[UP Minor Minerals Act] Forfeiture Of Deposit Not Authorised Once Letter Of Intent Is Cancelled: Allahabad High Court
While examining the Uttar Pradesh Minor Minerals (Concession) Act, the Allahabad High Court has held that once a Letter of Intent has been issued for a mining lease and a security deposit been made, the relevant authority does not possess the power to forfeit such deposit made by the lessee, upon cancellation of the Letter of Intent.“Upon a consideration of the submissions made and upon...
While examining the Uttar Pradesh Minor Minerals (Concession) Act, the Allahabad High Court has held that once a Letter of Intent has been issued for a mining lease and a security deposit been made, the relevant authority does not possess the power to forfeit such deposit made by the lessee, upon cancellation of the Letter of Intent.
“Upon a consideration of the submissions made and upon a careful scrutiny of the U.P. Minor Minerals (Concession) Rules, 2017 and 2019, we are unable to discern any power of forfeiture,” held the Division Bench comprising of Justice Anjani Kumar Mishra and Justice Jayant Banerji.
Case Background
Petitioner participated in the bidding for grant of mining leases for ordinary sand in the Village Pachayra, Tehsil Loni, District Ghaziabad. On 31.10.2017, a Letter of Intent was issued to the petitioner. Thereafter, he deposited 25% of the bid money as security and an equal amount as the first instalment of royalty per Rule 28(2)(i) of the U.P. Minor Minerals (Concession) Rules, 1963.
However, the Letter of Intent was cancelled on 28.01.2019 with no order passed for a refund of the security amount or the first instalment. Against this, petitioner filed a writ petition under Article 226 of the Constitution. During the pendency of the writ petition, on 28.08.2021, an order was passed by the District Magistrate, forfeiting the security and the first instalment royalty, in the favour of the State. Aggrieved by the same, petitioner filed the present writ petition against the order dated 28.08.2021.
Counsel for petitioner contended that the respondents did not have any authority to forfeit the security deposit in the favour of the state, subsequent to the cancellation of the Letter of Intent. Petitioner submitted that a mining plan submitted by him after the issuance of the Letter of Intent was approved. He submitted that it was only after he had applied for the environmental clearance, that the Letter of Intent was cancelled and that no order for forfeiture was passed at that time.
Petitioner contended that the order for forfeiture if at all, could only be passed at the time of cancellation of the Letter of Intent. He placed reliance on Rule 29 of the U.P. Minor Minerals (Concession) (Forty Third Amendment) Rules, 2017 to establish that forfeiture of security deposit was provided for where the lease deed was not executed within three months due to a fault on the part of a lease holder. It was submitted that in the present case, no lease deed had been executed. Thus, the said provision was not attracted at all.
Petitioner contended that Rule34(4), non-compliance of which was the basis of the impugned order, required a lessee to start mining operations only after obtaining environmental clearance and that the proviso mandated the lessee to apply for the environmental clearance, a procedure which he had followed. Counsel for petitioner submitted that contrary to the submissions of the respondents, the Uttar Pradesh Minor Minerals (Concession) (Forty Seven Amendment) Rules, 2019 would in fact not be applicable to the situation at hand as they came into force only 6 months after the cancellation of the Letter of Intent.
High Court Verdict
Counsel for respondent had submitted that the impugned order was passed for violation of Rule 34(5) of the U.P. Minor Minerals (Concession) (Forty Seven Amendment) Rules, 2019. However, the Court found that the respondents were unable to point to a specific provision which gave them the power to forfeit the petitioner's deposit in the favour of the state.
Examining the U.P. Minor Minerals (Concession) Rules, 2017 and 2019, the Court held that no power of forfeiture could be made out in the hands of the respondents and that the amount deposited had to be refunded to the petitioner.
“The deposit made by the petitioner in the year 2017 as the Letter of Intent was cancelled on 28.01.2019, the security deposit as also the first instalment of royalty, which had been deposited by the petitioner upon cancellation of the Letter of Intent is liable to be refunded. The respondents instead of refunding this amount have forfeited the same, wrongly and illegally and in the absence of any power to do so,” stated the Court.
The Court held that the petitioner was entitled to interest on the deposited amount. It was held that the interest would be calculated at the rate of 9% as prayed for by the petitioner.
Accordingly, the writ petition was allowed.
Case Title: M/S Deep Builders And Another v. State Of Uttar Pradesh And 2 Others 2024 LiveLaw (AB) 375 [WRIT - C No. - 33710 of 2021]
Citation: 2024 LiveLaw (AB) 375