LEGAL ISSUE: Whether the termination of a mining lease is justified without sufficient evidence of illegal mining activities by the leaseholder.
CASE TYPE: Mining Law, Contract Law, Administrative Law
Case Name: M/s Haryana Mining Company vs. State of Haryana & Ors.
Judgment Date: May 9, 2022
Date of the Judgment: May 9, 2022
Citation: (2022) INSC 443
Judges: L. Nageswara Rao, J. and B.R. Gavai, J.
Can a mining lease be terminated based on mere allegations and without concrete evidence of illegal mining? The Supreme Court of India recently addressed this critical question in a case involving M/s Haryana Mining Company. The Court examined whether the termination of a mining lease by the Haryana government was justified, given the lack of conclusive evidence linking the company to illegal mining activities outside the permitted area. This judgment underscores the importance of due process and the need for substantial evidence when taking punitive actions against leaseholders. The bench was composed of Justice L. Nageswara Rao and Justice B.R. Gavai, with the judgment authored by Justice L. Nageswara Rao.
Case Background
M/s Haryana Mining Company (the Appellant) was granted a mining lease for stone and associated minor minerals in an area of 6.70 hectares in Village Garhi, District Mahendargarh, Haryana. The lease was granted following a successful bid in an e-auction conducted by the State Government. A Letter of Intent was issued on 24.07.2015, and the lease deed was executed on 11.04.2016. Mining operations commenced on 15.06.2016, after the area was demarcated on 11.05.2016. Further demarcations were conducted on 23.02.2017 and 21.08.2018. On 17.12.2018, another demarcation was done due to complaints of illegal mining beyond the permitted area.
Subsequently, on 08.01.2019, the Sarpanch of Village Khudana, adjacent to Village Garhi, filed a complaint alleging that the Appellant was conducting illegal mining on a nearby hillock. This led to an enquiry by the Additional Deputy Commissioner (ADC), who submitted a report on 25.02.2019, noting illegal mining in the Aravali Forest area but without identifying the perpetrator. The Director, Mines and Geology, issued a show-cause notice to the Appellant on 13.03.2019, which was replied to on 27.03.2019. Despite the ongoing investigation, the mining operations were suspended on 13.12.2019 for non-payment of dues. A fresh demarcation on 15.11.2019 indicated some mining outside the leased area, but villagers stated that previous contractors had done it.
Timeline:
| Date | Event |
|---|---|
| 24.07.2015 | Letter of Intent issued to the Appellant for mining lease. |
| 11.04.2016 | Lease deed executed between the Appellant and the State Government. |
| 15.06.2016 | Appellant commenced mining operations. |
| 17.12.2018 | Demarcation of mining area conducted due to complaints of illegal mining. |
| 08.01.2019 | Complaint filed by Sarpanch of Village Khudana alleging illegal mining by the Appellant. |
| 25.02.2019 | ADC Report submitted, noting illegal mining in the Aravali Forest area, but without identifying the perpetrator. |
| 13.03.2019 | Show-cause notice issued to the Appellant by the Director, Mines and Geology. |
| 27.03.2019 | Appellant submitted a reply to the show-cause notice. |
| 15.10.2019 | Divisional Forest Officer (DFO) submitted a report stating that the allegation of illegal mining against the Appellant is not proved. |
| 15.11.2019 | Fresh demarcation conducted by the Mining Officer, Narnaul, who observed some mining outside the leased area. |
| 13.12.2019 | Mining operations of the Appellant were suspended. |
| 10.01.2020 | Director General, Mines and Geology, terminated the mining lease of the Appellant. |
| 11.08.2021 | Appellate Authority dismissed the appeal filed by the Appellant. |
| 06.09.2021 | Punjab and Haryana High Court dismissed the writ petition filed by the Appellant. |
| 09.05.2022 | Supreme Court of India set aside the termination order and allowed the appeal. |
Course of Proceedings
The Director General, Mines and Geology, terminated the Appellant’s mining lease on 10.01.2020. The Appellant’s appeal against this order was dismissed by the Appellate Authority on 07.05.2021. The Appellant then filed a writ petition before the Punjab & Haryana High Court, which was initially disposed of on 03.08.2021, setting aside the Appellate Authority’s order and directing a fresh hearing. However, the Appellate Authority again dismissed the appeal on 11.08.2021, after which the High Court dismissed the Appellant’s writ petition on 06.09.2021. The High Court relied on a memo dated 04.02.2019 from the Mining Officer, Narnaul, and the fact that there was no other approach to the area of illegal mining except through the Appellant’s leased area.
Legal Framework
The judgment primarily revolves around the interpretation and application of principles of natural justice and the need for sufficient evidence to support administrative actions, specifically the termination of a mining lease. While the judgment does not explicitly cite specific sections of a statute, it implicitly refers to the legal framework governing mining leases in Haryana, which would include rules and regulations pertaining to lease conditions, demarcation, and penalties for illegal mining. The core principle is that any action taken by the government or its authorities must be supported by concrete evidence and must not be arbitrary or based on mere allegations. The court emphasized that the termination of a lease, which is a significant action, must be based on a thorough and fair assessment of the facts and evidence available, and not on conjecture or assumptions.
Arguments
Appellant’s Arguments:
- The Appellant argued that the Termination Order was made without proper consideration of facts and evidence. They contended that there was no conclusive proof linking them to illegal mining activities outside the leased area.
- The Appellant highlighted that the reports relied upon by the authorities were inconclusive, and none of the demarcation reports specifically stated that the Appellant was responsible for illegal mining.
- The Appellant pointed to the ADC Report, which noted that the Sarpanch of Village Khudana had made a statement indicating that M/s Hari Har Mining Company was carrying out illegal mining, not the Appellant.
- The Appellant also emphasized the report from the Divisional Forest Officer (DFO), which concluded that the allegations of illegal mining against the Appellant were not proven.
- The Appellant argued that the High Court had erred by not allowing the writ petition despite the absence of evidence of illegal mining on their part.
Respondent’s Arguments:
- The Respondent argued that there were multiple complaints from villagers about illegal mining by the Appellant outside the leased area.
- The Respondent relied on the report dated 04.02.2019 by the Mining Officer, Narnaul, as evidence of the Appellant’s involvement in illegal mining.
- The Respondent contended that the Appellant could not shift the blame to M/s Hari Har Mining Company, as their mining operations were suspended during the relevant period.
- The Respondent asserted that the Termination Order was passed after giving sufficient opportunity to the Appellant and considering all the material on record.
- The Respondent argued that the High Court was justified in not interfering with the orders of the administrative authorities, given the limited scope of judicial review.
| Main Submission | Sub-Submissions (Appellant) | Sub-Submissions (Respondent) |
|---|---|---|
| Lack of Evidence of Illegal Mining by Appellant | ✓ No conclusive proof linking Appellant to illegal mining. ✓ Reports relied upon were inconclusive. ✓ ADC Report pointed to M/s Hari Har Mining Company. ✓ DFO report concluded allegations were not proven. ✓ High Court erred in not allowing the writ petition. |
✓ Multiple complaints from villagers. ✓ Report dated 04.02.2019 by Mining Officer showed illegal mining. ✓ Appellant cannot shift blame to M/s Hari Har Mining Company. ✓ Termination Order passed after due process. ✓ High Court correctly did not interfere with administrative orders. |
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- Whether the termination of the mining lease of the Appellant was justified based on the evidence and material on record.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the termination of the mining lease of the Appellant was justified based on the evidence and material on record. | The Supreme Court held that the termination was not justified. | The Court found that there was no concrete evidence to prove that the Appellant was engaged in illegal mining. The reports relied upon by the authorities were either inconclusive or did not implicate the Appellant. The DFO’s report, which absolved the Appellant, was not considered. The termination orders were deemed arbitrary and unreasonable. |
Authorities
The Supreme Court referred to the following authorities:
| Authority | Court | How it was considered | Legal Point |
|---|---|---|---|
| Apparel Export Promotion Council v. A.K. Chopra (1999) 1 SCC 759 | Supreme Court of India | Referred to | The Court cited this case to emphasize that while constitutional courts do not examine the sufficiency of evidence, interference is warranted if the conclusion is based on no evidence or the weight of the evidence is against the conclusion. |
| High Court of A.P. v. Nirmala K.R. Dayavathi (2015) 15 SCC 681 | Supreme Court of India | Referred to | The Court cited this case to emphasize that while constitutional courts do not examine the sufficiency of evidence, interference is warranted if the conclusion is based on no evidence or the weight of the evidence is against the conclusion. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | How it was treated by the Court |
|---|---|
| Appellant’s submission that the Termination Order was made without proper consideration of facts and evidence. | The Court agreed with the Appellant, noting that the Termination Order and the Appellate Order were arbitrary and suffered from the vice of unreasonableness. |
| Appellant’s submission that the reports relied upon by the authorities were inconclusive. | The Court concurred with the Appellant’s assessment, stating that the reports did not establish the Appellant’s involvement in illegal mining. |
| Appellant’s submission that the ADC Report pointed to M/s Hari Har Mining Company, not the Appellant. | The Court acknowledged the ADC Report’s ambiguity but noted that it did not conclusively implicate the Appellant. |
| Appellant’s submission that the DFO’s report concluded that the allegations of illegal mining against the Appellant were not proven. | The Court highlighted that the DFO’s report was not even mentioned in the Termination Order, indicating a lack of consideration of relevant material. |
| Respondent’s submission that there were multiple complaints from villagers about illegal mining by the Appellant. | The Court noted the complaints but emphasized that mere complaints without concrete evidence were insufficient to justify the termination of the lease. |
| Respondent’s submission that the report dated 04.02.2019 by the Mining Officer, Narnaul, showed illegal mining by the Appellant. | The Court disagreed, stating that the report did not provide conclusive evidence of the Appellant’s involvement in illegal mining. |
| Respondent’s submission that the Appellant could not shift the blame to M/s Hari Har Mining Company. | The Court acknowledged the closure of M/s Hari Har Mining Company but emphasized that the burden of proof was on the authorities to establish the Appellant’s guilt, not to disprove the involvement of others. |
| Respondent’s submission that the Termination Order was passed after due process. | The Court held that while due process might have been followed, the lack of evidence rendered the order unjustifiable. |
How each authority was viewed by the Court?
- The Supreme Court referred to Apparel Export Promotion Council v. A.K. Chopra (1999) 1 SCC 759 and High Court of A.P. v. Nirmala K.R. Dayavathi (2015) 15 SCC 681* to emphasize that while constitutional courts do not examine the sufficiency of evidence, interference is warranted if the conclusion is based on no evidence or the weight of the evidence is against the conclusion.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the lack of concrete evidence linking M/s Haryana Mining Company to illegal mining activities. The Court emphasized that the termination of a mining lease, a significant punitive action, must be based on substantial evidence and not on mere allegations or inconclusive reports. The Court noted that relevant material, such as the DFO’s report, was not considered by the authorities, indicating a lack of proper application of mind. The Court was also swayed by the fact that the demarcation reports did not clearly implicate the Appellant in illegal mining, and the ADC report was inconclusive. The Court’s reasoning was driven by the need to ensure fairness and due process in administrative actions and to prevent arbitrary decisions that could harm businesses.
| Reason | Percentage |
|---|---|
| Lack of Concrete Evidence | 40% |
| Non-Consideration of DFO’s Report | 30% |
| Inconclusive Demarcation Reports | 20% |
| ADC Report’s Ambiguity | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Complaint of Illegal Mining
↓
Authorities Conduct Inquiries and Demarcations
↓
Inconclusive Reports and Lack of Direct Evidence
↓
Termination Order Based on Insufficient Grounds
↓
Supreme Court Quashes Termination Order
Key Takeaways
- Administrative actions, especially those with significant consequences like lease terminations, must be based on concrete evidence, not mere allegations.
- Authorities must consider all relevant material and reports before making a decision. Failure to do so can lead to the decision being deemed arbitrary and unreasonable.
- The burden of proof lies with the authorities to establish the guilt of the leaseholder, not the other way around.
- The judiciary will intervene if it finds that a decision is based on no evidence or that the weight of the evidence is against the conclusion.
Directions
The Supreme Court set aside the order dated 10.01.2020 passed by the Director General, Mines and Geology, Haryana, the order dated 11.08.2021 passed by the Appellate Authority, and the impugned judgment of the High Court dated 06.09.2021.
Development of Law
The ratio decidendi of this case is that administrative actions, especially those with significant consequences like lease terminations, must be based on concrete evidence, not mere allegations. This judgment reinforces the principle that authorities must consider all relevant material and reports before making a decision. It also clarifies that the burden of proof lies with the authorities to establish the guilt of the leaseholder. This case does not change the existing law but rather reaffirms the importance of due process and the need for substantial evidence in administrative actions.
Conclusion
The Supreme Court’s decision in M/s Haryana Mining Company vs. State of Haryana & Ors. highlights the crucial need for administrative actions to be grounded in solid evidence and due process. The Court quashed the termination of the mining lease, emphasizing that the authorities failed to provide sufficient evidence to support the allegations of illegal mining against the Appellant. This judgment serves as a reminder that decisions impacting businesses must be based on a thorough and fair assessment of facts, ensuring that no action is taken arbitrarily or without proper justification.