No vested right to mining leases for lapsed LOI, PL holders: Rajasthan High Court

Jodhpur: The Rajasthan High Court has held that holders of Letters of Intent and Prospecting Licences under the Mines and Minerals (Development and Regulation) Act, 1957 possess no surviving enforceable right to the execution of mining leases, ruling that their claims stood lapsed by operation of law following the Amendment Act of 2021 and that the areas in question must now be allocated through auction.

Allowing a batch of appeals filed by the State of Rajasthan, a division bench of Justice Sunil Beniwal and Justice Arun Monga set aside a Single Judge’s orders that had quashed the cancellation of these grants, holding that a mere pending application or an unexecuted Letter of Intent creates no vested right, and that the doctrine of legitimate expectation must yield to the State’s conscious shift to a transparent auction-based regime.

The bench held that the doctrine of legitimate expectation “does not advance the case of the respondent-writ petitioners, inasmuch as such expectation cannot override legislative policy, particularly where the State, in larger public interest, has consciously shifted from the earlier regime of discretionary or first-come-first-served allocation to a transparent auction-based mechanism.”

The lead appeal, State of Rajasthan v Dalpat Singh Chundawat, arose from a batch of writ petitions filed by holders of LOIs and PLs — issued for minerals such as quartz and feldspar — whose grants were cancelled by orders dated 10 February 2021. The Single Judge had allowed the petitions and quashed the cancellations, relying on the court’s earlier decision in Kamlesh Metacast Pvt. Ltd. v State of Rajasthan.

Examining the effect of the Amendment Act of 2021, which inserted provisos to Section 10A(2) of the 1957 Act, the bench held that the rights of PL holders stood lapsed by operation of law upon commencement of the amendment under the proviso to Section 10A(2)(b), while LOI holders were required to secure execution of their leases on or before 11 January 2017 under Section 10A(2)(c). Having failed to do so, no vested, accrued or indefeasible right survived in their favour, and the consequence under Section 10A(2)(d) — that the areas be put to auction — necessarily followed.

Rejecting the argument that the petitioners’ long-pending claims had crystallised into enforceable rights, the Court observed that “lapse of time, pendency of proceedings, or administrative delay cannot convert a provisional or contingent arrangement into a vested legal entitlement.” It relied on Supreme Court authority, including State of Tamil Nadu v Hind Stone and State of Rajasthan v Sharwan Kumar Kumawat, to hold that no one has a vested right to the grant of a lease or to have an application dealt with under a particular set of provisions, and that legitimate expectation is a weak right that cannot prevail over a valid legislative policy.

On the contention that the 2021 amendment could not operate retrospectively, the bench held that the provisos were consciously enacted to apply to pending claims so as to give full effect to the auction regime and remove impediments in the transparent and competitive allocation of mineral resources.

In a concurring opinion, Justice Arun Monga rejected the petitioners’ reliance on Kamlesh Metacast, which they projected as having attained finality up to the Supreme Court. He held that “dismissal of an SLP by a non-speaking order does not constitute a declaration of law under Article 141, nor does it create a binding precedent,” adding that the validity of each Prospecting Licence depends on its own factual matrix and could not be homogenised into a single determination.

Allowing the State’s appeals and dismissing the writ petitions, the Court held that the petitioners could not seek a mandamus for execution of mining leases under the erstwhile non-auction regime. It clarified that, wherever the statute provides for reimbursement of expenditure incurred towards reconnaissance or prospecting operations, eligible parties would be at liberty to avail such remedy strictly in accordance with law.

Title: State of Rajasthan & Ors. v Dalpat Singh Chundawat & Anr.

Case No.: D.B. Special Appeal Writ No. 769/2023 (with connected appeals, including D.B. SAW No. 250/2024 and No. 30/2024)

Counsel for appellants: Mr. Rajendra Prasad, Advocate General, with Mr. Mahaveer Bishnoi, AAG, Mr. Harshwardhan Singh Chundawat, Mr. Anirudh Singh Shekhawat, Mr. Gaurav Bishnoi and Mr. Arpit Samariya

Counsel for respondents: Mr. M.S. Singhvi, Sr. Adv., Mr. Kamlakar Sharma, Sr. Adv., Mr. Rajesh Joshi, Sr. Adv. and Mr. Manoj Bhandari, Sr. Adv., among others