By adopting the purposive interpretation of Rule 10(6) of the Mineral (Auction) Rules, 2015, the Bombay High Court (Nagpur Bench) has granted extension of mining lease to Dalmia Cement (petitioner) and held that the State has committed an error in granting less than two years’ period from the date of the letter of extension, i.e. April 04, 2025, and thereby denying the benefit of extension of time to the petitioner to execute the mining lease deed.
The Court clarified that the expression used is a “further period of two years”, and not “up to two years”. Thus, this phrasing means that once the authority is satisfied that the reasons for delay were beyond the control of the Preferred Bidder, the extendable period must be for two years. The authority is given no discretion to reduce this period.
As the State granted an extension on April 04, 2025, but only until September 09, 2025, the Court found this to be an error, as in reality, the extension was only for about five months, not the two years contemplated by the statute. The Court therefore determined that the Preferred Bidder must receive the complete two-year extension period to make the necessary compliance.
The Division Bench comprising Justice Anil S. Kilor and Justice Rajnish R. Vyas observed that the core of the dispute revolves around the interpretation of Rule 10 of the Mineral (Auction) Rules, 2015. Sub-rules (1) to (5) of Rule 10 outline the compliance a “Preferred Bidder” must fulfil to reach the stage of executing a Mining Lease Deed, and therefore, no mining lease deed can be executed unless the conditions in sub-rules (3) to (5) are met, which include obtaining necessary consents, approvals, permits, and executing a Mine Development and Production Agreement.
As the first proviso to sub-rule (6) of Rule 10 establishes that no Mining Lease Deed shall be executed after the expiry of three years from the date of the Letter of Intent (LOI), the Bench held that the initial three-year period, and the extendable two-year period, are provided to allow the successful bidder to complete the compliances stipulated in sub-rules (3) to (5) of Rule 10. The extendable period of two years is specifically for making compliances that could not be completed within the initial three years for reasons beyond the Preferred Bidder’s control.
The Bench noted that the differing interpretations by the State and the petitioner necessitated the adoption of a “purposive construction” of the statute, and citing Supreme Court precedents, it reasoned that where a provision is capable of two or more constructions, the interpretation that advances the object of the provision should be preferred.
The Bench pointed out that the State’s interpretation of counting the extension from the date of the lapse of the initial three years, even if granted later, would lead to an ‘absurd result’ and render the second proviso redundant.
Briefly, the petitioner (Dalmia Cement Limited) participated in a bid process for a mining lease for the Gojoli Mineral Block in Chandrapur district, which was reserved for the manufacturing of cement. When the petitioner was declared the ‘Preferred Bidder’ with the highest offer, the State of Maharashtra issued a Letter of Intent (LOI) for a mining lease over 646.55 hectares for 50 years. However, this LOI had an initial validity of three years, extendable by a further two years.
Later, the petitioner discovered that the forest land involved had increased from 114.40 hectares (as per the tender document) to 185.83 hectares, causing delays. In the meantime, the Kanhargaon Wildlife Sanctuary was notified, and a part of the Gojoli Mineral Block fell within its 1 km radius, which was declared a no-mining zone by the Supreme Court. This resulted in a potential loss of 69 hectares of limestone reserves. These developments were unforeseen and beyond the petitioner’s control, necessitating various clearances, including from the National Board for Wildlife (NBWL) and the National Tiger Conservation Authority (NTCA). Accordingly, well before the initial three-year period of the LOI was to expire, the petitioner applied for a two-year extension.
Earlier, the State did not decide on the extension application for about 23 months. However, following a writ petition (W.P. No. 393 of 2025), the State granted an extension, but only up to September 09, 2025, assuming the total LOI period could not exceed five consecutive years from the original date. Although the High Court, in the previous petition, allowed the petitioner to make a fresh representation to the State, the State rejected the petitioner’s representation for a full two-year extension, leading to the current petition.
Appearances:
Senior Advocate Shashank Garg, along with Advocates Yashowardhan N. Sambre, Harsh Kaushik, and Nishitha Jain, for the Petitioner
Senior Advocate D.V. Chauhan, AFP Kalyani Marpakwar, and Advocate S.A. Chaudhari, for the Respondent
