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2016 Supreme(Ker) 1403
High Court of Kerala
Venkate Gopala Gowda, S.R. Bannurmath, JJ.
State of Kerala - Appellant
Versus
Kerala Rare Earth Minerals Ltd - Respondent
C.A. No. 3608 of 2016
Decided On : 08-04-2016
Headnote:
The Supreme Court of India ruled on the ownership of mineral deposits, the interpretation of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act), and the powers of the Central Government and State Governments in relation to regulation and development of mines and minerals. The Court held that the State Government is the owner of the mineral deposits in the lands which vest in the Government, but the Parliament has acquired complete dominion over the legislative field covered by the MMDR Act. The Act does not denude the State of the ownership of the minerals situate within its territories, but it regulates the development of mines and minerals in the country to the extent set out in the provisions of the Act. The Court further held that the State Government can reserve any area not already held under any prospecting license or mining lease for exploitation by the State-owned corporation or company, but it must resort to making such reservation in terms of Section 17A with the approval of the Central Government and by a notification specifying boundaries of the area and mineral or minerals in respect of which such areas will be reserved.
Fact of the Case:
The State Government of Kerala had granted mining leases for ilmenite, rutile, leucoxene, zircon, and sillimanite (non-scheduled mineral) to private parties. However, the State Government later decided to reserve the mining of these minerals for State/Central Public Sector Undertakings (PSUs) in order to restrict indiscriminate mining and exploitations of minerals having regard to the geographical and ecological conditions as well as the density of the population in the State. The respondents, who were private parties holding mining leases, challenged the State Government's decision on the ground that it was violative of the MMDR Act and the National Mineral Policy, 2008, which permitted facilitation of private entrepreneurs and that since the Government of Kerala had already exercised its discretion in terms of the prevalent Mining Policy and recommended to the Government of India the grant of approval for mining leases, the rejection of the applications on the basis of a changed policy after the Government of India had accorded sanction for the proposed mining leases was unjustified.
Finding of the Court:
The Supreme Court held that the State Government is the owner of the mineral deposits in the lands which vest in the Government, but the Parliament has acquired complete dominion over the legislative field covered by the MMDR Act. The Act does not denude the State of the ownership of the minerals situate within its territories, but it regulates the development of mines and minerals in the country to the extent set out in the provisions of the Act. The Court further held that the State Government can reserve any area not already held under any prospecting license or mining lease for exploitation by the State-owned corporation or company, but it must resort to making such reservation in terms of Section 17A with the approval of the Central Government and by a notification specifying boundaries of the area and mineral or minerals in respect of which such areas will be reserved. In the present case, the State Government had not reserved the area for exploitation by PSUs in accordance with the procedure laid down in Section 17A of the MMDR Act. Therefore, the State Government's decision to reject the applications for grant of mining leases in favor of the respondents was not justified.
Issues: 1. Whether the State Government is the owner of the mineral deposits in the lands which vest in the Government? 2. Whether the Parliament has acquired complete dominion over the legislative field covered by the MMDR Act? 3. Whether the Act denudes the State of the ownership of the minerals situate within its territories? 4. Whether the State Government can reserve any area not already held under any prospecting license or mining lease for exploitation by the State-owned corporation or company? 5. Whether the State Government must resort to making such reservation in terms of Section 17A with the approval of the Central Government and by a notification specifying boundaries of the area and mineral or minerals in respect of which such areas will be reserved?
Ratio Decidendi: 1. The State Government is the owner of the mineral deposits in the lands which vest in the Government. 2. The Parliament has acquired complete dominion over the legislative field covered by the MMDR Act. 3. The Act does not denude the State of the ownership of the minerals situate within its territories. 4. The State Government can reserve any area not already held under any prospecting license or mining lease for exploitation by the State-owned corporation or company. 5. The State Government must resort to making such reservation in terms of Section 17A with the approval of the Central Government and by a notification specifying boundaries of the area and mineral or minerals in respect of which such areas will be reserved.
Final Decision: The Supreme Court set aside the High Court's judgment and dismissed the appeals filed by the State Government. The Court held that the State Government's decision to reject the applications for grant of mining leases in favor of the respondents was not justified as the State Government had not reserved the area for exploitation by PSUs in accordance with the procedure laid down in Section 17A of the MMDR Act.
T.S. Thakur, CJI.
1. Leave granted.
2. These appeals arise out of a common judgment and order dated 13th November, 2014 passed by the High Court of Kerala at Ernakulam, whereby, Writ Appeals Nos.1610, 1611 and 1621 of 2014 filed by the appellants-State of Kerala have been dismissed affirming thereby an order passed by a Single Bench of that Court, allowing the writ petitions filed by the respondent.
3. By an order dated 15th September, 2004 the Government of Kerala sanctioned the grant of mining leases for Ilmenite, Rutile, Leucoxene, Zircon and Sillimanite (non-scheduled mineral) for a period of 20 years. The order came in exercise of the powers vested in the State Government under Section 11(5) of the Mines and Minerals (Development and Regulation) Act, 1957 and was preceded by the approval of the Government of India in terms of Section 5(1) thereof. Shortly after the issue of the sanction order, however, the State Government by another order dated 25th September, 2004 stayed further action in the matter on the ground that a detailed study on the environmental impact of the proposed leases need be undertaken before taking any further steps. This was followed by nine letters dated 12th October, 2006, 16th October, 2006 and 9th November, 2006 addressed to the respondent-company stating in no uncertain terms that the Government of Kerala did not consider it necessary to grant mining leases for mineral sand to private parties. Aggrieved by the said letters and communications, the respondents filed nine revision applications No. 14(1)/2007-RC-II to 14(3)/2007-RC-II and 14(6)/2007-RC-II to 14(11)/2007-RC-II under Section 30 of the Act aforementioned before the Government of India. These revision applications were heard and allowed by the prescribed revisional authority by a common order dated 30th November, 2009, setting aside the impugned orders and remanding the matters to the State Government to reconsider the cases in the light of the observations made in the order passed by the revisional authority. The operative portion of the order passed by the revisional authority was in the following words:
"......... 9. After hearing both the sides, we find that the State Government had recommended the mining lease applications of the applicant for seeking prior approval of the Central Government in line with the policy resolution dated 22.10.2002. In 7 cases the Central Government had also accorded its prior approval under Section 5(1) of the MMDR Act, 1957 for the proposal of the State Government for grant of mining lease for mineral sand in favour of the revision applicant. The impugned orders have been passed by the State Government after obtaining the prior approval of the Central Government in 7 cases, the State Government is required to pass order under Section 10(3) of the MMDR Act. In all the 9 cases, including those in which prior approval of Central Government has been conveyed, the impugned orders passed by the State Government are against competitive edge of the mining industry. The policy decision of the State Government appears to be not in consonance with the MMDR Act, 1957 and also against the National Mineral Policy, 2008.
10. The impugned orders in all the 9 revision applications mentioned above are set aside with a direction to the State Government to reconsider nil 9 cases in the light of the discussions made in para 9 above and pass appropriate orders accordingly.
Sd/- Sd/-
(R. Raghupathi) (Ajita Bajpal Pande)
Joint Secretary and Legal Joint Secretary (Mines)
Advisor
4. Upon remand, the Government of Kerala once again examined the matter and by an order dated 15th December, 2010 rejected all the applications filed by the respondents on the ground that although, as per Entry 54 List- I (Union List), Schedule VII of the Constitution of India, the Parliament is competent to make laws for regulation of mines and mineral development to the extent such regulation and development is declared by the Parliament by law to be
