Mining leases executed without prior approved mining plans are void and create no enforceable rights, rules Gauhati High Court

The appellants held prospecting licences granted by the State of Arunachal Pradesh for exploration of graphite. Their licences were initially granted in 2014, renewed in 2018, and remained valid until 29.05.2019.

On 16.08.2019, after expiry of the prospecting licences, the appellants applied for mining leases under Rule 7(1) of the Minerals (Other than Atomic and Hydro Carbon Energy Minerals) Concessions Rules, 2016 (“2016 Rules”) read with Section 10A(2)(b) of the Mines and Minerals (Development and Regulation) Act, 1957 (“MMDR Act”).

By communications dated 21.08.2019, the State Government communicated its decision to grant 50-year mining leases, subject to compliance with statutory requirements, including approval of mining plans and other clearances. Those conditions were not fulfilled within the stipulated period.

On 25.01.2021, the appellants submitted their mining plans and requested execution of the lease deeds. The State directed them to deposit stamp duty and registration charges, and the lease deeds were executed on 29.01.2021, before approval of the mining plans and fulfilment of the requirements under Rule 7(10).

The draft mining plans were forwarded to the Indian Bureau of Mines (“IBM”) only on 02.03.2021; provisional and final approvals were granted thereafter in May and August 2021. The MMDR Amendment Act, 2021 came into force on 28.03.2021 and provided for the lapse of rights to obtain prospecting licences followed by mining leases in pending cases under Section 10A(2)(b).

Following correspondence between the State Government, the Ministry of Mines and the IBM, the Regional Controller of Mines revoked the mining-plan approvals on 07.01.2022 on the ground that the lease deeds had been executed before approval of the mining plans and were therefore contrary to the statutory scheme. The State Government also initiated proceedings for cancellation of the lease deeds.

The learned Single Judge dismissed the appellants’ writ petitions, holding that the leases were contrary to the MMDR Act and the 2016 Rules, that no enforceable rights had accrued, and that the 2021 amendments applied to the appellants’ claims. The present intra-court appeals challenged that decision.

1. Whether the communications issued under Rule 7(6) of the 2016 Rules constituted a completed statutory grant of mining leases, or merely a decision identifying the successful applicants subject to further statutory compliance?

2. Whether an approved mining plan under Section 5(2)(b) of the MMDR Act was a mandatory condition precedent to the lawful grant of a mining lease, notwithstanding the sequence contemplated under Rule 7 of the 2016 Rules?

3. Whether the lease deeds executed on 29.01.2021, before approval of the mining plans, were valid and capable of creating enforceable or vested statutory rights?

4. Whether the appellants’ alleged rights survived the lapse provision introduced by the MMDR Amendment Act, 2021?

5. Whether the IBM had jurisdiction to revoke the approvals granted to the mining plans, and whether the revocation orders violated principles of natural justice?

The Court primarily applied Section 5(2)(b) of the MMDR Act, which prohibits the grant of a mining lease unless the State Government is satisfied that an approved mining plan exists; the Court treated this requirement as a substantive condition precedent to the exercise of statutory power, rather than a mere procedural formality.

Section 19 of the MMDR Act provides that a mining lease granted in contravention of the Act, rules or orders is void and of no effect.

Rule 7 of the 2016 Rules prescribes a sequential process: the State communicates its decision under Rule 7(6), the applicant fulfils conditions including those relating to the mining plan under Rule 7(10), and the State executes the lease deed under Rule 7(11).

Applying harmonious construction, the Court held that delegated legislation cannot dilute or override the substantive restrictions in the parent statute.

The Court further distinguished between a conditional statutory expectation and a vested statutory right, holding that the latter arises only after all statutory conditions are fulfilled.

Section 10A of the MMDR Act was treated as a transitional saving provision, and rights under it could survive legislative change only if they had crystallised into enforceable statutory rights before the 2021 amendment.

The decision in Aanne Mines & Minerals v. State of Karnataka, 2019 SCC OnLine Kar 3791, was held inapplicable because it did not consider whether a valid mining lease could arise without compliance with Section 5(2)(b).

The Court held that Section 5(2)(b) regulates the very exercise of the power to grant a mining lease. Since the appellants’ mining plans had not been approved when the lease deeds were executed on 29.01.2021, the State lacked authority to complete the statutory grant at that stage.

Rule 7(6) was construed as identifying an eligible or successful applicant and initiating the final stage of the process, not as creating an immediately enforceable mining right.

Rule 7(10)(c), which expressly requires satisfaction of the mining-plan condition before execution of the deed, was therefore harmonised with Section 5(2)(b), rather than treated as permitting post-grant compliance.

The subsequent execution of the lease deeds could not cure the initial statutory illegality; under Section 19, leases granted contrary to the Act were void automatically and incapable of creating enforceable rights.

Consequently, the appellants had at most a conditional entitlement or statutory expectation, not a vested right protected against the 2021 amendment.

In view of this conclusion, the Court found it unnecessary to separately decide the IBM’s power to revoke the mining-plan approvals or the alleged breach of natural justice, as those issues could not validate the void leases.

The appellants acquired no vested or accrued statutory rights capable of surviving the 2021 amendment, their rights remaining conditional upon fulfilment of the statutory requirements.

The judgment of the learned Single Judge was affirmed, the writ appeals were dismissed, and there was no order as to costs; pending applications, if any, were also disposed of.