Statutory mining rights and natural justice limit State action: unilateral suspension of operations and transport was not permitted.
The Andhra Pradesh HC stated that the Mines and Minerals (Development and Regulation) Act, 1957 and the Mineral Concession Rules do not confer any unilateral power on the State Government to suspend mining operations or stop transportation of already mined mineral, because restriction or premature termination must follow the statutory scheme under the Act. It also held that adverse action curtailing statutory mining rights must comply with natural justice: affected lessees were entitled to notice and a fair hearing, and an ex parte report could not justify the suspension. The suspension order was therefore set aside as unsustainable.
Issues: (i) Whether the State Government had power under the mining law to suspend mining operations and stop transportation of already mined mineral. (ii) Whether the impugned order was vitiated for breach of natural justice and for being founded on an ex parte report without notice to the affected lessees.
Issue (i): Whether the State Government had power under the mining law to suspend mining operations and stop transportation of already mined mineral.
Analysis: The mining leases were statutory grants governed by the Mines and Minerals (Development and Regulation) Act, 1957. The statutory scheme under Section 5 places restrictions on grant of leases with prior Central approval in the case of scheduled minerals, and Section 4A provides the mechanism for premature termination only at the instance of the Central Government after consultation with the State Government. The Court held that the Act and the Mineral Concession Rules did not confer any unilateral power on the State Government to suspend mining operations or restrain transportation of mineral on its own initiative. The State could not supplement the statute by invoking inherent executive power contrary to the legislative scheme under Article 246 and Entry 54 of List I.
Conclusion: The State Government had no authority to suspend the mining operations or transportation in the manner adopted, and the challenge succeeded on this ground.
Issue (ii): Whether the impugned order was vitiated for breach of natural justice and for being founded on an ex parte report without notice to the affected lessees.
Analysis: The impugned action was taken on the basis of the CEC report and the State committee report, but no notice was issued to the affected lessees before those reports were made or before the suspension order was passed. The Court held that where statutory rights under mining leases are sought to be curtailed, the affected parties must be given a reasonable opportunity of being heard. It further held that the CEC, in the facts of the case, acted without visiting the site and without hearing the petitioners, and that the State could not cure the defect by adding fresh reasons in counter-affidavit. The action therefore failed the test of fairness and natural justice.
Conclusion: The impugned order was invalid for violation of natural justice and could not be sustained.
Final Conclusion: The writ petitions succeeded, and the suspension order was set aside insofar as it applied to the petitioners.
Ratio Decidendi: A State Government cannot unilaterally suspend or curtail statutory mining rights where the governing Act provides a specific mechanism for restriction or termination, and any adverse action affecting such rights must be preceded by a fair hearing.
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