Orissa High Court
Shree Balaji Engicons Private Limited vs State Of Odisha on 6 May, 2026
ORISSA HIGH COURT : CUTTACK
W.P.(C) No.9272 of 2018
In the matter of an Application under Articles 226 & 227 of
the Constitution of India, 1950.
***
Shree Balaji Engicons Private Limited
(A company incorporated under
the Companies Act having
Registered Office
At: Belpahar (R.S.)
Jharsuguda - 768 217, Odisha
Represented through its Managing Director
Sri Anil Kumar Agrawal
Aged about 56 years
Son of Late Radheshyam Agrawal. ... Petitioner
-VERSUS-
1. State of Odisha
Represented through
The Principal Secretary to Government
Revenue and Disaster Management Department
At: Secretariat, Bhubaneswar
District: Khordha.
W.P.(C) No.9272 of 2018 Page 1 of 98
2. Secretary
Department of Mines
Government of Odisha
At: Secretariat, Bhubaneswar
District: Khordha.
3. The Collector-cum-District Magistrate
Jharsuguda, At/P.O./District: Jharsuguda.
4. The Tahasildar, Lakhanpur
At/P.O.: Lakhanpur
District: Jharsuguda.
5. Odisha Power Generation Corporation Ltd.
Having its Registered Office
At: Zone-A, 7th Floor, Fortune Towers
Chandrasekharpur, Bhubaneswar
District: Khordha. ... Opposite Parties
Advocates appeared in this case:
For the Petitioner : M/s. Pawan Upadhyaya and
Suvendu Kumar Sethi, Advocates
For the Opposite Party : Mr. Saswat Das,
Nos.1 to 4 Additional Government Advocate
For the Opposite Party : Mr. Surya Prasad Mishra,
No.5 Senior Advocate
Assisted by
M/s. Soumya Mishra,
A. Mohanta,
Lalit Kumar Maharana,
Advocates
W.P.(C) No.9272 of 2018 Page 2 of 98
P R E S E N T:
HONOURABLE CHIEF JUSTICE
MR. HARISH TANDON
AND
HONOURABLE JUSTICE
MR. MURAHARI SRI RAMAN
Date of Hearing : 11.02.2026 :: Date of Judgment : 06.05.2026
J UDGMENT
MURAHARI SRI RAMAN, J.--
The petitioner, craving to question the levy and
collection by way of deduction from the payments made
towards royalty on account of ―earth‖ extracted from
land leased out to the Odisha Power Generation
Corporation Ltd. (A Government of Odisha undertaking,
for brevity hereinafter be called ―OPGC‖) and utilized for
construction of Ash Pond at Village: Tilia for its 2X660
MW Thermal Power Plant Project, IB Thermal Power
Station, Banharpalli in the District of Jharsuguda
(Odisha), being contrary to the provisions of the Odisha
Minor Mineral Concession Rules, 20041, beseeches
exercise of power conferred on this Court under the
provisions of Articles 226 and 227 of the Constitution of
India for grant of following relief(s):
1 The Odisha Minor Mineral Concession Rules, 2004 has been superseded by
virtue of the Odisha Minor Mineral Concession Rules, 2016, except as respects
things done or omitted to be done before such supersession.
W.P.(C) No.9272 of 2018 Page 3 of 98
"In the facts and under the circumstances stated above,
the Hon‟ble Court would graciously be pleased to declare
that royalty is not leviable in respect of the extraction of
earth from the land of the opposite party No.5-Corporation
for construction of Ash Pond of the said opposite party;
And be further pleased to direct the opposite parties to
refund the already deducted royalty as per demand
notice under Annexure-9 from the running account bills of
the petitioner under Annexure-5 series;
Issue any appropriate order/orders deemed fit in the
facts and circumstances of the case;
And for which act of kindness, the petitioner shall remain
ever pray as in duty bound."
Facts leading to filing of writ petition:
2. The petitioner, having participated in connection with
the Request for Proposal for construction of Ash Pond
over the leased land in favour of the opposite party No.5-
OPGC by submitting its bid on 23.11.2016 was declared
successful and accordingly executed an agreement on
21.12.2016 with OPGC.
2.1. After such execution of agreement, by a Letter dated
17.02.2017 intimated that as against the letter of
acceptance issued by the OPGC indicating award of
work and performance guarantee, the same would be
subject to conditions inter alia that earth to be used with
respect to ―item 4.01 of BoQ‖ pertaining to inside the
W.P.(C) No.9272 of 2018 Page 4 of 98
pond area is not liable to be levied with royalty as per
provisions of Rule 3 of the Odisha Minor Mineral
Concession Rules, 2004 (―Rules, 2004‖, for short) and
earth to be used for item 4.01 of BoQ pertaining to
outside the pond area is chargeable to royalty and in
both the circumstances if royalty is to be levied, the
same would have to be borne by the OPGC.
2.2. Notwithstanding such objection being raised by the
petitioner, the opposite party No.5-OPGC proceeded to
withhold an amount towards royalty for extraction of
earth from the subject-land out of the Running Account
Bill(s) on the plea that the Tahasildar issued Letter dated
15.03.2018 demanding deposit of royalty on such
extraction of ―earth‖. Objecting to such action the
petitioner vide Letter dated 15.03.2018 (Annexure-7)
intimated the General Manager (MGR and Ash Pond),
OPGC-II, IB Thermal Power Station that royalty at
enhanced rate is not payable and citing that the rate
quoted by it was inclusive of royalty as per extant Rules,
i.e., the Odisha Minor Mineral Concession Rules, 2004,
but not the Odisha Minor Mineral Concession Rules,
2016 (―Rules, 2016‖ for convenience).
2.3. In connection with Demand Notice in Letter No.853,
dated 23.03.2018 issued by the Tahasildar, Lakhanpur
addressed to the Executive Director and Head (MGR and
W.P.(C) No.9272 of 2018 Page 5 of 98
Ash Pond), OPGC, Banharpal directing the latter to
deposit the royalty amount on account of ―earth used for
construction of Ash Pond at Mouza: Tilia‖, an e-mail was
received by the petitioner sent by OPGC-II with the
following instructions:
"Dear Sir, Please refer out Skire Letter under reference
wherein it was requested to submit proof of deposit of
royalty amount to Rs.1,05,35,000/- as demanded by
Tahasildar, Lakhanpur within 20.03.2018. We have not
received any reply from your side till date. As such we
once again request you to submit compliance as above
within 28.03.2018 positively or else the royalty amount
withheld from your RA Bills shall be deposited by OPGC
directly with Tahasildar, Lakhanpur. Please treat this as
most urgent. Regards, GP Mishra."
2.4. Responding to the Letter dated 16.03.2018 of the
petitioner, the OPGC sought to review item No.4.1 of
BoQ by reiterating conditions inter alia that the
contractor is liable to pay all royalties and licence fees
whether such royalty is applicable on ―inside earth‖ or
―outside earth‖.
2.5. Clarifying the fact that the petitioner was entrusted with
the work of construction of Ash Pond over the land of
OPGC for which extraction of earth was necessary. The
excavation of earth was done by mechanical means from
approved borough from inside the pond and dumped at
the bundh/embankment inside the enclosed land of
W.P.(C) No.9272 of 2018 Page 6 of 98
OPGC. Since the earth so excavated was used for
domestic purposes, said activity could not have been
construed as ―quarrying operation‖ as envisaged in Rule
3 read with Rule 2(t) of the Rules, 2004, (superseded by
the Rules, 2016). Under such premise request was made
by Letter dated 14.04.2018 addressed to the Tahasildar
to grant certificate of exemption from payment of royalty.
2.6. Further request was also made to OPGC by Letters dated
18.04.2018 and 24.05.2018 not to deduct amount of
royalty from further bills for payments in future; but to
no avail; hence this writ petition.
Counter affidavit of opposite party Nos.3 and 4:
3. Repelling contention of the petitioner, the opposite party
Nos.3 and 4 submitted that:
i. The use of extracted earth from the leasehold land
of OPGC during construction of Ash Pond does not
fall within the connotation of ―bona fide domestic
consumptions‖ as envisaged under Rule 3 of the
Rules, 2004/the Rules, 2016; but the narrative
facts of the petitioner that it utilized the earth in
forming embankment/dyke/bundh around the Ash
Pond after extraction of earth therefrom would
embrace within the meaning of the term ―quarrying
operation‖ envisaged in clause (t) of Rule 2 of the
W.P.(C) No.9272 of 2018 Page 7 of 98
Rules, 2004 [clause (v) of Rule 2 of the Rules, 2016]
and such activity of the petitioner attracts levy of
royalty in terms of Rule 3 of the Rules, 2004 or
Rule 3 of the Rules, 2016. It is stated that in view
of Rule 32, the levy of royalty and raising demand
is justified in law.
ii. Expanding further it is stated that the land was
alienated for construction of Thermal Power Project
which is a commercial project. Using the earth
being extracted from the subject-land in connection
with the construction of Ash Pond without licence/
―quarry permit‖ as defined under clause (w) of Rule
2 of the Rules, 2016 attracts demand for payment
of royalty under Rule 32(2) which is in consonance
with Clarification of the Revenue and Disaster
Management, Government of Odisha vide Letter No.
RDM-LRGEC-CLRIF-0002-2018/4214/R&DM,
dated 31.01.2018.
Counter affidavit of the opposite party No.5:
3.1. The OPGC, enjoying limited leasehold rights (surface
rights) over the land in question, asserts that no
invidious distinction being made with respect to
extraction of earth from inside the Ash Pond area vis-Ã -
vis outside it. It is the contractual obligation on the part
of the contractor (petitioner) to pay the royalty for
W.P.(C) No.9272 of 2018 Page 8 of 98
extraction of minor mineral under the Rules, 2004 as
superseded by virtue of the Rules, 2016 in view of
Clause 5.1.1 read with 1.2.6 of the contract. Even
though royalty is not specifically mentioned in the BoQ,
since Notes below Table-1 of Appendix-B of the Contract
entered into between the petitioner and the OPGC
speaks about such obligation the petitioner cannot
escape from discharging such liability.
3.2. In absence of any exemption certificate or ―quarry
permit‖ from competent authority, in view of Clause
5.1.4 of the Contract, the OPGC is entitled to deduct the
amount of royalty from the Bills for payment to the
petitioner.
Hearing:
4. This writ petition was disposed of on 01.08.2019 giving
liberty to the petitioner to approach the Arbitrator.
However, the said Order being carried further before the
Hon'ble Supreme Court of India in S.L.P.(C) No.20782 of
2019, the following Order was passed on 08.11.2019:
"The Impugned order passed by the High Court on
01.08.2019 is set aside. The matter is remanded to the
High Court to determine the issue of leviability of royalty
on the parties in this case. The matter is disposed of
accordingly. The parties may move the High Court for
interim relief.
W.P.(C) No.9272 of 2018 Page 9 of 98
We are informed that the contract expires in March, 2020.
We would request the High Court to dispose of the matter
expeditiously preferably within a period of three months."
4.1. After many adjournments sought for by the counsel for
the parties, and change of lawyer(s) in the midst of
hearing, finally the matter was heard on 11.02.2026.
4.2. Heard Sri Pawan Upadhyaya, learned Advocate assisted
by Sri B.K. Mohanty, learned Advocate for the petitioner;
Sri Saswat Das, learned Additional Government
Advocate for the opposite party Nos.1 to 4 and Sri Surya
Prasad Mishra, learned Senior Advocate assisted by Sri
Soumya Mishra, learned Advocate representing the
opposite party No.5 (OPGC).
4.3. Hearing being concluded on the said date, the matter
stood reserved for preparation and pronouncement of
Judgment/Order.
Consideration of rival contentions and submissions/
written note of submissions with analysis and discussion
on merit thereof:
5. Sri Pawan Upadhyaya, learned Advocate, commenced
hearing by stating that the petitioner extracted earth
from the land leased to the OPGC for the purpose of
construction of Ash Pond in connection with execution
of works contract entrusted pursuant to the Request for
W.P.(C) No.9272 of 2018 Page 10 of 98
Proposal wherein it was declared successful. Since the
earth extracted has been used for the purpose of
contractee (OPGC) itself and earth so excavated has
never been taken out of the area belonging to OPGC nor
was it sold to anybody by the petitioner, it is not liable
for payment of royalty. It is also emphasized that such
activity for self-use cannot be considered as commercial
exploitation of the minor mineral.
5.1. In the ―Further Counter Affidavit‖ dated 18.07.2024 it
has been clarified by the opposite party Nos.1 to 3 as
follows:
"That it is an admitted fact that the land was granted in
favour of opposite party No.5 by way of lease/acquisition
to set up the Thermal Power Plant, wherein the petitioner
was engaged as a Contractor for construction of Ash
pond, which would be utilized by the opposite party No.5
and the petitioner had constructed the said Ash Pond by
way of removing/extracting earth within the lease area
granted by the State Government. Hence, in view of the
provisions of Mines and Minerals (Development and
Regulation) Act, 1957 and Odisha Minor Mineral
Concession Rules, 2004 and 2016, the petitioner is liable
for payment of royalty."
5.2. It is also affirmed by the opposite party Nos.1, 3 and 4 in
their counter affidavit at paragraph 12 that the OPGC-
lessee was granted lease of land for setting up/
construction of Thermal Power Plant and the petitioner
W.P.(C) No.9272 of 2018 Page 11 of 98
was engaged for construction of Ash Pond at Tilia
Village, which is part of such Project. The earth
extracted from beneath the surface by utilizing machines
can be said to come within the fold of ―quarrying
operation‖ as defined under Clause (v) of Rule 2 of the
Rules, 2016 [pari materia with Clause (t) of Rule 2 of the
Rules, 2004], thereby such activity of the petitioner-
company attracts liability for payment of royalty as per
Rule 3 of the said Rules.
5.3. The genesis of ownership of land began with Order
No.2224, dated 02.03.2016 issued by the Collector,
Jharsuguda with the following caption:
"In exercise of the powers conferred in G.O. No.28677/R,
dated 27.04.1981 read with Rule 11, item 6 of the
Schedule-II of the Odisha Government Land Settlement
Rules, 1983, sanction of lease of Government land to the
extent of Ac.30.53 decs. As per schedule below in mouza
Tilia under Lakhanpur Tahasil is accorded in favour of
IDCO, Bhubaneswar for establishment of industries
subject to the terms and conditions prescribed in the lease
deed issued in Revenue Department Letter No.26678/
R&DM, dated the 9th July, 2013. ***"
5.4. The Mines and Minerals (Development and Regulation)
Act, 1957 defines the term ―MINOR MINERALS‖ in clause (e)
of Section 2 as follows:
"(e) "MINOR MINERALS" means building stones, gravel,
ordinary clay, ordinary sand other than sand
W.P.(C) No.9272 of 2018 Page 12 of 98
used for prescribed purposes, and any other mineral
which the Central Government may, by notification
in the Official Gazette, declare to be a minor
mineral".
5.5. The Ministry of Mines and Minerals (Department of
Mines) by Notification F.No.7/5/99-M.VII [GSR 95(E)],
dated 03.02.2000 published in the Extraordinary issue
of Gazette of India No.84, dated 08.02.2000 declared
that:
"In exercise of powers conferred by clause (e) of Section 3
of the Mines and Minerals (Development and Regulation)
Act, 1957 (67 of 1957), the Central Government hereby
declares the „ordinary earth‟ used for filling or levelling
purposes in construction of embankments, roads,
railways, buildings to be a minor mineral in addition to
minerals already declared as minor minerals hereinbefore
under the said clause."
5.6. The Odisha Minor Mineral Concession Rules, 2016 in
clause (aa) of Rule 2 specified as follows:
"SPECIFIED MINOR MINERALS means2 all minor minerals
including decorative stones other than the minor
minerals listed at serial No.2 of Schedule-III."
2 The Hon'ble Supreme Court of India in Commissioner of Trade Tax Vrs. Kajaria
Ceramics Ltd., (2005) Supp.1 SCR 437 interpreted the term ―means‖ used in
definition clause as under:
"The language of the definition of the phrase in Explanation 4 to Section 4A is
sufficiently clear and unambiguous. This coupled with the use of the word
„means‟ in the Explanation shows that the definition is exhaustive. As has been
observed in Feroze N. Dotiwala Vrs. P. M Wadhwani, (2003) 1 SCC 433, 442:
„Generally, when the definition of a word begins with „means‟ it is indicative of
the fact that the meaning of the word has been restricted; that is to say, it would
not mean anything else but what has been indicated in the definition itself.
W.P.(C) No.9272 of 2018 Page 13 of 98
5.7. The relevant portions of Schedule-II [Rule 25(5) and Rule
32(2)] and Schedule-III [Rule 2(gg)-- Controlling
Authority] are reproduced hereunder:
Schedule-II
See Rule 25(5) and Rule 32(2)
Royalty
33. Ordinary clay, silt, rehmatti, Rupees thirty five
brick-earth, ordinary earth, per cubic metre
moorum
Schedule-III
See Rule 2(g)
Sl. Type of Controlling
No. Minerals Authority
1. Specified minor minerals and Government in
all minor minerals occurring in Steel and Mines
areas granted under mining Department
lease for major minerals
2. Ordinary clay, silt, rehmatti,
ordinary sand other than used
for industrial and prescribed
purposes, brick-earth,
ordinary earth, moorum,
laterite slabs, ordinary
boulders, road metals
including ballasts, chips, bajri
and rock fines generated from
stone crushers, gravels of
ordinary stones and river
Therefore, unless there is any vagueness of ambiguity, no occasion will arise to
interpret the term in a manner which may add something to the meaning of the
word which ordinarily does not so mean by the definition itself, more particularly,
where it is a restrictive definition.‟
According to the Constitution Bench in PLD Corporation Ltd. Vrs. Presiding Officer,
(1990) 3 SCR 111, 150 when the statute says that a word or phrase shall mean
certain things it is a „hard and fast definition, and no other meaning can be
assigned to the expression than is put down. A definition is an explicit statement
of the full connotation of a term‟."
W.P.(C) No.9272 of 2018 Page 14 of 98
shingles and pebbles:
(a) when occurring in non- Deputy Director of
forest land Mines of respective
jurisdiction
(b) when available in any Principal Chief
forest area Conservator of
Forest, Odisha.
5.8. The petitioner has affirmed by way of rejoinder affidavit
dated 26.03.2019 (Paragraph 5), that:
"*** The petitioner being the successful tenderer has been
assigned with the said work of construction of Ash Pond
and accordingly the petitioner during such construction
has dug up and extracted earth from the land
belonging to opposite party No.5-Corporation and
has re-deployed the extracted earth for construction
of dyke/embankment thereof. It is undisputed by the
parties that the earth extracted during construction
of Ash Pond has been re-deployed there for dyke
purpose. As such there is no commercial exploitation of
the excavated earth by the petitioner and that the
excavated earth was not sent outside or sold to anybody
for commercial gain. In view of the above, construction of
Ash Pond being the domestic use of the opposite party
No.5/Corporation and the extracted earth having been
admittedly re-deployed there, it is undeniable that the
removal of minor mineral, i.e., earth in the present case is
for the „bona fide domestic consumption‟ of opposite party
No.5/ Corporation. It is vehemently denied that the
construction of Ash Pond is a commercial project of
the opposite party No.5/Corporation. As such, the
removal of minor mineral by the petitioner for the
opposite party No.5/Corporation is squarely coming
under the proviso to Rule 3(1) of the Odisha Minor
W.P.(C) No.9272 of 2018 Page 15 of 98
Mineral Concession Rules, 2016. In absence of any
mining or quarrying operation, the impugned
demand of royalty under Rule 32(2) of the Odisha
Minor Mineral Concession Rules, 2016 is bad in
law."
5.9. By setting forth relevant clauses of the Contract, the
OPGC in its counter affidavit strongly contended with
respect to liability for payment of royalty despite change
of law. It is submitted that the Contract being entered
into after coming into force the Odisha Minor Mineral
Concession Rules, 2016, in view of different clauses of
Contract, it is the contractor (petitioner) who is to
discharge liability to pay royalty. Under the Heading
―Definitions; Interpretation‖ vide Clause 1.0 of the
Contract for construction of Ash Pond at Tilia Village
entered into between OPGC and the petitioner
(Annexure-A/5) it is contained as follows:
"1.1. Defined terms.--
As used in this contract, the following terms shall
have the following meanings (such meaning as
necessary to be equally applicable to both the
singular and plural forms of the terms defined
unless the context otherwise requires):
APPLICABLE LAWS means any and all acts,
statutes, laws, codes, standards, regulations,
permits, constitutions, licenses, ordinances,
rules, judgments, orders, decrees, directives,
consents including but not limited to conditions laid
W.P.(C) No.9272 of 2018 Page 16 of 98
down in Consent to Establish issued by Odisha
Pollution Control Board vide Order No. 14266/Ind-II-
NOC-5037 dated 28.08.2010 and extensions and
modifications thereof, clearances including but not
limited to the conditions laid down in environmental
clearance granted by MoEF vide Letter No.J-
13011/5912008-IA.il(T) dated 04.02.2010 and
extension and modifications thereof, guidelines or
policies (to the extent mandatory), or any similar
form of decision or determination by, or any
interpretation or administration of any of the
foregoing, by any Government Authority concerning,
relating to or having jurisdiction over the
transportation, importation, customs clearance,
immigration, design, engineering, procurement,
permitting, fabrication, construction, installation,
commissioning, start-up, testing, ownership,
operation or maintenance of the equipment or any of
its components, the Site, Contractor, any
Subcontractor, Owner, the performance of the Work
or any other services to be performed under this
Contract, including:
(a) those of the Country, or any other country
where any of the work is being performed,
(b) Site-specific environmental requirements
(including those governing noise emissions),
including but not limited to those identified in
the Technical Specification,
(c) any applicable anti-corruption, anti-money
laundering, anti-terrorism and economic
sanction and anti-boycott laws etc.
W.P.(C) No.9272 of 2018 Page 17 of 98
***
CHANGE OF LAW means a change in, or the
enactment, promulgation, issuance or entry into
law of, any Applicable Law by a Government
Authority of the Country that occurs subsequent
to 23rd November 2016, including the introduction
of any new tax or change in the rate of any existing
tax, but excluding:
(a) any changes of law relating to taxation of
income or any other tax, duty, levy, impost, fee,
royalty or charge for which Contractor is
responsible under this Contract or
(b) any changes of law that are enacted on or
before the 23rd November 2016, but will come
into force after the 23rd November 2016.
1.2.6.Laws and Permits.--
References to any act, statute, law, code, standard,
regulation, permit, constitution, license, ordinance,
rule, judgment, order, decree, directive, guideline or
policy or policy (including Applicable Laws) shall be
construed as a reference to the same as it may have
been, or may from time to time be, amended,
modified, supplemented or re-enacted."
5.10. Meaningful reading of the afore-mentioned clauses
would lead to indicate that the Rules, 2016 having
superseded the Rules, 2004, the ―applicable laws‖ as
superseded would be applicable.
W.P.(C) No.9272 of 2018 Page 18 of 98
5.11. The Odisha Minor Mineral Concession Rules, 2016 came
into force with effect from 15.12.2016 by superseding
the Odisha Minor Mineral Concession Rules, 2004. The
said Rules saved the ―things done or omitted to be done
before such supersession" under the Rules, 2004. The
word ―supersede‖ vide Black's Law Dictionary, 5th
Edition, as referred to in Calcutta Municipal Corporation
Vrs. Pawan Kumar Saraf, (1999) 2 SCC 400 = (1999) 1
SCR 74, means ―obliterate, set aside, annul, replace,
make void or inefficacious or useless, repeal‖. The
purport of ―supersession‖ has been succinctly explained
in Union of India Vrs. Glaxo India Ltd., (2011) 6 SCC 668
= (2011) 4 SCR 50 as follows:
"39. The impugned notification uses the expression
„supersession' of the earlier notification. Therefore,
the first question that requires to be considered and
answered by us is, what is the meaning of the
expression „supersession‟ and what is its effect.
Webster‟s Third New International Dictionary
defines the word „supersession‟ to mean „the state of
being superseded‟, „removal‟ and „replacement‟. P.
Ramanatha Aiyar‟s Advanced Law Lexicon defines
„superseded‟ as „set aside‟ and „replaced by‟. The
view of this Court in some of the decisions is that the
expression „supersession‟ has to be understood to
amount „to repeal‟ and when notification is repealed,
the provisions of Section 6 of the General Clauses
Act would not apply to notifications.
***
W.P.(C) No.9272 of 2018 Page 19 of 98
42. In State of Orissa Vrs. Titaghur Paper Mills
Company Ltd., 1985 Supp SCC 280 = AIR 1985 SC
1293, the specific question whether on
„supersession‟ of a notification, the liability to tax for
a period prior to the supersession was wiped out or
not, directly arose and was considered. This Court
came to the conclusion that the previous liability to
tax for a period prior to the supersession was not
wiped out. In our view, the results that flow from
changes in the law by way of amendment, „repeal‟,
„substitution‟ or „supersession‟ on the earlier rights
and obligations cannot be decided on any set
formulae. It is essentially a matter of construction
and depends on the intendment of the law as could
be gathered from the provisions in accordance with
accepted cannons of construction.
***
45. In Syed Mustafa Mohamed Ghouse v. State of
Mysore, (1963) 1 Cri LJ 372 (Mys), the Sugar
(Movement Control) Order, 1959 of 06.11.1959 was
passed in supersession of the Sugar (Movement
Control) Order, 1959, dated 27.07.1959. It was held
that in law „supersession‟ has not the same effect as
repeal and proceedings of a superseded order can
be commenced. In R.S. Anand Behari Lal Vrs. United
Provinces Govt., AIR 1955 NUC 2769 (All), it was
held that in case of supersession of a notification,
the objections and liabilities accrued and incurred
under the earlier notification remain unaffected,
since the supersession will be effected from the date
of second notification and not retrospectively, so as
to abrogate the earlier notification from the date of
its commencement."
W.P.(C) No.9272 of 2018 Page 20 of 98
5.12. The distinction between the word ―substitution‖ and the
term ―supersession‖ can well be deduced from the
following observation of the Hon'ble Supreme Court of
India in the case of State of Maharashtra Vrs. Central
Provinces Manganese Ore Co. Ltd., (1977) 1 SCC 643:
"14. The following passage was also cited from Koteswar
Vittal Kamath Vrs. K. Rangappa Balica & Co., (1969)
1 SCC 255 = AIR 1969 SC 504 (at page 509) =
(1969) 3 SCR 40 (at p. 47):
„Learned counsel for the respondent, however, urged
that the Prohibition Order of 1119 cannot, in any
case, be held to have continued after 8th March,
1950, if the principle laid down by this Court in Firm
A.T.B. Mehtab Majid & Co. Vrs. State of Madras,
1963 Supp (2) SCR 435 = AIR 1963 SC 928 is
applied. In that case, Rule 16 of the Madras General
Sales Tax (Turnover and Assessment) Rules, 1939,
was impugned. A new Rule 16 was substituted for
the old Rule 16 by publication on September 7,
1955, and this new rule was to be effective from 1st
April, 1955. The Court held that the new Rule 16(2)
was invalid because the provisions of that rule
contravened the provisions of Article 304(a) of the
Constitution. Thereupon, it was urged before the
Court that, if the impugned rule be held to be invalid,
the old Rule 16 gets revived, so that the tax
assessed on the basis of that rule will be good. The
Court rejected this submission by holding that:
„Once the old rule has been substituted by the new
rule, it ceases to exist and it does not automatically
get revived when the new rule is held to be invalid.‟
W.P.(C) No.9272 of 2018 Page 21 of 98
On that analogy, it was argued that, if we hold that
the Prohibition Order of 1950 was invalid, the
previous Prohibition Order of 1119 cannot be held to
be revived. This argument ignores the distinction
between supersession of a rule, and substitution of
a rule. In the case of 1963 Supp (2) SCR 435 = AIR
1963 SC 928 (supra), the new Rule 16 was
substituted for the old Rule 16. The process of
substitution consists of two steps. First, the old rule
is made to cease to exist, and, next, the new rule is
brought into existence in its place. Even if the new
rule be invalid, the first step of the old rule ceasing
to exist comes into effect and it was for this reason
that the Court held that, on declaration of the new
rule as invalid, the old rule could not be held to be
revived‟.
15. In the above mentioned passage, this Court merely
explained the argument which was accepted in the
case of firm A.T.B. Mehtab Majid & Co. Vrs. State of
Madras, 1963 Supp (2) SCR 435 = AIR 1963 SC
928). After doing so, it distinguished the facts in
Koteshwar Vittal Kamath Vrs. K. Rangappa Baliga,
AIR 1969 SC 504, relating to an alleged substitution
of one Prohibition Order by a subsequent order
which was found to be invalid. It recorded its
conclusion as follows (at p. 509):
„In the case before us, there was no substitution of
the Prohibition Order of 1950 for the Prohibition
Order of 1119. The Prohibition Order of 1950 was
promulgated independently of the Prohibition Order
of 1119, and because of the provisions of law it
would have had the effect of making the Prohibition
Order of 1119 inoperative if it had been a valid
W.P.(C) No.9272 of 2018 Page 22 of 98
order. If the Prohibition Order of 1950 is found-to be
void ab initio, it could never make the Prohibition
Order of 1119 inoperative‟.
16. The argument before us is that since the word
„substituted‟ is used in the amending Act of 1949, it
necessarily follows that the process embraces two
steps. One of repeal and another of the new
enactment. But, this argument is basically different
from the argument which prevailed in Koteswar‟s
case (supra) where a distinction was drawn
between a „substitution‟ and „supersession‟. It is
true that, as the term substitution was not used
there, the old rule was not held to have been
repealed. Nevertheless, the real basis of that
decision was that what was called supersession
was void ab initio so that the law remained what it
would have been if no such legislative process had
taken place at all. It was held that the void and
inoperative legislative process did not affect the
validity of the pre-existing rule. And, this is precisely
what is contended or by the State before us."
5.13. The word ―supersession‖, as finds place in the Odisha
Rules, 2016, framed in exercise of powers conferred by
Section 15(1) of the Mines and Minerals (Development
and Regulation) Act, 1957, is construed to be used in
the sense as the word ―repeal‖ or the words ―repeal and
replacement‖. Using the term ―supersession‖ in said
notification, by the expression ―in supersession of the
provisions contained in the Odisha Minor Mineral
Concession Rules, 2004‖ all that was done was to repeal
W.P.(C) No.9272 of 2018 Page 23 of 98
and replace the previous Rules. Thus understood, the
Odisha Minor Mineral Concession Rules, 2016, repealed
and replaced the Odisha Minor Mineral Concession
Rules, 2004. The succeeding words ―except as respect
the things done or omitted to be done before such
supersession‖ contained in said Rules, 2016 are
significant, which can be construed to mean the earlier
action/process undertaken on the basis of the Rules,
2004 as amended from time to time is not wiped out.
Therefore, the only conclusion can be arrived at is that
the Rules, 2016 would be attracted even as the actions
under the Rules, 2004 would not be wiped out.
5.14. It is by now well-settled and does not require any
authority to be quoted for the proposition that there is
no estoppel against statute. Thus, the change of law
would attract in the present set of facts attracts proprio
vigore. Finding enclosed with the counter affidavit filed
on behalf of the opposite party Nos.3 and 4 as
Annexure-B/4, from which the following is transpired
with respect to clarification being issued by the
Government of Odisha in Revenue and Disaster
Management Department addressed to the Collector,
Jharsuguda vide Letter No.RDM-LRGEC-CLRIF-0002-
2018/4214/R&DM, dated 31.01.2018:
W.P.(C) No.9272 of 2018 Page 24 of 98
"In inviting a reference to your Letter No.706, dated
25.01.2018 on the subject cited above, I am directed to
say that mineral found on any land, including
Government land, leasehold land or even private land
belongs to Government minerals like ordinary clay, silt
and ordinary earth etc. are the items of or minor minerals
as per Schedule-III of the Odisha Minor Mineral
Concession Rules, 2016.
As per the lease principles under the Odisha Government
Land Settlement Act, the surface right has been leased
out, not the minerals. Besides, Rule 3 of the Odisha Minor
Mineral Concession Rules, 2016 provides that „no person
shall undertake any prospecting operation or mining
operation or quarrying operation for minor minerals in any
area except under and in accordance with the terms and
conditions of a prospecting licence-cum-mining lease or a
quarry permit granted under these Rules.‟
Thus, it is amply clear that the company which has been
provided land shall have no right to use the minor mineral
on it.
Therefore, it in the instant case, the company has to pay
royalty and other dues for the minerals they have
extracted from the leased out land.
This is for your information and further necessary action."
5.15. Relevant provisions of the Odisha Minor Mineral
Concession Rules, 2004 and the Odisha Minor Mineral
Concession Rules, 2016 are reproduced hereunder for
benefit of understanding:
W.P.(C) No.9272 of 2018 Page 25 of 98
The Odisha Minor Mineral the Odisha Minor Mineral
Concession Rules, 20043 Concession Rules, 20164
2. Definitions.-- 2. Definitions.--
(1) In these rules, unless (1) In these rules, unless
the context otherwise the context otherwise
requires,-- requires,--
(r) ‗Quarry lease' means a (q) ―Mining lease‖ means a
lease granted on lease granted under
tenure basis for these rules for specified
extraction, collection minor minerals over a
and/or removal of compact area;
minor minerals other (u) ―Quarry lease‖ means a
than decorative stones lease granted on tenure
over a compact area; basis for extraction,
(t) ‗Quarrying operations' collection and/or
means any operation removal of minor
undertaken for the minerals other than
purpose of winning specified minor
any minor mineral minerals over a
including decorative compact area;
stones and shall (v) ―Quarrying operation‖
include erection of means any operation
machinery, laying of undertaken for the
tramways, purpose of winning any
construction of roads minor mineral other
and other preliminary than specified minor
operations for the minerals and shall
purpose of quarrying; include erection of
(2) Words and expressions machinery, laying of
3 These Rules are framed in exercise of powers conferred by Sub-section (1) of
Section 15 of the Mines and Minerals (Development and Regulation) Act, 1957
(67 of 1957), by the State Government for regulating the grant of mineral
concessions in respect of minerals and for purposes connected therewith, vide
Notification No. S.R.O. No.421/2004, published in the Orissa Gazette
Extraordinary No. 1167, dated 31.8.2004.
4 These Rules are framed
W.P.(C) No.9272 of 2018 Page 26 of 98
used herein but not tramways, construction
defined in these rules of roads and other
shall have the preliminary operations
meanings as for the purpose of
respectively assigned quarrying;
to them in the Act, the (aa) ―Specified minor
Mineral Concession minerals‖ means all
Rules, 1960 and minor minerals
Granite Conservation including decorative
and Development stones other than the
Rules, 1999. minor minerals listed at
3. Restriction on serial No.2 of Schedule-
prospecting/mining/ III;
quarrying operation.-- (2) Words and expressions
(1) No person shall used herein but not
undertake any defined in these rules
prospecting or mining shall have the
or quarrying meanings as
operations for minor respectively assigned to
minerals in any area them in the Act, and
except under and in rules made thereunder.
accordance with the 3. Restriction on
terms and conditions prospecting or mining
of a prospecting or quarrying
licence or a operation.--
quarry/mining lease or (1) No person shall
auction of source or a undertake any
quarry permit, as the prospecting operation
case may be, granted or mining operation or
under these rules: quarrying operation for
Provided that minor minerals in any
extraction, collection area except under and
and/or removal of in accordance with the
minor minerals by a terms and conditions of
W.P.(C) No.9272 of 2018 Page 27 of 98
person from his own a prospecting license-
land for normal cum-mining lease or a
agricultural mining lease or a
operations or other quarry lease or a
bona fide domestic quarry permit, as the
consumptions shall case may be, granted
not be construed as under these rules:
quarrying operations. Provided that
Provided further that extraction, collection
nothing in this sub- and/or removal of
rule shall affect any minor minerals by a
quarrying operations person from his own
undertaken in any land for normal
area in accordance agricultural
with the terms and operations or other
conditions of a quarry bona fide domestic
lease or quarry permit consumptions shall
or auction sale before not be construed as
commencement of mining or quarrying
these rules which is in operation:
force at such Provided further that
commencement. nothing in this sub-rule
(2) No persons shall shall affect any
transport or store or prospecting or mining
cause to be or quarrying operation
transported or stored undertaken in any area
any minor minerals in accordance with the
for the purpose of terms and conditions of
selling or trading a prospecting license or
otherwise than in mining lease or quarry
accordance with lease or quarry permit
these rules. before commencement
(3) In the interest of of these rules which is
mineral development, in force at such
W.P.(C) No.9272 of 2018 Page 28 of 98
preservation of natural commencement:
environment, Provided also that
prevention of pollution nothing in this rule
or to avoid danger to shall apply to
public health or prospecting operations
communication or to undertaken by any
ensure safety to agency or organization
building, monuments of the State or the
or other structures, or Central Government.
for such other (2) No person shall
purposes, the transport or store or
competent/ controlling cause to be
authority may, by transported or stored
order in respect of any any minor mineral for
minor mineral, make the purpose of selling
premature termination or trading otherwise
of a prospecting than in accordance
license or mining/ with these rules.
quarry lease after (3) In the interest of
giving the holder of mineral development,
license or lease a preservation of natural
reasonable opportunity environment,
of being heard. prevention of pollution
Provided that the or to avoid danger to
Deputy Director, public health or
Mines/Mining Officer/ communication or to
Tahasildar/ Divisional ensure safety to
Forest Officer having buildings, monuments
jurisdiction, may in an or other structures or
emergent situation or to protect national
in case of irreparable security or for such
loss, pass necessary other purposes, the
orders as deemed Competent/Controlling
proper in the interest Authority may, by an
W.P.(C) No.9272 of 2018 Page 29 of 98
of mineral order in respect of any
development, minor mineral, make
preservation of natural premature termination
environment, of prospecting license-
prevention of pollution cum-mining lease or
or to avoid danger to mining lease or quarry
public health or lease or quarry permit
communication or to after giving the holder
ensure safety to of license or lease or
building, monuments permit a reasonable
or other structures, or opportunity of being
for such other heard:
purposes. Provided that the
Deputy Director of
Mines or Mining Officer
or Divisional Forest
Officer having
jurisdiction, may in an
emergent situation or
in case of irreparable
loss, pass necessary
orders as deemed
proper in the interest of
mineral development,
preservation of natural
environment,
prevention of pollution,
protection of national
security, or to avoid
danger to public health
or communication or to
ensure safety to
buildings, monuments
or other structures or
W.P.(C) No.9272 of 2018 Page 30 of 98
for such other
purposes.
5.16. First of all it is difficult to accede to the contention of the
petitioner as pleaded that the activity could not be
construed to be commercial nature. Order No.2224,
dated 02.03.2016 issued by the Collector, Jharsuguda,
clearly stated that the land has been leased out in
favour of IDCO under the provisions of the Odisha
Government Land Settlement Act, 1962 ―for
establishment of industries‖. Both the owner-OPGC as
well as the contractor in the Contract for construction of
Ash Pond dated 21.12.2016 described themselves to be
companies incorporated within the meaning of the
Companies Act, 2013. The contract is awarded to the
petitioner on being declared as successful in the Request
for Proposal.
5.17. In Jagdish Mandal Vrs. State of Orissa, (2007) 14 SCC
517 it has been laid down that:
"21. We may refer to some of the decisions of this Court,
which have dealt with the scope of judicial review of
award of contracts.
***
21.3. In Raunaq International Ltd. Vrs. I.V.R. Construction
Ltd., (1999) 1 SCC 492 this Court dealt with the
matter in some detail. This Court held:
W.P.(C) No.9272 of 2018 Page 31 of 98
"9. The award of a contract, whether it is by
a private party or by a public body or the
State, is essentially a commercial
transaction. In arriving at a commercial
decision, considerations which are of
paramount importance are commercial
considerations. These would be:
(1) the price at which the other side is willing
to do the work;
(2) whether the goods or services offered are
of the requisite specifications;
(3) whether the person tendering has the
ability to deliver the goods or services as
per specifications. When large works
contracts involving engagement of
substantial manpower or requiring
specific skills are to be offered, the
financial ability of the tenderer to fulfil the
requirements of the job is also important;
(4) the ability of the tenderer to deliver goods
or services or to do the work of the
requisite standard and quality;
(5) past experience of the tenderer, and
whether he has successfully completed
similar work earlier;
(6) time which will be taken to deliver the
goods or services; and often;
W.P.(C) No.9272 of 2018 Page 32 of 98
(7) the ability of the tenderer to take follow-
up action, rectify defects or to give post-
contract services.
Even when the State or a public body
enters into a commercial transaction,
considerations which would prevail in its
decision to award the contract to a given
party would be the same. However,
because the State or a public body or an
agency of the State enters into such a
contract, there could be, in a given case,
an element of public law or public interest
involved even in such a commercial
transaction. ***"
21.4. In Air India Ltd. Vrs. Cochin International Airport
Ltd., (2000) 2 SCC 617 this Court summarised the
scope of interference as enunciated in several earlier
decisions thus:
„7. *** The award of a contract, whether it is
by a private party or by a public body or
the State, is essentially a commercial
transaction. In arriving at a commercial
decision considerations which are
paramount are commercial
considerations. The State can choose its own
method to arrive at a decision. It can fix its own
terms of invitation to tender and that is not
open to judicial scrutiny. It can enter into
negotiations before finally deciding to accept
one of the offers made to it. Price need not
always be the sole criterion for awarding a
contract. It is free to grant any relaxation, for
W.P.(C) No.9272 of 2018 Page 33 of 98
bona fide reasons, if the tender conditions
permit such a relaxation. ***‟ ***"
5.18. Taking cue from the above observations of the Hon'ble
Supreme Court of India, it can safely be said that the
contract for construction of Ash Pond which is for the
purpose of commercial activity undertaken by the OPGC
and it cannot be denied that the petitioner has executed
the contract being declared successful in the bidding
process for commercial gain.
5.19. Careful reading of definitions of ―quarry lease‖ and
―quarrying operation‖ as given at Clauses (u) and (v) of
Rule 2 makes it clear that "extraction, collection and/or
removal of minor minerals other than specified minor
minerals over a compact area" and "any operation
undertaken for the purpose of winning any minor 5 mineral
5 In Bihar Mines Ltd. Vrs. Union of India, (1967) 1 SCR 707 the meaning of the
term ―winning‖ in the context of mining has been construed as follows:
"Counsel for the appellant submitted that a lease for extracting mineral from a
mine is not a lease for the purpose of winning a mineral within the purview of
Article 31-A(1)(e) of the Constitution, and as the Mines and Minerals (Regulation
and Development) Act, 1957 (67 of 1957) enables the compulsory acquisition of
such a lease by prematurely terminating it without payment of compensation, it
contravenes Article 31 and is not protected by Article 31-A(1)(e). Relying on Lewis
Vrs. Fothergill [Ch A 103] and Lord Rokeby case [7 AC 43 = 13 Ch D 277 = 9 Ch D
685] he submitted that a mineral is won when it is reached and is ready for
continuous working. In the collocation of words "work and win", the expression
"win" might be construed to mean some activity preparatory to the working and
extraction of the mineral. But we see no reason for giving this narrow
meaning to the expression "winning" in Article 31-A(1)(e) of the
Constitution or in Section 3(d) of the Mines and Minerals (Regulation and
Development) Act, 1957. In a popular sense, winning a mineral means
getting or extracting it from the mine. This is one of its dictionary meanings,
see The Shorter Oxford Dictionary. The plain and popular import of the expression
furnishes the true rule of the interpretation of Article 31-A(1)(e). A law providing
for the premature termination of a lease for getting or extracting a mineral is
W.P.(C) No.9272 of 2018 Page 34 of 98
other than specified minor minerals" would be
encompassed within the fold of the Rules, 2016, which
came into force with effect from 15.12.2016.
5.20. Appendix-D forming part of the aforesaid contract dated
21.12.2016 between OPGC and the petitioner would
reveal further fact that:
"The contractor shall be responsible for requesting,
obtaining, maintaining and paying for the permits
required for the full and complete performance of the
contract including without limitation the following which
shall be obtained by contractor in the name of owner
(OPGC):
Serial Permits Government
No. Authority
* * *
11. Usage of earth, ballast and all Government
such material Authority
5.21. Clause 1.2.6 under the heading ―Laws and Permits‖ of
the Contract referred to above makes it abundantly clear
that it is the responsibility of the contractor for obtaining
such permits. Said clause reads as follows:
"References to any act, statute, law, code, standard,
regulation, permit, constitution, licence, ordinance, rule,
judgment, order, decree, directive, guideline or policy
(including Applicable Laws) shall be construed as a
reference to the same as it may have been, or may from
protected by Article 31-A(1)(e), and cannot be attacked on the ground that it
contravenes Article 14, 19 or 31."
W.P.(C) No.9272 of 2018 Page 35 of 98
time to time be amended, modified, supplemented or re-
enacted."
5.22. Noticeably Clause 14.1.5 of the Contract stipulated that
all permits and other authorisations, approvals, orders
or consents required in connection with the execution,
delivery and performance of the Contract by contractor
have to be obtained.
5.23. The word ―any‖ used in the expression ―any operation
undertaken for the purpose of winning any minor
mineral‖ in Clause (v) of Rule 2 has much significance.
Meaning of the word ―any‖ can be understood as follows
vide, Saroj Kumar Sahoo Vrs. National Faceless
Assessment Centre, 2026 SCC OnLine Ori 679:
"8.19.The interpretation of word "any" came up for
consideration before the Supreme Court of India in
Lucknow Development Authority Vrs. M. K. Gupta,
(1994) 1 SCC 243 and it is held:
„The word „any‟ dictionarily means „one or some or
all‟.... The use of the word „any‟ in the context it has
been used in clause (o) indicates that it has been
used wider sense extending from one to all.‟
8.20. In Shri Balaganesan Metals Vrs. M.N. Shanmugham
Chetty, (1987) 2 SCC 707, after making a reference
to the meaning ascribed to the word in Black's Law
Dictionary, 15th Edition, it was held that the word
„any‟ has a diversity of meaning and may be
employed to indicate „all‟ or „every‟ as well as „some‟
W.P.(C) No.9272 of 2018 Page 36 of 98
or „one‟ and its meaning in a given statute depends
upon the context and the subject-matter of the
statute.
8.21. In Arjun Panditrao Khotkar Vrs. Kailash Kushanrao
Gorantyal, (2020) 7 SCR 180 it has been made clear
that:
„23. Under Sub-section (4) [Section 65B(4) of the
Evidence Act, 1872], a certificate is to be
produced that identifies the electronic record
containing the statement and describes the
manner in which it is produced, or gives
particulars of the device involved in the
production of the electronic record to show that
the electronic record was produced by a
computer, by either a person occupying a
responsible official position in relation to the
operation of the relevant device; or a person
who is in the management of "relevant
activities"- whichever is appropriate. What is
also of importance is that it shall be sufficient
for such matter to be stated to the "best of the
knowledge and belief of the person stating it".
Here, "doing any of the following things..."
must be read as doing all of the following
things, it being well settled that the expression
"any" can mean "all" given the context (see, for
example, this Court‟s judgments in Bansilal
Agarwalla Vrs. State of Bihar, (1962) 1 SCR
3316 and Om Parkash Vrs. Union of India,
6 "3. The first contention is based on an assumption that the word "any one" in
Section 76 means only "one of the directors, and only one of the
shareholders". This question as regards the interpretation of the word
"any one" in Section 76 was raised in Criminal Appeals Nos. 98 to 106 of
1959 (Chief Inspector of Mines, etc.) and it has been decided there that the
W.P.(C) No.9272 of 2018 Page 37 of 98
(2010) 4 SCC 1727. This being the case, the
conditions mentioned in sub-section (4) must
also be interpreted as being cumulative.‟
8.22. Having such understanding of the term "any", when
the word "any" is followed by "person" in
Explanation to Section 158B, it can be construed to
mean "every person"/"everyone"."
5.24. Understood thus the meaning of ―any‖, the fact as
adumbrated by the petitioner at paragraph 5 in the
rejoinder affidavit dated 26.03.2019 can be
unequivocally conceived. It is admitted that the
petitioner has ―extracted‖ earth during construction of
Ash Pond. Such activity, being comprehended within the
definition of ―quarrying operation‖ as given at Clause (v)
of Rule 2 of the Rules, 2016, requires ―Quarry Permit‖
envisaged under Clause (w) thereof. Clause (w) of Rule 2
of the Rules, 2016 defining the term ―quarry permit‖8
word "any one" should be interpreted there as "everyone". Thus under
Section 76 every one of the shareholders of a private company owning the
mine, and every one of the directors of a public company owning the mine
is liable to prosecution. No question of violation of Article 14 therefore
arises. "
7 "70. Perusal of the opinion of the Full Bench in B.R. Gupta-I [Balak Ram Gupta
Vrs. Union of India, AIR 1987 Del 239] would clearly indicate with regard
to interpretation of the word "any" in Explanation 1 to the first proviso to
Section 6 of the Act which expands the scope of stay order granted in one
case of landowners to be automatically extended to all those landowners,
whose lands are covered under the notifications issued under Section 4 of
the Act, irrespective of the fact whether there was any separate order of
stay or not as regards their lands. The logic assigned by the Full Bench,
the relevant portions whereof have been reproduced hereinabove, appear
to be reasonable, apt, legal and proper."
8 Clause (w) of Rule 2 of the Odisha Minor Mineral Concession Rules, 2016 reads
thus:
W.P.(C) No.9272 of 2018 Page 38 of 98
requires a permit to be obtained from Authority
concerned for ―extraction‖, ―collection‖ and/or ―removal‖
of minor mineral.
5.25. In Bhagwan Dass Vrs. State of U.P., (1976) 3 SCC 7849
the meaning of ―extraction‖ has been ascribed, to be
understood in the following sense:
"13. Only one more argument made on behalf of the
appellant requires to be noticed. It was urged that
the sand and gravel are deposited on the surface of
the land and not under the surface of the soil and
therefore they cannot be called minerals and equally
so, any operation by which they are collected or
gathered cannot properly be called a mining
operation. It is in the first place wrong to
assume that mines and minerals must always
be subsoil and that there can be no minerals on
the surface of the earth. Such an assumption
is contrary to informed experience. In any case,
the definition of mining operations and minor
minerals in Section 3(d) and (e) of the Act of 1957
and Rule 2(5) and (7) of the Rules of 1963 shows
that minerals need not be subterranean and
that mining operations cover every operation
undertaken for the purpose of "winning" any
minor mineral. "Winning" does not imply a
hazardous or perilous activity. The word
"QUARRY PERMIT means a permit granted for extraction, collection and/or removal
of any specified quantity of minor mineral other than specified minor minerals
under Chapter-V."
9 Referred to in nine-Judge Bench of the Hon'ble Supreme Court of India in the
matter of Mineral Area Development Authority Vrs. Steel Authority of India,
(2024) 7 SCR 1549.
W.P.(C) No.9272 of 2018 Page 39 of 98
simply means "extracting a mineral" and is
used generally to indicate any activity by
which a mineral is secured. "Extracting", in turn,
means, drawing out or obtaining. A tooth is
„extracted‟ as much as is fruit juice and as much as
a mineral. Only, that the effort varies from tooth to
tooth, from fruit to fruit and from mineral to mineral."
5.26. While considering Section 910 of the Mines and Minerals
(Development and Regulation) Act, 1957 read with Rule
64B and Rule 64C of the Mineral Concession Rules,
1960, in the case of State of Rajasthan Vrs. Hindustan
Zinc, (2014) 15 SCC 343 (cited at the Bar) it has been
held that lease holder is supposed to pay royalty only on
10 Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957
reads as follows:
"9. Royalties in respect of mining leases.―
(1) The holder of a mining lease granted before the commencement of this Act
shall, notwithstanding anything contained in the instrument of lease or in
any law in force at such commencement, pay royalty in respect of any
mineral removed or consumed by him or by his agent, manager,
employee, contractor or sub-lessee from the leased area after such
commencement, at the rate for the time being specified in the Second
Schedule in respect of that mineral.
(2) The holder of a mining lease granted on or after the commencement of this
Act shall pay royalty in respect of any mineral removed or consumed
by him or by his agent, manager, employee, contractor or sub-
lessee from the leased area at the rate for the time being specified in
the Second Schedule in respect of that mineral.
(2A) The holder of a mining lease, whether granted before or after the
commencement of the Mines and Minerals (Regulation and Development)
Amendment Act, 1972 (56 of 1972) shall not be liable to pay any royalty
in respect of any coal consumed by a workman engaged in a colliery
provided that such consumption by the workman does not exceed one-
third of a tonne per month.
(3) The Central Government may, by notification in the Official Gazette,
amend the Second Schedule so as to enhance or reduce the rate at which
royalty shall be payable in respect of any mineral with effect from such
date as may be specified in the notification:
Provided that the Central Government shall not enhance the rate of
royalty in respect of any mineral more than once during any period of
three years."
W.P.(C) No.9272 of 2018 Page 40 of 98
the contents of metal in ore produced and not on the
metal contained in the tailings, rejects or slimes which
were not taken out of the leased area but were dumped
into dumping ground of the leased area. Nonetheless, in
the instant case the fact-scenario is completely different
qua quarry lease. Here the consideration of this Court is
whether the nature of work undertaken by the petitioner
attracts liability for payment of ―royalty‖ as envisaged
under Rule 32 and in the teeth of definitions of various
terms contained in Rule 2 and restrictions imposed for
quarrying operation with specific reference to the
expression ―bona fide domestic consumptions‖ as
contemplated under Rule 3 of the Odisha Minor Mineral
Concession Rules, 2016 and whether the petitioner can
escape liability to pay royalty on extraction of earth in
absence of ―permit‖ from authority concerned as
required under the terms of Contract entered into with
the OPGC. The cited case law is distinguishable and has
no application to the present set of facts and the
language employed in the Odisha Minor Mineral
Concession Rules, 2016. Nothing is available on record
to imply that the petitioner has been accorded with such
―permit‖ by the competent authority for extraction/
winning of minor mineral, i.e., ordinary earth.
5.27. From the above analysis of facts, it is crystal clear that
without obtaining permission for extraction/winning of
W.P.(C) No.9272 of 2018 Page 41 of 98
minor mineral, the petitioner went on undertaking
quarry operation and upon extracting the earth beneath
the surface of leasehold area it ―redeployed the extracted
earth for construction of dyke/embankment‖.
6. This Court now would examine the liability to pay
royalty by the petitioner.
6.1. At paragraph 5 of the rejoinder affidavit the petitioner
candidly admitted that "it is undisputed by the parties
that the earth extracted during construction of Ash Pond
has been re-deployed there for dyke purpose". As has
already been taken note of that by way Notification dated
03.02.2000, the Ministry of Mines and Minerals declared
‗ordinary earth' used for filling or levelling purposes in
construction of embankment as ―minor mineral‖.
6.2. Sri Surya Prasad Mishra, learned Senior Advocate
appearing for OPGC cited Promoters and Builders
Association of Pune Vrs. State of Maharashtra, (2015) 12
SCC 736, wherein it has been held as follows:
"10. What is a mineral is not defined either under the
MRTP Act (Maharashtra Regional and Town
Planning Act, 1966) or the Code (Maharashtra Land
Revenue Code, 1966). The said expression is
however defined by Section 2(1)(j) of the Mines Act,
1952 and Section 3(a) read with Section 3(e) of the
1957 Act. As mining activities and operations are
regulated by the provisions of the 1957 Act it is the
W.P.(C) No.9272 of 2018 Page 42 of 98
definition contained in the said Act which will be
more relevant for the present. Section 3(a) and
Section 3(e) is in the following terms:
„3. Definitions.--
In this Act, unless the context otherwise
requires--
(a) „minerals‟ includes all minerals except
mineral oils;
(b)-(d) ***
(e) „minor minerals‟ means building stones,
gravel, ordinary clay, ordinary sand other
than sand used for prescribed purposes,
and any other mineral which the Central
Government may, by notification in the
Official Gazette, declare to be a minor
mineral;‟
11. Ordinary earth has been brought within
the fold of a minor mineral by Notification
of 03.02.2000 issued under Section 3(e)
of the 1957 Act. The said notification is in
the following terms:
*** (Notification)
It is, therefore, clear that "ordinary
earth" used for filling or levelling
purposes in construction of
embankments, roads, railways,
buildings is deemed to be a minor
mineral.
W.P.(C) No.9272 of 2018 Page 43 of 98
12. It is not in dispute that in the present
appeals excavation of ordinary earth had
been undertaken by the appellants either
for laying foundation of buildings or for
the purpose of widening of the channel to
bring adequate quantity of sea water for
the purpose of cooling the nuclear plant.
The construction of buildings is in terms
of a sanctioned development plan under
the MRTP Act whereas the excavation/
widening of the channel to bring sea
water is in furtherance of the object of the
grant of the land in favour of Nuclear
Power Corporation. The appellant
builders contend that there is no
commercial exploitation of the dug up
earth inasmuch as the same is
redeployed in the construction activity
itself. In the case of Nuclear Power
Corporation it is the specific case of the
Corporation that extract of earth is a
consequence of the use of the land for the
purposes of the grant thereof and that
there is no commercial exploitation of the
excavated earth inasmuch as „the soil
being excavated for „Intake Channel‟ was
not sent outside or sold to anybody for
commercial gain‟.
***
14. Though Section 2(1)(j) of the Mines Act,
1952 which defines "mine" and the
expression "mining operations" appearing
in Section 3(d) of the 1957 Act may
W.P.(C) No.9272 of 2018 Page 44 of 98
contemplate a somewhat elaborate
process of extraction of a mineral, in view
of the Notification dated 03.02.2000,
insofar as ordinary earth is concerned, a
simple process of excavation may also
amount to a mining operation in any
given situation. However, as seen, the
operation of the said notification has
an inbuilt restriction. It is ordinary
earth used only for the purposes
enumerated therein, namely, filling
or levelling purposes in construction
of embankments, roads, railways and
buildings which alone is a minor
mineral. Excavation of ordinary earth for
uses not contemplated in the aforesaid
notification, therefore, would not amount
to a mining activity so as to attract the
wrath of the provisions of either the Code
or the 1957 Act.
15. As use can only follow extraction or
excavation it is the purpose of the
excavation that has to be seen. The
liability under Section 48(7) for
excavation of ordinary earth would,
therefore, truly depend on a
determination of the use/purpose for
which the excavated earth had been
put to. An excavation undertaken to lay
the foundation of a building would not,
ordinarily, carry the intention to use the
excavated earth for the purpose of filling
up or levelling. A blanket
W.P.(C) No.9272 of 2018 Page 45 of 98
determination of liability merely
because ordinary earth was dug up,
therefore, would not be justified;
what would be required is a more
precise determination of the end use
of the excavated earth; a finding on
the correctness of the stand of the
builders that the extracted earth was
not used commercially but was
redeployed in the building
operations. If the determination was to
return a finding in favour of the claim
made by the builders, obviously, the
Notification dated 3-2-2000 would have
no application; the excavated earth would
not be a specie of minor mineral under
Section 3(e) of the 1957 Act read with the
Notification dated 03.02.2000.
16. Insofar as the appeal filed by Nuclear
Power Corporation is concerned, the
purpose of excavation, ex facie, being
relatable to the purpose of the grant of the
land to the Corporation by the State
Government, the extraction of ordinary
earth was clearly not for the purposes
spelt out by the said Notification dated
03.02.2000. The process undertaken by
the Corporation is to further the objects of
the grant in the course of which the
excavation of earth is but coincidental. In
this regard we must notice with approval
the following views expressed by the
Bombay High Court in Rashtriya
W.P.(C) No.9272 of 2018 Page 46 of 98
Chemicals and Fertilizers Ltd. Vrs. State
of Maharashtra, 1992 SCC OnLine Bom
248 = AIR 1993 Bom 144 while dealing
with a somewhat similar question:
„14. If it were a mere question of the
Mines and Minerals Act, 1957
covering the removal of earth, there
cannot be possibly any doubt
whatever, now, in view of the very
wide definition of the term contained
in the enactment itself, and as
interpreted by the authoritative
pronouncements of the Supreme
Court. As noted earlier, the question
involved in the present case is not to
be determined with reference to the
Central enactment but with
reference to the clauses in the grant
and the provisions in the Code.
When it is noted that the Company
was given the land for the purpose
of erecting massive structures as
needed in setting up a chemical
factory of the designs and
dimensions of the company, the
context would certainly rule out a
reservation for the State Government
of the earth that is found in the
land. That will very much defeat the
purpose of the grant itself. Every
use of the sod, or piercing of the
land with a pick-axe, would, in that
eventuality, require sanction of the
W.P.(C) No.9272 of 2018 Page 47 of 98
authorities. The interpretation so
placed, would frustrate the intention
of the grant and lead to patently
absurd results. To equate the earth
removed in the process of digging a
foundation, or otherwise, as a
mineral product, in that context,
would be a murder of an alien but
lovely language. The reading of the
entire grant, would certainly rule out
a proposition equating every pebble
or particle of soil in the granted land
as partaking the character of a
mineral product. In the light of the
above conclusion, I am clearly of the
view that the orders of the
authorities, are vitiated by errors of
law apparent on the face of the
record. They are liable to be
quashed. I do so.‟
17. For the aforesaid reasons all the appeals
are allowed, however, with the direction
that in the cases of the appellant builders
the respondent State will be at liberty to
proceed further in accordance with the
observations contained in this order if it is
so advised."
The petitioner cannot gain support from aforesaid case
in Promoters and Builders Association of Pune (supra)
inasmuch as the said case proceeded to consider
whether ―earth‖ is ―minor mineral‖ in terms of
W.P.(C) No.9272 of 2018 Page 48 of 98
Notification dated 03.02.2000 on the facts of said case.
It was held on the fact that penalty with reference to
Maharashtra Land Revenue Code, 1966 cannot be
fastened with respect to excavation of earth and its
redeployment for laying foundation of building without
commercial usage. The Bombay High Court in the said
case was considering whether ―excavation activity even
for the purposes of laying foundation of the building
would still attract rigours of Section 48(7) of the
Maharashtra Land Revenue Code, 1966‖. Per contra, in
the instant case, this Court is called upon to consider
the language set forth in the Odisha Minor Mineral
Concession Rules, 2016 read with Notification dated
03.02.2000 and the activity of the petitioner in
construction of Ash Pond in connection with the Power
Plant which is for commercial use of OPGC. The Hon'ble
Supreme Court of India in the context of statutory
framework in Odisha Minor Mineral Concession Rules,
1990, in the case of State of Odisha Vrs. Union of India,
(2001) 1 SCC 429 decided that earth excavated from
leasehold area and utilized thereat would attract levy of
royalty.
6.3. As discussed in the foregoing paragraphs, such
categorization can also be discernible from the definition
clause read with items/entries in Schedules appended to
the Odisha Minor Mineral Concession Rules, 2016. This
W.P.(C) No.9272 of 2018 Page 49 of 98
apart, in Som Datt Builders Limited Vrs. Union of India,
(2010) 1 SCC 311 taking into consideration the Central
Government Notification No.GSR 95(E), dated
03.02.2000, the Hon'ble Supreme Court of India held as
follows:
"6. *** That a substance has to be a mineral before it
can be notified as a "minor mineral" pursuant to the
power under Section 3(e) of the Act of 1957 is not in
dispute. Whether "ordinary earth" is a mineral is the
primary question for consideration. The question is a
little intricate one because the definition of
"minerals" in the 1957 Act is not of much help in
finding answer to the question.
7. The word "mineral" has come up for judicial
interpretation from time to time. In Glasgow Corpn.
Vrs. Farie, (1888) 13 AC 657 = (1886-90) All ER Rep
115 (HL) the issue before the House of Lords was
whether clay is included in "other minerals" under
the Waterworks Clauses Act, 1847. Lord Halsbury,
L.C. said: (AC pp. 669-70)
„There is no doubt that more accurate scientific
investigation of the substances of the earth and
different modes of extracting them have contributed
to render the sense of the word „minerals‟ less
certain than when it originally was used in relation
to mining operations. I should think that there could
be no doubt that the word „minerals‟ in old times
meant the substances got by mining, and I think
mining in old times meant subterranean excavation.
I doubt whether in the present state of the
authorities it is accurate to say that in every deed or
W.P.(C) No.9272 of 2018 Page 50 of 98
in every statute the word „minerals‟ has acquired a
meaning of its own independently of any question
as to the manner in which the minerals themselves
are gotten.‟
Lord Watson in his opinion stated that "mines" and
"minerals" are not definite terms: they are
susceptible of limitation or expansion, according to
the intention with which they are used.
***
9. In Scott Vrs. Midland Railway Co., (1901) 1 KB 317
(DC) Darling, J. observed that the word "minerals" is
one which at different times has been used with
very different meanings. In some statutes it has a
very restricted meaning, in others a very wide one.
In order to determine in each case whether the word
is used in a wide or narrow sense we must, as Lord
Herschell said in Glasgow Corpn. Vrs. Farie, (1888)
13 AC 657 = (1886-90) All ER Rep 115 (HL), look at
the object which the legislature had in view.
10. In Great Western Railway Co. Vrs. Carpalla United
China Clay Co. Ltd., 1910 AC 83 (HL) the House of
Lords had an issue before it whether china clay was
a mineral within the provisions of the Railways
Clauses Consolidation Act, 1845. Lord Macnaghten
said: (AC p. 84)
„... „... the word "minerals" undoubtedly may have a
wider meaning than the word "mines". In its widest
signification it probably means every inorganic
substance forming part of the crust of the earth other
than the layer of soil which sustains vegetable life.‟
W.P.(C) No.9272 of 2018 Page 51 of 98
[Ed.: As observed in Glasgow Corpn. v. Farie, (1888)
13 AC 657, at p. 689.]‟
12. In Banarsi Dass Chadha and Bros. Vrs. Lt.
Governor, Delhi Admn., (1978) 4 SCC 11, a three-
Judge Bench of this Court was seized with the
question whether "brick earth" is a "minor mineral"
within the meaning of that expression as defined in
Section 3(e) of the 1957 Act. Chinnappa Reddy, J.
speaking for the Bench observed: (SCC p. 13, para
4)
„4. … The expression „minor mineral‟ as defined in
Section 3(e) includes „ordinary clay‟ and
„ordinary sand‟. If the expression „minor
mineral‟ as defined in Section 3(e) of the Act
includes „ordinary clay‟ and „ordinary sand‟,
there is no reason why earth used for the
purpose of making bricks should not be
comprehended within the meaning of the word
„any other mineral‟ which may be declared as
a „minor mineral‟ by the Government. The word
„mineral‟ is not a term of art. It is a word of
common parlance, capable of a multiplicity of
meanings depending upon the context. For
example the word is occasionally used in a
very wide sense to denote any substance that
is neither animal nor vegetable. Sometimes it is
used in a narrow sense to mean no more than
precious metals like gold and silver. Again, the
word „minerals‟ is often used to indicate
substances obtained from underneath the
surface of the earth by digging or quarrying.
But this is not always so as pointed out by
W.P.(C) No.9272 of 2018 Page 52 of 98
Chandrachud, J. (as he then was) in Bhagwan
Dass Vrs. State of U.P., (1976) 3 SCC 784 …‟
13. This Court referred to a decision of the Supreme
Court of United States in Northern Pacific Railway
Co. Vrs. John A. Soderberg, 47 L Ed 575 = 188 US
526 (1902) and quoted the observations made
therein (Soderberg case, 47 L Ed 575 = 188 US 526
(1902), L Ed p. 581) as follows: (Banarsi Dass
Chadha case [(1978) 4 SCC 11] , SCC pp. 13-14,
para 5)
„5. … „The word “mineral” is used in so many
senses, dependent upon the context, that the
ordinary definitions of the dictionary throw but
little light upon its signification in a given case.
Thus, the scientific division of all matter into
the animal, vegetable, or mineral kingdom
would be absurd as applied to a grant of
lands, since all lands belong to the mineral
kingdom, and therefore could not be excepted
from the grant without being destructive of it.
Upon the other hand, a definition which would
confine it to the precious metals– gold and
silver– would so limit its application as to
destroy at once half the value of the exception.
Equally subversive of the grant would be the
definition of minerals found in the Century
Dictionary; as “any constituent of the earth’s
crust;” and that of Bainbridge on Mines: “All
the substances that now form, or which once
formed, a part of the solid body of the earth.”
Nor do we approximate much more closely to
the meaning of the word by treating minerals
as substances which are “mined”, as
W.P.(C) No.9272 of 2018 Page 53 of 98
distinguished from those which are “quarried”,
since many valuable deposits of gold, copper,
iron, and coal lie upon or near the surface of
the earth, and some of the most valuable
building stone, such, for instance, as the Caen
stone in France, is excavated from mines
running far beneath the surface. This
distinction between underground mines and
open workings was expressly repudiated in
Midland Railway Co. Vrs. Haunchwood Brick
& Tile Co., (1882) 20 Ch D 552 and in Hext
Vrs. Gill, (1872) 7 Ch App 699 = (1861-73) All
ER Rep 388.‟ „
14. This Court further held in para 6 of the Report thus:
(Banarsi Dass Chadha case, (1978) 4 SCC 11, SCC
p. 14)„6. The Supreme Court of United States also
referred to several English cases where stone
for road making or paving was held to be
„mineral‟, as also granite, sandstone,
flintstone, gravel, marble, fire-clay, brick-clay,
and the like. It is clear that the word „mineral‟
has no fixed but a contextual connotation.‟
15. It was then concluded that the word “mineral” has
no definite meaning but has a variety of meanings,
depending on the context of its use. This is what this
Court observed: (Banarsi Dass Chadha case [(1978)
4 SCC 11] , SCC pp. 14-15, para 7)
„7. … In the context of the Mines and Minerals
(Regulation and Development) Act, we have no
doubt that the word „mineral‟ is of sufficient
W.P.(C) No.9272 of 2018 Page 54 of 98
amplitude to include „brick-earth‟. As already
observed by us, if the expression „minor
mineral‟ as defined in the Act includes
„ordinary clay‟ and „ordinary sand‟, there is no
earthly reason why „brick-earth‟ should not be
held to be „any other mineral‟ which may be
declared as a „minor mineral‟. We do not think
it necessary to pursue the matter further except
to say that this was the view taken in Laddu
Mal Vrs. State of Bihar, AIR 1965 Pat 491,
Amar Singh Modi Lal Vrs. State of Haryana,
AIR 1972 P&H 356 and Sharma & Co. Vrs.
State of U.P., AIR 1975 All 386. We do not
agree with the view of the Calcutta High Court
in State of W.B. Vrs. Jagadamba Prasad Singh
[AIR 1969 Cal 281, that because nobody
speaks of „ordinary earth‟ as a mineral it is not
a minor mineral as defined in the Mines and
Minerals (Regulation and Development) Act.‟
***
22. It is appropriate to reproduce the meaning of the
word “mineral” noted in Black‟s Law Dictionary (8th
Edition) since it is a later edition. It reads thus:
„mineral, n. 1. Any natural inorganic matter that has
a definite chemical composition and specific physical
properties that give it value <most minerals are
crystalline solids>. (Cases: Mines and Minerals 48
CJS Mines and Minerals§§ 4, 140-142.) 2. A
subsurface material that is explored for, mined, and
exploited for its useful properties and commercial
value. 3. Any natural material that is defined as a
mineral by statute or case law.‟W.P.(C) No.9272 of 2018 Page 55 of 98
23. A survey of various decisions referred to
hereinabove would show that there is wide
divergence of meanings attributable to the word
“mineral” and that in judicial interpretation of the
expression “mineral” variety of tests and principles
have been propounded; their application, however,
has not been uniform. Insofar as dictionary meaning
of the word “mineral” is concerned, it has never
been held to be determinative and conclusive. The
word “mineral” has not been circumscribed by
a precise scientific definition; it is not a
definite term. The proposition that the
minerals must always be subsoil and that
there can be no minerals on the surface of the
earth has also not found favour in judicial
interpretation of the word “mineral”. The term
“mineral” has been judicially construed many
a time in widest possible amplitude and
sometimes accorded a narrow meaning. Pithily
said, its precise meaning in a given case has to
be fixed with reference to the particular
context.
24. We find ourselves in agreement with the view
expressed in Banarsi Dass Chadha, (1978) 4 SCC
11 that the word “mineral” is not a word of art
and that it is capable of multiplicity of
meanings depending upon the context and that
the word “mineral” has no fixed but a
contextual connotation. The test applied by this
Court in V.P. Pithupitchai, (2003) 9 SCC 534 in
holding seashell not a mineral because in its original
form it is not a mineral, in our view, is not
determinative and conclusive in all situations when
W.P.(C) No.9272 of 2018 Page 56 of 98
a question arises as to whether a particular
substance is a mineral or not. It is worth noticing
that any natural material that is defined as a
“mineral” by a statute or case law may also be
covered by the expression “mineral” as noted in
Black‟s Law Dictionary (8th Edn.). The common
parlance test that because nobody speaks of
“ordinary earth” as a “mineral” has not been
accepted by this Court in Banarsi Dass
Chadha, (1978) 4 SCC 11. As a matter of fact, this
Court in this regard specifically disagreed with the
view of the Calcutta High Court in Jagadamba
Prasad Singh, AIR 1969 Cal 281.”
6.4. It is apparent from ―Ash Pond Statement‖ depicting
recovery of royalty vide Annexure-D/5 that on the basis
of calculation of quantum of earth extracted for use in
construction of Ash Pond by the Chief of Project
Infrastructure, OPGC, the amount towards royalty has
been recovered, and said amount was deposited with the
Tahasildar, Lakhanpur. Letter No. RDM-LRGEC-
CLRFIC-0002-2018-4241-R&DM, dated 31.01.2018
issued by the Joint Secretary to Government of Odisha
in Revenue and Disaster Management Department
(Annexure-B/5 enclosed with the counter affidavit filed
by OPGC) reflects that in terms of Rule 3 of the Odisha
Minor Mineral Concession Rules, 2016, ―ordinary earth‖
being ―minor mineral‖, it is subject to levy of royalty. It is
further transpired from said letter that ―the company
W.P.(C) No.9272 of 2018 Page 57 of 98
which has been provided land shall have no right to use
the minor mineral on it‖.
6.5. Noteworthy here to bear in mind that in Mineral Area
Development Authority Vrs. Steel Authority of India,
(2024) 7 SCR 1549 it has been authoritatively
enunciated as follows:
“Royalty is not a tax. Royalty is a contractual
consideration paid by the mining lessee to the lessor for
enjoyment of mineral rights. The liability to pay royalty
arises out of the contractual conditions of the mining
lease. The payments made to the Government cannot be
deemed to be a tax merely because the statute provides
for their recovery as arrears;”
6.6. Restriction has been put on undertaking mining or
quarrying operation. The language employed in Rule 3 of
the Rules, 2016 are couched in the negative. The said
Rule commences with the words ―no person shall
undertake‖, thereby restricts ―mining operation or
quarrying operation for minor mineral‖ subject to terms
and conditions enshrined in the mining lease or quarry
lease or quarry permit.
6.7. In Mannalal Khetan Vrs. Kedar Nath Khetan, (1977) 2
SCC 424 the interpretation of negative word(s) in a
provision has been explained as follows:
“16. The provision contained in Section 108 of the Act
states that a company shall not register a transfer ofW.P.(C) No.9272 of 2018 Page 58 of 98
shares … unless a proper instrument of transfer
duly stamped and executed by or on behalf of the
transferor and by or on behalf of the transferee …
has been delivered to the company along with the
certificate relating to the shares or debentures … or
if no such certificate is in existence along with the
letter of allotment of the shares. There are two
provisos to Section 108 of the Act. We are not
concerned with the first proviso in these appeals.
The second proviso states that nothing in this
section shall prejudice any power of the company to
register as shareholder or debenture holder any
person to whom the right to any shares in, or
debentures of, the company has been transmitted by
operation of law. The words “shall not register”
are mandatory in character. The mandatory
character is strengthened by the negative form
of the language. The prohibition against
transfer without complying with the provisions
of the Act is emphasised by the negative
language. Negative language is worded to
emphasise the insistence of compliance with
the provisions of the Act. (See State of Bihar Vrs.
Maharajadhiraja Sir Kameshwar Singh of
Darbhanga, (1952) 1 SCC 528 = AIR 1952 SC 252 =
1952 SCR 889, 988-989; K. Pentiah Vrs. Muddala
Veeramallappa, AIR 1961 SC 1107 = (1961) 2 SCR
295, 308 and unreported decision dated April 28,
1976 in Criminal Appeal No. 279 of 1975 and
Additional District Magistrate, Jabalpur Vrs.
Shivakant Shukla, (1976) 2 SCC 521.) Negative
words are clearly prohibitory and are
ordinarily used as a legislative device to make
a statutory provision imperative.
W.P.(C) No.9272 of 2018 Page 59 of 98
17. In Raza Buland Sugar Co. Ltd. Vrs. Municipal Board,
Rampur, AIR 1965 SC 895 = (1965) 1 SCR 970 this
Court referred to various tests for finding out when a
provision is mandatory or directory. The purpose for
which the provision has been made, its nature, the
intention of the legislature in making the provision,
the general inconvenience or injustice which may
result to the person from reading the provision one
way or the other, the relation of the particular
provision to other provisions dealing with the same
subject and the language of the provision are all to
be considered. Prohibition and negative words
can rarely be directory. It has been aptly
stated that there is one way to obey the
command and that is completely to refrain
from doing the forbidden act. Therefore,
negative, prohibitory and exclusive words are
indicative of the legislative intent when the
statute is mandatory. (See Maxwell on
Interpretation of Statutes, 11th Edn., p. 362 seq.;
Crawford: Statutory Construction, Interpretation of
Laws, p. 523 and Seth Bikhrai Jaipuria Vrs. Union
of India, AIR 1962 SC 113 = (1962) 2 SCR 880, 893-
894.)
19. Where a contract, express or implied, is expressly or
by implication forbidden by statute, no court will
lend its assistance to give it effect. (See Mellis Vrs.
Shirley L.B., (1885) 16 QBD 446 = 55 LJQB 143 = 2
TLR 360) A contract is void if prohibited by a statute
under a penalty, even without express declaration
that the contract is void, because such a penalty
implies a prohibition. The penalty may be imposed
with intent merely to deter persons from entering
W.P.(C) No.9272 of 2018 Page 60 of 98
into the contract or for the purposes of revenue or
that the contract shall not be entered into so as to be
valid at law. A distinction is sometimes made
between contracts entered into with the object
of committing an illegal act and contracts
expressly or impliedly prohibited by statute.
The distinction is that in the former class one
has only to look and see what acts the statute
prohibits; it does not matter whether or not it
prohibits a contract: if a contract is made to
do a prohibited act, that contract will be
unenforceable. In the latter class, one has to
consider not what act the statute prohibits, but what
contracts it prohibits. One is not concerned at all
with the intent of the parties, if the parties enter into
a prohibited contract, that contract is unenforceable.
(See St. John Shipping Corporation Vrs. Joseph
Rank, (1957) 1 QB 267.) (See also Halsbury‟s Laws
of England, 3rd Edn., Vol. 8, p. 141.)
20. It is well established that a contract which involves
in its fulfilment the doing of an act prohibited by
statute is void. The legal maxim A pactis privatorum
publico juri non derogatur means that private
agreements cannot alter the general law. Where a
contract, express or implied, is expressly or by
implication forbidden by statute, no court can lend
its assistance to give it effect. (See Mellis Vrs. Shirley
L.B.) What is done in contravention of the provisions
of an Act of the legislature cannot be made the
subject of an action.
21. If anything is against law though it is not prohibited
in the statute but only a penalty is annexed the
agreement is void. In every case where a statute
W.P.(C) No.9272 of 2018 Page 61 of 98
inflicts a penalty for doing an act, though the act be
not prohibited, yet the thing is unlawful, because it
is not intended that a statute would inflict a penalty
for a lawful act.”
6.8. Rule 3 of the Rules, 2016 is, therefore, mandatory in
nature and it restricts undertaking mining operation or
quarrying operation for minor minerals in any area
subject to permit. Clause 14.1.5 of the Contract between
OPGC and the petitioner speaks of ―Regulatory
Approvals‖, which requires the petitioner to obtain ―all
permits and other authorizations, approvals, orders or
consents required in connection with the execution,
delivery and performance of this Contract‖. As has
already been spelt out that in view of Appendix-D to the
Contract the petitioner was required to obtain permit
from competent Government Authority with respect to
―usage of earth‖. In Note:3 appended to Table-1: Price
Schedule (Schedule of Quantity) it is clarified as follows:
“Unless specifically mentioned otherwise in the
Contract, the Contract Rate for the Contract Items
includes the complete cost towards labour, materials,
equipment, erection and dismantling of necessary
scaffolding, transport, storage, repairs, rectifications,
maintenance until handing over, contingencies, special
requirements as given in Contract and Technical
Specification, overheads, profits, all taxes, cess, duties,
levies, royalties, revenue expenses, etc. and all
incidental items not specifically mentioned but reasonablyW.P.(C) No.9272 of 2018 Page 62 of 98
implied and necessary to complete for the item according
to the Contract. It is further agreed that all materials
required for the execution of the items of work shall be
arranged by Contractor within the Contract Rates unless
specified otherwise. Appropriate cost for adhering to
Owner‟s EHSS Standards has been included in the
Contract Rates.”
6.9. From the pleadings as it seems the petitioner has been
claiming exemption from deduction of amount towards
royalty on extraction of earth and redeployment of the
same in construction of embankment in course of
execution of work of Ash Pond. It is stipulated in Clause
5.1.4 of the Contract dated 21.12.2016 (Annexure-A/5
enclosed with counter affidavit of OGPC) that ―Where
Contractor claims to be exempted from any statutory
deductions, it shall inform Owner and provide all
necessary documentation to support its case, including
a certificate of exemption issued by the relevant
authorities‖. No document as required under said clause
is forthcoming from the petitioner. Hence, this Court
does not find support to sustain assertion of the
petitioner (paragraph 6 of the rejoinder affidavit) that:
“*** The petitioner is only asserting that in terms of the
proviso to Rule 3(1) of the Odisha Minor Mineral
Concession Rules, 2016 has the right to extract or remove
minor mineral from its land inter alia for bona fide
domestic consumption and for the said purpose, it is notW.P.(C) No.9272 of 2018 Page 63 of 98
required to obtain any permission from the authorities
under the Odisha Minor Mineral Concession Rules, 2016.”
6.10. It emanates from the pleadings that the petitioner has
been urging that after extraction of earth from the
leasehold area it constructed the embankment for the
purpose of Ash Pond and, it, therefore, claims to be
exempted from liability as aforesaid activity can be
construed to fall within the connotation of expression
―bona fide domestic consumptions‖ contained in the first
proviso to sub-rule (1) of Rule 3 of the Rules, 2016.
6.11. The nuance of ―bona fide‖ can be understood in the
following manner which has been explained by this
Court in Tularam Patel Vrs. Siba Sankar Kalo, 35 (1969)
CLT 889 (Ori):
“9. Thus, a plea of bona fide claim of right has always a
reference to existence of an honest belief in the mind
of the accused that he has a legal right the property
he takes. A claim of right is said to be bona fide
when there is either a legal right or appearance of a
legal right or colour of a legal right. Colour of legal
right has been explained to mean a fair pretence of a
right or a bona fide claim of right however weak.
10. Mere existence of right, appearance or colour of a
legal right in the facts and circumstances of a
particular case would not exonerate the accused. He
must claim such a right and the claim must be bona
fide, that is to say, he must honestly believe that he
has such a right. So every Court, before giving fullW.P.(C) No.9272 of 2018 Page 64 of 98
effect to the plea of bona fide claim of right, which is
always a good defence for prosecution for theft,
must find out if such belief existed and the claim
was bona fide. Bona fide character of the claim of
right and belief of the accused in the same are
interconnected matters. Bona fide character tends to
establish the requisite belief in the accused. For
reaching such a conclusion, the other factors which
pointedly but collaterally arise for consideration are:
(a) reasonableness of the claim;
(b) existence of a dispute between the accused
and the complainant and
(c) Denial of participation in the act whose
criminality is in question.
Plea of denial is certainly indicative of existence of a
dishonest intention, but, if alongside such plea the
accused has alternatively tried to establish his bona
fide claim of right or to show existence of a bona fide
dispute then the plea may be ignored as a false
one.”
6.12. The petitioner while signing the Contract was conscious
of the covenants thereof and it was necessary for him to
obtain permits for extraction/excavation of minor
mineral from the leasehold area.
6.13. The shelter is taken under the umbrella of the
expression ―domestic consumptions‖ employed in the
first proviso to sub-rule (1) of Rule 3. To have clarity in
understanding the term ―domestic‖ contradistinguished
W.P.(C) No.9272 of 2018 Page 65 of 98
from the term ―commercial‖, attention can be invited to
New Delhi Municipal Council Vrs. Sohan Lal Sachdev,
(2000) 2 SCC 49411, wherein it has been reflected as
follows:
“12. The two terms “domestic” and “commercial” are not
defined in the Act or the Rules. Therefore, the
expressions are to be given the common parlance
meaning and must be understood in their natural,
ordinary and popular sense. In interpreting the
phrases the context in which they are used is also to
be kept in mind. In Stroud‟s Judicial Dictionary (5th
Edn.) the term “commercial” is defined as “traffic,
trade or merchandise in buying and selling of
goods”. In the said dictionary the phrase “domestic
purpose” is stated to mean use for personal
residential purposes. In essence the question is,
what the character of the purpose of user of
the premises by the owner or landlord is and
not the character of the place of user. For
example, running a boarding house is a business,
but persons in a boarding house may use water for11 In M.P. Electricity Board Vrs. Shiv Narayan, (2005) 7 SCC 283 the decision in
New Delhi Municipal Council Vrs. Sohan Lal Sachdev, (2000) 2 SCC 494 being
referred to larger Bench, it was held on 27.10.2005 as follows:
“We have heard Mr. M.L. Jaiswal, learned senior counsel for the Appellant. We
have perused the Circulars and seen the Tariff entries under which the levy has
been made. We find that the Tariff entry classificates into two categories viz.
(a) „domestic purposes‟ and
(b) „commercial and non-domestic purposes‟.
This classification has been done statutorily in exercise of powers under Section
49 of the Electricity Supply Act, 1948. The classification clubs „commercial and
non-domestic purposes‟ into one category. Thus the question whether an
Advocate can be said to be carrying on a commercial activity does not arise for
consideration. As the user is admittedly not „domestic‟ it would fall in the
category of „commercial and non-domestic‟. In such cases even for „non-domestic”
use the commercial rates are to be charged. Exclusively running an office is
clearly a „non-domestic‟ use. Thus, in our view the Judgment of this Court in
Sohan Lal Sachdev is correct and requires no reconsideration.”
W.P.(C) No.9272 of 2018 Page 66 of 98
“domestic” purposes. As noted earlier the
classification made for the purpose of charging
electricity duty by NDMC sets out the categories
“domestic” user as contradistinguished from
“commercial” user or to put it differently “non-
domestic user”. The intent and purpose of the
classification, as we see it, is to make a distinction
between purely “private residential purpose” as
against “commercial purpose”. In the case of a
“guest house”, the building is used for providing
accommodation to “guests” who may be travellers,
passengers, or such persons who may use the
premises temporarily for the purpose of their stay on
payment of the charges. The use for which the
building is put by the keeper of the guest house, in
the context cannot be said to be for purely
residential purpose. Then the question is, can the
use of the premises be said to be for “commercial
purpose”? Keeping in mind the context in which the
phrases are used and the purpose for which the
classification is made, it is our considered view that
the question must be answered in the affirmative. It
is the user of the premises by the owner (not
necessarily absolute owner) which is relevant
for determination of the question and not the
purpose for which the guest or occupant of the
guest house uses electric energy. In the broad
classification as is made in the Rules, different
types of user which can reasonably be grouped
together for the purpose of understanding the
two phrases “domestic” and “commercial” is to
be made. To a certain degree there might be
overlapping, but that has to be accepted in the
context of things. The High Court was not right inW.P.(C) No.9272 of 2018 Page 67 of 98
setting aside the order of the learned Senior Civil
Judge merely on the ground that the use of
electricity for running the “guest house” does not
come under the category of “commercial use”. The
High Court has not discussed any reason for holding
that user in such a case comes under the category of
“domestic” use.”
6.14. In Union of India Vrs. V.M. Salgaoncar and Bros. (P) Ltd.,
(1998) 2 SCR 293 the term ―consumption‖ has been
construed in the following manner:
“The word „consumption‟ may involve in the narrow sense
using the article to such an extent as to reach the stage of
its non-existence. But the word „consumption‟ in fiscal law
need not be confined to such a narrow meaning. It has a
wider meaning in which any sort of utilization of
the commodity would as well amount to
consumption of the article, albeit that article
retaining its identity even after its use. Constitution
Bench of this Court has considered the ambit of the word
„consumption‟ in Article 286 of the Constitution in M/s.
Anwarkhan Mahboob Co. Vrs. State of Bombay (now
Maharasthra) and others, (1961) 1 SCR 709. Their
Lordships observed thus:
„Consumption consists in the act of taking such
advantage of the commodities and services produced as
constitutes the „utilization‟ thereof. For each commodity,
there is ordinarily what is generally considered to be the
final act of consumption. For some commodities, there
may be even more than one kind of final consumption …
In the absence of any words to limit the connotation of the
word „consumption‟ to the final act of consumption, it willW.P.(C) No.9272 of 2018 Page 68 of 98
be proper to think that the Constitution-makers used the
word to connote any kind of user which is ordinarily
spoken of as consumption of the particular commodity.‟In another decision a two Judge Bench of this Court
considered the scope of the words „Consumption‟ vis-a-vis
„use‟. (Vide Kathiawar Industries Ltd. Vrs. Jaffrabad
Municipality, AIR 1979 SC 1721. There it was held that
the precise meaning to be given to those words would
depend upon the context in which they are used. It is in a
primary sense that the word „consumption‟ is understood
as using the article in such a manner as to destroy its
identity. It has a wider meaning which does not involve
the complete using up of the commodity.”
6.15. The Hon’ble Supreme Court of India had an occasion to
deal with a case under the Odisha Minor Mineral
Concession Rules, 1990 being State of Odisha Vrs. Union
of India, (2001) 1 SCC 429. In an identical fact-situation
that is obtained in the present case with similitude in
statutory language, the Hon’ble Supreme Court of India
in the said reported case proceeded to record the fact
that:
“The facts are not disputed namely for laying the railway
line, the Government of Orissa acquired the land and
handed over the same to the Railway Administration.
When the Railway Administration utilised certain
minor minerals like the rock-cut spoils and earth from
the very land, which had been acquired for laying
the railway line, the Revenue Authorities of the
State of Orissa initiated proceedings for realisation
of royalty and cess under the provisions of theW.P.(C) No.9272 of 2018 Page 69 of 98
Orissa Minor Minerals Concession Rules. The Railway
Administration and the Union of India assailed the same
by filing a writ petition in the Orissa High Court.
According to the Railway Administration, royalty or cess
could be levied against the lessee of any mineral and the
Railway Administration not being the lessee of the land or
the minor minerals therein, no royalty is payable for
utilisation of the aforesaid minor minerals for laying down
the railway line. The State Government on the other hand
took the stand that the handing over of the land for laying
of the railway track to the Railway Administration does
not amount to conferring ownership right over the
minerals existing on the land and in accordance with the
provisions of the Mines and Minerals (Regulation and
Development) Act, 1957 (hereinafter referred to as “the
Act”) as well as the Orissa Minor Minerals Concession
Rules, 1990 (hereinafter referred to as “the Rules”), the
Railway Administration would be liable to pay royalty for
use of any minerals from the land in question and
accordingly, the Revenue Authorities had rightly issued
notice. The High Court, in the impugned judgment
came to hold that the earth and rock-cut spoils
excavated by the Railway Administration are
minerals. This finding of the High Court has not been
assailed by the Railway Administration. But so far as
the right to levy royalty on the use of minerals from
the land in question is concerned, the High Court
came to the conclusion that the State would not be
justified in levying the royalty in respect of the
minerals on the land which had been acquired and
possession of which has been delivered to the
Railway Administration.”
W.P.(C) No.9272 of 2018 Page 70 of 98
Framing the question “whether the Railway
Administration would be liable to pay the royalty in
respect of minor minerals used by it in laying down the
railway line”, the Hon’ble Court came to observe as
follows:
“4. The State is the owner of all the mines and minerals
within its territory and the minerals vest with the
State. It has been so held in the case of Amritlal
Nathubhai Shah Vrs. Union Govt. of India, (1976) 4
SCC 108 by this Court. Entry 54 of List I of the
Seventh Schedule confers power on the Union
Legislature to have regulation of mines and minerals
development under the control of the Union, as
declared by Parliament by law to be expedient in the
public interest. The Mines and Minerals (Regulation
& Development) Act, 1957 has been enacted by the
Union Legislature in exercise of such powers
conferred upon it under Entry 54 of List I and in
Section 2 thereof, there is a declaration that the
Union should take under its control the regulation of
mines and the development of minerals to the extent
provided under the Act. Entry 23 of List II of the
Seventh Schedule deals with regulation of mines
and mineral development but the same is subject to
the provisions of List I with respect to regulation and
development under the control of the Union. Entry 50
of List II is the power of the State Legislature to have
taxes on mineral rights subject to any limitations
imposed by Parliament by law relating to mineral
development. This power of the State Government to
have taxes on mineral rights gets denuded to the
extent the MMRD Act [Mines and MineralsW.P.(C) No.9272 of 2018 Page 71 of 98
(Development and Regulation) Act, 1957] has taken
over and if any provision has been made for levy of
any tax on any mineral in the Central Act, the State
cannot make any law in the same field, again by
exercise of power under Entry 50 of List II. But if
there is no provision in the Central Act, providing for
levy of tax on any minerals, then the State will have
full power to make law to make levy in question.
Section 15 of the MMRD Act itself authorises
the State Government to make rules for
regulating the grant of quarry leases in respect
of minor minerals and for the purposes
connected therewith. “Minor minerals” is defined
in Section 3(e) of the MMRD Act to mean building
stones, gravel, ordinary clay, ordinary sand other
than used for prescribed purposes and any other
mineral which the Central Government may, by
notification in the Official Gazette, declare to be a
minor mineral. In exercise of powers conferred
under Section 15 of the MMRD Act, the
Government of Orissa has made a set of rules
called the Orissa Minor Minerals Concession
Rules, 1990. Rule 3 of the aforesaid Rules is
relevant for our purpose, which is quoted
hereinbelow in extenso:
„3. No person shall undertake any quarrying
operations for the purpose of extraction,
collection and/or removal of minor minerals
except under and in accordance with the terms
and conditions of quarry lease, permit and/or
auction sale provided under these Rules:
Provided that extraction, collection and/or
removal of minor minerals by a personW.P.(C) No.9272 of 2018 Page 72 of 98
from his own land for normal agricultural
operations or other bona fide domestic
consumption shall not be construed as
quarrying operations.‟The aforesaid Rule makes it explicit that no person
can undertake any quarrying operations for the
purpose of extraction, collection and/or removal of
minor minerals except under and in accordance with
the terms and conditions of a quarry lease permit
and/or auction-sale provided under the Rules. The
expression “person” has been defined in Rule 2(l) as
thus:
„2. (l) „person‟ shall include an individual, a
firm, a company, an association or body
of individuals, an institution or
department of the State or Central
Government and a labour cooperative
society.‟In view of the aforesaid definition of “person” in Rule
2(l) and in view of the embargo contained in Rule 3,
even the Central Government will not be entitled to
undertake any quarrying operations, unless such
permit is granted and it must be in accordance with
the terms and conditions of the permit. The
contention of the Railway Administration, that there
being no lease in favour of the Railway
Administration, it is not bound to pay any royalty,
will not hold good, in view of the proviso to Rule 3,
which on the face of it prohibits a person from
extracting or collecting minor minerals from his own
land, except for agricultural operations or other bona
fide domestic consumption. But for the exclusion,W.P.(C) No.9272 of 2018 Page 73 of 98
contained in proviso to Rule 3 in relation to
minor minerals extracted from the owner‟s own
land for normal agricultural operation or bona
fide domestic consumption, it would be a case
of quarrying operation within the definition of
the expression in Rule 2(o), which is quoted below
in extenso:
„2. (o) „quarrying operations‟ means any
operation undertaken for the purpose of
winning any minor mineral and shall
include erection of machinery, laying of
tramways, construction of roads and
other preliminary operations for the
purpose of quarrying.‟
5. This being the position and the use of minor
minerals on the railway track, after being
extracted from the land, not coming within the
expression “bona fide domestic consumption”,
the said operation would be a quarrying
operation under Rule 2(o), and consequently,
the embargo contained in Rule 3 would apply.
A combined reading of Rules 2(l), 2(o) and Rule 3
makes it crystal-clear that the Railway
Administration, cannot undertake the quarrying
operation unless a permit is granted in its favour
and, consequently, if the Railway Administration
utilises the minor minerals from the land, for the
railway track, it would be bound to pay the royalty
chargeable under the Orissa Minor Minerals
Concession Rules. The liability for payment of
royalty accrues under Rule 13 (sic 3) and no
doubt, speaks of a lease deed. If the Railway
Administration, though not a lessee and at the
W.P.(C) No.9272 of 2018 Page 74 of 98
same time is not authorised under Rule 3 to
undertake any quarrying operation for the
purpose of extraction of minor minerals, then
for such unauthorised action, the Railway
Administration would be liable for penalties,
as contained in Rule 24. This being the
position and in view of the prohibition
contained in sub-rule (2) of Rule 10 and taking
into account the fact that such minor minerals
would be absolutely necessary for laying down
the railway track and maintenance of the
same, we would hold that the Railway
Administration would be bound to pay royalty
for the minerals extracted and used by it, in
laying down the railway track. The impugned
judgment of the Orissa High Court is accordingly set
aside and this appeal is allowed.”
6.16. Upon reviewing Rule 3 of the Odisha Minor Mineral
Concession Rules, 2016 (which is identical to Rule 3 of
the Odisha Minor Mineral Concession Rules, 2004), this
Court finds the provisions to be in pari materia with Rule
3 of the Odisha Minor Mineral Concession Rules, 1990,
which was considered by the Hon’ble Supreme Court of
India in State of Odisha Vrs. Union of India, (2001) 1 SCC
429. Since the petitioner has emphasized that its case
would fall within the ambit of the first proviso to the
Rules, 2016, the ruling of the Hon’ble Supreme Court of
India in State of Odisha Vrs. Union of India, (2001) 1 SCC
429 would squarely be applicable.
W.P.(C) No.9272 of 2018 Page 75 of 98
6.17. To buttress his argument that ―royalty‖ is not payable on
extraction of earth and redeployment thereof for
construction of embankment within the lease area in
connection with Ash Pond, Sri Pawan Upadhyaya,
learned Advocate placed reliance on Tata Steel Ltd. Vrs.
Union of India, (2015) 6 SCC 193 wherein it has been
held that royalty is payable on all minerals including
coal at the stage mentioned in Rules 64B and Rule 64C
of the Mineral Concession Rules, 1960, i.e., on removal
of the mineral from the boundaries of the leased area. In
the said case it is held at paragraph 56 that Section 9 of
the Mines and Minerals (Development and Regulation)
Act, 1957 has to be read and understood in conjunction
with the Second Schedule to the said Act. There is a
good reason for it, which is that the scheme of levy of
royalty cannot be straitjacket in view of the variety of
minerals to which the said Act applies and for the
extraction of which royalty has to be paid. This case in
the humble opinion of this Court would not assist the
stance taken by the petitioner.
6.18. Sri Pawan Upadhyaya, learned Advocate cited decisions
of various High Courts to bolster his argument that
royalty can only be levied when the mineral extracted is
removed outside the lease area. Without demonstrating
the wordings employed in the statutory provisions under
consideration in those cases before those High Courts
W.P.(C) No.9272 of 2018 Page 76 of 98
and drawing similarity with the present nature of work
entrusted to the petitioner, it is perilous to apply the
ratio, if any, laid down therein on peculiar facts
emanating from the terms and conditions stipulated in
the agreement(s) under consideration therein.
6.19. This Court is not oblivious of dicta laid down by the
Hon’ble Supreme Court of India in the case of Union of
India Vrs. Arulmozhi Iniarasu, (2011) 7 SCC 39712.
6.20. On cursory reading of the decisions cited by the learned
counsel for the petitioner such as, IKEA India Private
Limited and another Vrs. State of Maharashtra and
others, 2024 SCC OnLine Bom 1029, AIGP Developers
Private Limited Vrs. State of Maharashtra and others,
2024 SCC OnLine Bom 762, BGR Energy System Ltd. Vrs.
Tahasildar, Saoner, 2017 SCC OnLine Bom 6760, Ircon
International Vrs. State of Maharashtra and others, 2019)
SCC OnLine Bom 544, Paranjape Schemes (Construction)
Ltd. Vrs. State of Maharashtra through its Principal
Secretary to thereafter Ministry of Revenue and others,
12 In Union of India Vrs. Arulmozhi Iniarasu, (2011) 7 SCC 397 it is observed as
follows:
“Before examining the first limb of the question, formulated above, it would be
instructive to note, as a preface, the well settled principle of law in the matter of
applying precedents that the Court should not place reliance on decisions without
discussing as to how the fact situation of the case before it fits in with the fact
situation of the decision on which reliance is placed. Observations of Courts are
neither to be read as Euclid‟s theorems nor as provisions of Statute and that too
taken out of their context. These observations must be read in the context in
which they appear to have been stated. Disposal of cases by blindly placing
reliance on a decision is not proper because one additional or different fact may
make a world of difference between conclusions in two cases.”
W.P.(C) No.9272 of 2018 Page 77 of 98
2021 SCC OnLine Bom 5059 and Royale Urbanspace,
Shahpur and others Vrs. State of Maharashtra and
another, 2022 SCC OnLine Bom 445, it may be stated
that the decisions were rendered in different contexts. It
is manifest that under different statutory setting of
words with factual distinction those decisions have been
rendered. Nevertheless, the relevant provisions of the
Odisha Minor Mineral Concession Rules, 2016 [even
identically worded in the Odisha Minor Mineral
Concession Rules, 2004] under consideration herein are
pari materia with the Odisha Minor Mineral Concession
Rules, 1990. Since the Hon’ble Supreme Court of India
in State of Odisha Vrs. Union of India, (2001) 1 SCC 429
taking into consideration such provisions, interpreted on
analysis of factual matrix, which is akin to the instant
case and it was held that royalty is payable in view of
restriction stipulated in Rule 3, any discussion on the
judgments of other High Courts cited at the Bar would
not be necessary.
6.21. In Government of Kerala Vrs. Mother Superior Adoration
Convent, (2021) 3 SCR 26 it has been laid down as
follows:
“23. It may be noticed that the 5-Judge Bench judgment
[Commissioner of Customs Vrs. Dilip Kumar & Co.,
(2018) 9 SCC 1] did not refer to the line of authority
which made a distinction between exemptionW.P.(C) No.9272 of 2018 Page 78 of 98
provisions generally and exemption provisions which
have a beneficial purpose. We cannot agree with
Shri Gupta‟s contention that sub-silentio the line of
judgments qua beneficial exemptions has been done
away with by this 5-Judge Bench. It is well settled
that a decision is only an authority for what it
decides and not what may logically follow from
it (see, Quinn Vrs. Leathem, (1901) AC 495 as
followed in State of Orissa Vrs. Sudhansu Sekhar
Misra (1968) 2 SCR 154 at 162,163).
24. This being the case, it is obvious that the beneficial
purpose of the exemption contained in Section 3(1)(b)
must be given full effect to, the line of authority
being applicable to the facts of these cases being the
line of authority which deals with beneficial
exemptions as opposed to exemptions generally in
tax statutes. This being the case, a literal formalistic
interpretation of the statute at hand is to be
eschewed. We must first ask ourselves what is
the object sought to be achieved by the
provision, and construe the statute in accord
with such object. And on the assumption that any
ambiguity arises in such construction, such
ambiguity must be in favour of that which is
exempted. Consequently, for the reasons given by
us, we agree with the conclusions reached by the
impugned judgments of the Division Bench and the
Full Bench.
25. The matter can also be seen from a slightly different
angle. Where a High Court construes a local
statute, ordinarily deference must be given to
the High Court judgments in interpreting such
a statute, particularly when they have stoodW.P.(C) No.9272 of 2018 Page 79 of 98
the test of time (see State of Gujarat Vrs. Zinabhai
Ranchhodji Darji, (1972) 1 SCC 233 at paragraph
10, Bishamber Dass Kohli Vrs. Satya Bhalla (1993)
1 SCC 566 at paragraph 11, Duroflex Coir Industries
Ltd. Vrs. CST 1993 Supp (1) SCC 568 at paragraph
2, State of Karnataka Vrs. G. Seenappa 1993 Supp
(1) SCC 648 at paragraph 3 and Bonam Satyavathi
Vrs. Addala Raghavulu 1994 Supp (2) SCC 556 at
paragraph 4). This is all the more applicable in the
case of tax statutes where persons arrange their
affairs on the basis of the legal position as it exists.”
6.22. Taking cue from above interpretation, as the Hon’ble
Supreme Court of India in State of Odisha Vrs. Union of
India, (2001) 1 SCC 429 considered Rule 3 of the Odisha
Minor Mineral Concession Rules, 1990 (akin provision
being found in Rule 3 of the Odisha Minor Mineral
Concession Rules, 2016), this Court applies the view
expressed therein to the present facts of the case.
6.23. In the case of Government of Kerala Vrs. Mother Superior
Adoration Convent, (2021) 3 SCR 26 the Hon’ble Supreme
Court of India considered the dominant object in the
following manner:
“11. Before coming to the case law that has been cited
before us, it is important to first analyse Section
3(1)(b) with which we are directly concerned. First
and foremost, the subject matter is “buildings”
which as defined, would include a house or other
structure. Secondly, the exemption is based upon
user and not ownership. Third, what is important is
W.P.(C) No.9272 of 2018 Page 80 of 98
the expression “principally”, showing thereby that
the legislature decided to grant this exemption qua
buildings which are “principally” and not exclusively
used for the purposes mentioned therein. Dominant
object therefore is the test to be applied to see
whether such building is or is not exempt.
Fourthly, religious, charitable or educational
purposes are earmarked by the legislature as
qualifying for the exemption as they do not pertain to
business or commercial activity. Fifthly, what is
important is that even factories or workshops
which produce goods and provide services are
also exempt, despite profit motive, as the
legislature obviously wishes to boost
production in factories and services in
workshops. What is important to note is that the
expression “used principally for” is wider than the
expression “as” which precedes the words “factories
or workshops”.
12. A reading of the provision would show that the
object for exempting buildings which are used
principally for religious, charitable or educational
purposes would be for core religious, charitable or
educational activity as well as purposes directly
connected with religious activity. One example will
suffice to show the difference between a purpose
that is directly connected with religious or
educational activity and a purpose which is only
indirectly connected with such activity. Take a case
where, unlike the facts in Civil Appeal No. 202 of
2012, nuns are not residing in a building next to a
convent so that they may walk over to the convent
for religious instruction. Take a case where the
W.P.(C) No.9272 of 2018 Page 81 of 98
neighbouring building to the convent is let out on
rent to any member of the public, and the rent is
then utilised only for core religious activity. Can it
be said that the letting out at market rent
would be connected with religious activity
because the rental that is received is ploughed
back only into religious activity? Letting out a
building for a commercial purpose would lose
any rational connection with religious activity.
The indirect connection with religious activity being
the profits which are ploughed back into religious
activity would obviously not suffice to exempt such a
building. But if on the other hand, nuns are living in
a neighbouring building to a convent only so that
they may receive religious instruction there, or if
students are living in a hostel close to the school or
college in which they are imparted instruction, it is
obvious that the purpose of such residence is not to
earn profit but residence that is integrally connected
with religious or educational activity.
13. A reading of the other provisions of the Act
strengthens the aforesaid conclusion. “Residential
building” is defined separately from “building” in
Section 2(1). A “residential building” means a
building or any other structure or part thereof built
exclusively for residential purpose. It is important to
note that “residential building” is not the subject
matter of exemption under Section 3 of the Act. Quite
the contrary is to be found in Section 5A of the Act,
which starts with a non-obstante clause, and which
states that a luxury tax is to be charged on all
residential buildings having a plinth area of 278.7
square meters and which have been completed on or
W.P.(C) No.9272 of 2018 Page 82 of 98
after 1.4.1999. If we were to accept the contention of
the State, buildings in which nuns are housed and
students are accommodated in hostels which have
been completed after 01.04.1999 and which have a
plinth area of 278.7 square meters would be liable
to pay luxury tax as these buildings would now no
longer be buildings used principally for religious or
educational purposes, but would be residential
buildings used exclusively for residential purposes.
This would turn the object sought to be achieved in
exempting such buildings on its head. For this
reason also, we cannot countenance a plea by the
State that buildings which are used for purposes
integrally connected with religious or educational
activity are yet outside the scope of the exemption
contained in Section 3(1)(b) of the Act. We may now
examine the case law.”
6.24. The present case is the converse one, as Rule 3 is not in
the context of exemption; rather puts condition/
restriction for extraction of minor mineral, subject to
―quarrying permit‖. If analogy of above case is taken, in
the instant case, it has already been observed that the
OPGC has been granted lease of land for establishment
of Power Plant for carrying on commercial activity and
the construction of Ash Pond is required for the purpose
and in connection with such commercial nature of
activity. The petitioner, having participated in the tender
floated by the OPGC and being declared successful,
entered into agreement with the OPGC for construction
of Ash Pond with full knowledge of the terms and
W.P.(C) No.9272 of 2018 Page 83 of 98
conditions, relevant portions of which have already been
extracted hitherto. Accepting the covenants of Contract,
the petitioner conceded to bear royalty amongst other
statutory liabilities under different statutes. It was
within its knowledge that such Ash Pond is not meant to
be used or utilized for the purpose of ―domestic
consumptions‖.
6.25. Examining the nature of work, i.e., construction of Ash
Pond for the purpose of Power Plant, and work being
entrusted to a company (petitioner) which carries on
commercial activity and works for commercial gain, this
Court from the recitals of the Contract could discern
that such construction would not definitely not for
―domestic consumptions‖. Rule 3 of the Rules, 2016
explicitly restricts quarrying operation without quarrying
permit being granted by the competent authority. In the
present matter, the ultimate use of the property
remained unchanged. Ash Pond is constructed for
commercial use inasmuch as the same is intrinsically
connected to the Power Plant of OPGC, which carries on
commercial activity, being provided with the land on
lease for establishment of industry.
6.26. It is worth repeating that the petitioner had a clear and
unambiguous condition put upon under the Contract to
ensure obtaining necessary permits. The petitioner in
W.P.(C) No.9272 of 2018 Page 84 of 98
terms of the Contract could have taken care to apply for
―quarry permit‖ attune with Rule 3 read with Rule 2(w)
of the Rules, 2016.
6.27. The nature of work entrusted to the petitioner would,
thus, be not fall within the connotation of ―bona fide
domestic consumptions‖.
7. The above discussion now takes this Court to the
ultimate discussion whether ―royalty‖ is a liability of the
petitioner under Rule 32 of the Odisha Minor Mineral
Concession Rules, 2016.
7.1. Rule 32 of the Rules, 2016 stands as follows:
“32. Liability for payment of royalty, dead rent, surface
rent, additional charge, amount of contribution
payable to the District Mineral Foundation, amount
of contribution payable to the Environment
Management Fund.–
(1) All the lessees for minor minerals other than
specified minor minerals shall be liable to pay
royalty or dead rent, surface rent, additional charge,
amount of contribution payable to the District
Mineral Foundation, amount of contribution payable
to the Environment Management Fund and fees for
compensatory afforestation.
(2) The lessee shall pay to the State Government every
year dead rent and surface rent at the rates
specified in Schedule-I for all the areas included inW.P.(C) No.9272 of 2018 Page 85 of 98
the lease deed and royalty at the rates specified in
Schedule-II:
Provided that the rates specified in Schedule-I and
Schedule-II may be revised by the Government, from
time to time, by an amendment made to the said
Schedules, but no revision shall be made before the
expiry of three years from the date when the rates
were last fixed:
Provided further that where the lessee becomes
liable for payment of royalty for any minor mineral
removed or consumed by him or his agent, manager
and employees or the contractor from the leased
area, he shall be liable to pay either such royalty or
the dead rent whichever is higher.
(3) In addition to the surface rent, dead rent or royalty,
as the case may be, the lessee shall be liable to pay
additional charge, amount of contribution payable to
the District Mineral Foundation and an amount of
contribution payable to the Environment
Management Fund in advance, on annual basis on
the minimum guaranteed quantity of minor minerals
even if the actual extraction falls short of such
quantity.
(4) The quantity of extraction beyond the minimum
guaranteed quantity, may be removed from the
lease area only after payment of royalty, additional
charge, amount of contribution payable to the
District Mineral Foundation and an amount of
contribution payable to the Environment
Management Fund on pro-rata basis.
W.P.(C) No.9272 of 2018 Page 86 of 98
(5) The royalty, additional charge, amount of
contribution to the District Mineral Foundation and
amount of contribution payable to the Environment
Management Fund for the period up to
commencement of the next year shall be paid on a
pro-rata basis before the execution of lease deed.
(6) For the purpose of determination of minimum
guaranteed quantity in the cases where the lease
has been executed on or after the 1st April, the
minimum guaranteed quantity for the first financial
year shall be equal to the minimum guaranteed
quantity divided by twelve and multiplied by the
number of months remaining in the first year of the
lease, treating part of any month as full month.
(7) The lessee shall pay, in addition to the surface rent,
dead rent or royalty, additional charge, amount of
contribution payable to the District Mineral
Foundation and to the Environment Management
Fund, fees for compensatory afforestation at rates
as may be specified by the Government from time to
time.”
7.2. In State of H.P. Vrs. Gujarat Ambuja Cement Ltd., (2005)
Supp.1 SCR 684 the Hon’ble Supreme Court of India
observed with regard to the meaning and nature of the
term ―royalty‖ as follows:
“In H. R. S. Murthy Vrs. Collector of Chittoor, AIR 1965 SC
177, this Court said that „royalty‟ normally connotes the
payment made for the materials or minerals won from the
land.
W.P.(C) No.9272 of 2018 Page 87 of 98
In Halsbury‟s Laws of England, 4th Edition in the volume
which deals with “Mines, Minerals and Quarries, namely,
volume 31, it is stated in paragraph 224 as follows:
„224. Rents and royalties.– An agreement for a lease
usually contains stipulations as to the dead rents
and other rent and royalties to be reserved by, and
the covenants and provisions to be inserted in, the
lease …‟The topics same of dead rent and royalties are dealt with
in Halsbury‟s Laws of England in the same volume under
the sub-heading „Consideration‟, the main heading being
„Property demised; Consideration‟. Paragraph 235 deals
with „dead rent‟ and paragraph 236 with „royalties‟. The
relevant passages are as follows:
235. Dead rent.– It is usual in mining lease to reserve
both a fixed annual rent (otherwise known as a
„dead rent‟, „minimum rent‟ or „certain rent‟) and
royalties varying with the amount of minerals
worked. The object of the fixed rent is to ensure that
the lessee will work the mine; but it is sometimes
ineffective for that purpose. Another function of the
fixed relit is to ensure a definite minimum income to
the lessor in respect of the demise. If a fixed rent is
reserved, it is payable until the expiration of the
term even though the mine is not worked, or is
exhausted during the currency of the term, or is not
worth working, or is difficult or unprofitable to work
owing to faults or accidents, or even if the demised
seam proves to be non-existent.
236. Royalties.– A royalty, in the sense in which the
word is used in connection with mining leases, is aW.P.(C) No.9272 of 2018 Page 88 of 98
payment to the lessor proportionate to the amount of
the demised mineral worked within a specific
period.
In paragraph 238 of the same volume ofHalsbury‟s Laws
of England it is stated:
„238. Covenant to pay rent and royalties.– Nearly every
mining lease contains a covenant by the lessee for
payment of the specified rent and royalties. Rent is
an integral part of the concept of a lease. It is the
consideration moving from the lessee to the lessor
for demise of the property to him. Section 105 of the
Transfer of Property Act, 1882, contains the
definitions of the terms „lease‟, „lessor‟, „lessee‟,
„premium‟ and „rent‟ and is as follows:
„105. Lease defined.– A lease of immovable
property is a transfer of a right to enjoy such
property, made for a certain time, express or
implied, or in perpetuity, in consideration ofa
price paid or promised, or of money, a share of
crops, service or any other thing of value, to be
rendered periodically or on specified occasions
to the transferor by the transferee, who accepts
the transfer on such terms.
Lessor, lessee, premium and rent defined. The transferor
is called the lessor, the transferee is called the lessee, the
price is called the premium, and the money, share, service
or other thing to be so rendered is called the rent.‟The decision of this Court in D.K. Trivedi & Sons Vrs.
State of Gujarat, (1986) Supp SCC 20 is a complete
answer to the plea raised by learned counsel for theW.P.(C) No.9272 of 2018 Page 89 of 98
appellate-State. It was, inter alia, held in that case as
follows: (The relevant paras are quoted)„39. In a mining lease the consideration usually moving
from the lessee to the lessor is the rent for the area
leased (often called surface rent), dead rent and
royalty. Since the mining lease confers upon the
lessee the right not merely to enjoy the property as
under an ordinary lease but also to extract minerals
from the land and to appropriate them for his own
use or benefit, in addition to the usual rent for the
area demised, the lessee is required to pay a certain
amount in respect of the minerals extracted
proportionate to the quantity so extracted. Such
payment is called „royalty‟. It may, however, be that
the mine is not worked properly so as not to yield
enough return income, whether the mine is worked
properly so as not to yield enough return to the
lessor in the shape of royalty. In order to ensure for
the lessor a regular income, whether the mine is
worked or not, a fixed amount is provided to be paid
to him by the lessee. This is called „dead rent‟.
„Dead rent‟ is calculated on the basis of the area
leased while royalty is calculated on the quantity of
minerals extracted or removed. Thus, while dead
rent is a fixed return to the lessor, royalty is a return
which varies with the quantity of minerals extracted
or removed. Since dead rent and royalty are both a
return to the lessor in respect of the area leased,
looked at from one point of view dead rent can be
described as the minimum guaranteed amount of
royalty payable to the lessor but calculated on the
basis of the area leased and not on the quantity of
minerals extracted or removed. In fact, clause (ix) ofW.P.(C) No.9272 of 2018 Page 90 of 98
Rule 3 of the Rajasthan Minor Mineral Concession
Rules, 1977, defines „dead rent‟ as meaning „the
minimum guaranteed amount of royalty per year
payable as per rules or agreement under a mining
lease‟. Stipulations providing for the lessee‟s liability
to pay surface rent, dead rent and royalty to the
lessor are the usual covenants to be found in a
mining lease.
54. As pointed out earlier, since dead rent is the
minimum guaranteed amount of royalty and
partakes of the nature of royalty, what, therefore,
applies to royalty must necessarily apply or should
be made applicable dead rent also. The proviso to
Section 9(3) prohibits the Central Government from
enhancing the rate of royalty in respect of any
mineral other than a minor mineral more than once
during any period of four years. The proviso to
Section 9-A(2) also prohibits the Central Government
from enhancing the dead rent in respect of any area
more than once during any period of four years.
Halsbury‟s Laws of England, 4th Edn., volume 31,
paragraph 236, points out that „usually the royalties
are made to merge in the fixed rent by means of a
provision that the lessee, without any additional
payment, may work, in each period for which a
payment of fixed rent is made, so much of the
minerals as would, at the royalties reserved,
produce a sum equal to the fixed rent‟. The same
purpose is achieved by the proviso to Section 9-A(1)
and in the Mineral Concession Rules, 1960, by the
proviso to clause (c) of Rule 27 under which the
lessee is liable to pay the dead rent or royalty in
respect of each mineral, whichever be higher in
W.P.(C) No.9272 of 2018 Page 91 of 98
amount, but not both. In all State rules which
provide for payment of both dead rent and royalty,
there is a provision that only dead rent or royalty,
whichever is higher in amount, is to be paid, but not
both. Rules made under the 1948 Act, as for
example, Rule 41 of the Mineral Concession Rules,
1949, and Rule 18 of the Bombay Mineral Extraction
Rules, 1955, also. contained a similar provision.
Thus,. the practice followed throughout in exercising
the power to make rules regulating the grant of
mining leases has been to provide that either dead
rent or royalty, whichever is higher in amount,
should be paid by the lessee, but not both.”
7.3. It may be relevant to take note of the following
observation made in Mineral Area Development Authority
Vrs. Steel Authority of India, (2024) 7 SCR 1549:
“128.This Court has held that royalty is not a tax, in
several decisions. In State of H.P. Vrs. Gujarat
Ambuja Cement Ltd., (2005) Supp.1 SCR 684 =
(2005) 6 SCC 499 a three judge Bench of this Court
held royalty not to be a tax. The subsequent decision
in Indsil Hydro Power & Manganese Ltd. Vrs. State
of Kerala, (2019) 10 SCR 647 = (2021) 10 SCC 165
brought out the distinction between tax and royalty
in the following terms:
„56. Thus, the expression “royalty” has consistently
been construed to be compensation paid for
rights and privileges enjoyed by the grantee
and normally has its genesis in the agreement
entered into between the grantor and the
grantee. As against tax which is imposedW.P.(C) No.9272 of 2018 Page 92 of 98
under a statutory power without reference to
any special benefit to the conferred on the
payer of the tax, the royalty would be in terms
of the agreement between the parties and
normally has direct relationship with the
benefit or privilege conferred upon the grantee.‟
129. The principles applicable to royalty apply to dead
rent because:
(i) dead rent is imposed in the exercise of the
proprietary right (and not a sovereign right) by
the lessor to ensure that the lessee works the
mine, and does not keep it idle, and in a
situation where the lessee keeps the mine idle,
it ensures a constant flow of income to the
proprietor;
(ii) the liability to pay dead rent flows from the
terms of the mining lease; [Rules 27 and 45,
Mineral Concession Rules 1960]
(iii) dead rent is an alternate to royalty; if the
rates of royalty are higher than dead rent, the
lessee is required to pay the former and not the
latter; and
(iv) the Central Government prescribes the dead
rent not in the exercise of its sovereign right,
but as a regulatory measure to ensure
uniformity of rates.”
7.4. Under the above premise, the petitioner cannot escape
from the rigours of the liability clause as enshrined in
W.P.(C) No.9272 of 2018 Page 93 of 98
Rule 32 of the Odisha Minor Mineral Concession Rules,
2016.
7.5. A significant factor which needs to be highlighted that,
―Grant of Quarry Leases‖ are dealt with under Chapter-
IV, whereas, the provisions dealing with ―Grant of
Mining Lease13 for Specified Minor Minerals‖ are given
under Chapter-III. Rule 25 under Chapter-III with
Marginal Heading: ―Liability for payment of royalty, dead
rent, amount for District Mineral Foundation, additional
charge, etc.‖ provides in sub-rule (5) thereof that
“Royalty shall be leviable on minor minerals removed
from the leased area at the rates specified in Schedule-II”.
On the contrary, Rule 32 under Chapter-IV dealing with
“Liability for payment of royalty, dead rent, surface rent,
additional charge, amount of contribution payable to the
District Mineral Foundation, amount of contribution
payable to the Environment Management Fund” does not
provide for such a condition; rather it saddles liability on
“all the lessees for minor minerals other than specified
minor minerals” to pay royalty or dead rent, etc. and
second proviso to sub-rule (2) of Rule 32 makes it
manifestly clear that “where the lessee becomes liable for
payment of royalty for any minor mineral removed or
13 ―MINING LEASE‖ is defined under Clause (q) of Rule 2 of the Odisha Minor
Mineral Concession Rules, 2016 as:
“MINING LEASE means a lease granted under these Rules for specified minor
minerals over a compact area.”
W.P.(C) No.9272 of 2018 Page 94 of 98
consumed by him or his agent, manager or employees or
the contractor from the leased area, he shall be liable to
pay either such royalty or the dead rent whichever is
higher”. As discussed earlier, having excavated the
minor mineral (earth) from the lease area and consumed
by utilising the same in course of execution of
construction work of Ash Pond in terms of Contract
dated 21.12.2016 (Annexure-A/5 enclosed with counter
affidavit of the OPGC) the contractor (petitioner) is liable
to pay ―royalty‖ as envisaged in Rule 32 read with Rule 3
of the Odisha Minor Mineral Concession Rules, 2016.
7.6. Having accepted the terms of the Contract, the denial to
pay royalty and/or claiming refund of amount of royalty,
which is deducted from payments made to it by the
OPGC is untenable and interference of this Court is
unwarranted. Ergo, the writ petition warrants dismissal.
Conclusion:
8. The undisputed fact is that the petitioner extracted earth
and utilized the same for construction of
embankment/bundh in connection with Ash Pond in the
lease area of the OPGC.
8.1. With the discussions above, it is summarized that:
i. ―Earth‖ is minor mineral.
W.P.(C) No.9272 of 2018 Page 95 of 98
ii. Having not obtained ―Quarry Permit‖ defined under
Clause (w) of Rule 2 the excavation/extraction of
mineral by the petitioner fell within the purview of
restrictions contained in Rule 3.
iii. No material is placed on record to demonstrate that
―permit‖ as required under statute has been
obtained from competent authority empowered
under the Odisha Minor Mineral Concession Rules,
2016. ―Quarry Permit‖ defined under Clause (w) of
Rule 2 does encompass not only ―removal‖, but also
―extraction‖ and ―collection‖ of minor minerals with
specified quantity.
iv. Rule 3 restricts undertaking ―quarrying operation‖
by ―person‖14 unless terms and conditions in the
quarry lease is fulfilled.
v. Discussions in the foregoing paragraphs on fact
and in law and in view of enunciation of position by
the Hon’ble Supreme Court of India in State of
Odisha Vrs. Union of India, (2001) 1 SCC 429 in
consideration of pari materia provisions and finding
similitude of fact-situation, there can be no other
conclusion than to hold that the extraction of
14 Clause (42) of Section 3 of the General Clauses Act, 1897 defines ―person‖ as
follows:
“(42) “person” shall include any company or association or body of individuals,
whether incorporated or not;”
W.P.(C) No.9272 of 2018 Page 96 of 98
―earth‖ from the leased land for construction of Ash
Pond in connection with establishment of Power
Plant of OPGC would not fall within the ambit of
expression ―bona fide domestic consumptions‖.
vi. Liability to pay royalty by the petitioner stems from
Rule 32 read with restrictions contained in Rule 3
of the Odisha Minor Mineral Concession Rules,
2016, having its activity embraced within the ken
of definitions of the terms ―quarry lease‖,
―quarrying operation‖ in Clause (u) and Clause (v)
of Rule 2 respectively.
vii. The petitioner is obligated to discharge its liability
in terms of covenants of Contract entered into with
the OPGC.
8.2. The petitioner had extracted ―ordinary earth‖ (construed
as ―minor mineral‖) without any permission or permit as
required under Chapter-IV read with Rule 2(w) of the
Rules, 2016 and it has not paid royalty. The OPGC
stated to have deducted the amount towards royalty
from the Bills/Running Account Bills of the petitioner
and deposited with the State Exchequer. The petitioner
is liable to discharge the demand raised by the
Tahasildar, Lakahanpur vide Demand Notice dated
23.03.2018 (Annexure-9), subject to verification by the
W.P.(C) No.9272 of 2018 Page 97 of 98
authority concerned taking into account such deposits
stated to have been made by the OPGC.
9. In the result, the writ petition, sans merit, is liable to be
dismissed and this Court does so. Pending Interlocutory
Application(s), if any, shall stand dismissed. In the
circumstances, there shall be no order as to costs.
I agree
(HARISH TANDON) (MURAHARI SRI RAMAN)
CHIEF JUSTICE JUDGE
High Court of Orissa, Cuttack
The 6th May, 2026/Aswini/Bichi/Laxmikant
Signature Not
Verified
Digitally Signed
Signed by: ASWINI KUMAR
SETHY
Designation: PERSONAL
ASSISTANT (SECY I/C)
Reason: Authentication
Location: ORISSA HIGH
COURT, CUTTACK
Date: 06-May-2026 18:34:44
W.P.(C) No.9272 of 2018 Page 98 of 98
