In the recent case of State of Orissav M/s Mesco Steels Ltd (decided on 6 March 2013), the Supreme Court examined the question of whether a writ petition (initiated under Article 226 of the Constitution of India) filed by the respondent company against the state government of Orissa was premature, inasmuch as the same was filed against an interdepartmental communication that did not finally determine any right or obligation inter se the parties.
Vide a notification dated 23 August 1991, the State Government of Orissa had de-reserved and thrown open iron/manganese ore areas, pursuant to which different parties, including the respondent company, made applications.
After obtaining the approval of the central government, the state government conveyed to the respondent company the terms and conditions subject to which it proposed to grant a mining lease for mining of iron ore in favour of the respondent company. In response to the same, the respondent company provided the state government with an unconditional acceptance to all the terms and conditions that were being imposed by it. Pursuant to the said unconditional acceptance by the respondent company, the state government sanctioned the grant of a lease in favour of the respondent company in terms of its order dated 17 March 1999.
Thereafter, the state government issued letters to the respondent company informing the respondent company that it had not been adhering to the various conditions (such as submission of a mining plan) that had been imposed on it when the mining lease was granted. In response, the respondent company sought to explain the delay by inter alia referring to the lean phase that the steel sector was going through.
After the aforesaid correspondence between the state government and the respondent company, the matter remained pending at different administrative levels of the state government for nearly four years. Shortly thereafter, the director of mines in Orissa wrote to the joint secretary at the Department of Steel and Mines of the government of Orissa, vide a letter dated 26 May 2004, inter alia stating that some of area of the proposed lease area was overlapping with the area recommended for allotment to one M/s Orissa Mining Corporation Ltd.
Vide another letter dated 19 September 2006, the director of mines in Orissa recommended reallocating resources based on the requirement of iron ore for the existing steel plant set up by the respondent company. It was further recommended that the respondent company should not be permitted to carry on any trading activity in iron ore removed from the area to be allocated in its favour based on its actual requirement for the existing unit.
Feeling aggrieved by the aforesaid interdepartmental communication, the respondent company filed a writ petition under Article 226 of the Constitution of India before the High Court of Orissa, whereby the respondent company inter alia sought for the quashing of recommendations made by the director of mines proposing to reduce the lease area. Vide an order dated 1 February 2007, the High Court directed maintenance of status quo. However, shortly thereafter, the state government issued a show cause notice dated 6 February 2007 calling upon the respondent company to show cause inter alia as to why the overlapping area of M/s Orissa Mining Corporation Ltd should not be deducted. While deciding the writ petition filed by the respondent company, even though the High Court observed that no final decision had been taken by the state government, the issuance of the show cause notice was merely a formality as the final decision had appeared to have been taken by the state government. Accordingly, the High Court quashed the interdepartmental communication dated 19 September 2006.
While deciding the case, the Supreme Court inter alia addressed the following issue:
- Whether the writ petition filed by the respondent company was manifestly premature as the government had not taken any final decision that could have been challenged by the respondent company – the argument was that the writ petition merely challenged an interdepartmental communication which did not by itself finally decide/adjudicate any right or obligation to the parties so as to furnish a cause of action to the respondent company to challenge the same in an extraordinary writ jurisdiction of the High Court.
After considering various facts on record, the Supreme Court observed that it was obvious from a conjoint reading of various letters preceding the interdepartmental communication that the appellant government was yet to arrive at a final decision on the subject – irrespective of the fact that it had provisionally decided to follow the line of action indicated in its earlier communication as regards grant of mining lease/reduction in existing mining leasehold area being subject to various conditions and stipulations. The Supreme Court also cited the show cause notice issued to the respondent company by the appellant government, to state that the issue of the show cause notice setting out the reasons that impelled the government to claim resumption of a part of the proposed lease area from the respondent company clearly suggested that the entire process leading up to the issuance of the show cause notice itself was tentative, and that no final decision on the subject had been taken at any level by the government. It was also noted by the Supreme Court that issuance of the show cause notice was nothing but a grant of opportunity to the respondent company to convince the state government otherwise.
Noting the express submissions extended at the bar on behalf of the state government that no final decision regarding any resumption of any part of the lease area had been taken by the state government so far and all that had transpired to date must necessarily be taken as provisional, the Supreme Court observed that:
- the High Court (at the lower stage of the dispute) erroneously proceeded on an assumption that a final decision had in fact been taken; and
- the High Court erroneously quashed what was no more than an interdepartmental communication, at best constituting a step in the process of taking a final decision by the government.
In such view of the matter, the writ petition filed by the respondent company was adjudged premature by the Supreme Court, and the appeal preferred by the appellant government against the order of the High Court (allowing the writ petition), was allowed.
In passing the aforesaid judgment, the Supreme Court has inter alia reinforced the principle of law that interdepartmental communications and notings in government departmental files do not bear the sanction of law, to create any legally enforceable right. In fact, it is pertinent to note specifically in this case that, even though the High Court had rightly observed that no final decision by the state government had been taken, it nevertheless finally quashed the letter dated 19 September 2006. Therefore, the Supreme Court was constrained to set aside the judgment of the High Court reiterating the proposition of law that only final decisions of governments could be a subject matter of a challenge in a court of law and not internal notes or interdepartmental communications that are prior in time to the said final decision. It is pertinent to note that the Supreme Court has also clarified that issuance of a show cause notice is nothing but an opportunity granted to the party concerned to respond to a view proposed to be taken by the state government.
In this regard, it is further relevant to note the specific observations of the Supreme Court in the case of Sethi Auto Service Station v DDA , that:
‘… internal notings are not meant for outside exposure. Any noting in the file culminates into an executable order, affecting the rights of the parties, only when it reaches the final decision-making authority in the department, gets his approval and the final order is communicated to the person concerned.’
Similar views are echoed in the cases of Union of India v Vartak Labour Union  and Jasbir Singh Chhabra v State of Punjab , that it:
‘… must always be remembered that in a democratic polity like ours, the functions of the government are carried out by different individuals at different levels. The issues and policy matters which are required to be decided by the government are dealt with by several functionaries some of whom may record notings on the files favouring a particular person or group of persons. Someone may suggest a particular line of action, which may not be conducive to public interest and others may suggest adoption of a different mode in larger public interest. However, the final decision is required to be taken by the designated authority keeping in view the larger public interest.’ (Jasbir Singh Chhabra)
By Manu Nair, partner, Saanjh N Purohit, senior associate, and Tanuj Bhushan, associate, Amarchand Mangaldas.
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