[Mining Rules] Letter Of Intent Is An Invitation To Offer, Cannot Create Futuristic / Prospective Rights: JKL High Court

The Jammu and Kashmir and Ladakh High Court on Wednesday ruled that a 'Letter of Intent' is only a form of an invitation to offer and does not confer any rights in the favour of the person of whom it is issued.

A bench comprising Justice Wasim Sadiq Nargal observed,

"Letter of Intent is only a formality of initiation of process and right to claim grant of lease and execution of formal lease deed would accrue to the concerned person only if the requisite formalities as envisaged under the Mining Rules are completed. Moreover, the recipient of Letter of Intent cannot create prospective/ futuristic right out of his own free will with regard to mining lease".

The observations came in a plea in terms of which the petitioner sought a writ in the nature of Mandamus commanding the Respondent to transfer the mining lease in his favour with respect to Mineral Block keeping in view the execution of Deed of Agreement and supplementary partnership deed between the parties.

Besides, the petitioner also prayed for a direction not to allow the private respondent no. 3 to undertake mining in the same Mineral Block.

In order to fortify his claim the petitioner placed reliance on the so-called agreement, supplementary partnership deed and the letter of intent sold by respondent no. 3 to him, by virtue of which respondent 3 conceded 85 per cent of the interest in the mining business to the petitioner for a sum of Rs. 5 lacs allegedly paid to respondent no.3.

Petitioner contended that by virtue of the said agreement and supplementary partnership deed, the petitioner had become a partner in the business and, as such, has acquired the right to license, lease and lease deed.

Senior Advocate Sunil Sethi and Advocate Ravi Abrol appearing for the petitioner submitted that futuristic/ prospective rights have been created by the respondent No. 3 in favour of petitioner by virtue of the deed of agreement as a result of which lease hold rights have been transferred to him.

Contesting the plea counsel for the private respondent No. 3 countered that the agreement is a fraud and has already been called in question before the Court of Additional District Judge, Kathua.

Adjudicating the matter Justice Nargal observed that the Letter of Intent is just an indication to the person to whom it is issued, that if he completes all the necessary formalities and obtains No Objection Certificates from all the concerned quarters, he might be considered for grant of mining license.

After perusing the record the bench noted that it is admitted case of the parties that respondent No. 3 has submitted an application for license, completed all the formalities, obtained NOCs from all the quarters, and finally pursued the matter with the respondents No. 1 & 2 which ultimately culminated into the grant of license, further adding "the respondent No. 3 by no stretch of imagination can create futuristic/prospective rights in favour of the petitioner on the basis of the Letter of Intent. After the issuance of the license and grant of lease, the Letter of Intent and everything else that may have happened in the meantime is wiped out of utility and significance".

Expounding on the law on the said position Justice Nargal observed that merely by reason of such Letter of Intent, a person does not acquire a right to the mining license, and such license can be refused by the respondents in case if the conditions are not fulfilled pursuant to the issuance of the Letter of Intent. 

The bench pointed that the case of the petitioner for transfer of lease on the basis of the agreement and supplementary partnership deed is utterly misconceived and the same tantamounts to seeking enforcement of his right on the basis of void documents which have no legal sanctity as respondent No. 3 has no authority whatsoever to transfer the lease deed on the basis of a Letter of Intent. 

While recording the relevance of Rule 37 and 51 of Jammu & Kashmir Minor Mineral Concession Storage, Transportation of Minerals and Prevention of Illegal Mining Rules, 2016 squarely applicable to the instant matter Justice Nargal underscored, 

"The lessee cannot assign, sublet, mortgage or in any other manner transfer the mining lease or any right, title or interest therein or enter into or make any arrangement, contract or understanding whereby the lessee will or may directly or indirectly financed to a substantial extent by or under which the lessee‟s operations or undertakings will or may be substantially controlled by any person or body of persons other than lessee except with the prior approval of the competent authority in writing".

Since the admitted case of the parties is that the agreement and the supplementary partnership deed have been entered prior to the grant of lease on the basis of Letter of Intent, respondent No. 3 had no authority, whatsoever, under law to transfer the lease by creating futuristic/prospective rights in favour of the petitioner, that too without the consent of the department, the bench maintained.

In view of the aforesaid discussion the bench found the petition misconceived and dismissed the same.

Case Title : Kanwarjit Singh Vs UT of J&K & Ors.

Citation : 2022 LiveLaw (JKL) 260

Coram : Justice Wasim Sadiq Nargal

Counsel For Petitioner : Mr Sunil Sethi Sr Adv, Mr Ravi Abrol

Counsel For Respondent : Mr. Ravinder Gupta, AAG Mr. R. S. Thakur, Sr. Advocate with Mr. Vasharan Thakur, Advocate for caveator

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