Ramakant Diwivedi vs. Rafiq Ahmed, 2016

Subject:  Transparency In illegal mining. 

• The Mines and Mineral (Development and Regulation) Act, 1957 (MMDR) provides for development and regulation of mines and minerals. Section 15 provides for making rules by the State Governments for regulating grant of mining leases and other matters in respect of ‘minor minerals’. The State of U. P. framed the Rules in exercise of the said power. The Rules contain two sets of procedures for grant of mining lease. Chapter IV of the Rules provides for grant of lease by auction while Chapter II provides for grant of lease otherwise than by way of auction. Prior to 31st May, 2012, the leases were being granted in the State of Uttar Pradesh under Chapter II. G.O. dated 31st May, 2012 changed this practice, providing that:

“To bring transparency in connection of approval of mining leases in the state, the decision has been taken to grant lease through e-tendering system by inviting tenders under the provisions of chapter-4 of Uttar Pradesh Minor Minerals (Concession) Rules, 1963. By this step, by lifting the minor minerals on remission, the transparency would increase and along with that competition would take place and due to that State Government would get maximum rate.”

• The above change of policy appears to be consistent with the position of law that State largesse ought to be distributed by non-arbitrary method consistent with Article 14 of the Constitution.
• The G.O. dated 31st May 2012, passed by the State of U. P. came to be challenged before the High Court inter alia on the ground that applications already made prior to 31st May, 2012 were required to be dealt with without applying the G.O. dated 31st May, 2012. This plea was rejected by the High Court vide its judgment dated 29 th January, 2013 in Nar Narain Mishra Vs. The State of U.P.4. Special leave petition filed against the High Court judgment was dismissed by this Court. The Division Bench of the High Court relied upon the judgment of this Court 4 2013(2) ADJ 166 5 SLP (Civil) No.14372/2013, dismissed on 3.3.2014.  in the State of Tamil Nadu Vs. M/s. Hind Stone6 and held that pendency of application did not create any vested right for the application being considered otherwise than by way of order dated 31 st May, 2012. The High Court upheld the stand of the State which was as follows :

“The State stand is that there are no inviolable rights of renewal in a lease and the right of consideration of the renewal and the claim of renewal of the lease have to be dealt with in accordance with the Rules as existing at the relevant time. It is submitted that declaration under Chapter IV having been issued all areas stand notified for settlement under Chapter IV, the renewal of lease cannot be granted since renewal can be granted only in accordance with the procedure prescribed under Chapter II which provision is no more applicable.When the State issued the Government Order on 31.5.2012 applying the same to all vacant areas, it intended to apply the Government Order on the areas which were not occupied.

• No exception has been provided in the Government order excluding those areas in respect of which renewal applications are pending. An application for renewal of lease is in essence an application for grant of lease and same principle has to be applied with regard to applications which are pending for grant of lease and on similar analogy, if the submissions of the petitioners are to be accepted those areas on which applications for grant of lease have been submitted should also be kept out of purview of the Government Order dated 31.5.2012. No such intention or object is decipherable from the Government order. By subsequent Government Order dated 5.9.2012, the State Government has provided that those areas where renewal has been sanctioned or granted on or before 5.9.2012, shall not be settled under Chapter IV.” 6 1981 (2) SCC 205
• Further, an appeal has been preferred against order dated 18th June, 2015 passed by the High Court of Judicature at Allahabad in PIL No.35233 of 2015 granting an interim order against excavation of minor minerals by the appellant in respect of lease executed in his favor on 17th October, 2013.

• The question for consideration is whether the High Court was justified in quashing mining lease granted in favor of the appellants (vide orders dated 24th May, 2014 and 26th May, 2014) on the ground that the said leases were granted in violation of the Government Order (G.O.) dated 31st May, 2012. 
• Under this order, mining leases could only be granted under Chapter IV of the U.P. Minor Minerals (Concession) Rules, 1963 (the Rules) by way of e-tendering in the interest of transparency and to safeguard the public revenue.

The High Court has rightly held that the renewal was in pursuance of the Government Order dated 26th February, 2013 which itself was in conflict with the order of the High Court in Nar Narain Mishra (supra) as reiterated in Sukhan Singh (supra). In view of order of the High Court dated 29 th January, 2013 in Nar Narain Mishra (supra) all pending applications as on 31st May, 2012 stood rejected. In the case of the appellant, environmental clearance was granted on 21st September, 2012 and renewal was granted on 27th April, 2013. Orders of the High Court in Nar Narain Mishra and Sukhan Singh (supra) which are not under challenge clearly debarred the grant of lease under Chapter II after 31st May, 2012. This aspect has been dealt with in greater detail in Civil Appeal Nos.4845-4846 of 2015 titled Sulekhan Singh & Co. versus State of U.P. with which the present appeal was tagged, which is being separately decided today. Stand of the State, to the contrary, can also not be appreciated. Reference may be made to the finding recorded by the High Court in the impugned order:

A Division Bench in the case of Nar Narain Mishra v. State of U.P. and others reported in 2013 (2) ADJ 166, after interpreting the Government Order dated 31.5.2012 recorded as principle of law, that once notification has been published by the State Government in exercise of powers under Rule 23 of the Rules 1963, for vacant areas being available for grant of leases under Chapter IV of Rules, 1963, no grant/renewal on the pending applications can be made, after 31.5.2012. The State was not satisfied with the legal position so explained. It came out with a Government Order dated 26.2.2013, which provided that pending applications, for renewal/grant in respect of which orders of approval have already been made by the State Government or by the competent authority shall not be controlled by the judgment in the case of Nar Narain Mishra (Supra) such cases may be processed further.

It, therefore, follows that no application which was pending on 31.5.2012 can be proceeded with for grant/renewal of lease under Chapter II/VI of the Minor Minerals Concession Rules, 1963 after 31.5.2012. The grant, if any, after 31.5.2012 can only be made under Chapter IV of the Rules of 1963 Le. by e-auction or tendering. The State and its Officers have shown little or no respect to the orders of this Court.

In an attempt to bring transparency in connection of approval of mining lease in the state, an apt decision has been taken to grant lease through e-tendering system by inviting tenders under the provisions of chapter-4 of Uttar Pradesh Minor Minerals (Concession) Rules, 1963. By this step, by lifting the minor minerals on remission, the transparency would increase and along with that competition would take place and due to that State Government would get maximum rate.

The Government of India appointed a Commission of Inquiry consisting of Shri Justice M.B. Shah, a former Judge of this (2012) 3 SCC 1 Centre for Public Interest Litigation Vs. Union of India; (2012) 10 SCC 1 Natural Resources Allocation, in Re, Special Reference No.1 of 2012; (2014) 9 SCC 516 Manohar Lal Sharma Vs. Principal Secretary and (2014) 6 SCC 590 Goa Foundation Vs. Union of India Court, inter alia, to enquire into the deficiencies of management and regulatory and monitoring systems on account of which illegal mining could not be tackled, vide notification dated 22nd November, 2010. The Commission was also to suggest remedial measures. 

The said Commission gave its reports, including a report dated March, 2012 (in respect of State of Goa), June, 2013 (in respect of the State of Odisha) and October, 2013 (in relation to the State of Jharkhand). In its report for the State of Goa, the Commission found that the procedure for grant of lease/renewal of lease required streamlining for transparency. It was further suggested that the authority to decide the applications should be a committee headed by Additional Chief Secretary (instead of a lower rank officer) and should also have representatives from Departments of Mines, Revenue, Forest and Environment. It was also suggested that mining leases should be granted by public auction for transparency and increase in revenue of the State and also to check corruption/favoritism.

Every step is being taken to reduce the menace of illegal mining but still the mining mafia continues to exist. Thus, the Supreme Court in concurring with the High Court has taken the just decision.