IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.6501 of 2002 BAKHTIARPUR PRAKHAND INT NIRMATA SANGH THROUGH ITS PRESIDENT RAVI KUMAR SINGH, SON OF PRAMOD KUMAR SINGH, RESIDENT OF VILLAGE-RAWAICH, P.S.-BAKHTIARPUR, DISTRICT- PATNA. ................................... PETITIONER Versus 1. THE STATE OF BIHAR THROUGH SECRETARY, MINES, GOVERNMENT OF BIHAR HAVING ITS OFFICE AT PATNA. 2. THE MINES COMMISSIONER, PATNA. 3. THE ASSISTANT MINING OFFICER, PATNA HAVING ITS OFFICE NEAR COLLECTORIATE, PATNA. ................................. RESPONDENTS ----------- 4 18/4/2009 Heard counsel for the petitioner and counsel for the State. Prayer of the petitioner in this writ application reads as follows:- “That this is an application calling in question the notification bearing S.O. 27 dated 24.3.2001 purported to be in exercise of the power under rule 26A of the Bihar Mines Minerals Concession Rules, 1972 and its consequential orders and for grant enter-alia of the following:- (A)Issuance of an appropriate writ order or directions commanding the respondents and their subordinates and agents to forbear from giving effect to the impugned notification in so far as it relates to the urban and Rural areas of the State of Bihar. (B)To issue an appropriate writ order or direction for commanding the respondents the demand notice issued through memo Camp 8 M dated 25.3.2002. ©To command the respondents not to take any penal or coercive action against the petitioner in pursuance of the impugned notification. This Court, however, would find that the petitioner in fact while claiming the aforementioned relief is assailing notification dated 24th March, 2001 laying down the amount of 2 royalty payable from the kiln owners. The said notification dated 24th March, 2001 reads as follows:- “S.O.27.dated 24 March, 2001-In exercise of the power conferred by rule 26 (A) of the Bihar Minor Mineral Concession Rules, 1972 and having regard to state of civil construction, state of industrial construction, state of situated population, state of urbanization and place of industrial growth in different areas of the State, the Governor of Bihar is pleased to amend the previous notification S.O.No. 0367, dated 6th October, 1994 and reclassify such areas to determine the number of bricks per fixed kiln and Bangata Bhatta and the consolidated amount of royalty to be paid thereon by brick- kiln owner/brick earth remover per kiln per annum to the State Government for different areas as shown in the table below:- Table Sl No Categories Of area Name of districts and areas Capacity fixed no for the manufactured bricks per fixed kiln and bangle bhatta situated in areas shown in column 3 Royalty amount of royalty payable per kiln per annum on number of bricks fixed in column 4 (in Rupees) 1 2 3 4 5 I I Urban areas of Patna, Muzaffarpur, Gaya, Darbhanga dists. 45 lakh bricks Rs.90,000/- 2 II Other Urban area 35 lakh bricks Rs.70,000/- 3 III Rural area 25 lakh bricks Rs.50,000/- 4 IV Bangal Bhatta 1 (one) lakh bricks Rs. 3,000/- 2.This order will come into force from 1.4.2001. Note 1-Consolidated roylty shall be paid in two instalments, namely:- (i)First instalment-50% of the total payable royalty amount before commencement of 3 kiln and (ii)Second instalment-Rest 50% of the total amount before the month of March. If the payment of total amount of payable royalty is made in one lump sum by a kiln owner then 5% rebate shall be given on the total payable roylty. Note II-Urban Area means the areas within the local limits of a Municipality or Municipal Corporation of notified Area Committee and also includes the area falling within 4 kms. Outside the boundary limits of such Municipal Corporation or Municipality or Notified Area Committee, as the case may be. Note III-No royalty shall be payable on bricks/brick earth manufactured in Bangal Bhatta for non-commercial, personal consumption.” It has to be taken note of that the said notification dated 24th March, 2001 has been issued by the State Government in exercise of its power under Rule 26 A of Bihar Minor Mineral Concession Rules, 1972 ( hereinafter referred to as the Rules) which reads as follows:- “26A.Consolidation of royalty on brick earth-Notwithstanding anything contained in these rules, the State Government shall by notification in the Official Gazette determine a consolidated amount of royalty which may be revised once in three years, to be paid by the brick kiln owner/brick earth remover per kiln per annum to the State Government in a manner prescribed therein on a fixed number of bricks for every classified area: Provided that the State Government may for the purposes of determining the consolidated amount of royalty to be so paid classify the places into different categories taking such facts into account which the State Government think proper: Provided further that if the brick earth remover/brick kiln owner fails to make payment to the consolidated amount of royalty in the manner so prescribed, he shall not be allowed to carry on the business and the competent officer or any other officer duly authorized in this behalf by the State 4 Government, shall be competent to stop such business.” The petitioner virtually is questioning the power of State to levy tax by way of royalty. The scope of judicial review in the matter of taxation under Article 226 of the Constitution is absolutely limited and its vires can be only tested on the touch stone of Article 14 of the Constitution of India. Merely because the petitioner has a hunch that such fixation of royalty for the brick kiln owners is arbitrary would not be a ground to set it aside. The amendments made in Rule 26 A of the Rules by the impugned notification dated 24.2.2001 in fact is based on an intelligible differentia and is rational, inasmuch as, it seeks to classify the brick kiln owners on the basis of Urban Area, Rural Area and Bangla Bhatta. It again proceeds to fix the capacity of such brick kilns which by itself cannot be said to be arbitrary. Since the State Legislature is competent to fix the amount of royalty there would be no lack in the legislative competence in the issuance of the impugned notification under Rule 26 A of the Rules. The expression royalty in fact had fallen for consideration in the judgment of the Apex Court in the case of „Inderjeet Singh Sial Vs. Karamchand Thapar‟, reported in (1995) 6 SCC 166, wherein it was held that in its primary and natural sense, “royalty” in the legal world, is known as the equivalent or translation of “jura regalia” or “jura regia”. Royal rights and prerogatives of a sovereign are covered thereunder. In its 5 secondary sense the word “royalty” signifies as in mining leases, that part of the redendum, variable though, payable in cash or kind, for rights and privileges obtained. The term is found in the clause of the deed by which the Grantor of mining lease reserves something to himself out of that which he grants. The Supreme Court in fact has considered the question of levy of royalty on minerals on various angles in the case of „State of M.P. Vs. Mahalaxmi Fabric Mills Ltd.‟ Reported in 1995 Supp (1) SCC 642 wherein it was held as follows:- “That takes us to the contention that even if it were so the impugned notification is ultra vires section 9 (3) as it has nothing to do with the development of minerals. As we have already seen earlier, to have a uniform pattern of rates of royalty to be charges for extracting different qualities and quantities of minerals from different parts of the country is a very vital aspect of minerals. It is true that one of the main objects of the notification was for recompensating the loss suffered by States; but the fact remains that they suffered loss since the last hike in royalty was done in 1981 by the Central Government. It cannot be said that even as purchasing power of rupee had fallen and inflation had risen including the prices of coal in national and international market, there was no felt need for raising the rates of royalty to be charged for extraction of minerals like coal from the lease-holders when the mineral belonged to the State. If the amount of royalty is so enhanced, it has to go to the coffers of the State concerned which is the owner of the mineral. This is a logical corollary of enhanced rates of royalty. It cannot be said to be an irrelevant consideration as tried to be suggested by the learned counsel for the petitioners. On the contrary, it was a relevant consideration because the States have to monitor the working of the mines and the income generating from extraction of minerals within their respective territories. If the Central Government exercised its power under section 9(3) of the Act through belatedly in 6 1991 for bringing out this result, it cannot be said that it has done what is ultra vires or beyond the scope of section 9 (3) of the Act. In this connection we may keep in view the basic fact that mineral as found in the bowels of the earth or attached to the earth surface by itself cannot develop. For developing it, it has to be brought on the surface and separated from the crust of mother earth and that can be done by mining operation for winning these minerals. In this connection it is profitable to look at Section 3 of the Act. It defines minerals to include all mineral except mineral oil including natural gas and petroleum. Mining lease is defined to mean a lease granted for the purpose of undertaking mining operations and includes a sub-lease granted for such purpose. Mining operation means any operations undertaken for the purpose of winning any mineral. It is obvious that development of mineral as envisaged by Section 18 of the Act and even by Entry 50 of list II of the Seventh Schedule of the constitution, necessarily would mean extraction of mineral out of the bowels of the earth or from the crust of the earth by mining operations. Therefore, the term development of minerals has a direct linkage with mining operation. Without that minerals cannot develop by themselves. It must therefore be held that regulation of mines and development of minerals are interconnected concepts. Consequently, it is not possible to agree with the contention of the learned counsel for the writ petitioners that imposition of royalty has nothing to do with the development of minerals or that enhancing the rates of the royalty by the impugned notification is extraneous to the purpose of developing mines but is solely for swelling the coffers of the States. Once that conclusion is reached, there would survive no question of notification being issued partly for legitimate purpose of enhancing royalty rates after a decade from 1981 and partly for an irrelevant purpose of swelling the State exchequer. In fact the entire purpose of this exercise is for a legitimate relevant purpose for developing the minerals and enabling the States which are the owner thereof to properly manage the mining leases so that minerals can develop on a uniform pattern throughout the country. In that view of the matter the submission made by Shri Ramaswamy relying on case S. Pratap 7 Singh Vs. State of Punjab AIR 1964 SC 72 that alien purpose cannot be mixed with statutory purpose is of no avail to him. The argument of Shri Sanghi relying upon the decision of this Court in case State of Haryana vs. Chanan Mal (1977) 1 SCC 340 in para 23 at page 350 that declaration, under section has a limited coverage also cannot be of any assistance to him for the simple reason that whatever may be covered by section 2 declaration, it has definitely covered the imposition of royalty by Parliament as held in the Constitution Bench decision of this Court in India Cement case (1990) 1 SCC 12. As a result of this discussion it must be held that the impugned notification cannot be said to be ultra vires of section 9 (2) of the Act. The second point is, therefore, answered in the negative.” In fact the Supreme Court in the case of Inderjeet Singh (Supra) had upheld the concept of royalty by holding that the royalty is meant to be employed to secure for the State something out of what the State conveys. In fact, all these aspects have been gone into by this Court in the case of „Tuntun Prasad Chaurasia Vs. State of Bihar‟ reported in 1996 (1) PLJR 754, wherein this Court had held the notifications envisaging consolidated amount of royalty payable in advance to be valid on the ground that once the entitlement of the State to realize the amount of royalty with respect to minor and mineral is established, it will be complete prerogative of the legislature to adopt a particular mode or modes for its collection from a lessee or a brick manufacturer and thereafter no transgression of power by legislature is made out. This Court in fact had held that the State Government was competent to consolidate the amount of royalty and the procedure to consolidate the amount of royalty on the quantity disclosed by 8 brick manufacturer in Form E does not make the system repulsive, irrational or unacceptable, so as to strike it down as ultra vires the provisions of section 15 (1) or (3) of the M.M.R.D. Act or Articles 14 and 19 of the Constitution. In view of settled position in law, this Court would find no reason to interfere with the impugned notification and as such this writ application being wholly misconceived must be and is hereby dismissed. Abhay Kumar (Mihir Kumar Jha, J.)