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Wednesday, 02 May 2012 12:09
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Govt has already petitioned SC on auctions vs FCFS
With over 400 mining lease/licences pending execution at a fairly advanced stage and over 40,000 applications to prospect for various minerals at a very basic level, it is not surprising the government should want to take legal advice, from the Attorney General, on how to proceed with the case. If these are dealt with in the old first-come-first-served (FCFS) manner, the government fears this could attract adverse attention from the CAG and others including the Supreme Court—the CAG’s draft report which reportedly talks of R10.7 lakh crore losses in allocating coal mines is expected to be finalised soon, and the SC had cancelled A Raja’s 122 telecom licences primarily because they were not auctioned but given out on a FCFS basis. If, on the other hand, the government waits for Parliament to pass the amended mining bill which allows for auctions, this could be a long wait—while the amendment to the Mines and Minerals (Development and Regulation) Act of 1957 that was passed in 2010 allowed states to grant a prospecting licence or a mining lease through auction, this was only for coal and lignite and only for captive users of these minerals.
While the Attorney General has cleared this saying the Supreme Court had not been called upon to consider the statutory provisions of the MMDR Act while cancelling the 2G licences, the fact of the matter is the government has put this before the Supreme Court while sending it the 2G Presidential Reference. The last question asked in the Reference, question 8, is quite clear when it asks “whether the Judgment lays down auction as mandatory for allocation of all natural resources across all sectors and in all circumstances”. In its review petition on the same 2G matter, the government invokes the MMDR Act when it says Section 11 of the Act gives the first person to apply a preferential right over a mining lease—in other words, the government’s review petition arguing the Supreme Court’s direction to auction all resources was contrary to the MMDR Act passed by Parliament. As it puts it, “It is respectfully submitted that if the impugned Judgment is correct, a necessary consequence would be that the grant of mining rights under the Mines and Minerals (Development and Regulation) Act, which was enacted as far back as 1957, after due deliberations in Parliament qua a most valuable natural resource, would be liable to be held illegal”. In this context, instead of pushing ahead with granting mining resources on an FCFS basis, now that the government has brought the matter to the SC, it would be better served by simply approaching SC again and ask for a quick resolution of both its review petition as well as the Presidential Reference.

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