“No Vested Right to Quarry Lease Under Repealed Rules”: Andhra Pradesh High Court Upholds Auction-Based Regime for Minor Minerals
Safiya Malik
In a matter concerning the Andhra Pradesh Minor Mineral Auction Rules, 2022, and amendments to the Andhra Pradesh Minor Mineral Concession Rules, 1966, a Division Bench of the Andhra Pradesh High Court comprising Chief Justice Justice Dhiraj Singh Thakur and Justice R. Raghunandan Rao dismissed a series of writ petitions challenging the Government Orders G.O.Ms.No.13 and G.O.Ms.No.14, both dated 14.03.2022. The Court recorded that “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 stated that “Section 15 of the 1957 Act empowers the State Government to make rules for regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for the purposes connected therewith.”
The Court examined the validity of G.O.Ms.No.13 and G.O.Ms.No.14, both dated 14.03.2022, through which the State of Andhra Pradesh amended several rules of the 1966 Rules and introduced the Andhra Pradesh Minor Mineral Auction Rules, 2022. The amendments replaced the previous regulatory framework that allowed a first-come-first-serve approach with an auction-based process for awarding quarry leases for minor minerals.
The petitioners submitted that Parliament introduced auctions for mineral concessions only for major minerals under the 1957 Act by incorporating Sections 10-A to 10-C in 2015 and later repealing Section 10-C in 2021. The petitioners contended that “no such provision was made, by an amendment to the 1957 Act, for grant of mineral concessions/leases for minor minerals,” and therefore, “changing the system of grant of leases, by way of amendment of the rules, is not permissible.”
They argued that pending applications, made under the prior regulatory scheme, created a vested right that should not be frustrated by the amendments. Further, the petitioners relied on the decision of the Supreme Court in Federation of Indian Mineral Industries and Others vs. Union of India and Others, contending that Section 15 of the 1957 Act does not empower the State Government to frame rules with retrospective effect. It was submitted that “the applicants have a vested right of grant of the mineral concession” due to the previous system.
The petitioners also raised concerns about the security deposit requirement under the amended rules, asserting that the requirement of furnishing three times the annual dead rent as security deposit violated Section 9A of the 1957 Act, which restricts increases in dead rent/royalty to once every three years. Additionally, they contended that the new rules excluded Mutually Aided Cooperative Societies from participating in the auction process and that the amendments conflicted with the Granite Conservation and Development Rules, 1999, and Marble Development and Conservation Rules, 2002.
In response, the State, through the learned Advocate General, argued that Section 15 of the 1957 Act empowers the State Government to make rules regulating minor minerals, including introducing an auction system. The State submitted that “the applicants, whose applications, has now been rendered ineligible, do not have any vested right for grant of lease.” It was contended that the amendments did not apply retrospectively but rather introduced a new process prospectively, affecting pending applications without violating vested rights.
The Court recorded that Section 14 of the 1957 Act “explicitly excludes the provisions of Section 4 to 13, in relation to minor minerals.” Referring to the Supreme Court decision in D.K. Trivedi and Sons vs. State of Gujarat, the Court recorded that “the ambit of the power under Section 13 and under Section 15 is, however, the same, the only difference being that in one case it is the Central Government which exercises the power in respect of minerals other than minor minerals while in the other case it is the State Governments which do so in respect of minor minerals.”
The Court rejected the petitioners’ submission regarding retrospective application, stating that “the applicant does not have any vested right for a grant of a mineral concession on the ground that he had made an application which meets the requirements of the 1957 Act and the Rules made there under.”
The Court further noted the Supreme Court’s finding in State of Rajasthan and Others vs. Sharwan Kumar Kumawat, where it was held that “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.”
On the issue of whether the amended rules were in conflict with the Granite Rules or Marble Rules, the Court observed that “there is no conflict between the Granite Rules and Marble Rules on one hand and the 1966 rules on the other hand.” The Court stated that “these rules deal with the manner in which the mining or excavation activity is to be carried out and leaves the area of regulation of grant of leases for these minerals, to the rules, under Section 15 of the 1957 Act.”
Regarding the exclusion of Mutually Aided Cooperative Societies from auctions, the Court recorded that “the auction rules in fact, give additional benefits to Local Societies,” and clarified that “the definition of Local Society, contained in rule 2(h) of A.P. Minor Mineral Rules, 2022 includes Mutually Aided Co-operative Societies.”
Addressing the contention related to the increased security deposit, the Court recorded that “the petitioners have not placed any material before the Court to demonstrate that there was increase in the dead rent/royalty in the three years before the issuance of G.O.Ms.No.13 or G.O.Ms.No.14.” The Court added, “It would not be appropriate for this Court, to substitute its judgment for determining, what would be a reasonable security deposit.”
On allegations of misuse of the amended rules by authorities, the Court noted that “the possibility of misuse or even actual misuse cannot be a ground for setting aside a statutory Rule.” The Bench further observed that “the petitioners have not shown any specific instance of such misuse.”
The Court dismissed all the writ petitions, stating, “for all the aforesaid reasons, the present batch of Writ Petitions are dismissed.” The Court ordered that “there shall be no order as to costs.” Pending miscellaneous petitions, if any, were directed to stand closed.
Advocates Representing the Parties
For the Petitioner: Mr. Hari Sreedhar, Advocate
For the Respondent: Learned Advocate General for State; GP for Mines and Geology
Case Title: Federation of Minor Minerals Industry (femm) and Others vs. The State of Andhra Pradesh and Others
Case Number: W.P.No.19459 of 2022 & batch
Bench: Chief Justice Dhiraj Singh Thakur, Justice R. Raghunandan Rao
[Read/Download order]
