Dismissed

M/S Nishant Traders v. State of U.P. and 2 Others

Allahabad HC18 Jan 2021WRIC/595/2021

Case brief

AI extract

What is this about?

The High Court dismissed a challenge to the 50th Amendment Rules 2020 modifying Rule 23(2)(a) of the U.P. Minor Minerals (Concession) Rules, 1963. The amendment mandated e-tendering for riverbed mining and introduced short-term permits. The Court held the amendment was within the State's power under Section 15(1) of the MMDR Act, 1957, did not abrogate existing rights, and was not contrary to the

What did the court decide?

The petition challenging the validity of Rule 23(2)(a) and seeking quashment of the tender notice was dismissed. The amendment rules are upheld.

M/S Nishant Traders Vs State of U.P. and 2… — Public Procurement and Tenders | Allahabad HC (2021)

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Court No. - 9

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AFR

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Case :- WRIT - C No. - 595 of 2021

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Petitioner :- M/S Nishant Traders Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Devbrat Mukherjee Counsel for Respondent :- C.S.C.

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Hon'ble Sanjay Yadav,J. Hon'ble Jayant Banerji,J.

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Shri Devbrat Mukherjee appears for the petitioner.

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Learned standing counsel appears for the State respondents.

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The validity of clause (a) of sub rule (2) of Rule 23 of Uttar Pradesh Minor Minerals (Concession) Rules, 1963 is being questioned vide this petition under Article 226 of the Constitution of India. Ancillary relief sought by the petitioner is the quashment of notice dated 20.6.2020 inviting e-tender for grant of mineral lease. Petitioner also seeks mandamus to the extent that the respondents be directed to grant mining lease for five years.

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The impugned clause (a) sub rule (2) of Rule 23 of 1963 Rules as brought in vogue vide 50^th Amendment Rules 2020 w.e.f. 22.5.2020 is reproduced for ready reference:

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“ (2) Subject to direction issued by the State Government from time to time in this behalf-

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(a) The area or areas for mining leases in respect of sand or morrum or bajari or boulder or any of these in mixed state exclusively found in the riverbed shall be leased out only by e-tender or e-auction or e- tender-cum-e-auction for the fixed period of five years at a time:

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Provided that, if for any reason, it is not possible to settle the river bed mining areas for the long term, the areas may be settled through short term mining permit. Short term permit will be granted for a maximum period of 6 months by e-tender/e-auction, under terms and conditions laid down by the State Government from time to time:

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Provided further that in case of grant of mining permit, the permit holder shall make payment of all due amount in advance.”

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Apparently the amendment is in exercise of the powers conferred under section 15 of the Mines and Minerals (Regulation and Development) Act, 1957, which provides that the State Government may by Notification in the official gazette make rule for regulating the grant of quality leases and mining leases or other mineral concessions in respect to minor minerals and for purpose connected therewith. Sub section (1-A) of Section 15 of 1957 Act further empowers the State Government to make Rules in respect of matters which find mention in clauses (a) to (o) thereof. That clause (a) stipulates that the Rule can be made in respect of the person by whom and the manner in which, applications for quarry leases, mining leases or other mineral concessions may be made and the fees to be paid therefor. That clause (e) stipulates that rule can be framed in respect of the procedure for obtaining quarry leases, mining leases or other mineral concession.

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Precise submissions on behalf of the petitioner is that the Rules of 1963 there are two provisions for grant of concession under Chapter II by way of mining lease and the other under Chapter IV by way of auction lease. It is urged that both these Chapters cannot operate simultaneously. In other words it is contended that under Chapter IV of the Rules of 1963 there being a legislation that once a mining area had been declared for grant of e-tender-cum-e-auction lease other Chapters for grant of concession are inoperative.

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It is further contended that under declaration of Rule 23(3) of the Rules of 1963, the provisions of Chapter II, III and IV does not apply to such area. It is urged that Chapter II deals with grant of mining lease on the basis of certain preferential rights and Chapter VI deals with mining permit. It is contended that the impugned amendment which facilitates short term mining permit by way of e-tender-cum-eauction is contrary to the entire scheme of Rules of 1963. As also it contravenes the provisions contained under sub section (3) of Section

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15 and Section 19 of 1957 Act. It is also borne out from the pleadings that the petitioner is a prospective applicant for lease of mining area situated at village Manjh Sautarampur Tehsil Haraiya District Basti admeasuring 10.15 hectares having a preferential rights under Rule 9(2) of the Rules of 1963. Be that as it may the impugned amendment is challenged mainly on the ground of it being violative of Section 15(3) and 19 of 1957 Act and is contrary to the scheme of 1963 Rules.

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As regard to contention that the impugned rule contravenes Section 15(3) and 19 of 1957 Act, it is observed that Section 15 of 1957 Act empowers the State Government may, by notification in the official gazette, make rules for regulating the grant of quality leases, mining leases and other mineral concessions in respect of minor minerals and for purposes connected therewith. Sub section (3) of Section 15 of 1957 Act which stipulates that the holder of a mining lease or any other mineral concession granted under any rule made under subsection (1) shall pay royalty or dead rent, whichever is more in respect of minor minerals removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee at the rate prescribed for the time being in the rules framed by the State Government in respect of minor minerals. Proviso to sub rule (3) stipulates that the State Government shall not enhance the rate of royalty or dead rent in respect of any minor mineral for more than once during any period of three years.

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Fair reading of sub section (3) and the proviso indicates that it relates to payment of royalty or dead rent by the holder of a mining lease or any other mineral concession granted under any rule made under sub section (1) of Section 15 of 1957 Act. The impugned amendment as apparent therefrom is in exercise of powers under Section 15(1) of 1957 Act and is in the domain of regulating the grant of mining permit where if for any reason it is not possible to settle the river bed mining

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areas for the long term, the areas can be settled through short term mining permit not exceeding 6 months by e-tender/e-auction. It being not the case of the petitioner that newly substituted Rule 23(2)(a) abrogated the right of the holders of lease on concession in praesent, we perceive no good reasons to accede to the contention that it violates section 15(3) of 1957 Act. The contention to that effect therefore fails. Similarly the contention that the impugned amendment violates section 19 of 1957 also fails for the reason that with the advent of Rule 23(2)(a) the grant of mining permit for a short period being in accordance with the Rules, the wrath of Section 19 of 1957 is not attracted.

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As to the contention that the impugned amendment contravenes sub rule (3) of Rule 23 of the Rules, 1963. Evidently sub-rule (3) stipulates that on the declaration of the area under sub-rule (1) the provisions of Chapters II, III, VI and IX except Rules 10, 12, 17 and 93 shall not apply to the area or areas in respect of which the declaration has been issued. Such area or areas may be leased out according to the procedure described in this Chapter.

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Thus the application of the provisions of Chapter II (which makes provision regarding grant of mining lease and includes provision as to preferential right of certain persons) Chapter III (which provides the payment of royalty and dead rent) and Chapter VI (which deals with mining permit) stand suspended once an area is declared to be leased out by auction-cum-e-tender or e-auction. It be noted that the applicability of Rule 10 and 12 of Chapter II which provides for ‘extent of area for which a mining lease may be granted’ and the ‘period of mining lease’ is not suspended. In our considered opinion the empowerment of the State Government to settle river bed mining area for short term mining permit where for any reason it is not possible to settle river bed mining for the longer term does not violate the mandate as contained under sub rule (3) of Rule 23 of the Rules,

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Similarly the proviso to clause (a) of sub rule (2) of Rules 23 does not violate the provision contained under Rule 51 which sets out the outer limit of six months for grant of mining permit.

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During course of hearing on admission learned counsel for the petitioner relied on various judgments.

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In Sandur Magnese and Iron Ores Ltd. v. State of Karnataka and Others (2010) 13 SCC 1 dwelling on following issues, viz,

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“ 6. (a) Whether the State government’s recommendation dated 6-12-2004 and the proceedings of the Chief Minister are contrary to the provisions of Section 11 of the Act and rules 59 and 60 of MC Rules and not valid in law.

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(b). Whether the respondent Jindal’s application dated 24-10-2002 made prior to notification dated 15-03-2003 is capable of being entertained along with the applications made in pursuant to the said notification.

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(c.) Whether the order of the high court of Karnataka in Ziaulla Sharieff’s case permits the consideration of the respondent Jindal’s application dated 24-10-2002 made prior to the notification dated 15-3-2003.

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(d.) Whether Rule 35 of the MC Rules justifies the recommendation of the State Government in favour of the respondents Jindal and Kalyani.

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(e.) Whether the criterion of “captive consumption” referred to in TISCO Ltd. v. Union of India (1996) 9 SCC 709, has any application in this case despite the MMDR Act and the MC Rules constituting a complete code.

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(f.) Whether factors such as the past commitments by the State Government to the applicants who have already set up steel plants, matter for consideration for grant of lease despite the MMDR Act and the MC Rules constituting a complete code.

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(g.) Whether the recommendation in favour of respondents Jindal and Kalyani saved by the operation of the law of equity.

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(h.) Whether the learned Single Judge as well as the Division Bench are justified in arriving at such conclusion.”

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it was held by their Lordships as under:

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“ 43. It is not open to the State Government to justify grant based on criteria that are dehors the MMDR Act and the MC Rules. The exercise has to be done strictly in accordance with the statutory provisions and if there is any deviation the same cannot be sustained. It is the normal rule of construction that when an statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself. This principal has been reiterated in CIT v. Anjum M.H. Ghaswala (2002) 1 SCC 633; Captain Sube Singh v. Lt. Governor of Delhi (2004) 6 SCC 440 and State of U.P. v. Singhara Singh AIR 1964 SC 358”

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Present is not a case where the functionaries of the State Government dehors the rules have issued instructions rather the State in exercise of its powers conferred under section 15(1) of 1957 Act has incorporated Rule 23 through instruction which being within its competent and being not in contravention to any other existing rule cannot be faulted with.

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As to decision in State of Kerala and Others Vs. Kerala Rare Earth And Minerals Limited And Others (2016) 6 SCC 323 the issue therein was whether the ownership in the mineral resources in the land owned by the State Government is vested in the State Government and if it is, whether the State Government has the right to decline lease on the ground that the minerals on the areas where the same are found have been reserved for exploitation by Government Companies or Corporations, it was held in paragraph 17 and 19 as under:

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“17. It is well settled that if the law requires a particular thing to be done in a particular manner, then, in order to be valid the act must be done in the prescribed manner alone [See: Commissioner of Income Tax, Mumbai v. Anjum M.H. Ghaswala and ors. (2002) 1 SCC 633; Captain Sube Singh and Ors. v. Lt. Governor of Delhi and Ors. (2004) 6 SCC 440; State of U.P. v. Singhara Singh AIR 1964 SC 358; and Mohinder Singh Gill v. Chief Election Commissioner (1978) 1 SCC 405]. Absence of the Central Government’s approval to reservation and a notification as required by Section 17A, therefore, renders the State Government’s claim of reservation untenable till such time a valid reservation is made in accordance with law. It is trite that the State Government’s general executive power cannot be invoked to make a reservation dehors Section 17A.

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18…

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19.The upshot of the above discussion then is that while the State Government is the owner of the mineral deposits in the lands which vest in the Government as is the position in the case at hand, the Parliament has by reason of the declaration made in Section 2 of the 1957 Act acquired complete dominion over the legislative field covered by the said legislation. The Act does not denude the State of the ownership of the minerals situate within its territories but there is no manner of doubt that it regulates to the extent set out in the provisions of the Act the development of mines and minerals in the country. It follows that if the State Government proposes to reserve any area for exploitation by the State owned corporation or company, it must resort to making of such reservation in terms of Section 17A with the approval of the Central Government and by a notification specifying boundaries of the area and mineral or minerals in respect of which such areas will be reserved.

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Inasmuch as the State Government have not so far issued any notification in terms of Section 17A, the Industrial Policy – 2007 of the Kerala State Government does not have the effect of making a valid reservation within the comprehension of Section 17A. The High Court was, therefore, justified in holding that there is no valid reservation as at present no matter the government can make such a reservation if so advised in the manner prescribed by law. In other words, the dismissal of this appeal shall not prevent the State from invoking its right under Section 17(A)(2) of the Act by issuing notification in respect of the mineral deposits in question. There is, in that view, no reason for us to interfere with the judgment and order passed by the High Court. ”

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Apparently the issue was not whether the State in exercise of its powers under section 15(1) of 1957 Act can amend the rules relating to minor mineral to regulate the mining lease and other mineral concession. Therefore the petitioner is not benefited from the decision in State of Kerala and others Vs. Kerala Rare Earth And Minerals Limited And Others (supra)

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Even the decision in Shiv Charan vs. Union of India 1981 Alld. LJ 641 wherein it is held that the mining lease can be granted only in accordance with the procedure in Chapter II or IV and not in any way by relaxing terms and condition under section 68 of U.P. Minor Minerals (Concession) Rules 1963 is of no assistance.

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Having this considered since we do not perceive any merit in the challenge to the 50^th amendment whereby impugned Rule 23(2)(a) is substituted in the Rules of 1963, the indulgence is declined.

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Petition fails and is dismissed .

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No costs.

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Order Date :- 18.1.2021 Kirti

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(Jayant Banerji, J) (Sanjay Yadav, J)

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