State govt can reserve land for mining only with Centre’s approval, Supreme Court

The Supreme Court has ruled that state governments can reserve land owned by them for mining exploitation only with the approval of the Central government.

While ruling on questions relating to the Mines and Minerals (Development and Regulations) Act, 1957, the Court also said that the Centre will not be bound by any recommendations while deciding on proposals for reservation of land.

A Bench of Justice Madan Lokur and Deepak Gupta was hearing an appeal in the case of Geomysore Services Pvt. Ltd. & Anr. v. Hutti Goldmines Co. Ltd. & Ors. The case deals with questions relating to the right of state governments to reserve land for mining exploitation, the binding nature of state government proposals, and preferential rights guaranteed to some persons under the Act.

The two appellants, Geomysore Services (Geomysore) and Deccan Gold Exploration Services (Deccan), had applied for and were granted Reconnaissance Permits (RP) for certain pieces of land at Hutti Gold Mines in Karnataka. Reconnaissance is a non-invasive procedure to identify the presence of minerals in the land.

Following this, the two appellants filed applications for Prospecting Licence (PL), which is obtained to carry out the prospecting operation, which is a more definitive technique to identify and locate the presence of minerals.

The respondent, Hutti Gold Mines Co. Ltd. (HGML), which is a state public sector undertaking, did not file any application for RP at this time, but subsequently wrote to the Department of Mines and Geology, Bangalore praying for the entire Hutti area to be reserved for PSUs for the purpose of conservation. This included the areas of land where the appellants had carried out their reconnaissance work.

Under Section 11 of the Act, RP holders are given a preference during grant of PL and PL holders are given preference during grant of Mining Licence (ML). However, the respondent, who had not filed for RP earlier, wanted the land to be reserved for PSUs even when both the appellants had already successfully carried out their reconnaissance.

The appellants wrote to both the Central government and the State of Karnataka on this issue. In the meantime, the Karnataka government wrote to the Centre regarding reservation of the entire area in HGML’s favour.

As a result, the appellants filed a revision petition before the Central government considering the area they held their RPs for were proposed to be reserved in HGML’s favour. The Centre allowed this revision petition, asking Karnataka to consider PL applications of the appellants. Subsequently, HGML moved the Karnataka High Court through a writ petition.

After hearing the matter, the Karnataka High Court set aside Centre’s orders and directed it to consider the recommendation made by the state of Karnataka. The Centre rejected these recommendations, stating that the appellants had a preferential right. Another petition was subsequently filed by HGML which was allowed and then challenged before the Supreme Court by the appellants.

The main questions before the Supreme Court were whether the Centre is bound by the recommendations and proposals made by the state government and what factors can be considered by the Centre while dealing with such proposals. Other questions raised were whether the preferential right provided for in the Act and the right of PSUs can exist simultaneously, and if the Centre was right in rejecting the proposal in this specific case.

After hearing the counsel for all the parties, the Court laid down a point by point answer to each of these questions. Additional Solicitor General Maninder Singh appeared for the Union of India, Senior Counsel Meenakshi Arora for the appellants, Senior Counsel Basava Prabhu S Patil for the State of Karnataka and Senior Counsel CU Singh and Jaideep Gupta for HGML.

The Court said that while the state government has the right to make proposals regarding reservation of land for mineral exploitation, an approval from the Centre is necessary. The Centre will not be bound by any recommendations and is required to decide each case based on its merits.

As regards preferential right and reservation of land, the Court said that when a piece of land is held under a PL or an ML, a process to reserve that land cannot be initiated. In this specific case, the Court held that the Centre was right in rejecting the proposal made by the Karnataka government.

Consequently, the judgment of the High Court was set aside, and the decision of the Central government was upheld.

Source: Bar & Bench INDIAN LEGAL NEWS

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