Case Note & Summary
The writ petition arose from mining lease ML 2572 granted to Sri N. Shaik Sab for iron ore extraction in Siddapura Village, Sandur Taluk, Ballari District, for a term of twenty years with effect from 05.01.2008. The petitioner extracted iron ore during 2010 and obtained bulk work permits for transport of iron ore fines and lumps from the Department of Mines and Geology. He paid royalty in advance against those permits but later surrendered permits for 21,504 MT of material. During a joint inspection, no mineral stock was found at the mine site. A show-cause notice dated 30.09.2014 was issued under Rule 27(5) of Mineral Concession Rules, 1960 alleging theft of 54,120 MT of iron ore and demanding penalty under Section 21(5) of the Mines and Minerals (Development and Regulation) Act, 1957. The Director, Department of Mines and Geology issued a final demand notice dated 18.04.2015 for Rs 67.65 crores, being five times the value of the alleged missing ore. The High Court in earlier writ petitions W.P No.25561/2017 and 26089/2017 quashed that demand for lack of reasons and directed fresh adjudication. A subsequent order dated 31.12.2018 was withdrawn on 30.05.2022, and W.P No.14987/2021 was dismissed as infructuous on 31.05.2022. Thereafter, the Director passed the impugned order dated 10.10.2023 relying on a Lokayukta report and joint inspection findings that 54,120 MT of iron ore was missing. The Senior Geologist computed a penalty of Rs 13,85,38,423 in the demand notice dated 02/05.12.2023. The petition raised two principal legal issues: whether the petitioner is liable to penalty under Section 21(5) of the MMDR Act; and whether royalty and penalty should be computed on the basis that the grade of iron ore was 65% and above. The petitioner initially argued that the assumption of 75,000 MT raised and missing mineral were baseless and relied on a mahazar, but later conceded that records showed 75,000 MT had been mined and no stock was found during inspections. He contended that only permits for 42,384 MT were issued, of which 21,504 MT were surrendered, so the issue was confined to that quantity, and Section 21(5) was inapplicable. The respondents relied on the Lokayukta report and joint inspection. The court accepted that the facts regarding 75,000 MT of ore raised and absence of stock were no longer contested. It analyzed the permits, dispatch, surrender, and the stock that should have been available, noting that 17,608 MT of lumps and 36,512 MT of fines had no permits issued. The court set out Section 21 of the MMDR Act as in force at the material time. The final operative decision is not available in the provided extract.
Headnote
A) Mines and Minerals - Penalty for Illegal Mining - Section 21(5) Mines and Minerals (Development and Regulation) Act, 1957 - The court considered whether the petitioner was liable to pay penalty for 54,120 MT of iron ore allegedly removed without payment of royalty - The petitioner initially disputed the quantum of ore raised and missing stock but later conceded that records showed 75,000 MT was mined and no stock was found; the court noted this concession and framed the principal question of liability under Section 21(5) (Paras 15-23). B) Mines and Minerals - Computation of Royalty and Penalty on Grade Basis - Section 21(5) Mines and Minerals (Development and Regulation) Act, 1957 - The petition also raised whether the royalty and penalty should be computed on the basis that the grade of iron ore was 65% and above, the highest grade with maximum average sale price - The court identified this as part of the principal controversy and set out the relevant statutory provision for examination (Paras 3, 23). C) Constitutional Law - Writ of Certiorari - Article 226 Constitution of India - The petitioner sought quashing of the order dated 10.10.2023 and consequent demand notice - The court proceeded to examine the legality of the penalty order and demand in writ jurisdiction (Paras 1-2).
Issue of Consideration
Whether the petitioner is liable to pay penalty under Section 21(5) of MMDR Act for 54,120 MT of iron ore; and whether penalty and royalty are to be computed on the basis that the grade of iron ore was 65% and above.
Law Points
- Section 21(5) of MMDR Act imposes penalty for raising minerals without lawful authority or without paying royalty
- once a party concedes facts
- court need not examine them
- royalty and penalty computation depends on grade of ore
- writ jurisdiction under Article 226 may be invoked to challenge penalty orders and demand notices
