Supreme Court clarifies the scope of mining rights in Bihar: State of Bihar vs. Pawan Kumar (2022) INSC 30

Date of the Judgment: 18 January 2022
Citation: (2022) INSC 30
Judges: L. Nageswara Rao J. and B.R. Gavai J.

Can previously successful bidders for mining contracts claim a vested right to continue operations when new environmental regulations are introduced? The Supreme Court of India addressed this question while hearing a batch of Interlocutory Applications (IAs) arising from a prior order concerning mining activities in Bihar. The court clarified that the interim arrangement allowing the Bihar State Mining Corporation to conduct mining operations does not grant any vested rights to previous contractors.

Case Background

The State of Bihar had appealed against an order by the National Green Tribunal (NGT) regarding illegal mining. The Supreme Court, on November 10, 2021, modified the NGT’s directions, allowing the Bihar State Mining Corporation to continue mining operations temporarily while new District Survey Reports (DSRs) were prepared to ensure environmental compliance. Several IAs were then filed by previous contractors who had been successful bidders for mining rights in various districts, challenging the state’s decision to issue new tenders. These contractors argued that they had a right to continue mining based on prior contracts and extensions.

Timeline:

Course of Proceedings

The National Green Tribunal (NGT) had initially issued directions to curb illegal mining. The Supreme Court modified these directions on 10th November 2021, allowing the Bihar State Mining Corporation to conduct mining temporarily while new environmental assessments were carried out. Following this, several contractors who had previously won bids for mining rights filed Interlocutory Applications (IAs). They contested the new NITs issued by the Corporation, arguing that their prior contracts and extensions gave them a vested right to continue mining. The court heard these IAs to clarify the scope of its previous order and the rights of the applicants.

Legal Framework

The judgment primarily revolves around the interpretation of the Supreme Court’s order dated 10th November 2021, which allowed the Bihar State Mining Corporation to carry out mining activities temporarily. The court also considered the need to balance environmental concerns with the economic requirements of the state. The court emphasized the importance of preparing District Survey Reports (DSRs) and obtaining necessary environmental clearances before resuming regular mining operations.

Arguments

The applicants in the IAs put forth several arguments:

• Applicants in I.A. Nos. 154740-154741 of 2021 and I.A. No. 165173 of 2021:
  • They were successful bidders in 2019 and should be allowed to continue mining.
  • They should be appointed as contractors, or at least be given the right to match the highest bid with a right of first refusal.
• Applicants in I.A. Nos. 153531-153532 of 2021 and I.A. Nos. 160138, 160139, and 160142 of 2021:
  • They were successful bidders from 2015-2019 and had been granted extensions up to March 31, 2022, and thus should be allowed to continue mining till then.
• Applicant in I.A. No. 163177 of 2021:
  • The mining activities by the Corporation are without environmental clearance, violating the purpose of the Tribunal and the Supreme Court’s orders.
  • The NITs are silent on environmental aspects and amount to contempt of court.

The State of Bihar argued that the NITs were issued for a limited period due to the Supreme Court’s order of 10th November 2021. They stated that the process of preparing DSRs and obtaining clearances was underway and the Corporation was ensuring that environmental concerns were addressed during this interim period. The State also contended that the mining was being conducted to prevent illegal mining and loss to the public exchequer.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in this order. However, the core issue before the court was:

1. Whether the previous successful bidders for mining contracts have a vested right to continue mining operations based on prior contracts and extensions, in light of the Supreme Court’s order dated 10th November 2021.

Treatment of the Issue by the Court

The following table demonstrates how the Court addressed the issues:

Authorities

The Supreme Court’s decision was primarily based on the interpretation of its own order dated 10th November 2021. No other cases or legal provisions were explicitly cited in this order.

Judgment

The Court reiterated that the mining activities permitted through the Corporation were a stop-gap arrangement. It was intended to balance the need to curb illegal mining with the economic requirements of the state. The court emphasized that the NITs issued by the Corporation were valid only up to March 31, 2022, and subject to further orders.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to balance environmental concerns with the practical need for mining activities. The court recognized that a complete ban on mining would lead to illegal activities and loss to the public exchequer. However, it also emphasized the importance of environmental compliance and the need for proper assessments through DSRs. The court’s reasoning was heavily influenced by the need to ensure that its previous order was followed in letter and spirit.

The Court reasoned that the permission granted to the Corporation to carry out mining activities was a temporary measure to prevent illegal mining and ensure that the public exchequer does not suffer. The court emphasized that this arrangement did not grant any vested rights to the previous contractors. The court stated,

“It could thus be seen that this was only a stop gap arrangement.”

The court further clarified that,

“Though they were successful in the bidding process held in the year 2015, which was extended up to 2019 and thereafter, they were only continuing under the extensions granted.”

The court also noted that,

“Taking into consideration the peculiar facts and circumstances in which we had passed the order, we find that entertaining any of such applications would result in further complications.”

Key Takeaways

• Interim arrangements for mining operations do not grant vested rights to previous contractors.
• Environmental compliance and proper assessments are crucial before resuming mining activities.
• The Supreme Court’s orders must be strictly adhered to, and any deviations must be justified.

Directions

The State Government of Bihar was directed to ensure that all environmental concerns are taken care of and no damage is caused to the environment while carrying out mining activities.

Development of Law

The ratio decidendi of the case is that interim arrangements made by the court to allow mining operations do not grant any vested rights to previous contractors. This clarifies the position of law that such arrangements are temporary and do not confer any long-term rights.

Conclusion

The Supreme Court’s order clarified that the interim arrangement allowing the Bihar State Mining Corporation to conduct mining operations was a stop-gap measure. It did not grant any vested rights to previous contractors. The court emphasized the need for environmental compliance and proper assessments before resuming regular mining operations. The decision underscores the importance of balancing economic needs with environmental concerns and adherence to court orders.

Category

• Mining Law
  • Mining Contracts
  • Environmental Regulations
  • Interim Orders
• Environmental Law
  • Environmental Clearances
  • National Green Tribunal
• Supreme Court Orders
  • Interlocutory Applications
  • Interpretation of Orders
• Bihar State Mining Corporation
  • Tenders and Bids
  • Mining Operations
• Mining Law
  • Order dated 10th November 2021

FAQ

Q: What was the main issue in the Supreme Court’s order?
A: The main issue was whether previous mining contractors had a right to continue operations based on prior contracts when new environmental regulations were introduced.

Q: Did the Supreme Court allow previous contractors to continue mining?
A: No, the Supreme Court clarified that the interim arrangement allowing the Bihar State Mining Corporation to conduct mining did not grant any vested rights to previous contractors.

Q: What did the court say about environmental concerns?
A: The court emphasized the importance of environmental compliance and the need for proper assessments before resuming regular mining operations.

Q: Why did the court allow the Bihar State Mining Corporation to continue mining temporarily?
A: The court allowed it to prevent illegal mining and loss to the public exchequer while ensuring environmental assessments were carried out.

Q: What is the significance of District Survey Reports (DSRs) in this context?
A: DSRs are crucial for assessing the environmental impact of mining and ensuring that mining activities are carried out in compliance with regulations.