' AJMAL MIAN, J.---By this common judgment, we intend to dispose of the above two appeals, which have been filed with the leave of the Court though they are directed against two separate judgments passed by two Division Benches of the Peshawar High Court but relate to the same subject-matter, namely, the right to mine in the suit area. In Civil Appeal No,64 of 1991, the appellant had filed Writ Petition No,244 of 1990 against the cancellation of the lease by order dated 1-10-1989, which order was maintained in departmental appeal by respondent No,1 through the order dated 22-3-1990, dismissing the same and maintaining the above cancellation order.
2. Whereas in Civil Appeal No,341 of 1992, the appellants had also filed Writ Petition No,475 of 1990 against the order dated 13-9-1990 passed by respondent No,9, cancelling inter alia the prospecting licence of mining of the suit area, which was the subject-matter of the lease of the appellant in Civil Appeal No,64 of 1991, dismissing the same.
3. In Civil Appeal No,64 of 1991, leave to appeal was granted to consider the following questions:--
(1) Whether temporary suspension of work amounts to violation of Rule 44 of N.-W.F.P. Mining Concession Rules?
(2) Whether a fresh notice was necessary after having further ,extended the lease on 4-2-1989 by the respondent?
4. Whereas in Civil Appeal No,341 of 1992, leave to appeal was granted to consider, whether the official respondents had rightly pressed into service Rule 46 for cancellation of the above prospecting licence.
5. The brief facts are as follows:-- Civil Appeal No,64 of 1991 ' The appellant first obtained prospecting licence for exploiting minerals in the suit area. It seems that on 4-2-1979, the appellant was granted lease for a period of two years expiring on 3-2-1981.
After that, the above lease was renewed for a period of five years from 4-2-1981 expiring on 3-2- 1986. It seems that on 17-7-1986, the appellant was granted lease for a period of 20 years commencing from 4-2-1986 to 2006.
6. It may be observed that on 17-12-1987, respondent No,2 served a show-cause notice on the appellant, alleging therein that its performance in the area was unsatisfactory as it had failed to fulfil the working obligations as provided under Rule 44 of the N.-W.F.P. Mining Concession Rules, 1976, hereinafter referred to as 'the Rules'. The appellant was directed to submit its reply within 20 days from the date of issue of the above notice. In response to the above notice, the appellant sent a reply dated 31-12-1987, in which it explained the reasons for the suspension of the mining operations. It may be advantageous to reproduce the same:- "SUB:- Show-Cause Notice/Mining Lease Over 1,882.05 Acres. Dear Sir, ' In reference to your Letter No, 6776/MDW/KT/ML-Coal(27)/75 dated 17-12-1987 we would like to put the factual position before you as under:--
1. For development and exploitation of coal reserves of this lease block (i.e, 1,882 acres) we have installed three (3) Ropeways and made about 1,500 ft. Underground drivages.
2. We have been exploiting coal from this lease area through our mines in Khatkiara and Doya areas.
3. The quality of coal in this area is very poor as a result disposal of this coal badly affected our economy. We had to sell the coal at a very low rate.
4. In this area the thickness of coal seam is so thin that production . Remained very less and cost went very high.
5. Considering the slow lifting and heavy losses the production of coal from this area was suspended for a temporary period.
6. Now the position is improving and we have prepared a new scheme/proposal and shortly we are going to start new mines in this area.
7. The detail position and our further programme was discussed with the Director and Deputy Director during their last visit of this Colleries in the month of November, 1987.
' Under the abovementioned facts and our efforts and heavy investment in this regard, we hope, you will be satisfied and allow us to take fresh measures for improving the production.
' Thanking you, Yours faithfully, (Sd.)
(S. Ghulam Abbas Shah), Chief Mining Engineer. Copy to:
1. The Chief (P & D) PMDC Head Office, Islamabad, with the remarks that as per the indication from the discussion held with Director Industries and Mineral Development, N.-W.F.P. On 11-11-1987, we apprehend that they are determined to cancel our maximum leased-hold area on one pretext or the other. It is requested that may be persued on higher level.
2. R.R. Peshawar with the request to pursue personally."
7. It appears that after the receipt of the above reply, no action was taken. On the contrary, lease deed was executed on 4-2-1989. It also appears that after the expiry of nearly two years from the date of the above first show-cause notice, respondent No,2 through his letter dated 1-10-1989, cancelled the lease on the ground that the appellant failed to fulfil the working obligations as provided in Rule 44 of the Rules and kept the area idle. Against the above order, the appellant filed a departmental appeal, which was dismissed by respondent No,1 by the above order dated 22-3- 1990 on the ground that there was no trace of the operation in the area, as there was Nil production in violation of Rule 44 of the Rules. Thereupon, the appellant filed the above writ petition, which was dismissed. After that, a petition for leave to appeal was filed, which was granted to consider the above questions. Civil Appeal No, 341 of 1992
8. The relevant facts are that after the cancellation of the above lease in favour of the appellant in the above first appeal, the appellants approached the respondent department. In response to their request, the appellants were granted prospecting licence on 17-6-1990 in respect of the same area, which was the subject-matter of the lease of the appellant in the above first appeal. However; the above prospecting licence was cancelled upon appeal filed by the private respondents, by respondent No,9 through his order dated 13-9-1990, and it was ordered the area in question to be divided in economically viable blocks and auctioned as provided under Rule 46. Against the above order, the appellants filed aforesaid writ petition, which was dismissed by the aforementioned judgment. Thereupon, the appellants filed a petition for leave to appeal, which was granted for the above reason.
9. In support of Civil Appeal No,64 of 1991, Mr. Aftab Ahmad Khan, learned counsel for the appellant, has vehemently contended that respondent No,2 could not have cancelled the lease on the basis of the notice dated 17-12-1987 as after the receipt of the reply to the above notice, respondent department was satisfied inasmuch as it executed the lease of 20 years in favour of the appellants on 4-2-1989. Reliance was placed by him on clause 70 of the lease. On the other hand, Mr. Sardar Khan, learned Advocate-General, N.-W.F.P. Appearing for the respondent department, has urged that the above show-Ouse notice dated 17-12-1987 was issued on the basis of the site inspection held on 10-11-1987 in presence of the appellants and that the cancellation order was passed on 1- 10-1989 after making second inspection on 29-5-1989 and having been found that the appellant was not in fact operating the mines for the last several years. His further submission was that Rule 44, under which action was taken, did not provide for the service of the notice and that in Case of conflict between above clause 70 of the lease and Rule 44 of the Rules, the latter shall prevail.
10. In order to appreciate the above contentions, it may be pertinent to reproduce above clause 70 of the lease and Rule 44 of the Rules, which read as follows:-- "70. Power of revocation. ---If there shall be any violation of the undertaking given in accordance with the North-West Frontier Province Mining Concession Rules, 1976, or any breach or nonobservance by the lessee of any of the terms and conditions of this lease or if the lessee shall become bankrupt or make or enter into any agreement for compensation with his creditors or, if where the lessee is a Company, a Receiver shall be appointed of the Company or the Company shall enter into liquidation, or in any other such case, the licensing authority may forfeit, in whole or in part, the security deposit made by the lessee under the North-West Frontier Province Mining Concession Rules, 1975 and/or revoke this lease and thereupon all rights hereby granted shall cease, but subject nevertheless and without prejudice to any obligation/liability imposed by or incurred under the terms and conditions of this lease. The licensing authority may also blacklist the lessee for further grants for ever or for any period specified it: ' Provided always that save as to the non-payment of rents and royalties, the aforesaid power shall not be exercisable unless and until notice has been given to the lessee specifying the particular breach complained of and if the breach is capable of remedy, may require the lessee to remedy it within one month and thereafter, to make reasonable compensation in money to the satisfaction of the licensing authority of the said breach."
' Rule 44 of the Rules: "44. Working obligations--Commencement of operations, etc.- --Unless the licensing authority for good and sufficient reasons of which it shall be the sole judge, otherwise directs, the lessee shall commence operations according to the approved development and exploitation scheme within six months from the date of the grant of mining lease within the granted area and shall thereafter carry them out effectively in a proper, scientific, skillful and workmanlike manner, up to the entire satisfaction of the licensing authority and shall not depillar or abandon the mine without obtaining the prior approval of the licensing authority. It shall be deemed to be a breach of this condition if the lessee within one year of the commencement of the operations, without good and sufficient cause, fails to work the mine so as to produce sufficient mineral for which the royalty accrued is at least equal to the dead rent. In case of breach of any condition of working obligations by the lessee, his lease shall be liable to cancellation at any time during the currency of a term."
11. A perusal of the above-quoted clause 70 indicates that the lease is liable to be cancelled in the following eventualities:--
(i) if the lessee commits breach or fails to observe the terms and conditions of the lease;
(ii) if the lessee becomes bankrupt;
(iii) if the lessee makes or enters into an agreement for compensation with creditors; and
(iv) If the lessee is a company, a Receiver is appointed or a Liquidator is appointed.
It may also be noticed that the licensing authority, besides cancelling the lease, is also authorised to blacklist the lessee for further grants for ever or for any specified period. However, the proviso to the above clause envisages that the above clause will not be pressed into service save as to the nonpayment of rents and royalties and the power shall not be exercised unless and until notice has been given to the lessee specifying the particular breach complained of and if the breach is capable of remedy, the licensing authority may require the lessee to remedy it within one month and thereafter to make reasonable compensation in money to the satisfaction of the licensing authority.
Whereas a plain reading of above-quoted Rule 44 of the Rules shows that unless the licensing authority has good and sufficient reasons of which it . Shall be the sole judge, otherwise directs the lessee to commence operations according to their approved, development and exploitation scheme within six months from the date of grant of mining lease within the area granted and thereafter shall carry them effectively in proper, scientific, skilful and workmanlike manner, up to the entire satisfaction of the licensing authority. It also prohibits the lessee from abandoning or depillaring the mine without the prior approval of the licensing authority. It also provides that it shall be deemed to be a breach of the condition if the lessee within one year of the commencement of the operations, without good and sufficient cause, fails to work the mine so as to produce sufficient mineral for which the royalty accrued is at least equal to the dead rent. It also evisages the cancellation of the lease in case of breach of any of the above obligations.
12. We may observe that the pro forma of the lease is also provided in the Third Schedule to the Rules and, therefore, it is a part of the Rules. Besides that we do not find any inconsistency between clause 70 of the lease and Rule 44 of the Rules. Both are to be read together and are to be construed in . The manner which may harmonize them. The requirement of the notice contained in clause 70 of the lease has not been negatived by Rule 44 of the Rules. Even otherwise, it is a well- settled proposition of law that in the absence of express exclusion for cogent reasons, the principle of audi alteram partem is to be read into the relevant provision if the action is going to affect any vested right of a person.
13. Adverting to merits of the case, it is an admitted position that after the receipt of the appellant's reply dated 31-12-1987 to the above show-cause notice dated 17-12-1987, the appellant was not informed that its reply was unsatisfactory or that the contents thereof were not correct: On the contrary, as pointed out hereinabove, on 4-2-1989 the lease was executed, which manifests that the above first show-cause notice was not acted upon. It is also an admitted position that before the passing of the above cancellation order dated 1-10- 1989, no show-cause notice was issued either under clause 70 of the lease or under Rule 44 of the Rules. However, it was urged by Mr.Sardar Khan that the above cancellation was founded on the above second inspection dated 29-5-1989, when it was found that the appellant was not in fact carrying on operations of the mining. He also submitted that factually a third inspection was also made during the pendency of the appellant's appeal before the department.
14. Mr. Aftab Ahmad Khan has relied upon the case of Messrs Universal Mining Corporation v. Joint Director, Licensing Authority and another (PLD 1986 Quetta 176) in which one of us, Ajmal Mian J., while construing Rule 32 of the Balochistan Mining Concession Rules, 1970, which was in line with above Rule 44 of the Rules, held as follows:-- "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."
15. We are also of the view that before the respondent department could resort to the cancellation of the lease which was for a period of 20 years, it should have served a fresh show-cause notice upon the appellants and the appellants should have been given an opportunity to be heard in order to explain the reasons for the stoppage of work. We may observe that minerals are vested in the State under the relevant law. The exploration of minerals is not intended and designed to benefit a few chosen lessees. But its main object is to benefit the public-at-large by opening new avenues for employment and by making available minerals for local consumption and for export for earning foreign exchange for the country. We are therefore, inclined to hold that if a lessee does not carry on mining operations in terms of Rule 44 of the Rules not for the reasons beyond his control, he entails the risk of cancellation of his lease. His plea that he has been paying the dead rent and royalty in terms of the lease may be of no avail to him.
16. The upshot of these above discussion is that Civil Appeal No,64 of 1991 is allowed and it is declared that the cancellation of the lease is without lawful authority and of no legal effect, subject to the observation that it will be open to the respondent 'department to issue a fresh show-cause notice and, after hearing the above appellant, to take appropriate action in accordance with the terms of the lease and the Rules.
17. Since we have declared the cancellation of the lease of the appellant in Civil Appeal No,64 of 1991 as without ?Awful authority in our view, it will not be necessary to examine the contention of Mr.Qazi Muhammad Jamil learned counsel for the appellants in Civil Appeal No,341 of 1992, that the cancellation order of the prospecting licence was not warranted by law, as till the time of the lease of the appellant in the above first appeal remains intact the appellants in the above second appeal cannot obtain prospecting licence for the same area. However, we would like to observe that in case the respondent department decides to issue fresh show-cause notice against the appellant in Civil Appeal No,64 of 1991 and eventually it cancels the lease in its favour, the appellants in Civil Appeal No,341 of 1992 can approach respondent No,9 (Secretary to the Government of N.-W.F.P., Industries, Commerce and Mineral Development, Peshawar), who will re- hear the appeal, which was filed against the grant of prospecting licence in favour of the above appellants in Civil Appeal No,341 of 1992 for deciding, afresh whether the cancellation was warranted by law.
17. The appeals are disposed of in the above terms, with no order as to costs.