The main legal point established in the judgment is the government's right to demand 100% royalty on minerals extracted from patta lands, rejecting the petitioner's claim that the rights to minerals vest with the owner of patta lands.

1. The petitioner states that the petitioner herein is a Public Limited Company, incorporated under the provisions of the Indian Companies Act, 1913 having its registered office at Mumbai with manufacturing facilities producing Cement at various locations in India including one at Madukkarai in Coimbatore District, Tamil Nadu. The Madukkarai works had been established in the year 1934 and today has installed capacity of one million tonne of cement per year. The primary raw material in the manufacture of cement is limestone which is a mineral that is a major mineral under Schedule II of the Mines and Minerals (Regulation and Development) Act, (MMRD Act) 1957 and the Mineral Concession Rules, 1960 (MCR) made there under.

2. The mining of limestone is done by the petitioner both in patta lands owned by the respondent which are leased by the respondent Government in favour of the petitioner. Mining in patta lands as well as Government lands require mining leases to be executed by the Government in favour of the petitioner under the provisions of the MMRD Act and the MCR. The terms of the mining lease include, interalia, provisions for payment of royalty to the respondent Government which is as prescribed by the MMRD Act. The MMRD Act further provides for fixation of the rate of royalty by the Central Government and the rules prevailing earlier also circumscribed the limits of the rate so as to not exceed 20% of the sale price of the mineral at the pit head. The said rule of limitation was subsequently deleted and rate of royalty was fixed per metric tonne.

3. Under the powers conferred by Section 9 & 9-A of the MMRD Act, the Central Government has periodically fixed the rates of royalty payable on the mining of limestone. This rate originally stood at Rs.4.30 per tonne in 1982 which was subsequently enhanced to Rs.10/- per tonne and to Rs.25/- per tonne in 1992 and to Rs.32/- per tonne from April, 1997 and thereafter to Rs.45 per tonne from October 2004. In Tamil Nadu, there has been a practice that had been prevailing for several decades by which the royalty collected by the Respondent Government, on the limestone extracted from the mines by the mining companies was shared equally by the respondent Government and the owner of the patta lands in cases where the mining takes place at freehold lands. Consequently, in the case of the petitioner and other similarly situated cement factories, they were paying only 50% royalty whenever they were mining for limestone ore in their own patta lands.

4. Apparently arising out of certain audit objections raised in 1977 that it was incorrect to collect only 50% royalty on minerals extracted for patta lands, the respondent government took the stand that the minerals absolutely vest in the respondent even in respect of minerals extracted from patta lands and consequently the entire royalty was payable andthe pattadar was not entitled to any share thereto. The respondent Government accordingly issued directions to all District Collectors to stop sharing the royalty with pattadars and instead make demands for 100% of the royalty on minerals extracted from on all mines including mines on patta lands.

5. A batch of writ petitions were filed before this Court by various mining companies and pattadars including cement companies such as the petitioner herein challenging the above directions of the respondent Government in seeking to collect 100% royalty on minerals extracted from patta lands.

6. The petitioner's writ petition being in W.P.No.10723 of 1988 was admitted by this Court and an interim injunction was granted on 19.09.1988 restraining the respondent from collecting 100% royalty. The petitioner accordingly continued paying 50% royalty for minerals extracted from its mines on patta lands while continuing to pay the full royalty for minerals extracted from its mines on Government lands. The ba