MSPL LIMITED A COMPANY Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) These writ petitions are filed challenging the constitutional validity of Rule 4(10) of the Karnataka (Prevention of Illegal Mining, Transportation and Storage of Minerals) Rules, 2011 (hereinafter referred to as 'the Rules of 2011' for short) and also sought for a mandamus directing the respondents to refund the amount of royalty collected on differential grade of one ore from the petitioner along with interest.

(2.) Brief facts leading rise to filing of this petition are as under: The petitioner in W.P.No.19773/2018 has been into mining business for more than 5 decades. The petitioner is a lessee under a subsisting mining lease for mining iron ore (M.L.No.2416 of Vyasankere Village, Hospet Taluk in Ballari District) and the mining lease is valid upto 2022. The petitioner has undertaken forward integration of mining activities and in the process has established iron ore "pellet" manufacturing plant at Halawarthy Village in Koppal Taluk & District. The pellet plant of petitioner is buying the iron ore required for its production through e-auction. It is mandatory to register pellet plant as a mineral base industry under the provisions of the Rules of 2011. The iron ore may be in the form of 'fines' or 'lumps' or both. When iron ore is a mix of both fines and lumps, i.e., run of mines, the pellet plant after processing the uses only fines and lump ore is separated and sold. After processing the grade of fines is lower and the grade of lump is higher than ROM grade. The weightage average grade of fines and lumps is more than for which royalty is paid while transporting from lease area, the State Government issues permit to the transport, the same only after collecting royalty on such differential grade under the Rules of 2011, the petitioner aggrieved by the levy of royalty on iron ore to the extent of differential grade, filed this writ petition challenging the enactment of the Rules of 2011, regulating the transporting of minerals and issue of permits for transportation, etc. Rule 4(10) of the Rules of 2011 provides for collection of royalty. The said provision has been introduced by the State Government in order to extract additional royalty which is neither found in the MMDR Act nor in MC Rules which alone have all the powers to control, regulate and manage the iron ore. The iron ore mineral is considered tobe a major mineral and therefore the State Government cannot have control over the same by way of introducing State Rules. The tenor of Rule 4(10)(b) of the State Rules creates an additional liability to the lease holder/processing company by imposing a royalty for the differential higher grade of ore after beneficiating process. When the ore is transported to the plant, the iron ore is bifurcated into fines and lumps. When the lumps which is a waste for pellet plant, is transported outside the plant. The State insist pellet plant to pay additional royalty for differential grade and the pellet plant has been constrained to pay such additional royalty solely on account of the said Rule which is without authority of law and unconstitutional. The petitioner being not liable to pay differential royalty, requested Senior Geologist, Department of Mines & Geology, Koppal to refund differential royalty collected vide letter dtd. 14/11/2017 and the Senior Geologist did not respond to the said representation. The State has no power to promulgate the impugned Rule as the entire field of royalty is covered by Central Legislation. Action of collection of additional royalty is arbitrary, illegal and unconstitutional. Hence the petitioner aggrieved by the impugned Rules, filed this writ petition. The petitioners in W.P.No.8022/2022 and W.P.No.8134/2022 have installed benefication plant which carries out the process of miling, scrubbing, magnetic separation, hydro-cyclone, jigging, tabling and thickening of iron ore and manganese ore. The petitioner carries out the process of upgrading low grade iron and manganese ore mineral and carries out the benefication of the ore which will minimize the waste dump generated and manufacture the mineral which is used by the steel plants in the State of Karnataka. The petitioners used to purchase the iron ore, mineral and manganese ore from the subsisting lease on payment of royalty charges at the mine head and used to transport to the factory premises from the mining lease with all the valid permits issued by the Department of Mines & Geology. The respondent Nos.1 to 3 used to collect the royalty charges at the mine head from the lessee on the unprocessed ROM and used to issue Mineral Despatch Permits (MDP) for transporting the iron ore/manganese ore from mining lease to the plant of the petitioner. The respondents cannot collect the difference of royalty charges from the plants where they were carrying on benefication of the ore. It is submitted that royalty charges is covered by the Central Act & Rules framed by the Central Enactments. The State Government has no jurisdiction to enact fixing royalty charges under Sec. 23-C of the Mines & Minerals (Development & Regulations) Act MMDR Act (hereinafter referred to as 'the MMDR Act' for short). The impugned Rules framed by the State Government is beyond the jurisdiction of the State under Sec. 23-C of the MMDR Act. The petitioners do not have any mining lease of its own to carry on the manufacture of beneficiated ore by utilizing the iron ore and manganese ore of its own mining lease. Hence the petitioners filed this writ petition challenging clause(b) of Sub-rule 10 of Rule 4 of the impugned Rules as arbitrary without jurisdiction, repugnant to Sec. 9 of the MMDR Act, Rule 64-B of the Mineral Concession Rules, 1960 (hereinafter referred to as 'the Rules of 1960' for short) and Rule 39 of the Minerals (Other than Atomic, Hydro Carbons, Energy Minerals) Concession Rules, 2016 (hereinafter referred to as 'the Rules of 2016' for short) Rules of 2016 and the same is liable to be declared as unconstitutional.

(3.) Respondent No.3 filed statement of objections contending that the writ petitions are liable to be dismissed as the petitioners have not stated any grounds in order to demonstrate that the legal rights have been violated. It is contended that the petitioners have registered before the Department of Mines and Geology and issued a certificate of registration and it is further contended that the petitioners are purchasing iron ore through monitoring committee constituted by the Hon'ble Apex Court by way of e-auction upon payment of royalty on ad volarem basis. The petitioners are carrying activity and had paid differential royalty as prescribed under Rule 4(10) of the Rules of 2011. It is further contended that the constitutional validity of the provision can be challenged on one of the following two grounds: (a) The impugned provision violates any fundamental rights under the constitution; or (b) The provisions have been enacted without necessary legislative competency.