Ownership of mineral rights : A case study of Manipur

Kachui Timothy Zimik *

In order to understand the ownership of mineral rights and the mining operations in India, we need to study the relevant provisions of the Constitution of India and the mining laws. They are briefly discussed as under :

Ownership of mining rights in India

Serial No. 53 of the Union List (List 1) of the Constitution of India states that "Regulation and development of oilfields and mineral oil resources, petroleum and petroleum products; other liquids and substances declared by the Parliament by law to be dangerously inflammable".

Serial No. 54 of the Union List states that "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest".

In Serial No. 23 of the State List, it is stated that "Regulation of mines and mineral development subject to the provisions of List 1 with respect to regulation and development under the control of the Union".

Numerous mining laws have been enacted by the Parliament to regulate the mining operations in India. As per Section 15 of Mines & Minerals (Development & Regulation) Act, 1957 (MMDRA), the State Governments have been given the power to make rules in respect of minor minerals such as building stones, gravel, ordinary clay/sand, etc.

It is generally assumed that the sub-soil minerals belong to the State. We now know that this is not correct in all cases. In the landmark verdict in July, 2013, the Supreme Court of India in the case of Thressiamma Jacob & Others vs. Geologist, Department of Mining Geology & Others (Civil Appeal No. 4549 of 2000) has held that ownership over · 'minerals that lie beneath the soil does not necessarily lie with the state.

A three member bench concluded: "there is nothing in the law which declares that all mineral wealth sub-soil rights vest in the state; on the other hand, the ownership of sub-soil/mineral wealth should normally follow the ownership of the land, unless the owner of the land is deprived of the same by some valid process." This Supreme Court means that the ownership of mineral rights vests with the landowners.

In another recent landmark judgement dated 3rd July, 2019, the Supreme Court in the case of State of Meghalaya vs. Others (Civil Appeal No. 10720 of 2018) has held that-
"From the foregoing discussions we arrived at following conclusions: .... 4) According to the land tenure system as applicable in the Hills - Districts of State of Meghalaya, the most of the lands are either privately or community owned in which State does not claim any right. The private owners of the land as well as community owners have both the surface right as well as sub-soil rights.

6) There is nothing in Section 4(1) of 1957 Act to indicate that restriction contained in Section 4(1) does not apply with regard to privately owned/community owned land in Hill Districts of Meghalaya. Further, word 'any area' under Section 4(1) also has significance which does not have any exception. Further phrase "except under and in accordance with terms and condition with a mining lease granted under the Act" are also significant which make the intent and purpose of prohibition clear and loud.

10) In Hill District of State of Meghalaya for carrying coal mining operations in privately owned/community owned land it is not the State Government which shall grant the mining lease under Chapter V of Rules, 1960, but it is the private owner/community owner of the land, who is also the owner of the mineral, who shall grant lease for mining of coal as per provisions of Chapter V of Rules, 1960 after obtaining previous approval of the Central Government through the State Government."

In this ·Order, the Supreme Court has held that there is nothing in Section 4(1) of MMDRA to indicate that restriction contained in Section 4(1} does not apply with regard to privately owned/community owned land.

Further, the statutory schemes delineated by Section 13(2) of MMDRA and the Minerals (concession) Rules, 1960 clearly contemplate grant of mining lease, with regard to both the categories of land, i.e., land in which minerals vest in the Government, and the land in which minerals vest in a person other than the government.

While implementing the statutory regime for carrying mining operations, the State has to ensure compliance of not only MMDR Act, 1957, but Mines Act, 1952 as well as Environment (protection) Act, 1986. Thus, the Supreme Court in its verdict of July 2019, has clearly concluded that the private owners of the land have both the surface as well as sub-soil mineral rights.

The MMDA Act, 1957 does not declare the propriety rights of the State in the Mineral wealth nor does the Act contain any provision divesting any owner of mine of his proprietary rights. The MMDA Act, 1957 is enacted by the parliament to regulate the mining activities in this country. Even the Mineral Laws (Amendment) Act, 2020 which is deemed to have come into force on the 10th day January, 2020 has not made any changes with regard to the ownership of mineral rights.

If we examine the various enactments made by the Parliament such as Coking Coal Mines (Nationalization) Act, 1972 and Coal Bearing Areas (Acquisition and Development) Act, 1957, it will be seen that express declarations have been made under Section 4 an 7 respectively for acquisition of the mines and rights in or over the land from which coal is obtainable.

This clearly shows that the proprietory rights in mines do not stand transferred and vested in the State. As held by the Supreme Court in the cases cited above, some valid legal process is to be followed to acquire such mineral rights from the owners of the land.

Article 294 of the constitution provides for the succession by the Union of India of the property and assets which vested in the British Crown immediately before the commencement of the Constitution. Similarly, Article 297 provides that all lands, mineral and other things of value underlying the ocean within the territorial waters of India shall vest in the Union. Whenever minerals are to be vested in the Union of India (State), then the Constitution of India or mining laws enacted by the Parliament provides such express declaration to that effect.

The makers of the Constitution were aware of the fact that the mineral wealth obtaining in the land mass of India is not vested in the State in all cases, but such proprietory rights in sub-soil minerals can vest in private parties who happen to own the land.

Now the Apex Court of the land has authoritatively affirmed the law that the owner of the land is also the owner of the sub-soil minerals.

A case study of Manipur

As per the details available in public domain, it is seen that, in many cases, the Government of India, through the Indian Bureau of Mines and the Ministry of Mines, has granted mining leases and licenses for extraction/ prospecting/exploitation to private companies in Manipur including the ophiolite belt of Ukhrul and Chandel districts of Manipur.

In all such cases, separate Memorandum of Understanding (MoU) has been signed between the Government of Manipur and the companies for transfer of land, raw materials, water and mining rights. These mining companies have raced to Manipur for exploiting mineral resources as Manipur has huge reserves of hydro-carbons, chromites and limestone.

The landowners of the sub-soil minerals need to know their basic legal rights and the relevant provisions of the Constitution and mining laws. Due to space constraint, only a few important mining issues have been very briefly discussed in this article. For mining operations in Manipur particularly in the hill areas, the following points be kept in mind:-

1. The private community land owners are also the owners of the sub-soil minerals.

2. The Government of India may acquire lands and the sub-soil minerals for mining projects by some valid process. In the hill areas of Manipur, all lands are either owned by the private persons or the community. If the lands are legally owned by the State, then the State will have the sub-soil rights as well as the mining rights.

3. Any mining right/license/lease obtained by the private persons/companies through misrepresentation of facts or misinformation is liable to be declared null and void by the competent courts. The facts of each case in question will determine the ownership of the lands and the sub-soil mineral rights.

4. Certain rights and protections are provided in the Fifth Schedule of the Constitution of India with respect to Scheduled Areas and Scheduled Tribes. The Hill Areas Committee and District Councils of Manipur are tasked to safeguard the interests including the mining rights of the tribal people of hill areas.

5. As clearly pointed out by the Supreme Court in a number of judgements, lack of Free & Prior Informed Consent (FPIC) of the land owners, Forest & Environment Clearances, proper Impacts Assessments, accountability and transparency will render the mining projects in Manipur are self-defeating exercises and therefore, unviable proposition to say the least.

6. Mining operations in the state without taking into account of the rights and interests of the indigenous tribal people of Manipur and their involvement will not be legally tenable and physically unworkable.

7. In the well known case of Samata vs. State of Andhra Pradesh of 1997, the Supreme Court of India has authoritatively stated that Government lands, forest and tribal lands cannot be sold or leased out to non-tribal persons, including private industries, since this would contradict the Fifth Schedule of the Constitution·

In other words, the Supreme Court has recognized the rights of the tribal people on their land-holding and that the tribal land cannot be transferred to non-tribal people. Mining activities in the Scheduled Areas can only be undertaken by the State Mineral Development Corporation or a tribal cooperative acting in compliance with the Forest (Conservation) Act 1980 and the Environment (Protection) Act 1986.

If the State leases out its lands in the Scheduled Areas to the non-tribal persons or industries for exploitation of mineral resources, at least 20 percent of the net profits from such activities is to be set aside in a permanent fund for the improvement of local education, health or other social services.

8. All land owners having sub-soil minerals that lie beneath such lands will have to comply with the mining regulations enforced by the union of India.

( The views expressed in this article are his personal, and not the views of the Government of India )

* Kachui Timothy Zimik, IRS, wrote this article for The Sangai Express
The author is the Principal Commissioner of Income Tax
This article was webcasted on September 29 2020.

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