Leases of Mining Companies will not be lapsed automatically; SC issues Guidelines [Read Jt]

Supreme Court, in Common Cause vs. Union of India has held that that lapse of mining lease as contemplated under Section 4A(4) of the Mines and Minerals (Development and Regulation) Act, 1957 is not automatic, and that, for a lease to lapse, express order needs to be passed.

Apex Court Bench comprising of Justices J.S. Kehar and C. Nagappan observed that Rule 28(4) of the Mineral Concession Rules, caters to a situation wherein a leaseholder has moved an application, that his lease be permitted to continue even though mining operations could not be carried on (or had actually not been carried on) for a continuous period of two years. The proviso under Rule 28(4) is clear and categoric to the effect, that in cases where the State Government, on receipt of such application,does not pass an order, the lease would be deemed to have been extended, until an order was actually passed by the State Government.

The Court issued the following Guidelines.

• A leaseholder would have a subsisting mining lease, if the period of the original grant was still in currency on 12.1.2015. Additionally, a leaseholder whose original lease has since expired, would still have a subsisting lease, if the original lease having been renewed, the renewal period was still in currency on 12.1.2015. Such a leaseholder, would be entitled to the benefit of Section 8A of the amended MMDR Act.
• A leaseholder who had not moved an application for renewal of a mining lease (which was due to expire, prior to 12.1.2015), at  least twelve months before the existing lease was due to expire, under the provisions of the unamended MMDR Act and the Mineral Concession Rules, will be considered as not a valid/subsisting leaseholder, after the expiry of the lease period. The provisions of the amended MMDR Act will therefore not enure to the benefit of such leaseholder.
• A leaseholder who has moved an application for renewal (of the original/first or subsequent renewal) of a mining lease, at least twelve months before the existing lease was due to expire, and on consideration, such an application has been rejected, will be considered as not a valid/subsisting leaseholder. The provisions of the amended Section 8A of the MMDR Act will not enure to the benefit of such leaseholder, because of the express exclusion contemplated for the above exigency, under Section 8A(9) of the amended MMDR Act.
• A leaseholder who has moved an application for “first renewal” of the original mining lease, at least twelve months before the original lease was due to expire, and such application has not been rejected, will be considered to be a valid leaseholder having a subsisting right to carry on mining operations, till the expiry of two years after 18.7.2014, i.e., up to 17.7.2016, as is apparent from a conjoint reading of the unamended and amended Rule 24A of the Mineral Concession Rules. Such leaseholder would 33 have the benefit of sub-sections (5) and (6) of Section 8A of the amended MMDR Act.
• A leaseholder who had moved a second (third or subsequent) renewal application under Section 8(3) of the unamended MMDR Act, at least twelve months before the renewed lease was due to expire, and whose application had not been considered and rejected (though not entitled to any benefit under the unamended Section 8A of the MMDR Act and the amended Rule 24A(6) of the Mineral Concession Rules) up to 12.1.2015, would still have the benefit of sub-sections (5) and (6) of Section 8A of the amended MMDR Act, in view of the situation sought to be remedied by the Mines and Minerals (Development and Regulation) Amendment Act, 2015.
• Consequent upon the amendment of Section 8A of the MMDR Act, the regime introduced through sub-sections (5) and (6) thereof, provides for three contingencies where benefits have been extended to leaseholders whose lease period had earlier been extended by a renewal. Firstly, for a leaseholder whose renewal period had expired before 12.1.2015, and the leaseholder had moved an application for renewal at least twelve months before the leaseholder’s existing lease was due to expire, and whose application has not been considered and rejected, the lease period would stand extended up to 31.3.2030/31.3.2020 (in the case of captive/non-captive mines, respectively). 34 Additionally, a leaseholder whose period of renewal would expire after 12.1.2015, but before 31.3.2030/31.3.2020, the lease period would stand extended up to 31.3.2030/31.3.2020 (in the case of captive/non-captive mines, respectively). Secondly, where the renewal of the mining lease already extends to a period beyond 31.3.2030/31.3.2020 (in the case of captive/non-captive mines, respectively), the lease period of such leaseholders, would continue up to the actual period contemplated by the renewal order. Thirdly, a leaseholder would have the benefit of treating the original lease period as of fifty years. Accordingly, even during the renewal period, if the period of the mining lease would get extended (beyond the renewal period) by treating the original lease as of fifty years, the leaseholder would be entitled to such benefit. Out of the above three contingencies provided under sub-sections (5) and (6) of Section 8A, the contingency as would extend the lease period farthest, would enure to the benefit of the leaseholder.
• Based on the interpretation placed by us on Section 4A(4) of the MMDR Act, and Rule 28 of the Mineral Concession Rules, we can draw the following conclusions. Firstly, unless an order is passed by the State Government declaring, that a mining lease has lapsed, the mining lease would be deemed to be subsisting, 35 up to the date of expiry of the lease period provided by the lease document. Secondly, in situations wherein an application has been filed by a leaseholder, when he is not in a position to (or for actually not) carrying on mining operations, for a continuous period of two years, the lease period will not be deemed to have lapsed, till an order is passed by the State Government on such application. Where no order has been passed, the lease shall be deemed to have been extended beyond the original lease period, for a further period of two years. Thirdly, a leaseholder having suffered a lapse, is disentitled to any benefit of the amended MMDR Act, because of the express exclusion contemplated under Section 8A(9) of the amended MMDR Act.