JUDGMENT : Vipin Sanghi, J. The petitioner has preferred the present writ-petition to challenge the vires of the notification no.1824/VII-A-1/2021/80-Kha/16 dated 28.10.2021 issued by the Uttarakhand Shasan, Industrial Development (Mining), Section-1, as being violative of Article 14 and 19(1)(g) and Article 21 of the Constitution. 2. The petitioner also seeks direction to the respondents to allot mining leases by competitive E-Tender cum E-auction process in terms of the Policy Notification dated 31.10.2017 affirmed by the judgment of this Court dated 19.09.2018 in WP(PIL) No.147 of 2018. 3. The case of the petitioner is that the petitioner is engaged in the business of operating mining leases for minor minerals granted by the State Government. 4. The petitioner participated in e-auction conducted by the respondent-State vide e-auction notice dated 10.01.2018 for grant of mining rights in respect of the minor minerals i.e. river bed material consisting of sand, gravel, boulder, clay and muck etc. Under the tender the maximum quantity of RBM which could be mined on an annual basis by the lessee was fixed 1,32,000/- tons per year. The minimum amount which could be mined was stipulated as 66,000/- tons per year. 5. The petitioner emerged as the highest bidder in respect of the said e-tender no.001_Nainital_Bhaursha_Nainital_6.00ha/ Hkw0[kfu0bZ0@ bZ0 fufo0 lgbZ0 uhyk0@2017&18 fnukad 10-01-2018 related to Bhaursha village, Nainital, which is as follows:- ^^1- {ks= dk fooj.k Ø0 la0- mi[kfut dk uke YkkWV dk dzekad {ks= dk fooj.k fu;ekoyh] 2001 ds vuqlwph 1 ds vuqlkj vU; ns;dksa jfgr jk;YVh nj ¼:0 izfr Vu½ [kuu ;ksX; vuqekfur mi[kfut dk Hk.Mkj ¼Vu izfr o"kZ½ izFke o"kZ esa vuqekfur Hk.Mkj dh dqy jk;YVh :0 esa ¼dkye 8 esa vafdr jk;YVh dh nj ls xq.kk djus ij miyC/k ldy /kujkf'k½ vusZLV euh :0 esa ¼dkYke 11 esa vafdr ldy /kujkf'k dk 25 izfr'kr½ rglhy xzke [kljk la0 {ks=Qy ¼gs0esa½ U;wure vf/kdre 1 2 3 4 5 6 7 8 9 10 11 12 1- vkj0ch0,e0 ¼1½ uSuhrky uSuhrky HkkSlkZ 2519v 6-00 42-50 66000 132000 5610000 1402500-00 The petitioner was, accordingly, granted the mining lease on 02.12.2020. 6. The royalty payable by the petitioner was fixed as follows:- 7. The royalty was revisable upwardly 10% each year on the royalty paid for the previous year. For the first two years i.e. 2018-19 and 2019-20, the petitioner was not required to pay the royalty as the petitioner could not carry on the mining activity.
6. The royalty payable by the petitioner was fixed as follows:- 7. The royalty was revisable upwardly 10% each year on the royalty paid for the previous year. For the first two years i.e. 2018-19 and 2019-20, the petitioner was not required to pay the royalty as the petitioner could not carry on the mining activity. No royalty was payable by the petitioner for the period from 15.05.2018 to 14.05.2019 and 15.05.2019 to 14.05.2020 since the environmental clearance was not granted till then. However, the petitioner became liable to pay the royalty from 15.05.2020 onwards, which, for the third year, was Rs.6,07,53,495/-. 8. If the said amount of royalty is divided by the maximum quantity of the RBM, which the petitioner could mine it was fixed at 1,32,000 ton, the same translates to around Rs.460.25 per ton. 9. The respondent-State issued the impugned notification dated 28.10.2021, thereby seeking to amend the Uttarakhand Minor-Minerals (Concession) Rules 2001 vide the Uttarakhand Minor-Minerals (Concession)(Amendment) Rules, 2021. The relevant amendment with which we are concerned, was carried out in Rule 3. The relevant extracts of the amendment carried out in Rule 3 by the impugned notification reads as follows:- “Amendment of Rule 3 2. In Rule 3 of the Uttarakhand Minor Minerals (Concession) Rules, 2001, in place of additional provisions given in Column-1 below, the additional provision given in Column-2 will be substituted, i.e. Column-1 Present Provision Column-1 Hereby Substituted Provisions For the purpose of development of land in the hilly and plains of Uttarakhand, the ordinary soil that comes out, when the hill is cut, basement is excavated or the levelling of the land is done, can be transferred to the plot of the same private land or to any other plot of its own, then it will not come under the category of mining, and thus there will be no obligation of EIA in relation to the above category, and so this JCB can be used and it will be ensured that this process will be applicable only on the ordinary soil that comes out for the purpose of own personal measurement land. This will not apply to other mining operations.
This will not apply to other mining operations. If the ordinary soil is transported from the plot of private land to any other place for commercial use as above, then the said person will have to pay the royalty at the rates specified for the time being as mentioned in the First Schedule of the Rules. Explanation For the construction of building in the hilly areas of Uttarakhand, the arrangement of keeping the ordinary soil and waste material coming out of the basement of the building is not with the owner of the building and he does not use it commercially, then to keep it in the dumping zone declared by the Tehsildar of the Tehsil concerned with the permission of the local administration will be preserved, which will be used in future for making ground/helipad etc. This process will be applicable only on ordinary soil and waster material coming out from the purpose of own building construction, for this exemption in royalty is given. If ordinary soil and waster material is used for filling other than the dumping zone royalty for ordinary soil will be payable by the users For the purpose of development of land in the hilly and plains of Uttarakhand, the ordinary soil that comes out, when the hill is cut, basement is excavated or the levelling of the land is done, can be transferred to the plot of the same private land or to any other plot of its own, then it will not come under the category of mining, and thus there will be no obligation of EIA in relation to the above category, and so this JCB can be used and it will be ensured that this process will be applicable only on the ordinary soil that comes out for the purpose of own personal measurement land. This will not apply to other mining operations. If the ordinary soil is transported from the plot of private land to any other place for commercial use as above, then the said person will have to pay the royalty at the rates specified for the time being as mentioned in the First Schedule of the Rules.
This will not apply to other mining operations. If the ordinary soil is transported from the plot of private land to any other place for commercial use as above, then the said person will have to pay the royalty at the rates specified for the time being as mentioned in the First Schedule of the Rules. Explanation For the construction of building in the hilly areas of Uttarakhand, the arrangement of keeping the ordinary soil and waste material coming out of the basement of the building is not with the owner of the building and he does not use it commercially, then to keep it in the dumping zone declared by the Tehsildar of the Tehsil concerned with the permission of the local administration will be preserved, which will be used in future for making ground/helipad etc. This process will be applicable only on ordinary soil and waster material coming out from the purpose of own building construction, for this exemption in royalty is given. If ordinary soil and waster material is used for filling other than the dumping zone royalty for ordinary soil will be payable by the users Additional Provision:- Under the provisions of Point No.3 and Point No.13 of Appendix-9 of the Notification No.1088, dated 28.03.2020 of the Ministry of Environment, Forests and Climate Change, Government of India, the Environment Clearance will not be required for the said non-mining activity by declaring the construction activities other than the levelling of land, water storage tanks, recycling tanks, fish ponds etc. being non-mining activity. In addition to the above, the process of removing ordinary soil for brick, earth and road filling will not come under mining operations, unless the depth of the mining site does not exceed 02 meters. Royalty and other fees will be payable as per Rules on the extraction of minerals like sand, gravel, boulder, clay, muck etc. extracted from these activities. For this, the application under the Uttarakhand Minor-Minerals (Concession) Rules 2001 (as amended from time to time), will be submitted before the Authorized Officer nominated by District Mines Officer/Director, Geology and Mining Unit and the report of the Committee constituted of Sub Divisional Magistrate and District Mining Officer after Joint Spot Inspection would be submit to the Director General, Geology and Mining Unit, permission will be granted by the Government for a maximum period of 06 months.” 10.
It would be seen on a comparison of the unamended Rule 3 with the amended Rule 3, that under the amended rule a bhoomidhar could use the soil, sand, rock, boulders and gravel etc. excavated in his own property for the purpose of construction on his property. For such extraction and user there was no requirement of obtaining environmental clearance and the bhoomidhar could even use a JCB machine for that purpose. However, if the extracted material-which is a minor-mineral, is exploited commercially, royalty was payable on the same. The additional provision introduced by the amendment stated that environmental clearance would not be required for carrying out activities of levelling of land, creation of water storage tanks, recycling tanks, fish ponds etc. as they are not considered to be mining activities. 11. The process of removing ordinary soil for brick, earth and road filling would also not come under the mining operations, unless the depth of the mining site exceeds two meters. It further provides that royalty and other fees would be payable, as per rule on the extraction of minerals like sand, gravel, boulder, clay, muck etc. extracted from these activities. 12. For this, the application under the Uttarakhand Minor-Minerals (Concession) Rule, 2001 (as amended from time to time), will be submitted before the Authorized Officer nominated by the District Mines Officer / Director, Geology and Mining Unit and the report of the Committee constituted of Sub Divisional Magistrate and District Mining Officer after Joint Spot Inspection would be submitted to the Director General, Geology and Mining Unit and on the recommendation of the Director General, Geology and Mining Unit, permission will be granted by the Government for a maximum period of six months. 13. The grievance of the petitioner is that by the aforesaid amendment, through a backdoor, the respondents have introduced a policy to grant the right to mine few minor minerals to bhoomidhar, without a transparent and public process in the form of a public auction or tender, and the royalty charged from them is also miniscule compared to the royalty obligation to which the petitioner is subjected.
The learned counsel for the petitioner has placed before the Court the schedule to the aforesaid rules which prescribe the royalty payable by bhoomidhar, which reads as follows:- [kfut LokfeRo ¼jk;YVh½ dh njsa ¼:0 esa½ 8&fofgr iz;kstuksa ds fy;s iz;qDr gksus okyh ckyw ;k eksje ;k ctjh ;k cksYMj ;k blesa ls dksbZ Hkh feyh tqyh voLFkk esa gks 1- :0 8-50 izfr dqUVy vFkkZr~ :0 187-00 izfr ?kuehVj ¼xkSyk unh½ 2- :0 8-00 izfr dqUVy vFkkZr~ 176-00 izfr ?kuehVj ¼dkslh] nkcdk unh½ 3- :0 7-00 izfr dqUVy vFkkZr~ :0 154-00 izfr ?kuehVj ¼gfj}kj ,oa vU; LFkku½ 14. Learned counsel for the petitioner submits that the royalty payable by bhoomidhars who are granted permission in terms of the impugned amended rules, is in the range of Rs.8.50 to Rs.7.00 per quintal, which translates to Rs.85 to Rs.70 per metric tonne (as 10 quintals make 1 Metric tonne), as opposed to Rs.460 per metric tonne payable by the petitioner. He further submits that in the garb of granting mining rights to bhoomidhars, large swathes of land have been granted for the purpose of extraction of minor minerals i.e. RBM in the name of bhoomidhars. In respect of District Nainital itself, the petitioner has placed on record the following tabulations. The first tabulation gives the details of the persons who have been granted licenses in the name of levelling of their respective lands. They are 33 in number, and the areas over which they have been granted these rights are even as large as 1.337 hectares, which translates over three acres. The second tabulation is a list of 10 entities who have been granted permission to mine the minor-minerals on the pretext of recycling. These are all stone crusher units. These tabulations are as under:- 15. Learned counsel for the petitioner submits that the State is not dealing with its own resources in a prudent way, and in the larger public interest, so as to maximize its revenue. 16. Valuable assets of the State are being dolled out on the basis of mere recommendation of an officer, and in the District of Nainital itself, 43 such licences have been issued. The land coverage over which these rights have been granted, as well as the quantity of RBM which they are entitled to mine, far exceeds the mining rights awarded to the petitioner in a public auction at comparatively extremely high rates. 17.
The land coverage over which these rights have been granted, as well as the quantity of RBM which they are entitled to mine, far exceeds the mining rights awarded to the petitioner in a public auction at comparatively extremely high rates. 17. Mr Joshi, learned counsel for the petitioner has placed reliance on the judgment of the Hon'ble Supreme Court in Centre for Public Interest Litigation and others Vs. Union of India and others (2012) 3 SCC 1 , which is the case relating to allotment of 2G spectrum. He has also relied on the judgment of the Hon'ble Supreme Court in Loop Telecom and Trading Limited Vs. Union of India and Anr. 2022 LiveLaw (SC) 238, Civil Appeal Nos.1447-1467 of 2016 with Civil Appeal No.893 of 2019 decided on 03.03.2022. By placing reliance on the later judgment aforesaid, Mr. Joshi has submitted that the Supreme Court in Centre for Public Interest Litigation (supra) had found the mechanism adopted for grant of licences of spectrum to be violative of Article 14 of the Constitution of India. In particular, Mr. Joshi has placed reliance on the following extract from a Loop Telecom (supra):- “C. The CPIL judgment 12. The decision of this Court, which was rendered on 2 February 2012, arose from petitions under Article 32 of the Constitution. The petitions questioned the grant of UASLs to the private respondents in those proceedings (which included the appellant), on the ground that the procedure which was adopted by DoT was arbitrary, illegal and in violation of Article 14 of the Constitution.
The petitions questioned the grant of UASLs to the private respondents in those proceedings (which included the appellant), on the ground that the procedure which was adopted by DoT was arbitrary, illegal and in violation of Article 14 of the Constitution. Among the grounds of challenge, it was urged that: (i) Since the cut-off of 25 September 2007 fixed for considering the applications had been held to be arbitrary by the Delhi High Court (which was approved by this Court), the procedure adopted by DoT with the approval of the Minister for Communications and Information Technology was liable to be declared as arbitrary and illegal; (ii) The DoT had violated the recommendations made by Telecom Regulatory Authority of India, ”TRAI” that there should be no cap on the number of access service providers in any service area; (iii) As noted in the report of the Comptroller and Auditor General, the consideration of a large number of ineligible applications and the grant of licences to them was illegal and arbitrary, (iv) The method adopted by DoT for grant of licences was flawed because it was based upon the recommendations made by TRAI, which were arbitrary and contrary to public interest, since they recommended the granting of licences at the entry fees which were determined in 2001; (v) While granting licences which were bundled with the spectrum at a price which was fixed in 2001, the DoT did not consult the Finance Ministry and violated the decision taken by the Council of Ministers in 2003; (vi) The "First Come First Serve” policy violated Article 14, and its distortion by the then Minister of Communications and Information Technology and the consequent grant of licences was liable to be annulled; and (vii) The Union government did not take any action to cancel the licences of a number of licensees who had failed to fulfil the rollout obligations and violated the conditions of the licences. 13. While dealing with the grounds of challenge, in the course of the judgment, this Court underscored that natural resources, such as spectrum, are public goods and the doctrine of equality and public trust must guide the State in determining the actual mechanism for their distribution. After analysing the rationale adopted by TRAI for recommending the allocation of the 2G spectrum on the basis of 2001 prices, this Court held: “91.
After analysing the rationale adopted by TRAI for recommending the allocation of the 2G spectrum on the basis of 2001 prices, this Court held: “91. To say the least, the entire approach adopted by TRAI was lopsided and contrary to the decision taken by the Council of Ministers and its recommendations became a handle for the then Minister of Communications and Information Technology and the officers of DoT who virtually gifted away the important national asset at throw-away prices by wilfully ignoring the concerns raised from various quarters including the Prime Minister, Ministry of Finance and also some of its own officers. This becomes clear from the fact that soon after obtaining the licences, some of the beneficiaries offloaded their stakes to others in the name of transfer of equity or infusion of fresh capital by foreign companies, and thereby made huge profits. We have no doubt that if the method of auction had been adopted for grant of licence which could be the only rational transparent method for distribution of national wealth, the nation would have been enriched by many thousand crores. 14. This Court found a basic flaw in the “First Come First Serve” policy, holding: “94. There is a fundamental flaw in the first-come-first-served policy inasmuch as it involves an element of pure chance or accident. In matters involving award of contracts or grant of licence or permission to use public property, the invocation of first-come-first-served policy has inherently dangerous implications. Any person who has access to the power corridor at the highest or the lowest level may be able to obtain information from the government files or the files of the agency/instrumentality of the State that a particular public property or asset is likely to be disposed of or a contract is likely to be awarded or a licence or permission is likely to be given, he would immediately make an application and would become entitled to stand first in the queue at the cost of all others who may have a better claim.” 15. This Court held that an auction conducted after due publicity was perhaps the best method for fulfilling the constitutional requirement of preserving equity in the alienation of natural resources.
This Court held that an auction conducted after due publicity was perhaps the best method for fulfilling the constitutional requirement of preserving equity in the alienation of natural resources. In the absence of such a mechanism, this Court held that alienation of natural resources/public property is likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for constitutional ethos and values.” 18. Mr. Joshi has submitted that there is striking similarity to be found in the modus operandi adopted in the present case, with the modus operandi adopted in the case of Centre for Public Interest Litigation (supra) inasmuch, as, on the mere recommendation of an officer, licences for mining of minor minerals have been issued and the royalty is being collected at much lower rates than the markets rates. He submits that market rate would be the rate at which the petitioner had tendered its bid in the year 2018, which also stipulates a yearly increase of 10% in the licence fee over the licence fee paid for the immediately preceding year. 19. The respondents have contested the petition. They have filed their counter affidavit. The stand taken by the respondents in their counter affidavit may now be noticed. In paragraph E, F, G and I, the respondents have stated as follows:- “E. That the impugned amendment/notification was issued in order to protect the fundamental rights of shelter of the citizens of Uttarakhand, so that, they may be able to raise to construct their house or raise shelter on their private measured land. F. That the most of the private land in Uttarakhand is situated at the foothill adjacent to rivers, river tributaries and waterfalls and the said land, during rainy season, is covered by garbage, because of stringent mining operation rules, it was not permissible for them to remove that garbage for construction of their house and shelters and for other activities relating to agriculture, therefore, in public interest it was thought that the rules should be amended to the extent of permitting them to remove ordinary soil from their own private land strictly for construction purposes and not for commercial activities.
It is further clarified that the permit process will be carried out after obtaining permission or following the procedure as given in the Regulation and Policy, only in those condition the permission can be granted for sale of the garbage/minor minerals after due deposition of royalty amount in the government exchequer. The farmer thereafter can in a position to transport or sale the said garbage/sand etc., but in the matter in hand, the petitioner has clubbed both the lease and permit for his own benefit and did not disclose the actual fact in his entire writ petition. G. That the aforesaid amendment was carried in order to give facility to the people of Uttarakhand, so that they may easily construct their house and shelters without indulging in stringent legal process and infact, the amendment has been carried to protect their fundamental right to shelters. I. That the river which is flowing on the private land, the nature of land and the course of the river has not been described:- (a) The river flowing on the private land-it is to humbly submit that as per the revenue records, such land, adjacent to the river banks, is duly recorded as Bhomidhari (ownership) land in the name of the owner and contains proper Khasra Number (revenue number) as per respective Khatauni of the Bhoomidhar. (b) The nature of land, it is to humbly submit that such recorded Bhoomidhari land is generally being used for cultivation. However, since being adjacent to the river side/bank, due to change of course by the river/excessive water flow during rainy season, minor mineral being sand, gravel, boulder and silt is deposited all around, unevenly and makes the said Bhoomidhari land unfit for agriculture purposes. Accordingly, as per the provisions of the Mines and Mineral (Development and Regulation) make Rules Regulations and the Policy, to ensure that such deposited material i.e. sand and gravel may be removed in environmentally sustainable and socially responsible manner, have framed such Rules and the Policy by issuing permit for the purpose, all in accordance with “The Sustainable Sand Mining Guidelines 2016”, issued by the Ministry of Environment, Forest and Climate Change Government of India.
(c) The course of the river has not been described, it is to humbly submit that during the different rainy seasons, the course of the river keep on changing from time to time and at times there happen to be natural disaster like flood etc., thereby, at time the adjacent Bhoomidhari land of one side gets eroded and sometime on the other side of the river banks and thereby the private Bhoomidhari land which is nearby to the river banks, gets eroded/covered with silt etc. (d) It is also not mentioned that the private land is, as it is recorded in the name of private land owners/farmers and no compensation has been paid by the government to the farmers/private individuals. a. The private land is, as it is recorded in the nature of private land owners/farmers-it is to humbly submit that the said land is recorded Bhoomidhari of the land owner having Khasra Number in records of right of the Government i.e. Revenue Records, Khatauni. However, due to being flooded with silt etc. due to rainy season, to remove the excessive silt etc., the permission for picking/extraction of such silt i.e. sand, gravel and boulder is given on such nizi naap bhoomi (Private Owned Land) so as to make it for cultivation/other uses.” 20. Reading of the aforesaid stand of the respondents would show that the respondents have sought to justify the amendment in rule 3 to facilitate the clearing of the RBM from the agricultural lands which receive the RBM during the floods, so that the agricultural land could be once again put to use for agricultural purposes. The emphasis laid by the respondents is on the fact that the land belongs to the bhoomidhars who are granted the licences to mine, remove and commercially exploit the RBM. 21. The minor minerals i.e. the RBM is the property of the State. Merely because the same gets deposited on the lands belonging to the bhoomidhars during the flooding season, it does not become the private property of the bhoomidhars. 22. It is precisely for this reason that the respondents exercise their right to grant the permission/ licences to mine, remove and commercially exploit the RBM. 23. There can be no quarrel with the policy of the State to encourage removal of such minor minerals /RBM which may have got deposited on agricultural land adjoining the flowing rivers.
22. It is precisely for this reason that the respondents exercise their right to grant the permission/ licences to mine, remove and commercially exploit the RBM. 23. There can be no quarrel with the policy of the State to encourage removal of such minor minerals /RBM which may have got deposited on agricultural land adjoining the flowing rivers. However, the way in which the respondents have worked, their said policy clearly shows that under the garb of permitting removal of the RBM for the purpose of levelling the land, and for the purpose of creating recycling tanks etc., the respondents have actually granted substantial mining rights in respect of the minor minerals / RBM to various persons, such that the right of the petitioner to carry on its commercial activities under its mining lease have been reduced to a cipher. Even if the bhoomidhars were to be granted the mining rights in respect of the RBM which gets deposited on their agricultural lands, there is no justification for charging from them royalty at the rate which is just a fraction of the prevailing market rate. The market rate is already in the open inasmuch, as, the petitioner is being required to pay the same which translates to Rs.460 per tonne for the third year i.e. 15.05.2020 to 14.05.2021. For the fourth year i.e. from 15.05.2021 to 14.05.2022 the same is Rs.6,68,28,845/-, which translates to Rs.506 per tonne. As opposed to that, the bhoomidhars are required to pay royalty ranging between Rs.70 to 85 per metric tonne. 24. To encourage the removal of the RBM from fertile agricultural land, the State could have given some concession to the bhoomidhars, say, upto 10% over the prevailing market rate as evidenced from the rates received during the public auction. However, the respondents cannot be so charitable as to give away its rights in the minor minerals/ RBM at rates which are miniscule compared to the prevailing market rates, and that too at the cost of the petitioner, who has obtained the valuable mining rights at much higher rates. The disparity in the rates, particularly when we see the extent of permissions granted to the bhoomidhars and others by resort to the amended Rules 3- in terms of area and mining quantity, may well drive the petitioner out of business, at a huge cost to the State exchequer. 25.
The disparity in the rates, particularly when we see the extent of permissions granted to the bhoomidhars and others by resort to the amended Rules 3- in terms of area and mining quantity, may well drive the petitioner out of business, at a huge cost to the State exchequer. 25. We have already noticed that the rate fixed in the scheduled for the minor minerals / RBM is only Rs.7 per tonne in so far as Haridwar and other areas are concerned, within which District Nainital. We further find that there is no upper cap in the number of licenses which may be granted on the recommendation of the Director General, Geology and Mining Unit. A completely unguided and unrestricted power is vested in the Director General, Geology and Mining Unit in this regard, which has resulted in grant of 43 licenses under the amended rule 3 in District Nainital itself. In the entire State, which has 13 districts the number could be running into hundreds. It pains us to see the way in which the State is letting its valuable resource being exploited with hardly any return. 26. In our view, therefore, the present case is squarely covered by the judgment of the Hon’ble Supreme Court in Centre for Public Interest Litigation (supra). Accordingly, we quash the notification dated 28.10.2021, whereby Rule 3 of the Uttarakhand Minor Minerals (Concession) Rules, 2001 was amended vide the Uttarakhand Minor Minerals (Concession) (Amendment) Rules, 2021. 27. Accordingly, the present writ-petition is allowed in the above terms.