Supreme Court of India
STATE OF GUJARAT & ORS.versusNIRMALABEN S. MEHTA & ANR. ETC.
- Citation
- 2016 INSC 523
- Decided
- 13 July 2016
- Disposal
- Appeal(s) allowed
- Bench
- V GOPALA GOWDA
Holding
A renewal of a mining lease is a fresh grant, and the State, after the Central Government’s 16‑Jan‑1980 permission, may impose the captive‑plant condition under Rule 27(3), rendering the High Court and Revisional Authority orders void.
Summary
The State of Gujarat entered into a 20‑year mining lease with the respondents for bauxite extraction. The State later de‑reserved the mining area and sought Central Government permission to impose conditions, including the establishment of a captive plant, under Rule 27(3) of the Mineral Concession Rules, 1960. When the respondents applied to sell a large quantity of non‑plant‑grade bauxite, the State rejected the request on the ground that they had not set up the captive plant within two years. The Central Government set aside the State’s rejection, but the High Court and a Revisional Authority upheld it, holding that a lease renewal was not a fresh grant and the State could not impose new conditions. The Supreme Court held that renewal of a mining lease is a fresh grant, that the State, after the Central Government’s 16‑Jan‑1980 permission, could impose the captive‑plant condition, and that the Central Government’s permission under Rule 27(3) applied to the respondents’ lease. Consequently, the orders of the High Court and Revisional Authority were set aside and the appeals were allowed.
Issues considered
- Whether the State can impose a condition of setting up a captive plant at the time of renewal of a mining lease.
- Whether the Central Government's permission under Rule 27(3) of the Mineral Concession Rules, 1960 (letter dated 16‑Jan‑1980) is applicable to a lease granted prior to that date.
- Whether a renewal of a mining lease constitutes a fresh grant for the purpose of imposing new conditions.
Legislation cited
- Mineral Concession Rules, 1960s. Rule 27(3), s. Rule 54, s. Rule 55, s. Rule 640
- Mines and Minerals (Development and Regulation) Act, 1957s. 13, s. 30, s. 9(3)
- Mines and Minerals (Regulation) Act (repealed)s. 58, s. 66, s. 70, s. 71, s. 80, s. 81
Subjects
mining lease renewalfresh grantcaptive plant conditionMineral Concession Rulesde‑reservationcentral government permissionbauxite exportroyaltystate vs central jurisdiction
Judgment
[2016] 4 S.C.R. 140
A STATE OF GUJARAT & ORS.
v.
NIRMALABEN S. MEHTA & ANR. ETC.
(Civil Appeal No. 6209-6211 of2016)
B JULYl3,2016
[V. GOPALA GOWDA AND ARUN MISHRA, JJ.]
Mines and Minerals (Development and Regulation Act, 1957
- s. 9(3) - Schedule Part I - Mineral Concession Rules, 1960 -
Lessor entered into lease agreement for 20 years with the State for
c mining lease for.bauxite in respect of certain lands - liy Notification
State reserved the mining areas for public sector, however, 14 years
later de-reserved the said areas - Thereafter, the State sought
permission fro/i, Central Government to impose certain conditions
upon the mining of bauxite to protect the interest of the State -
D Grant of permission by Central Government for de-reservation of
the areas ond for imposition of conditions on mining lease -
ThereaftP•; issu•.. 1ce of circular by State Government permitting sale-
export of A •n Plant Grade(NI'G) Bauxite and guidelines framed
for computation of royalty on sale of NPG Bauxite - Respondent
then sought permission from the State Government for sale of 11290
E
metric; tones of bauxite - Rejection by State on the ground offailure
of the respondent to establish captive plant within a period of two
years in accordance with the prevailing policy- Challenge to, by
the respondent - Central Government set aside the State
Governments rejection order - Appeal by the State - High Court
F dismissed the appeal and imposed cost of Rs. 50,0001- for non-
disclosure of writ filed by the State Government - Division Bench
set aside the order imposing cost - On appeal, held: Fresh grant
and' a renewal of existing lease of the mining area stands on the
same footing - State after 16.01.1980 had the power to impose
condition inter alia, for setting up of a captive plant for bauxite by
G
the respondents at the time of renewal of their lease - It cannot be
said that permission for inclusion of certain conditions including
condition for setting up of a captive plant by the leaseholders u/r.
27(3) for the de-reserved area granted by the Ce~tral Government
vide letter dated 16. 01.1980 would not be applicable to the
H respondents' lease which was granted prior to 16. 01.1980 merely
140
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 141
ANR. ETC.
because their mines were not affected by the notification of A
reservation issued by the appellant-State - Orders of both the High
Court as well as the Revisional Authority set aside.
Allowing the appeals, the Court
HELD: 1.1 Both the Revisional Authority as well as the
High Court erred in coming to the conclusion that a renewal of B
leaSl' "f the mining area is not a fresh grant and that at the time of
grant vf renewal of lease of the area, the State Government is not
empowered to impose -or enforce condition inter-alia, of setting
up of a captive plant by the respondents. [Para 25) [153-B)
1.2 The High Court failed to appreciate that for imposition c
of condition in the grant of renewal of lease, inter alia, of setting
up of a captive plant by the respondents, the appellant-State had
sought permission_ from the Central Government vide
communication dated 02.08.1978 and the same was granted by
the Central Government vide its letter no.4(2)/78-NVI dated D
16.01.1980. The letter makes it clear that the Central
Government had no objection if clauses pertaining to the
imposition of certain conditions upon the leaseholders 11re
included under Rule 27(3) of the Mineral Concession Rules, 1960
with respect to the bauxite areas of Junagadh and Jamnagar .E
·districts de-reserved by the State vide n_otification dated
02.08.1978, which were earlier reserved for exploitation of
bauxite by the public sector undertakings. [Para 26] [153-C-E]
1.3 The'High Court erred in not noticing the well settled
legal proposition as laid down by this Court in Gajraj Singh 's case,
on the point that the grant of renewal of the lease in respect of F
the mining area in question is a fresh grant. The permission for
de-reservation of bauxite areas in the said districts of the State''
which were earlier reserved for bauxite mining in the public
interest as well as for imposition of condition,interalia, of setting
up of a captive plant by the respondents the permission in this G
regard was granted by the Central Government vide letter dated
16.01.1980, whereby the Central Government showed no
objection for the inclusion of conditions mentioned in the letter
dated 02.08.1978 addressed to it by the appellant under Rule
27(3) of the Mineral Concession Rules, 1960 ifor the de-reserved
area. [Para 27] (153-F; 154-F-G] · H
142 SUPREME COURT REPORTS [2016] 4 S.C.R.
A 1.4 It is clear that in the absence of any provision in the
lease deed or in the Act, Rules or Orders etc in operation as on
the date of renewal of lease of the mining area in question
providing renewal of lease in favour of the respondents shall be
granted on the same terms and conditions, is governed by the
law or conditions in force at the time of renewal. [Para 28] {154-
B
H; 155-A]
1.5 The appellant-State after 16.01.1980 had the power to
impose condition i11teralia, for setting up of a captive plant for
bauxite by the respondents at the time of renewal of their lease.
Therefore, the impugned order passed by both the Revisional
c Authority and High Court are vitiated in law. [Para 29] [155-B-C]
2.1 The respondents' mines were located in the Jamnagar
district, which area along with Junagadh district area was declared
a reserved area for exploitation of bauxite in public interest vide
notification dated 26.02.1964 issued by the appellant-State.
D However, the said notification did not affect the mine belonging
to the respondents as the said notification was made to operate
prospectively. On 02.08.1978 the appellant-State issued a
notification whereby the bauxite areas of Jamnagar and Junagadh
districts were de-reserved, which were earlier reserved and on
E the same day addressed a letter to the Central Government
seeking permission for the same along with permission for
imposition of certain conditions on the leaseholders of the said
area with a view to protect the interest of the State Government
and at the same time extending help to the industries which
require bauxite for its bona fide captive use. The Central
F Government vide letter dated 16.01.1980 granted permission in
favour of the State Government for both i.e., it allowed de-
reservation of the bauxite areas of Jamnagar and Junagadh
districts, which were earlier reserved, and also allowed the
appellant-State to read clauses referred by it in its letter dated
G 02.08.1978 under Rule 27(3) of the Mineral Concession Rules,
1960 for the de-reserved area. [Para 30] [155-D-G]
2.2 Since the respondents' mines were located in the area
of the Jamnagar district, it would not be correct as contended by
the counsel for the respondent that the permission for inclusion
H of certain conditions including condition for setting up of a captive
STATE OF GUJARAT & ORS. v. NlRMALABEN S. MEHTA & 143
ANR. ETC.
plant by the leaseholders under Rule 27(3) of the Mineral A
Concession Rules, 1960 for the de-reserved area granted by the
Central Government vide letter dated 16.01.1980 would not be
applicable to the respondents' lease which was granted prior to
16.01.1980 merely because their mines were not affected by the
notification of reservation dated 26.02.1964 issued by the
B
appellant-State. [Para 31) (155-H; 156-A-B)
2.3 The appellant-State rightly submitted that any other
interpretation of the said order of the Central Government in
this regard would lead to discrimination between fresh leases
granted post 16.01.1980 on the one hand and renewals of the
existing leases granted after 16.01.1980 on the other. Such a c
distinction sought to be made by the respondents' counsel is
impermissible in law as after 16.01.1980, a fresh grant and a
renewal of existing lease of the mining area stands on the same
footing. [Para 32) [156-C)
2.4 The impugned order passed by the High Court D
confirming the order passed by the Revisional Authority being
contrary to the approval given by the Central Government vide
letter dated 16.01.1980 is not only erroneous but also suffer from
error in law. Thus, the impugned orders of both the High Court
as well as the Revisional Authority are set aside as they are E
vitiated in law. '!'he State Government is at liberty to impose such
terms and conditions in the renewal of lease of the mining area in
question granted in favour of the respondents. A cost of Rs.5
lakhs is awarded to the appellant-State Government in respect of
these proceedings. [Paras 33, 34) [156-E, G-H)
F
Gajraj Singh 1( State Transport Appellate Tribunal 1996
(6) Suppl. SCR 172 : (1997) 1 SCC 650 - referred to.
Case Law Reference
1996 (6) Suppl. SCR 172 referred to Para 17
Cl VIL APPELLATE JURISDICTION: Civil Appeal Nos. 6209- G
6211 of2016.
From the Judgment and Order dated 13.12.2011 of the High Court
of Gujarat at Ahmedabad in Letters Patent Appeal No. 683 of 2011 in
Special Civil Application Nos. 6897 of2010, Letters Patent Appeal No.
684of2011 in Special Civil Application 6899 of20 I 0 and Letters Patent H
144 SUf>REME COURT REPORTS [2016) 4 S.C.R.
A Appeal 685 of2011 in Special Civil Application No. 6898 of20 I 0.
Parag Tripathi, Sr. Adv., Pritesh Kapoor, Ms. Hemantika Wahi,
Ad vs. for the Appel !ants.
Mih. Joshi, Sr. Adv., Satyen Thakker, Ms. Parul Shukla, Satyendra
Kumar, E. C. Agrawala, Ms. Sunita Gautam, Ms. Bharti Tyagi, Shreekant
B N. Terdal, Advs. for the Respondents.
The Judgment of the Cowt was delivered by
V. GOPALA GOWDA, J. I. Leave granted.
2. These appeals are directed against the common judgment and
C order dated 13.12.2011 passed by the High Court of Gujarat at
Ahmedabad in LPA No. 683of2011 in SCA No. 6897of2010, LPA No.
684of2011 in SCA No. 6899 of20 I 0 and LPA No. 685of2011 in SCA
No. 6898 of2010 urging various legal grounds and praying to set aside
the same.
D 3. Brief facts of the case are stated hereunder to appreciate the
rival legal contentions urged on behalf of both the parties:
One Kantilal Mohanlal Mehta entered into lease agreement with the
appellant-State on 20.02.1964 for mining lease for bauxite in respect of
lands described in Part I of the Schedule to Mines and Minerals
E (Development and Regulation) Act, 1957 (hereinafter called the "MMDR
Act"). The said. lease was for 20 years and was given effect from
09.10.1963.
4. On 26.02.1964, the appellant-State issued a notification bearing
no.MND l 760/3788G.V. reserving all areas of Jamnagar and Junagadh
F district for exploitation of bauxite for public sector. However, on
02.08.1978, again a notification was issued by the appellant-State,
whereby the lands, specified int.he schedule thereto, which were earlier
reserved vide notification dated 26.02.1964, for exploitation of bauxite
for the public sector were de-reserved and thus, made available for
grant.ofmineral concession w.e.f. 02.09.1978.
G
The same day, i.e., on 02.08.1978, the appellant-State addressed a letter
to the Central Government seeking permission for de-reservation of the
areas of bauxite in Jamnagar and Junagadh districts, which were earlier
reserved for exploitation of bauxite in public sector for setting up of
alumina plant. on the ground that many applicati9ns were received by it
B
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 145
ANR. ETC. [V. GOPALA GOWDA, J.]
for the establishment of small scale industries in the State based on A
bauxite as raw material. The appellant-State, therefore, desired to release
areas, which were earlier reserved, to industrial units for their captive
consumption only. By this letter the appellant-State sought permission
not only for de-reservation of the areas, which were earlier reserved for
public sector but also to impose certain conditions upon the mining of
B
bauxite with a view to protect the interest of the State and at the same
time extending help to industries which require bauxite as a raw material
for bonafide captive use. The relevant portion of the aforesaid letter
dated 02.08.1978 reads thus:
"5. Central Government may kindly be moved in the interest of
mineral development to grant permission under Rule 27 of the
c
Mineral Concession Rules, 1960 for imposing the following
conditions for protecting the interest of the State Government and
at the same time extending help to industries which need bauxite
for its bonafide captive use.
( 1) the lessee shall establish an industrial unit consuming bauxite D
as main raw material within a period of two years from the date
of grant of the mineral concession.
(2) the State Government shall have right to review and reduce
the areas of mining lease for bauxite granted, ifthe industrial unit
set up works continuously below the rated capacity and areas E
granted is found excess of its requirements.
(3) the lessee shall utilize maximum quantity of bauxite excavated
in his own industrial unit and shall be allowed to sell the bauxite
not suitable for its own industrial unit to other industrial unit in the
State for their own consumption, provided the quantity of bauxite F
for sale does not exceed 20% of the total production and also
provided that the prior permission of the D.G.M. or an officer
authorizes by the State Government is obtained for the sale.
(4) the lessee shall have to sell the bauxite at prevailing market
rate to government or the person to whom the State Government G
may direct, as and when such need arise.
(5) Briefly the Central Government's approval to the following
proposal is required;
( 1) to de-reserve the areas of Kalyanpur Taluka of Jamnagar-
H
146 SUPREME COURT REPORTS [2016] 4 S.C.R.
A District mentioned in the Govt. oflndia letter dated 17 .03 .1962.
(2) to stipulate conditions mentioned above."
5. On 16.01.1980, Central Government addressed a letter bearing
No.4(2)/78-NVI to the appellant-State, whereby, it granted permission
for de-reservation of areas of Jamnagar for exploitation of bauxite mineral,
B which were earlier reserved, and for the imposition of conditions on
mining lease. The relevant portion of the aforesaid letter reads thus:
"2. As regards the pmposal contained in Para 5 of the State
Government's letter dated 02.08.1978, I am directed to say that
the Central Government has no objection if such clauses are
c included under Rule 27(3) of Mineral Concession Rules, 1960 for
the de-reserved area."
6. On 27.02.1992, a circular was issued by the State Government
permitting sale/export of Non-Plant Grade (NPG) bauxite. During the
period from I 0.04.2003 to 04.03.2005 various notifications were issued
D by the Central Government in exercise of its power under Section 9(3)
of the MMDRAct, 1957 and Rule 640 of the Mineral Concession Rules,
1960, laying down the guidelines for computation of royalty on the basis
of State wise mineral value to be notified by the Indian Bureau of Mines
(IBM).
E 7. On 28.11.2007, respondent no.1- Nirmalaben S. Mehta sought
the permission of the appellant-State for sale of NPG bauxite for a
quantum of I lakh metric tonnes (approx). The appellant-State vide its
order dated 15.02.2008 granted permission for sale of NPG bauxite
subject to condition, interal ia, that the respondent no. I shall deposit royalty
F
of Rs. 120 per metric tonne in advance with the appellant-State.
8. The respondent no. I again applied to the appellant-State by
letter dated 18.02.2008 for sale of I, 12,900 metric tonnes ofNPG bauxite.
The same was rejected by the appellant-State vide order dated 19.06.2008
holding that the respondent no. I has failed to establish captive plant
within a period of two years in accordance with prevailing policy. The
G
relevant portion of the aforementioned order reads thus:
"5. Sanction of lease area was accorded to the lease holder for
establishing bauxite base unit for his own consumption use.
However, such unit is not yet setup by the lease holder and the
minerals at the lease area is not utilised for its value addition
H
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 147
ANR. ETC. [V. GOPALA GOWDA, J.]
purpose. Valuable and useful mineral was being excavated in the A
bulk and the same was exported/sold. This activity is not found
befitting to wider interest of the state."
9. Aggrieved by the orders dated I 5.02.2008 and 19.06.2008
passed by the appellant-State, the respondent no. I approached the High
Court of Gujarat atAhmedabad by filing Special Civil Application. The B
learned Single Judge vide order dated 31.07 .2008 dismissed the application
holding that the respondent no. I had not exhausted the statutory remedy
available under Section 30 of the MMDR Act, 1957 read with Rule 54
of the Mineral Concession Rules, 1960. Instead of approaching the High
. Court, the respondent no. I should have approached the Central
Government which is the Revisional Authority under the MMDR Act, in
c
the matter.
I 0. Thereafter, respondent no. I approached the Central
Government by filing Revision Application No. 09/16 of2008 against the
order dated 19.06.2008 passed by the appellant-State. The Central
Government vide its order dated 27.08.2009 allowed the said Revision D
Application by setting aside the order dated 19.06.2008 passed by the
appellant-State holding thus:
"5 ....... We have gone through the case records carefully and
after hearing the both sides come to the conclusion that-
(a) as far as the instant case is concerned, it is not a case of fresh E
grant of mining lease but one ofrenewal.
(b) no conditions of setting up of captive plant of bauxite was
mentioned while granting mining lease.
(c) no restriction was put on export and mining of bauxite in mining
leases. F
(d) applicant if expo11ing bauxite for more than a decade.
(e) guidelines issued by the State Govt. vi de G.R. dated 04.02.2005
as only an administrative in nature.
(f) the approval of Central Government given vide letter No. 4(2)/
G
78-VI dated 16.01.1980 in pursuance of State Government
communication dated 02.08.1978 is not applicable in respect of
the area already under lease and to which neither reservation nor
de-reservation would be applicable.
6. In view of the above circumstances and taking all aspects into
H
148 SUPREME COURT REPORTS [2016] 4 S.C.R.
A consideration we come to the conclusion that in the instant case
while rejecting the applicants renewal application State Govt. has
not followed the due process oflaw under Rule 27(3) of the Mineral
Concession Rules, 1960."
11. Aggrieved by the aforesaid order dated 27.08.2009 passed by
B the Central Government in exercise of its revisional power under Section
30 of the MM DR Act, 1957 read with Rule 55 of the Mineral Concession
Rules, 1960, the appellant-State approached the High Court of Gujarat
atAhmedabad by filing Special Civil Application No. 6897 of2010. The
learned Single Judge vide order dated 22.12.2010 dismissed the said
Special Civil Application holding that the appellant-State ought not to
c have suppressed the material fact of Writ Petition being filed before the
High Court of Delhi at New Delhi with regard to the same matter. The
learned Single Judge further imposed costs of Rs.50,000/- on the
appellant-State.
12. Aggrieved by the Order dated 22.12.2010 passed by the learned
D Single Judge, the appellant-State approached the Division Bench of the
High Court of Gujarat at Ahmedabad by filing Letters Patent Appeal
No.683 of 2011. The High Court vide its common judgment and order
dated 13.12.2011 partly allowed the appeals to the extent of setting aside
the order of the learned Single Judge imposing cost ofRs.50,000/- upon
E the appellant-State. Hence, these Appeals.
13. Mr. ParagTripathi, the learned senior counsel forthe appellant-
State contended that the High Court has failed to consider that huge
quantity of bauxite has been exported by the lease holders without
informing the appellant-State and without paying due amount ofroyalty.
F Only with a view to regulate the trade of bauxite, vide Resolution dated
04.02.2005 the appellant-State had framed policy for taking prior approval
before expo1ting bauxite outside India. He further submitted that by way
of the said resolution a mechanism is framed so that the trade of bauxite,
especially the export can be regulated by the appellant-State. Bauxite
being a valuable mineral which is available in rare pockets of the State
G of Gujarat, such a step is necessary on the part of the appellant-State
which enables it to take necessary action with regard to the same. It
was further submitted by him that as per the data available with the
appellant-State from 2004 onwards, around 70% to 90% of bauxite
excavated from the land in the areas by the lease holders was exported
from the leased areas. Thus, if such a huge quantity of bauxite is exported
H
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 149
ANR. ETC. [V. GOPALA GOWDA, J.]
outside India it would ce11ainly jeopardise the purpose of establishing the A
bauxite based value addition projects in the State. Further, export of
bauxite in such a huge quantity might lead to non-availability of bauxite
for consumption in the State. He further submitted that the resolution
dated 04.02.2005 was indirectly accepted by the lessee-respondents and
even applications were filed in tune with the same. He further contended
B
that the High Court has committed error while not considering the purpose
and object advanced by the appellant-State vide resolution dated
04.05.2005.
14. It was further contended by him that the application dated
28.11.2007 made by the lessee-respondents to the appellant-State seeking
permission of sale/export ofNPG bauxite for quantum of 1, 12,900 MTs,
c
was based on the premise that they were seeking permission to export
the bauxite which is not useful for the plant. However, factually, from
almost five decades, the lessee-respondents have not taken any step for
the establishment of captive plant. He further submitted that from the
circumstances it is clear that the lessee-respondents are only interested D
in excavation of the bauxite for export purpose which would result in
irreparable depletion of the valuable mineral for domestic purpose. The
High Court has failed to take note of this important aspect while passing
impugned judgment and order and therefore, the same is required to be
interfered with by this Court in exercise of its appellate jurisdiction.
E
15. It was further contended by the learned senior counsel for the
appellant-State that the High Court has erred in coming to the conclusion
that the permission granted by the Central Government under Rule 27(3)
of the Mineral Concession Rules, 1960 vide letter dated 16.01.1980 would
not be applicable to the respondents' mine for the reason that since the
notification reserving the area of bauxite mining did not affect their mines, F
it must necessarily follow that the permissions granted by the Central
Government at the time of de-reservation also would not apply to their
mines. It was further submitted by him that by the notification dated
26.02.1964 issued by the appellant-State the entire areas of Junagadh
and Jamnagar districts were reserved for public sector. Admittedly, the G
respondents' mine fell within Jamnagardistrict, a reserved area, though
the respondents were not affected by the reservation as the said
reservation was made to operate prospectively.
16. He fu11her submitted that the appellant-State wrote a letter
dated 02.08.1978 to the Central Government seeking permission under H
150 SUPREME COURT REPORTS [2016) 4 S.C.R.
A Rule 27(3) of the Mineral Concession Rules, 1960 for de-reservation of
the areas of J unagadh and Jamnagar Districts and for imposition of certain
conditions, including establishment of an industrial unit for captive
consumption of bauxite. The permission for the said de-reservation was
granted by the Central Government vide letter dated 16.01.1980. He
further submitted that once it is admitted that the respondents' mines fall
B
within the area of the aforesaid Jamnagar district, it would not be correct
to say that the permission of the Central Government under Rule 27(3)
of the Mineral Concession Rules, 1960 for de-reservation of areas of
bauxite mining would not be applicable to leases granted prior to
16.01.1980 merely because the concerned mines were not affected by
c the reservation. He further submitted that any other interpretation in this
regard would lead to discrimination between fresh leases granted post
16.01.1980 on the one hand and renewals of existing lease granted after
16.01.1980 on the other and the same is impermissible.
17. With regard to the renewal of the lease, it was contended by
D him that the High Court has erred in concluding that a renewal of lease
is not a fresh grant and thus, at the time ofrenewal oflease the appellant-
State cannot impose conditions, interalia, of setting up ofa captive plant.
In this regard it was submitted by him that it is well settled position of
law that a renewal of a lease is akin to a fresh grant and hence, in the
absence of either Lease Deed or the Rules providing that renewal shall
E
be granted on the same terms and conditions as the original grant, a
renewal is governed by the law/conditions in force at the time of grant
ofrenewal of the lease of the mining area in question. Therefore, in the
case at hand, the appellant-State, at the time of grant of renewal of
lease, can impose such condition/conditions, inter alia, of setting up of a
F captive plant. With regard to aforesaid legal submission he has placed
strong reliance upon the decision of this Court in the case of Gajraj
Si11glt v. State Transport Appellate Tribunal 1 • The relevant paras
relied upon by him read thus:
"38. It is settled law that grant of renewal is a fresh grant though
G it breaths life into the operation of the previous lease or licence
granted as per existing appropriate provisions of the Act, rules or
orders or acts intra vires or as per the law in operation as on the
date of renewal. The right to get renewal of a permit under the
Act is not a vested right but a privilege subject to fulfillment of the
H ' (1997) 1sec650
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 151
ANR. ETC. [V. GOPALA GOWDA, J.]
conditions precedent enumerated under the Act... A
xx xx xx
41. In State ofM.P. & Ors. v. Krishnadas Tikaram this Court had
held that it is settled law that renewal is a fresh grant and must be
granted consistent with law in operation as on that date ...... "
18. It was further submitted by him that the renewal clause in the B
Lease Deed of 1964 makes it very clear that any" renewal of the lease
shall be in accordance with the provisions of the Act and Rules in force
at the time of grant of renewal. Therefore, the Revisional Authority and
the High Court, both have arrived at erroneous conclusion that in the
absence of condition of setting up of a captive plant in the Lease Deed c
of 1964, such a condition cannot be imposed at the time of grant of
renewal of the lease of the area in question.
19. Per Contra, Mr. Mihir Joshi, the learned senior counsel
appearing on behalf of the respondents contended that neither the Export
Import policy nor the MMDR Act enacted by the Central Government D
impose any restrictions on sale/export of bauxite and hence, the appellant-
State could not have introduced its own policy for restricting or regulating
the sale/export of bauxite in conflict with policies and decisions of the
Central Government.
20. It was further submitted by him that there is no question of E
general public importance in the instant case. It was submitted by the
learned senior counsel that under the scheme of Section 9 read with
Section 13 ofMMDRAct and Article 162 of the Constitution oflndia, it
is the prerogative of Central Government to frame policies with regard
to major minerals. The State Governments across the country are only
supposed to implement the policies made by the Central Government F
with regard to the grant of lease as well as renewal of lease in respect
of major minerals. He further submitted that when the Central
Government has deemed it fit not to impose any restrictions on sale/
export of bauxite either in export/import policy or under the MMDR
Act, the appellant-State being simply an implementing agency, has no G
authority, whatsoever, to impose any restriction in the renewal of grant
order prohibiting the export of bauxite to other countries by the
respondents.
21. It was further submitted by the learned senior counsel that
merely because huge quantity of bauxite has been exported by
H
152 SUPREME COURT REPORTS [2016] 4 S.C.R.
A leaseholders, the same does not confer any power under the MMDR
Act upon the appellant-State to frame any policy with regard to the
export of bauxite vide resolution dated 04.02.2005 under the guise of
regulating the export of bauxite without the sanction of the Central
Government. Furthermore, it is an admitted fact that the said resolution
dated 04.02.2005 was passed by the State Government without the
B
permission of the Central Government.
22. It was further contended that as per the terms and conditions
of the lease deed executed between the respondents and the appellant-
State there was no restriction of any kind on the sale/export of bauxite.
A conjoint reading of the notification dated 02.08.1978 issued by the
c appellant-State, the letter addressed to the Central Government by the
appellant-State on the same day seeking permission for de-reservation
of bauxite areas which were earlier reserved for exploitation by the
public sector undertakings and for imposing conditions of captive
consumption for industrial units, read with the order dated 16.01.1980 of
D the Central Government make it absolutely clear that the said permission
of imposing the condition of captive consumption, granted by the Central
Government to the appellant-State was only for new units requiring the
said lease. He further submitted that respondents were already continuing
with the mining activity on the demised premises even ·during the alleged
period of reservation. It neither formed part of reserved area nor de-
E reserved area. Thus, the sanction of the Central Government vi de its
letter dated 16.01.1980 certainly should not apply to the lease of bauxite
mining area belonging to the respondents as has been rightly held by
both the Revisional Authority and the High Court.
23. With regard to the renewal of lease of the mining area in
F question it was submitted by the learned senior counsel that concept of
deemed renewal or that each renewal is a fresh lease, would not apply
to the facts of the instant case in view of the specific directions of the
Central Government in its order dated 16.01.1980.
24. After considering the rival legal contentions urged on behalf
G of both the parties, following issues would arise for our consideration:
1. Whether the appellant-State has the power at the time of
renewal of lease of the mining area in question to impose the
condition of setting up of a captive plant by the respondents?
2. Whether the permission granted by the Central Government
H under Rule 27(3) of the Mineral Concession Rules, 1960 vide
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 153
ANR. ETC. [V. GOPALA GOWDA, J.]
letter dated 16.01.1980 would be applicable to the respondents' A
mine?
3. What order?
Answer to Point No.1
25. Both the Revisional Authority as well as the High Court have
B
a
erred in coming to the conclusion that renewal oflease of the mining
area in question is not a fresh grant and have wrongly concluded that at
the time of grant of renewal of lease of the area, the State Government
is not empowered to impose or enforce condition inter-alia, of setting up
of a captive plant by the respondents.
26. The High Court has failed to appreciate an important aspect c
of the matter namely that for imposition of condition in the grant of
renewal of lease, inter alia, of setting up of a captive plant by the
respondents, the appellant-State had sought permission from the Central
Government vide communication dated 02.08.1978 and the same was
granted by the Central Government vide its letter no.4(2)/78-NVI dated D
16.01.1980. The relevant para no.2 of the aforesaid letter, stated supra,
makes it abundantly clear that the Central Government had no objection
if clauses pertaining to the imposition of certain conditions upon the
leaseholders are included under Rule 27(3) of the Mineral Concession
Rules, 1960 with respect to the bauxite areas of Junagadh and Jamnagar
districts de-reserved by the appellant-State vide notification dated E
02.08.1978, which were earlier reserved for exploitation of bauxite by
the public sector undertakings.
27. Further, the High Court has erred in not noticing the well settled
legal proposition as laid down by this Court in Gajmj Singh 's case supra,
on the point that the grant of renewal of the lease in respect of the F
mining area in question is a fresh grant. The relevant paras read thus:
"37. In Provash Chandra Dalui v. Bisawanath Banerjee this
Court drew the distinction between the meaning of the words
extension and renewal. It was held that:
G
" ... a distinction between 'extension' and 'renewal' is chiefly
that in the case ofrenewal, a new lease is required while in the
case of extension the same lease continues in force during
additional period by the performance of stipulated act. In other
words, the word 'extension' when used in its proper and usual
sense in connection with a lease, means prolongation of the H
154 SUPREME COURT REPORTS [2016] 4 S.C.R.
A lease."
38. It is settled law that grant ofrenewal is a fresh grant though it
breathes life into the operation of the pervious lease or licence
granted as per existing appropriate provisions of the Act. rules, or
orders or acts intra vires or as per the law in operation as on the
B date of renewal. The right to get renewal of a permit under the
Act is not a vested right but a privilege subject to fulfilment of the
conditions precedent enumerated under the Act. Under Section 58
of the Repealed Act, renewal of a permit is a preferential right
and refusal thereof is an exception. But the Act expresses different
intention. Sections 66, 70 71 and 80 prescribe procedure for
c making application and compliance of the conditions mentioned
therein. Existence of the provisions of the Act consistent with the
Repealed Act is a precondition. Grant of renewal under
Section 81 is a discretion given to the authority (STA or RTA)
subject to the conditions and the requirement of law. Discretion
D given by a statute connotes making a choice between competing
considerations according to rules of reason and justice and not
arbitrary or whim but legal and regular. Sections 70 and 71 read
with Section 81 do indicate that grant of permit or renewal thereof
is not a matter of right of course. It is subject of rejection for
reasons to be recorded in support thereof. Therefore, right to
E renewal of a permit under Section 81 is not a vested or accrued
right but a privilege to get renewal according to law in operation
and after compliance with the preconditions and abiding the law."
(emphasis supplied by this Court)
The permission for de-reservation of bauxite areas in the above
F
districts of the State which were earlier reserved for bauxite mining in
the public interest as well as for imposition of condition, interalia, of
setting up of a captive plant by the respondents the permission in this
regard was granted by the Central Government vide letter dated
16.01.1980, whereby the Central Government showed no objection for
G the inclusion of conditions mentioned in the letter dated 02.08.1978
addressed to it by the appellant-State under Rule 27(3) of the Mineral
Concession Ru Jes, 1960 for the de-reserved area.
28. It is clear that in the absence of any provision in the lease
deed or in the Act, Rules or Orders etc in operation as on the date of
H renewal of lease of the mining area in question providing renewal of
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 155
ANR. ETC. [V. GOPALA GOWDA, J.]
lease in favour of the respondents shall be granted on the same terms A
and conditions, is governed by the law or conditions in force at the time
of renewal.
29. Thus, from the factual matrix, the relevant legal provisions
and the case law referred supra upon which strong reliance is placed by
the learned senior counsel on behalf of the appellant-State, it is clear B
that in the instant case the appellant-State after 16.01.1980 had the power
to impose condition interalia, for setting up of a captive plant for bauxite
by the respondents at the time of renewal of their lease. Therefore, the
impugned order passed by both the Revisional Authority and High Court
are vitiated in law and therefore, the same are liable to be set aside.
c
Thus, point no. I is answered accordingly.
Answer to Point No.2
30. The factual matrix of the instant case further reveals an
important undisputed fact that the respondents' mines were located in
the Jamnagar district, which area along with Junagadh district area was D
declared a reserved area for exploitation of bauxite in public interest
vide notification dated 26.02.1964 issued by the appellant-State. However,
the said notification did not affect the mine belonging to the respondents
as the said notification was made to operate prospectively. The facts of
the instant case further reveals that on 02.08.1978 the appel Iant-State E
issued a notification whereby the bauxite areas of Jamnagar and J unagadh
districts were de-reserved, which were earlier reserved and on the same
day addressed a letter to the Central Government seeking permission
for the same along with permission for imposition ofcertain conditions
on the leaseholders of the above area with a view to protect the interest
of the State Government and at the same time extending help to the F
industries which require bauxite for its bona.fide captive use. The Central
Government vide letter dated 16.01.1980 granted permission in favour
of the State Government for both i.e., it allowed de-reservation of the
bauxite areas of Jamnagar and Junagadh districts, which were earlier
reserved, and also allowed the appellant-State to read clauses referred G
by it in its letter dated 02.08.1978 under Rule 27(3) of the Mineral
Concession Ru !es, 1960 for the de-reserved area.
31. As it is an admitted fact that the respondents' mines were
located in the area of the above Jamnagar district, it would not be correct
as contended by the learned senior counsel for the respondent that the
H
156 SUPREr...j.E COURT REPORTS [2016] 4 S.C.R.
A pennission for inclusion ofcertain conditions including condition for setting
up ofa captive plant by the leaseholders under Rule 27(3) of the Mineral
Concession Rules, 1960 for the de-reserved area granted by the Central
Government vi de letter dated 16.01.1980 would not be applicable to the
respondents' lease which was granted prior to 16.01.1980 merely because
their mines were not affected by the notification of reservation dated
B
26.02.1964 issued by the appellant-State.
32. It has been rightly contended by the learned senior counsel on
behalf of the appellant-State that any other interpretation of the above
order of the Central Government in this regard would lead to
discrimination between fresh leases granted post 16.0 I. I 980 on the one
c hand and renewals of the existing leases granted after I 6.0 I .1980 on
the other. Such a distinction sought to be made by the respondents'
counsel is impermissible in law as after 16.01.1980, a fresh grant and a
renewal of existing lease of the mining area stands on the same footing.
33. The aforesaid important legal aspect of the matter has not
D been taken note of by the High Court as well as the Revisional Authority.
Therefore, the impugned order dated 13.12.2011 passed by the High
Court confirming the order dated 27.08.2009 passed by the Revisional
Authority being contrary to the approval given by the central government
vi de letter dated 16.01.1980 is not only erroneous but also suffer from
E error in law. For the reasons stated supra the impugned orders of both
the High Court as well as the Revisional Authority are liable to be set
aside as they are vitiated in law.
Answer to Point No.3
34. Therefore, for the aforesaid reasons, we accept the legal
F submissions made by the learned senior counsel on behalf of the appellant-
State as the same are well founded and based on law laid down by this
Court in the case referred to supra. The civil appeals are allowed by
setting aside the order of the High Court dated 13.12.2011 and the order
of the RevisionalAuthority dated 27.08.2009. The State Government is
G at liberty to impose such terms and conditions in the renewal of lease of
the mining area in question granted in favour of the respondents. A cost
ofRs.5 lakhs is awarded to the appellant-State Government in respect
of these proceedings.
Nidhi Jain Appeals allowed.
H
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