SUPREME COURT UPHOLDS GOVERNMENT’S AUTHORITY TO AMEND MINING LEASE RULES

INTRODUCTION

A Two-Judge Bench of the Supreme Court comprising Justice A.S. Bopanna and Justice M.M Sundresh passed a Judgment dated 01/08/2023 in The State of Rajasthan & Ors. V. Sharwan Kumar Kumawat  ETC. ETC in C.A. Nos. 1212-1214/2016, C.A. Nos. 1207-1211/2016, C.A. Nos. 1202-1206/2016, C.A. Nos. 1182-1186/2016, C.A. Nos. 1172-1176/2016, C.A. Nos. 1177-1181/2016, C.A. Nos. 1187-1189/2016, C.A. Nos. 1197-1199/2016, C.A. Nos. 1195-1196/2016, C.A. Nos. 1200-1201/2016, C.A. Nos. 1190-1194/2016 and observed that the Division Bench of Hon’ble High Court of Rajasthan, Jaipur Bench, had totally misconstrued the issues ignoring the fact that there is a delegation of power to the First Appellant which was rightly exercised as conferred under Section 15 of the Mines and Minerals Act, 1957.

FACTS

i) The Appellant (the “Government”), vide Notification dated 23.05.2003, invited applications for leasing out mines for minor minerals. Several people applied for the said Lease. Thereafter, followed by the Notification mentioned above, the Appellant made another Notification dated 24.04.2007 declaring that the applications made for the four villages qua sandstone was rejected in the exercise of the power conferred under Rule 65A of Rajasthan Minor Mineral Concession Rules, 1986 (Rules) which allows the Appellant to make amendments.

ii) Thereafter, writ petitions were filed by some of the Applicants in the Hon’ble High Court of Rajasthan and the same were allowed by the High Court, inter-alia holding that such a restriction applied only for four districts alone and cannot be sustained in the eyes of law as there was no material available to invoke the Rule 65A of the Rules in the purported interest of mineral development, and, directed the Appellants, after quashing the Notification dated 24.04.2007, to revive the applications of the writ petitioners and consider them in accordance with law.

iii) Thereafter, there were some amendments made to the rules vide Notification dated 28.01.2011 after the orders were passed by the High Court on 21.05.2009. In compliance with the Order of the High Court, a Government Order was passed on 16.11.2011 facilitating the relief to such of those Applicants who approached the High Court.

iv) Thereafter, a Government Order was passed on 28.11.2011 for the payment of royalty for the masonry stone applicants before the grant of the lease. The two orders were later then challenged by certain other applicants other that the writ petitioners in the earlier round, inter-alia contending that the same benefits will have to be extended to them as well.

v) Thereafter, the High Court passed an Order, dated 13.03.2013, stating that the earlier decisions have to be construed as decision in rem but subject to the rider that all the pending applications ought to be considered in accordance with the amendment made vide Notification date 28.01.2011 to Rule 4 and Rule 7.

vi) Further, the Orders passed in the second round of litigation remained unchallenged and therefore it became final. It is pertinent to note that the High Court had not granted relief to the Petitioners by directing the Appellants to adopt the first-come first serve basis for the grant of mining lease but only as per the Amended Rules.[1]

vii) The Appellants, taking a cue from the Orders passed, issued a further Notification on 03.04.2013 introducing the impugned amendments. It stated that all the applications were declared as rejected while facilitating a grant of 50% of the leases through the auction except the categories mentioned thereunder as entitled for preference. 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 have vested in them.

SUPREME COURT JUDGMENT AND ANALYSIS

(1) The Apex Court heard submissions from both sides, wherein the Appellant submitted that the decision of the High Court pertains to minor minerals and sandstone alone and that too with specific reference to four districts. But, the High Court in the impugned order did not take into consideration this fact and just struck down Rules completely which were meant to be applied to all the minerals. To which the Respondents submitted that the High Court was right to hold that the impugned amendments are nothing but an attempt to overreach the earlier decision of the Court.

(2) The Bench discussed various points in this case, namely;

(i) Vested Right

(a) The Bench stated that the mere filing of an application for the lease of Government land or minerals does not create any vested right for the applicant. The Government has the power to amend laws and regulations independently, and pending applications do not prevent the Government from making changes in the interest of the public.

(b) For a right to be vested, there must be statutory recognition and a decision made by the competent authority must result in the creation of that right. If the Government decides, in the public interest, to evolve a better process such as an auction, any right that may have been presumed by the applicant seeking a lease over Government land will cease to exist.

(ii) Fundamental Right

The Bench by relying on the case of Monnet Ispat & Energy Ltd. v. Union of India, (2012) said that no person has a fundamental right to claim that they should be granted a mining lease or any other right in any land belonging to the Government.

(3) The Court further said that Legitimate Expectation is a weak and sober right as ordained by a statute. Further, it adds that when the Government has, by way of auctions, facilitated all the eligible persons to contest on equal terms, one cannot contend that he is entitled for a lease merely on the basis of a pending application.

(4) The Bench further stated that the Appellants have duly complied with the Orders passed by the High Court. Even otherwise, the law is quite settled that basis of a judgment can be removed and a decision of the court cannot be treated like a statute, particularly when there is a power available to act and it is accordingly exercised in the public interest. And that, the Bench did not find any legal malice in the amendments.

CONCLUSION

The Apex Court held that, in view of the above observations, the decisions of the High Court rendered earlier do not stand in the way of the impugned amendments. They were in respect of sandstone alone, while in the impugned judgment, the High Court applied it to all the minor minerals. The Bench further stated that in the decision rendered by the High Court dated 13.03.2013 all the applications were directed to be considered as per the amended Rules and that the reasoning of the High Court in the impugned order is contrary to the earlier order passed. Furthermore, the Bench held that, as held by the Apex Court in the decisions of the cases the Bench relied upon, there is neither a right nor it gets vested through an application made over a Government land. The Bench held that the High Court had totally misconstrued the issues ignoring the fact that there is a delegation of power to the First Appellant which was rightly exercised as conferred under Section 15 of the Mines and Minerals Act. The Bench, therefore, with this view set-aside the Impugned Judgments of the High Court, and the Appeals of the Appellant were allowed.

EDITOR’S COMMENTS

While applying for Government Contracts, an Applicant has the right to expect certain benefits if the said Applicant is granted a contract. This is what the Law means when it talks about Legitimate Expectation. However, Legitimate Expectation can be overridden if it is deemed to be against public policy of the interest of the public. The Government Authorities are given powers to amend the Rules by way of Notifications if they feel that a situation demands the amendment. In the present case, the Government of Rajasthan after issuing a Notification calling upon Applicants to apply for leasing of minor minerals mines, had the power to make amendments if it was in the larger interest of the public. The Supreme Court, after considering the facts in totality supported the Government’s powers to make amendments in the notification if it was in public’s interest.

 

Kartik G. Khandekar

Associate

The Indian Lawyer

 

Edited by:

Sushila Ram Varma

Chief Consultant

The Indian Lawyer

 

[1] Rule 4 of Rajasthan Minor Mineral Concession Rules, 1986: Restriction on grant and renewal of mining lease:- 

(1) No mining lease shall be granted in respect of such mineral / minerals as Mining Engineer / Assistant Mining Engineer may notify in this behalf within his jurisdiction with the approval of the Director.

(2) No mining lease shall be granted to a person who is not a citizen of India unless prior approval of the Government of India has been obtained. 

(3) 1 [ ] 

(4) (i) No mining lease shall be granted or renewed to a person against whom or any member of his / her family or against a firm of which he / she is or was a partner, the dues of the Department are outstanding. (ii) No mining lease shall be granted in favor of a partnership firm or a private limited company unless a no dues certificates of Department is submitted by all partners of the partnership firm or all members of the private limited company as the case may be. Provided that where an injunction order has been issued by a court of law or any other competent authority staying the recovery of such dues, the non payment there of shall not be treated as disqualification for the purpose of grant or renewal of any mining lease.] 

(5) No mining lease shall be granted or renewed in respect of lands notified by the Government as reserved for use of the Government or local authorities for any other public or special purposes. 

(6) No mining lease shall be granted or renewed in the forest area without clearance from the Central Government in accordance with the Forest (Conservation) Act, 1980 and the rules made thereunder. 

(7) Unless otherwise notified by the Mining Engineer / Assistant Mining Engineer no mining lease shall be granted in the area in which quarry licences are in the process of grant for a particular mineral. 2 [The process of grant of quarry licences shall be deemed to have started from the date of entry made in the register of mining lease mentioned in rule 10(2).  

(8) No prospecting licence, mining lease or any other mineral concession in respect of a 3 [minor mineral shall be granted or renewed] in the Schedule Area without obtaining prior recommendation of the Panchayati Raj Institutions at appropriate level as prescribed under Rajasthan Panchayati Raj (Modification of provisions in their Application to the Schedule Areas) Act, 1999 (Act No. 16 of 1999).

(9) No fresh mining lease shall be granted to a person, who has committed offence under rule 48 and / or 68, for next five years from the date of offence. 

(10) No mining lease in Government land, including the forest land for which diversion is granted by the Central Government under Forest (Conservation) Act, 1980, shall be granted on an application by the applicant unless the area is delineated and applications are invited by the Government. All the applications which are presented in Government Land upto 27-01-2011, except the application presented by person having preferential right under the rule 3N or sub-rule (1) of rule 11, in respect of which lease deed as per rule 19 has not been executed shall be rejected.]

(11) No mining lease in khatedari land shall be granted to a person other than khatedar or a person having registered consent of khatedar.] 

(12) No mining lease shall be granted or renewed in contravention of Environment Impact Assessment Notification dated 14.09.2006 issued by the Ministry of Environment and Forest, Government of India, as amended from time to time.]  

 

Rule 7 of Rajasthan Minor Mineral Concession Rules, 1986: Procedure for grant of lease.- 

(1) In Government land, the mining lease shall be granted after the area is first delineated, plots suitably numbered and a notification inviting application is published in two daily news papers, at least one of which is state level and other having wide publicity in the area where lease are being allotted. The notification shall be published at least 30 days before the intended date of inviting applications and shall contain the date or the period within which applications shall be received. Out of these delineated plots the committee constituted under sub-rule (3) of rule 23A shall reserve 50% of plots which shall be allotted only by auction/tender and the remaining 50% shall be allotted by way of lottery to the following categories of persons as per percentage mentioned against each category:- 

(i) Persons who undertake to install a crusher / mineral based industry; 10% 

(ii) Manual workers and widows of manual workers belonging to Scheduled Castes / Scheduled Tribes / Other Backward Classes / Special Backward Class employed in Mines; 5%

(iii) Manual workers and widows of manual workers other than Scheduled Castes / Scheduled Tribes / Other Backward Class / Special Backward Class employed in mines; 5% 

(iv) Persons belonging to Scheduled Castes / Scheduled Tribes / Other Backward Class / Special Backward Class; 20%

(v) Persons identified as “Below Poverty Line”; 10% 

(vi) Freedom fighter/Ex-soldiers including members of para military forces belonging to Rajasthan, who have been permanently incapacitated or dependents of those who have died while in service; 5% 

(vii) Rajasthan State Government servants who have been permanently disabled while on duty or the dependents of those who have died while in service; 5% 

(viii) Persons with disabilities (disabled persons) other than those covered in categories (vi) & (vii) above; 5%

(ix) Societies of Unemployed youth of Rajasthan; and 25%

(x) Other persons. 10% Provided that mining leases for mineral bajri shall only be granted by way of tender or auction. 

(2) No person shall be eligible for making application for mining lease to be granted by way of lottery who already holds two mining leases in the respective office or three in the State for that mineral or associated group of minerals. 

(3) All applications of the applicants other than the applicant who is selected for grant of mining lease shall be deemed to have been rejected and application fee in respect of such applications shall be forfeited.]