Legalcops – Legal Blog – Business Registrations & Tax Compliances

Hi there,

Whether the petitioner company’s mining lease allocation is illegal and  is it liable to pay additional levy/compensation?

Judgement Name– B.L.A. Industries Private Ltd vs Union of India and Ors

Judgement Date– 17 August, 2022

Judges/Bench– J. N.V.Ramana; J. Krishna Murari; J. Hima Kohli

 

INTRODUCTION

Mining is a major economic activity in India and accounted for 2% of the country’s gross value added (GVA) for the third quarter of 2019 to 2020. The Ministry of Mines has handed over 152 mineral block reports to different state governments until November 2021. India produces 95 minerals including fuel-related minerals, metallic and non-metallic minerals, atomic minerals and minor minerals. It is the 2nd largest producer of coal and is leading in production of Bauxite, Iron Ore, etc.

The Centre and State both have equal powers in this area under Entry 54 of Union List and Entry 23 of State list. However, the state’s power is subject to the Centre and the Parliament.  The Mines and Minerals (Development and Regulation) Act, 1957 along with the Mineral Laws Amendment Act, 2020 is the principal legislation laying down the rules and regulations governing the mining industry (except petroleum & natural gas). Apart from these main acts, the lease applicants have to satisfy rules laid down by the state government and several other environmental laws and approvals for ex. Forest Conservation Act. 

This article deals with a case involving the nuances of granting a mining lease and the subsequent consequences on the mining companies thus reiterating the need for adherence towards the laws. 

 

The Ruling in Manoharlal Sharma vs Principal Secretary and Ors.

The Central government had given a series of mining leases from 1993-2011 through an arbitrary process leading to corruption and allocation of coal blocks to unqualified applicants by flouting the MMDR act. The court in the above case had struck down the leases granted through the screening committee/ government dispensation process. The court in the same case passed another judgement dividing the allottees into 2 categories. The UOI submitted Annexure 1 & 2 that had a list of allottees which can be saved provided they comply with certain conditions and the other category including allottees who were outrightly rejected as arbitrary. One of the conditions was to pay an additional levy of Rs. 295/metric tonne of coal extracted. 

 

Why did the petitioner fail to pay the amount as directed?

The petitioner contended that its inclusion in the above mentioned list is wrong as it did not obtain its lease through the Screening committee route rather it had followed all the rules in accordance with the MMDR Act and other requirements. Thus, it brought a petition under Article 32 of the Indian Constitution against its inclusion in the schedules attached to the Coal Mines (Special Provisions) Ordinance, 2014 and sought to cancel the additional levy charged upon it. The center brought a contempt case for failing to comply with the court’s order.

 

Was the inclusion in the list erroneous?

The petitioners contended that they had followed the due procedure by initially applying to state government authorities and then proceeded to the central government’s approval. It did not get approval through the government dispensation process which was done without any interference by state governments. They also contended that principles of natural justice has been flouted as the court didn’t grant opportunity to present this information in the 2nd case. However, the Centre contended that the nature of levy is punitive and compensatory on those allottees who derived benefit from the screening committee process of which the petitioners were also a part according to the ruling in Manoharlal Sharma case. 

 

Were the principles of natural justice violated?

The Centre contended that all parties were given due hearing in the 2nd judgement. But the petitioners highlighted that in the above case, the court had itself observed that “ the judgement does not apply to an individual case rather it deals with only the arbitrary process”. Therefore, this judgement does not apply to the petitioners who followed due procedure for allocation as required in the Manoharlal Sharma case.

 

Were the petitioners allocated lease by the Screening Committee Process?

If not, the company is not liable to pay the additional levy. The petitioner first submitted the application to the Collector (Mining), Narsingpur, Madhya Pradesh which was forwarded to other state authorities and finally a report in favor of the petitioner was transferred to the state government which wrote a letter to the Centre thus approving their eligibility under the Rule 22 (3) of the Mining Concession Rules,1960. The state also sought Centre’s approval under S. 5(1) of MMDR Act. The Centre through its several Screening Committee meetings considered it and finally granted approval. 

However, following all the steps and going through screening committee is different from directly getting approval from Screening Committee. Therefore, the mere participation in that process cannot be cited as a reason for labelling the approval as arbitrary. 

 

What did the State government say about the process?

The state government’s affidavit stated that allocation was not made on any allocation letter issued by the committee or the centre, rather it was based on an independent consideration in accordance with the MMDR Act read with MC Rules. It also referred to its affidavit filed in the Manoharlal Sharma case, where the state government had submitted that the arbitrary procedure was followed for all approvals “other than one” where application was not made directly to the center (it was only the petitioner who applied to state government).

 

CONCLUSION

The court considered the above submissions and issues and held that the inclusion of the petitioner company in the schedule of companies liable to pay the levy was wrongful. It also quashed the criminal contempt case on the petitioner. It strongly condemned the callous attitude of the Centre in preparing the list and its non-adherence to proper procedure thus costing a private entity which has duly followed the law. It levied Rs. 1 lakh as litigation costs to be paid by the Central government to the petitioner. It advised strongly against the negligent conduct of governments in public affairs. 

 

Written By: Sneha M.

Leave a Comment

Your email address will not be published. Required fields are marked *