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Petitioner: Pakistan Mineral Development Corporation Ltd. VS Respondent: Province of Sindh and others
Court Name: Sindh High Court Judge(s): Adnan Iqbal Chaudhry, Syed Hassan Azhar Rizvi Title:Pakistan Mineral Development Corporation Ltd. vs Province of Sindh and
others Case No.: (1) C.P. No. D-8125 of 2018 (2) C.P. No. D-8126 of 2018 Date of Judgment:2019-05-22 Reported As: PLD 2020 Sindh 99, 2019 SHC 160 Result: petition disposed of Judgment Adnan Iqbal Chaudhry J. - The Petitioner in both petitions is aggrieved of the refusal to renew its mining leases and the grant of mining permits to the Respondent No.3. Both petitions involve the same set of facts and raise common questions of law, therefore, we decide these petitions by a common judgment. 2. The petitioner , Pakistan Mineral Development Corporation (Pvt.) Ltd., is a company under the laws of Pakistan with its registered office at Islamabad. Per the petition, the Petitioner is under the administrative control of the Ministry of Petroleum and Natural Resources, Government of Pakistan. The Respondent No.3, Sindh Lakhra Coal Mining Company (Pvt.) Ltd. (hereinafte r 'SLCMC'), is also a company under the laws of Pakistan, incorporated on 12-02-2016, the entire shares of which are said to be owned by the Government of Sindh. 3. C.P. No.D-8125/2018 is in respect of an area of 3818.81 acres at Lakhra, District Jamshoro, for which a mining-lease was granted to the Petitioner for mining coal w.e.f. 16-04-1985 for a period of thirty [30] years (expired on 15-04-2015). C.P. No.D-8126/2018 is in respect of another area of 1278.31 acres at Lakhra for which a mining-lease was granted to the Petitioner for mining coal w.e.f. 18 04-1985 for a period of thirty [30] years (expired on 17-04-2015). The said mining-leases had been granted to the Petitioner under the erstwhile Pakistan Mining Concession Rules, 1960 which were succeeded in the Province of Sindh by the Sindh Mining Concession Rules, 2002 (hereinafter 'the SMC Rules'). The SMC Rules were framed by the Provincial Government under section 2 read with section 6 of the Regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1948 (a Central Act). Under the SMC Rules, the Licensing Authority is the Director General, Mines and Mineral Development, Government of Sindh (Respondent No.2). 4. On or about 12-11-2014, i.e. around 5 months prior to the expiry of its mining-leases, the Petitioner applied to the Respondent No.2 for renewal of its mining-leases. These renewal applications remained pending with the Respondent
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No.2, and though in the meantime both the mining-leases of the Petitioner expired in April 2015, the date of such expiry stood extended by virtue of Rule 48(2) of the SMC Rules which reads as under: ?48. Duration of Mining Lease --(1) ...... (2) Notwithstanding the provisions of sub-rule (1), but subject to these rules, where an application is made for the renewal of a mining lease, the lease shall not expire until the application is refuse d, withdrawn, granted or lapses, whichever first occurs. (3)..... (4)....? 5. The applications of the Petitioner for the renewal of its mining-leases were eventually rejected by the Respondent No.2 vide the impugned Notifications dated 20-09-2017, and thus both the mining-leases of the Petitioner stood expired on the said date. 6. Against the refusal of the Respondent No.2 to renew the mining-leases, the Petitioner filed appeals (one for each lease) before the Secretary , Energy Depa rtment, Government of Sindh (the Appel late Authority), under Rule 71 of the SMC Rules. 7. While the Petitioner's appeals under Rule 71 of the SMC Rules were pending, the Respondent No.2 granted to SLCMC 'mining-permits' for coal vide the impugned Notifications dated 09-07-2018, valid for a period of ten [10] years each, for the same area of 3818 acres and 1265 acres at Lakhra, which was previously the mining area of the Petitioner's mining-leases. Per the said Notifications dated 09-07-2018, the mining-permits granted to SLCMC were converted from exploration permits that had been granted earlier . 8. Being aggrieved of the fact that the Respondent No.2 had granted mining-permits to SLCMC without waiting for a decision on the Petitioner's appeals pending under Rule 71 of the SMC Rules , the Petitioner filed C.P. No.D- 2484/2018 and C.P. No.D-2485/2018 before the Circuit Court at Hyderabad on 26-07-2018 (hereinafter 'the Hyderabad Petitions') to challenge the impugned Notifications dated 09 -07-2018. 9. On 31-10-2018, one Sagar Ujan also filed C.P. No. D-7643/2018 before this Court at Karachi to challenge in the public interest the same impugned Notifications dated 09-07-2018 for mining permits issued by the Respondent No.2 in favor of SLCMC. The order dated 08-11-2018 passed in C.P. No. D-7643/2018 records SLCMC's acknowledgment that it had yet to take possession of the coal field and its undertaking that in any case it will not commence extraction of coal till the next date. It appears that C.P. No. D-7643/2018 is still pending before this Court and the said undertaking of SLCMC still continues in that petition. 10. The appeals of the Petitioner under Rule 71 of the SMC Rules pending before the Appellate Authority were eventually dismissed vide a common order , hereinafter referred to as the impugned decision dated 08-1 1-2018. 11. Vide order dated 15-11-2018 passed in the Hyderabad Petitions, the Petitioner was given time to move for a transfer of the Hyderabad Petitions to the principal seat at Karachi so as to be heard along with C.P. No. D- 7643/2018 (Sagar Ujan v. Province of Sindh ). However , the Petitioner chose instead to file these fresh petitions at the principal seat on 20-1 1-2018. 12. Despite notices by the Respondents to vacate the subject coal field, the Petitioner managed to remain in possession. On 20-11-2018 a status quo order was passed in these petitions. By order dated 20 12-2018 it was clarified that the status quo order did not allow the Petitioner to excavate coal. The SLCMC did not come in possession of the said coal field and it has yet to commence operations under the mining-permits granted to it. Such fact is also acknowledged by SLCMC in its reply to this petition. 13. The prayer made in the subject petitions is as follows: "1. Declare that the refusal of Respondent No.1 and 2 to renew the mining lease of petitioner is illegal, unlawful, unconstitutional, malafide, arbitrary, discriminatory, unreasonable, unfair and unjust and in violation of principles of natural justice, equity and fairness and set aside the same forthwith; 2. To set aside the Notification dated 20.09.2017 and order dated 08.11.2018 passed by the Respondent No.1 and direct the Respondent No.1 and 2 to renew the mining lease of the Petitioner; 3. To set aside the Notification dated 09.07.2018 and order dated 08.11.2018 and permanently restrain the Respondents, its attorneys, representatives, assignees, successors or anybody acting on their behalf from making1
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procurement in violation of Sindh Public Procurement Rules, 2010 as well as Sindh Mining Concession Rules 2002 and all other applicable laws; 4. Restrain the Respondents No.1 and 2, their attorneys, agents, officers or anybody acting on their behalf from interfering in possession of leased area of Petitioner, till final adjudication of the captioned petition; 5. Grant costs of the Petition; 6. Grant any other relief ........." 14. Heard the learned counsel and perused the record. Mr. Jawad Dero, the learned AAG Sindh, and Mr. Jaffar Raza, learned counsel for SLCMC had objected to the maintainability of these fresh petitions on the ground that the Hyderabad Petitions for the same relief were still pending. On the other hand, Barrister Zamir Ghumro, learned counsel for the Petitioners submitted that these fresh petitions had been filed also to challenge the impugned decision dated 08-11-2018 passed by the Appellate Authority, a fresh cause of action, and that in any case, under sub-Rule 3(a) of Rule 71 of the SMC Rules, a person aggrieved of a decision of the Appellate Authority ?may apply to the court for a judicial review of that decision.? Since the subject petitions also impugn the decision of the Appellate Authority dated 08-11-2018 which came subsequent to the Hyderabad Petitions, and in view of Rule 3(a) of Rule 71 of the SMC Rules, we agree with Barrister Zameer Ghumro that these petitions cannot be held to be not-maintainable merely on the ground that the Hyderabad Petitions are also pending. 15. To give context to the other submissions made by learned counsel, it would be expedient to first highlight certain provisions of the SMC Rules. Rule 4 provides for a 'Mines Committee' to advise the Licensing Authority in relation to matters concerning the administration of the SMC Rules inter alia on the grant of mining concessions, its renewal, cancellation, amendment in its terms and conditions etc. The SMC Rules provide for different types of mining concessions, two of them being a 'Mining Lease' and a 'Mining Permit'. A Mining Lease along with certain other mining concessions is classified as a 'Mineral Title' [Rule 2(gg)], while a Mining Permit along with certain other mining concessions is classified as a 'Mineral Permit' [Rule 2(ff)]. The duration of a Mining Lease does not exceed 30 years (Rule 48), while the duration of a Mining Permit does not exceed 10 years (Rule 86). Rule 85 suggests that a Mining Permit is granted for small-scale mining. Learned counsel for both sides too submitted that a Mining Permit is granted for small-scale mining while a Mining Lease is granted for large-scale mining. Rule 50 of the SMC Rules lists instances where a Mining Lease is to be granted and where it is to be refused. Rule 52 deals with the renewal of a mining lease as follows: ?52. Application for Renewal of Mining Lease - (1) Subject to sub-rule (2), the provisions of rules 49 and 50 shall apply with necessary modifications in relation to an application for the renewal of a mining lease under this rule. (2) An application for the renewal of a mining lease shall be made not later than [six months] [twelve months] before the date of expiration of the lease or such later date, but not later than such date of expiration, as the licensing authority may allow, on good cause shown. (3) Subject to sub-rule (4), on application duly made, the lease may be renewed in accordance with rule 48(1)(b) with or without a variation of the conditions of the lease and upon payment of the fee specified in the First Schedule. (4) The licensing authority shall not grant a renewal of a mining lease if minerals in workable quantities do not remain to be mined and cannot be mined on a profitable basis." 16. Barrister Zamir Ghumro, learned counsel for the Petitioners first submitted that the coal mined by the Petitioner is supplied by it to the WAPDA on subsidized rates, which assists the Federal Government in producing less-expensive electricity, and hence a renewal of the Petitioner's mining-leases was in the public interest. He submitted that given such public interest, the words "lease may be renewed" appearing in Rule 52(3) of the SMC Rules were to be read as "lease shall be renewed". He relied on Muhammad Tajammal Hussain v. Shaukat Mahmood (PLD 2007 SC 277) and Abdul Karim v. The Returning Officer (PLD 1999 Quetta 78) to submit that where the use of the word "may" concerns public interest, it is to be construed to mean "must". 17. Barrister Ghumro's second line of argument was that the impugned Notifications dated 20-09-2017 by the Respondent No.2 and the impugned decision dated 08-11-2018 by the Appellate Authority whereby the renewal of the Petitioner's mining-leases was declined, and the impugned Notifications dated 09-07-2018 whereby the SLCMC was granted mining-permits instead, were all malafide acts. He submitted that the impugned decision of the Appellate2
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Authority manifests that the refusal to renew the Petitioner's mining-leases was only for the reason that the Petitioner was a Federal Government entity and the Government of Sindh had already made up its mind to award a mining concession in the same area to the SLCMC, a company wholly owned by the Government of Sindh. He drew our attention to the mention of a previous exploration permit in the impugned Notifications dated 09-07-2018 and submitted that no exploration was or could have been carried out by SLCMC; that under Rule 78(2)(c) of the SMC Rules, there was no point to give an exploration permit for an area that had already been the subject of a mining lease; and that mining- permits in favour of SLCMC were apparently issued only to oust the Petitioner. He submitted that by reason of Rule 68(a)(iii) of the SMC Rules, a mining-permit could not have been granted to SLCMC when the Petitioner's appeal under Rule 71 of the SMC Rules was pending. He submitted that in any case, under Rule 68 of SMC Rules and the Sindh Public Procurement Act, 2009 it was incumbent on the Respondent No.2 to invite competitive bids before granting mining-permits to SLCMC. He submitted that the impugned Notifications dated 09-07-2018 granting mining-permits to SLCMC were issued by the caretaker Provincial Government which was contrary to its mandate under section 230 of the Elections Act, 2017. 18. Mr. Jawad Dero, learned A.A.G. Sindh arguing for the Respondents 1 and 2 submitted that the Petitioner did not have any vested right in the renewal of a mining lease; that under Rule 52 of the SMC Rules the Respondent No.2 was competent to refuse renewal of a mining lease; that under Rule 50 the Respondent No.2 was competent to give preference to an entity registered in Sindh such as the SLCMC. He submitted that notwithstanding their respective control with the Government, both the Petitioner and SLCMC were private limited companies and therefore it was wrong of the Petitioner to portray the matter as a dispute between the Federal Government and the Government of Sindh. He submitted that the grant of mining concessions is not a =Public Procurement' with the meaning of section 2(m) of the Sindh Public Procurement Act, 2009 and therefore the said Act is not applicable to the case; and that the calling of competitive bids under Rule 68 of the SMC Rules is attracted only for the grant of an Exploration License and a Mining Lease and not for the grant of a Mining Permit. He pointed out that Rule 71 of the SMC Rules categorically states that "..... but the bringing of the appeal will not affect the operation of the decision, pending dispensation of the appeal", and thus there was no embargo on the grant of mining permits to SLCMC pending the Petitioner's appeal under Section 71 of the SMC Rules. He acknowledged that the impugned Notifications dated 09-07-2018 granting SLCMC the mining- permit were issued during the tenure of the caretaker Government, but he submitted that the decision to issue such permits had been taken by the Coal Mines Committee in its meeting held on 23-05-2018 during the tenure of the preceding elected Government. The learned AAG submitted that the Petitioner was in unlawful occupation of the coal field. 19. Mr. Jaffer Raza, learned counsel for the SLCMC while adopting the arguments of the learned AAG drew our attention to the fact that the impugned Notifications dated 09-07-2018 granting SLCMC the mining permits were issued after nine (09) months of the impugned Notification dated 20-09-2017 whereby the Petitioner was denied a renewal of its mining leases. Thus, he submitted, that the allegation of malafides was absurd. 20. It was contended on behalf of the Petitioner that since a renewal of the Petitioner's mining-leases was in the public interest on account of it supplying coal to WAPDA, the words "lease may be renewed" appearing in Rule 52(3) of the SMC Rules were to be read as "lease shall be renewed". But in our view that amounts to arguing that Rule 52(3) is to be interpreted subjectively from the Petitioner's point of view, i.e., when a renewal is perceived in the public interest, the Rule is to be read as stating that the mining lease shall' be renewed; and when it cannot be perceived in the public interest then the Rule is to be read as stating that a mining lease 'may' be renewed. Such an argument is clearly misconceived. True, that the word 'may' in a statute can be read as 'shall', but that is always dependent on the context in which the word is used in the statute and on the intent of the legislature behind the use of such word, which intent is gathered from the scheme of the relevant statute. 21. In Tajammal Hussain (PLD 2007 SC 277), the case relied upon by Barrister Ghumro, the provision under consideration was section 12(1) of the Representation of the People Act, 1976 which provided that "Any elector of a constituency may propose or second the name of any duly qualified person to be a member for that constituency". The election of the returned candidate had been challenged on the ground that his proposer and seconder were not electors from the constituency. In his defense the returned candidate submitted that the word 'may' in section 12(1)
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meant that it was not mandatory for the proposer and seconder to be electors from the same constituency. Such argument was rejected by the Supreme Court by observing that the word 'may' as used in section 12(1) could not be construed to mean a person who is not elector of the constituency, and that "looking in this scenario one can safely conclude that the word 'may' used in section 12(1), to achieve the object of the law, is to be used as 'shall' or 'must". The ratio decidendi of Tajammal Hussain's case is found in the following paragraph: "8. It is well-settled that the word 'may' used in the statute, in the circumstances of the particular case, can also be used as 'shall'. Reference in this behalf may be made to Muhammad Saleh v. The Chief Settlement Commissioner, Lahore PLD 1972 SC 326, Fida Jan v. State 2001 SCMR 36 and Nasiruddin and others v. Sita Rain Agarwal AIR 2003 SC 1543. In the case of Muhammad Saleh (ibid) it has been observed that "it is now well-settled that the word 'may' and 'shall' in the legal phraseology are interchangeable, depending on the context in which they are used, and are not to be interpreted with the rigidity which is attributed to them in ordinary parlance." Similarly in Nasiruddin's case (ibid) it is observed that "it is well-settled that the real intention of the Legislature must be gathered from the language used. It may be true that use of expression 'shall or may' is not decisive for arriving at a finding as to whether a statute is directory or mandatory , but the intention of the Legislature must be found out from the scheme of the Act." The other case relied upon by Mr. Ghumro, that of Abdul Karim (PLD 1999 Quetta 78), was also an election matter where Rule 17(1) of the Balochistan Local Government Election Rules, 1983 provided that the proposers of a candidate "may" attend the scrutiny of nomination papers. The Returning Officer and the Appellate Authority both rejected the nomination paper of the petitioner on the ground that the seconder of the petitioner was not present at the time of scrutiny, essentially treating the word "may" in Rule 17(1) to mean "shall". The learned Division Bench discussed the case law where the word "may" was read as "shall" but held that the word "may" appearing in Rule 17(1) of the Balochistan Local Government Election Rules, 1983 could not be read as "shall". It was held that : "An analysis of the rulings cited above would show that the word 'may' has in the following circumstances been treated as a binding obligation on the authority invested with the permissive power:-- (1) When the power is given for the benefit of persons who are specifically pointed out and the condition upon which it is to be exercised has also been provided for . (2) If it is to ef fectuate a legal right. (3) If it authorizes the doing of a thing for the sake of justice. (4) If it authorizes the doing of a thing for public good. (5) In the light of the consequences that would follow by construing it one way or the other ." 22. Thus, both the cases of Tajammal Hussain and Abdul Karim supra also lay down the same rule ie., the word 'may' appearing in a statute will only be read as 'shall' if that is the context in which the word is used in the statute and if that reflects the intent of the legislation. The case of Tajammal Hussain also clarifies that when the statute is unambiguous as to the use of the word 'may', then the doctrine of telescoping and the doctrine of pragmatic construction should be avoided. In the case at hand, it is clear from Rules 50 and 52 of the SMC Rules that on expiry of its mining lease, the applicant does not ipso facto become entitled to its renewal, for that would then defeat the purpose of providing an expiry. Therefore, the words ?lease may be renewed" appearing in Rule 52(3) of the SMC Rules are unambiguous and there is no reason to read them as ?lease shall be renewed". Consequently, the Petitioner cannot claim a renewal of its mining leases as a matter of right, and such renewal was at the discretion of the Licensing Authority, a discretion that is of course guided by the SMC Rules. Reliance can also be placed on the case of Ghani Corporation v. Government of NWFP (PLD 2011 Peshawar 1), where a Division Bench of the Peshawar High Court while commenting on the provisions of the NWFP Mining Concession Rules, 2005 also held that the petitioner had no vested right to claim an extension in its mining lease after the lease had expired. 23. The reason for which the Respondent No.2 declined to renew the mining leases of the Petitioner is contained in the minutes of the meeting of the Coal Mines Committee held on 24-05-2017, a copy of which was placed on the record by the AAG Sindh. These minutes read as follows: "Description / Discussion Recommendations (5) (6)
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M/s. PMDC has been furnishing Since the PMDC is a Federal monthly Production & Dispatch Entity and the mineral (coal) is Returns regularly. The account purely a provincial subject, as per position could not be reconciled, as provisions of Constitution of record of account of these leases, have not been handed over by thePakistan. Directorate General Mines Mineral Therefore, in view of future plans Development. for power generation projects by the Govt. of Sindh, the The Committee observed that PMDC Committee recommends that Coal is selling coal in open market, with Mining Leases of PMDC may little quantity supplied to the Power not be renewed and treated as Generation Projector (GENCO-IV). expired Total area 5096-24 acres The GoS is in process of setting up a may also be resumed in favour of Coal Development Company at Government of Sindh." Lakhra and further establishment of coalfired power plant to meet the energy crisis. The reason given by the Appellate Authority for dismissing the Petitioner's appeal under Rule 71 of the SMC Rules is in the conclusion of its decision dated 08-1 1-2018 as follows: "6. Decision: (i) Rule 48 SMCR 2002 provide for an extension in an existing mining lease but it does not establish it as a right of the lessee therefore, DG Directorate of Coal Mines is within lawful authority if a lease period is not extended. (ii) After passing of Eighteenth Amendment in the Constitution of Pakistan, the Provinces are well within their rights to develop their provincial resources on their own and through their Provincial entities rather than Federal entities like PMDC. (iii) Based on the above & views of the Coal Mines Committee referred to in the impugned two notifications dated 20-09- 2017, both subject appeals of PMDC are not accepted, the said notifications shall remain operative with the direction to the Directorate of Coal Mines Development to proceed under law/rules to take over the possession of the areas." 24. The above mentioned minutes of the meeting of the Coal Mines Committee and the decision of the Appellate Authority both manifest that the mining-leases of the Petitioner were not renewed for the reason that the Government of Sindh had plans to use the coal mined from the Lakhra coal field for a coal-fired power plant that it intended to set-up in Sindh, which purpose could not be achieved by renewing a mining-lease (of the Petitioner) that did not cater for the said requirements of the Government of Sindh. It will be seen that under section 49 of the West Pakistan Land Revenue Act, 1967, coal extracted within the Province is the property of the Provincial Government which has all powers necessary for the proper enjoyment of its rights thereto. The scheme of the SMC Rules is also to provide for the development of the mineral resources of Sindh, and with that, the development of technology, employment and skills in the mining industry in Sindh [see for example Rules 9, 13(1), 27(2), 38, 50(3)(c)(ii)…
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