AI Drafter 
TaxTMI 
TaxTMI 
2016 (4) TMI 1362
X X X X Extracts X X X X
X X X X Extracts X X X X
.... were now legally eligible to recommence mining operations. During the course of such consideration at our hands, Mr. A.D.N. Rao, learned amicus curiae pointed out, that the question of granting permission to the leaseholders to recommence mining operations would arise, only if the leaseholders have a subsisting mining lease. It was therefore submitted, that before determining the legitimacy of the claim raised by the applicants, this Court should first examine, whether the applicants have a subsisting right to carry on mining operation, under a valid lease. 3. This submission advanced at the hands of the learned amicus curiae, was strongly contested by learned Counsel representing the applicants. They invited our attention to paragraph 4 of the order dated 16.5.2014, passed in the Common Cause case, so as to contend, that this Court had not postulated such a precondition, and therefore, the submission advanced at the hands of the learned amicus curiae, should be rejected. Paragraph 4 aforementioned, is extracted hereunder: 4. We have considered the report dated 25.4.2014 of the CEC, and the submissions made by learned Counsel appearing for different parties, and we find that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nted (or renewed). During the course of hearing it emerged, that the deduction as to whether the applicant-leaseholders were possessed of subsisting mining lease(s), was a complicated question of fact and law. Since the same has to be resolved, before the claim of the applicants for revoking the suspension order (-dated 16.5.2014) can be accepted, we would endeavour to lay down parameters for such determination. 6. A leaseholder would have a subsisting mining lease, if the period of the original grant is in currency. Additionally, a leaseholder whose original lease has since expired, would have a subsisting lease, if the original lease having been renewed, the renewal period is in currency. 7. It is also essential to notice, that to start with, renewal could be granted to a mining leaseholder, any number of times, under the unamended Section 8 of the MMDR Act. The duration of the original grant (of the mining lease), as also, the duration of renewals, and the number of permissible renewals, that a leaseholder can seek, have undergone a change. We shall dwell upon the instant aspect of the matter in the instant order, as it has a vital bearing on the issue, whether or not the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be granted only if the State Government expressed its satisfaction, that the grant of the second or subsequent renewal, would be in the interest of mineral development. Furthermore, the "second renewal" or still further renewal(s), had to also have the approval of the Central Government. Even though the period of subsequent renewals, is of no significance, insofar as the present controversy is concerned, it may be mentioned, that all subsequent renewals including the second, third or further renewals, could individually extend to a period not exceeding twenty years. 8. The interpretation placed by us, on Section 8 of the MMDR Act (as it existed in 1994), finds support from Rule 24A of the Mineral Concession Rules, 1960 (hereinafter referred to as, the Mineral Concession Rules)-as the Rule existed prior to 18.7.2014. Rule 24A in the manner in which it was then structured, is extracted below: A. Renewal of mining lease.--(1) An application for the renewal of a mining lease shall be made to the State Government in Form J, at least twelve months before the date on which the lease is due to expire, through such officer or authority as the State Government may specify in thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The next relevant provision is Sub-rule (4) of Rule 24A of the Mineral Concession Rules. The instant Sub-rule required, that an application for renewal, would be disposed of within six months, from the date of receipt of such application. We have extracted hereinabove, Sub-rule (5) of Rule 24A, wherein it was mandated, that an application for renewal, which had not been disposed of within the period of six months, as provided for Under Rule 24A(4) of the Mineral Concession Rules, would be deemed to have been refused. It is however relevant to notice, that the aforementioned Sub-rule (5) came to be omitted by an amendment, with effect from 7.1.1993. It is significant to record, that Sub-rule (6) came to be substituted by an amendment, with effect from 27.9.1994. Sub-rule (6) of Rule 24A of the Mineral Concession Rules, is of extreme importance for the determination, whether the applicant-leaseholder is possessed of subsisting mining lease because a large number of applicants rely on the instant Rule in support of their claim for being possessed of a subsisting mining lease. Sub-rule (6) aforementioned postulated, that if an application for renewal of a mining lease (made within twe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....In TISCO Ltd. v. Union of India (1996) 9 SCC 709, this Court has held that the language of Sub-section (3) of Section 8 is quite clear that ordinarily a lease is not to be granted beyond the time specified in Sub-section (2) and only if the Government is of the view that it would be in the interest of mineral development, it is empowered to renew lease of a lessee for a further period after recording sound reasons for doing so. This Court has further held in the aforesaid case that this measure has been incorporated in the legislative scheme as a safeguard against arbitrariness and the letter and spirit of the law must be adhered to in a strict manner. 28. The MC Rules have been made Under Section 13 of the MMDR Act by the Central Government and obviously could not have been made in a manner inconsistent with the provisions of the Act. Sub-rule (6) of Rule 24A of the MC Rules provides that: -A.(6) If an application for the renewal of a mining lease made within the time referred to in Sub-rule (1) is not disposed of by the State Government before the date of expiry of the lease, the period of that lease shall be deemed to have been extended by a further period till....
X X X X Extracts X X X X
X X X X Extracts X X X X
....after the judgment in the Goa Foundation case, it came to be understood, that in the absence of an express order of second or subsequent renewal(s), a mining lease would expire after completion of the period of first renewal. 12. In order to give effect to the conclusions recorded by this Court in the Goa Foundation case, Rule 24A(6) came to be amended on 18.7.2014. The above amendment is reproduced below: Rule 24-A xxx (6) If an application for first renewal of a mining lease made within the time referred to in Sub-rule (1) is not disposed of by the State Government before the date of expiry of the lease, the period of that lease shall be deemed to have been extended by a further period of two years or till the State Government passes order thereon, whichever is earlier: Provided that the leases where applications for first renewal of mining lease have been made to the State Government and which have not been disposed of by the State Government before the date of expiry of lease and are pending for disposal as on the date of the notification of this amendment, shall be deemed to have been extended by a further period of two years from the dat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion is concerned, but only with reference to "first renewals". We may hasten to explain, that the instant determination emerges from an interpretation of the unamended and amended Rule 24A(6). Whether subsequent amendments would alter the situation, is being determined hereinafter. 14. One clarification is imperative at this stage. After the passing of the order on 21.4.2014, in the Goa Foundation case, subsisting "first renewals" Under Rule 24A, would expire on the completion of a further period of twenty years, after the expiry of the period contemplated under the original grant, or as interpreted above. There was no similar automatic grant of "second renewals", after the Goa Foundation case. Therefore, for all intents and purposes, the conclusion recorded hereinabove, should be deemed to be relevant only with reference to the grant of "first renewals". It is necessary to reiterate, that in the Goa Foundation case, this Court had held, that second renewals would be subject to an order passed by the State Government recording reasons that it was in the interest of mineral development to do so. Needless to mention, that a second or subsequent renewal also required, the previous....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the renewal applications in respect of the other leases. In any case, the State Government will ensure that the entire process of consideration and disposal of renewal applications Under Section 8(3) of the Act is completed within six months from today. With the aforesaid interim directions, the interim matter stand disposed of. (Emphasis is ours) It seems, that the above direction was breached, as the State Governments, seemingly had no facility or potential, to comply with it. Resultantly, a further order came to be passed in IA No. 21 of 2014, which had been filed, for extension of time. The order granting further time of three months, dated 16.5.2014, is extracted hereunder: I.A. No. 21 of 2014 After hearing Shri L. Nageswara Rao, learned senior Counsel appearing for the State of Orissa, we deem it appropriate to grant them another three months' time from today to comply with the order dated 16.05.2014. We reserve liberty to all the private Respondents to object to the orders that may be passed by the State Government while complying with this Court's order dated 16.05.2014. I.A. No. 21 of 2014 is disposed of accordingly. (Em....
X X X X Extracts X X X X
X X X X Extracts X X X X
....od of fifty years from the date of grant of such lease, whichever is later, subject to the condition that all the terms and conditions of the lease have been complied with. (7) Any holder of a lease granted, where mineral is used for captive purpose, shall have the right of first refusal at the time of auction held for such lease after the expiry of the lease period. (8) Notwithstanding anything contained in this section, the period of mining leases, including existing mining leases, of Government companies or corporations shall be such as may be prescribed by the Central Government. (9) The provisions of this section, notwithstanding anything contained therein, shall not apply to a mining lease granted before the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, for which renewal has been rejected, or which has been determined, or lapsed. 17. In terms of Section 8A(2) of the amended MMDR Act, all future mining grants, would be for a uniform period of fifty years. Section 8A(3) envisages, that all original mining lease grants, made prior to the insertion of Section 8A, in the MMDR Act (with effect from 12.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation under a renewal. Since the original lease period of fifty years has been adopted as the overarching rule, the third contingency, aims at allowing the leaseholder, the benefit of treating the original lease period as of fifty years. Therefore, even during the renewal period, if the period of mining lease would get extended (beyond the renewal period), by treating the original lease as of fifty years, the leaseholder would be entitled to the said benefit under the third contingency. For the leases governed by Section 8A(5), out of the above three contingencies, the contingency as would extend the lease period farthest, would be applicable. 19. A similar contingency has been provided for Under Section 8A(6) with reference to mining leases used for non-captive purposes. Herein also, the same three contingencies are contemplated. Firstly, the period of all renewals expiring before 31.3.2020 "...shall be extended and be deemed to have been extended..." up to 31.3.2020, "...with effect from the date of expiry of the period of renewal last made...". Secondly, if the renewal period in any case would have actually stretched beyond 31.3.2020-then till the completion of the postula....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ngencies/situations. According to learned Counsel, these terms are contemplated for different exigencies, under the MMDR Act (and the Rules framed thereunder). And that, the said terms cannot be extended to situations beyond those, for which the same are expressly used. It was therefore asserted, that the expiry of the original grant or renewal, would per se not exclude the applicability of Section 8A. 23. Insofar as the words "renewal had been rejected" (used in Section 8A(9) of the MMDR Act are concerned, it was submitted, that it was clear from the words deployed, that the contemplated contingency applied only to a situation where an application for renewal had been rejected. Namely, that a renewal of a mining lease had been applied for Under Sub-section (2) or (3) of Section 8 of the MMDR Act, read with Rule 24A of the Mineral Concession Rules, and thereupon, the request for renewal had been rejected. For the term "determination", reliance was placed on Rules 27(4), 27(5), 29, 37(3) and Part IX Clause 2, Form K of the Mineral Concession Rules. It was contended, that the term "determination" had been deployed for situations where the lease period could be brought to an end, o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enewals remaining pending with the State Government without any decision, had occasioned the passing of the instant amendment. The above position emerges from the following excerpts of the statement of "Objects and Reasons": 3. The mining sector has been subjected to numerous litigations in the past few years. Important judgments related to the mining sector have been pronounced by the Supreme Court, besides judgments on the issue of allocation of natural resources which have direct relevance to the grant of mineral concessions. 4. The present legal framework of MMDR Act, 1957, does not permit the auctioning of mineral concessions. Auctioning of mineral concessions would improve transparency in allocation. Government would also get an increased share of the value of mineral resources. Some provisions of the law relating to renewals of mineral concessions have also been found to be wanting in enabling quick decisions. Consequently, there has been a slowdown in the grant of new concessions and the renewal of existing ones. As a result, the mining sector started registering a decline in production affecting the manufacturing sector which largely depends on the raw ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ginal grant period of fifty years, for all mining leaseholders. It also excluded renewal(s), after the expiry of the original lease period. Accordingly, no renewal application can now be filed (after 12.1.2015). Under Sub-sections (5) and (6) of Section 8A, in our view, such leaseholders who had moved applications for renewal of captive/non-captive mines, would be entitled to continue up to 31.3.2030/31.3.2020. The "Objects and Reasons" for the amendment to the MMDR Act aim at remedying the position which emerged upon the interpretation of the provisions of the MMDR Act, as they existed hitherto before. The instant amendment was also directed at remedying the grievances of the mining industry due to "second and subsequent renewals" remaining pending. And also, because the provisions of law relating to renewals had been found to be wanting. The above view is also endorsed by the fact, that Section 8A(9) deals with a situation wherein "... renewal has been rejected...". It is therefore apparent, that Sub-sections (5) and (6) of Section 8A of the amended MMDR Act are aimed at situations, wherein an application for renewal (validly made) has remained unattended. Therefore, for no fault....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... expired, but would also extend to leaseholders whose term of lease/renewal had expired prior to 12.1.2015 and the concerned leaseholder(s) had moved a valid application for renewal, at least twelve months before the leaseholder's existing lease (original, first, second or subsequent) was due to expire, and whose application has not been considered and rejected. 27. Irrespective of the position noticed herein above, it is imperative for us to clarify, that the benefit of extension of the lease period postulated Under Section 8A of the MMDR Act is available, subject to a further overriding condition, namely, "... that all the terms and conditions of the lease have been complied with". A leaseholder who does not satisfy any of the required conditions of the lease, as for instance, the postulated clearances/approvals/consent, would not be entitled to the benefits extended Under Sub-section (5) or (6) of Section 8A of the amended MMDR Act. 28. Having addressed the issue with reference to the subsistence of a mining lease, on the basis of an interpretation of Sections 8 and 8A of the MMDR Act, we have substantially covered the area needed to be traversed. It is however important t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....od of two years, the lease would lapse. The above two exigencies will be referred to as the first, and the second contingency respectively, hereinafter. 29. According to learned Counsel, the only remedy available to such a leaseholder, to prevent the lease from lapsing is, to move an application, either prior to the expiry of the period of two years (of non-mining operations), or thereafter. The State Government on being satisfied, that mining operations were not discontinued as expressed above, for the reasons beyond the control of the leaseholder, could make an order, in the first contingency, that the lease would not lapse. And in the second contingency, that the lease would rematerialize. 30. It is not possible for us to accept, that vital vested rights in a leaseholder, can be curtailed without affording him an opportunity to repudiate the impression(s) of the competent authority, namely, that the leaseholder could not have (or had actually not) carried out mining operations, for a continuous period of two years. Our instant contemplation, stands affirmed through Rule 28 of the Mineral Concession Rules. The same is reproduced below: 28. Lapsing of leases-(1) Subject t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sons for non-commencement of operations for a continuous period of more than one year (sic. two years). Explanation 2. - Where the discontinuance of mining operations for a continuous period of two years after the commencement of such operations is on account of- (a) orders passed by any statutory or judicial authority; or (b) operations becoming highly uneconomical; or (c) strike or lock out, and the lessee is able to furnish documentary evidence supported by a duly sworn affidavit, the State Government may consider if there are sufficient reasons for discontinuance of operations for a continuous period of more than one year (sic. two years). Explanation 3.-In case of mining lessee who has undertaken reconnaissance operations or in case of mining lessee whose capital investment in mine development is planned to be in excess of Rs. 200 crores and where the mine development is likely to take more than two years, the State Government shall consider it to be sufficient reason for non-commencement of mining operations for a continuous period of more than two years. (Emphasis is ours) It is apparent from a perusal of Sub-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e amended MMDR Act. (ii) A leaseholder who had not moved an application for renewal of a mining lease (which was due to expire, prior to 12.1.2015), at least twelve months before the existing lease was due to expire, under the provisions of the unamended MMDR Act and the Mineral Concession Rules, will be considered as not a valid/subsisting leaseholder, after the expiry of the lease period. The provisions of the amended MMDR Act will therefore not enure to the benefit of such leaseholder. (iii) A leaseholder who has moved an application for renewal (of the original/first or subsequent renewal) of a mining lease, at least twelve months before the existing lease was due to expire, and on consideration, such an application has been rejected, will be considered as not a valid/subsisting leaseholder. The provisions of the amended Section 8A of the MMDR Act will not enure to the benefit of such leaseholder, because of the express exclusion contemplated for the above exigency, Under Section 8A(9) of the amended MMDR Act. (iv) A leaseholder who has moved an application for "first renewal" of the original mining lease, at least twelve months before the original le....