Mines and Minerals:
Mining leases – Renewal of – Propriety – Appointment of Commission of Inquiry, pursuant to information regarding largescale illegal mining in contravention of provisions of relevant laws – After the report of the Commission, Govt. of Goa by order dated 10.9.2012 suspended all the mining operations in the State – Ministry of Environment and Forest (MoEF) kept in abeyance the environmental clearances in the State of Goa by order dated 14.9.2012 – PIL was filed by Goa Foundation in Supreme Court seeking directions to Governments of Union and State of Goa to take steps to terminate the mining leases where mining was carried out in violation of various statutes – Writ petitions by mining leaseholders before High Court seeking quashing of the orders dated 10.9.2012 and 14.9.2012, were transferred to Supreme Court – Supreme Court in *Goa Foundation case held that orders dated 10.9.2012 and 14.9.2012 were not liable to be quashed and would continue till decisions are taken to grant fresh leases and fresh environmental clearances for mining projects – Other writ petitions were filed before High Court by several mining lease-holders for consideration of their applications for second renewal of mining leases – High Court held that the decision in *Goa Foundation case was not an impediment in considering the applications for second renewal; and that renewal of a lease is also a fresh grant – High Court directed the State to execute the lease deeds u/s. 8(3) of MMDR Act in favour of the lease-holders who have already paid the stamp duty in accordance with Mineral Policy 2013 – Further directed the State to decide the renewal applications u/s. 8(3), of those who had not paid the stamp duty – State of Goa thereafter formulated Goa Grant of Mining Leases Policy 2014 – Central Government prepared draft of Mines and Minerals (Development and Regulation) Act, 2014 (amended Act) and uploaded the same on the website – The proposed amendment inter alia by introducing s. 10B provided for competitive bidding – Soon thereafter and till the date of promulgation of Amendment Ordinance, State of Goa granted second renewals to several mining lease-holders – Thereafter, the State requested MoEF to lift the abeyance order (dated 14.9.2012) on environmental clearances – Consequently MoEF by orders dated 20.3.2015 lifted the abeyance order in respect of 72 cases out of
139 – Held: The decision of State of Goa to grant second renewal of mining leases was erroneous and contrary to decision in *Goa Foundation case – State was obliged to grant fresh mining leases as declaration in *Goa Foundation case was explicitly to grant fresh leases – Grant of fresh lease is not the same as renewal of lease – State was not under any constitutional obligation to grant fresh mining leases through process of competitive bidding or auction – However, the second renewals were unduly hasty, without taking into consideration all relevant material and ignoring relevant material, was not in the interest of mineral development – The decision of renewal was only to augment the revenues of the State which is outside the purview of s. 8(3) of 1957 Act – Therefore, the second renewal granted by the State is liable to be set aside – MoEF was obliged to grant fresh environmental clearance in respect of fresh grant of mining leases in accordance with law and decision in *Goa Foundation case and not by merely lifting the abeyance order dated 14.9.2012 – High Court proceeded on the erroneous basis that it could direct the State to grant second renewal notwithstanding the direction in *Goa Foundation case – Mines and Minerals (Development and Regulations) Act, 1957 – s.8(3) – Forest (Conservation) Act, 1980 – Environment (Protection) Act, 1986. Auction:
Natural Resource allocation – Through auction method – Whether mandatory – Held: There is no constitutional or otherwise mandate for allocation of natural resources (other than spectrum) through auction method – But, auction process should not be given a go-bye without any justification – The decision to give a go-bye is judicially reviewable and would attract Art. 14 – Review is permissible only when the allocation is for commercial pursuits of profit de hors any social or welfare purpose – It will not be permissible if such allocation is for a social or welfare purpose – Judicial Review – Constitution of India – Art. 14.
Judicial Review:
Judicial review of policy decision – In respect of disposal of natural resources – Scope of – Held: Judicial review of a policy is kept open if it does not serve the common good as understood in Art. 39(b) and if violates Art. 14 – However, the courts must be very cautious and circumspect in diluting or setting aside a policy and must do so only if it is constitutionally unavoidable – Constitution of India – Arts. 14 and 39(b) – Administrative Law. Lease:
Renewal of lease vis-a-vis grant of fresh lease – Held: Grant of a fresh lease is not the same as the renewal of a lease – Therefore, renewal cannot be called amounting to grant of fresh lease. Environmental Law:
The issues having impact on the environment and the people of a community or a region or the State are required to be looked at holistically – One or two violations may be wished away as inconsequential, but multiple violations by several persons can result in serious problems.
Disposing of the petitions, the Court
HELD: 1.1 The decision of the State of Goa to grant a second renewal of the mining leases is erroneous, contrary to the decision in *Goa Foundation case and must be and is quashed. In *Goa Foundation case the Court was quite obviously aware that it was concerned, inter alia, with the second renewal of mining leases and yet it chose to recount the factual situation, make a declaration and pass a direction without adverting to the possibility of a second renewal of a mining lease. The Court was also conscious that the mining lease holders had carried out indiscriminate and illegal mining for about five years (from November 2007 to September 2012) and had made profits out of the illegal mining. The sequence of events from September 2012 onwards, the appointment of a Monitoring Committee to dispose of the illegally mined ore, the declaration and direction unmistakably point to the intention of the Court to end the sordid chapter of illegal mining by the lease holders and start on a clean slate. Viewed in this perspective, the Court really did intend the State of Goa to consider the grant of fresh leases in accordance with law. [Paras 41, 58] [395-B-D; 400F-G]
1.2 The declaration of the Court in *Goa Foundation case in paragraph 87.5 of Report is also quite clear, namely, “It is for the State Government to decide as a matter of policy in what manner mining leases are to be granted in future….” The declaration was explicit and related to the grant of mining leases and not a second renewal. Similarly, the direction given in paragraph 88.4 of the Report that “The State Government may grant mining leases of iron ore and other ores in Goa in accordance with its policy decision…..” was equally explicit and related to the grant of mining leases and not a second renewal. [Paras 42, 43] [395-E-F]
1.3 From a reading of the decision rendered by the High Court in the present petition, it is evident that the State of Goa understood the decision of this Court in *Goa Foundation case to mean that fresh mining leases were required to be granted on the basis of a policy yet to be framed by the State of Goa and the issue of second renewals did not survive consideration. The High Court noted that this Court was alive to the fact that the State of Goa had granted in-principle second renewal to 28 mining leases and had collected renewal fees or stamp duty from 27 mining leases (presumably out of the 28 mining leases). Notwithstanding the in-principle grant of second renewal of 28 mining leases and collection of renewal fees or stamp duty, this Court in *Goa Foundation case consciously required the State of Goa to grant fresh leases. What is equally significant is that the State of Goa also understood the decision of the Court in the same manner and intended to act on that basis. [Paras 46-48] [396-D-E, 397-CE, F-G]
1.4 While this Court had required the State of Goa to grant fresh mining leases and the State of Goa was willing to comply with this direction, the High Court instead directed it to execute mining leases under Section 8(3) of the MMDR Act in respect of those who had paid the renewal fees or stamp duty. The High Court also directed the State of Goa to decide their pending second renewal applications within a period of three months keeping in mind the provisions of Section 8(3) of the MMDR Act (presumably after paying the renewal fees or stamp duty in terms of the Government order of 21 st February, 2013). The understanding by the High Court of the decision of this Court in *Goa Foundation case is totally incorrect. [Para 49] [398-A-C]
1.5 It appears from the contents of the Grant of Mining Leases Policy that in view of the decision of this Court in *Goa Foundation case, the State was actively considering a policy for granting fresh mining leases by considering several factors. However, the decision and directions of the High Court supervened leaving no choice, according to the State, but to completely abandon the process of grant of fresh mining leases through the process of competitive bidding for earning revenue and justify the abandonment. [Para 50] [398-D]
1.6 There is no doubt that the renewal of a lease is virtually the same as the grant of a fresh lease but a converse direction to grant a mining lease cannot be understood to mean granting a renewal of a mining lease. Obviously, the grant of a fresh lease is not the same as the renewal of a lease and when the Court in *Goa Foundation case required the State of Goa to grant a fresh lease, it did not require the State to renew the existing (expired) lease. The Court could have explicitly declared and directed the State of Goa to grant a second renewal of the mining leases rather than to say it in a roundabout manner that it should do so by granting a fresh lease equivalent to a renewal. Therefore, it cannot be said that the renewal of a mining lease is equivalent to or amounts to the grant of a fresh lease. [Paras 52, 55] [399-F-G; 400-A]
Common Cause v. Union of India (2014) 14 SCC 155 : [2014] 7 SCR 561 – distinguished.
Delhi Development Authority v. Durga Chand Kaushish (1973) 2 SCC 825 : [1974] 1 SCR 535; Provash
Chandra Dalui v. Biswanath Banerjee (1989) Supp 1 SCC 487 : [1989] 2 SCR 401; M.C. Mehta v. Union of India (2004) 12 SCC 118 : [2004] 3 SCR128; State of West Bengal v. Calcutta Mineral Supply Company Private Limited (2015) 8 SCC 655 : [2015] 9 SCR 230; Gajraj Singh v. State Transport Appellate Tribunal (1997)
1 SCC 650 : [1996] 6 Suppl. SCR 172 – referred to.
2.1 There is no constitutional requirement (let alone a mandate) for allocation of natural resources through the auction method (other than spectrum) but at the same time the auction process should not be given a go-bye without any justification – the decision to give a go-bye is judicially reviewable though the scope of judicial review might be rather restricted. [Para 69] [406C-D]
2.2 Consequently, while there is no mandate, constitutional or otherwise, that natural resource allocation must be only by auction, it is certainly “a more preferable method”. There are exceptions, such as when the natural resource allocation is for a “social or welfare purpose”. On the other hand if the natural resource allocation is “for commercial pursuits of profit maximising private entrepreneurs” de hors any social or welfare purpose, then judicial review would be permissible and Article
14 of the Constitution would be attracted and if the executive action is found to be arbitrary, it would be struck down. Therefore, when it comes to natural resource allocation, the executive has a somewhat limited elbow room. [Para 69] [406-E-F]
3.1 Judicial review of a policy is kept open if it does not serve the common good as understood in Article 39(b) of the Constitution, if it violates Article 14 of the Constitution and alienates natural resources for maximizing profits of private entrepreneurs while sidelining Article 39(b) of the Constitution. “The legislature and the executive are answerable to the Constitution and it is there where the judiciary, the guardian of the Constitution, must find the contours to the powers of disposal of natural resources, especially Article 14 and Article 39(b) [of the Constitution]. [Para 74] [410-G; 411-A]
3.2 Notwithstanding this, a Court must exercise restraint and not set aside Government policy only because it disagrees with it or because a better policy could be framed or simply because it has the power to set aside the policy. Policies framed by the State, after due consideration, must be respected and given enough elbow room and flexibility for implementation. Of course, there would be occasions when the implementation of a policy has teething problems or some lacuna is discovered at a slightly later stage, but that does not mean that policy itself is defective. Therefore, Courts must be very cautious and circumspect in diluting or setting aside a policy and must do so only if it is constitutionally unavoidable, otherwise good governance could be a casualty. [Paras 75] [411-B-C]
3.3 There is no doubt that iron ore mining in Goa was solely for commercial purposes. The State sacrificed maximizing revenue for no apparent positive reason, virtually surrendering itself to the commercial and profit making motives of private entrepreneurs and ignoring the interests of Goan society in general. Therefore, in principle, the decision of the State of Goa to not auction the grant of mining leases was flawed in that it did not serve the common or public or social good but primarily assisted in filling the coffers of private entrepreneurs. [Para 93] [419-D, F]
Sandur Manganese and Iron Ores Limited v. State of Karnataka (2010) 13 SCC 1 : [2010] 11 SCR 240 – distinguished.
4.1 In renewing the mining leases, the State of Goa completely ignored several relevant and important and significant factors giving the impression that the renewals were not quite fair or reasonable. The State ignored the fact that every single mining lease holder had committed some illegality or the other in varying degrees. To identify these illegalities (although they had already been identified by the Justice Shah Commission and by the EAC), a Special Investigation Team had been set up as also a team of Chartered Accountants. Instead of waiting for a report from any one of these teams, the State acted in violation of the Grant of Mining Leases Policy and renewed the mining leases. [Paras 104-105] [423-F-H]
4.2 The undue haste in which the State acted gives the impression that it was willing to sacrifice the rule of law for the benefit of the mining lease holders and the explanation of satisfying the needs of some sections of society for their livelihood. The undue haste also needs to be looked at in the context that the Grant of Mining Lease Policy was an in-principle decision and was to be notified after it was vetted for legal requirements “from specific necessities as also from financial view points”. In other words, the Grant of Mining Leases Policy as published on 4th November, 2014 was not a final policy statement but only an intent that would take final shape after due vetting. The Grant of Mining Leases Policy was eventually published on 20th January, 2015 but it was acted upon even before it was gazetted. [Paras 106, 107] [424-E-F; 428-G-H]
4.3 An Ordinance to amend the MMDR Act was made known to the general public on 5th January, 2015 and promulgated by the President on 12 th January, 2015 thereby mandating competitive bidding or auction for the grant of mining leases. The State of Goa perhaps anticipated this in view of the publication of the draft Mines and Minerals (Development and Regulation) Act, 2014 and therefore hurried into the second renewal of mining leases (notwithstanding the Grant of Mining Leases Policy) to defeat the introduction of the auction process. [Para 109] [425E-F]
4.4 The National Mineral Policy, 2008 clearly suggests that for a period of five years between 2006 and 2012 the mining lease holders committed various illegalities and irregularities in the mining process. Irreparable damage was being caused by the mining lease holders without any benefit to the domestic industry. Therefore, while the mining lease holders may have contributed virtually nothing to the domestic industry, they might have made considerable profits through exports and might have also benefited the foreign exchange reserves of the country, but the real-time damage to the quality of health and life of the average Goan and damage to the environment and ecology of Goa is nevertheless incalculable or at least considerable – and export benefits cannot be weighed against health or the environment. [Para 113] [427-C-E]
4.5 There was no social or public purpose attached to the mining operations. There was one and only one objective behind the mining activity and that was profit maximization. The renewal of the mining leases would give considerable profits to the mining lease holders well beyond the benefits that could accrue to the State or to the average resident of Goa. It was not kept in mind that the material resources of the country should not be dissipated free of cost or at a consideration lower than their actual worth, and mining leases were renewed for a small payment of stamp duty and royalty. It is therefore clear that the considerations that weighed with the State were not for the people of Goa but were for the mining lease holders. This certainly cannot be described as being “in the interests of mineral development.”[Para 114] [427-F-H]
Special Reference No. 1 – Natural Resources Allocation (2012) 10 SCC 1 : [2012] 9 SCR 311 – relied on.
4.6 In this background, there is little to suggest that the State considered the requirements of Section 8(3) of the MMDR Act in that the interests of mineral development was secondary while granting the second renewal of mining leases. The entire exercise undertaken by the State was a hasty charade, regardless of violations of the law by the mining lease holders, without any benefit to the Indian industry and without any concern for the health of the average Goan. [Para 116] [428-C]
4.7 It is informed that of the 88 mining leases that were renewed, 38 of them are not working for a variety of reasons – making their renewal an empty exercise. This also shows the undue haste shown by the State of Goa in granting a second renewal to the mining leases. [Paras 121, 122] [430-A-B]
4.8 It is possible that the State did have some serious governance issues to contend with as mentioned in the Grant of Mining Leases Policy. Nevertheless the State is bound by the law, however uncomfortable it might be in granting a second renewal in terms of Section 8(3) of the MMDR Act. Therefore, on an overall consideration of all aspects of the case, the decision of the State of Goa to quickly renew the mining leases while ostensibly complying with the requirements of Section 8(3) of the MMDR Act and thereby jettisoning the rule of law was unjustified. [Paras 123, 124] [430-D-E, H; 431-A-B]
4.9 Thus, the second renewal of the mining leases granted by the State of Goa was unduly hasty, without taking all relevant material into consideration and ignoring available relevant material and therefore not in the interests of mineral development. The decision was taken only to augment the revenues of the State which is outside the purview of Section 8(3) of the MMDR Act. The second renewal of the mining leases granted by the State of Goa is liable to be set aside and is quashed. [Para 149] [440-B-C]
5.1 The Ministry of Environment and Forest (MoEF) was obliged to grant fresh environmental clearances in respect of fresh grant of mining leases in accordance with law and the decision of this Court in *Goa Foundation case and not merely lift the abeyance order of 14th September, 2012. [Para 149] [440-D] *Goa Foundation v. Union of India (2014) 6 SCC 590 : [2014] 5 SCR 302; Goa Foundation v. Union of India (2014) 6 SCC 738; State of M.P. v. Krishnadas Tikaram 1995 Supp (1) SCC 587 : [1994] 3 Suppl. SCR 747 – relied on.
Centre for Public Interest Litigation v. Union of India (2012) 3 SCC 1: [2012] 3 SCR 147; Manohar Lal Sharma v. Principal Secretary (2014) 9 SCC 516 : [2014] 8 SCR 446; M/s. Ajar Enterprises Private Limited v. Satyanarayan Somani 2017 (10) SCALE 346; Tata Iron & Steel Co. Ltd. v. Union of India (1996) 9 SCC 709 : [1996] 3 Suppl. SCR 808; Property Owners’ Association v. State of Maharashtra (2013) 7 SCC 522 – referred to.
5.2 The MoEF acted without any application of mind in lifting the order placing all the environmental clearances in abeyance. Since the entire exercise carried out by the MoEF on 20th March, 2015 was mechanical, at the behest of the State of Goa, without due application of mind, without considering the multiple illegalities and irregularities committed by the mining lease holders or passing on the buck to the State of Goa and without considering relevant material such as the report of the EAC and the Expert Committee appointed by this Court, the exercise of lifting the abeyance order on 20th March, 2015 by the MoEF must be held void and as directed by the Court in Goa Foundation case all the mining lease holders must obtain fresh environmental clearance for their mining project. [Para 136] [435C-E]
5.3 Issues impacting society are required to be looked at holistically and not in a disaggregated manner. An overall perspective is necessary on such issues including issues that have impact on the environment and the people of a community or a region or the State. One or two violations here and there may be wished away as inconsequential, but multiple violations by several persons can result in serious problems. Therefore, the Mineral Policy, the Grant of Mining Leases Policy, the amendment to the MMDR Act, the report of the EAC and the report of the Expert Committee must be considered in the larger context of constitutionalism, the rule of law, environmental jurisprudence as well as the fundamental right of the people of Goa to have clean air and protection of the fragile ecology. Governance cannot and should not be carried out de hors the interests of the people and some uncomfortable decisions may be inevitable for balancing the equities. [Para 138] [436-B-E]
5.4 It is not correct to say that if environmental clearance is granted and mining operations commence within the five year period, then the environmental clearance under EIA 1994 is valid till the project or the mining lease period is over. Such a view overlooks the decisions in # M. C. Mehta case and ## Common Cause case which accept the view that the validity of an environmental clearance granted under EIA 1994 is only five years as also the view that a valid environmental clearance is necessary for the renewal of a mining lease. No notification of the MoEF can overrule decisions of this Court. As far as EIA 2006 is concerned, this provides that the environmental clearance would be valid for the estimated project life subject to a maximum of 30 years. [Para 145] [438-E-G]
# M.C. Mehta v. Union of India (2004) 12 SCC 118 : [2004] 3 SCR 128;
## Common Cause v. Union of India (2017) 9 SCC 499 – referred to.
5.5 The renewal of a lease, whether under the provisions of the Forest (Conservation) Act, 1980 or otherwise cannot be granted without the lease holder complying with the necessary statutory requirements particularly since the grant of renewal is a fresh grant and must be consistent with law. [Para 132] [433-G; 434-A]
Ambica Quarry Works v. State of Gujarat (1987) 1 SCC
213 : [1987] 1 SCR 562; Rural Litigation and
Entitlement Kendra v. State of U.P. (1989) Supp 1 SCC
504 : [1988] 2 Suppl. SCR 690; State of M.P. v. Krishnadas Tikaram (1995) Supp 1 SCC 587 : [1994]
3 Suppl. SCR 747 – relied on.
6. The High Court proceeded on the erroneous basis that it could direct the State of Goa to grant a second renewal of the mining leases notwithstanding the direction in *Goa Foundation case. [Para 148] [439-F]
S. N. Mohanty v. Union of India 2012 SCC OnLine Del 4000 – distinguished.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.