Court overturns mining lease revocation, orders State to refund premium. Compliance with Mineral Concession Rules stressed.

The appellant challenged the State Government's revocation of a mining lease for mica in Rajasthan, which led to the State ordering the appellant to vacate the area. The Court found the revocation improper and directed the State to refund the illegally realized premium of Rs. 1,21,930.71 to the appellant. Emphasizing compliance with Mineral Concession Rules, the Court highlighted that the State cannot impose terms arbitrarily. The appellant's waiver of further compensation claims and reservation of rights against future State actions were noted. The appeal was partly allowed, and costs were awarded to the appellant.

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Issues:
1. Validity of the State Government's revocation of mining lease.
2. Legality of the premium realization by the State Government.
3. Compliance with Mineral Concession Rules.
4. Entitlement to refund of illegally realized premium.

Validity of State Government's Revocation of Mining Lease:
The appellant submitted a tender for mining rights for mica in response to a notification by the State of Rajasthan. The lease was granted for 20 years with an option for renewal. However, the lease was not executed within the required period, leading to the Director of Mines and Geology revoking the lease. The appellant filed a review application against the revocation, but the State Government proposed a new lease, which the appellant did not contest. The State Government later ordered the appellant to vacate the mining area, citing that the license was not governed by Mineral Concession Rules but by general law. The appellant challenged this order through a writ petition, seeking various reliefs, including compensation and lease grant. The single Judge dismissed the petition as infructuous due to the State's compensation offer.

Legality of Premium Realization:
The State Government demanded a premium of Rs. 1,55,000 from the appellant for the mining lease. However, the Government of India set aside an order demanding dead rent, stating that the premium acceptance was illegal as it lacked prior approval from the Central Government. The Rules only authorized royalty, dead rent, and surface rent, not premium. The Court held that the State Government acted unlawfully by realizing the premium without prior approval, entitling the appellant to a refund of Rs. 1,21,930.71 out of the total premium.

Compliance with Mineral Concession Rules:
The Court emphasized that the State Government, in granting mining leases, must adhere to the Mineral Concession Rules made under the Mines & Minerals Act, 1948. Any deviation from these statutory rules is impermissible. The State cannot impose terms at its discretion, disregarding the binding statutory rules. The appellant's entitlement to a refund was based on the State Government's failure to comply with the Rules in realizing the premium.

Entitlement to Refund of Illegally Realized Premium:
The Court directed the State Government to refund Rs. 1,21,930.71 to the appellant, representing the amount illegally realized as premium. The appellant, having vacated the mining area, waived further compensation claims but reserved the right to defend against any future State actions related to the mining grant. The appeal was partly allowed, and the appellant was awarded costs.

This judgment highlights the importance of adherence to statutory rules in the grant of mining leases, emphasizing the illegality of premium realization without proper approval. The appellant's entitlement to a refund underscores the significance of legal compliance in administrative actions.

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