MMDR Act - Supreme Court Explains Exceptions To Sec 10A(1) Which Makes Mining Lease Applications Received Before 12.01.2015 Ineligible

The Supreme Court has elucidated the exceptions applicable to Section 10-A (1) of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act), which provides that all applications received for grant of mining lease prior to 12.01.2015, shall become ineligible. The court remarked that the object and purpose of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 is to ensure that allocation of mineral resources is done through auctioning. This is the reason why sub-section (1) to Section 10-A, which is inserted by the 2015 Amendment Act, mandates that all applications received prior to 12.01.2015 shall become ineligible, the court remarked.

The court held that where a prospecting licence has been granted to the permit holder or the licensee has the right to obtain a prospecting licence followed by a mining lease, and the State Government is satisfied that the permit holder or the licensee has complied with the requirements specified in Section 10-A (2)(b) of the MMDR Act, the bar of Section 10-A (1) shall not be applicable.

“The reason for protecting this class of cases is on account of the fact that they had altered their position by spending money on reconnaissance operations or prospecting operations. Accordingly, the principle of legitimate expectation is applied,” the bench of Justices Sanjiv Khanna and Aravind Kumar said.

Another exception, the court said, was when the Central Government had already communicated their previous approval or the State Government had issued a ‘Letter of Intent’ for grant of mining lease before coming into force of the 2015 Amendment Act. The court observed that, this is because certain rights had already accrued to the applicants before the cut-off date, as all necessary procedures and formalities had been complied with, and only the formal lease remained to be executed.

The top court was dealing with the case of an applicant who was issued a Grant Order dated 16.07.2015, for mining of Dolomite, which was notified as a ‘minor’ mineral with effect from 10.02.2015.

The Supreme Court was considering whether the applicant’s case was covered by the exception provided under the proviso to Rule 61 of the Concession Rules, 2016. As per Rule 61 of the Concession Rules, all applications for mining lease of minor minerals, received prior to enforcement of the Concession Rules, 2016, shall become ineligible. However, the proviso to the said Rule carved an exception, stipulating that if an applicant who had made an application prior to 29.07.2016, had been issued a Grant Order or a Letter of Intent, or any other order requiring alteration of the applicant’s position, his application for mining lease may be considered after due compliance of all necessary conditions.

Facts of the case:

The Calcutta High Court, vide order dated 10.09.2014, had directed the Joint Secretary, Commerce and Industries Department (West Bengal), to grant a long-term lease to the respondent-applicant, M/s Chiranjilal (Mineral) Industries of Bagandih, for extraction of Dolomite, after its application for grant of mining lease was rejected by the Joint Secretary.

Subsequently, on 10.02.2015, vide notification No. S.O. 423 (E), Dolomite was notified as a minor mineral, falling under the legislative and administrative jurisdiction of the State Government.

Thereafter, Grant Order dated 16.07.2015 was issued by the Deputy Secretary for Dolomite mining in favour of the applicant, subject to certain conditions. It was stipulated in the Grant Order that execution of the lease deed was subject to the No Objection Certificate to be obtained from the Central Government since Dolomite was a major mineral at the time of the order dated 10.09.2014 passed by the High Court.

Challenging the conditions imposed on the mining lease, the respondent-applicant filed a writ petition before the Calcutta High Court. Allowing the writ petition, the High Court held that Dolomite had become a minor mineral with effect from 10.02.2015 and thus, prior approval of the Central Government was not required under Section 5(1) of the MMDR Act, 1957. The appeal filed by the State of West Bengal against the said decision was dismissed by the Division Bench of the High Court.

Supreme Court’s Analysis:

In the appeal filed before the Supreme Court, the top court was considering whether the applicant’s case was covered by the exception provided under the proviso to Rule 61 of the Concession Rules, 2016.

The Apex Court noted that the Division Bench was of the view that the 2016 Rules would not be applicable as the applicant had made the application in March 1998, and the Joint Secretary had passed the order to grant mining lease in 13.10.2006, which was, however, later revoked/cancelled. The writ petition filed by the applicant against the said revocation was allowed by the High Court, who had directed the Joint Secretary to grant a long-term lease to the applicant in respect of 76 acres of land, the top court observed.

The court further noted that Section 10-A (1) of the MMDR Act, 1957 mandates that all applications received prior to 12.01.2015 shall become ineligible.

The bench said that there are three kinds of situations specified in Section 10-A (2) of the MMDR Act that carve out an exception to the same, or operate as a saving clause:

“The first category is where an application has been received under Section 11-A of the MMDR Act,1957. The second category is where a reconnaissance permit or a prospecting licence has been granted (to) the permit holder or the licensee has the right to obtain a prospecting licence followed by a mining lease and the State Government is satisfied that the permit holder or the licensee has complied with the requirements specified in sub-clauses (i) to (iv) of clause (b) of sub-section (2) to Section 10-A of the MMDR Act, 1957,” the court said.

The third category of exception, the court said- after referring to its decision in Bhushan Power and Steel Ltd vs S.L. Seal, Additional Secretary (Steel and Mines), State of Odisha and Ors., (2017) 2 SCC 125, is where the Central Government had already communicated their previous approval or the State Government had issue Letter of Intent for grant of mining lease before coming into force of the 2015 Amendment Act. “The raison dêtre, it is observed therein, is that certain rights had accrued to these applicants inasmuch as all necessary procedures and formalities had been complied with and only formal lease remains to be executed,” the court added.

Referring to the facts of the case, the court said that the Grant Order dated 16.07.2015, issued in favour of the applicant, was provisional, and was subject to fulfilment of the conditions specified therein. One of the conditions included the requirement to submit consent letters of the owners of the subject land- which was a ‘Raiyati’ land- before the execution of the lease deed.

The court remarked that in order to decide the question whether the applicant was entitled to the benefit of the proviso to Rule 61 of the 2016 Rules, it was necessary to ascertain whether the applicant had altered its position post the issue of the Grant Order, but before the enforcement of the 2016 Rules. This, the court said, had not been verified and ascertained.

The court, however, noted the stand of the State of West Bengal that they are owners of 20.87 acres of the land in question and to this extent, they have no difficulty in executing the mining lease. “This being the stated stand, which has also been affirmed before us, there should be no difficulty in granting of mining lease for the said area to the Respondent No. 1 - M/s. Chiranjilal (Mineral) Industries of Bagandih,” the court said.

The court thus set aside the judgment of the Division bench and partly allowed the appeal, directing the State of West Bengal to execute a mining lease for 20.87 acres of land.

“Accordingly, and for the reasons stated, we partly allow the present appeal and set aside the impugned judgment with a direction that the government of West Bengal will execute a mining lease for 20.87 acres of land in favour of the Respondent No. 1 - M/s. Chiranjilal (Mineral) Industries of Bagandih. The Writ Petition No. 20309 (W) of 2016 will be treated as allowed to the extent as indicated above. The claim of the Respondent No. 1 - M/s. Chiranjilal (Mineral) Industries of Bagandih towards the balance area for the grant of mining lease will be treated as rejected and dismissed. In the facts of the present case, there will be no order as to costs.”

Case Title: STATE OF WEST BENGAL AND ANOTHER vs M/S. CHIRANJILAL (MINERAL) INDUSTRIES OF BAGANDIH AND ANOTHER

Dated: 12.09.2023

Counsel for the Appellants: Mr. Anand Grover, Sr. Adv. Ms. Astha Sharma, AOR Mr. Srisatya Mohanty, Adv. Ms. Anju Thomas, Adv. Mr. Sanjeev Kaushik, Adv. Ms. Mantika Haryani, Adv. Mr. Shreyas Awasthi, Adv. Mr. Himanshu Chakravarty, Adv. Ms. Ripul Swati Kumari, Adv. Mr. Bhanu Mishra, Adv. Ms. Muskan Surana, Adv.

Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act): Sections 10-A, 10-A (1), 10-A (2)(b); Mines and Minerals (Development and Regulation) Amendment Act, 2015; Concession Rules, 2016: Rule 61 and Proviso

The Supreme Court has elucidated the exceptions applicable to Section 10-A (1) of the MMDR Act.

The court held that where a prospecting licence has been granted to the permit holder or the licensee has the right to obtain a prospecting licence followed by a mining lease, and the State Government is satisfied that the permit holder or the licensee has complied with the requirements specified in Section 10-A (2)(b) of the MMDR Act, the bar of Section 10-A (1) shall not be applicable.

Another exception, the court said, was when the Central Government had already communicated their previous approval or the State Government had issued a ‘Letter of Intent’ for grant of mining lease before coming into force of the 2015 Amendment Act.

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