Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2016 (4) TMI 1362

..... red for carrying on the mining operations - interpretation of Sections 8A(3), 8A(5) and 8A(6) of the MMDR Act. HELD THAT:- A leaseholder would have a subsisting mining lease, if the period of the original grant was still in currency on 12.1.2015. Additionally, a leaseholder whose original lease has since expired, would still have a subsisting lease, if the original lease having been renewed, the renewal period was still in currency on 12.1.2015. Such a leaseholder, would be entitled to the benefit of Section 8A of the amended MMDR Act. A leaseholder who had not moved an application for renewal of a mining lease (which was due to expire, prior to 12.1.2015), at least twelve months before the existing lease was due to expire, under the provisions of the unamended MMDR Act and the Mineral Concession Rules, will be considered as not a valid/subsisting leaseholder, after the expiry of the lease period. The provisions of the amended MMDR Act will therefore not enure to the benefit of such leaseholder - A leaseholder who has moved an application for renewal (of the original/first or subsequent renewal) of a mining lease, at least twelve months before the existing lease was due to expire, .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... suspension order. 2. A number of applications came to be filed before this Court seeking revocation of the above order of suspension, wherein the concerned applicants asserted, that they had obtained all clearances/approvals/consent, and further that, they were now legally eligible to recommence mining operations. During the course of such consideration at our hands, Mr. A.D.N. Rao, learned amicus curiae pointed out, that the question of granting permission to the leaseholders to recommence mining operations would arise, only if the leaseholders have a subsisting mining lease. It was therefore submitted, that before determining the legitimacy of the claim raised by the applicants, this Court should first examine, whether the applicants have a subsisting right to carry on mining operation, under a valid lease. 3. This submission advanced at the hands of the learned amicus curiae, was strongly contested by learned Counsel representing the applicants. They invited our attention to paragraph 4 of the order dated 16.5.2014, passed in the Common Cause case, so as to contend, that this Court had not postulated such a precondition, and therefore, the submission advanced at the hands of the .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... substantiate whether or not, they were possessed of a subsisting mining lease. 5. To commence with, we were of the view, that a decision/conclusion in this behalf, would emerge from the actual document by which the mining lease had been granted (or renewed). During the course of hearing it emerged, that the deduction as to whether the applicant-leaseholders were possessed of subsisting mining lease(s), was a complicated question of fact and law. Since the same has to be resolved, before the claim of the applicants for revoking the suspension order (-dated 16.5.2014) can be accepted, we would endeavour to lay down parameters for such determination. 6. A leaseholder would have a subsisting mining lease, if the period of the original grant is in currency. Additionally, a leaseholder whose original lease has since expired, would have a subsisting lease, if the original lease having been renewed, the renewal period is in currency. 7. It is also essential to notice, that to start with, renewal could be granted to a mining leaseholder, any number of times, under the unamended Section 8 of the MMDR Act. The duration of the original grant (of the mining lease), as also, the duration of ren .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... Under Section 8(3), for all intents and purposes, shall be described hereinafter, as the second (or third, or fourth ...) renewal . The renewal(s) Under Section 8(3) could be granted only if the State Government expressed its satisfaction, that the grant of the second or subsequent renewal, would be in the interest of mineral development. Furthermore, the second renewal or still further renewal(s), had to also have the approval of the Central Government. Even though the period of subsequent renewals, is of no significance, insofar as the present controversy is concerned, it may be mentioned, that all subsequent renewals including the second, third or further renewals, could individually extend to a period not exceeding twenty years. 8. The interpretation placed by us, on Section 8 of the MMDR Act (as it existed in 1994), finds support from Rule 24A of the Mineral Concession Rules, 1960 (hereinafter referred to as, the Mineral Concession Rules)-as the Rule existed prior to 18.7.2014. Rule 24A in the manner in which it was then structured, is extracted below: A. Renewal of mining lease.-(1) An application for the renewal of a mining lease shall be made to the State Government in Form .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... the lease document, if such an application had not been preferred. 9. The next relevant provision is Sub-rule (4) of Rule 24A of the Mineral Concession Rules. The instant Sub-rule required, that an application for renewal, would be disposed of within six months, from the date of receipt of such application. We have extracted hereinabove, Sub-rule (5) of Rule 24A, wherein it was mandated, that an application for renewal, which had not been disposed of within the period of six months, as provided for Under Rule 24A(4) of the Mineral Concession Rules, would be deemed to have been refused. It is however relevant to notice, that the aforementioned Sub-rule (5) came to be omitted by an amendment, with effect from 7.1.1993. It is significant to record, that Sub-rule (6) came to be substituted by an amendment, with effect from 27.9.1994. Sub-rule (6) of Rule 24A of the Mineral Concession Rules, is of extreme importance for the determination, whether the applicant-leaseholder is possessed of subsisting mining lease because a large number of applicants rely on the instant Rule in support of their claim for being possessed of a subsisting mining lease. Sub-rule (6) aforementioned postulated, .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ot specified in Part A and Part B of the First Schedule. In TISCO Ltd. v. Union of India (1996) 9 SCC 709, this Court has held that the language of Sub-section (3) of Section 8 is quite clear that ordinarily a lease is not to be granted beyond the time specified in Sub-section (2) and only if the Government is of the view that it would be in the interest of mineral development, it is empowered to renew lease of a lessee for a further period after recording sound reasons for doing so. This Court has further held in the aforesaid case that this measure has been incorporated in the legislative scheme as a safeguard against arbitrariness and the letter and spirit of the law must be adhered to in a strict manner. 28. The MC Rules have been made Under Section 13 of the MMDR Act by the Central Government and obviously could not have been made in a manner inconsistent with the provisions of the Act. Sub-rule (6) of Rule 24A of the MC Rules provides that: -A.(6) If an application for the renewal of a mining lease made within the time referred to in Sub-rule (1) is not disposed of by the State Government before the date of expiry of the lease, the period of that lease shall be deemed to have .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... above. Therefore, after the judgment in the Goa Foundation case, it came to be understood, that in the absence of an express order of second or subsequent renewal(s), a mining lease would expire after completion of the period of first renewal. 12. In order to give effect to the conclusions recorded by this Court in the Goa Foundation case, Rule 24A(6) came to be amended on 18.7.2014. The above amendment is reproduced below: Rule 24-A xxx (6) If an application for first renewal of a mining lease made within the time referred to in Sub-rule (1) is not disposed of by the State Government before the date of expiry of the lease, the period of that lease shall be deemed to have been extended by a further period of two years or till the State Government passes order thereon, whichever is earlier: Provided that the leases where applications for first renewal of mining lease have been made to the State Government and which have not been disposed of by the State Government before the date of expiry of lease and are pending for disposal as on the date of the notification of this amendment, shall be deemed to have been extended by a further period of two years from the date of coming into forc .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... rst renewals . We may hasten to explain, that the instant determination emerges from an interpretation of the unamended and amended Rule 24A(6). Whether subsequent amendments would alter the situation, is being determined hereinafter. 14. One clarification is imperative at this stage. After the passing of the order on 21.4.2014, in the Goa Foundation case, subsisting first renewals Under Rule 24A, would expire on the completion of a further period of twenty years, after the expiry of the period contemplated under the original grant, or as interpreted above. There was no similar automatic grant of second renewals , after the Goa Foundation case. Therefore, for all intents and purposes, the conclusion recorded hereinabove, should be deemed to be relevant only with reference to the grant of first renewals . It is necessary to reiterate, that in the Goa Foundation case, this Court had held, that second renewals would be subject to an order passed by the State Government recording reasons that it was in the interest of mineral development to do so. Needless to mention, that a second or subsequent renewal also required, the previous approval of the Central Government-as provided for Unde .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... se, the State Government will ensure that the entire process of consideration and disposal of renewal applications Under Section 8(3) of the Act is completed within six months from today. With the aforesaid interim directions, the interim matter stand disposed of. (Emphasis is ours) It seems, that the above direction was breached, as the State Governments, seemingly had no facility or potential, to comply with it. Resultantly, a further order came to be passed in IA No. 21 of 2014, which had been filed, for extension of time. The order granting further time of three months, dated 16.5.2014, is extracted hereunder: I.A. No. 21 of 2014 After hearing Shri L. Nageswara Rao, learned senior Counsel appearing for the State of Orissa, we deem it appropriate to grant them another three months time from today to comply with the order dated 16.05.2014. We reserve liberty to all the private Respondents to object to the orders that may be passed by the State Government while complying with this Court s order dated 16.05.2014. I.A. No. 21 of 2014 is disposed of accordingly. (Emphasis is ours) 16. The Parliament was alive to the predicament of the State Governments. It was also felt, that the reg .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ny holder of a lease granted, where mineral is used for captive purpose, shall have the right of first refusal at the time of auction held for such lease after the expiry of the lease period. (8) Notwithstanding anything contained in this section, the period of mining leases, including existing mining leases, of Government companies or corporations shall be such as may be prescribed by the Central Government. (9) The provisions of this section, notwithstanding anything contained therein, shall not apply to a mining lease granted before the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, for which renewal has been rejected, or which has been determined, or lapsed. 17. In terms of Section 8A(2) of the amended MMDR Act, all future mining grants, would be for a uniform period of fifty years. Section 8A(3) envisages, that all original mining lease grants, made prior to the insertion of Section 8A, in the MMDR Act (with effect from 12.1.2015) would also be deemed to have been made for a period of fifty years. 18. Section 8A(5) pertains to mining leases granted for captive purposes, and is principally aimed at leaseholders operating under a .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... years. Therefore, even during the renewal period, if the period of mining lease would get extended (beyond the renewal period), by treating the original lease as of fifty years, the leaseholder would be entitled to the said benefit under the third contingency. For the leases governed by Section 8A(5), out of the above three contingencies, the contingency as would extend the lease period farthest, would be applicable. 19. A similar contingency has been provided for Under Section 8A(6) with reference to mining leases used for non-captive purposes. Herein also, the same three contingencies are contemplated. Firstly, the period of all renewals expiring before 31.3.2020 ...shall be extended and be deemed to have been extended... up to 31.3.2020, ...with effect from the date of expiry of the period of renewal last made... . Secondly, if the renewal period in any case would have actually stretched beyond 31.3.2020-then till the completion of the postulated renewal period. Thirdly, for extending the original lease to fifty years, from the date of grant of the original lease. For leases governed by Section 8A(6) the contingency, as would expire last of all, would be applicable to the lease .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... pressly used. It was therefore asserted, that the expiry of the original grant or renewal, would per se not exclude the applicability of Section 8A. 23. Insofar as the words renewal had been rejected (used in Section 8A(9) of the MMDR Act are concerned, it was submitted, that it was clear from the words deployed, that the contemplated contingency applied only to a situation where an application for renewal had been rejected. Namely, that a renewal of a mining lease had been applied for Under Sub-section (2) or (3) of Section 8 of the MMDR Act, read with Rule 24A of the Mineral Concession Rules, and thereupon, the request for renewal had been rejected. For the term determination , reliance was placed on Rules 27(4), 27(5), 29, 37(3) and Part IX Clause 2, Form K of the Mineral Concession Rules. It was contended, that the term determination had been deployed for situations where the lease period could be brought to an end, on account of a default having been committed by a leaseholder. For instance, default in the payment of royalty or in the payment of dead rent. The default could also be of violating the lease conditions envisaged Under Rule 27(1) or (2) or (3) of the Mineral Conces .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... tions in the past few years. Important judgments related to the mining sector have been pronounced by the Supreme Court, besides judgments on the issue of allocation of natural resources which have direct relevance to the grant of mineral concessions. 4. The present legal framework of MMDR Act, 1957, does not permit the auctioning of mineral concessions. Auctioning of mineral concessions would improve transparency in allocation. Government would also get an increased share of the value of mineral resources. Some provisions of the law relating to renewals of mineral concessions have also been found to be wanting in enabling quick decisions. Consequently, there has been a slowdown in the grant of new concessions and the renewal of existing ones. As a result, the mining sector started registering a decline in production affecting the manufacturing sector which largely depends on the raw material provided by mining sector. The Government has therefore felt it necessary to address the immediate requirements of the mining sector and also to remedy the basic structural defects that underlie the current impasse. 5. In view of the urgent need to address these problems, the Mines and Mineral .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... /31.3.2020. The Objects and Reasons for the amendment to the MMDR Act aim at remedying the position which emerged upon the interpretation of the provisions of the MMDR Act, as they existed hitherto before. The instant amendment was also directed at remedying the grievances of the mining industry due to second and subsequent renewals remaining pending. And also, because the provisions of law relating to renewals had been found to be wanting. The above view is also endorsed by the fact, that Section 8A(9) deals with a situation wherein ... renewal has been rejected... . It is therefore apparent, that Sub-sections (5) and (6) of Section 8A of the amended MMDR Act are aimed at situations, wherein an application for renewal (validly made) has remained unattended. Therefore, for no fault of the leaseholder, he would be subjected to an arbitrary prejudice. It needs to be clarified, that since an application for renewal cannot be filed after 12.1.2015, an application for renewal as would be treated as having been validly made, ought to have been made before 12.1.2015. We are of the view, that out of the three contingencies contemplated Under Sub-Sections 8A(5) and 8A(6), referred to above, .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... bove, it is imperative for us to clarify, that the benefit of extension of the lease period postulated Under Section 8A of the MMDR Act is available, subject to a further overriding condition, namely, ... that all the terms and conditions of the lease have been complied with . A leaseholder who does not satisfy any of the required conditions of the lease, as for instance, the postulated clearances/approvals/consent, would not be entitled to the benefits extended Under Sub-section (5) or (6) of Section 8A of the amended MMDR Act. 28. Having addressed the issue with reference to the subsistence of a mining lease, on the basis of an interpretation of Sections 8 and 8A of the MMDR Act, we have substantially covered the area needed to be traversed. It is however important to notice, that one further aspect needs to be dealt with. The same emerges from a collective reading of Section 4A(4) of the MMDR Act and Rules 28, and 28A of the Mineral Concession Rules. Section 4A(4) was substituted for the earlier Section 4A with effect from 10.2.1987, as under: -A. Termination of prospecting licences or mining leases.- xxx (4) Where the holder of a mining lease fails to undertake mining operation .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ed as expressed above, for the reasons beyond the control of the leaseholder, could make an order, in the first contingency, that the lease would not lapse. And in the second contingency, that the lease would rematerialize. 30. It is not possible for us to accept, that vital vested rights in a leaseholder, can be curtailed without affording him an opportunity to repudiate the impression(s) of the competent authority, namely, that the leaseholder could not have (or had actually not) carried out mining operations, for a continuous period of two years. Our instant contemplation, stands affirmed through Rule 28 of the Mineral Concession Rules. The same is reproduced below: 28. Lapsing of leases-(1) Subject to the other conditions of this Rule where mining operations are not commenced within a period of one year (sic. two years) from the date of execution of the lease, or is discontinued for a continuous period of one year (sic. two years) after commencement of such operations, the State Government shall, by an order, declare the mining lease as lapsed and communicate the declaration to the lessee. (2) Where a lessee is unable to commence the mining operation within a period of one year .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... nce of operations for a continuous period of more than one year (sic. two years). Explanation 3.-In case of mining lessee who has undertaken reconnaissance operations or in case of mining lessee whose capital investment in mine development is planned to be in excess of ₹ 200 crores and where the mine development is likely to take more than two years, the State Government shall consider it to be sufficient reason for non-commencement of mining operations for a continuous period of more than two years. (Emphasis is ours) It is apparent from a perusal of Sub-rule (1) extracted above, that the State Government is mandated to pass an order, and thereby, declare that a mining lease had lapsed. It is also the mandate of Sub-rule (1) aforesaid, that such an order passed by the State Government, must be communicated to the leaseholder. On a conjoint reading of Section 4A(4) and Rule 28(1), we are satisfied to hold, that a mining lease Under Section 4A(4) would not be deemed to have lapsed, till the State Government passes an order, declaring the mining lease to have lapsed, and further communicates the same to the leaseholder. 31. Rule 28(4) of the Mineral Concession Rules, caters to .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... re the existing lease was due to expire, and on consideration, such an application has been rejected, will be considered as not a valid/subsisting leaseholder. The provisions of the amended Section 8A of the MMDR Act will not enure to the benefit of such leaseholder, because of the express exclusion contemplated for the above exigency, Under Section 8A(9) of the amended MMDR Act. (iv) A leaseholder who has moved an application for first renewal of the original mining lease, at least twelve months before the original lease was due to expire, and such application has not been rejected, will be considered to be a valid leaseholder having a subsisting right to carry on mining operations, till the expiry of two years after 18.7.2014, i.e., up to 17.7.2016, as is apparent from a conjoint reading of the unamended and amended Rule 24A of the Mineral Concession Rules. Such leaseholder would have the benefit of Sub-sections (5) and (6) of Section 8A of the amended MMDR Act. (v) A leaseholder who had moved a second (third or subsequent) renewal application Under Section 8(3) of the unamended MMDR Act, at least twelve months before the renewed lease was due to expire, and whose application had .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||