'Pending Application For Mining Lease Doesn't Create Any Vested Right' : Supreme Court Upholds Rajasthan Rule Introducing Auction

The Supreme Court on Tuesday set aside the order of the Rajasthan High Court that declared Rule 4 (10) and Rule 7(3) of the Rajasthan Minor Mineral Concession Rules, 1986 as unconstitutional.

A division bench of Justice A.S. Bopanna and Justice M. M. Sundresh while setting aside the High Court order observed:

“The High Court, in our considered view, has totally misconstrued the issues ignoring the fact that there is a delegation of power to the first appellant [State] which was rightly exercised as conferred under Section 15 of the 1957 Act [Mines and Minerals (Development and Regulation) Act, 1957].”

The grievance of the respondents was that the amendments brought in the process of considering applications for lease by way of auctions, when their applications were already pending before the government. The Top Court observed that:

“Legitimate expectation is a weak and sober right as ordained by a statute. When the Government decides to introduce fair play by way of auction facilitating all eligible persons to contest on equal terms, certainly one cannot contend that he is entitled for a lease merely on the basis of a pending application. The right being not legal, apart from being non-existent, it can certainly not be enforceable.”

Rajasthan Minor Mineral Concession Rules, 1986 came into force for the regulation of grant of quarry licenses, mining leases and other mineral concessions with respect to minor minerals.  Prior to amendment, under Rule 7, an application being made prior in point of time had a preferential right over the others. In 2011, Rule 7(3) was amended to introduce the process of auction. In 2011, Rule 4 Sub-rule (10) was also introduced in which it was specified that there cannot be a mining lease in a Government land except for marble and granite, unless such area is delineated.

“.. the impugned Rules undertake two exercises; the process of auction as existed earlier, and creation of a level playing field by declaring all the pending applications, meant to be considered on a first-come first-serve basis, as rejected.” The Apex Court observed.

In 2004, the State issued a notification that declared that the applications made for four villages with respect to sandstone was rejected in exercise of the power conferred under Rule 65A of the Rules. However, the High Court held that there was no material available to invoke Rule 65A in the interest of mineral development. It held that such a restriction that applied only to four districts cannot be sustained in the eyes of law. The High Court directed the applications of the writ petitioners to be revived and considered.

Subsequent to this the amendments to the Rules were made, which were declared unconstitutional by the High Court.

“By the impugned orders, the Division Bench of the High Court declared the amendments as illegal on three primary grounds, namely; the applicants have not been heard, and their applications ought to be revived in view of the earlier orders passed by the Court on the principle of legitimate expectation and rights having vested in them", the Apex Court noted.

Sr. Adv. Manish Singhvi, appearing for the State of Rajasthan argued that the Respondents cannot claim a preferential right as there cannot be a fundamental right in mining. The Respondents cannot claim a vested right either, it was argued.

Adv. Shobha Gupta, AOR and Adv. Ankita Gupta, appearing for the Respondents, argued that the amendments were an attempt to overreach the earlier decision of the High Court. The applications of the Respondents were pending for decades, and had they been considered earlier, leases would have been granted, it was contended. It was also argued that there was legal malice in the amendment of the Rules.

The Apex Court relied on Monnet Ispat & Energy Ltd. v. Union of India, (2012) 11 SCC 1 to observe that the applicants did not have a fundamental right in mining.

The Top Court also observed that the respondents did not have a vested right, only because an application was filed. When a competent authority evolves a better process for consideration of applications in public interest, any right of the applicant ceases to exist unless there is a statutory recognition for such right:

“It is far too settled that there is no right vested over an application made which is pending seeking lease of a Government land or over the minerals beneath the soil in any type of land over which the Government has a vested right and regulatory control. In other words, a mere filing of an application ipso facto does not create any right. The power of the Government to amend, being an independent one, pending applications do not come in the way. For a right to be vested there has to be a statutory recognition. Such a right has to accrue and any decision will have to create the resultant injury. When a decision is taken by a competent authority in public interest by evolving a better process such as auction, a right, if any, to an applicant seeking lease over a Government land evaporates on its own. An applicant cannot have an exclusive right in seeking a grant of license of a mineral unless facilitated accordingly by a statute.” 

The Top Court also found that there was no legal malice in bring about the amendments as argued by the Respondents, as the amendments were made in public interest via the statutory power vested in the competent authority.

“..there is neither a right nor it gets vested through an application made over a Government land. Law does not facilitate hearing the parties in bringing an amendment by an authority competent to do so. “ the Apex Court observed while setting aside the order of the High Court.

Case Title: State of Rajasthan V. Sharwan Kumar Kumawat, CIVIL APPEAL NOS. 1162-1171 of 2016

Citation: 2023 LiveLaw (SC) 586

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