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

The state cannot make a miner pay royalty on quantity of minerals that he did not remove from the mine, irrespective of whether it is explicitly mentioned in the memorandum of understanding or not. This was held in the judgement passed by a two member bench of the High Court of Uttarakhand consisting of Justice Raghvendra Singh Chauhan and Justice Alok Kumar Verma in the case of M/s Bhawani Stone Crusher v State of Uttarakhand & others [Special Appeal No. 225 of 2021] on 26th July 2021.

The appellant, M/s Jai Bhawani Stone Crusher challenged the legality of an order passed by a single judge which directed the appellant to submit a representation before respondent No.1. in turn respondent No.1 was directed to decide the representation within ten weeks from the date of receipt of the representation. The counsel appearing for the appellant submitted that the appellant also prayed that writs be filed against the respondents as the appellant was being asked to pay royalty on the quantity of minerals which he had never even lifted or transported from the mines. The single judge expressed his opinion that since there was no stipulation in the memorandum of understanding that the appellant would be liable to pay royalty only on the actual quantity of the river bed material extracted; therefore the demand made by the respondents was reasonable.

The two member bench of the High Court of Uttarakhand first clarified that as sufficient cause had been shown by the appellant for the delay in preferring the present Special Appeal, the delay has been condoned by the Court. The respondents argued that since the Memorandum of Understanding signed with the appellant did not explicitly mention that they were only authorised to charge royalty for the value of the minerals mined by the appellant, the respondents believed they were entitled to levy more royalty charges on the appellant. Rule 21 of the Uttarakhand Minor Minerals (Concession) Rules 2001 stipulated that royalty was payable in respect of any mineral removed by the miner and for this reason, the appellant submitted that he should not have to pay royalty for minerals he did not mine.

The bench came to the conclusion that “A bare perusal of the provision clearly reveals that royalty would be payable only on the quantity “removed” by the miner. Therefore, even if the MoU is silent on the point with regard to the payment of royalty, naturally, the payment of royalty would have to be in consonance with Rule 21 of the Rules, 1963. Therefore, the opinion expressed by the learned Single Judge is legally unsustainable” Consequently the appeal was allowed and it was decided that “it will be in the interest of justice to permit the appellant-petitioner to file a representation vis-à-vis relief Nos.1 to 4 before the respondent No.1. The respondent No.1 is directed to decide the appellant’s representation after giving an opportunity of personal hearing to the appellant. He is further directed to decide the representation within a period of three weeks from the date of submission of the representation”.

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