MMDR Act | Mining Lease Granted In Violation Of Rule 22-D Is Void Ab Initio; No Deemed Extension Permissible: Karnataka High Court
The Karnataka High Court has held that a mining lease granted in violation of the minimum area requirement under Rule 22-D of the Mineral Concession Rules, 1960, is void under Section 19 of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act).
Consequently, the Court ruled that such a void lease cannot be the subject of a 'deemed extension' under Section 8A(3) of the Act.
A Division Bench of Chief Justice Vibhu Bakhru and Justice CM Poonacha was hearing a writ petition challenging an order dated 04.02.2023 rejecting the petitioner's application for deemed extension under Section 8A(3) of the MMDR Act.
Case in brief
The original applicant (Sri Ninganagouda Appanagouda Patil) was granted a mining lease for limestone on January 25, 2006 for a period of 20 years over an area of 6 acres (approx. 2.43 hectares).
Dolomite mineral was subsequently included in the lease in 2011. After the original applicant's demise, his legal heir proposed the transfer of the lease in favour of the current petitioner, pursuant to which a transfer deed was executed on January 25, 2024.
However, when the proposal for deemed extension of the lease to 50 years was scrutinized, the authorities found that the lease had been granted in breach of Rule 22-D of the MCR, 1960, which prescribed a minimum area of four hectares for such minerals.
The petitioner contended that in view of the proviso to Rule 22D of the Mineral Concession Rules, 1960, the minimum area requirement would not apply at the stage of renewal or deemed extension.
The Petitioner further relied on the Minerals (Other Than Atomic and Hydro Carbon Energy Minerals) Concession Rules, 2016 ('2016 Rules'), arguing that under Rule 12(5)(b), the minimum area for limestone is now 2 hectares.
The State opposed the plea, arguing that the mining lease was granted on January 25, 2006, which was after the insertion of Rule 22-D (w.e.f. 10.04.2003). Therefore, the grant violated Rule 22-D which rendered the original grant void from the outset under Section 19 of the MMDR Act.
High Court's order
Rejecting the petitioner's argument that similarly placed leaseholders had been granted extensions, the Court held that the petitioner could not claim a right to deemed extension for an invalid lease merely because others may have wrongly received such benefit. It noted:
“It is well-settled that Article 14 of the Constitution of India does not envisage any negative equality and the fact that any person has been wrongfully granted any benefit, would not be a ground for extending the benefit to all.”
Addressing the reliance on the 2016 Rules, the Court observed that the lease was granted before the 2016 Rules came into force. Therefore, the validity of the grant had to be tested against the MCR, 1960, which was applicable at the relevant time.
The Court held that the mining lease was void, since it had been granted in violation of Rule 22-D of the MCR, 1960. It specifically rejected the petitioner's contention that the proviso saved the lease, holding that the proviso was inserted before the grant of the mining lease in question, whereas the lease itself was granted after Rule 22-D came into effect. The Court noted:
“…A plain reading of clause (c) of Rule 22-D of MCR, 1960 clearly indicates that the minimum area for grant of mining lease for 'dolomite' which is not one of the minerals as specified under clauses (a) and (b) of Rule 22-D of the MCR, 1960, is four hectares. Thus, there is little doubt that the grant of the mining lease in question was in violation of Rule 22-D of the MCR, 1960, which was in force at the relevant point of time..”
Accordingly, the Court held that the mining lease was void under Section 19 of the MMDR Act, and dismissed the writ petition.
Title: M/s Shri Venkateshwara Minerals v State of Karnataka and Anr.
Case Number: Writ Petition No. 23583 of 2024 (GM-MM-S).
Appearances: Senior Advocate Sri D.L.N. Rao, along with Sri Anirudh Anand, Advocate, appeared for the petitioner. Sri Kiran V. Ron, Additional Advocate General, along with Smt Niloufer Akbar, Additional Government Advocate, appeared for the respondents.