Important point
Section 9(3) of the Mines and Minerals (Regulation and Development) Act, 1957 is not violative of Constitution of India.

JUDGMENT

Pattanaik, J.—These appeals raise a common question of law as to the Constitutional validity of Section 9(3) of the Mines and Minerals (Regulation and Development) Act, 1957 [hereinafter referred to as ‘the Act’], inter alia on the ground that the levy of royalty on minerals is not a tax and the Union Legislature do not have the powers under Entry 54 of List I to enact such a law which denudes the right of the State Legislature to levy tax on mineral rights under Entry 50 of List II. A further contention also has been advanced in some of these appeals that the enactment of the Act, violates the provisions of Articles 268, 269 and 270 of the Constitution, and, therefore, Section 9(3) must be declared to be ultra vires. When the writ petition, challenging the vires of the provisions of Section 9(3) of the Act was filed before the Gujarat High Court, a Bench of the Gujarat High Court, dismissed the same, following the decision of the Supreme Court in the case of India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.1, and following an earlier decision of the said High Court in Special Civil Application No. 6226/94. Subsequent to the decision of this Court in India Cement, all the questions raised in these appeals have been considered by a three Judge Bench in the case of State of Madhya Pradesh v. Mahalaxmi Fabric Mills Ltd. and Ors.2, and this Court in Mahalaxmi’s case, rejecting the contentions raised by the consumers of minerals, upheld the validity of the Act and set aside the order of the High Court. Since the judgment of this Court in Mahalaxmi, deals directly on all issues raised in this batch of appeals, Mr. Chidambaram, the learned senior counsel, submitted with force that this batch of appeals should be referred to a larger Bench, as the Bench while disposing of Mahalaxmi’s case, had assumed some legal position erroneously, to be the law laid down by this Court in India Cement. Mr. Shanti Bhushan, the learned senior counsel, appearing for the appellants in some other appeals, however contended that the Constitutional validity of Section 9(3) of the Act has not been tested in the anvil of Articles 268, 269 and 270 of the Constitution and, therefore the matter remains wide open for being re-considered by this court notwithstanding the three Judge Bench judgment in Mahalaxmi.

2. Before dealing with the contentions raised by the learned counsel, appearing for the appellants, we think it appropriate to briefly notice how this Court has dealt with the law relating to the Mines and Minerals (Regulation and Development) Act, 1957 in different cases. The first decision which requires to be noticed in this connection is the case in The Hingir-Rampur Coal Co. Ltd. and Ors. v. The State of Orissa and Ors.3. In the said case, the competency of the State Legislature to enact Orissa Mining Areas Development Fund Act, 1952, was under consideration and one of the contentions in this Court was such a legislation made by the State Legislature is ultra vires the law made by Parliament under Entry 54 of List I. The Majority judgment answered the question and held that in the absence of requisite parliamentary declaration necessary under Entry 54 of List I, the State Legislature cannot be denuded of its power under Entry 23 of List II and the competence of the State Legislature under Entry 23 read with Entry 66 of List II was not impaired in any manner. The Court, therefore, upheld the validity of the legislation made by the State Legislature. In elaborating the discussion, this Court had observed that the limitation imposed by the latter part of Entry 23 of List II is a limitation on the legislative competence of the State Legislature itself and the test whether a statute passed by the State Legislature thereunder was ultra vires would be whether the requisite declaration under Entry 54, List I has been made by Parliament by law covering, the same field or not. Considering the effect of Entries 23 and 66 of List II and Entry 54 o