SUPREME COURT HELD STATE GOVERNMENT LIABLE TO REFUND SECURITY DEPOSIT FOR DISRUPTION OF MINING OPERATIONS

The Hon’ble Supreme Court of India passed a Judgment dated 28.10.2020 in the case of Dharmendra Kumar Singh v. The State of Uttar Pradesh & Ors. (Civil Appeal No. 12202 of 2018) and held that the Appellants are entitled to the refund of #SecurityDeposit and the Advance #Royalties for the period during which the #mining operations were not carried on in the #Lease Area.

In the present case, Mining Leases were granted to various Projects in the District of Sonbhadra. An Application was filed by the All India Kaimur People’s Front (AIKPF) before the National Green Tribunal, New Delhi (NGT) whereby they sought directions for prohibition of alleged illegal mining in the ecologically sensitive area surrounding the Kaimur Wildlife Sanctuary located in Village Billi Markundi in Sonbhadra District. As it is important to preserve the wildlife, directions were issued by the NGT in this respect.

Thirty-three leases were operational outside the Eco-Sensitive Zone (ESZ) and the State of Uttar Pradesh (UP) was called upon by the NGT to explain the position of the Leases in view of the Order dated 04.05.2016 that was passed by the NGT directing the State of UP to cancel all Mining Leases and all other non-forestry activities in the areas that were notified under Section 4 of the Indian Forest Act, 1927 (Forest Act). The Notification specified as to what are the limits of reserved forest area.

However, the State of UP made an admission that some Leases were still active in the area covered under Section 4 of the Forest Act. Thereafter, the NGT vide Order dated 13.7.2018 directed the State of UP to prohibit all the Leases under Section 4 of the Forest Act. Subsequently, a Review was filed by the State of UP which was dismissed vide Order dated 29.8.2018.

Aggrieved by the said Order, the Appellants filed Appeals in the Apex Court under Section 22 of the National Green Tribunal Act, 2010 (NGT Act). The main question involved in the present Appeals was whether to refund the Lease Amount for the period of disruption of mining operations or whether to allow renewal of Leases for the said period of obstructed time.

The State of UP contended that according to the Uttar Pradesh Mining Minerals (Concession) Rules, 1963 (Mining Rules) there was no provision for grant of permission for mining in case of disruption of mining operations and that it was willing to refund the lease amount, i.e. for the period during which the Leases have not been permitted to operate. The Appellants raised an objection to the same. The main contention of the Appellant was that there was no illegal mining going on.

The Supreme Court held “that a mere filing of an application either for the grant of a lease or for the renewal of a lease does not confer a vested right for either grant or renewal of a lease. The statutory provision of Rule 68 of the Mining Rules, which has been strongly relied upon by learned counsel for the appellants, is in the nature of a relaxation rule in special cases and has to be read with the Rules which provide the manner in which the exploitation of minerals should take place.”

The Apex Court disposed of the Appeals with the following Orders:

1. The Security Deposit should be refunded and the amount (i.e. the Advance Royalties) which has been deposited by the Appellants/Leaseholders to the Respondent/State should also be returned to them in addition to interest @ 9% per annum.
2. Furthermore, the Advance Royalties for the obstructed period will carry interest @ 9% per annum from the date on which the obstruction occurred i.e. 29.8.2018 and 5.2.2019, till the date of payment.
3. The Supreme Court directed that both these amounts should be refunded within two months from the date of Judgment.

Suchitra Upadhyay

Associate

The Indian Lawyer & Allied Services