Jurisdiction - India
News
India – Infrastructure Updates.

17 July, 2014

 


SC, by its decision dated April 21, 2014, in case of Goa foundation v. Union of India(‘Goa Foundation’), has decided some important issues concerning mining leases that are likely to have an impact on the Indian mining industry.

 
Section 8 of the Mines and Minerals (Development and Regulation) Act, 1957 (‘MMDR Act’) sets out the period for which mining leases may be granted or renewed. Section 8(1) states that a mining lease may be granted for a period of no less then 20 years and no more than 30 years. Section 8(2) states that the mining lease may be renewed for a period of 20 years. Accordingly, where the lessee makes an application for renewal within the statutory period (being at least 12 months prior to the date of expiry of the lease), such lease may be renewed for one term of 20 years.

 
Rule 24A(6) of the Mineral Concession Rules, 1960 embodies the “deemed renewal” concept, in terms of which, a lessee who has made a renewal application within the statutory time period is deemed to have obtained a renewal of the lease until the earlier of the receipt of an adverse communication from the relevant Government or the actual renewal.

 
Finally, Section 8(3) of the MMDR Act states that a mining lease may be renewed for one or more terms of 20 years beyond the first period of renewal only where the relevant Government applies its mind and records a finding that such renewal will be in the interest of mineral development. Further, such view must necessarily be corroborated by a report furnished by the Controller of Mines, IBM.

 
Presently, there are a large number of mines in respect of which the mining leases are under “deemed renewal” even after the first renewal period.

 
SC in the Goa Foundation case, has held that a renewal beyond the first renewal period of 20 years may be granted by GoI only after due application of the mind and recording of special reasons that such renewal would indeed be in the interests of mineral development. Accordingly, the operation of Rule 24A(6) would remain subservient to Section 8(3), which imposes special requirements to check arbitrariness. Hence, lessees may operate mining leases on a deemed renewal basis only during the first renewal period and not beyond that. Any mining on a deemed renewal basis beyond the first renewal period would be tantamount to illegal mining.

 
Further, relying on an earlier decision, SC has reaffirmed that where the dump / overburden / rejects from mining are kept beyond the mining area, such storage would constitute “mining activity” and would, accordingly, require a forest clearance (where the dumping area is within a forest area) and would also require an environmental clearance under the EIA Notification, 2006. Further, they affirmed that no lessee has the legal right to dump / store mining waste on the strength of the authorisation granted under the mining lease deed, whether such land belongs to the Government / private parties or to the lessee.

 

End Notes:

 

1 Writ Petition (Civil) no. 435 of 2012


AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
[email protected]

 

Abhijit Joshi, AZB & Partners 
[email protected]


Shuva Mandal, AZB & Partners 

[email protected]

 

Samir Gandhi, AZB & Partners
[email protected]


Percy Billimoria, AZB & Partners 

[email protected]

 

Aditya Bhat, AZB & Partners 
[email protected]

 

AZB & Partners Energy & Project Finance Practice Profile in India

 

Energy & Project Finance Law Firms in India

 

Comments are closed.