A bench of justices R M Lodha and H L Gokhale gave the ruling rejecting the private firms` plea that the state`s act of withdrawing its recommendation to the Centre after making the same was illegal.
"Mines and minerals are a part of the wealth of a nation. They constitute the material resources of the community. Article 39(b) of the Directive Principles mandates that the state shall, in particular, direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good."
"We, however, do not find any error in the letter of withdrawal dated September 13, 2005, issued by the state of Jharkhand and the letter of rejection dated March 6, 2006, issued by the Union of India for the reasons stated therein."
"In our view, the state of Jharkhand was fully justified in declining the grant of lease to the private sector operators and in reserving the areas for the public sector undertakings on the basis of notifications of 1962, 1969 and 2006," the bench said in a judgement.
The apex court gave the ruling while dismissing a batch of appeal by Monnet Ispat and Energy Ltd and various other firms challenging denial of mining lease to them in the state. "The act of the state government is neither unfair nor arbitrary nor does it suffer from (breach of) the principles of natural justice," the bench said.
By its letter dated September 13, 2005, the Jharkhand government had sought to withdraw its recommendation for grant of mining leases made in favour of the appellants in the iron ore bearing areas in Mauza Ghatkuri, West Singhbhum District, and certain other places after the Union ministry of mines returned the recommendation.
The Centre had rejected the recommendations on the ground that subject area was under reservation and not available for exploitation by private parties.
Under the Mines and Minerals (Development and Regulation) Act, 1957, the lease in the reserved areas cannot be given to anyone, except to the public sector undertakings or joint venture projects of the State.
"In these circumstances, if the clauses in the MOU are allowed to be carried out, it would tantamount to enforcement of promise, assurance or representation which is against law, public interest and public policy which I am afraid cannot be permitted. All that the state government has done is to act in furtherance of the policy of the statute and it cannot be faulted for the same," the apex court said.