LEGAL ISSUE: Whether a mining lease application can be considered after the enactment of new rules that render prior applications ineligible, and the effect of prior orders when a subsequent order cancels the same.
CASE TYPE: Mining Law, Land Law
Case Name: State of West Bengal and Another vs. M/S. Chiranjilal (Mineral) Industries of Bagandih and Another
Judgment Date: 12 September 2023
Introduction
Date of the Judgment: 12 September 2023
Citation: 2023 INSC 824
Judges: Sanjiv Khanna, J., and Aravind Kumar, J.
Can a mining lease be granted based on a prior application when new rules have come into effect, rendering such applications ineligible? The Supreme Court of India recently addressed this question in a case involving the State of West Bengal and M/S Chiranjilal (Mineral) Industries. The core issue revolved around the interplay between prior orders, subsequent cancellations, and the impact of new mining regulations on pending lease applications. This judgment clarifies the conditions under which a prior application can be considered despite the introduction of new rules. The bench comprised Justices Sanjiv Khanna and Aravind Kumar. The majority opinion was authored by Justice Sanjiv Khanna.
Case Background
The case originates from a dispute over a mining lease application. On 07.08.1985, West Bengal Mineral Development and Trading Corporation Limited (WBMDTCL) applied for a long-term mining lease for Dolomite, Limestone, and Quartzite. They also applied for Iron Ore, Manganese, and Fireclay on the same date. A grant order was issued to WBMDTCL on 07.04.1986.
On 06.03.1998, M/S Chiranjilal (Mineral) Industries of Bagandih applied for a mining lease for Dolomite in 76 acres of land in the same area. After initial rejections, a fresh order for apportionment of land was passed on 13.10.2006, granting the 76 acres to M/S Chiranjilal, and a Letter of Intent (LoI) was issued on 26.10.2006. However, this order was revoked on 03.12.2010. Despite this revocation, the High Court of Calcutta, in an ex-parte order dated 25.03.2014, directed the State to consider granting a lease to M/S Chiranjilal.
Subsequently, the Joint Secretary, Commerce and Industries Department, West Bengal rejected M/S Chiranjilal’s application on 09.07.2014, citing WBMDTCL’s prior application. This order was challenged, and the High Court directed the grant of a long-term lease to M/S Chiranjilal on 10.09.2014. A grant order was issued on 16.07.2015, subject to conditions, including consent from landowners and necessary clearances. M/S Chiranjilal challenged these conditions, and the High Court allowed their writ petition on 12.04.2017, stating no conversion certificate was needed and no excess land was acquired. The State’s appeal against this order was dismissed on 04.10.2018.
Timeline
| Date | Event |
|---|---|
| 07.08.1985 | WBMDTCL applies for a long-term mining lease for Dolomite, Limestone, and Quartzite. Also applies for Iron Ore, Manganese, and Fireclay. |
| 07.04.1986 | Grant Order issued in favor of WBMDTCL. |
| 06.03.1998 | M/S Chiranjilal (Mineral) Industries applies for a mining lease for Dolomite in 76 acres of land. |
| 13.06.2001 | High Court directs State authorities to dispose of M/S Chiranjilal’s application. |
| 13.03.2003 | Joint Secretary rejects M/S Chiranjilal’s application due to the prior application of WBMDTCL. |
| 26.03.2003 | Joint Secretary reiterates rejection of M/S Chiranjilal’s application. |
| 13.10.2006 | Joint Secretary orders apportionment of land, granting 76 acres to M/S Chiranjilal. |
| 26.10.2006 | Letter of Intent (LoI) issued to M/S Chiranjilal for 76 acres. |
| 03.12.2010 | Joint Secretary revokes the order dated 13.10.2006. |
| 25.03.2014 | High Court, in an ex-parte order, directs consideration of a lease to M/S Chiranjilal. |
| 09.07.2014 | Joint Secretary rejects M/S Chiranjilal’s application, citing WBMDTCL’s prior application. |
| 10.09.2014 | High Court directs the grant of a long-term lease to M/S Chiranjilal for 76 acres. |
| 10.02.2015 | Dolomite is notified as a minor mineral. |
| 16.07.2015 | Grant Order issued to M/S Chiranjilal, subject to conditions. |
| 12.04.2017 | High Court allows M/S Chiranjilal’s writ petition, stating no conversion certificate is needed. |
| 04.10.2018 | State’s appeal against the High Court order is dismissed. |
| 12.09.2023 | Supreme Court partially allows the appeal, directing a lease for 20.87 acres. |
Course of Proceedings
Initially, M/S Chiranjilal filed Writ Petition No. 7808 (W) of 2001, seeking disposal of their mining lease application. The High Court directed the State authorities to dispose of the application. The Joint Secretary rejected the application on 13.03.2003 and 26.03.2003, citing the prior application of WBMDTCL. M/S Chiranjilal challenged these orders in Writ Petition No. 7505 (W) of 2003.
During the pendency of this writ petition, the Joint Secretary reviewed the orders and passed a fresh order on 13.10.2006, for apportionment of land between WBMDTCL and M/S Chiranjilal, granting the 76 acres to M/S Chiranjilal. However, this order was cancelled on 03.12.2010. The High Court disposed of Writ Petition No. 7505 (W) of 2003 ex-parte on 25.03.2014, relying on the recalled order of 13.10.2006, and directed the State to consider the lease application.
The Joint Secretary again rejected M/S Chiranjilal’s application on 09.07.2014, which led to Writ Petition No. 21358 (W) of 2014, where the High Court directed the grant of a long-term lease to M/S Chiranjilal on 10.09.2014. The State issued a grant order on 16.07.2015, subject to conditions, which M/S Chiranjilal challenged in Writ Petition No. 20309 (W) of 2016. The High Court allowed this petition on 12.04.2017, stating no conversion certificate was needed. The State’s appeal was dismissed on 04.10.2018, leading to the present appeal before the Supreme Court.
Legal Framework
The case involves several key legal provisions. The Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act, 1957), governs the regulation of mines and minerals in India. Specifically, Section 11 of the MMDR Act, 1957, deals with preferential rights for certain persons in obtaining mining leases. Sub-section (2) of Section 11 states that when the State Government has not notified an area for grant of mining lease, the applicant whose application was received earlier shall have a preferential right.
Section 10-A of the MMDR Act, 1957, introduced by the Amendment Act, 2015, specifies the rights of existing concession holders and applicants. Sub-section (1) of Section 10-A states that all applications received prior to the commencement of the Amendment Act, 2015, shall become ineligible. However, sub-section (2) provides exceptions, including cases where a Letter of Intent has been issued by the State Government before the commencement of the Amendment Act, 2015.
The West Bengal Land Reforms Act, 1955 (WBLR Act, 1955) also plays a crucial role. Section 14-Y of the WBLR Act, 1955, limits future acquisition of land by a raiyat (landholder). Section 4-C of the WBLR Act, 1955, requires permission for changing the character or use of land.
The West Bengal Minor Minerals Concession Rules, 2016, also apply, with Rule 61 stating that all applications for mining leases received before the rules came into effect are ineligible, unless a Grant Order or Letter of Intent had been issued.
Arguments
The State of West Bengal argued that the application of M/S Chiranjilal was ineligible under Rule 61 of the Concession Rules, 2016, and Section 10-A of the MMDR Act, 1957. They contended that the order dated 13.10.2006, and the Letter of Intent dated 26.10.2006, were revoked on 03.12.2010 and did not survive. The State further argued that the grant order dated 16.07.2015 was conditional and subject to compliance with the provisions of the WBLR Act, 1955.
M/S Chiranjilal argued that their application should be considered under the exception in Rule 61 of the Concession Rules, 2016, as they had been issued a Grant Order on 16.07.2015. They relied on the High Court’s order dated 10.09.2014, which directed the grant of a long-term lease. They also argued that the land was classified as ‘Dungri,’ which is used for mining, and therefore, no conversion certificate was needed under Section 4-C of the WBLR Act, 1955. M/S Chiranjilal relied on the judgment in Bhushan Power and Steel Limited v. S.L. Seal, Additional Secretary (Steel and Mines), State of Odisha and Others [(2017) 2 SCC 125] to argue that the State was bound by its earlier commitments.
| Submission | Sub-Submissions | Party |
|---|---|---|
| Application Ineligibility | Application is ineligible under Rule 61 of the Concession Rules, 2016. | State of West Bengal |
| Application is ineligible under Section 10-A of the MMDR Act, 1957. | State of West Bengal | |
| Orders dated 13.10.2006 and 26.10.2006 were revoked on 03.12.2010. | State of West Bengal | |
| Application Eligibility | Application should be considered under the exception in Rule 61 of the Concession Rules, 2016 due to Grant Order on 16.07.2015. | M/S Chiranjilal (Mineral) Industries |
| High Court’s order dated 10.09.2014 directed the grant of a long-term lease. | M/S Chiranjilal (Mineral) Industries | |
| Land is classified as ‘Dungri’, so no conversion certificate is needed under Section 4-C of the WBLR Act, 1955. | M/S Chiranjilal (Mineral) Industries | |
| State’s Commitment | State is bound by its earlier commitments as per Bhushan Power and Steel Limited v. S.L. Seal, Additional Secretary (Steel and Mines), State of Odisha and Others [(2017) 2 SCC 125]. | M/S Chiranjilal (Mineral) Industries |
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame specific issues in a numbered list. However, the core issues that the court considered were:
- Whether the application of M/S Chiranjilal was eligible under Rule 61 of the Concession Rules, 2016, given the revocation of the order dated 13.10.2006 and the Letter of Intent dated 26.10.2006.
- Whether the Grant Order dated 16.07.2015 was sufficient to bring the application within the exception to Rule 61 of the Concession Rules, 2016.
- Whether the land classification as “Dungri” obviated the need for a conversion certificate under Section 4-C of the WBLR Act, 1955.
- The effect of the High Court’s orders on the grant of the mining lease.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Eligibility under Rule 61 | Partially Eligible | The court held that the Grant Order dated 16.07.2015 was provisional and subject to conditions. The prior orders dated 13.10.2006 and 26.10.2006 were revoked and did not survive. |
| Grant Order dated 16.07.2015 | Not Sufficient | The court found that the Grant Order was subject to conditions and did not automatically bring the application within the exception to Rule 61. |
| Land Classification as “Dungri” | Not Conclusive | The court stated that the classification of land as ‘Dungri’ alone cannot decide the issue under Section 4-C of the WBLR Act, 1955, because Raiyat land is not meant for mining. |
| Effect of High Court’s Orders | Partially Upheld | The court partly upheld the High Court’s direction to the extent of the State-owned land (20.87 acres), but not for the entire 76 acres. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How Considered | Legal Point |
|---|---|---|---|
| Bhushan Power and Steel Limited v. S.L. Seal, Additional Secretary (Steel and Mines), State of Odisha and Others [(2017) 2 SCC 125] | Supreme Court of India | Distinguished | The court distinguished this case, noting that the facts were different and the judgment was based on different legal provisions. |
| Bhushan Power and Steel Limited and Others v. State of Orissa and Another [(2012) 4 SCC 246] | Supreme Court of India | Referred | This case was referred to, as it was the original judgment in the Bhushan Power and Steel matter, which was later distinguished. |
| Bhushan Power and Steel Limited v. Rajesh Verma [(2014) 5 SCC 551] | Supreme Court of India | Referred | This case was referred to in the context of the contempt proceedings arising from the Bhushan Power and Steel case. |
| Sandur Manganese and Iron Ores Ltd. v. State of Karnataka [(2010) 13 SCC 1] | Supreme Court of India | Referred | This case was referred to in the context of the contempt proceedings in the Bhushan Power and Steel case, but was distinguished and not applied. |
| Rishi Kiran Logistics Private Limited v. Board of Trustees of Kandla Port Trust and Others [(2015) 13 SCC 233] | Supreme Court of India | Referred | This case was referred to for the definition of “Letter of Intent,” but was not applied in the final analysis. |
| Rajasthan Cooperative Dairy Federation Limited v. Maha Laxmi Mingrate Marketing Service Private Limited and Others [(1996) 10 SCC 405] | Supreme Court of India | Referred | This case was referred to for the definition of “Letter of Intent,” but was not applied in the final analysis. |
| Thressiamma Jacob and Others v. Geologist, Department of Mining and Geology and Others [(2013) 9 SCC 725] | Supreme Court of India | Referred | This case was referred to, but the court observed that it was prior to the 2015 amendment of the MMDR Act and the 2016 Concession Rules. |
| Section 11, Mines and Minerals (Development and Regulation) Act, 1957 | Statute | Explained | The court explained the preferential rights for mining leases. |
| Section 10-A, Mines and Minerals (Development and Regulation) Act, 1957 | Statute | Explained and Applied | The court discussed the ineligibility of prior applications and the exceptions. |
| Section 14-Y, West Bengal Land Reforms Act, 1955 | Statute | Explained | The court discussed the limitations on future acquisition of land by a raiyat. |
| Section 4-C, West Bengal Land Reforms Act, 1955 | Statute | Explained | The court discussed the requirements for permission for change of land use. |
| Rule 61, West Bengal Minor Minerals Concession Rules, 2016 | Rules | Explained and Applied | The court explained the ineligibility of prior applications and the exceptions. |
Judgment
| Submission | Court’s Treatment |
|---|---|
| M/S Chiranjilal’s application is eligible under Rule 61 due to the Grant Order. | Rejected. The court held that the Grant Order was provisional and subject to conditions, not automatically bringing the application within the exception to Rule 61. |
| High Court’s order of 10.09.2014 directs the grant of a long-term lease. | Partially Upheld. The court partly upheld the High Court’s direction to the extent of the State-owned land (20.87 acres). |
| Land is classified as ‘Dungri’, so no conversion certificate is needed under Section 4-C of the WBLR Act, 1955. | Rejected. The court stated that the classification of land as ‘Dungri’ alone cannot decide the issue under Section 4-C of the WBLR Act, 1955, because Raiyat land is not meant for mining. |
| State is bound by its earlier commitments as per Bhushan Power and Steel Limited v. S.L. Seal, Additional Secretary (Steel and Mines), State of Odisha and Others [(2017) 2 SCC 125]. | Distinguished. The court distinguished this case, noting that the facts were different and the judgment was based on different legal provisions. |
The Supreme Court held that the Grant Order dated 16.07.2015 was provisional and subject to conditions. The prior orders dated 13.10.2006 and 26.10.2006 were recalled and did not survive. The court distinguished the case of Bhushan Power and Steel Limited v. S.L. Seal, Additional Secretary (Steel and Mines), State of Odisha and Others [(2017) 2 SCC 125], stating that the facts were different, and the judgment was based on different legal provisions.
The court noted that the object of the Amendment Act, 2015, was to ensure that allocation of mineral resources is done through auctioning. This is why sub-section (1) to Section 10-A of the MMDR Act, 1957, mandates that all applications received prior to 12.01.2015 shall become ineligible. The exceptions are limited to situations specified in sub-section (2) to Section 10-A.
The court observed that “Raiyat land is to be used for cultivation, etc., and not for mining.” It also noted that “a contradiction arises, as the grant of Raiyat land and the classification of the same land as ‘Dungri’ is contradictory.” The court further stated that “the controversy relating to Section 4-C of the WBLR Act, 1955, cannot simply be decided on the basis of Memo No. V/RTI/775/15 dated 06.03.2017 issued by the Deputy District Land and Land Reforms Officer, Purulia.”
The court directed the government of West Bengal to execute a mining lease for 20.87 acres of land in favor of M/S Chiranjilal, as the State had affirmed that they are the owners of this portion of the land. The claim of M/S Chiranjilal towards the balance area for the grant of mining lease was rejected.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the following factors:
- The ineligibility of prior applications under the new mining rules and the MMDR Act, 1957.
- The provisional nature of the Grant Order dated 16.07.2015, which was subject to conditions.
- The revocation of prior orders dated 13.10.2006 and 26.10.2006, which did not survive.
- The contradiction between the classification of Raiyat land and its use for mining.
- The need for compliance with the WBLR Act, 1955, particularly Section 4-C, regarding land use conversion.
- The limited scope of the High Court’s orders, which could not override the new legal framework.
- The fact that the State of West Bengal had affirmed that they owned 20.87 acres of the land.
| Sentiment | Percentage |
|---|---|
| Ineligibility of prior applications under new rules | 30% |
| Provisional nature of Grant Order | 25% |
| Revocation of prior orders | 20% |
| Contradiction in land classification | 10% |
| Need for compliance with WBLR Act | 10% |
| Limited scope of High Court’s orders | 5% |
| Ratio | Percentage |
|---|---|
| Fact | 40% |
| Law | 60% |
Logical Reasoning
Conclusion
The Supreme Court partially allowed the appeal filed by the State of West Bengal. The court directed the State to execute a mining lease for 20.87 acres of land in favor of M/S Chiranjilal, as the State had affirmed that they are the owners of this portion of the land. The claim of M/S Chiranjilal towards the balance area for the grant of mining lease was rejected.
The judgment clarifies that prior applications for mining leases are ineligible under the new rules unless they fall under the exceptions specified in Section 10-A of the MMDR Act, 1957, and Rule 61 of the Concession Rules, 2016. The court emphasized that provisional grant orders do not automatically bring an application under the exceptions. It also highlighted the need for compliance with land use regulations under the WBLR Act, 1955.