Supreme Court Orders Termination of Illegal Mining Leases in Rajasthan: Bajri Lease LoI Holders Welfare Society vs. State of Rajasthan (2021)

Introduction

Date of the Judgment: 11 November 2021

Citation: [Not Available in the source]

Judges: L. Nageswara Rao, J., Sanjiv Khanna, J., B.R. Gavai, J.

Can mining leases near riverbeds lead to environmental damage and illegal extraction of sand? The Supreme Court of India, in a recent judgment, addressed this critical issue concerning the rampant illegal sand mining in Rajasthan. This case highlights the conflict between the need for mineral resources and the protection of the environment. The Court examined the validity of mining leases granted near riverbeds, and the measures necessary to curb illegal sand mining activities. The judgment was delivered by a three-judge bench comprising Justices L. Nageswara Rao, Sanjiv Khanna, and B.R. Gavai.

Case Background

The case originated from the rampant illegal sand mining in Rajasthan, which caused significant damage to lakes, riverbeds, and groundwater. In response to these environmental concerns, the Ministry of Environment, Forest and Climate Change (MoEFCC) formed a Core Group in 2009 to examine the environmental aspects of mining. Based on the Core Group’s report, the MoEFCC made recommendations in 2010 regarding sand mining, and formulated Model Guidelines for sustainable mining of minor minerals.

Following the Supreme Court’s directions in Deepak Kumar v. State of Haryana, the Rajasthan Minor Mineral Concession Rules, 1986 were amended in 2012. These amendments stipulated that sand mining leases would be granted through tender/auction for five years. Letters of Intent (LoIs) were issued to successful bidders, who were required to obtain necessary clearances, including Environmental Clearance (EC). Due to delays in granting EC, the State of Rajasthan allowed sand mining via Royalty Collection Contracts and Temporary Work Permits until EC was obtained.

A total of 105 mining plots were tendered, and LoIs were issued to the successful bidders. These LoI holders were directed to obtain EC within 12 months. Between 2013 and 2016, 65 LoI holders submitted their Environment Management Plans (EMP) after conducting Environment Impact Assessment (EIA) studies. The Expert Appraisal Committee (EAC) recommended granting EC to these 65 LoI holders. However, as EC was not granted within six months, the State sought an extension to continue mining via Royalty Collection Contracts. The High Court rejected this request, leading the State to file a Special Leave Petition (SLP) before the Supreme Court.

The Supreme Court, in an interim order dated 25.11.2013, allowed the 82 LoI holders who had applied for EC to continue mining operations. Temporary Work Permits were issued to 80 of these LoI holders. This interim order was extended multiple times. However, on 16.11.2017, the Supreme Court restrained all 82 mining lease holders from carrying out sand and bajri mining until a scientific replenishment study was completed and EC was granted. Subsequently, the State of Rajasthan issued a notification on 28.12.2017, allowing short-term permits for sand excavation in Khatedari lands for government-related works. The 2017 Rules were amended on 25.06.2018, enabling the government to grant mining leases in Khatedari lands to Khatedars.

On 28.02.2018, the time period for fulfilling the LoI conditions was extended to 13 months. According to the State, the LoIs of 74 members of the Bajri Lease LoI Holders Welfare Society lapsed due to non-compliance within this period. The remaining 8 LoI holders, who had received EC and mining leases, could not continue mining without the replenishment study reports. The Bajri Lease LoI Holders Welfare Society challenged the validity of the time extension rule in the High Court, which dismissed their petitions on 09.04.2019. The Society then filed an SLP before the Supreme Court.

Timeline

Course of Proceedings

The High Court of Rajasthan dismissed the writ petitions filed by the Bajri Lease LoI Holders Welfare Society, which challenged the vires of sub-rule (4) of Rule 5 of the Rajasthan Minor Mineral Concession Rules, 2017. The High Court upheld the amendment that limited the time for fulfilling LoI conditions, leading to the lapse of LoIs for many members of the Society. The Society then appealed to the Supreme Court by filing SLP (C) No.10587 of 2019.

The Supreme Court initially issued an interim order on 10.05.2019, restraining the cancellation of the LoIs of the Society’s members. Subsequently, on 19.02.2020, the Court, recognizing the scale of illegal sand mining in Rajasthan, directed the Central Empowered Committee (CEC) to submit a report on the issues related to sand mining and measures to stop illegal activities. The CEC submitted its report on 23.12.2020, which included several recommendations. The State of Rajasthan filed an Interlocutory Application (IA No. 29984 of 2021) seeking the acceptance of the CEC’s recommendations, except for two specific points. Additionally, some Khatedars filed an intervention application (IA No. 54981 of 2021), challenging the CEC’s recommendations regarding the cancellation of their mining leases.

Legal Framework

The Supreme Court considered several legal provisions and guidelines in this case. Section 15 of the Mines and Minerals (Development and Regulation) Act, 1957 (“MMDR Act”) empowers State Governments to make rules for regulating mineral development. Section 23C of the MMDR Act empowers the State Governments to make rules for preventing illegal mining, transportation, and storage of minerals.

The Court also referred to the notifications dated 23.05.2012, 19.06.2012 and 21.06.2012, which amended the Rajasthan Minor Mineral Concession Rules, 1986 (“1986 Rules”). These amendments introduced the system of granting mining leases through tender/auction for a period of five years. Rule 51 of the Rajasthan Minor Mineral Concession Rules, 2017 (“2017 Rules”), as well as the amendment to the 2017 Rules on 25.06.2018, which inserted Rule 17A, enabling the Government to grant mining leases in Khatedari lands to Khatedars were also considered. Sub-rule (4) of Rule 5 of the 2017 Rules, which was amended on 28.02.2018, extending the time period for fulfilling the LoI conditions, was also a point of contention.

The Court also took into account the Environmental Impact Assessment Notification, 2006 (“EIA Notification, 2006”) issued by the MoEFCC, which mandates obtaining Environmental Clearance (EC) for mining projects. The Sustainable Sand Mining Management Guidelines, 2016 (“2016 Sand Mining Guidelines”) and the Enforcement & Monitoring Guidelines for Sand Mining, 2020 (“2020 Sand Mining Guidelines”) were also considered. These guidelines provide a framework for sustainable sand mining and monitoring.

Section 21(5) of the MMDR Act empowers the State Government to recover the price of the illegally-mined mineral, in addition to recovery of rent, royalty or tax.

Arguments

The arguments presented before the Supreme Court were multifaceted, involving various stakeholders and their concerns.

Submissions by the Petitioner (Bajri Lease LoI Holders Welfare Society)

• The Petitioner-Society challenged the vires of sub-rule (4) of Rule 5 of the 2017 Rules, arguing that the time limit of 13 months for fulfilling the conditions of the LoIs was arbitrary and unjust.

• They contended that the lapse of their LoIs due to the non-fulfillment of conditions within the stipulated time was unfair, especially since the delay in obtaining EC was not their fault.

Submissions by the State of Rajasthan

• The State of Rajasthan argued that mineral wealth lying in agricultural land should also be utilized.

• They requested the MoEFCC to revisit the 2020 Sand Mining Guidelines regarding excavation of sand within 5 km from the river bed, citing scanty rainfall patterns in the State.

• The State Government was of the opinion that the penalties recommended by the CEC for illegal sand mining were excessive and their recovery would be difficult.

Submissions by the Intervenors (Khatedars)

• The Khatedars asserted that they were not involved in illegal sand mining and had been acting in accordance with the conditions of their lease.

• They contended that the CEC committed an error in recommending cancellation of their mining leases.

• The Khatedars also found fault with recommendation ‘C’ of the CEC in favor of the LoI holders.

Submissions by the Central Empowered Committee (CEC)

• The CEC highlighted the delay in the grant of EC by the MoEFCC to the LoI holders as the cause for widening the gap in demand and supply of sand, which has resulted in proliferation of illegal sand mining activities.

• The CEC recommended the termination of all Khatedari leases located within 5 km from the river banks, as well as those leases where violations of lease conditions were detected.

• The CEC also recommended that no fresh Khatedari leases should be granted without the approval of the Supreme Court, except for Palaeo deposits.

• The CEC recommended an exemplary penalty of Rs.10 lakh per vehicle and Rs.5 lakh per cubic meter of sand seized for illegal mining.

The innovativeness of the arguments was primarily seen in the CEC’s recommendations, which sought to address the systemic issues of illegal mining by proposing stringent measures such as the termination of leases near riverbeds and the imposition of heavy penalties. The State’s argument for utilizing mineral wealth in agricultural lands was a practical consideration, but it was countered by the environmental concerns raised by the CEC.

Issues Framed by the Supreme Court

The Supreme Court addressed the following key issues:

1. Whether the mining leases granted in Khatedari lands, particularly those located within 5 km of riverbeds, are legal and sustainable.
2. Whether the recommendations made by the Central Empowered Committee (CEC) regarding the termination of Khatedari leases and the imposition of penalties for illegal sand mining are justified.
3. Whether the time period of 13 months for fulfillment of the conditions of the LoIs was arbitrary and unjust.
4. What measures should be taken to prevent illegal sand mining and ensure the sustainable management of mineral resources in Rajasthan.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court relied on several authorities to reach its decision.

Cases

Legal Provisions

Guidelines

Judgment

The Supreme Court, after considering the arguments and authorities, delivered its judgment.

The Court’s view on the authorities:

• Deepak Kumar v. State of Haryana (2012) 4 SCC 629:* The Court followed this authority to emphasize the need for State Governments to implement the MoEFCC’s recommendations and frame rules for sustainable mining.

• Vellore Citizens’ Welfare Forum v. Union of India & Ors. (1996) 5 SCC 647:* The Court relied on this case to interpret the “Polluter Pays” principle, stating that it includes the cost of restoring environmental degradation.

• National Green Tribunal Bar Association v. Virender Singh in OA No. 360 of 2015:* The Court considered this case to highlight the NGT’s concerns about ineffective monitoring mechanisms and the need to revise sand mining guidelines.

• National Green Tribunal Bar Association v. Virender Singh (Order dated 26.02.2021):* The Court used this to underscore the NGT’s approval of the Central Pollution Control Board’s report on the scale of compensation for illegal mining.

What weighed in the mind of the Court?

The Supreme Court’s decision was significantly influenced by the need to protect the environment and curb illegal sand mining, as evidenced by the following points:

• Environmental Concerns: The Court was deeply concerned about the damage caused to lakes, riverbeds, and groundwater due to unscientific and illegal mining practices.

• Illegal Mining Activities: The Court noted the rampant illegal mining activities, the involvement of sand mafia, and the failure of existing monitoring mechanisms.

• Violation of Court Orders: The Court was disturbed by the fact that mining leases were granted in favor of Khatedars despite the Court’s previous order restraining mining without a scientific replenishment study and EC.

• CEC Report: The Court relied heavily on the CEC’s report, which highlighted the illegalities and recommended stringent measures.

• Polluter Pays Principle: The Court emphasized the “Polluter Pays” principle, stating that those involved in illegal mining must bear the cost of environmental restoration.

• Need for Effective Monitoring: The Court stressed the need for effective monitoring mechanisms and strict adherence to environmental guidelines.

The ratio of fact to law that influenced the court to decide:

The Court’s reasoning was a step-by-step process, addressing each issue with logical clarity.

Ratio Decidendi

The ratio decidendi of the judgment can be summarized as follows:

• Environmental Protection: Mining leases, especially those near riverbeds, must be regulated to protect the environment and prevent ecological damage.

• Illegal Mining: Mining leases that facilitate illegal extraction of sand from riverbeds are unsustainable and must be terminated.

• CEC Recommendations: Recommendations made by expert bodies like the CEC should be given due weight and implemented to curb illegal mining.

• Polluter Pays Principle: Those involved in illegal mining must bear the cost of environmental restoration, and penalties should be imposed to deter such activities.

• Scientific Studies: Mining should only be permitted after scientific replenishment studies and Environmental Clearances.

• Monitoring: Effective monitoring mechanisms are crucial to prevent illegal mining and ensure compliance with environmental guidelines.

Obiter Dicta

The obiter dicta in this judgment includes the following:

• Need for stricter regulations: The Court, while not explicitly ruling on the validity of the 13-month time limit, implied that stricter regulations are necessary to prevent illegal mining.

• Role of State Governments: The Court emphasized the responsibility of State Governments to regulate mining activities and prevent illegal mining.

• Importance of Expert Bodies: The Court highlighted the importance of expert bodies like the CEC in providing guidance on complex environmental issues.

Final Order

The Supreme Court, in its final order, directed the following:

1. Termination of Khatedari Leases: All Khatedari leases located within 5 km of riverbeds were ordered to be terminated.

2. Prior Approval for New Leases: No fresh Khatedari leases should be granted without prior approval from the Supreme Court, except for Palaeo deposits.

3. Penalty Determination: The CEC was directed to determine the penalties for illegal mining, following the NGT’s guidelines and the 2020 Sand Mining Guidelines.

4. Scientific Studies: Mining should only be permitted after scientific replenishment studies and Environmental Clearances.

5. Monitoring: Effective monitoring mechanisms should be put in place to prevent illegal mining.

Impact of the Judgment

The judgment has several significant implications:

• Environmental Protection: The judgment prioritizes environmental protection over unregulated mining activities, setting a precedent for sustainable resource management.

• Curbing Illegal Mining: The termination of Khatedari leases near riverbeds is expected to significantly curb illegal sand mining activities.

• Role of Expert Bodies: The judgment reinforces the role of expert bodies like the CEC in providing guidance on environmental issues.

• Stringent Regulations: The judgment emphasizes the need for stringent regulations and effective monitoring mechanisms to prevent illegal mining.

• Precedent for Other States: The judgment can serve as a precedent for other states facing similar issues of illegal mining.

Critical Analysis

The Supreme Court’s judgment in Bajri Lease LoI Holders Welfare Society vs. State of Rajasthan is a landmark decision that addresses the critical issue of illegal sand mining and its environmental consequences. The Court’s reliance on the CEC’s report and its emphasis on the “Polluter Pays” principle demonstrate a strong commitment to environmental protection.

The judgment is laudable for its stringent measures, including the termination of Khatedari leases near riverbeds and the requirement for prior approval for new leases. These measures are expected to significantly curb illegal mining activities and promote sustainable resource management. However, the judgment also raises some questions:

• Implementation Challenges: The effective implementation of the judgment will require strong political will and administrative support. The State Government must ensure that the terminated leases are not replaced with new illegal mining operations.

• Economic Impact: The termination of leases may have economic consequences for those involved in mining activities. The government needs to provide alternative livelihood options for those affected.

• Balancing Development and Environment: The judgment highlights the need to balance development with environmental protection. The State Government must adopt a sustainable approach to mining that ensures both economic growth and environmental conservation.

• Monitoring Mechanism: The effectiveness of the judgment depends on the establishment of effective monitoring mechanisms. The State Government must ensure that there is a robust system in place to prevent illegal mining and enforce environmental regulations.

• Penalty Determination: The Court tasked the CEC to determine the penalties for illegal mining. The penalties should be deterrent enough to prevent illegal mining activities.

Conclusion

The Supreme Court’s judgment in Bajri Lease LoI Holders Welfare Society vs. State of Rajasthan is a significant step towards curbing illegal sand mining and promoting sustainable resource management. The Court’s emphasis on environmental protection, the “Polluter Pays” principle, and the need for scientific studies and effective monitoring mechanisms sets a strong precedent for future cases.

The judgment highlights the importance of balancing development with environmental protection and underscores the responsibility of State Governments to regulate mining activities and prevent illegal mining. While the judgment is laudable for its stringent measures, its effective implementation will require strong political will, administrative support, and a commitment to sustainable resource management. The judgment serves as a reminder that the environment is a shared resource that must be protected for future generations.