A) ABSTRACT / HEADNOTE
The Supreme Court of India, in Shivji Nathubhai v. Union of India & Others, 1960 (2) SCR 775, resolved a critical question concerning the nature of review powers exercised by the Central Government under Rule 54 of the Mineral Concession Rules, 1949. The Court ruled that such review proceedings are quasi-judicial and thus must adhere to the principles of natural justice. The appellant, Shivji Nathubhai, was granted mining leases by the State of Orissa. However, these leases were later revoked by the Central Government on a review petition filed by a rival applicant—without affording the appellant a hearing. The Punjab High Court held the act as administrative. The Supreme Court reversed that ruling, declaring the cancellation invalid due to violation of audi alteram partem. The Court emphasized that a lis was created between the original grantee and the aggrieved review petitioner. Hence, the reviewing authority was legally obliged to act judicially. This judgment significantly bolsters procedural safeguards in administrative actions with civil consequences, reinforcing constitutional fidelity to natural justice.

Keywords: Natural justice, Quasi-judicial authority, Mining lease, Review under Mineral Concession Rules, Administrative vs judicial action.

B) CASE DETAILS

i) Judgement Cause Title:
Shivji Nathubhai v. The Union of India & Others

ii) Case Number:
Civil Appeal No. 428 of 1959

iii) Judgement Date:
January 19, 1960

iv) Court:
Supreme Court of India

v) Quorum:
B.P. Sinha, C.J.; P.B. Gajendragadkar, J.; K.N. Wanchoo, J.; K.C. Das Gupta, J.; J.C. Shah, J.

vi) Author:
Justice K.N. Wanchoo

vii) Citation:
1960 (2) SCR 775

viii) Legal Provisions Involved:

• Rule 52 to 55 of the Mineral Concession Rules, 1949

• Article 226 of the Constitution of India

• Section 6 of the Mines and Minerals (Regulation and Development) Act, 1948

ix) Judgments overruled by the Case:
None

x) Case is Related to which Law Subjects:
Administrative Law, Natural Justice, Mines and Minerals Law, Constitutional Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

This case dealt with the sanctity of natural justice in administrative review proceedings under mining laws. It examined whether the Central Government’s power under Rule 54 of the Mineral Concession Rules, 1949, was quasi-judicial or administrative. Shivji Nathubhai was granted mining leases by the State Government. These were later revoked in favor of a competing applicant—without notice or hearing. The High Court considered the Central Government’s action administrative and thus non-reviewable. The appellant challenged the denial of opportunity to be heard under Article 226 before the High Court and eventually in the Supreme Court, where the decision took a significant turn. The Court found that once a right is conferred by a statutory rule for review, a lis arises. Hence, quasi-judicial obligations bind the authority. This ruling embedded natural justice into executive reviews where civil rights are at stake.

D) FACTS OF THE CASE

The appellant was originally granted a mining lease by the Ruler of Gangpur State on December 30, 1947, just before its merger with Orissa on January 1, 1948. That lease was annulled in June 1949. The appellant later secured fresh approvals and applied on December 19, 1949, for five manganese-rich areas in Sundergarh district. The applications were regularized on September 6, 1950, and the Orissa government granted the leases on December 22, 1952, under Rule 32 of the Mineral Concession Rules, 1949, considering the appellant’s applications as having chronological priority.

Meanwhile, a third respondent also applied for leases in July 1950 but submitted defective applications and failed to pay the mandatory deposit under Rule 29. After revisions, the respondent applied afresh on September 6, 1950. Still, the State granted the leases to the appellant due to his earlier and more complete submissions. Possession was handed over to the appellant on April 21, 1953.

However, the third respondent filed a review petition with the Central Government under Rule 52. Without notifying or hearing the appellant, the Central Government cancelled the appellant’s leases for two areas and instructed the State Government to issue them to the third respondent. The appellant only learned of this decision much later. His writ petition under Article 226 was rejected by the Punjab High Court, which viewed the Central Government’s decision as administrative. He then appealed to the Supreme Court.

E) LEGAL ISSUES RAISED

i) Whether the Central Government’s order under Rule 54 of the Mineral Concession Rules, 1949, is administrative or quasi-judicial in nature?
ii) Whether the principles of natural justice, especially the right to be heard, apply to review proceedings under Rule 54?
iii) Whether the cancellation of a previously granted lease without hearing the grantee is valid in law?

F) PETITIONER/ APPELLANT’S ARGUMENTS

i) The counsels for Petitioner / Appellant submitted that the scheme of Rules 52 to 55 clearly indicates a quasi-judicial framework. Rule 52 gives a statutory right to a review, creating a lis between the review petitioner and the original grantee. They stressed that the creation of a statutory appeal-like mechanism necessitates adherence to audi alteram partem. Furthermore, Rule 53 imposes a fee, and Rule 52 sets a limitation period, reinforcing the judicial nature of the review.

They relied on the precedent in Nagendra Nath Bora v. Commissioner of Hills Division and Appeals, Assam, [1958 SCR 1240], to show that when a statute creates a right to seek review against an order that affects another’s rights, the authority must act judicially. The counsel highlighted that the appellant was not even notified about the pending review. Hence, he could not present his case or challenge the rival’s claim, which is a gross breach of natural justice.

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that the Central Government was exercising an administrative function. They asserted that since mineral resources belong to the State, applicants do not have any legal right to be granted a lease. The review under Rule 54, they claimed, was a matter of policy and discretion. Further, the priority rule (Rule 32), in their view, did not create binding rights but only guided the State’s administrative decision-making.

They also argued that since the grant of lease was itself administrative, the review of such a decision by the Centre must also be administrative. Thus, no legal obligation to grant a hearing existed. The Central Government was free to cancel or revise the lease without adhering to formal judicial procedures.

H) RELATED LEGAL PROVISIONS

i) Mineral Concession Rules, 1949

• Rule 52: Right to seek review by aggrieved party within two months.

• Rule 53: Fee for review application.

• Rule 54: Powers of the Central Government to call records, examine, revise or cancel the State’s order.

• Rule 55: Finality of the Central Government’s review decision.

ii) Constitution of India

• Article 226: Power of High Courts to issue writs for enforcement of rights.

iii) Mines and Minerals (Regulation and Development) Act, 1948

• Section 6: Rule-making power relating to mining leases.

I) JUDGEMENT

a. RATIO DECIDENDI
i) The Court held that the power exercised by the Central Government under Rule 54 is quasi-judicial. It emphasized that once a statutory rule grants a party the right to challenge a grant, a lis is created. In such a situation, the authority must act judicially unless the statute explicitly provides otherwise. The Court noted that the Central Government’s power to act in a manner it deems “just and proper” does not exclude judicial obligations. Consequently, the failure to hear the appellant rendered the order illegal.

b. OBITER DICTA (IF ANY)
i) The Court observed that even if the original grant by the State was administrative, the presence of a statutory review mechanism with clear timelines and fees transforms the nature of the proceeding into one demanding judicial fairness.

c. GUIDELINES (IF ANY – WRITE IN DETAIL AND IN POINTERS AS THE CASE MAYBE)

• The presence of a statutory right of review indicates a quasi-judicial process.

• Authorities deciding such reviews must afford a reasonable opportunity to the affected party.

• Failure to hear the original grantee before canceling a lease is a breach of audi alteram partem.

• Use of discretionary language such as “just and proper” does not remove the obligation to act fairly.

J) CONCLUSION & COMMENTS

This landmark ruling drew a sharp line between administrative and quasi-judicial actions under statutory schemes. It firmly embedded natural justice into executive decision-making wherever individual rights are at stake. The Court’s approach ensures fairness and transparency in mining lease adjudications, preventing arbitrary revocation of vested rights. It also safeguards the right to livelihood, particularly in resource-based industries. The decision serves as a constitutional checkpoint against bureaucratic discretion and remains a foundational precedent for interpreting review provisions under modern regulatory statutes.

K) REFERENCES

a. Important Cases Referred
i) Nagendra Nath Bora v. Commissioner of Hills Division and Appeals, Assam, [1958] SCR 1240
ii) Province of Bombay v. Kushaldas S. Advani, [1950] SCR 621
iii) R v. Electricity Commissioners, [1924] 1 KB 171

b. Important Statutes Referred
i) Mineral Concession Rules, 1949, [Rules 52, 53, 54, 55]
ii) Constitution of India, [Article 226]
iii) Mines and Minerals (Regulation and Development) Act, 1948, [Section 6]