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Mining area not able to operate for a specific period; only that amount is liable to be refunded: SC

Amount paid as installments under mining lease; Mining area not able to operate for that period – only that amount is liable to be refunded: SC

Dharmendra Kumar Singh v. The State of Uttar Pradesh & Ors.

Civil Appeal No. 12202 of 2018

Decided on October 28, 2020

Counsels for the Appellant: Mr. Mukul Rohatgi and Mr. S.P. Singh

Counsels for the Respondent: Mr. V.Shekhar

A division bench comprising Justice Sanjay Kishan Kaul and Justice Hrishikesh Roy decided the present litigation. The main question brought before the Court pertained to whether to adopt the course of extending the leases for the obstructed period or in some way compensating the appellants for the same.

In order to elucidate on the current matter, the Court traced back the fact flow of the present case. Mining leases were granted to projects in Sonbhadra, Uttar Pradesh in 1989. The All India Kaimur People’s Front (AIKPF) sought directions before the National Green Tribunal, New Delhi (NGT) for prohibiting alleged illegal mining in the Kaimur Wildlife Sanctuary located in the Sonbhadra District. In pursuance of this development, a Notification dated 20.03.2017 was issued by the Ministry of Environment, Forest and Climate Change declaring the “area in question” as an Eco-Sensitive Zone (ESZ) under the Environment (Protection) Act, 1986.

The State of UP laid out the position of all the grant of leases before the NGT in an affidavit filed in this behalf. Thirty-three leases were stated to be operational outside ESZ. The NGT called upon the State of UP to explain the position of these leases in view of the order it had passed on 4.5.2016 in T.N. Godavarman Thirumalpad v. Union of India and Ors., M.A. No. 1166 and 1164 of 2015, in which the NGT had directed the State of UP to cancel all mining leases and all other non-forestry activities on the areas notified under Section 4 of the Indian Forest Act, 1927, which specified as to what lied within the limits of reserved forest area. In the said proceedings, the Court noted some active leases still remained in force on lands which were covered under the Notification issued under Section 4 of the Forest Act for which the corresponding notification under Section 20 of the Forest Act had still not been issued. The NGT, thus, directed through order dated 13.7.2018 that all leases under Section 4 area be prohibited by the State of UP forthwith. The review filed by the State of UP came to be dismissed through order dated 29.8.2018. The aforesaid order dated 13.7.2018 by the appellants is impugned before the Court currently, except for appellants in C.A. No. 5093/2019 where order dated 25.3.2019 of the NGT has been impugned. However, this order was also decided in terms of the main impugned order dated 13.7.2018.

The appellants, i.e. the leaseholders of the leases who were not made parties in the previous disputes but had to suffer the consequences of the aforesaid order in as much as the administrative orders of the District Magistrate, Sonbhadra (on 29.8.2018 and 5.2.2019) in pursuance of the aforesaid order of the NGT prohibiting mining and transportation of boulders till the next order, filed appeals before this Court as being the affected parties under Section 22 of the National Green Tribunal Act, 2010 against the State of UP, its concerned departments and officers, Ministry of Environment, Forest and Climate Change, as well as AIKPF as respondents. The appeals are brought forth on the ground that the respective lands and corresponding leases being excluded from the purview of the Notification issued under Section 4 of the Forest Act, the lands in question being ‘pahadh lands’, i.e., uncultivable waste lands that belonged to the Revenue Department.

In the present civil appeal, notices were issued and all appeals were clubbed. In the counter affidavit dated 23.4.2019 filed by the State of UP, the factual progression discussed aforesaid in respect of the land excluded from the purview of Section 4 was set out. The State of UP also sought permission of the Court with respect to issuance of the notification under Section 20 for those lands, which did come under Section 4 of the Forest Act.

In the counter affidavit, the question that emerged was that if the notification under Section 20 had not been issued and certain parts of the lands covered under the notification under Section 4 had been deleted by the competent authorities, whether such deleted lands shall be treated as non-forest lands without issuance of notification under Section 20 of the Forest Act. On 15.7.2020, this Court noted that the Section 20 notification had finally been issued on 15.6.2020. Thus, the Court noted that on that date the only question remaining to be determined was with regard to the extension of leases for the period for which the mining leases of the appellants were not permitted to operate and sought the view of the State of UP on this aspect.

The State respondents filed an additional affidavit dated 06.08.2020 setting forth its stand. It was contended by the State of UP that no permission for mining can be granted for the obstructed period as there does not exist any provision for grant of such permission for mining in case of disruption of mining operations under the Uttar Pradesh Mining Minerals (Concession) Rules, 1963. On 10.8.2020 while noticing the aforesaid and upon a query from the Court, the State of UP conceded that it was willing to refund the proportionate amount of the lease money, for which period the leases have not been permitted to operate. This was objected to by the appellants.

Thus, the Court crystallised the issue to be determined as to whether the appropriate order to pass would be for refund of the lease amount for the period it was not permitted to operate, or whether the leases are liable to be renewed for the period of obstructed time.

The State of UP, represented by learned senior counsel Mr. V.Shekhar, stated that the impugned order resulted in 41 leases ceasing to exist and 29 leases out of them have been covered by Notification under Section 20. The notification had resulted in 5 out of 29 leases falling within the radices of 100 metres of the forest land and out of the remaining 24 leases, 12 have expired and 12 subsist, and only the latter is of concern now. The State of UP also contended that it had only complied with the impugned order and if these mining leases are now extended there would be consequences flowing to the State of UP, on account of judicial orders. He stated that there was no legal rule or any provision in the respective lease deeds to pay damages in case of disruption of mining leases and the consequences of such disruption are set out in Rule 40(h) of the Mining Rules, owing to which in the event of disruption of mining operations in the leased areas due to special circumstances, the District Magistrate, with the prior approval of the State Government shall adjust the amount equivalent to the installment payable during the disrupted period against the forthcoming installment. Thus, it was contended that the State of UP is only liable to refund (i) any security deposit, or (ii) advance royalties paid to it. The concluding argument was that the appellants were not entitled to any extension or renewal of their old leases and at the most are entitled to refund of their respective lease amounts for the period for which the leases were not permitted to operate, an aspect which has already been conceded on behalf of the State Government in the proceedings dated 10.8.2020. Thus, the permission sought by the appellants for operating the expired mining lease for the obstructed period was strongly opposed, leaving it for the appellants to file an application under Rule 40(h) if the amount is to be refunded or adjusted.

The contentions of the appellants, on the other hand, led by learned senior counsel, Mr. Mukul Rohatgi and Mr. S.P. Singh, was that the land for which mining leases were granted to the appellants were excluded from the purview of the Section 4 notification in pursuance of the settlement proceedings concluded as per directions in Banwasi Seva Ashram case, (1986) 4 SCC 753. These settlement proceedings are pleaded to have been ignored while passing the impugned order and that too without notice to the appellants. The counsels pleaded that suspension of the mining leases is not on account of illegal mining or any such factor, which may weigh against the appellants. The delay in issuance of the Section 20 notification was solely because of the delayed State action, and the issue was finalised only on 15.6.2020 whereby the land categorised as revenue land was excluded from the purview of forest land. The plea of the State of non-grant of extension of leases is stated to be contrary to record as that power has been exercised in the past under Rule 68 of the Mining Rules and placed reliance on the judgments in J.P. Yadav v. Kanhaiya Singh & Ors., CA No.8621/2013 and Jagdish Prasad Nishad v. State of UP & Ors., (2015) 128 RD 150. The learned counsel relied upon the observations in Beg Raj Singh v. State of UP & Ors., (2003) 1 SCC 726, for the proposition that the ordinary rule is that the Court should try to place the successful party in the same position which they had been in, if the wrong complained against them would not have been done to them. Moreover, it was argued that, it is a well-settled proposition of law that an act of the Court shall prejudice no one and the same is reflected in the maxim, ‘Actus curiae neminem gravabit’.

The Court, on hearing both sides, agreed with the submission of the Counsel for the State by reiterating the view in Vijay Kumar Dwivedi, (2016) 4 All LJ 690 :

If there has been an obstructed period by reason of a judicial interdict, that itself will not give window to extend the lease by not following the statutory provisions, especially when the terms of the lease do not provide for any consequences thereof. (Para 36)

The Court rejected the contention of the appellants that this should relate back to the date of the lease and not as on date by observing that the State of UP had issued a New Mining Policy on 12.6.2017 and this policy has no provision for grant of extension of time for obstructed period of mining lease and all mining leases were to be permitted by e-tendering or e-auction alone. If the mining lease is extended for the obstructed period, it would amount to violation of this New Mining Policy and since the extension would have to be granted now, it would violate the policy.

Thus, monetary adjustment is all that has been provided for by Rule 40(h) of the Mining Rules making the legislative intent obvious, i.e., that if some amounts have been paid as installments under the mining lease for the period when the beneficiary is not able to operate the mining area, only that amount is liable to be refunded. (Para 40)

The Court stated that the appropriate course of action to be adopted in this case cannot be to extend the lease for the obstructed period but to direct that the security deposit, if not already refunded, should be refunded and the amount deposited by the appellants/leaseholders as advance royalties to the respondent/State be also paid back to them in addition that the monies should carry simple interest @ 9% per annum since these monies have remained blocked and that they be refunded within two months from the date of judgment.

The Court disposed the appeals and all pending applications in terms aforesaid.

Jhanavi M



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