2004 Supreme(SC) 600

2004(7) Supreme 372
SUPREME COURT OF INDIA
(From Madhya Pradesh High Court)
R.C. Lahoti & Ashok Bhan, JJ.
National Mineral Development Corpn. Ltd. -Appellant
versus
State of M.P. & Anr. -Respondents
Civil Appeal Nos. 7880-7883 of 2001
Decided on 5-5-2004
Counsel for the Parties :
For the Appearing Parties : Mukul Rohtagi, Additional Solicitor General, K. Raghavacharyulu, P.S. Narasimha, Potaraju Sridhar, Saurabh Kirpal, Ananga Bhattacharya, G. Seshagiri Rao, V.G. Pragasam, S.K. Agnihotri, Rohit K. Singh, Prakash Srivastava, Advocate (NP)/Advocates.

IMPORTANT POINT
Slime or Slimes cannot be included in fines or concentrates for the purpose of charging royalty under Section 9(1) read with Entry 23 of the Second Schedule of the Mines and Minerals (Regulation and Development) Act, 1957.

Headnote:(i) Mines and Minerals (Regulation and Development) Act, 1957-Section 9; Entry 23 of Second Schedule-Royalties in respect of mining leases-Slimes-Exigibility to charge of royalty challenged-Iron Ore project of appellant company-In the process of mining, iron ore is extracted and separated into ore lumps, fines and waste material, known as slime -State of Madhya Pradesh initiated process of seeking to levy royalty on slimes-Levy challenged as arbitrary-Whether slimes is included in fines or concentrates , within the meaning of Entry 23 of the Second Schedule, for the purpose of charging royalty-(No).

       Held : There can be no manner of doubt that the entire material extracted from the earth, so far as iron ore mines are concerned, has to be subjected to a process for the purpose of wining iron therefrom. The process results into (i) lumps; (ii) fines and (iii) slimes. Section 9 of the Act obliges the holder of a mining lease to pay royalty in respect of any mineral removed or consumed from the leased area. If only it would have been the question of considering Section 9 and determining the impact thereof, may be it is the total quantity of mineral removed from the leased area or consumed in the beneficiation process which would have been liable for payment of royalty and that quantity may have included the quantity of slimes as well, as was held by this Court in State of Orissa Vs. Steel Authority of India Ltd. (supra). But in case of iron ore the process of beneficiation involves introduction of catalytic agents leading to separation and generation of waste consisting of impurities which the scheme of the Act has left out from charging. (Para 22)

       Section 9 neither prescribes the rate of royalty nor does it lay down how the royalty shall be computed. The rate of royalty and its computation methodology are to be found in the Second Schedule and therefore the reading of Section 9 which authorizes charging of royalty cannot be complete unless what is specified in the Second Schedule is also read as part and parcel of Section 9. (Para 24)

       Entry 23, the manner in which it has been drafted, mandates the quantification of royalty to await or be postponed until the processing has been carried out and the lumps, fines and concentrates are prepared. Once the result of processing is available, the lumps, fines and the concentrates are subjected to levy of royalty at different rates applied by reference to the quantity of each of the three items earned as a result of processing. The slimes have been left out of consideration by Entry 23 for the purpose of quantification and levy. The High Court is, therefore, not right in forming an opinion that the slimes are part of fines and hence liable to be included in Clause (ii) of Entry 23 for the purpose of charging the royalty. In the mining circles, fines and slimes both have different meanings. Both the terms are well understood as two different objects. Slimes cannot be included in fines . (Paras 25 and 26)

       Our answers to the questions framed in the earlier part of this judgment are:

        (i) Slime or slimes is a term well understood in mining industry and trade. It is different from fines and concentrates - the term as used in the Second Schedule, Entry -23 of this Act;

        (ii) Slime or slimes cannot be included in fines or concentrates for the purpose of charging royalty under Section 9(1) read with Entry-23 of the Second Schedule of the Act. (Para 36)

       (ii) WORDS AND PHRASES-Technical Terms in Mining-Terms Iron Ores , Fines , Slimes , Concentrate , Tailing -Meanings.

       Held : Glossary of Geology edited by Robert L. Bates and Julia A. Jackson (Second Edition) defines tailings as those portions of washed or milled ore that are regarded as too poor to be treated further, as distinguished from the concentrates, or material of value. According to Handbook of Mineral Dressing by Arthern & Taggart (at p.15.04), "Slime" is the term used in milling practice to describe a suspension, in water of the fully divided fraction of pulverized ore; also the solid, whether suspended or after settling out to drying. The terminology is not precise e.g. the overflow of a mechanical classifier or guarding the discharge of a grinding mill may be called SLIME as distinguished from the coarser sand, even though the separation be made at upward of 0.5 mm size; the over of a hydraulic classifier is called slime, more or less irrespective of the size of grains. Some writers (41 A S 98, 42 A 752) define slime as crushed rock in water when rock is of such fineness that it will pass a 150-or 200 m. (0.1- to 0.075-mm) screen. The solid particles in mill slimes are rock or mineral fragments formed by operations, and secondary minerals such as steatite, talc, and clayey substances that have been disintegrated and dispersed by wetting. These latter substances are often called as SLIMES. (Paras 13 and 14)

       (iii) INTERPRETATION OF STATUTES-Technical Terms-Those words and expressions should be construed in the sense in which they are understood in the trade by the dealer and the consumer. (Para 27)