A miner is only required to pay royalty on the quantity he removed even if the MoU is silent on the matter: High Court of Uttarakhand

IN THE HIGH COURT OF UTTARAKHAND THE HON’BLE THE CHIEF JUSTICE SRI RAGHVENDRA SINGH CHAUHAN AT NAINITAL THE HON’BLE SRI JUSTICE ALOK KUMAR VERMA SPECIAL APPEAL NO. 225 OF 2021 26TH JULY 2021 M s Jai Bhawani Stone Crusher State of Uttarakhand & others Counsel for the Petitioner Mr. Rakesh Thapliyal learned Counsel for the respondents Mr. K.N. Joshi learned Deputy Senior Counsel assisted by Mr. Xitij Kaushik. Advocate General Mr. Sandeep Kothari learned counsel for respondent no.2. The Court made the following: JUDGMENT:(per Hon’ble The Chief Justice Sri Raghvendra Singh Chauhan) Since the sufficient cause has been shown by the appellant for the delay of 150 days in preferring the present Special Appeal the delay is hereby condoned by this Court. Delay Condonation Application is disposed of. The appellant has challenged the legality of the order dated 07.01.2021 whereby the learned Single Judge while expressing his opinion with regard to relief Nos.1 to 4 has directed the appellant petitioner submit a representation before the respondent No.1. The respondent No.1 in turn has been directed to decided the representation ten weeks the date of receipt of Judge: Mr. Rakesh Thapliyal learned Senior Counsel appearing for the appellant submits that the appellant has also made the following prayers before the learned Single “I. Issue a writ order or direction in the nature of certiorari quashing the Office Letter dated 29.10.2020 Annexure 15) issued by respondent no. 2 to the extent whereby the Royalty is being demanded on the quantity of mineral as mentioned in the work order dated 16.01.2020 which includes the quantity which was not actually extracted by the petitioner and also includes the period of lockdown in which the mining activity was not done. II. Issue a writ order or direction in the nature of certiorari quashing the office letter dated 13.10.2020 Annexure 14) issued by the Government to the extent that the quantity of minerals to be extracted has not been reduced through the total mining area has been reduced by respondents after consideration the second demarcation report. III. Issue a writ order or direction in the nature of mandamus directing to the respondents to raise the demand of the royalty by treating the Mining area to be 29.265 Hect in place of 51.020 Hect and on the actual quantity of Mineral extracted by the petitioner keeping in view of section 15(3) of Mines & Minerals Act 1957 and also Rule 21 of UP Miner Mineral Rules IV. Issue a writ order or direction in the nature of mandamus directing the respondent no. 2 i.e. the Managing Director of GMVN to grant the additional time for extracting picking the mineral pursuant to the work order dated 16.01.2020 and the of Association Annexure No. 2) for the period during which due to the lockdown all mining activity were banned in the State i.e.: w.ef 22.03.2020 to 20.05.2020).” One of the main grievances of the appellant was that the appellant was being asked to pay royalty on the quantity of mineral which the appellant had never lifted and transported from the mines. The learned Single Judge has expressed his opinion with regard to the said relief. According to the learned Single Judge since there was no stipulation in the Memorandum of Understanding that the appellant petitioner would be liable to pay royalty only on the actual quantity of River Bed Material extracted therefore the learned Single Judge was of the opinion that the demand made by the respondents by order dated 29.10.2020 was justified. However according to the learned Senior Counsel such a conclusion is patently against Rule 21 of the U.P. Minor MineralRules 1963as adopted by the State of Uttarakhand called “the Uttarakhand Minor Minerals Rules 2001”. For the said act clearly stipulates that royalty is payable in respect of “any mineral removed by him”. Therefore the finding of the learned Single Judge is against the tenor of Rule 21 of the Rules 1963. He further informs this Court that in accordance with the impugned order the appellant petitioner had submitted a representation with regard to relief No.5. The same has been dismissed by the Competent Authority. However the appellant petitioner should be permitted to file his representation with regard to relief Nos.1 to 4 mentioned hereinabove. Mr. Sandeep Kothari the learned counsel for respondent No.2 concedes that indeed the representation filed by the appellant petitioner has been dismissed. Moreover according to him the recovery order has also been passed by the Competent Authority. Rule 21 of the Rules 1963 reads as under: “21. Royalty. The holder of a mining lease granted on or after the commencement of these rules shall pay royalty in respect of any mineral removed by him from the lease area at the rates for the time being specified in the First Schedule to these rules. 1 a) Notwithstanding anything to the contrary contained in Rule 3 royalty should be payable by concerned brick kiln owner or use of ordinary clay on ordinary earth at the rate for the time being specified in First Schedule to these rules: Provided that the State Government shall take fees to be known as Regulating Fees from brick kiln owners in respect of district categorized on the basis of pay on at such rates as may be notified from time to time by 2) The State Government may by notification in the Gazette amend the First Schedule so as to include therein or exclude there from or enhance or reduce the rate of royalty in respect of any mineral with effect from such date as may be specified in the notification: Provided that the State Government shall not enhance the rate of royalty in respect of any mineral for more than once during any period of three years and shall not fix the royalty at the rate of more than 20 per cent of the Pit s mouth value. 3) Where the royalty is to be charged on the Pit’s mouth value of the mineral the State Government may assess such value at the time of the grant of the lease and the rate of royalty will be mentioned in the lease deed. It shall be open to the State Government to reassess not more than once in a year the pit’s mouth value if it considers that an enhancement is necessary. 4) Regulating Fees may be determined by the State Government from time to time on minerals entering the State from other States”. 10. A bare perusal of the provision clearly reveals that royalty would be payable only on the quantity “removed” by the miner. Therefore even if the MoU is silent on the point with regard to the payment of royalty naturally the payment of royalty would have to be in consonance with Rule 21 of the Rules 1963. Therefore the opinion expressed by the learned Single Judge is legally unsustainable. 11. Thus it will be in the interest of justice to permit the appellant petitioner to file a representation vis à vis relief Nos.1 to 4 before the respondent No.1. The respondent No.1 is directed to decide the appellant’s representation after giving an opportunity of personal hearing to the appellant. He is further directed to decide the representation within a period of three weeks from the date of submission of the Till the decision on the representation is taken the respondent No.1 shall not take any coercive steps against the appellant petitioner. With these directions the appeal is allowed. 12. 13. RAGHVENDRA SINGH CHAUHAN C.J.) ALOK KUMAR VERMA J.) Dated: 26th July 2021 

Summary: The state cannot make a miner pay royalty on quantity of minerals that he did not remove from the mine, irrespective of whether it is explicitly mentioned in the memorandum of understanding or not. This was held in the judgement passed by a two member bench of the High Court of Uttarakhand consisting of Justice Raghvendra Singh Chauhan and Justice Alok Kumar Verma in the case of M/s Bhawani Stone Crusher v State of Uttarakhand &amp; others [Special Appeal No. 225 of 2021] on 26th July 2021. The appellant, M/s Jai Bhawani Stone Crusher challenged the legality of an order passed by a single judge which directed the appellant to submit a representation before respondent No.1. in turn respondent No.1 was directed to decide the representation within ten weeks from the date of receipt of the representation. The counsel appearing for the appellant submitted that the appellant also prayed that writs be filed against the respondents as the appellant was being asked to pay royalty on the quantity of minerals which he had never even lifted or transported from the mines. The single judge expressed his opinion that since there was no stipulation in the memorandum of understanding that the appellant would be liable to pay royalty only on the actual quantity of the river bed material extracted; therefore the demand made by the respondents was reasonable. The two member bench of the High Court of Uttarakhand first clarified that as sufficient cause had been shown by the appellant for the delay in preferring the present Special Appeal, the delay has been condoned by the Court. The respondents argued that since the Memorandum of Understanding signed with the appellant did not explicitly mention that they were only authorised to charge royalty for the value of the minerals mined by the appellant, the respondents believed they were entitled to levy more royalty charges on the appellant. Rule 21 of the Uttarakhand Minor Minerals (Concession) Rules 2001 stipulated that royalty was payable in respect of any mineral removed by the miner and for this reason, the appellant submitted that he should not have to pay royalty for minerals he did not mine.