The court ruled that DMF contributions are mandatory from auction participants engaged in mining operations, interpreting 'royalty' as the auction bid price within the MMRD Act's definition.

JUDGMENT :

(Delivered by Hon’ble Saral Srivastava,J)

1. Heard learned counsel for the petitioner and Sri RajeshwarTripathi, learned Chief Standing Counsel-II for the State-respondents.

2. The petitioner by means of the present writ petition has prayed forthe following relief:-

“(a). Issue a writ, order or direction in the nature of certiorari to quash the letter of intent dated 04.05.2018 bearing nos.343/Mining/2018 & 344/Mining/2018 to the extent that a demand for contribution towards DMF has been raised.

(b). Issue a writ, order or direction in the nature of certiorari to quash para-6 of the letter dated 21.05.2018 to the extent demand is raised forcompulsory contribution towards DMF.”

3. During the pendency of the writ petition, respondent no.3-District Magistrate passed an order dated 01.06.2018 by which he has directed the petitioner to deposit 10% of the royalty in District Mineral Foundation (DMF) which has been assailed by the petitioner by filing Amendment Application, which was allowed by this Court by order dated 03.07.2019. Accordingly, petitioner amended the writ petition.

4. The facts of the case, in brief, are that Directorate of Geology & Mining, Lucknow and its subordinate offices issued E-Tender No.2858/ Mineral/E-Tender/2018 dated 09.03.2018 inviting offers for the auction of limestone, a major mineral, which was obtained during the blasting/digging and levelling operation for the purpose of expansion of Obra ‘C’ (2 x 660 MW) Power Project situated in District Sonbhadra which was divided in three blocks, for which respondent-State fixed minimum amount as ‘reserve price’.

5. It is stated that the value of the mineral was mentioned as ‘royalty’ in the auction notice which was meant as ‘sale price’ of the mineral and not the ‘royalty’ as understood under the provisions of Mines and Minerals (Regulation & Development) Act, 1957 (hereinafter referred to as the ‘MMRD Act’).

6. It is further stated that as per the auction notice, the applications submitted before 5:00 P.M. on 21.03.2018 were to be considered, but certain bids had been submitted even after the last date notified. The petitioner pointed out the said fact by notice dated 23.03.2018 to the authorities. The authorities on being apprised about the aforesaid discrepancy, cancelled the tender notice dated 24.03.2018 and invited fresh offers by issuing E-Tender Notice on 24.03.2018 at the three locations detailed in the said notice. It was mentioned in the said notice that successful tenderer would have to pay tax and other amount including DMF as per the rules.

7. The petitioner being interested, submitted its bid on 07.04.2018 for all the three locations described as Part-I, Part-II and Part-III. Subsequently, letters dated 04.05.2018 bearing no.343/Mines/2018 and no. 344/Mines/2018 were issued to the petitioner declaring the petitioner as the highest bidder for the limestone described as Part-II and Part-III respectively in the public notice. It is stated that the aforesaid letters dated 04.05.2018 were issued only after the Government granted approval vide letter dated 02.05.2018, as is evident from perusal of the Letter of Intent (hereinafter referred to as ‘LOI’) itself.

8. According to the petitioner, he had quoted an amount of Rs.777.70 per cubic meter as value of the mineral against the reserve price of Rs.275/- per cubic meter for the mineral stacked and described as Part-II lying at the banks of the river within the given coordinates. The quantity of mineral was 48,300 per cubic meter.

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