Case Note & Summary
These writ petitions arose out of challenges by various mining leaseholders in Goa to the notification dated 13 August 2009, the amendment to Rule 64D of the Mineral Concession Rules, 1960, and a directive issued by the Central Government on 10 December 2009, all concerning the computation of royalty on iron ore. The petitioners, who held mining leases and were engaged in extraction and sale of iron ore, contended that the royalty payable had previously been fixed at a specific rate under the Second Schedule to the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act). By the impugned notification, the Central Government amended the Second Schedule to prescribe royalty at 10% of sale price on an ad valorem basis for iron ore. Subsequently, Rule 64D of the Mineral Concession Rules was amended, replacing the earlier provision and providing that the Indian Bureau of Mines (IBM) would publish the sale price of minerals grade-wise and state-wise, and royalty would be calculated as the product of that published sale price, the percentage rate, and the quantity of mineral produced or dispatched. The directive dated 10 December 2009 instructed the Controller General of IBM on the method for determining the sale price, which was to be based on the weighted average pit mouth value (PMV) reported by the top ten non-captive producers in their monthly returns under the Mineral Conservation and Development Rules, 1988. The petitioners argued that the amendments exceeded the powers conferred by Section 9(3) of the MMDR Act. They contended that the Central Government's authority under that sub-section was limited to enhancing or reducing the rate of royalty, not to altogether altering the method of computation. By shifting from a fixed rate to an ad valorem system and delegating the periodic determination of the base price to IBM, the government had effectively created a variable rate that changed every month. This, they submitted, violated the proviso to Section 9(3), which expressly prohibits the Central Government from enhancing the rate of royalty more than once in any period of three years. Additionally, one of the petitions separately challenged an order of the Captain of Ports dated 16 June 2010. The Court framed four questions for determination: (1) whether the notification dated 13 August 2009 was ultra vires Section 9(3) of the MMDR Act; (2) whether the amended Rule 64D was ultra vires; (3) whether the directive dated 10 December 2009 was ultra vires; and (4) whether the Captain of Ports order was illegal. The matter was heard at length, with counsel for the petitioners and the Central Government and State making submissions. However, the extracted portion of the judgment does not contain the Court's analysis or final decision. The text ends at paragraph 8, merely referring to the preamble of the MMDR Act. Therefore, the reasoning of the Court and the operative directions are not available in the given excerpt. The common judgment was pronounced on 8 May 2013 by a Division Bench consisting of Justice V.M. Kanade and Justice U.V. Bakre.
Issue of Consideration
Whether the Notification dated 13/08/2009 is ultra vires Section 9(3) of MMDR Act; Whether the amended Rule 64D is ultra vires; Whether the directive dated 10/12/2009 is ultra vires; Whether the Order dated 16/6/2010 issued by the Captain of Ports is illegal and invalid
Case Details
2013 LawText (BOM) (05) 52
Writ Petition No.735 of 2010 along with Civil Application No.220/2010, MCA No.939/2010, Civil Application No.164/2011, and Writ Petitions Nos.264/2011, 331/2012, 854/2010, 188/2012
V.M. Kanade, U.V. Bakre, JJ.
Mr. M.S. Sonak, Mr. J.P. Supekar, Mr. A.F. Diniz, Mr. Dhruv Mehta, Mr. Saket Sikri, Ms. Swati Kamat, Mr. M. Salkar, Mr. M. Amonkar
Salitho Ores Pvt Ltd, Balaji Mines & Minerals Pvt Ltd, Mr Anil V. Salgaocar, Mr. Harish Melwani, M/s Nathurmal Mining & Minerals Pvt. Ltd., M/s SOVA, Shri Anil Vassudeva Salgaocar, Shri Arjun Anil Salgaocar, M/s LITHOFERRO, Mr. KAUSTUBH SAWKAR, M/s Bandekar Brothers Private Limited, Mr. Suvarna R. Bandekar
The Captain of Ports, State of Goa, Directorate of Mines & Geology, Union of India, Indian Bureau of Mines
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petitions challenging the validity of a notification, an amended rule, and a directive relating to the computation of royalty on iron ore mining leases under the Mines and Minerals (Development and Regulation) Act, 1957.
Remedy Sought
Petitioners sought declarations that Notification dated 13/08/2009, amended Rule 64D of the Mineral Concession Rules, 1960, and directive dated 10/12/2009 are ultra vires Section 9(3) of the MMDR Act and that the Captain of Ports order dated 16/06/2010 is illegal.
Filing Reason
The Central Government amended the method of royalty computation from a fixed rate to an ad valorem basis at 10% of sale price and empowered IBM to publish monthly sale prices, allegedly violating the statutory scheme and the proviso to Section 9(3) of MMDR Act which restricts enhancement of royalty rate to once in three years.
Issues
Whether the Notification issued by the Central Government dated 13/8/2009 is ultra vires Section 9(3) of the MMDR Act?
Whether the amended Rule 64D is ultra vires of sub-section (3) of Section 9 of the MMDR Act?
Whether the directive dated 10/12/2009 is ultra vires of the provisions of Section 9(3) of the MMDR Act?
Whether the Order dated 16/6/2010 issued by the Captain of Ports is illegal and invalid?
Submissions/Arguments
Petitioners contended that the amendment to Rule 64D and the notification were beyond the power of the Central Government under section 9(3) of the MMDR Act, as it only allows enhancing or reducing rate, not prescribing a new computation method.
Petitioners argued that the monthly publication of sale price by IBM effectively changes the royalty rate, violating the proviso to section 9(3) which prohibits enhancement more than once in three years.
Petitioners also challenged the directive dated 10/12/2009 as ultra vires and the Captain of Ports order as illegal.
Judgment Excerpts
All these Petitions can be disposed of by a common judgment since the Petitioners in these Petitions are challenging the vires of Notification dated 13/08/2009, amended Rule 64D of the Mineral Concession Rules, 1960 and are challenging the instruction dated 10/12/2009 which had been issued by Respondents on the ground that it is contrary to the proviso to section 9(3) of the Mines and Minerals (Development and Regulation) Act, 1957.
The contention of the Petitioners is that by virtue of the said amendment and more particularly amendment to Rule 64D of the Mineral Concession Rules, IBM can now change the rate every month by publishing the sale price of the iron ore every month and, therefore, that is contrary to proviso to sub-section (3) of section 9 that there should be fixed rate for three years.
Procedural History
Multiple writ petitions were filed by different mining lessees in the High Court of Bombay at Goa, challenging the notification, amendment to Rule 64D, and directive. The petitions were heard together and a common oral judgment was pronounced on 8 May 2013.
Acts & Sections
- Mines and Minerals (Development and Regulation) Act, 1957: Section 9, Second Schedule
- Mineral Concession Rules, 1960: Rule 64D
- Mineral Conservation and Development Rules, 1988:
