Summary
The Supreme Court upheld the Central Government’s refusal to approve Karnataka’s proposed mineral-area reservation for Hutti Gold Mines. State ownership did not dispense with central approval under section 17A(2). In deciding approval, the Centre could consider mineral policy, economic circumstances and existing reconnaissance investment alongside other relevant factors. A reconnaissance permit did not itself bar reservation. The High Court judgment was set aside and the private applicants’ prospecting-licence applications were directed to be considered under the Act as amended in 2015.
Issues
- Whether State ownership made its reservation proposal binding on the Central Government.
- Which considerations could inform central approval under section 17A(2).
- How reconnaissance preference and statutory reservation interacted.
- Whether rejection of Karnataka’s proposal was lawful.
Provisions considered
- Sections 2, 11(1) and 17A(2), as applicable before the 2015 amendment, Mines and Minerals (Development and Regulation) Act, 1957State ownership remained subject to the statutory scheme of Union regulation. Reservation required central approval and prescribed notification. Reconnaissance preference did not bar reservation, but the investment and applications could be considered with other relevant factors when approval was assessed. The ultimate direction required consideration of prospecting applications under the amended Act. (¶¶ 12, 17, 19, 21, 39, 42, 45, 46, 47, 48)
Held
- State ownership conferred a right to propose reservation of eligible land, not to compel central approval. Under section 17A(2), an existing prospecting licence or mining lease barred reservation; approval, Gazette notification of boundaries and identification of the minerals were also necessary. (¶¶ 39, 44, 45, 46)
- The Centre’s approval decision was not confined to national security or public interest narrowly understood. It could independently consider economic factors, the National Mineral Policy and other matters relevant to whether exclusive exploitation by a State undertaking was justified. The considerations were illustrative and fact-dependent. (¶¶ 40, 41, 46)
- Reconnaissance permits were distinct from prospecting licences and mining leases. A reconnaissance permit did not create a statutory prohibition on reservation, and its existence alone could not justify refusing approval. Its practical effects could nevertheless be considered together with other relevant circumstances. (¶¶ 12, 13, 14, 15, 16, 42)
- Section 11(1) preference and section 17A(2) reservation operated separately. A private applicant’s preference did not defeat a lawful reservation; where no reservation existed, the State company did not enjoy automatic priority over private applicants. (¶¶ 42, 45, 46)
- The Centre lawfully considered the applicants’ completed reconnaissance, pending prospecting applications, private-investment policy and absence of a demonstrated security or public-interest justification. Promissory estoppel and legitimate expectation were expressly not the basis of the decision. (¶¶ 41, 43, 46)
- The Court did not decide the disputed effect of the 2015 amendments, including sections 10A and 10B. It restored the Centre’s refusal of reservation and required the applicants’ prospecting-licence cases to be considered in accordance with the Act as amended, without itself granting licences. (¶¶ 47, 48, 49)
Result
Appeals allowed; High Court judgment set aside and Central Government decision of 31 May 2011 upheld. Karnataka to consider Geomysore’s and Deccan’s prospecting applications under the Act as amended in 2015. No order as to costs; pending applications disposed of.