Case Note & Summary
The petitioner, M/s. J.K. Cement Limited, held a mining lease (ML No. 2344A) over certain lands in Metagudda Village, Mudhol Taluk, Bagalkot District, which was originally granted to Mysore Minerals Limited in 1978 and renewed in 2002. A part of the lease area (307 acres out of 687.97 acres) was transferred to the petitioner by a transfer deed dated 29th August 2002, which was approved by the State Government under Rule 22(6) of the Mineral Concession Rules, 1960. On 14th September 2016, the State Government passed an order directing that certain survey numbers within the petitioner's lease area be removed from the lease and put up for auction under the Mineral (Auction) Rules, 2015. The petitioner challenged this order by way of a writ petition under Articles 226 and 227 of the Constitution. The court examined the validity of the transfer and the State's power to excise part of the lease area. It held that the transfer was valid and the petitioner was the lawful lessee. The State's action of unilaterally excising part of the lease area without following the procedure under the Mineral Concession Rules, 1960, and without affording an opportunity of hearing to the petitioner, was arbitrary and violative of Article 14. The court also noted that the Mineral (Auction) Rules, 2015, do not apply to existing valid leases. Consequently, the court quashed the impugned order to the extent it directed removal of the specified survey numbers from the petitioner's lease and directed the State to restore the status quo ante.
Headnote
A) Mining Law - Transfer of Mining Lease - Validity of Transfer - Rule 22(6) of Mineral Concession Rules, 1960 - The transfer of a part of the mining lease area from Mysore Minerals Limited to the petitioner was validly approved by the State Government under Rule 22(6) of the Mineral Concession Rules, 1960, and the petitioner became the lawful lessee of the transferred area. (Paras 2-4) B) Mining Law - Excise of Lease Area - Unilateral Action by State - Principles of Natural Justice - The State Government cannot unilaterally excise part of a mining lease area and put it up for auction without following the procedure under the Mineral Concession Rules, 1960, and without affording an opportunity of hearing to the lessee. Such action is arbitrary and violative of Article 14 of the Constitution. (Paras 5-7) C) Mining Law - Auction of Mineral Rights - Applicability of Mineral (Auction) Rules, 2015 - The Mineral (Auction) Rules, 2015, do not apply to existing mining leases that have been validly granted and transferred. The State cannot invoke these rules to cancel or modify an existing lease without following due process. (Para 6) D) Constitutional Law - Legitimate Expectation - Doctrine of Legitimate Expectation - The petitioner had a legitimate expectation that its mining lease would not be interfered with except in accordance with law. The State's action of excising part of the lease area for auction without notice or hearing defeats this legitimate expectation. (Para 7)
Issue of Consideration
Whether the State Government can unilaterally excise part of a mining lease area and put it up for auction without following the procedure under the Mineral Concession Rules, 1960, and without affording an opportunity of hearing to the lessee.
Final Decision
The court allowed the writ petition and quashed the impugned order dated 14.09.2016 to the extent it directed removal of the specified survey numbers from the petitioner's mining lease and putting them up for auction. The court directed the respondents to restore the status quo ante.
Law Points
- Transfer of mining lease valid under Rule 22(6) of Mineral Concession Rules
- 1960
- State cannot unilaterally excise lease area for auction without following due process
- Doctrine of legitimate expectation
- Principles of natural justice
