Executive Inaction, Legislative Transition, and Vested Mining Rights: A Doctrinal Re-Examination of Section 10A(2)(c) of the MMDR Act, 1957

Introduction

India’s mining law has undergone significant changes when it moved from a discretionary allocation system to a competitive auction process. The Mines and Minerals (Development and Regulation) Act, 1957 (“MMDR Act”) gave State Governments the primary role in reviewing mining lease applications but required prior approval from the Central Government. The 2015 amendment made auctions the primary way to allocate mining rights. This raised concerns about what would happen to applications still pending under the old system. Section 10A of the MMDR Act addressed these concerns by protecting cases where the Central Government had already given approval under Section 5(1) of the MMDR Act, or where the State Government had issued a “letter of intent (by whatever name called)” before January 12, 2015.

The Pre-2015 Structure of the MMDR Act

Before the 2015 amendment, Sections 4, 5, and 11 of the MMDR Act governed the granting of reconnaissance permits, prospecting licences, and mining leases. When there were competing applications, the State compared them under Section 11(5) of the MMDR Act to decide which was stronger. After finding the most eligible applicant, the State recommended the case to the Central Government. Thereafter, the State would then grant the lease provided that Central Government approval has been obtained.  

Judicial Intervention and the 2015 Amendment

The allocation system was challenged in Centre for Public Interest Litigation v. Union of India ^[1], where the Supreme Court stressed the need for transparency and fairness in allocating natural resources. In response, the 2015 Amendment Act aimed to remove discretion, make the process more transparent, speed up decision making, and raise more revenue for the state.  

Interpretation of “Letter of Intent (By Whatever Name Called)”

In Rishi Kiran Logistics Pvt. Ltd. v. Board of Trustees of Kandla Port Trust, the Supreme Court stated that a “letter of intent signifies a concluded decision to contract, leaving only formalization”^[2]. The words “by whatever name called” are used by lawmakers to make sure the substance is not lost because of the name given to a document. When the State Government compares applications, finds one applicant stronger, and formally recommends granting a mining lease, it has made the key decision. This recommendation names the recipient, the area, the mineral, and the lease term. It shows a clear intention to grant the lease. Not calling it a “letter of intent” does not change what it is.

However, there is some inconsistency in the Supreme Court’s reasoning in Bhushan Power & Steel Ltd. v. S.L. Seal. The Court “declined to treat the State Government’s recommendation as a “letter of intent” under Section 10A(2)(c), emphasizing the absence of prior Central Government approval as a determinative factor”^[3]  

If courts decided otherwise, the phrase “by whatever name called” would become meaningless. Courts usually avoid interpretations that make legal text redundant. So, when the State recommends a grant after judging merit, it is basically the same as a letter of intent under Section 10A(2)(c) of the MMDR Act. The phrase “letter of intent (by whatever name called)” shows that Parliament cared about the substance, not the label. When the law uses broad phrases, courts should focus on the intent of the document rather than name of the document.

The Doctrine of Vested Interests and Crystallization of Rights

Section 10A(2)(c), as explained in Bhushan Power (Supra), says that once approval or a letter of intent is given, the right is established. In administrative law, once an authority makes a decision and is satisfied, its role in that matter ends. So, when the State decides on merit and recommends a grant, the vested rights have been created. Courts have also said that long delays by the government cannot be used to take away rights that have already been created under the MMDR Act’s transitional rules. In Indocil Silicons Pvt. Ltd. v. State of Karnataka^[4], the Karnataka High Court stressed that administrative delays cannot cancel these rights as authorities should not benefit from their own inaction (nullus commodum capere potest de injuria sua propria).

In situations where the State continues to issue notices inviting tenders for the very same mineral-bearing area despite having previously determined comparative merit in favour of a particular applicant, the delay must therefore be attributed solely to the executive authorities. Such administrative paralysis not only undermines the rule of law but also results in substantial loss of public revenue. Long delays affect more than just the applicants. If mineral-rich land is left unleased for years, the State loses money from royalties and dead rent. The public trust doctrine, explained in M.C. Mehta v. Kamal Nath, says the State must use natural resources for the public good. Leaving mining areas unused due to government delays goes against this duty. The State loses revenue during these years and then uses the delay as a reason to cancel earlier grants. This approach is neither economically viable nor legally sustainable.

Conclusion

The law, court decisions, and constitutional principles all point to one conclusion. If a mining company applied for a mining lease prior to the 2015 amendment, and the State found the application deserving and recommends for a mining lease, such recommendation should count as a “letter of intent (by whatever name called)” under Section 10A(2)(c) of MMDR Act. Such a right will materialize at that point, and subsequent amendments cannot take away such rights retroactively. Deciding otherwise would focus on technicalities instead of real issues, encourage delays, and lead to loss of revenue. The rule of law requires that transitional rules protect fair expectations and rights that have already been earned. Section 10A(2)(c) of MMDR Act should be interpreted in a way that ensures justice, respects vested rights and stops the State from benefiting from its own delays.

References

[1] (2012) 3 SCC 1

[2] (2015) 13 SCC 233

[3] Contempt Petition(Civil) No. 275 of 2016

[4] W.P.No. 1920 of 2021  

‍