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Constitutional Petition No. 113 of 1985, decided on 12th March, 1986.

‑‑‑R. 32(d)‑Prospecting licence for coal‑Cancellation of‑Oppor tunity to produce evidence not provided‑Effect‑Failure to provide opportunity to licensee to produce evidence in support of reply made in pursuance of show‑cause notice, held, would not warrant cancella tion of prospecting licence especially when department was at one stage considering to grant lease rights to petitioner for number of years.

‑‑Art. 199‑Baluchistan Mining Concession Rules, 1970, r.32(d) Constitutional jurisdiction, exercise of‑Non‑providing opportunity to licensee to substantiate claim in accordance with law, held, would justify exercise of constitutional jurisdiction by High Court to declare order for cancellation of licence to be of no legal effect.

Muhammad Zafar for Petitioner.

Muhammad Yousaf Chaudhary, A. A.‑G. far Respondent.

Date of hearing :12th March, 1986.

‑The petitioner through this petition has impugned order, dated 11th July, 1985 cancelling the prospecting licence, dated 18‑1‑1967 for an Area of 358.3 Acres, situated in Spin Gund, Quetta, on the ground that the petitioner failed to extract any coal. Against the above order the petitioner had filed an appeal, which was dismissed by the appellate authority by an order, dated 8‑8‑1985. The petitioner has, there fore, filed the present petition.

2. In support of the above petition Mr. Muhammad Zafar, the learned counsel for the petitioner has vehemently urged that the petitioner had made all the efforts which were possible to exploit the above licence but since the area in respect of which the above licence was granted is a disturbed area, therefore, the efforts failed.

3. On the other band Mr. Muhammad Yousuf Chaudhry, learned A. A.‑G. has contended that the licensees of the adjacent area have succeed ed in extracting the coal and, therefore petitioner's above contention that on account of disturbed area no coal would be extracted is unfounded. He has pointed out the names of the two firms who according to him have succeeded in extracting the coal.

4. From the documents on record, we find that the petitioner had been filing a return from year to year indicating production as nil, since 1968 onwards. However, in 1985 the petitioners were served with a show cause notice, dated 11‑4‑1985 calling upon them to show cause as to why their prospecting licence in question, should not be cancelled forthwith, as they had violated rule 32 of Baluchistan Mining Concession Rules, 1970 (hereinafter referred to as the Rules'). The above show‑cause notice was replied to by the petitioner by their letter, dated 4th May, 1985, in which in sub‑pare. (2) the following averments were made :‑

"We feel concerned that our best of efforts have not yet proved fruitful. We have driven and literally combed the area within a depth of 300 to 350 feet at many points. All our prospecting notes have gone blind as the area is highly disturbed. This is the common experience, we share with the neighbouring concessionnaires who hold prospecting rights on the same belt lying in continuity."

Upon the receipt of the above reply the petitioners were not provided any opportunity to prove the above averments as to show their bona fide and also to indicate that they had made all the efforts which could have been made by a prudent prospecting licence‑holder. After the receipt of the above reply the petitioner's licence was cancelled by above order, dated 11th July, 1985 without hearing the petitioner any further.

5. The ground on which the above licence has been cancelled as observed hereinabove is that the petitioners have violated rule 32 which reads as follows :‑

"32. Working obligations.‑(a) The licensee shall in respect of the areas covered by each licence prepare within three months of the grant of the licence a scheme of prospecting for the approval of the licensing authority, and shall not commence the operations unless the scheme has been so approved.

The licensee shall, in respect of the area covered by the licence, carry out the prospecting work in accordance with the approved prospec ting scheme.

(b) If the licensee fails to submit a prospecting scheme within the prescribed period or in case of rejection of the same, a revised scheme within a period of two months from the date of rejection, the prospecting licence shall be cancelled without notice.

(c) The licensee shall submit to the licensing authority, in such form as may be prescribed by the licensing authority quarterly reports about the progress of work carried out by him and shall abide by the instructions issued by the licensing authority from time to time in respect of the prospecting work.

(d) If, in the opinion of the licensing authority the licensee has failed to fulfil the working obligations including acceptance of terms and conditions of the letters of allotment, payment of Government dues, demarcation of the area, submission of prospecting scheme and submission of prescribed progress reports, or has not carried out reasonable prospecting work the licensee shall forfeit the right of renewal of the prospecting licence or grant of mining lease over whole or any part of the area covered by the licence.

(e) If at any time it is found on inspection or otherwise that the licensee is not conforming to the .provisions of prospecting scheme he shall be liable to a penalty of Rs. 2,000 in the first instance. If the defects or irregularities are not removed within a period of 30 days from the imposition of this penalty the prospecting licence shall be terminated. '

6. The reliance has been placed on clause (d) of the above‑quoted rule, which provides that if in the opinion of the licensing authority the licensee has failed to fulfil the working obligations and has not carried out reasonable prospecting work, etc. the licensee shall forfeit the right of renewal of the prospecting licence or grant of mining lease over whole or any part of the area covered by the licence.

7. In the present case the petitioner was granted yearly prospecting licence. The last licence; according to the official respondents has expired in 1976, which has not been renewed for the reasons that the petitioner had requested for the grant of mining lease. Mr. Zafar has invited our attention to a letter, dated 14‑1‑1980 addressed by the Joint Director, Mineral Development, Quetta to the petitioner intimating to them that their case for grant of lease has been approved and the same would be presented in the meeting of the Mines Committee for consideration/decision. It appears that upon the above letter no further action has yet been finalized as according to the representative of the respondent‑department that the matter was under process when the impugned action was taken. Mr. Zafar has also invited our attention to the fact that the petitioner has paid licence fee upto March, 1986 which is reflected in the paid‑up challan, dated 2‑5‑1985 of Messrs National Bank of Pakistan (at page 43 of the present petition). It appears that though the prospecting licence was not renewed after 1976 on account of the fact that the petitioner's request for grant of mining lease for 30 years was approved by the Joint Director, Mineral Development, Quetta but they continued to be treated as licensee by the department inasmuch as that the licence fee was received.

8. We are inclined. to hold that before taking an action under clause (d) of the above‑quoted rule 32 the petitioner should have been provided an opportunity to produce evidence to substantiate their averments contained in the above‑quoted sub‑para. of their letter, dated 4th May, 1985. It is the case of the petitioner that they have invested considerable amount in making efforts to extract coal from the prospecting lease. If the, petitioner can prove that they have taken all possible steps which a prudent prospecting mining licensee would have taken in the circumstances of the present case, the impugned action would not be warranted by above rule 32 particularly in view of the fact that in 1980 the department was willing to grant a lease of 30 years. This could not have been the view of the department if there was a default on the part of the petitioner.

We would, therefore, allow the petition and set aside the impugned orders but would allow the respondent to take any action after providing B to the petitioner an opportunity to substantiate his case in accordance with law. However, there would be no order as to costs.

A. A. Petition allowed.

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