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Mining Lease Of 999 Years Violates ‘Rule Against Perpetuity’ And Shall Be Void Being Against Public Policy: Jharkhand High Court
Udit Singh
17 Jan 2023 8:30 AM GMT
The Jharkhand High Court has observed that a mining lease of 999 years amounts to a leave for perpetuity, which is opposed to public policy and is void.A division bench of Justice Shree Chandrashekhar and Justice Ratnaker Bhengra observed,“A period of Nine Hundred and Ninety-Nine years may be construed a period in perpetuity. It may also be considered an indefinite period and a mining lease...
The Jharkhand High Court has observed that a mining lease of 999 years amounts to a leave for perpetuity, which is opposed to public policy and is void.
A division bench of Justice Shree Chandrashekhar and Justice Ratnaker Bhengra observed,
“A period of Nine Hundred and Ninety-Nine years may be construed a period in perpetuity. It may also be considered an indefinite period and a mining lease for an indefinite period shall be void being against the public policy. The word “perpetuity” simply means indefinite period. The “rule against perpetuity” is applied to prevent property interests from being tied up for generation after generation after the death of lessor, trustor etc. The “rule against perpetuity” aims at providing benefits accruing from property to the future generation and therefore this rule takes exception to creation of future remote interest. The philosophy behind this rule seems to be that if future remote interests are created in the property the society will be deprived of any benefit arising out of that property. Because it is important to ensure free circulation of property both for trade and commerce as well as for betterment of the property, the policy of law is to prevent the creation of perpetuity.”
The observation was made while deciding a dispute between Tata Steel and then State of Bihar (now Jharkhand). Court held “whatever was the reason or some compulsion under which the Tata Lease was executed by the State of Bihar for Nine Hundred and Ninety Nine years, the executive powers of the State could not have been exercised in teeth of the mandatory provisions under the Mines & Minerals (Development & Regulation) Act, 1957 (MMDR Act).”
Factual background
According to the Tata Steel, the State of Bihar started making settlements over different parts of disputed lands comprised under the Tata Lease without any notice/intimation to it. It pleaded that such settlements were causing serious difficulties and hindrances in mining operations at a time when vast expansion plans were in the offing for raising coal production. It further pleaded that such settlements were made in teeth of the rights flowing to it through the Tata Lease and that was the reason why it was constrained to approach the writ Court. Accordingly, a writ petition was filed.
The State of Bihar raised objections to the writ petition on several grounds and denied that the Tata Steel has any exclusive right much less surface rights under the Tata Lease, except the mining rights. On the contrary, it claimed various rights under the Chota Nagpur Tenancy Act, 1908 (in short, CNT Act) to grant settlements for agricultural purposes over any portion of the leasehold area which are not under mining operations.
The writ Court held that Tata Steel shall have surface rights by virtue of the order passed by the Deputy Commissioner, Hazaribagh affixing and accepting surface rent under rule 27(1)(d) of the Mineral Concession Rules, 1960 (in short, MC Rules). After forming such an opinion, the writ court proceeded to issue restrain orders against the State of Jharkhand from making settlement(s) over any part of the leasehold lands in favor of any person. The writ Court further held that the settlements, if any, made after 5th March 1997 when an interim order was issued by the writ Court shall be null and void, and ordered an enquiry by an officer authorized by the State of Jharkhand to examine validity of the settlements made prior to 5th March 1997.
Hence, the State of Jharkhand questioned legality and propriety of the aforesaid directions issued by the writ Court in the present Latent Patents Appeal.
Court’s Decision
The Court while dismissing the directions of the writ court held that the dispute of this nature can be resolved only in a proceeding before the civil Court where the parties by leading evidence may prove a fact. The writ Court by creating an extra-statutory authority which shall exercise powers of the civil Court has committed a serious error in law.
The court held:
“There are marked distinctions between a proceeding in the civil Court and before a writ Court and the writ Court is required to see whether the fundamental facts and requirements in law are fulfilled or not for issuing directions. While considering validity of the impugned action or inaction by the State, the High Court need not restrict itself to pleadings of the parties and would be free to satisfy itself whether any case as such is made out by the party invoking the extraordinary jurisdiction under Article 226 of the Constitution of India. We are of the opinion that in a writ petition which involved such important issues in law, prayers made by the Tata Steel could not have been granted by the writ Court.”
The court relied upon Tata Iron & Steel Co. Ltd. v. Union of India (1996) 9 SCC 709 in which the Supreme Court has laid down that in a case for renewal of a mining lease of Chromite ore to a lessee holding about 55% of the area of the reserve of the entire country, the State's decision to limit the lease area to the lessee's needs so as to avoid monopoly and ensure equitable distribution.
The court also put emphasis upon Centre for Public Interest Litigation & Ors. v. Union of India & Ors. (2012) 3 SCC 1 where the Supreme Court has held that the State is the legal owner of the natural resources as the trustee of the people and any distribution of the natural resources must be in the larger public good. Therefore, there must a kind of rule against “perpetuity” be applied against execution of a mining lease for such a period.
Hence, LPA was allowed.
Case Title: The State of Jharkhand & Ors. v. Tata Steel Limited & Anr.
Citation: 2023 LiveLaw (Jha) 1
