Chandra Bhan Singh vs State Of U.P. And 2 Others
2017 Latest Caselaw 6887 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R
 
Chief Justice's Court
 
Case :- WRIT - C No. - 54052 of 2017
 
Petitioner :- Chandra Bhan Singh
 
Respondent :- State Of U.P. And 2 Others
 
Counsel for Petitioner :- Mukesh Prasad
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Dilip B. Bhosale, Chief Justice
 
Hon'ble Manoj Kumar Gupta, J.

P.C. The petitioner, by means of the instant writ petition under Article 226 of the Constitution of India, has called in question the demand notice dated 25 October 2017, issued by the Additional District Magistrate (F&R), Kanpur Nagar, whereby he has been directed to deposit a sum of Rs. 54,12,960/- in the District Mineral Foundation Trust, Kanpur (for short, 'the Trust'), established vide Government notification dated 25 April 2017 and governed by the District Mineral Foundation Trust Rules, 2017 (for short, 'Rules, 2017").

The challenge raised to the impugned demand notice is solely on the ground that, under any circumstances, the holder of a mineral concession/permit under the Rules, 2017 is liable to pay to the Trust, only an amount which is equivalent to 10 percent of "royalty" and not of the "bid amount" and, therefore, the demand raised (i.e. 10 percent of the bid amount) is illegal and deserves to be set aside. In support of this contention, counsel for the petitioner drew our attention to the relevant provisions in the Rules, 2017 and the provisions of Section 9-B of the Mines and Minerals (Regulation and Development) Act, 1957 (for short, "the Act, 1957") and to sub-section (5) thereof in particular.

The Rules, 2017 are made in exercise of the powers conferred by sub-section (3) of Sections 9-B, 15 and 15-A of the Act, 1957 for regulating the composition and functions of the District Mineral Foundation Trusts, established vide Government notification dated 25 April 2017 and prescribing the manner for carrying development activities in the affected areas of mining activities. The relevant Rule for our purpose is Rule 10, which deals with contribution to the Trust-fund. This Rule is divided into two parts. Sub-Rule (1) provides for contribution to the Trust-fund in case of major minerals and sub-section (2) in case of mineral minerals. We are concerned with sub-rule (2) of Rule 10 of the Rules, 2017, which reads thus:

"(2) In case of minor minerals-

The holder of every mineral concession/permit shall in addition to the royalty, pay to the Trust of the district in which the mining operations are carried on, an amount which is equivalent to 10% of royalty or as may be prescribed by the State Government from time to time."

The Rules, 2017, as stated earlier, have been framed in exercise of the powers conferred by sub-section (3) of Section 9-B of the Act, 1957. It would be relevant to reproduce Section 9-B of the Act, 1957, which reads thus:

"9-B. District Mineral Foundation.―(1) In any district affected by mining related operations, the State Government shall, by notification, establish a trust, as a non-profit body, to be called the District Mineral Foundation.

(2) The object of the District Mineral Foundation shall be to work for the interest and benefit of persons, and areas affected by mining related operations in such manner as may be prescribed by the State Government.

(3) The composition and functions of the District Mineral Foundation shall be such as may be prescribed by the State Government.

(4) The State Government while making rules under sub-sections (2) and (3) shall be guided by the provisions contained in article 244 read with Fifth and Sixth Schedules to the Constitution relating to administration of the Scheduled Areas and Tribal Areas and the Provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996 (40 of 1996) and the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 (2 of 2007).

(5) The holder of a mining lease or a prospecting licence-cum-mining lease granted on or after the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount which is equivalent to such percentage of the royalty paid in terms of the Second Schedule, not exceeding one-third of such royalty, as may be prescribed by the Central Government.

(6) The holder of a mining lease granted before the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount not exceeding the royalty paid in terms of the Second Schedule in such manner and subject to the categorisation of the mining leases and the amounts payable by the various categories of lease holders, as may be prescribed by the Central Government."

This Section was inserted by Act No. 10 of 2015, dated 26 March 2015 (with effect from 12 January 2015).

From bare perusal of sub-section (5) of Section 9-B of the Act, 1957, it is clear that it provides that the holder of a mining lease granted on or after the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, shall, in addition to the royalty, pay to the District Mineral Foundation Trusts of the districts in which the mining operations are carried on, an amount which is equivalent to such percentage of the royalty paid in terms of the Second Schedule, not exceeding one-third of such royalty, as may be prescribed by the Central Government. The Second Schedule referred to in sub-section (5) of Section 9-B provides for the rates of royalty in respect of minerals at Item Nos. 1 to 9, 11 to 40 and 42 to 55 referred to therein. The minerals referred to in this Schedule are minerals other than minor minerals. This is clear from the provisions contained in Sections 9 and 14 of the Act, 1957. Section 9 deals with royalties in respect of mining leases, whereas Section 14 states that Sections 4 to 13 shall not apply to minor minerals. It is not necessary to deal with these provisions further for addressing the question raised for our consideration in the instant petition. In the present case, admittedly, we are concerned with minor minerals. Conjoint reading of Rule 10(2), which speaks of deposit of an amount, equivalent to 10% of royalty, and Section 9-B speaks of "percentage of royalty paid", would show that both do not correlate payment to "rate of royalty" but to royalty actually paid.

Section 15 of the Act, 1957 empowers the State Government to make rules in respect of minor minerals and Section 15-A deals with the power of the State Government to collect funds for the District Mineral Foundation in case of minor minerals. Section 15-A provides that the State Government may prescribe the payment by all holders of concessions related to minor minerals of amounts to the District Mineral Foundation of the district in which the mining operations are carried on.

We have carefully seen Section 15(4), which states that, without prejudice to sub-sections (1), (2) and (3), the State Government may, by notification, make rules for regulating the provisions of the Act, 1957 for the following:

"(a) the manner in which the District Mineral Foundation shall work for the interest and benefit of persons and areas affected by mining under sub-section (2) of Section 9B;

(b) the composition and functions of the District Mineral Foundation under sub-section (3) of Section 9B; and

(c) the amount of payment to be made to the District Mineral Foundation by concession holders of minor minerals under Section 15A".

We have also perused the Uttar Pradesh Minor Minerals (Concession) Rules, 1963 (for short, 'Rules, 1963'). Section 2(6) defines mining permit to mean a permit granted under these Rules to extract a specified quantity of minor mineral within the period stipulated in the permit. Chapter VI of the Rules, 1963 provides the procedure for obtaining a mining permit. Our attention was also invited to Rules 54 and 55 of the Rules, 1963. Rule 55 in Chapter VI provides that a mining permit in Form MM-10 with such additional terms and conditions subject to which the order is made under Rule 53, shall be issued to the applicant within 15 days of the deposit of the royalty in accordance with sub-rule (1) of Rule 54. Sub-rule (1) of Rule 54 of the Rules, 1963 provides that, when an order granting a mining permit has been made under Rule 53, the applicant shall, within 15 days of the communication of the order, deposit the "royalty" for the "total quantity of the mineral permitted" in the said order at the rate for the time being specified in the First Schedule to these Rules. Based on the provisions of Rule 53, it is sought to be contended that royalty payable under the Permit granted to the petitioner is only that specified in the First Schedule i.e. Rs.65/- per cubic meter, whereas, the demand for payment to the Trust has been made on the entire bid amount. However, we are unable to accept the contention of learned counsel for the petitioner, as in our view, Rule 54 does not get attracted. The Permit dated 11 October 2017 granted to the petitioner authorising him to extract a specified quantity of ordinary sand on payment of Rs.630/- per cubic metre is not a Permit envisaged under Chapter VI of the Rules. It is, in fact, granted to the petitioner as per the interim policy of the State Government laid down in the Government Order dated 22 April 2017, as admitted by the petitioner himself in paragraphs 7 and 11 of the writ petition.

In Gulab Chandra Mishra Vs. State of U.P. (Writ-C No.1498 of 2015) and connected matters decided by a Coordinate Division Bench on 1 May 2017, the Government Order dated 22 April 2017 was considered in extenso, and it was held that the said Government Order has been issued under Rule 68, which empowers the State Government to grant mining concessions on terms different from those prescribed under the Rules, if it is necessary so to do, in the interest of mineral development. The Government Order dated 22 April 2017 contemplates grant of short term mining permits for a period of six months, by e-tender, as an interim measure. The highest bidder has to deposit the entire bid amount, in addition to that deposited as earnest money, before a permit is issued. The petitioner admits having deposited the entire bid amount and only thereafter the permit dated 11 October 2017 has been issued to him. The relevant observations from the judgment of the Division Bench in relation to the Government Order dated 22 April 2017, are extracted below:-

"Several objections, which were taken to the adoption of e-tender process for settlement of short-term permits, was based upon the contention that the provisions of Chapter VI did not comprehend the grant of permits by way of e-tender. To this, we may only note that the order dated 22 April 2017, strictly speaking, neither emulates nor prescribes a procedure in terms identical to those envisaged under Chapter VI. This primarily because the order, as we have noted above, is made with reference to Rule 68 of the 1963 Rules which confers a power upon the State Government to relax the provisions of any rule/s in the interest of mineral development. Since the order has been passed in exercise of powers conferred by Rule 68, the submission of the learned counsels to the requirement of a strict adherence to the provisions comprised in Chapter VI is untenable."

(emphasis supplied by us)

Rule 54 on which reliance has been placed falls under Chapter VI, which, as held by the Division Bench, would not be applicable. The Government Order dated 22 April 2017 is not challenged nor could it be, as the permit obtained by the petitioner was issued under the said Government Order. The highest bid on which the petitioner was granted the permit is nothing but the royalty paid by the petitioner to the State Government for obtaining permission to extract the mineral resource. We find no illegality in the demand raised by the respondents for payment of 10% of the entire bid amount for being deposited with the Trust in compliance of the provisions of the Act and the Rules.

In the circumstances, we find no merit in the challenge raised in the writ petition. Petition is accordingly dismissed.

Order Date :- 15.11.2017

AHA

(Dilip B Bhosale, CJ)

(M K Gupta, J)