Centre's Approval Necessary For Reserving Land For State Govt. Companies Under Mines And Minerals Act: SC [Read Judgment]

The Supreme Court on Tuesday held that approval of the Central Government is necessary for reserving land not held under a prospecting licence or mining lease for exploitation by State Government companies or undertakings under the Mines and Minerals (Development and Regulations) Act, 1957.

The Bench comprising Justice M.B. Lokur and Justice Deepak Gupta ruled, "The State Government being the owner of the land and minerals, has a right to make a proposal to the Central Government to reserve lands not held under a prospecting licence or mining lease for exploitation by the State Government companies or undertakings but approval of the Central Government is necessary."

Factual matrix

The Court was hearing Appeals filed by M/s. Geomysore Services (India) Pvt. Ltd. and Deccan Gold Exploration Services Pvt. Ltd., both companies litigating for their rights to exploit certain gold mines in the State of Karnataka.

Both, Geomysore and Deccan had been granted Reconnaissance Permits (RPs) by the State Government, after approval by the Centre for land in Hutti South Belt Gold Mines area. An RP holder carries out operations to determine whether the area is fit for mining only by way of non-invasive techniques, except for some minimal drilling.

Pursuant to the RPs, consolidated reports suggesting existence of gold deposits were submitted by both companies. On the basis of these results, both the companies had filed applications for grant of Prospecting Licences (PLs) under the Act.

[During prospecting, invasive methods can be used to the extent allowed under law for determining the extant mineral deposits and whether they can be exploited commercially. After completion of prospecting comes the stage of grant of Mining Lease.]

In the meantime, M/s. Hutti Goldmines Co. Ltd. & Ors. (HGML) sent a letter to the State authorities, demanding reservations of the area for its conversation exclusively for public sector undertakings under Section 17A(2) of the Act. Meanwhile, the Ministry of Mines published the National Mineral Policy, 2008 (NMP), and the Government of Karnataka released the Karnataka Mineral Policy, 2008 (KMP) in consonance with NMP.

The State supported HGML's application before the Centre. Geomysore and Deccan objected to this, submitting that they were entitled to preference while considering their PLs as their PLs had been filed earlier in time. They had further asserted that in view of the NMP, 2008 and the KMP, 2008, such reservation cannot be made.

The Centre rejected the State's proposal for conversation. After several rounds of litigation and deliberations, the High Court ruled in favor of HGML, noting that Section 17A of the Act did not speak of any preferential right on the basis of the RPs. It further opined that the NMP, 2008 cannot overrule the provisions of Section 17A of the Act.

The Apex Court was now faced with the issue: "What is the role and power of the Central Government while dealing with the request of a State Government for reservation of lands for government companies or corporations owned and controlled by the State Government under section 17A (2) of the Mines and Minerals (Development and Regulations) Act, 1957".

Court's findings

The Court's findings were based on the Act prior to its amendment in the year 2015. On perusal of several judgments on the issue, the Court reiterated that while the State is the owner of the land and minerals, the control and regulation of mines and development of minerals are in the domain of the Union Government.

It then went on to reject the contention that while examining the State's application, the Centre can only consider issues of national interest and security. The Court opined that the Act does not provide any parameters for the Centre to follow. It explained, "The Central Government, while considering the request of the State Government, can take into consideration various factors which may include economic factors, the factors reflecting the image of the country internationally to the global world community and also other factors of national security etc.. These are just illustrative and each case has to be decided on its own facts."

It then upheld the Centre's rejection of the State's proposal, and summarized its conclusions as follows:

"(i) The State Government being the owner of the land and minerals, has a right to make a proposal to the Central Government to reserve lands not held under a prospecting licence or mining lease for exploitation by the State Government companies or undertakings but approval of the Central Government is necessary;

(ii) The Central Government cannot be bound by any specific parameters. Each case has to be decided on its own merits. However, as indicated by us above, the Central Government can not only take into consideration factors of national security or public interest but also economic factors, the policy of the Government and all such other factors which are relevant to decide the issue whether the land should be reserved for exploitation only by State Government Undertakings;

(iii) Section 11(1) and Section 17A(2) of the Act have no connection with each other. Section 11(1) of the Act deals with preference to be given to RP holder and PL holder while considering their case for grant of PL and ML respectively. This has nothing to do with reservation of land under Section 17A(2) of the Act. The only connection, if it can be called that, is that if a land is held under a PL or ML, then action under Section 17A(2) of the Act cannot even be initiated;

(iv) In view of the discussion held above, we feel that the Central Government was justified in rejecting the request of the State of Karnataka in reserving the land in question."