Delhi High Court Dismisses ArcelorMittal's Plea for Mining Lease, Citing Failure to Meet Statutory Deadline and Lack of Vested Rights

New Delhi: In a significant ruling concerning mining lease eligibility under the amended laws, the Delhi High Court has dismissed a writ petition filed by ArcelorMittal India Private Limited, seeking directions for the grant of a mining lease in the Saranda Forest Division of Jharkhand. A bench comprising HON'BLE THE ACTING CHIEF JUSTICE and HON'BLE MS. JUSTICE MINI PUSHKARNA held that the petitioner failed to fulfill the mandatory conditions stipulated in the Letter of Intent (LOI) by the statutory cut-off date of January 11, 2017, as required by Section 10A(2)(c) of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 (MMDR Act).

The judgment, delivered on February 29, 2024, emphasized that the statutory timeline for fulfilling LOI conditions was sacrosanct and that the area in question was not even available for fresh mining approvals until environmental studies were completed after the cut-off date.

Background of the Case

ArcelorMittal had applied for a mining lease for iron ore and manganese in the Saranda Forest area back in 2007 under the then-prevailing first-come-first-serve regime. The Central Government granted initial approval under Section 5(1) of the MMDR Act, 1957, in June 2008, followed by an LOI from the State of Jharkhand, subject to conditions including obtaining Forest Clearance (FC) under the Forest Conservation Act, 1980 (FC Act) and Environmental Clearance (EC).

The process for obtaining these clearances faced significant delays. Meanwhile , the Justice M.B. Shah Commission 's report on illegal mining in Jharkhand (2013) highlighted the ecological sensitivity of the Saranda region and recommended against granting new leases in proposed areas, including the one sought by ArcelorMittal, pending detailed environmental studies (Carrying Capacity Study and Sustainable Mining Plan). This led to an embargo on new EC and FC approvals in the area.

The legal landscape changed dramatically with the MMDR Amendment Act, 2015, which replaced the first-come-first-serve system with auction for granting mineral concessions. Section 10A of the amended Act rendered all prior applications ineligible, with limited exceptions. Section 10A(2)(c) saved applications where previous approval or an LOI had been issued before the amendment, provided the conditions of the approval/LOI were fulfilled within two years from the Act's commencement (i.e., by January 11, 2017).

ArcelorMittal filed the present writ petition in 2017, initially challenging the vires of Section 10A(2)(c) and related rules but later confining its challenge to the interpretation and application of these provisions, arguing that government delays prevented them from meeting the deadline.

Arguments Presented

The Petitioner (ArcelorMittal) contended that delays by the State and Central Governments in processing their FC application (specifically under Section 2(ii) for diversion of forest land) were the primary reason for not meeting the January 11, 2017 deadline. They argued they had largely fulfilled conditions, obtained approval for their mining plan, and later even received Section 2(iii) FC approval (for lease execution, not diversion) in 2021/2022, proving mining was permissible. They claimed discriminatory treatment compared to other companies and asserted that the court's interim order in 2017 protected their claim despite the passing of the cut-off date. They argued for a vested right to the lease under the old regime.

The Respondents (Union of India and State of Jharkhand) countered that ArcelorMittal failed to meet essential LOI conditions, particularly obtaining FC under Section 2(ii) and EC, by the mandatory January 11, 2017 deadline. They highlighted that based on the Shah Commission report and subsequent government decisions, fresh mining approvals in the Saranda region were put on hold pending critical environmental studies, which were finalized only in 2018. They argued that the Removal of Difficulties Order was inapplicable as other conditions weren't met. The interim order's protection was tied to the vires challenge, which was abandoned. Respondents asserted that no vested right existed under the old regime, which has been replaced by a non-discriminatory auction process for natural resource allocation. They also raised concerns about the petitioner's conduct in pursuing simultaneous litigation in different courts.

Court's Analysis and Findings

The Delhi High Court meticulously examined the factual matrix and the relevant legal provisions.

The bench noted that the LOI was conditional upon obtaining necessary clearances, including EC and FC under Section 2(ii). Critically, the court found that as of January 11, 2017, ArcelorMittal did not possess these mandatory clearances.

The court placed significant reliance on the Shah Commission Report and the subsequent Action Taken Report (ATR) . It highlighted that the Shah Commission had recommended against granting fresh leases in the proposed areas within Saranda and that the ATR had explicitly directed the MoEFCC not to accept new proposals or process pending ones for EC and FC diversion until the Carrying Capacity Study and Sustainable Mining Plan were completed.

"Thus, even in a case where EC had already been issued to a party viz. M/s Jindal Steel & Power Limited, the same was kept in abeyance till the report of the Carrying Capacity Study is received and appropriate view is taken by the MoEFCC," the court observed, citing the MoEFCC letter from August 1, 2014.

The court rejected the petitioner's argument that their area was always available for mining. It found that the inclusion of their specific compartments (KP-33, KP-34, KP-35) in the identified 'Mining Zones' only occurred after the finalization and acceptance of the Sustainable Mining Plan in June 2018, well after the statutory deadline.

The court clarified that the Removal of Difficulties Order, 2017 did not benefit the petitioner. This order allowed grant of lease even if EC was pending by the deadline, provided all other LOI conditions had been fulfilled . Since ArcelorMittal lacked crucial FC Section 2(ii) approval and the area itself was under an embargo for fresh leases, the order was inapplicable.

Regarding the interim order of January 10, 2017, which stated the cut-off date would not hinder relief if the petitioner was ultimately found entitled, the court held its protection ceased once the petitioner withdrew their challenge to the vires of Section 10A(2)(c). By accepting the legality of the provision, the petitioner became bound by its mandatory requirements, including the deadline.

The bench firmly rejected the notion of a vested right for ArcelorMittal to obtain a mining lease under the old first-come-first-serve regime. Citing Supreme Court precedents, the court reiterated that there is no fundamental right in mining and that natural resources are public property to be allocated for common good, preferably through transparent mechanisms like auction, which is now the mandate of the MMDR Act, 2015.

"No one has a vested right to the grant or renewal of a lease and none can claim a vested right to have an application for the grant or renewal of a lease dealt with in a particular way, by applying particular provisions," the court quoted from State of Tamil Nadu v. M/s Hind Stone (1981).

The court also addressed the petitioner's claim of delay attributable to the respondents. While acknowledging the process took time, especially for the State in verifying the complex proposal involving forest land, the court found the State's actions were justified under the Precautionary Principle , balancing environmental concerns with development. More importantly, the court held that even if there were delays, they could not grant relief that contradicted a mandatory statutory provision (the cut-off date under Section 10A(2)(c)).

"The power conferred by Articles 226/227 is designed to effectuate the law... It cannot be invoked for directing the authorities to act contrary to law," the court stated, citing Union of India v. Kirloskar Pneumatic Co. Limited (1996).

Finally, the court noted that subsequent approvals obtained by the petitioner (like the Section 2(iii) FC) after 2017 did not cure the fundamental defect of not fulfilling the statutory conditions by the prescribed cut-off date. These later approvals were, in fact, considered by the Forest Advisory Committee partly in light of the court's earlier interim order, which no longer provided a basis for granting final relief contrary to the statute.

Conclusion

Finding no merit in the petitioner's contentions, the Delhi High Court dismissed the writ petition, reinforcing the mandatory nature of the statutory deadline under Section 10A(2)(c) of the MMDR Act, 2015, and the principle that no vested rights accrue under the repealed first-come-first-serve regime, especially when the area itself was subject to environmental restrictions at the time of the statutory cut-off. The judgment underscores the primacy of statutory compliance and the public interest in the allocation of natural resources.