Madhya Pradesh High Court
M/S Shri Bamdev Global vs The State Of Madhya Pradesh on 24 February, 2025
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NEUTRAL CITATION NO. 2025:MPHC
2025:MPHC-JBP:6393
IN THE HIGH COURT OF MADHYA PRADESH
AT JAB AL P UR
BEFORE
HON'BLE SHRI JUSTICE SURESH KUMAR KAIT,
CHIEF JUSTICE
&
HON'BLE SHRI JUSTICE VIVEK JAIN
PETITION No. 28431 of 2021
R.K.TRANSPORT AND CONSTRUCTION LTD. THR. DIRECTOR
CHANDRA PRAKASH SINGH
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
WITH
WRIT PETITION No. 26824 of 2021
M/S ANANDESHWAR AGRO FOODS PVT.LTD.
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
WRIT PETITION No. 1457 of 2022
R.K.GUPTA CONTRACTORS AND ENGINEERS PVT.LTD. BEING
REPRESENTED
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
WRIT PETITION No. 1508 of 2022
VIRENDRA SINGH JADON
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
Signature Not Verified
Signed by: CHRISTOPHER
PHILIP
Signing time: 2/24/2025
2:53:14 PM
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NEUTRAL CITATION NO. 2025:MPHC
2025:MPHC-JBP:6393
WRIT PETITION No. 2009 of 2022
M/S AARADHYA LOGISTICS SOLUTIONS PVT. LTD.
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
WRIT PETITION No. 9728 of 2022
M/S MUSA CONSTRUCTION
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
WRIT PETITION No. 10916 of 2022
M/S SHRI BAMDEV GLOBAL
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
WRIT PETITION No. 11067 of 2022
JAI MAHAKAL ASSOCIATES
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
WRIT PETITION No. 17667 of 2022
R.K. TRANSPORT AND CONSTRUCTION LTD.
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
WRIT PETITION No. 26614 of 2022
M/S RAO CONSTRUCTIONS
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
Appearance:
Shri Siddharth Dave, Shri Shekhar Sharma - Senior Advocates with Shri Shreyas
Dharmadhikari, Shri Shoeb Hasan Khan, Shri Ankur Chawla, Shri C.B.Bansal, Shri
Akshay Rinje, Shri Gurpreet Singh, Shri Teerthesh Bharilya and Ms. Prerna Mahajan
Signature Not Verified
Signed by: CHRISTOPHER
PHILIP
Signing time: 2/24/2025
2:53:14 PM
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NEUTRAL CITATION NO. 2025:MPHC
2025:MPHC-JBP:6393
- Advocates for petitioners in their respective petitions.
Shri Prashant Singh - Advocate General with Shri Amit Seth - Additional Advocate
General for the respondents/State.
Shri Sachin
achin Kumar Verma - Advocate for respondents No.4 and 5 (Through V.C.).
V.C.)
Reserved on - 30.01.2025
Pronounced on - 24.02.2025
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ORDER
Per: Hon'ble Shri Justice Suresh Kumar Kait, Chief Justice Justice:
1. The facts and issues involved in these petitions are same and similar, therefore, present petitions are being disposed of by this common order. The facts and annexures shall be discussed with reference to Writ Petition No.28431 No.2 of 2021,, however, facts of other petitions shall not be repeated for for the sake of brevity being similar.
2. The petitioners have filed these petitions petition under nder Article 226 of the Constitution of India praying for the following reliefs:
(i) To Issue a writ/orders/directions more particularly in the nature of certiorari thereby setting aside /quashing Rule 10(3) and Rule 12(5) of Madhya Pradesh Rules regarding Sand (Mining, Transportation, Storage and Trading), 2019 being without competence and being ultravires of Section.
15(3) of the Mines and Minerals (Development and Regulation) Act, 1957;
(ii) To Issue a writ/orders/directions more particularly in the nature of certiorari c thereby setting aside/quashing quashing the show cause notice dated 28.10.2021 and 26.11.2021 along with the orders / letter dated 26.10.2021, 07.12.2021 anda 07.12.2021 issued by the Respondent no. 4 being without authority and jurisdiction;
Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM..4..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393
(iii)) To Issue a writ/orders/directions more particularly in the nature of mandamus thereby directing SIEAA / Respondent no. 5 to consider the application of the Petitioner ner for grant of permission / clearance of the 13 sand quarries pending for approval before the said authority.
(iv) To issue ssue a writ/order/direction more particularly in the nature of quo warranto thereby calling upon the Respondent no. 4 to show cause that that under what authority show cause notice dated 28.10.2021 and 26.11.2021 was issued to the Petitioner.
(v) To issue ssue a writ/order/direction more particularly in the nature of certiorari thereby setting aside / quashing the termination letter dated 31.12.2021(ANNEXURE 31.12.2021(ANNEXURE P P-27) passed by the Respondent no. 4 and further hold that the termination letter dated 31.12.2021 issued by the Respondent no.4 being without authority and jurisdiction;
(vi) That this Hon'ble Court may be pleased to summon the ing to the Show Cause Notice dated 28th of record relating December, 2021 (ANNEXURE P-26) 26) and after perusing the same may be pleased to quash and set aside the same;
3. The factual matrix of the case is that the respondent No.4 State Mining Corporation invited tenders for excavation of minor mineral sand from 118 quarries situated at district Hoshangabad for a period of three years vide e-Notice Notice Inviting Tender dated 12.06.2020 (Annexure P/3) stipulating that a prospective bidder could mine around 80,0 80,00,000 cubic meter of sand per year from the said quarries and the bidder who offers to pay the highest royalty to the State Government each year over and above the upset price of Rs.110 Crores will be contracted for a period of three years.
4. In pursuance of the said NIT, petitioner submitted its bid for an amount of Rs.262 Crores (Rs.327.50 per cubic meter of sand). Being the Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..5..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 highest bidder, the State Government issued a letter of intent dated 04.12.2020 (Annexure P/4) in favour of petitioner for mining sand to the extent of 80 lakhs cubic meter every year for a period 13.01.2021 to 30.06.2023. An agreement, agreement Annexure P/5 was executed in this respect on 13.01.2021 between the petitioner and the respondent No.4 No.4.. Initially, an amount of Rs.262 crores crores was to be paid on a quarterly basis, however, later on the State Government revised the said condition and the petitioner was required to pay the same in 12 equal installment installments of Rs.21,83,33,333/- per month in advance.
5. The he case of the petitioner is that the he State Environment Impact Assessment Authority, Authority the respondent No.5 granted approval for 43 mines out of 55 mines for which the petitioner had sought clearance for extracting 76,62,258 cubic meter sand per year. Subsequently, a stay order was passed ssed on one mine out of 43 mines for which approval was granted to the petitioner. However, the petitioner could mine sand only from 42 mines to the extent of 43,33,332.81 cubic meter per year. The petitioner paid a total sum of Rs.145,13,82,935/-
Rs.145,13,82,935/ during the period from 13.01.2021 to September, 2021. However, the petitioner was able to excavate only 30,83,106 cubic meter of sand against the approved quantity of 43,33,332.81 cubic meter and 4,37,783 cubic meter of sand is lying at the registered stock yards of the petitioner.
6. The further case of the petitioner is that on 28.10.2021 (Annexure P/15), the respondent No.4 issued show cause notice to the petitioner to show cause as to why contract be not terminated for non-
non-payment of royalty for the month of October, 2021, which was replied by the petitioner on 10.11.2021. Thereafter, the he petitioner filed Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..6..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 W.P.No.25983/2021 before this Court seeking a direction to make proportionate adjustment for the royalty amount. However, the said writ petition was dismissed dismisse on 26.11.2021. Thereafter, the respondent No.4 issued another show cause notice dated 28.12.2021 (Annexure P/26) to the petitioner proposing to terminate the contract on account of non non-
payment of contract amount for the month of December, 2021. However, ultimately during pendency of this petition, the respondent No.4 terminated the contract vide order dated 31.12.2021 (Annexure P/27) P/27), which has also been challenged by amending the petition.
7. The averment of the petitioner is that in this petition, by an interim order dated 04.01.2021 passed by this Court,, the State was directed not to initiate any proceeding against the petitioner in relation to the contract in question recording the submission of the State that there shall be no re-tender tender of the mining area that were granted to the petitioner. However, the said interim order was modified/vacated by this Court vide order dated 03.03.2023 granting liberty to the respondents to float fresh NIT in respect to the leased out area of the petitioner for which the contract was already terminated and outcome of the fresh NIT was directed to be subject to the final out outcome of the petition.
8. In these petitions, petition , the petitioners have challenged the constitutional stitutional validity of Rule 10(3) and 12(5) of the Madhya Pradesh Sand (Mining Transportation, Storage and Trading) Rules, 2019 (for short "the Rules of 2019").
2019"). The petitioners have also challenged the show cause notice dated 28.10.2021, 26.11.2021 and te termination rmination letter dated 31.12.2021 by which the contract granted to the petitioners was Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..7..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 terminated by the State Government for non-payment non payment of royalty demanded as per Rules 10(3) and 12(5) of the Rules of 2019.
9. The contention tions of the petitioners are that Rules 10(3) and 12(5) of the Rules of 2019 are contradictory/violative and ultravires of Section 15(3) of the Mines and Minerals (Development and Regulation) Act, 1957 (for short "the MMDR Act") as the said Rules have been framed in exercise ercise of powers under section 15(1) 15 of the MMDR Act and hence the same cannot go beyond the said provision. Though the regulation of grant of mineral concessions for minor minerals are within the legislative and administrative domain of the State Government Government but the same should be in consonance with the parent Act i.e. MMDR Act. Further contention of the petitioners is that in view of section 15(3) of the MMDR Act, royalty is payable only in respect of minor minerals removed or consumed by the holder of a mining mining lease. The learned counsel for the petitioners further contended that Rules 10(3) and 12(5) of the Rules of 2019 are completely contradictory to Section 15(3) of the MMDR Act which explicitly provides payment of royalty only in respect of the mineral consumed or removed.
10. It is further submitted that Rules 10(3) and 12(5) take away any relationship between the mineral ineral actually consumed or removed and the royalty payable is completely contrary to the parent Act, therefore, they may be declared ultra-vires ultra to the Section 15 of the MMDR Act and there cannot be any estoppel against law to challenge the same before this Court. It is submitted that no opportunity of hearing was granted to the petitioners before passing the termination order and hence issuance of show cause notices, notices terminating contract and demanding ing royalty for Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..8..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 the mineral which the petitioner was not able to excavate or removed as per Rules 10(3) and 12(5) of the Rules of 2019 are without jurisdiction and bad in law.
11. The learned counsel for the petitioners further submitted that he could not mine due to non-grant non grant of statutory permission and required environmental clearance and the body constituted as the State Environment Impact Assessment Authority was not in functioning, which is no fault of the petitioner. It is further submitted that the MMDR Act provides that the royalty should be charged only for the mineral consumed or removed and on the contrary Rules of 2019 provides that the annual contract amount should not be reduced in any condition, which is contrary to the provision of the parent Act.
12. The learned counsel for the petitioners also pointed out that during the Covid pandemic amount of royalty/contractual amount was reduced, hence it is well within the power of State Government to reduce the amount of royalty/contractual amount.
13. Per contra, Shri Prashant Prashan Singh, learned earned Advocate General while opposing the averments of the petitioners vehemently argued that in the present case, the principle of estoppel would operate as the petitioners entered into a contract with the State Government with open eyes and agreed to pay the annual contract amount in terms of the aforesaid rules, rules therefore they have no locus to challenge the said provisions of the Rules of 2019.
14. The learned Advocate General further contended that the whole case of the petitioners repeatedly rests upon the royalty but the case of Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..9..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 the respondents is based upon the annual contract amount, hence the petitioners having entered into a contract agreement cannot wrig wriggle out the obligations and cannot challenge the validity of the terms of the contract agreement. They are estopped on the principle of estoppel against law to challenge the statutory provisions of Rules 10(3) and 12(5) of the Rules of 2019.
2019 The whole NIT was based upon the contract amount. The upset set price was Rs.110 Rs.1 Crores per cubic meter of sand sand. The petitioners voluntarily offered to pay the contract amount i.e. Rs.262 Crores (Rs.327.50 per cubic meter of sand). He further cont contended that the petitioners are liable to fulfil the terms of the contract.
15. Heard learned counsel for the parties and perused the record.
16. To consider the rival contentions of the parties advanced, we may refer to the relevant aspects and legal provisions on the issue in question. The State Government is vested with power to make rules in view of Section 15(1) of the MMDR Act. Section 15(1) and 15(3) of the MMDR Act as envisaged read as follows:-
follows:
15. Power of the State Government to make rules in minerals (1) The State Government respect of minor minerals-
may, by notification in the Official Gazette, make rules for regulating the grant of quarry leases, mining leases or other mineral mine concessions in respect of minor minerals and for purposes connected therewith........"
therewith........
*** *** ***
(3) The holder of a mining lease or any other
mineral concession granted under any rule made under sub-section section (1) shall pay royalty or dead rent, whichever is more in respect of minor minerals removed or consumed by him or by his agent,, manager, employee, contractor or sub-lessee sub lessee at the rate prescribed for the time Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..10..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 being in the rules framed by the he State Government in respect of minor minerals. Provided that the State Government shall not enhance thehe rate of royalty or dead rent in respect respect of any minor mineral for more than once during any period of three years."
years.
17. Rules 10(3) and 12(5) of the Rules of 2019 of which constitutional validity has been challenged by the petitioners may be referred, which provide as under:-
"10 Fixation and Payment of contract amount:
*** *** ***
(3) The whole annual contract money for the group
shall be payable on commencing mining operation in any one or more quarry included in the group after getting statutory permission.
permission
*** *** ***
12 Statutory Permissions.-
Permissions
*** *** ***
(5): The annual contract amount shall not be
reduced in any case if there is reduction in mineable quantity in approved mining plan, environmental clearance, water and air consent."
18. The learned Advocate General raised an objection that the petitioners do not have locus to challenge the statutory provisions of Rules of 2019.. Once the parties entered into contract agreeing with the terms and conditions of the contract, hence at this stage, they cannot challenge the rule because the principle of estoppel would operate against them. He further argued that they can very well cha challenge the validity of rule, but not in this petition at this stage. The petitioners have no locus and the petition is liable to be dismissed at the threshold. In Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..11..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 support of his contention, he h placed reliance on various judgments of the Apex Court. He further furt contends that in one such judgment rendered in the case of State of Orissa and others Vs. Narain Prasad and others (1996) 5 SCC 740, the Apex Court in para 36 held as follows:
follows:-
"36. Lastly we may also invoke the holding in Har Shankar and Jageram that the writ petitioners, having entered into agreements vo oluntarily, luntarily, containing the conditions aforesaid and having done the business under the licences obtained by them, cannot be allowed to either wriggle out of the agreements nor can they be allowed to challenge challenge the validity of the Rules which constitute the terms of the contract. The High Court should not have exercised its extra-ordinary extra ordinary discretionary jurisdiction under Article 226 of the Constitution in aid of such licencees."
19. On the contrary, learned counsel appearing for the petitioners submitted that they can very well challenge the legality and validity of the rule which is ultra vires the Section 15(3) of the MMDR Act and the principle of estoppel to challenge the rule would would not apply in the present case. He further submitted that in a catena of judgments, the Apex Court has laid down that the there can be no estoppel against law.
20. The above contention of the respondents cannot be legally acceptable.. It is settled position position of law that a person can never be estopped stopped from challenging any statute/rules if the same inter alia infringes the fundamental rights and/or are beyond the legislative competence and/or in case of a sub-ordinate/delegated sub ordinate/delegated legislation if the same travels beyond the principal legislation. If the rule made therein is inconsistent with the provision of enabling Act, the respondents cannot be allowed to take advantage of the said rule. It is well settled position of the law that the principle of estoppel would not apply to defeat the Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..12..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 statute. We may refer to the proposition of law as laid down by the Apex Court. In the case of ITC Bhadrachalam Paper boards Vs. Mandal Revenue Officer reported in (1996) 6 SCC 634,, the Apex Court held as follows:-
"30. ............ If the statute requires that a particular act should be done in a particular manner and if it is found, as we have found hereinbefore, that the act done by the Government is i invalid and ineffective for non-compliance compliance with the mandatory requirements of law, it would be rather curious if it is held that notwithstanding such non- non compliance, it yet constitutes a 'promise' or a 'representation' for the purpose of invoking the rule rul of promissory/equitable estoppel. Accepting such a plea would amount to nullifying the mandatory requirements of law besides providing a licence to the Government or other body to act ignoring the binding provisions of law. Such a course would render the mandatory provisions of the enactment meaningless and superfluous. Where the field is occupied by an enactment, the executive has to act in accordance therewith, particularly where the provisions are mandatory in nature. There is no room for any administrative administrative action or for doing the thing ordained by the statute otherwise than in accordance therewith. Where, of course, the matter is not governed by a law made by a competent legislature, the executive can act in its executive capacity since the executive power ower of the State extends to matters with respect to which the legislature of a State has the power to make laws (Article 162 of the Constitution). The proposition urged by the learned counsel for the appellant falls foul of our constitutional scheme and public public interest. It would virtually mean that the rule of promissory estoppel can be pleaded to defeat the provisions of law whereas the said rule, it is well settled, is not available against a statutory provision. The sanctity of law and the sanctity of thethe mandatory requirement of the law cannot be allowed to be defeated by resort to rules of estoppel. None of the decisions cited by the learned counsel say that where an act is done in violation of a mandatory provision of a statute, such act can still be made a foundation Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..13..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 for invoking the rule of promissory/equitable estoppel. Moreover, when the Government acts outside its authority, as in this case, it is difficult to say that it is acting within its ostensible authority. If so, it is also not permissible to invoke the principle enunciated by the court of appeal in Wells v. Minister of Housing & Local Govt. [(1967) 2 All ER 1041:
(1967) 1 WLR 1000]"
1000]
21. In another decision in the case of Employees' mployees' State Insurance Corporation Vs. Union of India and others reported in (2022) 11 SCC 392, the Apex Court considering the issue of estoppel, held as under:
under:-
"23. The contesting respondents submitted that the appellant is estopped from urging that the DACP scheme is not applicable to the Teaching Cadre at the ESIC since they have taken this stance before CAT and in its writ petition before the High Court. While this Court expresses its disapproval at the lack of proper instructions being tendered to the counsel of the appellant, there can be no estoppel against a statute tatute or regulations having a statutory effect.
24. In Nedunuri Kameswaramma v. Sampati Subba Rao [Nedunuri Kameswaramma v. Sampati Subba Rao, AIR 1963 SC 884] a three-Judge three Judge Bench of this Court decided a central point of the dispute in favour of a party, irrespective of the concession of its counsel since it was on a point of law. M. Hidayatullah, J. (as the learned Chief Justice then was), speaking on behalf of the Court observed : (AIR p. 890, para
21) "21. From the above analysis of the documents, it is quite clear that the documents on the side of the appellant established that this was a Karnikam service inam, and the action of the Zamindar in resuming it as such, which again has a presumption of correctness attaching to it, clearly established the appellant's appellant's case.
Much cannot be made of a concession by counsel that this was a Dharmila inam, in the trial court, because it was a concession on a point of law, and it was withdrawn. Indeed, the central point in the dispute was Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..14..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 this, and the concession appears appears to us to be due to some mistake or possibly ignorance not binding on the client. We are thus of opinion that the decision of the two courts below which had concurrently held this to be jeroyti land after resumption of the Karnikam service inam, was correct correct in the circumstances of the case, and the High Court was not justified in reversing it."
(emphasis supplied) suppl
26. Recently, a two-Judge two Bench of this Court in Director of Elementary Education v. Pramod Kumar Sahoo [Director Director of Elementary Education v. Pramod Kumar Sahoo,, (2019) 10 SCC 674 : (2020) 1 SCC (Civ) 38 : (2020) 1 SCC (L&S) 42] observed that a concession on a question of law concerning service rules would not bind the State : (SCC p. 678, para 11) "11. The concession given by the learned State Counsel before the Tribunal was a concession in law and contrary to the statutory rules. Such concession is not binding on the State for the reason that there cannot be any estoppel against law. The rules provide for a specific grade of pay, therefore, the concession given by the learned State Counsel before the Tribunal is not binding on the appellant."
27. The concession of the counsel for the appellant before CAT does not preclude the finding on the law that is arrived at by this Court.
22. The Apex Court Cou in the case of Tata Chemicals Ltd. Vs. Commissioner of Customs (preventive), Jamnagar reported in (2015) 11 SCC 628 has categorically held that there can be no estoppel against law. If the law requires something to be done in a particular manner, it must be done in that manner, and if it is not done in that manner, then it would have no existence in the eye of the law. The above enunciation of law has been followed by the Apex Court in the case oof Krishna Rai Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..15..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 (Dead) through LRs. & ors. Vs. Banaras Hin Hindu University through Registrar & ors. reported in (2022) 8 SCC 713..
23. On analysis of the above judgments of the Apex Court, it is clear that the principle of estoppel would not apply to challenge the statute. We are unable to accept the contention raised by the learned Advocate General that the principle of estoppels would apply to the matter in hand.
24. The learned Advocate General further argued that that the rule 10 of Rules of 2019 deals with the annual contractual contractual amount. It is nothing to do with the royalty. Section 15(3) of the MMDR Act provides that royalty should be charged for mineral consumed or removed. It is further submitted that there cannot be said to be overreaching of the legislative power of the State tate Government in the matter of fixing of the contract price in terms of Rule 10 or 10(3) of the Rules of 2019. He further submitted that rule 12(5) of the Rules of 2019 cannot in any manner be said to be violative of Section 15(3) of the MMDR Act as it does not relate to royalty in any manner but deals with the contract price. The entire case of the petitioners is based on the royalty but under the Rules of 2019, it only deals with the annual contract contract amount. It is admitted by the learned counsel for the respondents that Rules of 2019 does not speak about the payment of royalty. The royalty amount should be charged separately under the Madhya Pradesh Minor Mineral Rules, 1996 1996.
25. Per contra, learned learned counsel for the petitioners submitted that royalty is nothing but the contractual amount. This issue is already settled by this Court on earlier occasion in the case of Vista Sales Pvt. Ltd. Vs State of M.P. and others in Writ Petition No.25052/2022 decided on 11.12.2024.
Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM..16..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393
26. On perusal of the aforesaid judgment passed by this Court on earlier occasion, this issue was elaborately considered by this Court. Paras 45 and 46 are relevant, which are reproduced as under:-
under:-
"45. In a recent Nine-Judge's Nine Judge's judgment of the Constitution Bench of the Supreme Court in the case of Mineral Area Development Authority and Anr. Vs. Steel Authority of Anr.reported in (2024) 10 SCC 1, it has been held India and Anr.reported as under:-
"130. On first principles, principles, royalty is a consideration paid by a mining lessee to the lessor for enjoyment of mineral rights and to compensate for the loss of value of minerals suffered by the owner of the minerals. The marginal note to Section 9 states that royalties are "in re respect spect of mining leases." The liability to pay royalty arises out of the contractual conditions of the mining lease. [See Mineral Concession Rules, 1960, Rules 27 and 45.] A failure of the lessee to pay royalty is considered to be a breach of the terms of tthe he contract, allowing the lessor to determine the lease and initiate proceedings for recovery against the lessee.
131. Section 9 of the MMDR Act statutorily regulates the right of a lessor to receive consideration in the form of royalty from the lessee for removing or carrying away minerals from the leased area. Prior to the enactment of the MMDR Act, such a condition was treated as part of a mining lease. The object of empowering the Central Government to specify rates of royalty for major minerals was to ensure a certain level of uniformity in mineral prices in view of the domestic and international market.
132. The fact that the rates of royalty are prescribed under Section 9 of the MMDR Act does not make it a "compulsory exaction by public authority for public purposes" because:
(i) the compulsion stems from the contractual conditions of the mining lease agreed between the lessor and lessee;
(ii) the demand is not made by a public authority, but the lessor (which can either be the State Government or a prprivate ivate party);
and Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..17..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393
(iii) the payment is not for public purposes, but a consideration paid to the lessor for parting with their exclusive privileges in the minerals.
Moreover, the fact that Section 25 allows recovery of royalty due to the Government under th thee MMDR Act or "under the terms of the contract" as arrears of land does not make royalty "an impost enforceable by law". Section 25 is a standard recovery provision allowing the Government to recover any dues payable to it, flowing from statute or the termtermss of a contract. Pertinently, contractual payments due to the Government cannot be deemed to be a tax merely because the statute provides for their recovery as arrears.
133. There are major conceptual differences between royalty and a tax:
(i) the proprietor proprietor charges royalty as a consideration for parting with the right to win minerals, while a tax is an imposition of a sovereign;
(ii) royalty is paid in consideration of doing a particular action, that is, extracting minerals from the soil, while tax is generally levied with respect to a taxable event determined by law;
[Goodyear (India) Ltd. v. State of Haryana, (1990) 2 SCC 71, para 27] and
(iii) royalty generally flows from the lease deed as compared to tax which is imposed by authority of law.
134. Under der the MMDR Act, the Central Government fixes the rates of royalty, but it is still paid to the proprietor by virtue of a mining lease. In case the minerals vest in the government, the mining lease is signed between the State Government (as lessor) and thee lessee in pursuance of Article 299 of the Constitution. Through the mining lease, the Government parts with its exclusive privilege over mineral rights. A consideration paid under a contract to the State Government for acquiring exclusive privileges cann cannotot be termed as an impost. Since royalty is a consideration paid by the lessee to the lessor under a mining lease, it cannot be termed as an impost.
135. This Court has held that royalty is not a tax, in several decisions. In State of H.P. v. Gujarat Ambuja a Cement Ltd. [State of H.P. v. Gujarat Ambuja Cement Ltd., (2005) 6 SCC 499] , a three three-Judge Judge Bench of this Court held royalty not Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..18..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 to be a tax. The subsequent decision in Indsil Hydro Power & Manganese Ltd. v. State of Kerala [Indsil Hydro Power & Manganesee Ltd. v. State of Kerala, (2021) 10 SCC 165, para 56] brought out the distinction between tax and royalty in the following terms : (Indsil Hydro Power case [Indsil Hydro Power & Manganese Ltd. v. State of Kerala, (2021) 10 SCC 165, para 56] , SCC p. 209, para 56) "56. Thus, the expression "royalty" has consistently been construed to be compensation paid for rights and privileges enjoyed by the grantee and normally has its genesis in the agreement entered into between the grantor and the grantee. As against tax which is imposed under a statutory power without reference to any special benefit to be conferred on the payer of the tax, the royalty would be in terms of the agreement between the parties and normally has direct relationship with the benefit or privilege ilege conferred upon the grantee."
(emphasis in original)
136. The principles applicable to royalty apply to dead rent because:
(i) dead rent is imposed in the exercise of the proprietary right (and not a sovereign right) by the lessor to ensure that the lessee essee works the mine, and does not keep it idle, and in a situation where the lessee keeps the mine idle, it ensures a constant flow of income to the proprietor;
(ii) the liability to pay dead rent flows from the terms of the mining lease; [See Mineral Concession cession Rules, 1960, Rules 27 and 45.]
(iii) dead rent is an alternate to royalty; if the rates of royalty are higher than dead rent, the lessee is required to pay the former and not the latter; and
(iv) the Central Government prescribes the dead rent not in the exercise of its sovereign right, but as a regulatory measure to ensure uniformity of rates.
137. In view of the above discussion, we hold that both royalty and dead rent do not fulfil the characteristics of tax or impost. Accordingly, we conclude that th the observation in India Cement [India Cement Ltd. v. State of T.N., (1990) 1 SCC 12] to the effect that royalty is a tax is incorrect.
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NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 J. Conclusions
365. In view of the above discussion, we answer the questions formulated in the reference in terms of the following conclusions:
365.1. Royalty is not a tax. Royalty is a contractual consideration paid by the mining lessee to the lessor for enjoyment of mineral rights. The liability to pay royalty arises out of the contractual conditions of the mining leas lease.
e. The payments made to the Government cannot be deemed to be a tax merely because the statute provides for their recovery as arrears."
46. The Supreme Court in above judgment in the case of Mineral Area Development Authority and Anr. (supra), has held that the royalty is a consideration paid by the lessee to the lessor for enjoyment of mineral rights and the liability to pay royalty arises out of the contractual condition of the mining lease. The royalty is different from tax. The lessee is liable to payy tax etc. separately."
27. On reading of the aforesaid judgment, we are unable to accept the submission made by the respondents that the annual contract amount charged under the Rules of 2019 is nothing to do with the royalty. In the Nine-Judge's Judge's judgment judgment of the Constitution Bench of the Supreme Court in the case of Mineral Area Development Authority (supra (supra), it was held that the royalty is a consideration paid by the lessee to the lessor for enjoyment of mineral rights and the liability to pay royalty arises out of the contractual condition of the mining lease.
28. Now the question is to be considered whether the Rules 10(3) and 12(5) of the Rules of 2019 are ultra vires the Section 15(3) of the parent Act.
29. On this point, learned Advocate General submitted submitted that the rule rules which are framed under the Rules of 2019 are well within the domain Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..20..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 and competence of the State Government to frame such rules and lay down the terms on which and the conditions subject to which, the quarry lease, mining lease or mineral concession could be granted. He further argued that the said rules are consistent with the parent Act. On the other hand, learned counsel for the petitioners submitted that the rule rules are not in consonance with the parent Act. The MMDR Act provides that the royalty shall be charged for mineral removed or consumed whereas Rules of 2019 provides that the amount shall not reduced in any case, hence rules 10(3) and 12(5) are invalid and ultravires the Section 15(3) of the MMDR Act.
30. A careful reading of Section 15(3) of the MMDR Act shows that the he holder of a mining lease or any other mineral concession granted under any rule made under sub-section sub section (1) shall pay royalty or dead rent, whichever is more in respect of minor minerals removed or consumed by him or by his agent, manager, employee, contractor or sub sub-lessee at the rate prescribed for the time being in the rules framed by the State Government in respect of minor minerals, minerals, whereas Rules 10(3) and 12(5) were framed by the State Government Gover in exercise ercise of power conferred under Section 15(1) of the parent Act i.e. MMDR Act. Rule 10(3) provides that the he whole annual contract money for the group shall be payable on commencing mining operation in any one or more quarry included in the group after getting get statutory permission. Rule 12(5) of the Rules of 2019 envisages that the annual contract amount shall not be reduced in any case if there is reduction in mineable quantity in approved mining plan, environmental clearance, water and air consent.
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NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393
31. It is not in dispute that Sub-section Sub section (1) of Section 15 of the MMDR Act confers power to the State Government to frame rules in respect of minor minerals. It is settled position of law that the sub-
sub ordinate legislation cannot go beyond the parent Act. A bare are perusal of Rules 10(3) and 12(5) of the Rules of 2019 shows that the same are not in consonance with the parent Act. Section 15(3) of the MMDR Act provides that royalty should be charged for minerals removed or consumed by the contractor but rule 12(5) provides that the amount shall not be reduced in any case.
case. We have no hesitation to say that the rules framed therein is not in consonance with the parent Act. It would be worthwhile to refer to the decision of the Apex Court rendered in the case of Kerala State Electricity Board and others Vs. Thomas Joseph @ Thomas M.J. and other reported in (2023) 11 SCC 700,, wherein it has been held that iff a rule goes beyond the rule making power conferred by the statute, the same has to be declared as invalid and a rule must be in accord with the parent statute, as it cannot travel beyond it it. Relevant paras 70 and 71 are reproduced as under:-
under:
"70. At this stage, it is apposite to state about the rule making powers of a delegating authority. If a rule goes beyond the rule making power conferred by the statute, the same has to be declared invalid. If a rule supplants any provision for which power has not been conferred, it becomes invalid. The basic test is to determine and consider the source of power, which is relatable to the rule. Similarly, a rule must be in accord with the parent statute, as it cannot travel beyond it.
71. Delegated legislation has come to stay as a necessary component of the modern administrative process. Therefore, the question today is not whether there ought to be delegated legislation or not, but that it should operate under proper controls so that it may be ensured that the the power given to the Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..22..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 Administration is exercised properly; the benefits of the institution may be utilised, but its disadvantages minimised. The doctrine of ultra vires envisages that a rule making body must function within the purview of the rule making authority authority conferred on it by the parent Act. As the body making rules or regulations has no inherent power of its own to make rules, but derives such power only from the statute, it has to necessarily function within the purview of the statute. Delegated legislation gislation should not travel beyond the purview of the parent Act. If it does, it is ultra vires and cannot be given any effect. Ultra vires may arise in several ways; there may be simple excess of power over what is conferred by the parent Act; delegated legislation legislation may be inconsistent with the provisions of the parent Act or statute law or the general law; there may be noncompliance with the procedural requirement as laid down in the parent Act. It is the function of the courts to keep all authorities within within the confines of the law by supplying the doctrine of ultra vires."
vires.
32. In a recent judgment of the Apex Court in the case of Naresh Chandra Agrawal Vs. Institute of Chartered Accountants of India and others reported in 2024 SCC OnLine SC 114,, the Apex Court has distilled and summarized the legal principles that may be relevant in adjudicating cases where subordinate legislation are challenged on the ground of being ultra vires the parent Act. Relevant para 35 is reproduced, which is as follow follows:-
"35. From reference to the precedents discussed above and taking an overall view of the instant matter, we proceed to distil and summarise the following legal principles that may be relevant in adjudicating cases where subordinate legislation are challenged on the ground of being 'ultra vires' the parent Act:
(a) The doctrine of ultra vires envisages that a Rule making body must function within the purview of the Rule making authority, conferred on it by the parent Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..23..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 Act. As the body making Rules or Regulations has no inherent power of its own to make rules, but derives such power only from the statute, it must necessarily function within the purview of the statute. Delegated legislation should not travel beyond the purview of the parent Act.
(b) Ultra ltra vires may arise in several ways; there may be simple excess of power over what is conferred by the parent Act; delegated legislation may be inconsistent with the provisions of the parent Act; there may be non-
non compliance with the procedural requirement as laid down in the parent Act. It is the function of the courts to keep all authorities within the confines of the law by supplying the doctrine of ultra vires.
(c) If a rule is challenged as being ultra vires, on the ground that it exceeds the power co conferred nferred by the parent Act, the Court must, firstly, determine and consider the source of power which is relatable to the rule. Secondly, it must determine the meaning of the subordinate legislation itself and finally, it must decide whether the subordinate legislation is consistent with and within the scope of the power delegated.
(d) Delegated rule-making rule making power in statutes generally follows a standardized pattern. A broad section grants authority with phrases like 'to carry out the provisions' or 'to carry carr out the purposes.' Another sub-section section specifies areas for delegation, often using language like 'without prejudice to the generality of the foregoing power.' In determining if the impugned rule is intra vires/ultra vires the scope of delegated power, Courts Courts have applied the 'generality versus enumeration' principle.
(e) The "generality versus enumeration" principle lays down that, where a statute confers particular powers without prejudice to the generality of a general power already conferred, the particular powers are only Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..24..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 illustrative of the general power, and do not not in any way restrict the general power. In that sense, even if the impugned rule does not fall within the enumerated heads, that by itself will not determine if the rule is ultra vires/intra vires. It must be further examined if the impugned rule can be upheld by reference to the scope of the general power.
(f) The delegated power to legislate by making rules 'for carrying out the purposes of the Act' is a general delegation, without laying down any guidelines as such. When such a power is given, it may be permissible to find out the object of the enactment and then see if the rules framed satisfy the Act of having been so framed as to fall within the scope of such general power confirmed.
(g) However, it must be remembered that such power delegated by an an enactment does not enable the authority, by rules/regulations, to extend the scope or general operation of the enactment but is strictly ancillary. It will authorize the provision of subsidiary means of carrying into effect what is enacted in the statute itself and will cover what is incidental to the execution of its specific provision. In that sense, the general power cannot be so exercised as to bring into existence substantive rights or obligations or disabilities not contemplated by the provisions of the Act itself.
(h) If the rule making power is not expressed in such a usual general form but are specifically enumerated, then it shall have to be seen if the rules made are protected by the limits prescribed by the parent Act.
33. On taking aking note of the the aforesaid proposition of law as laid down by the Apex Court and on bare perusal of provision of Section 15(3) of the MMDR Act, it is clear that the rule 10(3) and 12(5) of the Rules of 2019 exceeds the power which is conferred on rule making power of the State Signature Not Verified Signed by: CHRISTOPHER PHILIP Signing time: 2/24/2025 2:53:14 PM ..25..
NEUTRAL CITATION NO. 2025:MPHC 2025:MPHC-JBP:6393 Government.. The Apex Court in the aforesaid judgment held that it is function of the Courts to keep all the authorities within the confines of the law by supplying the doctrine of ultra vires. Thus, we are of the considered view that the rule making power exceeds the legal scope of their authority as the provisions of Rule 10(3) and 12(5) of the Rules of 2019 travel beyond what is enacted in Section 15(3) of the parent Act. Consequently, Rules 10(3) and 12(5) of the Rules of 2019 are declared invalid and ultravires Section 15(3) of the MMDR Act and are thus liable to be struck down.
34. The contract period has already come to an end. As we have held that Rules 10(3) and 12(5) of the Rules of 2019 are invalid and ultravires Section 15(3) of thee MMDR Act, 1957, therefore the show cause notices issued to the petitioners proposing imposition of demand calculated in terms of the impugned Rules 10(3) and 12(5) of the Rules of 2019 so also all punitive measures taken or proposed in default thereof are hereby set aside.. However, the respondents shall be at liberty to issue fresh notices by assessing demand of contract amount based upon quantity of mineral assessed to be actually consumed or removed by the petitioners or by their agent, manager, manage employee, contractor or sub-lessee.
lessee.
35. The writ petitions are allowed in the above terms.
(SURESH KUMAR KAIT) (VIVEK JAIN)
CHIEF JUSTICE JUDGE
C.
Signature Not Verified
Signed by: CHRISTOPHER
PHILIP
Signing time: 2/24/2025
2:53:14 PM