Banshidhar Construction PVT. LTD vs. The State Of Bihar

Facts

Banshidhar Construction Pvt. Ltd. (the petitioner) held a sand mining lease for a period of five years from 2016 to 2021. The lease agreement stipulated terms for royalty payments and allowed for extension or remission under certain conditions. Due to the COVID-19 pandemic lockdown, mining activities were restricted from March 23, 2020, to April 20, 2020. The petitioner represented to the authorities on September 30, 2020, seeking either a 30-day extension of the lease term or proportionate remission in royalty for the period of restriction, citing that similar benefits were granted to sand mining leaseholders. The petitioner also pointed to a letter from the Ministry of Mines suggesting states consider relaxation for mining leaseholders due to the pandemic. The authorities did not decide on the representation before the lease period ended on March 31, 2021.

Held

The Court found merit in the petitioner's contention. It acknowledged the Central Government's advisory to consider relaxations for mining leaseholders due to the COVID-19 pandemic. The Court noted that the State Government had indeed granted concessions to sand mining leaseholders. It was an admitted fact that the mining activities for the petitioner were brought to a standstill for approximately 29-30 days due to the restriction order dated April 20, 2020. The Court held that the petitioner's representation, seeking either a lease extension or remission for this period, should have been considered and an appropriate decision taken, especially in light of the relief granted to sand miners. The failure to take any decision on the representation, filed well before the lease expiry, was deemed unacceptable. The Court rejected the Mines Department's argument that the 29-day restriction was negligible and that sand miners could not be equated with stone quarry operators. The Court directed the Respondent Authorities to consider the petitioner's representation dated September 30, 2020, taking into account the Central Government's request and the relief extended to sand mining leaseholders, and to pass a decision within three months.

Key Issues

1. Whether the petitioner is entitled to an extension of the lease term by 30 days or proportionate remission in royalty in lieu of the mining activity restriction imposed during the COVID-19 pandemic from March 23, 2020, to April 20, 2020, as per Clause 5, Part IX of the Agreement dated April 4, 2020? (Question of law and mixed fact/law, turning on interpretation of the lease agreement and the impact of the pandemic). 2. Whether the action of the Respondent Authorities in granting remission in royalty to sand mining leaseholders for the COVID-19 lockdown period, while denying the same benefit to the petitioner (a stone quarry leaseholder), is illegal, arbitrary, and discriminatory? (Question of law, turning on principles of equality and non-arbitrariness). Petitioner's Arguments: The petitioner argued that Clause 5, Part IX of the agreement entitled them to a 30-day lease extension or proportionate remission. They contended that the Central Government's letter dated May 5, 2020, advised states to consider relaxations for mining leaseholders affected by the pandemic. They further argued that the State Government had extended benefits to sand mining leaseholders, as evidenced by Memo No. 2721 dated September 21, 2020, and therefore, denying them the same relief was discriminatory and arbitrary. The failure to decide their representation was also cited as unreasonable and arbitrary. Revenue/State's Arguments: The Respondent Authorities argued that the restriction on stone mining activities was only for 29 days, which they considered negligible over the five-year lease period. They contrasted this with sand mining, where restrictions were longer (43 days due to COVID-19, plus monsoon period prohibition) and royalty was increased by 50%, making the two categories not comparable. They admitted that the representation remained pending.