This presentation discusses the complexities regarding ownership/proprietary rights over Minerals in India.

1. Ms. NEHA TRIPATHI
Assistant Professor (Law), MNLUA
Former Faculty, NUSRL

2. ▪ Locke’s premise was that God gave the earth and its fruit in common to men
for their use.
▪ According to Locke, in the “natural state”- that original condition in which
every person had an equal right to use natural resources provided by the
“spontaneous hand of Nature”- no one had “a private dominion, exclusive of
the rest of the mankind”, over those resources.
▪ After having established an individual’s right to own property in the state of
nature, Locke goes on to define the right to property broadly to include both
“the fruits of the earth and the earth itself”.
▪ Further, “labour makes the far greatest part of the value of things we enjoy in
this world.” Hence, natural law dictates that labour guarantees the right to
property since labour is 9/10th responsible for the value of goods created.
▪ Locke also infers that as long as men heed the injunction not to allow anything
to go to waste uselessly in their possession, there will in this early state of
nature, be plenty of land and resources to go around for everyone.

3. ▪ Furthermore, the growing accumulation of physical property and land
puts pressure on natural resources and makes it increasingly less likely
that any individual could find “enough and as good” land left over after
appropriation by others.
▪ The men form societies and governments to protect their property which
Locke takes to include life, liberty and estate. Once, men form states, the
government is expected to rule in the public good and not for its own
good, and one of the ways in which it fulfils this charge is by regulating
property so as to make it secure.
▪ Locke seems to argue that the consequences will be property disputes
and increasing concern for personal safety, although these consequences
follow as much from the growth of population as from increasing
resource scarcity brought about by the introduction of money in the state
of nature. The result, however, is that men will find it greatly to their
advantage to come together to form a contract to enter into civil society
and establish a government.

4. ▪ Thomas Jefferson had stated that there are three basic rights: 1) Right to Life 2) Liberty
and 3) Right to Pursuit of Happiness. Right to Pursuit Of Happiness is nothing but related
to the right to property.
▪ Mines and minerals in their original position are part and parcel of the land. The common
law presumption is that a landowner owns everything below the surface down to the centre
of the earth. Unworked mines and minerals are the property of the surface owner.
▪ According to Halsbury’s Law of England :
“Mines, quarries and minerals in their original possession are part and parcel of the
land. Consequently, the owner of the surface land is entitled prima facie to everything
beneath and within it, down to the center of the earth.”
▪ The countries like South Africa, Australia, Canada etc., are having public ownership of the
mining and the minerals. Only the USA and few other countries are having this kind of
freedom to the owner of the land that the owner can develop their own farms and their own
lands into mines.

5. ▪ In the colonial period, the colonial state usurped all rights of the people over
land, forests and other natural resources.
▪ The British colonialists set up the Indian Forest Service in 1864 and formulated
the Indian Forest Act in 1865, which declared that all "reserved" and
"protected" forests belong to the colonial state. Using the principle of power of
eminent domain and the Land Acquisition Act of 1894, the colonial state
usurped the right of people to decide on the usage of land and exploit minerals
buried under the land.
▪ After the colonialists left, the government of independent India endorsed the
colonial concept of eminent domain power. The new Indian state accepted the
colonial principles of jurisprudence that made the power of eminent domain,
and the nature of ‘public purpose’, a matter solely for executive determination
and statement, and, therefore, non-justiciable.

6. ▪ The basic principle in a land ownership system is that any minerals belong to the owner of the
land where the deposits are found. This system is derived from Roman law, and is also referred to
as an “accession system.” The minerals are accessories to the land, and therefore from the
beginning are owned by the landowner. Prior to the French Revolution, France followed the
accession system to such an extent that the system is sometimes also referred to as the “French”
system.
▪ The land ownership system has also traditionally been used in the Anglo-American common law
countries due to the principle that the owner of the surface is likewise the owner of the subsurface
and all that it contains with certain exceptions. In England, for example, gold and silver belonged
to the Crown as part of its royal prerogative. The modern approach is that the rights to a number
of minerals are owned or vested in either the Crown or State by common law or statute, or by
mineral severance. Mineral severance means that the land interests have been separated, or
severed, by deed (contract) leading to separate ownership and rights to surface and underlying
minerals.
ACCESSION AND CONCESSION
SYSTEM

7. ▪ It is important to stress that land ownership systems in many countries today
also apply to certain non-metallic minerals, often basic construction materials
such as stone, sand and gravel. In Sweden, for example, minerals not
encompassed by the Minerals Act constitute what are termed “landowner
minerals”, for example, limestone, feldspar, sand and gravel. In Ireland, “non-
scheduled” minerals such as stone, sand and gravel are not covered by any
specific mineral development legislation and belong to the landowner.
▪ Under a concession system, the right to search for and process mineral deposits
is conferred after an assessment by a national authority. This system originated
on the premise, proclaimed during the French Revolution, that all mines should
be at the disposal of the nation, in the sense that they should not be operated
without the consent of the nation.

8. ▪ The concession system is built on the assumption that the State or nation holds
rights and can dispose over mineral resources. The system gives the State
power as exercised in a discretionary assessment as to whether mineral rights
should be granted and to whom. For instance, preference can be given to a
person (or several) deemed most suitable according to the State/authority. The
discoverer might be compensated if not selected. The degree of impartiality in
the assessments may vary due to any discretionary elements within the system.
▪ France, Belgium and Portugal are “classical” examples of countries where the
concession system has influenced the legislation dealing with mineral rights. In
many countries, certain types of deposits, such as coal, oil and gas, are
regulated through a concession or similar system

9. CLAIM SYSTEM
▪ The third alternative, the claim system, means that any party discovering mineral
deposits can, subject to certain formalities, acquire the sole right of exploitation. This
system originated in Germany, where it appeared in the Saxon “Mining Order” during the
late 15th and early 16th centuries.
▪ Two ways of perceiving “original” ownership can be discerned in connection to this
system, namely the Regalian and Res-nullius theories.
▪ According to the Regalian theory, prevalent during medieval times and from which the
system originates, the State grants mineral rights to the claimant.
▪ According to the Res-nullius theory, the minerals belong to no one until they have been
found, which can be categorized as a kind of right of occupation. The claim system is
argued to stimulate prospecting and the exploration for new mineral deposits.

10. ▪ The claim system is associated with little or no discretionary consideration.
Mineral rights are granted to whoever has discovered the minerals first (first-
come, first-served). The fundamental principle of the claim system is that the
right of precedence is given to the discoverer of the deposit.
▪ The free entry system, a common heritage for the United States, Canada, New
Zealand and Australia, has strong elements of the claim system. The free entry
system comprises the right to enter and explore public lands and acquire title to
minerals by staking a claim. It also comprises the right of the miner to obtain a
lease or grant in order to extract minerals

11. CPIL V. UNION OF INDIA
2G SPECTRUM CASE (2012)
▪ISSUE TO BE CONSIDERED
Whether the Government has the right to alienate, transfer or distribute natural
resources/national assets otherwise than by following a fair and transparent
method consistent with the fundamentals of the equality clause enshrined in the
Constitution?

12. ▪ Natural resources belong to the people but the State legally owns them on
behalf of its people and from that point of view natural resources are
considered as national assets, more so because the State benefits immensely
from their value.
▪ The State is empowered to distribute natural resources. However, as they
constitute public property/national asset, while distributing natural resources,
the State is bound to act in consonance with the principles of equality and
public trust and ensure that no action is taken which may be detrimental to
public interest. Like any other State action, constitutionalism must be reflected
at every stage of the distribution of natural resources.
▪ In Article 39(b) of the Constitution it has been provided that the ownership and
control of the material resources of the community should be so distributed so
as to best sub-serve the common good, but no comprehensive legislation has
been enacted to generally define natural resources and a framework for their
protection.

13. ▪ The ownership regime relating to natural resources can also be ascertained
from international conventions and customary international law, common law
and national constitutions.
▪ In international law, it rests upon the concept of sovereignty and seeks to
respect the principle of permanent sovereignty (of peoples and nations) over
(their) natural resources as asserted in the 17th Session of the United Nations
General Assembly and then affirmed as a customary international norm by the
International Court of Justice in the case of Democratic Republic of Congo v.
Uganda.
▪ The State is deemed to have a proprietary interest in natural resources and must
act as guardian and trustee in relation to the same. Constitutions across the
world focus on establishing natural resources as owned by, and for the benefit
of, the country.
▪ In most instances where constitutions specifically address ownership of natural
resources, the Sovereign State, or, as it is more commonly expressed, ‘the
people,’ is designated as the owner of the natural resource.

14. ▪ In India, the Courts have given an expansive interpretation to the concept of
natural resources and have from time to time issued directions, by relying upon
the provisions contained in Articles 38, 39, 48, 48A and 51A(g), for protection
and proper allocation/distribution of natural resources and have repeatedly
insisted on compliance of the constitutional principles in the process of
distribution, transfer and alienation to private persons.
▪ The doctrine of public trust, which was evolved in Illinois Central Railroad
Co. v. People of the State of Illinois 146 U.S. 387 (1892), has been held by this
Court to be a part of the Indian jurisprudence in M.C. Mehta v. Kamal
Nath (1997) 1 SCC 388 and has been applied in Jamshed Hormusji Wadia v.
Board of Trustee, Port of Mumbai (2002) 3 SCC 214, Intellectuals Forum,
Tirupathi v. State of A.P. (2006) 3 SCC 549 and Fomento Resorts and Hotels
Limited v. Minguel Martins (2009) 3 SCC 571.

15. In Fomento Resorts and Hotels Limited case, the Court referred to the
article of Prof. Joseph L. Sax and made the following observations:
"The public trust doctrine enjoins upon the Government to protect the
resources for the enjoyment of the general public rather than to permit
their use for private ownership or commercial purposes. This doctrine
puts an implicit embargo on the right of the State to transfer public
properties to private party if such transfer affects public interest,
mandates affirmative State action for effective management of natural
resources and empowers the citizens to question ineffective management
thereof.

16. ▪ The heart of the public trust doctrine is that it imposes limits and obligations upon
government agencies and their administrators on behalf of all the people and
especially future generations.
▪ In our view, a duly publicised auction conducted fairly and impartially is perhaps
the best method for discharging this burden and the methods like first-come-first-
served when used for alienation of natural resources/public property are likely to be
misused by unscrupulous people who are only interested in garnering maximum
financial benefit and have no respect for the constitutional ethos and values. In
other words, while transferring or alienating the natural resources, the State is duty
bound to adopt the method of auction by giving wide publicity so that all eligible
persons can participate in the process.

17. In Reliance Natural Resources Limited v. Reliance Industries Limited, (2010) 7
SCC 1, Justice P. Sathasivam, made the following observations:
“It must be noted that the constitutional mandate is that the natural
resources belong to the people of this country. The nature of the word
"vest" must be seen in the context of the public trust doctrine (PTD).
Even though this doctrine has been applied in cases dealing with
environmental jurisprudence, it has its broader application.”
The Learned Judge then referred to the judgments, In re Special Reference No. 1
of 2001 (2004) SCC 489 and M.C. Mehta v. Kamal Nath (1997) 1 SCC 388 and
observed:
“This doctrine is part of Indian law and finds application in the present
case as well. It is thus the duty of the Government to provide complete
protection to the natural resources as a trustee of the people at large.”

18. ▪The Court also held that natural resources are vested with the Government as a
matter of trust in the name of the people of India, thus it is the solemn duty of
the State to protect the national interest and natural resources must always be
used in the interests of the country and not private interests.
▪As natural resources are public goods, the doctrine of equality, which emerges
from the concepts of justice and fairness, must guide the State in determining
the actual mechanism for distribution of natural resources. In this regard, the
doctrine of equality has two aspects: first, it regulates the rights and obligations
of the State vis-a-vis its people and demands that the people be granted
equitable access to natural resources and/or its products and that they are
adequately compensated for the transfer of the resource to the private domain;
and second, it regulates the rights and obligations of the State vis-a-vis private
parties seeking to acquire/use the resource and demands that the procedure
adopted for distribution is just, non-arbitrary and transparent and that it does
not discriminate between similarly placed private parties.

19. THRESSIAMMA JACOB V. DEPTT. OF MINING & GEOLOGY, (2013) 9 SCC 725
The appellants asserted that they are holders of jenmom rights in the lands in question and
the State has no legal authority to demand payment of royalties on the minerals excavated
by the holder of jenmom right.
Such a claim of the appellants is based on the belief and assertion of the appellants (1)
that the holder of the jenmom rights is not only the proprietor of the soil for which he has
jenmom rights, but also the owner of the mineral wealth lying beneath the soil. (2) that the
understanding of the appellants that a claim of royalty can be made only by the owner of
the mineral against a person who is excavating the mineral with the consent of the owner.
The Court agreed to examine the amplitude of the rights of the jenmom land holders
called jenmis in the Malabar area of the Kerala State and decide whether a jenmi is
entitled to the rights of subsoil/the minerals lying beneath the surface of the land.

20. ▪ The appellants’ case is that a ‘jenmi’ holds jenmom lands as absolute owner
and has proprietary rights over both the soil and subsoil. The ryotwari
settlement made by the British Government in the Malabar area of the
erstwhile Madras Province only obligated the jenmis to pay revenue to the
State but did not in any way affect their proprietary rights in the lands. Nor did
the ryotwari settlement have the effect of transferring and vesting the
ownership either of the land or the subsoil (minerals) to the State. In support of
this submission, the appellants heavily relied on a judgment of this Court
in Balmadies Plantations Ltd. and Anr. v. The State of Tamil Nadu AIR 1972
SC 2240 and also a standing order of the Board of Revenue of the erstwhile
Madras Province dated 19th March 1888.
▪ On the other hand, the State of Kerala took the stand that subsequent to the
extension of the ryotwari settlement to the Malabar area of the erstwhile
Madras Province, the jenmis ceased to be the absolute owners and proprietors
of the lands held by them. The ryotwari settlement had the effect of
transferring the ownership of subsoil (minerals) to the Government.

21. The Court cited Halsbury’s Laws of England and stated that
“……Mines, quarries and minerals in their original position are part and parcel of the
land. Consequently the owner of surface land is entitled prima facie to everything beneath
or within it, down to the center of the earth. This principle applies even where title to the
surface has been acquired by prescription, but it is subject to exceptions. Thus, at common
law, mines of gold and silvery belong to the Crown, and by statute unworked coal which
was, at the restructuring date, vested in the British Coal Corporation is vested in the Coal
Authority. Any minerals removed from land under a compulsory rights order or opencast
working of coal become the property of the person entitled to the rights conferred by the
order. The property in petroleum existing in its natural condition in strata is vested by
statute in the Crown.”
The Court therefore, proceeded to examine whether the law of this country and more
particularly with reference to Malabar area regarding the rights over the mines and minerals
is the same as it operates in England or different.

22. ▪ The makers of the Constitution were aware of the fact that the mineral wealth
obtaining in the land mass (territory of India) is not vested in the State in all
cases. They were conscious of the fact that under the law, as it existed,
proprietary rights in minerals (subsoil) could vest in private parties who
happen to own the land. Hence the difference in the language of the two
Articles. (Art 294 and Art 297)
▪ The power to tax is a necessary incident of sovereign authority (imperium) but
not an incident of proprietary rights (dominium). Proprietary right is a
compendium of rights consisting of various constituent rights.
▪ Mines and Minerals Act is an enactment made by the Parliament to regulate the
mining activities in this country. The said Act does not in any way purport to
declare the proprietary rights of the State in the mineral wealth nor does it
contain any provision divesting any owner of a mine of his proprietary rights.
▪ 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.

23. M/S GEOMYSORE SERVICES (I) PVT. LTD. & ANR.
V.
M/S HUTTI GOLDMINES CO. LTD. & ORS. (MAY, 2018)
▪ What is the role and power of the Central Government while dealing with the request of a
State Government for reservation of lands for government companies or corporations
owned and controlled by the State Government under section 17A (2) of the Mines and
Minerals (Development and Regulations) Act, 1957.
▪ Whether the State Government being the owner of land and minerals can claim that its
proposal to reserve such land for exploitation of minerals by its undertakings is virtually
binding on the Central Government?

24. ▪ In State of T.N. v. M/s Hind Stone and Others
“Rivers, Forests, Minerals and such other resources constitute a nation’s
natural wealth. These resources are not to be frittered away and
exhausted by any one generation. Every generation owes a duty to all
succeeding generations to develop and conserve the natural resources of
the nation in the best possible way. It is in the interest of mankind. It is in
the interest of the nation……………… In the case of minor minerals, the
State Government is similarly empowered, after consultation with the
Central Government. The public interest which induced Parliament to
make the declaration contained in Section 2 of the Mines and Minerals
(Regulation and Development) Act, 1957, has naturally to be the
paramount consideration in all matters concerning the regulation of
mines and the development of minerals.”

25. ▪ It is now common ground between the parties that as a result of the declaration
made by Parliament, by Section 2 of the Act, the State legislatures are denuded of
the whole of their legislative power with respect to regulation of mines and
mineral development and that the entire legislative field has been taken over by
Parliament
▪ In Monnet Ispat & Energy Ltd. v. Union of India & Ors (2012), Justice Lodha, in
his leading judgment held that Section 2 of the Act does not affect the State’s
ownership of mines and minerals within its territory although the regulation of
mines and development of minerals have been taken under the control of the
Union. It was held that the Central Government may have taken over the power to
regulate the mines and development of minerals but the State could not be
denuded of its rights .

26. In State of Kerala and Ors. v. Kerala Rare Earth & Minerals Ltd. & Ors., a three-Judge
Bench of this Court again dealt with the scope of Section 17A of the Act and per majority
held as follows:
The upshot of the above discussion then is that while the State Government is the owner
of the mineral deposits in the lands which vest in the Government as is the position in the
case at hand, Parliament has by reason of the declaration made in Section 2 of the 1957
Act acquired complete dominion over the legislative field covered by the said legislation.
The Act does not denude the State of the ownership of the minerals situate within its
territories but there is no manner of doubt that it regulates to the extent set out in the
provisions of the Act the development of mines and minerals in the country. It follows
that if the State Government proposes to reserve any area for exploitation by the State-
owned corporation or company, it must resort to making of such reservation in terms
of Section 17-A with the approval of the Central Government and by a notification
specifying boundaries of the area and mineral or minerals in respect of which such areas
will be reserved.

27. CONCLUSION
▪ On a careful perusal of the judgments aforesaid, it would be more than apparent that
this Court has consistently held that the State is the owner of the land and minerals.
However, the control and regulation of mines and development of minerals are in the
domain of the Union Government. The State Government is denuded of its legislative
power to make any law in respect of regulation of mines and mineral development in
so far as that field is covered by the provisions of the Act. It is only if the field is
vacant that the State can exercise its legislative powers. Otherwise, it has to exercise
its power strictly in accordance with the powers specifically conferred on the State
Government by the Act and the Rules. It is also a well settled position of law that
while exercising the powers of reservation vested in Section 17A(2) of the Act, the
State Government has to take approval of the Central Government

28. The Indigenous Adivasi People have followed the laws of nature:
The United Nations Declaration on the Rights of Indigenous Peoples, Adopted by
General Assembly Resolution 61/295 on 13 September 2007, in Article 26
affirms:
1. Indigenous peoples have the right to the lands, territories and resources which
they have traditionally owned, occupied or otherwise used or acquired.
2. Indigenous peoples have the right to own, use, develop and control the lands,
territories and resources that they possess by reason of traditional ownership or
other traditional occupation or use, as well as those which they have otherwise
acquired.
3. States shall give legal recognition and protection to these lands, territories and
resources. Such recognition shall be conducted with due respect to the customs,
traditions and land tenure systems of the indigenous peoples concerned.