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SANJAY KAROL, N. KOTISWAR SINGH
Director of Mines and Geology – Appellant
Versus
BMM Ispat Ltd. – Respondent
Key Points: - The judgment holds that payment of royalty is on the date of movement/despatch of minerals and that a statutory amendment increasing royalty can impact pre-existing contracts, requiring deduction of the enhanced amount from security deposits (!) (!) . - It confirms that if the royalty increase is via statutory amendment, contractual provisions cannot shield against the higher rate; the appellant’s deduction of 5% extra royalty from the security deposit was correct (!) (!) (!) . - The central question addressed: whether the State could charge a royalty amount different from that in a tender agreement due to a subsequent change in law; the court allows the appeal and sets aside the High Court's ruling, holding that enhanced royalty applies to the movement/despatch after amendment (!) (!) (!) . - Section 9 MMDR Act allows the Central Government to amend the Second Schedule to adjust royalty rates, but such enhancements cannot be more than once every three years (!) (!) . - The decision discusses the elements for applicability of Section 9: existence of mining lease, removal/consumption of mineral, and liability extending to agents/lessees (!) (!) (!) . - The court cites that dispatch/removal is the basis for royalty payable, and that payment is linked to the act of removal/despatch, not merely acceptance/delivery documents (!) (!) . - The 9-judge context references Mineral Area Development Authority and the principle that royalty is payable on dispatch/removal from the leased area (!) (!) .
JUDGMENT :
SANJAY KAROL J.
1. Leave granted.
2. The Director of Mines and Geology, Department of Mines and Geology, Government of Karnataka, in appeal by special leave, lays challenge to the judgment and order dated 18th March 2019 passed in Writ Petition No. 6979 of 2017 by the High Court of Karnataka at Bengaluru, whereby the Court allowed the respondent’s petition directed against an order passed by the appellant herein, rejecting the respondent’s representation made against the charge of higher royalty than what was stipulated in the tender agreement, which in itself was a consequence of an earlier round of litigation.
3. The question that we must consider, in essence, is whether the State could, on account of a subsequent change in law, charge an amount of royalty which is different from (increased) what is stipulated in the tender agreement. The facts that give rise to this question are.
3.1 This Court, in Writ Petition (Civil) No. 562 of 2009, on 23rd September 2011 constituted a committee1 [Hereafter ‘Monitoring Committee/Second Respondent’] for ensuring sale of the existing stock of iron ore. The order is extracted hereunder:
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