) publication of important Government advertisements in Urdu also, (vi) publication of Urdu translation also of the Gazette, and (vii) exhibition of important signposts in Urdu.

II. Relevant Provisions

Article 345. Official language or languages of a State.- Subject to the provisions of articles 346 and 347, the

Legislature of a State may by law adopt any one or more of the languages in use in the State or Hindi as the

language or languages to be used for all or any of the official purposes of that State:

Provided that, until the Legislature of the State otherwise provides by law, the English language shall

continue to be used for those official purposes within the State for which it was being used immediately

before the commencement of this Constitution.

Article 347. Special provision relating to language spoken by a section of the population of a State.-

On a demand being made in that behalf the President may, if he is satisfied that a substantial proportion of

the population of a State desire the use of any language spoken by them to be recognised by that State,

direct that such language shall also be officially recognised throughout that State or any part thereof for

such purpose as he may specify.

III. Contention against the Constitutionality of the Amendment

It is contended that

(a) Article 345 provides that State Government by law provide for either adopting (i) any one or more of the languages in use in the State or (ii) Hindi; as the language or languages to be used for all or any of the official purposes of that state.

The submission by counsel for the appellant, in short, was that having regard to the Special Constitutional Status enjoyed by Hindi [being the Official Language for the Union, not to be confused with 'National Language'], if one legislature of a State by law adopts Hindi as the Official Language, then, no other language can be adopted as official language.

(b) Power to provide for any other language is reserved for the President of India u/Article 347 and not Article 345 (since Art 345 itself starts with the phrase "subject to Article 347...").

In other words, arrangement in Part XVII of the Constitution seeks to ensure that the States do not yield to demands for multiple official languages sequentially and this power is reserved exclusively with the President (Union Executive) u/ Art 347.

IV. Judgment on the Issue

With respect to the Contention (a), the Hon'ble Court held that the significance of the word “or” occurring before “Hindi” is to dispense with the requirement of Hindi being “in use”, while the requirement of being “in use” for any other language to be declared official language has to be satisfied for exercise of power by the State Legislature under Article 345.

The Court while noting the hostility that arose in the Constituent Assembly on the language issue and the compromise reached on Hindi being only an Official Language and not a National Language, opined that dispensing the requirement for Hindi was meant to absorb the adoption of Hindi across States. This cannot be taken to mean that the particular State Legislature must sacrifice its power in promoting other languages within the State.

However, it is submitted that in the present case, since 'Hindi' is itself 'in use' in U.P., therefore, the incorporation of Urdu could have been justified on the first part of the Article 345, i.e., one or more languages in use.

With respect to the Contention (b), the Court held that the expression “subject to the provisions of Articles 346 and 347” occurring in Article 345 does not make Article 345 subordinate to Articles 346 and 347. The Court opined that both the Articles provide for different procedure for making law or issuing directions for recognizing a language as Official language. While Article 347 requires "a substantial portion of the population of a State desire the

use of any language spoken by them to be recognized by that State", Article 345 provides for for the State Legislature to enact law adopting the language as official language of the State, which is "in use in the State".

The only limitation being on the State Legislature under Article 345 of the Constitution of India is that the said language must be in use in the State and further if any direction has been issued by the President under Article 347 then the same will have a binding effect.

In conclusion, it provides two routes for designating a language as an official

language in a State; (a) the adoption by law by the Legislature of the State;

and (b) a direction by the President of India.

V. Decision

The Court upheld the validity of Section 3 in the 1989 Amendment Act and the impugned notification in pursuance of the above provision notifying Urdu as the second language for seven purposes.

VI. Conclusion
The Court by interpreting the letter and spirit of law has given due credence to the difficulty by which the provisions came into existence, where Hindi was made an Official Language only for the Union and to facilitate Hindi as an Official language for states also, the requirement of "being in use" was done away with. (Prof. Granville Austin in the Indian Constitution – Cornerstone of a Nation has described Munshi–Ayyangar formula as half-hearted compromise, a compromise between opinions which were not easily reconcilable and Acharya Dr. Durga Das Basu, in his commentary on the Constitution of India, Volume 9, 2011 observes that the Constitution makers failed to declare one language as the national language of India and what has been provided in the Constitution is mainly a compromise between the diverse claims).
The compromise was on the draft provisions on the official language, as revised by the Drafting Committee, which had four chapters, Language of the Union, Regional languages, Language of Supreme Court and High Courts etc. and Special Directive.

While the Court by not accepting the contention that the Constitution seeks to ensure that the States do not yield to demands for multiple official languages sequentially by reserving such power exclusively with the President, had reiterated the idea of India as a pluralistic nation with deep embedded roots in tolerance of diversity, one can now only hope that the power (power of giving recognition to any language/s as regional official language/s) being vested in a state governments does not become another tool for garnering votes, where the affection of any section of the society for their language is not taken unfair advantage of.