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2025 Supreme(MP) 202

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR
SURESH KUMAR KAIT, CJ. VIVEK JAIN, J.  
R.K.Transport And Construction Ltd. Thr. Director Chandra Prakash Singh – Appellant
Versus
The State Of Madhya Pradesh And Others – Respondent
PETITION No. 28431 of 2021 WITH WRIT PETITION No. 26824 of 2021, WRIT PETITION No. 1457 of 2022, WRIT PETITION No. 1508 of 2022
Decided On :   24-02-2025

Advocate Appeared:
For the Appellant :Shri Shekhar Sharma – Senior Advocates with Shri Shreyas Shri Shoeb Hasan Khan, Shri Ankur Chawla, Shri C.B.Bansal, Shri Akshay Rinje, Shri Gurpreet Singh, Shri Teerthesh Bharilya and Ms. Prerna Mahajan petitioners in their respective petitions.
For the Respondent:Shri Prashant Singh – Advocate General with Shri General for the respondents/State.
Shri Sachin Kumar Verma Advocate for respondents No.4 and 5 (Through V.C.)

Subordinate legislation must align with the parent Act; regulations exceeding authority are invalid. Royalty payment under mining laws can only be for minerals actually removed or consumed.

Headnote:(A) Mines and Minerals (Development and Regulation) Act, 1957 - Section 15(1) and 15(3) - Madhya Pradesh Sand (Mining, Transportation, Storage and Trading) Rules, 2019 - Rule 10(3) and Rule 12(5) - Constitutional validity challenged - Rules declared ultra vires Section 15(3) of the MMDR Act for charging royalty inviolation of statutory provisions - The petitioners challenged the legality of rules as they were inconsistent with the parent Act and did not account for the actual mineral excavated - The State was directed to set aside the show cause notices and punitive measures based on the invalid rules - Writ petitions allowed. (Paras 33, 34, 35)

Facts of the case:
The petitioner, having been granted a contract for mining sand, faced termination due to alleged non-payment of royalty based upon contested rules, despite only extracting limited quantities of sand.

Findings of Court:
The court found the provisions within the 2019 Rules conflicted with statutory mandates of the MMDR Act, specifically in relation to royalty payment for minerals.

Issues: The major questions addressed concerned the conflict between the Rules of 2019 and the parent Act regarding the royalty payment structure and the enforcement of punitive measures without due process.

Ratio Decidendi: The court held that rules not in accordance with parent statutes lack validity. It emphasized that it is settled law that no one can be estopped from challenging statutes which infringe upon legal rights.

Result: Writ petitions allowed.

Judgement Key Points

Key Points: - The Rules 10(3) and 12(5) of the Rules of 2019 are declared invalid and ultra vires Section 15(3) of the MMDR Act; show cause notices and termination based on these rules are set aside. (!) (!) - Royalty under MMDR Act is not a tax and arises from contractual conditions of mining leases; the annual contract amount under Rule 10(3) is not to override the royalty requirement, but disputes over its relation to royalty are addressed; fresh notices may be issued based on quantity actually consumed or removed. (!) (!) (!) - The writ petitions are allowed, and respondents may issue fresh notices assessing contract demand based on actual consumption/removal rather than the invalid rules. (!) (!)

What is the court's ruling on the constitutional validity of Rule 10(3) and Rule 12(5) of the Madhya Pradesh Sand (Mining, Transportation, Storage and Trading) Rules, 2019?

What is the court's conclusion regarding royalty payment under MMDR Act and its relation to the annual contract amount under Rules of 2019?

What directive does the court issue concerning show cause notices and termination, and how may the contract be recalculated going forward?


Table of Content
1. common issues and reliefs sought in several petitions. (Para 1 , 2)
2. factual background regarding contract and notices. (Para 3 , 4 , 5 , 6)
3. petitioners challenge laws related to mining royalties. (Para 8 , 9 , 10 , 11 , 24)
4. arguments supporting the petitioners' stance. (Para 12 , 13 , 14)
5. court's consideration of legal provisions and arguments. (Para 15 , 16 , 21)
6. estoppel does not apply against legislation concerning fundamental rights. (Para 20)
7. determination of rules' ultra vires status. (Para 30 , 32 , 33)
8. ultra vires ruling concerning subordinate legislation. (Para 31)
9. court's conclusion to invalidate rules and allow petitions. (Para 34 , 35)

ORDER

Per: Hon'ble Shri Justice Suresh Kumar Kait, Chief Justice:

1. The facts and issues involved in these petitions are same and similar, therefore, present petitions are being disposed of by this common order. The facts and annexures shall be discussed with reference to Writ Petition No.28431 of 2021, however, facts of other petitions shall not be repeated for the sake of brevity being similar.

2. The petitioners have filed these petitions under Article 226 of the Constitution of India praying for the following reliefs:

(i) To Issue a writ/orders/directions more particularly in the nature of certiorari thereby setting aside /quashing Rule 10(3) and Rule 12(5) of Madhya Pradesh Rules regarding Sand (Mining, Transportation, Storage and Trading), 2019 being without competence and being ultravires of Section. 15(3) of the Mines and Minerals (Development and Regulation) Act, 1957;

(ii) To Issue a writ/orders/directions more particularly in the nature of certiorari thereby setting aside/quashing the show cause notice dated 28.10.2021 and 26.11.2021 along with the orders / letter dated 26.10.2021, 07.12.2021 and 07.12.2021 issued by the Respondent no. 4 being without authority and jurisdiction;

(iii) To Issue a writ/orders/directions more particularly in the nature of mandamus thereby directing SIEAA / Respondent no. 5 to consider the application of the Petitioner for grant of permission / clearance of the 13 sand quarries pending for approval before the said authority.

(iv) To issue a writ/order/direction more particularly in the nature of quo warranto thereby calling upon the Respondent no. 4 to show cause that under what authority show cause notice dated 28.10.2021 and 26.11.2021 was issued to the Petitioner.

(v) To issue a writ/order/direction more particularly in the nature of certiorari thereby setting aside / quashing the termination letter dated 31.12.2021(ANNEXURE P-27) passed by the Respondent no. 4 and further hold that the termination letter dated 31.12.2021 issued by the Respondent no.4 being without authority and jurisdiction;

(vi) That this Hon'ble Court may be pleased to summon the record relating to the Show Cause Notice dated 28th of December, 2021 (ANNEXURE P-26) and after perusing the same may be pleased to quash and set aside the same;

3. The factual matrix of the case is that the respondent No.4 State Mining Corporation invited tenders for excavation of minor mineral sand from 118 quarries situated at district Hoshangabad for a period of three years vide e-Notice Inviting Tender dated 12.06.2020 (Annexure P/3) stipulating that a prospective bidder could mine around 80,00,000 cubic meter of sand per year from the said quarries and the bidder who offers to pay the highest royalty to the State Government each year over and above the upset price of Rs.110 Crores will be contracted for a period of three years.

4. In pursuance of the said NIT, petitioner submitted its bid for an amount of Rs.262 Crores (Rs.327.50 per cubic meter of sand). Being the highest bidder, the State Government issued a letter of intent dated 04.12.2020 (Annexure P/4) in favour of petitioner for mining sand to the extent of 80 lakhs cubic meter every year for a period 13.01.2021 to 30.06.2023. An agreement, Annexure P/5 was executed in this respect on 13.01.2021 between the p

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