Auction: Sections 10B and 11, and What 2015 Changed

In one line

Until 2015 a mineral concession was granted to whoever the State chose; since 2015 it is auctioned, and every application made before the change became worthless overnight.

In the wording a student can write in an exam: the Mines and Minerals (Development and Regulation) Amendment Act, 2015, replaced discretionary grant with auction by competitive bidding; section 10A(1) declares that all applications received before the commencement of the amendment became ineligible, subject to the savings in section 10A(2); section 10B requires a mining lease for a notified mineral, being one in the Fourth Schedule, to be granted through auction where the existence of its mineral contents is established; section 11 requires a composite licence to be granted through auction for any other mineral where that evidence is inadequate, section 10B(2) allowing the same for a notified mineral; and section 10BA, inserted in 2023, requires an exploration licence for a Seventh Schedule mineral to be granted through auction.

Why the change was made

Because discretionary allocation of a public resource had produced two things the country could not defend: arbitrariness, and a windfall to the allottee.

A concession is worth a great deal. The right to work an iron ore body for fifty years has an enormous value, and until 2015 it was given away for the royalty and the dead rent alone. Whatever the block was really worth above that went to the person who got it.

And the choice was made by an official. Section 10(3) as it stood said the State Government "may grant or refuse to grant" the concession, and the first-come-first-served practice around that discretion was the subject of a long line of litigation.

Auction answers both. The bid captures the value for the State, and the process removes the discretion. That is the argument for it, and a student should also give the argument against, which is that an auction favours the deepest pocket and that a very high bid is later paid for by cutting corners on the environment and on the workforce.

Section 10A: the guillotine

Section 10A(1). "All applications received prior to the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, shall become ineligible."

That is one of the bluntest provisions in Indian resource law. Tens of thousands of pending applications, some more than a decade old, ceased to be applications at all.

Section 10A(2) saves three classes, and they are examinable because most litigation since has been about whether an applicant falls within them.

(a) applications received under section 11A, which is the coal and lignite provision.

(b) where before the commencement a reconnaissance permit or prospecting licence had been granted for a mineral in any land, the holder has a right to obtain a prospecting licence followed by a mining lease, or a mining lease, for that mineral in that land, if the State Government is satisfied that he has undertaken the operations and established the existence of the mineral and has not been in default.