News Citation : 2026 LN (HC) 167 | 2026:CGHC:9584
February 24, 2026 : The High Court of Chhattisgarh has dismissed a writ petition filed by M/s Shri Bajrang Power and Ispat Limited challenging a compensation demand of ₹68.28 lakh linked to its iron ore mining lease in Kanker district.
In a detailed order delivered on February 24, 2026, Justice Sanjay S. Agrawal upheld the validity of an additional condition inserted in the company’s mining lease, which required annual payments to project-affected families for loss of forest produce such as grazing rights, tendu leaves and other non-timber forest produce.
Background of the Dispute
The company had applied for a mining lease over 75 hectares of forest land in Kanker in 2006. After securing in-principle approval in 2013 and final forest clearance in August 2014 under the Forest (Conservation) Act, the lease was formally executed in November 2014.
Before execution of the lease, the State government incorporated an additional clause, identified as Condition 10.7(2), requiring the company to deposit, on a pro rata basis, the estimated annual value of forest produce accruing from the diverted land. The amount was to be credited to the Local Mineral Area Development Fund and then transferred to affected families, with a 10 percent annual increase.
Based on this clause, forest authorities issued a demand notice in September 2019 seeking ₹68,28,480 from the company. The firm challenged the demand along with related State communications issued in July 2020.
Company’s Argument
The petitioner argued that the State government could not impose additional conditions in the mining lease without prior approval from the Central Government under Rule 27(3) of the Mineral Concession Rules, 1960. It relied on Supreme Court decisions, including Sandur Manganese and Iron Ores Ltd. v. State of Karnataka and M/s Ramlal and Sons v. State of Rajasthan, to contend that States cannot act beyond the statutory framework of the Mines and Minerals (Development and Regulation) Act, 1957.
According to the company, the compensation demand was illegal because the clause itself was inserted without mandatory Central approval.
Court’s Findings
The High Court rejected this contention. It examined Rule 27 of the Mineral Concession Rules, 1960 and clarified that prior approval of the Central Government is required only when additional conditions are imposed in the interest of mineral development, including atomic minerals.
The Court held that the disputed clause was not related to mineral development. Instead, it addressed third-party claims and compensation to local villagers for loss of forest-based livelihood. Such matters, the Court observed, fall within the State’s authority under Rule 27(2)(k), which deals with indemnification against third-party claims.
Since the condition was not connected to mineral development, prior Central approval was not required. The Court also noted that the company had given consent before the clause was incorporated into the lease.
The judgments cited by the petitioner were found distinguishable. The Court held that those cases dealt with situations where State action directly conflicted with the MMDR Act or exceeded statutory limits, which was not the case here.
Petition Dismissed
Concluding that there was no illegality in incorporating Condition 10.7(2) or in issuing the compensation demand, the High Court dismissed the writ petition.
The ruling clarifies the scope of State authority in structuring mining lease conditions, particularly in relation to compensation for project-affected communities dependent on forest produce.
Case Reference : WPC No. 1943 of 2020, M/s Shri Bajrang Power and Ispat Limited vs State of Chhattisgarh & Others : For the Petitioner: Mr. Ankit Singhal, Advocate, with Mr. Mehal Jethani, Mr. Ashish Mittal and Mr. Amartya Bajpai, Advocates; For Respondents No. 1 to 5 (State): Mr. Dharmesh Shrivastava, Deputy Advocate General; For Respondents No. 6 and 7: Mr. Tushar Dhar Diwan, Advocate, with Mr. Shayon Kar, Advocate.
