Mining lease renewal valid despite rule change: Cal HC

Kolkata: The Calcutta High Court has held that a mining lease containing a one-time renewal clause cannot be denied renewal merely because the rules under which the lease was originally granted have since been repealed.

A Division Bench of Justice Sabyasachi Bhattacharyya and Justice Supratim Bhattacharya allowed an appeal filed by a stone quarry operator against the State government’s refusal to renew a black stone quarry lease.

The lease had been granted under the West Bengal Minor Mineral Rules, 2002. Although those rules were replaced by the West Bengal Minor Minerals Concession Rules, 2016, a formal lease deed was executed in 2019 pursuant to the earlier grant. The lease deed included a clause permitting one-time renewal.

After expiry of the five-year lease period, the authorities rejected the renewal application on the ground that the 2002 rules had been repealed and the 2016 rules did not provide for renewal. A single judge of the High Court had upheld that decision.

The Division Bench disagreed, holding that the original grant under the 2002 rules was an action saved by the saving clause in the 2016 rules, and that execution of the lease deed was only a formal step completing that grant. The court said the lease could not be treated as a fresh lease under the 2016 rules. The Bench also held that the renewal clause was part of a completed transfer of rights under the lease deed and was not wiped out by a subsequent change in law. It ruled that the right to seek renewal flowed from the lease deed itself, while the earlier rules governed only the procedure to be followed.

Setting aside both the single judge’s order and the government’s decision refusing renewal, the High Court directed the competent authority to reconsider the renewal application afresh and to complete the exercise within two months. Renewal, the court said, could be refused only if the lessee’s performance under the lease was found to be unsatisfactory.