NATIONAL LAW UNIVERSITY ODISHA

5th Year, Semester IX

LAW ON MINES AND MINERALS

PROJECT ON

MINING LEASE, ITS NUANCES AND EXTENSION BY

LAW

Submitted by: Submitted to:

HEMANT PRAJAPATI MS. DIVYA RATHOR

MAM

(2014/BALLB/017) (Asst. Professor of law)

 TABLE OF CONTENTS

1. Mining Lease- An Introduction..............................................................................................1

2. Procedural requirements for grant of a mining lease.............................................................1

3. Grant of a mining Lease.........................................................................................................2

4. Lapse of a mining lease..........................................................................................................2

5. Revision and Appeals.............................................................................................................3

6. Changes brought about by the Amendment Act, 2015- Extension of a MIning Lease..........3

I. Issue of Subsisting Lease................................................................................................4

A. Judgment given by the Honourable Supreme Court:..................................................5

B. Key points highlighted by the Honourable Supreme Court:.......................................6

II. Automatic lapse of a mining lease..................................................................................7

7. Analysis of the present scenario.............................................................................................7

8. Conclusion..............................................................................................................................9
 1. MINING LEASE- AN INTRODUCTION

“There are various mineral concessions that are granted by different state governments with
respect to the minerals that are found within the boundary of the concerned state, under the
provisions of the Mines and Minerals (Development and Regulation) Act, 1957, as well as
the Mineral Concession Rules, 1960 framed under the same. There are three types of mineral
concessions granted-
 Reconnaissance permit
 Prospecting lease
 Mining lease
This article deals specifically with mining leases, its important nuances and aspects of its
extension in light of recent judgment given by the Honourable Supreme Court of India. A
mining lease essentially refers to a lease that is granted in order to undertake mining
operations.1

2. “PROCEDURAL REQUIREMNTS FOR GRANT OF A MINING LEASE

An application seeking grant of a mining lease is to be made to the State Government through
the Director, Geology and Mining for minerals mentioned in Schedule I of the Act and
through the District Collectors for the other minerals. The application is to be made in a
prescribed Form – I, that is appended to the Mineral Concession Rules, 1960. Such an
application must be accompanied by:
 A non-refundable fee of Rs.2500/-2
 A valid clearance certificate in the form prescribed by State Government, showing the
payment of mining dues3
 An affidavit stating that the applicant has paid income tax assessed based on self-
assessment.4
 An affidavit showing particulars of area mineral-wise in the State which applicant or
any person jointly with him already holds, has applied for but not granted, being applied

1
Sec. 39(c), Mines and Minerals (Development and Regulation) Act, 1957.
2
Rule 22(3)(a), Mineral Concession Rules, 1960.
3
Rule 22(3)(d), Mineral Concession Rules, 1960
4
Rule 22(3)(f), Mineral Concession Rules, 1960

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 for simultaneously.5
 Where land is not owned by applicant, obtained surface rights over the area or has
obtained the consent of the owner for starting mine (may be furnished after execution of
lease deed but before entry in to area)6
 Memorandum and Articles of Association of company, deed of partnership in case of
company.
 Every application for the grant of a mining lease shall in addition to those specified fee
be accompanied by a deposit of one thousand rupees for meeting the preliminary
expenses in connection with the grant of mining lease.7
 Documents with regards to financial worthiness.

3. GRANT OF A MINING LEASE

“Once the State government receives an application for grant of a mining lease, it shall decide
as to the precise area that is to be granted for carrying out mining operations, and shall also
communicate its decision to the applicant.8 The maximum area for which a mining lease is to
be granted must not exceed 10 sq. km in a particular state. However, if the Central
Government is of the opinion that in the interest of development of any mineral it is
necessary to do so, the maximum area limit can be relaxed.”

4. LAPSE OF A MINING LEASE

A lease holder has to commence mining operation within two years from the date of
execution of the mining lease.9 Where mining operations are not commenced within a period
of two years from the date of execution of a lease or is discontinued for a continuous period
of two year after commencement or such mining operations, the Director, Directorate of
Geology and Mining shall by an order declare the mining lease as lapsed.
However, if the lessee unable to start mining operations for period exceeding two years for
reasons beyond his control may submit application to the State Government along with fee of
Rs.200 and other document explaining the reasons for the same at least three months before

5
Rule 22(3)(g), Mineral Concession Rules, 1960
6
Rule 22(3)(h), Mineral Concession Rules, 1960
7
Form I, Mineral Concession Rules, 1960, 3rd Proviso (ii), Mineral Concession Rules. 1960.
8
Rule 22(4), Mineral Concession Rules, 1960.
9
Sec. 4A(4), Mines and Minerals (Development and Regulation) Act, 1957.

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expiry of such period. The Director and State Government may grant or refuse the request of
lessee. After lapse of mining lease it can be revived not more than twice during entire period
of lease. Every such application shall be accompanied by a fee of Rs.500/-.
However, in light of the recent verdict given by the Honourable Supreme Court in 2016, a
mining lease is considered to have lapsed only if the concerned State Government has
expressly declared so.

5. REVISION AND APPEALS

In major mineral concessions, any person aggrieved by any order made by the State
Government or other authority in exercise of powers conferred under Acts & Rules may
within three months of the date of communication of the order to him, apply to the Central
Government in Form N of MCR 1960 for revision of the order . Application of revision shall
be accompanied by prescribed fee as decided by government.
In case on minor mineral concession any person aggrieved by any order made by collector or
other authority may within 2 months from date of such order can file appeal with State
Government against the order. Application of appeal shall be accompanied by prescribed fee
as decided by government.10

6. CHANGES BROUGHT ABOUT BY THE AMENDMENT ACT, 2015- EXTENSION

OF A MINING LEASE

The Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as
the Act) was amended in the year 2015. This amendment brought about significant changes
in the law with respect to regulation of mining operations in India. One such change is the
extension of a mining lease by the operation of law.

The scenario before the amendment came into force was that, initially it was within the power
of the various State governments to grant extensions and renewals of mining leases other than
that with respect to coal, lignite, atomic minerals. However, the Mineral Concession Rules,
1960 was amended in 2014 (pursuant to the judgment delivered by the Honourable Supreme
Court in 2014 in the case of Goa Foundation v. Union of India and Others 11) to the effect that
10
Sustainable Development- Emerging issues in India’s Mineral Sector, Planning Commission, Government of
India (2012), Page 12.
11
Goa Foundation v. Union of India and Others, (2014) 6 SCC 590.

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for second and further renewals, any deemed extension was prohibited. 12 Now, with the
coming of the amendment to the Act in 2015, all mining leases that had been granted prior to
the amendment shall be deemed to be extended for any of the periods given below:

 If a mineral is used for captive use, March 31, 2030, if a mineral is use for any
purpose other than captive use, March 31, 2020, effective from the date of expiry of
the period of the last renewal, or
 The date of actual completion of the renewal period, or,
 50 years from the date on which the mining lease has been granted,

Whichever is later?13

The amendment to the old Act with respect to the extension of mining leases is being seen as
a welcome measure that would provide an impetus to the mining industry in India. 14 This is
primarily because, the situation until now has been such that many mines all over the country
have been closed down owing to the pendency of applications for second and further
renewals of mining leases. However, various contentious issues also arise from the changes
brought about by the Amendment Act, 2015, a few of which have been dealt with in the
subsequent sections.

I. Issue of Subsisting Lease

It is important to note that Section 8A of the new Act provides for an automatic extension of
the mining leases granted before the Amendment Act of 2015 had come into force. This is to
say that a holder of a subsisting mining lease would be eligible to avail the benefits of Section
8A of the new Act.

The issue that often arises is whether a person or entity whose mining lease has remained
suspended can be said to be holding a subsisting mining lease and therefore consequently can
it avail the benefit under the new Act.15 This issue started arising primarily because entities
whose mining leases had been suspended and mines closed down, were trying to take the
advantage of the deemed extension granted under Section 8A of the new Act.
12
Extension to old mines, Press Information Bureau, Ministry of Mines, available at
http://pib.nic.in/newsite/PrintRelease.aspx?relid=123815, last visited on September 27, 2017.
13
Section 8A, Mines and Minerals (Development and Regulation) Act, 1957.
14
Moving Forward With A World Class Mineral Policy, the Energy and Resources Institute (2015), Page 13.
15
18 Mining Leases Extended, The Hindu, April 30, 2015, available at
http://www.thehindu.com/news/national/other-states/18-mining-lease-extended-in-odisha/article7155952.ece,
last visited on September 27, 2017.

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 A. Judgment given by the Honourable Supreme Court:

One important judgment with respect to the extension of mining lease by operation of law
was delivered by the Honourable Supreme Court on April 4, 2016, in Common Cause v.
Union of India16 and Prafulla Samantra v. Union of India concerning iron ore mining in
Odisha.

Brief facts of the overall matter were that by an order of May 16, 2014 the Honourable
Supreme Court had restrained mining operations of as many as 102 holders of mining leases
on the ground that they did not possess the clearances and approvals requisite for carrying on
mining operations. However, this order also granted these 102 lease holders the right to
approach this Court after getting the required licenses, approvals and the Court if deems fit
would revoke the order. Utilising this liberty granted by the apex Court of the country, many
applications came up before the Court, claiming that they may not be allowed to commence
the mining operations as they have now obtained the required approvals and licenses. In this
regard the issue that arose was whether these applicants were holders of a subsisting mining
lease and as a consequence whether they could be allowed the benefit under Section 8A of
the new Act.17

Thus, the issue that arose was whether ne needed to have a subsisting mining lease in order to
avail the benefit of Section 8A of the new Act. For this, it was necessary to ascertain the
meaning of a subsisting mining lease.

The Honourable Court in its judgment, while deciding this issue held that a leaseholder
would be said to have a subsisting mining lease if the period of the original grant of the lease
is still continuing as on January 12, 2015 (the date when the amendment came into force) or
if his original lease has expired, but he has applied for a renewal of the lease and the renewal
period is in currency as on January 12, 2015.18

B. Key points highlighted by the Honourable Supreme Court:

 “A leaseholder whose renewal of the mining lease already extends to a period beyond 31
March 2030/31 March 2020, the lease period of such leaseholders, would continue up to the
actual period contemplated by the renewal order. A leaseholder whose period of renewal
16
Common Cause v. Union of India, (2014) 14 SCC 155.
17
Common Cause v. Union of India with Prafulla Samantrey v. Union of India, AIR 2016 SC 1672, Vol. 103.
18
Ibid at Para 32(i).

5
would expire after 12 January 2015, but before 31 March 2030/31 March 2020, the lease
period would stand extended up to 31 March 2030/31 March 2020 (in the case of
captive/non-captive mines, respectively).19”
 “A leaseholder would have the benefit of treating the original lease period as of fifty years.
Accordingly, even during the renewal period, if the period of the mining lease would get
extended (beyond the renewal period) by treating the original lease as of fifty years, the
leaseholder would be entitled to such benefit.20”
 “A leaseholder who had not moved an application for renewal of a mining lease (which
was due to expire, prior to 12 January 2015), at least twelve months before the existing lease
was due to expire, under the provisions of the unamended MMDR Act, 1957 and the Mineral
Concession Rules, 1960 is not a valid/subsisting leaseholder, after the expiry of the lease
period.21”
 “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, and on consideration such an application has been rejected, then the same is not
a valid/subsisting leaseholder as per the exception created under Section 8A (9).22”
 “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, the same is a valid leaseholder having a subsisting right to carry on
mining operations, till the expiry of two years after 18 July 2014, i.e., up to 17 July 2016, as
is apparent from a conjoint reading of the unamended and amended Rule 24A of the Mineral
Concession Rules, 1960.23”
 “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 not been considered and rejected (though not
entitled to any benefit under the unamended Section 8A of the MMDR Act and the amended
Rule 24A(6) of the Mineral Concession Rules) up to 12 January 2015, would still have the
benefit of sub-sections (5) and (6) of Section 8A of the 12 January 2015 MMDRA.24”

19
Supra note 17, at Para 32(vi).
20
Supra note 17, at Para 17.
21
Supra note 17, at Para 32(ii).
22
Supra note 17, at Para 32(iii).
23
Supra note 17, at Para 32(iv).
24
Supra note 17, at Para 32(v).

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 II. Automatic lapse of a mining lease

In the aforementioned case itself, the issue of automatic lapse of a mining lease was dealt
with. The Court held that unless the State Government passes an explicit order stating the
lapse of a mining lease, it would be considered to be subsisting till the expiry of the lease
period as mentioned in the document of lease. 25 This was with respect to the argument
advanced by the petitioners that once a holder of a lease has defaulted by not carrying on the
operations of mining for 2 years continuously; it would lead to a lapse of the lease. The Court
however said that this lapse is not an automatic one.

Thus, unless an order has been passed by the State government declaring the lapse of a
mining lease, such lease is deemed to be a subsisting mining lease. But, the holder of a lease
would not be entitled to the extension under the new Act if his renewal application has been
considered and thereby rejected, or has lapsed or has been determined. 26 This however, does
not include a leaseholder whose renewal application has not yet been rejected or with respect
to whom no order has been passed by the State government declaring the same as having
lapsed.

7. ANALYSIS OF THE PRESENT SCENARIO

“It is important to note that the Amendment Act of 2015was passed with a primary objective
of clarifying the cloud of misinterpretations around the provisions of the Act, evidenced by a
large number of past litigations prior to the amendment.27

25
Supra note 17, at Para 32(vii).
26
Regulation of Minerals, Mineral Production, Mineral Based Industries, Ministry of Energy and Mineral
Development, Page 6.
27
Statement of Objects and Reasons, The Mines and Minerals (Development and Regulation) Amendment Bill,
2015.

7
Another objective had been to reduce the hardship of various holders of mining leases due to
pending second and subsequent renewals. However, even after the coming of the new Act,
the issue of subsisting mining leases continued to arise.

The judgment of the Honourable Supreme Court in 2016 in the case of Common Cause has
clarified the position to a great extent. This judgment that was to be a mere follow up (after
the suspension order dated May 16, 2014) for the commencement of mining operations again
in Odisha, turned out to be a judgment pivotal in the arena of mining law, providing clarity in
interpretation of the new Act.

While delivering its judgment, the apex Court of the country was conscious of the fact that its
decision on the issue of subsisting mining lease will have an impact not only on the
applicants in the state of Odisha, but on the mining projects all over India.

Hence, the Court has clarified the law in this aspect, has not complicated the matter by
applying the peculiar facts and has left for later the application of the complicated fact
scenarios of different cases.

The Court has also taken into consideration the legislative intent behind the 2015 amendment
to the Act. Thereby, it has recognized the intention of the Legislature to support and help the
Executive in addressing the issue of pending renewal applications under Section 8 of the Act
prior to the amendment, by an expressly putting down parameters that make one eligible for
the benefit of extension under Section 8A of the new Act.

However, it is also important to mention that even though the Honourable Supreme Court has
delivered a judgement on law, a few aspects remained to be seen. Firstly, once the law laid
down is applied to peculiar set of facts, it will provide some clarity and will set out factual
instances that others can follow later.

Also, the mining industry players are losing out time in the pendency of the litigation
proceedings, with the cut-off date of 31st March 2030 or 31st March 2020 approaching.

Finally the judgment based on the peculiar facts in the case of Common Cause was delivered
by the Honourable Supreme Court on 2nd August, 2017.
8
The Court has herein directed the Union of India to give a fresh look to the almost a decade
old National Mineral Policy, specifically with respect to mineral development and
conservation. It has further clarified that any mining activity that is carried on with
environmental clearance or forest clearance would attract full compensation.

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 8. CONCLUSION

In light of the above discussion, it is thus clear that the entire regime of mining concessions in
the form of mining leases have undergone substantial changes with the coming of the new
amendment in 2015.

It is now hoped that these changes have a positive impact on the mining leaseholders and
therein on the mining industry as a whole.

The results have already started showing. The Odisha state government had as an immediate
after effect of the new law regarding extension formed a committee under the chairmanship
of U.N. Behera, Development Commissioner to look into and consider all cases eligible for
extension of mining lease as per the new Act after the 2015 amendment.

Further, the state government via a decision of the Cabinet sought to action all such mining
leases for which second and subsequent renewal applications were pending.

However, even though the passing of the 2015 Amendment Act is being considered as a
welcoming change in a sector which has always been like a breeding ground for scams and
controversies, there are a few questions which are still causing worries among the integrated
mining companies.”

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 BIBLIOGRAPHY

The following resources have been primarily relied on for the making of this project:

Statutes and Rules-

 Statement of Objects and Reasons, The Mines and Minerals (Development and
Regulation) Amendment Bill, 2015.
 Mines and Minerals (Development and Regulation) Act, 1957
 Mineral Concession Rules, 1960

Discussion Papers
 Sustainable Development- Emerging issues in India’s Mineral Sector, Planning
Commission, Government of India (2012)
 Moving Forward With A World Class Mineral Policy, The Energy and Resources
Institute (2015)
 Regulation of Minerals, Mineral Production, Mineral Based Industries, Ministry of
Energy and Mineral Development

Case Laws
 Goa Foundation v. Union of India
 Common Cause v. Union of India
 Prafulla Samantra v. Union of India

Web sources
 18 Mining Leases Extended, The Hindu, April 30, 2015, available at
http://www.thehindu.com/news/national/other-states/18-mining-lease-extended-in-
odisha/article7155952.ece
 Extension to old mines, Press Information Bureau, Ministry of Mines, available at
http://pib.nic.in/newsite/PrintRelease.aspx?relid=123815

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