P L D 2011 Quetta 1
Before Qazi Faez Isa, C.J. and Muhammad Noor Meskanzai, J
PAKISTAN PETROLEUM LTD. ---Petitioner
Versus
DIRECTOR -GENERAL MINES AND MINERALS MINES AND MANPOWER
BUILDING and 2 others ---Respondents
C.P. No.511 of 2010, decided on 23rd October, 2010.
(a) Balochistan Mineral Rule s, 2002 ---
----Rr. 2, 7(1), 46(2), 70, 75(3)(b) & 90 ---Constitution of Pakistan, Arts.199, 4 & 18 ---
Constitutional Jurisdiction of High Court ---Scope ---Petitioners were granted prospecting
licence of iron ore ---Mining lease was executed in favour of peti tioners but authorities,
subsequently, issued one month notice to petitioners to show -cause for not utilizing the
lease ---However, before expiry of the period allowed in the notice, authorities issued
prospecting licence of the area included in petitioners ' lease to another
company/respondent ---Validity ---Authorities violated the terms of their own notice and
condemned the petitioners unheard against principle of audi alteram partem by issuing
prospecting licence to another company/respondent before expiry of the time provided in
the show -cause notice ---Awarding of the prospecting licence of the area included in
petitioners' lease smacked of bias, mala fide and favouritism of authorities depriving
petitioners of peaceful and quiet enjoyment of the demised ri ght under the lease agreement -
--Where a statutory functionary acted with mala fide or with partiality or in unjust or
oppressive manner, ample power were vested in the High Court to issue appropriate
direction under Art. 199 of the Constitution ---Issuance of the prospecting licence and
permission to the other company to undertake prospecting mining operations in the area
leased to the petitioner violated R. 75(3)(b) of the Balochistan Mineral Rules, 2002 ---
Article 18 of the Constitution, conferred on every citizen right to conduct any lawful trade
or business; in the event of infringement of such right by a public functionary, High Court
could enforce such right under Art.199(1)(3) of the Constitution ---Every citizen's right to
be dealt with in accordance wi th law was safeguarded by Art.4 of the Constitution, which
barred any action to a person's property except in accordance with law ---Appropriate
direction and declaration could be made by the High Court under Art.199 of the
Constitution to the authorities w ho did not deal with/treat the petitioners in accordance
with law ---Authorities acted in blatant disregard of Balochistan Mineral Rules, 2002 ---
Officials of the department was obligated to decide the appeal of petitioners promptly but
he omitted to exercis e appellate powers vested in him under R.70(5) of the Balochistan
Mineral Rules, 2002 by adjourning the appeal indefinitely ---Impugned orders having been
passed in violation of Balochistan Mining Rules, 2002 were declared to be void ab initio
and without l egal effect ---Petition was accepted.
(b) Constitution of Pakistan ---
----Art. 199---Jurisdiction of High Court ---Scope ---Where a statutory functionary acted
with mala fide or with partiality or in unjust or oppressive manner, ample powers were
vested i n the High Court to issue appropriate direction under Art.199 of the Constitution --
-Article 18 of the Constitution, conferred on every citizen right to conduct any lawful
trade or business; in the event of infringement of such right by a public functionary , High
Court could enforce such right under Art. 199(1)(3) of the Constitution of Pakistan.
Hazara (Hill Tract) Improvement v. Qaisar Elahi 2005 SCMR 678 and Muhammad Bashir
v. Abdul Karim PLD 2004 SC 271 fol.
M.D. The Bank of Punjab v. Shahzad Hussa in 2006 SCMR 1023 ref.
Muhammad Riaz Ahmed for Petitioner.
Syed Ayaz Zahoor for Respondents.
Date of hearing: 15th September, 2010.
JUDGMENT
QAZI FAEZ ISA, C J .---Through this petition Pakistan Petroleum Limited, a public
limited company, has assailed the orders dated 18th June, 2010, '29th June, 2010 and 30th
June, 2010 (hereinafter collectively referred to as "the impugned orders") passed by the
respondent No.1, the Director -General Mines & Minerals, Government of Balochistan.
2. The petit ioners were granted a Prospecting License bearing No. DGMM/PL -Iron Ore
(109)/4284 -92 dated 12 June, 2004 enabling it to prospect for iron ore over an area of
2,066.12 acres in Pachin Koh, Nokundi, District Chagai of Balochistan pursuant to Rule
7(1) of the Balochistan Mineral Rules, 2002 (hereinafter "the Rules"). Subsequently,
pursuant to Rule 46(2) of the Rules, Mining Lease No.ML -Iron Ore (5) in respect of the
said area was executed in favour of the petitioner by the Government of Balochistan
which came into effect from 1st January, 2007 and was "for the term of 20 years." On 7th
June, 2010 the respondent No.1 issued a Show -Cause Notice (hereinafter "the Notice") to
the petitioner "to show cause as to why your leases in question should not be cancelled
forthwith" since the same was "unworked and unutilized since long" which according to
the Notice was a "serious violation of rule 90" of the Rules. The Notice sought
cancellation of Mining Lease No.ML -Iron Ore (5) and two other Mining Leases granted
to the p etitioner and granted 30 days to the petitioner, from the date of issuance of the
Notice, to submit reply. However, before the expiry of the said 30 days period the
respondent (sic.)
"Subject: ISSUANCE OF REVISED/ REDUCED PLAN OF 929.75 ACRES IN
RESPECT OF ML -IRON ORE (5).
With the prior approval of the Mines Committee, the undersigned is pleased to
enclose herewith four (4) copies of the revised/ reduced plan of covering 1136.37
acres situated near Pachin Koh, District Chagai, after excluding the alre ady
granted area of Messrs Shahnawaz Pumice for Pumice and Iron Ore in respect of
your granted Mining Lease No. ML -Iron Ore (5) for Iron Ore.
You are directed to return one copy out of the attached plans duly signed in token
of having accepted the same a longwith a Challan of Rs.1000 as cost of plan and a
Demarcation Certificate signed and issued by the Registered Mining Survey in
respect of the revised/reduced area within a period of one month. The other terms
and conditions of this office allotment lette r No.ML -Iron Ore (5) 2985 -94 dated
26-3-2007 shall remain unchanged."
From the aforesaid letter it appears that an area of 929.75 acres from the petitioner's
Mining Lease No.ML -Iron Ore (5) was given to Messrs Shahnawaz Pumice, respondent
No.2, before th e expiry of the stipulated 30 days Notice period, thus reducing the
petitioner's area to 1,136.37 acres. From the documents on record it appears that on 29th
May, 2010 the respondent No.1 had offered to issue a prospecting licence in respect of an
area of 929.75 acres to the respondent No.2 provided the amounts mentioned therein were
deposited, and on 18th June, 2010 Prospecting License No.PL -Iron Ore (322) 5075 -80
was issued to the respondent No.2 by respondent No.1 in respect of 929.75 acres. A few
days t hereafter the respondent No.1 issued letter dated 30th June, 2010 permitting
respondent No.1 "to start Prospecting/Mining operations for Iron Ore" over an area of
929.75 acres in the said area.
3. The petitioner being aggrieved by the impugned orders pre ferred an appeal on 8 July,
2010 under Rule 70 of the Rules before the designated appellate authority, i.e. Secretary
Mines and Minerals, Government of Balochistan the respondent No.3 herein. The appeal
was accompanied with a stay application. The appeal a nd stay application were taken up
on 22nd July, 2010, on which date notices were issued to respondents Nos. l and 2 for
29th July, 2010, but no order was passed on the stay application and the case was fixed
for 2nd August, 2010, when again no orders were passed and it is stated that the appeal
was adjourned for an indefinite period.
4. The respondents Nos. 1 and 3 filed joint comments and the fact of the issuance of the
Prospecting License and the Mining Lease No.ML -Iron Ore (5) in favour of the petition er
was admitted. However, the issuance of the Notice was justified and it was further stated
that the impugned orders were "in accordance with rules." The respondent No.2 also filed
his comments raising a number of legal objections and justified the action s of the
respondent No.1 and supported the impugned orders.
5. Mr. Riaz Ahmed learned counsel for the petitioner assailed the impugned orders inter
alia on the following grounds: (a) admittedly Mining Lease No.ML -Iron Ore (5) had been
issued and valuable rights had accrued in favour of the petitioner which could not be
arbitrarily taken away; (b) there was no justification for issuance of the Notice; (c) having
issued the Notice, wherein 30 days was provided to the petitioner to submit reply, no
action co uld have been taken before the expiry of the stipulated 30 days and before
providing the petitioner with a hearing; (d) the issuance of the Notice was mala fide as a
substantial area from the petitioner's said Mining Lease had already been carved out and
given to the respondent No.2; (e) that the issuance of the Notice was a mere ruse to cover
the illegal actions that had already been taken by the respondent No.1 on the behest of
respondent No.2 and (f) the petitioner had made huge investments as detailed i n the
petition amounting to over Rupees 153 million. Reliance was also placed upon various
provisions of the Rules and on the following reported judgments of the Hon'ble Supreme
Court: Hazara (Hill Tract) Improvement Trust v. Qaisar Elahi, 2005 SCMR 678 an d M.D.
The Bank of Punjab v. Shahzad Hussain, 2006 SCMR 1023.
6. Mr. Salahuddin Mengal, learned Advocate -General opposed the filing of the petition
since the appeal was pending adjudication before the respondent No.3. Mr. Ayaz Zahoor,
learned counsel for the respondent No.2, supported the contention of the learned
Advocate General and further alleged that the respondent No.2 had applied for
prospecting pumice in an area of 1,549.58 acres in -the year 1992, which application was
accepted on 22 March, 2003 b y the Mining Committee by reducing the area to 929.75
acres, but since the offer letter was not accepted the same was withdrawn on 9th August,
2005, whereupon the respondent No.2 filed an appeal before respondent No.3 which was
allowed by consent. Subseque ntly Prospecting License for pumice was issued to the
respondents Nos.2 on 13th September, 2005 over an area of 929.75 acres, which was
followed by a Mining Lease No.ML -Pumice (6) issued in respect of pumice on 12th May,
2010. On 19th May, 2010 the respond ent No.2 sought permission to also mine iron ore in
the said area and on 29th May, 2010 the respondent No.1 offered a prospecting licence in
respect of an area of 929.75 acres to the respondent No.2 provided the amounts
mentioned. therein were deposited an d on 18th June, 2010 Prospecting License No.PL -
Iron Ore (322) 5075 -80 for iron ore was issued to the respondent No.2 by respondent No.
1. A few days thereafter the respondent No.1 issued letter dated 30th June, 2010
permitting - respondent No.1 "to start Pr ospecting/Mining operations for Iron Ore" over
the an area of 929.75 acres.
7. That the date (13th September, 2005) on which the respondent No.2 was issued
Prospecting Licence for prospecting for pumice in respect of 929.75 acres the petitioner
already held a Prospecting License for prospecting for Iron Ore, which had been issued to
the petitioner on 12 June 2004. The petitioner's Prospecting License enabled the petitioner
to prospect for iron ore over an area of 2,066.12 acres in Pachin Koh, Nokundi, Di strict
Chagai, Balochistan. A Mining Lease in respect of iron ore over the said area of 2,066.12
acres was executed in favour of the petitioner by the Government of Balochistan "for the
term of 20 years," commencing from 1st January 2007, whereas the. Mini ng Lease in
respect of pumice was executed in favour of the respondents Nos.2 on 12th May, 2010.
Accordingly, both the Prospecting Licence and the Mining Lease were issued to the
petitioners before issuance/execution of similar documents in favour of the r espondent
No.2. Moreover, and significantly the respondent No.2 was granted Prospecting Licence
and Mining Lease only in respect pumice, and not iron ore.
8. The respondent No.2 submitted an application on 19th May, 2010 to the respondent.
No.1 claiming that, "During the prospecting of pumice there were frequent showings of
iron ore and that might indicate significant iron ore deposits underneath" and as such
requested that he "may be allowed to explore and mine the iron ore." The respondent
No.2 promptly processed the said application of the respondent No.2 and issued him an
offer letter dated 29th May, 2010 and sought deposit of applicable fees. Thereafter on
18th June, 2010 Prospecting Licence No.PL -Iron Ore (322) 5075 -80 for iron ore, which
has been im pugned herein, was issued to respondent No.2, and the same was followed by
letter dated 30th June, 2010, also impugned herein, permitting respondent No.1 "to start
Prospecting/Mining operations for Iron Ore" over an area of 929.75.
9. That the Notice add ressed to the petitioner stated as under:
"Subject: SHOW -CAUSE NOTICE.
It has been observed with great concern that you have kept your granted areas
under ML -Iron Ore (1), ML -Iron Ore (4), ML -Iron Ore (5) covering 13660.17
acres, 2551.49 acres, 2066. 12 acres situated near Dilband, Mashki Chah, and
Pachin Koh District Mastung and Chagai, for Iron Ore unworked and un utilized
since long which is a serious violation of rule 90 of the Balochistan Mineral Rules,
2002.
You are, therefore, directed to show cause as to why your leases in question
should not be cancelled forthwith. Your reply must reach to this office within 30
days of the date of issue of this notice."
The Notice threatened cancellation inter alia of the Mining Lease No.ML -Iron Ore (5)
covering 2,066.12 acres and gave the petitioner 30 days to submit a reply, but before the
time granted to the petitioner had expired and without hearing the petitioner the
respondent No.1 had already issued a prospecting license to the respondent No.2 in
respect of 929.75 acres from the petitioner's said land. It will be useful to reproduce Rule
90 pursuant to which the said Notice was stated to have been issued: --
"90. Keeping the Area un -worked/unutilized .--(1) Mining concession holder shall
carry out mini ng operations in a proper skilful and workman like manner over the
granted concession. If at any time it is found on inspection that the concession
holder is not conforming to the provisions of Prospecting/Exploitation Scheme or
has not been able to utiliz e the entire allotted area or has kept the allotted areas
idle for years together continuously, the Licensing Authority shall take action for
cancellation of the un -worked/unutilized area and grant the same under the
provisions of these rules.
(2) Before taking action under the above rule the concession holder shall be
provided opportunity of being heard to explain his position."
Accordingly, the respondent No. 1 not only violated the terms of his own Notice, but also
violated the provisions of Rule 90 by not providing the petitioner an opportunity to be
heard.
10. That in any event the principle, that, no one should be condemned unheard (referred
to in Latin as audi alteram partem) is by now well entrenched in the jurisprudence of
Pakistan and even if the same is not specifically provided in the law is deemed to be a
part thereof. In this regard the Hon'ble Supreme Court in the Hazara Improvement Trust
case (supra), held, that: --
"The principle of natural justice enshrined in the maxim "audi alteram partem" is
one of the most important principles and its violation is always considered enough
to vitiate even most solemn proceedings. Reference in this behalf may be made to
the case of Pakistan International Airlines Corporation and others v. Nasir Jamal
Malik and others 2001 SCMR 934. In this judgment it has been held that where
adverse action is contemplated to be taken against the person/ persons, he/ they
has/have a right to defend such action, notwithstanding the fact that the statute
governing their rights does not contain provision of the principle of natural justice
and even in absence thereof it is to be read/considered as a part of such statute in
the interest of justice."
11. Moreover, the action of awarding Prospecting License No.PL -Iron Ore (322) 5075 -80
for iron ore and permitting respondent No.1 "to start Prospecting/Mining operations for
Iron Ore" in respect of 929.75 acres, which formed part of the land in respect whereof the
petitioner had been granted Mining Lease No.ML -Iron Ore(5) was also in violation of the
specific covenant made by Governor, the issuing authority, in the said Mining Lease,
reproduced hereunder:
"Clause 55. For quiet enjoyment .--The Lessee paying the rent and royalties hereby
reserved and observing and performing al l the covenants and provisions herein
contained and on his part to be observed and performed. shall and may peaceably
and quietly hold and enjoy the rights and privileges hereby demised for and during
the term hereby granted without any unlawful interrupti on from or by the
Governor or any person rightfully claiming authority."
12. That the action of the' respondent No.1 in granting to the respondent No.2 a
prospecting licence in respect of the leased land of the petitioner on the twelfth day of the
issuan ce of the Notice, before the stipulated period of 30 days for submitting a reply to
the Notice had expired and before granting a hearing to the petitioner smacks of mala
fide, bias and favouritism. In issuing the prospecting licence to the respondent No.2 from
the leased land of the petitioner, the respondent No.1 violated the Rules and the terms of
the Mining Lease executed in favour of the petitioner and the covenant contained therein
enabling the petitioner to "peaceably and quietly hold and enjoy the ri ghts and privileges
hereby demised for and during the term hereby granted without any unlawful
interruption."
13. That in the case of Muhammad Bashir v. Abdul Karim, PLD 2004 SC 271, the
Hon'ble Supreme Court held that where a statutory functionary acts mala fide or in
partial, unjust and oppressive manner ample power vests in the High Court to issue
appropriate directions under Article 199 of the Constitution of Pakistan. It would be
appropriate to reproduce the following passages from the said judgment:
"It is well -settled by now that "Article 199 casts an obligation on the High Court
to act in aid of law, protect the rights of the citizens within the framework of the
Constitution against the infringement of law and Constitution by the executive
author ities, strike a rationale compromise and a fair balance between the rights of
the citizens and the actions of the State functionaries, claimed to be in the larger
interest of Society. This power is conferred on the High Court under the
Constitution and is to be exercised subject to Constitutional limitations. The
Article is intended to enable the High Court to control executive action so as to
bring it in conformity with the law. Whenever the executive acts in violation of the
law, an appropriate order can be granted which will relieve the citizen of the
effects of illegal action. It is an omnibus Article under which relief can be granted
to the citizens of the country against infringement of any provision of law or of the
Constitution. If the citizens of th is country are deprived of the guarantee given to
them under the Constitution, illegally or, not in accordance with law, then Article
199 can always be invoked for redress."
"There is ample power vested in the High Court to issue directions to an executi ve
authority when such an authority is not exercising its power bona fide for the
purpose contemplated by the law or is influenced by extraneous and irrelevant
considerations. Where a statutory functionary acts mala fide or in a partial, unjust
and oppress ive manner, the High Court in the exercise of its writ jurisdiction has
ample power to grant relief to the aggrieved party."
14. That the issuance of the Prospecting Licence No. PL -Iron Ore (322) 5075 -80 for iron
ore and permitting respondent No.1 "to st art Prospecting/Mining operations for Iron Ore"
in respect of 929.75 acres that had been leased to the petitioner also infringed Rule
75(3)(b), since the said provision stipulates that, "the holder of a prospecting licence shall
not exercise any rights" in respect of a "mining area," which, as defined in Rule 2 (zh),
"means an area of land, including its lateral limits, to which a mining lease relates."
15. That the aforesaid transgressions and violations reveal that the respondent. No.1 who
is required t o ensure the enforcement of the Rules and compliance with terms of the
prospecting licences/mining leases, has instead demonstrated by his conduct and the
impugned orders, that he himself is violating the same, and further that he has effectively
acted as the agent of the respondent No.2. Such actions destroy the confidence of
investors and public in an important public functionary and will dissuade the much
needed investment in the nascent mining industry, which is one of the major and foremost
industries of the Province of Balochistan. Needless to state that the mining industry
requires heavy capital investment, which is recovered and profits reaped after a long
gestation period. Investments made in the mining industry, which is labour intensive, also
help to generate employment and the payment of royalties and taxes contribute to the
economic well -being of the people. It is thus the duty of public functionaries to act
strictly in accordance with law and in a just, fair and transparent manner. Arbitrariness ,
capriciousness, favoritism and nepotism would stifle the growth of the mining industry.
16. Article 18 of the Constitution of Pakistan lists as a Fundamental Right a citizen's right
"to conduct any lawful trade or business," which Right is infringed if he is prevented, as
in the present case, from utilizing the Mining Lease executed in his favor by the Province,
and is subjected to arbitrary and/or capricious action by a public functionary in
contravention of the applicable Rules and the terms of the sa id Mining Lease. The said
Right can be enforced pursuant to Article 199(1)(c) of the Constitution.
17. Article 4 of the Constitution of Pakistan enshrines the right "to be treated in
accordance with law" and safeguards any action detrimental to a person' s property taken
except in accordance with law. The official respondents have not dealt with the petitioner
in accordance with the Rules (supra) and have proceeded against the Mining Lease that
was granted to the petitioner contrary to the terms thereof. A ccordingly, appropriate
declarations can be made and directions issued respectively pursuant to sub -paragraph (ii)
and (i) of paragraph (a) to sub -Article (1) of Article 199 of the Constitution.
18. That it was expected that the respondent No.3, before w hom the petitioner had filed
the appeal along with a stay application, would have acted promptly in this case of blatant
violation of the Rules, and in respect of a matter in which the respondent No. 1 had
contravened the terms of the Mining Lease and also ignored basic concepts of natural
justice, but instead the respondent No.3 virtually sat on the appeal preferred before it and
did not deem it necessary to pass any orders on the stay application, despite being
specifically vested with powers to grant a s tay order under Rule 70(5) of the Balochistan
Mineral Rules, 2002. Moreover, the filing of joint comments by the respondent. Nos. 1
and 3 in the petition preferred before this Court was to say the least, most unusual since
the respondent No.3 was the appel late authority and an appeal had been preferred before
the respondent No.3 against the impugned orders of the respondent No.1. In such
comments the impugned orders were upheld and it was stated that the same, "were in
accordance with rules." Therefore, the respondent No.3 too has, without hearing the
petitioner and the pending appeal, effectively decided the same against the petitioner.
19. In view of the reasons stated above we declare that the impugned orders dated 18th
June, 2010, 29th June, 2010 and 3 0th June, 2010 passed by the respondent No.1 to have
been passed in violation of the Balochistan Mining Rules, 2002, in contravention of the
terms of the Mining Lease held by the petitioner and in disregard of the principles of
natural law and as such to b e of no legal effect and void ab initio. Consequently the
appeal filed by the petitioner before the respondent No.3 against the said impugned orders
has become infructuous. However, if the respondent No.1 intends to proceed against the
petitioner for any a lleged contravention of the Balochistan Mineral Rules, 2002 and/or the
infringement of the terms of any Mining Lease granted to the petitioner the respondent
No.1 is directed to act strictly pursuant to applicable provisions of the Balochistan
Mineral Rule s, 2002 and terms of the said Mining Lease(s) and afford to the petitioner
sufficient opportunity of a hearing.
The petition is allowed in the aforesaid terms with special costs of Rs.5,000 (five
thousand only), which are to be borne by the respondent No .1.
A.R.K./118/Q Petition alloweThis judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
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