STATE OF GUJARAT & ORS. versus NIRMALABEN S. MEHTA & ANR. ETC.
[2016] 4 S.C.R. 140, Supreme Court of India, 2016
Outcome: Appeal(s) allowed (Granted)
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[2016] 4 S.C.R. 140 
STATE OF GUJARAT & ORS. 
v. 
NIRMALABEN S. MEHTA & ANR. ETC. 
(Civil Appeal No. 6209-6211 of2016) 
JULYl3,2016 
[V. GOPALA GOWDA AND ARUN MISHRA, JJ.] 
Mines and Minerals (Development and Regulation Act, 1957 
- s. 9(3) - Schedule Part I - Mineral Concession Rules, 1960 -
Lessor entered into lease agreement for 20 years with the State for 
mining lease for.bauxite in respect of certain lands - liy Notification 
State reserved the mining areas for public sector, however, 14 years 
later de-reserved the said areas - Thereafter, the State sought 
permission fro/i, Central Government to impose certain conditions 
upon the mining of bauxite to protect the interest of the State -
Grant of permission by Central Government for de-reservation of 
the areas ond for imposition of conditions on mining lease -
ThereaftP•; issu •.. 1ce of circular by State Government permitting sale-
export of A •n Plant Grade(NI'G) Bauxite and guidelines framed 
for computation of royalty on sale of NPG Bauxite - Respondent 
then sought permission from the State Government for sale of 11290 
metric; tones of bauxite - Rejection by State on the ground of failure 
of the respondent to establish captive plant within a period of two 
years in accordance with the prevailing policy- Challenge to, by 
the respondent -
Central Government set aside the State 
Governments rejection order - Appeal by the State - High Court 
dismissed the appeal and imposed cost of Rs.
50,0001- for non-
disclosure of writ filed by the State Government - Division Bench 
set aside the order imposing cost - On appeal, held: Fresh grant 
and' a renewal of existing lease of the mining area stands on the 
same footing - State after 16.01.1980 had the power to impose 
condition inter alia, for setting up of a captive plant for bauxite by 
the respondents at the time of renewal of their lease - It cannot be 
said that permission for inclusion of certain conditions including 
condition for setting up of a captive plant by the leaseholders u/r. 
27(3) for the de-reserved area granted by the Ce~tral Government 
vide letter dated 16. 01.1980 would not be applicable to the 
respondents' lease which was granted prior to 16. 01.1980 merely 
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STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 
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ANR. ETC. 
because their mines were not affected by the notification of 
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reservation issued by the appellant-State - Orders of both the High 
Court as well as the Revisional Authority set aside. 
Allowing the appeals, the Court 
HELD: 1.1 Both the Revisional Authority as well as the 
High Court erred in coming to the conclusion that a renewal of 
leaSl' "f the mining area is not a fresh grant and that at the time of 
grant vf renewal of lease of the area, the State Government is not 
empowered to impose -or enforce condition inter-alia, of setting 
up of a captive plant by the respondents. [Para 25) [153-B) 
1.2 The High Court failed to appreciate that for imposition 
of condition in the grant of renewal of lease, inter alia, of setting 
up of a captive plant by the respondents, the appellant-State had 
sought permission_ from the Central Government vide 
communication dated 02.08.1978 and the same was granted by 
the Central Government vide its letter no.4(2)/78-NVI dated 
16.01.1980. The letter makes it clear that the Central 
Government had no objection if clauses pertaining to the 
imposition of certain conditions upon the leaseholders 11re 
included under Rule 27(3) of the Mineral Concession Rules, 1960 
with respect to the bauxite areas of Junagadh and Jamnagar 
·districts de-reserved by the State vide n_otification dated 
02.08.1978, which were earlier reserved for exploitation of 
bauxite by the public sector
undertakings. [Para 26] [153-C-E] 
1.3 The'High Court erred in not noticing the well settled 
legal proposition as laid down by this Court in Gajraj Singh 's case, 
on the point that the grant of renewal of the lease in respect of 
the mining area in question is a fresh grant. The permission for 
de-reservation of bauxite areas in the said districts of the State'' 
which were earlier reserved for bauxite mining in the public 
interest as well as for imposition of condition,interalia, of setting 
up of a captive plant by the respondents the permission in this 
regard was granted by the Central Government vide letter dated 
16.01.1980, whereby the Central Government showed no 
objection for the inclusion of conditions mentioned in the letter 
dated 02.08.1978 addressed to it by the appellant under Rule 
27(3) of the Mineral Concession Rules, 1960 ifor the de-reserved 
area. [Para 27] (153-F; 154-F-G] 
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1.4 It is clear that in the absence of any provision in the 
lease deed or in the Act, Rules or Orders etc in operation as on 
the date of renewal of lease of the mining area in question 
providing renewal of lease in favour of the respondents shall be 
granted on the same terms and conditions, is governed by the 
law or conditions in force at the time of renewal. [Para 28] {154-
H; 155-A] 
1.5 The appellant-State after 16.01.1980 had the power to 
impose condition i11teralia, for setting up of a captive plant for 
bauxite by the respondents at the time of renewal of their lease. 
Therefore, the impugned order passed by both the Revisional 
Authority and High Court are vitiated in law. [Para 29] [155-B-C] 
2.1 The respondents' mines were located in the Jamnagar 
district, which area along with Junagadh district area was declared 
a reserved area for exploitation of bauxite in public interest vide 
notification dated 26.02.1964 issued by the appellant-State. 
However, the said notification did not affect the mine belonging 
to the respondents as the said notification was made to operate 
prospectively. On 02.08.1978 the appellant-State issued a 
notification whereby the bauxite areas of Jamnagar and Junagadh 
districts were de-reserved, which were earlier reserved and on 
the same day addressed a letter to the Central Government 
seeking permission for the same along with permission for 
imposition of
certain conditions on the leaseholders of the said 
area with a view to protect the interest of the State Government 
and at the same time extending help to the industries which 
require bauxite for its bona fide captive use. The Central 
Government vide letter dated 16.01.1980 granted permission in 
favour of the State Government for both i.e., it allowed de-
reservation of the bauxite areas of Jamnagar and Junagadh 
districts, which were earlier reserved, and also allowed the 
appellant-State to read clauses referred by it in its letter dated 
02.08.1978 under Rule 27(3) of the Mineral Concession Rules, 
1960 for the de-reserved area. [Para 30] [155-D-G] 
2.2 Since the respondents' mines were located in the area 
of the Jamnagar district, it would not be correct as contended by 
the counsel for the respondent that the permission for inclusion 
of certain conditions including condition for setting up of a captive
STATE OF GUJARAT & ORS. v. NlRMALABEN S. MEHTA & 
ANR. ETC. 
plant by the leaseholders under Rule 27(3) of the Mineral 
Concession Rules, 1960 for the de-reserved area granted by the 
Central Government vide letter dated 16.01.1980 would not be 
applicable to the respondents' lease which was granted prior to 
16.01.1980 merely because their mines were not affected by the 
notification of reservation dated 26.02.1964 issued by the 
appellant-State. [Para 31) (155-H; 156-A-B) 
2.3 The appellant-State rightly submitted that any other 
interpretation of the said order of the Central Government in 
this regard would lead to discrimination between fresh leases 
granted post 16.01.1980 on the one hand and renewals of the 
existing leases granted after 16.01.1980 on the other. Such a 
distinction sought to be made by the respondents' counsel is 
impermissible in law as after 16.01.1980, a fresh grant and a 
renewal of existing lease of the mining area stands on the same 
footing. [Para 32) [156-C) 
2.4 The impugned order passed by the High Court 
confirming the order passed by the Revisional Authority being 
contrary to the approval given by the Central Government vide 
letter dated 16.01.1980 is not only erroneous but also suffer from 
error in law. Thus, the impugned orders of both the High Court 
as well as the Revisional Authority are set aside as they are 
vitiated in law. '!'he State Government is at liberty to impose such 
terms and conditions in the renewal of lease of the
mining area in 
question granted in favour of the respondents. A cost of Rs.5 
lakhs is awarded to the appellant-State Government in respect of 
these proceedings. [Paras 33, 34) [156-E, G-H) 
Gajraj Singh 1( State Transport Appellate Tribunal 1996 
(6) Suppl. SCR 172 : (1997) 1 SCC 650 - referred to. 
Case Law Reference 
1996 (6) Suppl. SCR 172 
referred to 
Para 17 
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Cl VIL APPELLATE JURISDICTION: Civil Appeal Nos. 6209-
G 
6211 of2016. 
From the Judgment and Order dated 13.12.2011 of the High Court 
of Gujarat at Ahmedabad in Letters Patent Appeal No. 683 of 2011 in 
Special Civil Application Nos. 6897 of2010, Letters Patent Appeal No. 
684of2011 in Special Civil Application 6899 of20 I 0 and Letters Patent 
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Appeal 685 of2011 in Special Civil Application No. 6898 of20 I 0. 
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Parag Tripathi, Sr. Adv., Pritesh Kapoor, Ms. Hemantika Wahi, 
Ad vs. for the Appel !ants. 
Mih. Joshi, Sr. Adv., Satyen Thakker, Ms. Parul Shukla, Satyendra 
Kumar, E. C. Agrawala, Ms. Sunita Gautam, Ms. Bharti Tyagi, Shreekant 
N. Terdal, Advs. for the Respondents. 
The Judgment of the Cowt was delivered by 
V. GOPALA GOWDA, J. I. Leave granted. 
2. These appeals are directed against the common judgment and 
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order dated 13.12.2011 passed by the High Court of Gujarat at 
Ahmedabad in LPA No. 683of2011 in SCA No. 6897of2010, LPA No. 
684of2011 in SCA No. 6899 of20 I 0 and LPA No. 685of2011 in SCA 
No. 6898 of2010 urging various legal grounds and praying to set aside 
the same. 
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3. Brief facts of the case are stated hereunder to appreciate the 
rival legal contentions urged on behalf of both the parties: 
One Kantilal Mohanlal Mehta entered into lease agreement with the 
appellant-State on 20.02.1964 for mining lease for bauxite in respect of 
lands described in Part I of the Schedule to Mines and Minerals 
(Development and Regulation) Act, 1957 (hereinafter called the "MMDR 
Act"). The said. lease was for 20 years and was given effect from 
09.10.1963. 
4. On 26.02.1964, the appellant-State issued a notification bearing 
no.MND l 760/3788G.V. reserving all areas of Jamnagar and Junagadh 
district for exploitation of bauxite for public
sector. However, on 
02.08.1978, again a notification was issued by the appellant-State, 
whereby the lands, specified int.he schedule thereto, which were earlier 
reserved vide notification dated 26.02.1964, for exploitation of bauxite 
for the public sector were de-reserved and thus, made available for 
grant.ofmineral concession w.e.f. 02.09.1978. 
The same day, i.e., on 02.08.1978, the appellant-State addressed a letter 
to the Central Government seeking permission for de-reservation of the 
areas of bauxite in Jamnagar and Junagadh districts, which were earlier 
reserved for exploitation of bauxite in public sector for setting up of 
alumina plant. on the ground that many applicati9ns were received by it
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 
ANR. ETC. [V. GOPALA GOWDA, J.] 
for the establishment of small scale industries in the State based on 
bauxite as raw material. The appellant-State, therefore, desired to release 
areas, which were earlier reserved, to industrial units for their captive 
consumption only. By this letter the appellant-State sought permission 
not only for de-reservation of the areas, which were earlier reserved for 
public sector but also to impose certain conditions upon the mining of 
bauxite with a view to protect the interest of the State and at the same 
time extending help to industries which require bauxite as a raw material 
for bonafide captive use. The relevant portion of the aforesaid letter 
dated 02.08.1978 reads thus: 
"5. Central Government may kindly be moved in the interest of 
mineral development to grant permission under Rule 27 of the 
Mineral Concession Rules, 1960 for imposing the following 
conditions for protecting the interest of the State Government and 
at the same time extending help to industries which need bauxite 
for its bonafide captive use. 
( 1) the lessee shall establish an industrial unit consuming bauxite 
as main raw material within a period of two years from the date 
of grant of the mineral concession. 
(2) the State Government shall have right to review and reduce 
the areas of mining lease for bauxite granted, ifthe industrial unit 
set up works continuously below the rated capacity and areas
granted is found excess of its requirements. 
(3) the lessee shall utilize maximum quantity of bauxite excavated 
in his own industrial unit and shall be allowed to sell the bauxite 
not suitable for its own industrial unit to other industrial unit in the 
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State for their own consumption, provided the quantity of bauxite 
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for sale does not exceed 20% of the total production and also 
provided that the prior permission of the D.G.M. or an officer 
authorizes by the State Government is obtained for the sale. 
(4) the lessee shall have to sell the bauxite at prevailing market 
rate to government or the person to whom the State Government 
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may direct, as and when such need arise. 
(5) Briefly the Central Government's approval to the following 
proposal is required; 
( 1) to de-reserve the areas of Kalyanpur Taluka of Jamnagar-
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District mentioned in the Govt. oflndia letter dated 17 .03 .1962. 
(2) to stipulate conditions mentioned above." 
5. On 16.01.1980, Central Government addressed a letter bearing 
No.4(2)/78-NVI to the appellant-State, whereby, it granted permission 
for de-reservation of areas of Jamnagar for exploitation of bauxite mineral, 
which were earlier reserved, and for the imposition of conditions on 
mining lease. The relevant portion of the aforesaid letter reads thus: 
"2. As regards the pmposal contained in Para 5 of the State 
Government's letter dated 02.08.1978, I am directed to say that 
the Central Government has no objection if such clauses are 
included under Rule 27(3) of Mineral Concession Rules, 1960 for 
the de-reserved area." 
6. On 27.02.1992, a circular was issued by the State Government 
permitting sale/export of Non-Plant Grade (NPG) bauxite. During the 
period from I 0.04.2003 to 04.03.2005 various notifications were issued 
by the Central Government in exercise of its power under Section 9(3) 
of the MMDRAct, 1957 and Rule 640 of the Mineral Concession Rules, 
1960, laying down the guidelines for computation of royalty on the basis 
of State wise mineral value to be notified by the Indian Bureau of Mines 
(IBM). 
7. On 28.11.2007, respondent no.1- Nirmalaben S. Mehta sought 
the permission of the appellant-State for sale of NPG bauxite for a 
quantum of I lakh metric tonnes (approx). The
appellant-State vide its 
order dated 15.02.2008 granted permission for sale of NPG bauxite 
subject to condition, interal ia, that the respondent no. I shall deposit royalty 
of Rs. 120 per metric tonne in advance with the appellant-State. 
8. The respondent no. I again applied to the appellant-State by 
letter dated 18.02.2008 for sale of I, 12,900 metric tonnes ofNPG bauxite. 
The same was rejected by the appellant-State vide order dated 19.06.2008 
holding that the respondent no. I has failed to establish captive plant 
within a period of two years in accordance with prevailing policy. The 
relevant portion of the aforementioned order reads thus: 
"5. Sanction of lease area was accorded to the lease holder for 
establishing bauxite base unit for his own consumption use. 
However, such unit is not yet setup by the lease holder and the 
minerals at the lease area is not utilised for its value addition
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 
ANR. ETC. [V. GOPALA GOWDA, J.] 
purpose. Valuable and useful mineral was being excavated in the 
bulk and the same was exported/sold. This activity is not found 
befitting to wider interest of the state." 
9. Aggrieved by the orders dated I 5.02.2008 and 19.06.2008 
passed by the appellant-State, the respondent no. I approached the High 
Court of Gujarat atAhmedabad by filing Special Civil Application. The 
learned Single Judge vide order dated 31.07 .2008 dismissed the application 
holding that the respondent no. I had not exhausted the statutory remedy 
available under Section 30 of the MMDR Act, 1957 read with Rule 54 
of the Mineral Concession Rules, 1960. Instead of approaching the High 
. Court, the respondent no. I should have approached the Central 
Government which is the Revisional Authority under the MMDR Act, in 
the matter. 
I 0. Thereafter, respondent no. I approached the Central 
Government by filing Revision Application No. 09/16 of2008 against the 
order dated 19.06.2008 passed by the appellant-State. The Central 
Government vide its order dated 27.08.2009 allowed the said Revision 
Application by setting aside the order dated 19.06.2008 passed by the 
appellant-State holding thus: 
"5 ....... We have gone through the case records carefully and 
after hearing the both sides come to the conclusion that-
( a) as far as the instant case is concerned, it is not a case of fresh 
grant of mining lease but one
ofrenewal. 
(b) no conditions of setting up of captive plant of bauxite was 
mentioned while granting mining lease. 
(c) no restriction was put on export and mining of bauxite in mining 
leases. 
(d) applicant if expo11ing bauxite for more than a decade. 
( e) guidelines issued by the State Govt. vi de G.R. dated 04.02.2005 
as only an administrative in nature. 
(f) the approval of Central Government given vide letter No. 4(2)/ 
78-VI dated 16.01.1980 in pursuance of State Government 
communication dated 02.08.1978 is not applicable in respect of 
the area already under lease and to which neither reservation nor 
de-reservation would be applicable. 
6. In view of the above circumstances and taking all aspects into 
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consideration we come to the conclusion that in the instant case 
while rejecting the applicants renewal application State Govt. has 
not followed the due process oflaw under Rule 27(3) of the Mineral 
Concession Rules, 1960." 
11. Aggrieved by the aforesaid order dated 27.08.2009 passed by 
the Central Government in exercise of its revisional power under Section 
30 of the MM DR Act, 1957 read with Rule 55 of the Mineral Concession 
Rules, 1960, the appellant-State approached the High Court of Gujarat 
atAhmedabad by filing Special Civil Application No. 6897 of2010. The 
learned Single Judge vide order dated 22.12.2010 dismissed the said 
Special Civil Application holding that the appellant-State ought not to 
have suppressed the material fact of Writ Petition being filed before the 
High Court of Delhi at New Delhi with regard to the same matter. The 
learned Single Judge further imposed costs of Rs.50,000/- on the 
appellant-State. 
12. Aggrieved by the Order dated 22.12.2010 passed by the learned 
Single Judge, the appellant-State approached the Division Bench of the 
High Court of Gujarat at Ahmedabad by filing Letters Patent Appeal 
No.683 of 2011. The High Court vide its common judgment and order 
dated 13.12.2011 partly allowed the appeals to the extent of setting aside 
the order of the learned Single Judge imposing cost ofRs.50,000/- upon 
the appellant-State. Hence, these Appeals. 
13. Mr.
ParagTripathi, the learned senior counsel forthe appellant-
State contended that the High Court has failed to consider that huge 
quantity of bauxite has been exported by the lease holders without 
informing the appellant-State and without paying due amount ofroyalty. 
Only with a view to regulate the trade of bauxite, vide Resolution dated 
04.02.2005 the appellant-State had framed policy for taking prior approval 
before expo1ting bauxite outside India. He further submitted that by way 
of the said resolution a mechanism is framed so that the trade of bauxite, 
especially the export can be regulated by the appellant-State. Bauxite 
being a valuable mineral which is available in rare pockets of the State 
of Gujarat, such a step is necessary on the part of the appellant-State 
which enables it to take necessary action with regard to the same. It 
was further submitted by him that as per the data available with the 
appellant-State from 2004 onwards, around 70% to 90% of bauxite 
excavated from the land in the areas by the lease holders was exported 
from the leased areas. Thus, if such a huge quantity of bauxite is exported
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 
ANR. ETC. [V. GOPALA GOWDA, J.] 
outside India it would ce11ainly jeopardise the purpose of establishing the 
bauxite based value addition projects in the State. Further, export of 
bauxite in such a huge quantity might lead to non-availability of bauxite 
for consumption in the State. He further submitted that the resolution 
dated 04.02.2005 was indirectly accepted by the lessee-respondents and 
even applications were filed in tune with the same. He further contended 
that the High Court has committed error while not considering the purpose 
and object advanced by the appellant-State vide resolution dated 
04.05.2005. 
14. It was further contended by him that the application dated 
28.11.2007 made by the lessee-respondents to the appellant-State seeking 
permission of sale/export ofNPG bauxite for quantum of 1, 12,900 MTs, 
was based on the premise that they were seeking permission to export 
the bauxite which is not useful for the plant. However, factually, from 
almost five decades, the lessee-respondents have not taken any step for 
the establishment of captive plant. He further submitted that from the 
circumstances it is clear that the lessee-respondents are only interested 
in excavation of the bauxite for export purpose which would result in 
irreparable depletion of the valuable mineral for domestic purpose. The 
High Court has failed to take note of this important aspect while passing 
impugned judgment and order
and therefore, the same is required to be 
interfered with by this Court in exercise of its appellate jurisdiction. 
15. It was further contended by the learned senior counsel for the 
appellant-State that the High Court has erred in coming to the conclusion 
that the permission granted by the Central Government under Rule 27(3) 
of the Mineral Concession Rules, 1960 vide letter dated 16.01.1980 would 
not be applicable to the respondents' mine for the reason that since the 
notification reserving the area of bauxite mining did not affect their mines, 
it must necessarily follow that the permissions granted by the Central 
Government at the time of de-reservation also would not apply to their 
mines. It was further submitted by him that by the notification dated 
26.02.1964 issued by the appellant-State the entire areas of Junagadh 
and Jamnagar districts were reserved for public sector. Admittedly, the 
respondents' mine fell within Jamnagardistrict, a reserved area, though 
the respondents were not affected by the reservation as the said 
reservation was made to operate prospectively. 
16. He fu11her submitted that the appellant-State wrote a letter 
dated 02.08.1978 to the Central Government seeking permission under 
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Rule 27(3) of the Mineral Concession Rules, 1960 for de-reservation of 
the areas of J unagadh and Jamnagar Districts and for imposition of certain 
conditions, including establishment of an industrial unit for captive 
consumption of bauxite. The permission for the said de-reservation was 
granted by the Central Government vide letter dated 16.01.1980. He 
further submitted that once it is admitted that the respondents' mines fall 
within the area of the aforesaid Jamnagar district, it would not be correct 
to say that the permission of the Central Government under Rule 27(3) 
of the Mineral Concession Rules, 1960 for de-reservation of areas of 
bauxite mining would not be applicable to leases granted prior to 
16.01.1980 merely because the concerned mines were not affected by 
the reservation. He further submitted that any other interpretation in this 
regard would lead to discrimination between fresh leases granted post 
16.01.1980 on the one hand and renewals of existing lease granted after 
16.01.1980 on the other and the same is impermissible. 
17. With regard to the renewal of the lease, it was contended by 
him that the High Court has erred in concluding that a renewal of lease 
is not a fresh grant and thus, at the time ofrenewal oflease the appellant-
State cannot impose conditions, interalia, of setting up ofa captive plant. 
In this regard it was submitted by him that it is well settled position
of 
law that a renewal of a lease is akin to a fresh grant and hence, in the 
absence of either Lease Deed or the Rules providing that renewal shall 
be granted on the same terms and conditions as the original grant, a 
renewal is governed by the law/conditions in force at the time of grant 
ofrenewal of the lease of the mining area in question. Therefore, in the 
case at hand, the appellant-State, at the time of grant of renewal of 
lease, can impose such condition/conditions, inter alia, of setting up of a 
captive plant. With regard to aforesaid legal submission he has placed 
strong reliance upon the decision of this Court in the case of Gajraj 
Si11glt v. State Transport Appellate Tribunal 1• The relevant paras 
relied upon by him read thus: 
"38. It is settled law that grant of renewal is a fresh grant though 
it breaths life into the operation of the previous lease or licence 
granted as per existing appropriate provisions of the Act, rules or 
orders or acts intra vires or as per the law in operation as on the 
date of renewal. The right to get renewal of a permit under the 
Act is not a vested right but a privilege subject to fulfillment of the 
' (1997) 1sec650
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 
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conditions precedent enumerated under the Act... 
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41. In State ofM.P. & Ors. v. Krishnadas Tikaram this Court had 
held that it is settled law that renewal is a fresh grant and must be 
granted consistent with law in operation as on that date ...... " 
18. It was further submitted by him that the renewal clause in the 
Lease Deed of 1964 makes it very clear that any" renewal of the lease 
shall be in accordance with the provisions of the Act and Rules in force 
at the time of grant of renewal. Therefore, the Revisional Authority and 
the High Court, both have arrived at erroneous conclusion that in the 
absence of condition of setting up of a captive plant in the Lease Deed 
of 1964, such a condition cannot be imposed at the time of grant of 
renewal of the lease of the area in question. 
19. Per Contra, Mr. Mihir Joshi, the learned senior counsel 
appearing on behalf of the respondents contended that neither the Export 
Import policy nor the MMDR Act enacted by the Central Government 
impose any restrictions on sale/export of bauxite and hence, the appellant-
State could not have introduced its own policy for restricting or regulating 
the sale/export of bauxite in conflict with policies and decisions of the 
Central Government. 
20. It was further submitted by him that there is no question of 
general public importance in the instant case. It was submitted by the 
learned
senior counsel that under the scheme of Section 9 read with 
Section 13 ofMMDRAct and Article 162 of the Constitution oflndia, it 
is the prerogative of Central Government to frame policies with regard 
to major minerals. The State Governments across the country are only 
supposed to implement the policies made by the Central Government 
with regard to the grant of lease as well as renewal of lease in respect 
of major minerals. He further submitted that when the Central 
Government has deemed it fit not to impose any restrictions on sale/ 
export of bauxite either in export/import policy or under the MMDR 
Act, the appellant-State being simply an implementing agency, has no 
authority, whatsoever, to impose any restriction in the renewal of grant 
order prohibiting the export of bauxite to other countries by the 
respondents. 
21. It was further submitted by the learned senior counsel that 
merely because huge quantity of bauxite has been exported by 
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leaseholders, the same does not confer any power under the MMDR 
Act upon the appellant-State to frame any policy with regard to the 
export of bauxite vide resolution dated 04.02.2005 under the guise of 
regulating the export of bauxite without the sanction of the Central 
Government. Furthermore, it is an admitted fact that the said resolution 
dated 04.02.2005 was passed by the State Government without the 
permission of the Central Government. 
22. It was further contended that as per the terms and conditions 
of the lease deed executed between the respondents and the appellant-
State there was no restriction of any kind on the sale/export of bauxite. 
A conjoint reading of the notification dated 02.08.1978 issued by the 
appellant-State, the letter addressed to the Central Government by the 
appellant-State on the same day seeking permission for de-reservation 
of bauxite areas which were earlier reserved for exploitation by the 
public sector undertakings and for imposing conditions of captive 
consumption for industrial units, read with the order dated 16.01.1980 of 
the Central Government make it absolutely clear that the said permission 
of imposing the condition of captive consumption, granted by the Central 
Government to the appellant-State was only for new units requiring the 
said lease. He further submitted that respondents were already continuing 
with the mining activity on the demised
premises even ·during the alleged 
period of reservation. It neither formed part of reserved area nor de-
reserved area. Thus, the sanction of the Central Government vi de its 
letter dated 16.01.1980 certainly should not apply to the lease of bauxite 
mining area belonging to the respondents as has been rightly held by 
both the Revisional Authority and the High Court. 
23. With regard to the renewal of lease of the mining area in 
question it was submitted by the learned senior counsel that concept of 
deemed renewal or that each renewal is a fresh lease, would not apply 
to the facts of the instant case in view of the specific directions of the 
Central Government in its order dated 16.01.1980. 
24. After considering the rival legal contentions urged on behalf 
of both the parties, following issues would arise for our consideration: 
1. Whether the appellant-State has the power at the time of 
renewal of lease of the mining area in question to impose the 
condition of setting up of a captive plant by the respondents? 
2. Whether the permission granted by the Central Government 
under Rule 27(3) of the Mineral Concession Rules, 1960 vide
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 
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letter dated 16.01.1980 would be applicable to the respondents' 
A 
mine? 
3. What order? 
Answer to Point No.1 
25. Both the Revisional Authority as well as the High Court have 
erred in coming to the conclusion that a renewal oflease of the mining 
area in question is not a fresh grant and have wrongly concluded that at 
the time of grant of renewal of lease of the area, the State Government 
is not empowered to impose or enforce condition inter-alia, of setting up 
of a captive plant by the respondents. 
26. The High Court has failed to appreciate an important aspect 
of the matter namely that for imposition of condition in the grant of 
renewal of lease, inter alia, of setting up of a captive plant by the 
respondents, the appellant-State had sought permission from the Central 
Government vide communication dated 02.08.1978 and the same was 
granted by the Central Government vide its letter no.4(2)/78-NVI dated 
16.01.1980. The relevant para no.2 of the aforesaid letter, stated supra, 
makes it abundantly clear that the Central Government had no objection 
if clauses pertaining to the imposition of certain conditions upon the 
leaseholders are included under Rule 27(3) of the Mineral Concession 
Rules, 1960 with respect to the bauxite areas of Junagadh and Jamnagar 
districts de-reserved by the appellant-State vide notification dated 
02.08.1978, which were earlier reserved for
exploitation of bauxite by 
the public sector undertakings. 
27. Further, the High Court has erred in not noticing the well settled 
legal proposition as laid down by this Court in Gajmj Singh 's case supra, 
on the point that the grant of renewal of the lease in respect of the 
mining area in question is a fresh grant. The relevant paras read thus: 
"37. In Provash Chandra Dalui v. Bisawanath Banerjee this 
Court drew the distinction between the meaning of the words 
extension and renewal. It was held that: 
" ... a distinction between 'extension' and 'renewal' is chiefly 
that in the case ofrenewal, a new lease is required while in the 
case of extension the same lease continues in force during 
additional period by the performance of stipulated act. In other 
words, the word 'extension' when used in its proper and usual 
sense in connection with a lease, means prolongation of the 
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lease." 
38. It is settled law that grant ofrenewal is a fresh grant though it 
breathes life into the operation of the pervious lease or licence 
granted as per existing appropriate provisions of the Act. rules, or 
orders or acts intra vires or as per the law in operation as on the 
date of renewal. The right to get renewal of a permit under the 
Act is not a vested right but a privilege subject to fulfilment of the 
conditions precedent enumerated under the Act. Under Section 58 
of the Repealed Act, renewal of a permit is a preferential right 
and refusal thereof is an exception. But the Act expresses different 
intention. Sections 66, 70 71 and 80 prescribe procedure for 
making application and compliance of the conditions mentioned 
therein. Existence of the provisions of the Act consistent with the 
Repealed Act is a precondition. Grant of renewal under 
Section 81 is a discretion given to the authority (STA or RTA) 
subject to the conditions and the requirement of law. Discretion 
given by a statute connotes making a choice between competing 
considerations according to rules of reason and justice and not 
arbitrary or whim but legal and regular. Sections 70 and 71 read 
with Section 81 do indicate that grant of permit or renewal thereof 
is not a matter of right of course. It is subject of rejection for 
reasons to be recorded in support thereof. Therefore, right to 
renewal of a permit under
Section 81 is not a vested or accrued 
right but a privilege to get renewal according to law in operation 
and after compliance with the preconditions and abiding the law." 
(emphasis supplied by this Court) 
The permission for de-reservation of bauxite areas in the above 
districts of the State which were earlier reserved for bauxite mining in 
the public interest as well as for imposition of condition, interalia, of 
setting up of a captive plant by the respondents the permission in this 
regard was granted by the Central Government vide letter dated 
16.01.1980, whereby the Central Government showed no objection for 
the inclusion of conditions mentioned in the letter dated 02.08.1978 
addressed to it by the appellant-State under Rule 27(3) of the Mineral 
Concession Ru Jes, 1960 for the de-reserved area. 
28. It is clear that in the absence of any provision in the lease 
deed or in the Act, Rules or Orders etc in operation as on the date of 
renewal of lease of the mining area in question providing renewal of
STATE OF GUJARAT & ORS. v. NIRMALABEN S. MEHTA & 
ANR. ETC. [V. GOPALA GOWDA, J.] 
lease in favour of the respondents shall be granted on the same terms 
and conditions, is governed by the law or conditions in force at the time 
of renewal. 
29. Thus, from the factual matrix, the relevant legal provisions 
and the case law referred supra upon which strong reliance is placed by 
the learned senior counsel on behalf of the appellant-State, it is clear 
that in the instant case the appellant-State after 16.01.1980 had the power 
to impose condition interalia, for setting up of a captive plant for bauxite 
by the respondents at the time of renewal of their lease. Therefore, the 
impugned order passed by both the Revisional Authority and High Court 
are vitiated in law and therefore, the same are liable to be set aside. 
Thus, point no. I is answered accordingly. 
Answer to Point No.2 
30. The factual matrix of the instant case further reveals an 
important undisputed fact that the respondents' mines were located in 
the Jamnagar district, which area along with Junagadh district area was 
declared a reserved area for exploitation of bauxite in public interest 
vide notification dated 26.02.1964 issued by the appellant-State. However, 
the said notification did not affect the mine belonging to the respondents 
as the said notification was made to operate prospectively. The facts of 
the instant case further reveals that on 02.08.1978 the appel I ant-State 
issued a notification
whereby the bauxite areas of Jamnagar and J unagadh 
districts were de-reserved, which were earlier reserved and on the same 
day addressed a letter to the Central Government seeking permission 
for the same along with permission for imposition ofcertain conditions 
on the leaseholders of the above area with a view to protect the interest 
of the State Government and at the same time extending help to the 
industries which require bauxite for its bona.fide captive use. The Central 
Government vide letter dated 16.01.1980 granted permission in favour 
of the State Government for both i.e., it allowed de-reservation of the 
bauxite areas of Jamnagar and Junagadh districts, which were earlier 
reserved, and also allowed the appellant-State to read clauses referred 
by it in its letter dated 02.08.1978 under Rule 27(3) of the Mineral 
Concession Ru !es, 1960 for the de-reserved area. 
31. As it is an admitted fact that the respondents' mines were 
located in the area of the above Jamnagar district, it would not be correct 
as contended by the learned senior counsel for the respondent that the 
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pennission for inclusion ofcertain conditions including condition for setting 
up ofa captive plant by the leaseholders under Rule 27(3) of the Mineral 
Concession Rules, 1960 for the de-reserved area granted by the Central 
Government vi de letter dated 16.01.1980 would not be applicable to the 
respondents' lease which was granted prior to 16.01.1980 merely because 
their mines were not affected by the notification of reservation dated 
26.02.1964 issued by the appellant-State. 
32. It has been rightly contended by the learned senior counsel on 
behalf of the appellant-State that any other interpretation of the above 
order of the Central Government in this regard would lead to 
discrimination between fresh leases granted post 16.0 I. I 980 on the one 
hand and renewals of the existing leases granted after I 6.0 I .1980 on 
the other. Such a distinction sought to be made by the respondents' 
counsel is impermissible in law as after 16.01.1980, a fresh grant and a 
renewal of existing lease of the mining area stands on the same footing. 
33. The aforesaid important legal aspect of the matter has not 
been taken note of by the High Court as well as the Revisional Authority. 
Therefore, the impugned order dated 13.12.2011 passed by the High 
Court confirming the order dated 27.08.2009 passed by the Revisional 
Authority being contrary to the approval given by the central government 
vi de letter dated 16.01.1980
is not only erroneous but also suffer from 
error in law. For the reasons stated supra the impugned orders of both 
the High Court as well as the Revisional Authority are liable to be set 
aside as they are vitiated in law. 
Answer to Point No.3 
34. Therefore, for the aforesaid reasons, we accept the legal 
F 
submissions made by the learned senior counsel on behalf of the appellant-
State as the same are well founded and based on law laid down by this 
Court in the case referred to supra. The civil appeals are allowed by 
setting aside the order of the High Court dated 13.12.2011 and the order 
of the RevisionalAuthority dated 27.08.2009. The State Government is 
G 
at liberty to impose such terms and conditions in the renewal of lease of 
the mining area in question granted in favour of the respondents. A cost 
ofRs.5 lakhs is awarded to the appellant-State Government in respect 
of these proceedings. 
Nidhi Jain 
Appeals allowed. 
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