Patna High Court
Arena Food and Agro Industries Private LimitedversusThe State of Bihar
- Decided
- Disposal
- DISPOSED
- Bench
- SANDEEP KUMAR
Holding
The demand for additional royalty is lawful under the proviso to Rule 52(4) of the Bihar Minor Mineral Concession Rules 1972 and Rule 22(3) of the Bihar Minerals Rules 2019, but the auction notice is quashed and the petitioner may pay the balance in installments and lift the excavated mineral.
Summary
Arena Food & Agro Industries Pvt Ltd obtained a stone mining lease in Bihar through a public auction for Rs 29 crore for the period 2017‑2022 and paid the auction amount plus a small royalty. The State authorities later demanded an additional royalty of Rs 6.25 crore, asserting that the value of minerals dispatched exceeded the bid amount. The petitioner contended that the auction amount itself satisfied royalty liability, that it had not exceeded the environmental‑clearance cap, and sought to pay any balance in installments and to lift the already excavated mineral. The Court examined the Bihar Minor Mineral Concession Rules 1972 and the Bihar Minerals (Concession, Prevention of Illegal Mining, Transportation & Storage) Rules 2019, particularly the provisos to Rule 52(4) and Rule 22(3) which allow extra royalty for quantity exceeding the bid amount. It held that the demand for additional royalty was lawful, but noted procedural delays and the petitioner’s partial compliance with the installment scheme. Consequently, the Court quashed the auction notice, directed the Mines Commissioner to calculate the outstanding amount, allowed payment in installments, permitted lifting of the excavated mineral, and set timelines for procedural permissions. The writ petitions were allowed and disposed of.
Issues considered
- The auction amount in a mining lease does it exhaust the royalty liability or can additional royalty be demanded for quantity exceeding the bid amount?
- Whether the petitioner exceeded the permissible extraction limit under the environmental clearance, thereby attracting extra royalty.
- Whether the rates in Schedule II of the 1972 Rules and Schedule III‑A of the 2019 Rules apply only to excess mineral beyond the environmental cap.
- Whether the petitioner is entitled to pay the additional royalty in installments and to lift the already excavated mineral.
- Whether the auction notice for the remaining mineral is valid or arbitrary.
Legislation cited
- Bihar Minor Mineral Concession Rules, 1972 — s. Rule 26(1)(b), Rule 26(4), Rule 52(4)
- Companies Act, 1956
- Indian Penal Code — s. 406, 419, 420
Subjects
- mineral lease
- auction royalty
- additional royalty
- environmental clearance
- Bihar Minor Mineral Concession Rules
- installment payment
- auction notice
- quashing
- public revenue
- mineral extraction
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.6873 of 2025
======================================================
Arena Food and Agro Industries Private Limited a Company incorporated
under the provisions of the Companies Act, 1956, having its registered office
at Village Nimi, P.S. Shekhopur, District Sheikhpura, through its director,
Shreekrishan Kumar, aged about 39 (male) Son of Harangi Singh, resident of
Village Nimmi, P.S. Shekhopur, District- Sheikhpura.
... ... Petitioner
Versus
1. The State of Bihar through the Principal Secretary, Mines and Geology
Department, Government of Bihar, Vikas Bhawan, Bailey Road, Patna.
2. The Principal Secretary, Mines and Geology Department, Government of
Bihar, Vikas Bhawan, Bailey Road, Patna.
3. The Additional Secretary, Mines and Geology Department, Government of
Bihar, Vikas Bhawan, Bailey Road, Patna.
4. The Director, Mines and Geology Department, Government of Bihar, Vikas
Bhawan, Bailey Road, Patna.
5. The District Magistrate cum Collector, Sheikhpura.
6. The Mineral Development Officer, Sheikhpura.
... ... Respondents
======================================================
with
Miscellaneous Jurisdiction Case No. 2212 of 2025
In
Civil Writ Jurisdiction Case No.6873 of 2025
======================================================
Arena Food and Agro Industries Private Limited a company incorporated
under the provisions of the Companies Act, 1956, having its registered Office
at Village Nimi, P.S.- Shekhopur, District Sheikhpura, through its director,
Shreekrishan Kumar, aged about 39 (male) Son of Late Harangi Singh,
resident of village Nimmi, P.S. Shekhopur, District- Sheikhpura.
... ... Petitioner
Versus
1. The State of Bihar through Sri. Divesh Sehara, the Principal Secretary Mines
and Geology Department, Government of Bihar, Vikas Bhawan, Bailey
Road, Patna.
2. Sri Divesh Sehara, the Principal Secretary, Mines and Geology Department,
Gvernment of Bihar, Vikas Bhawan, Bailey Road, Patna.
3. Sri Bharat Bhushan Prasad, the Additional Secretary, Mines and Geology
Department, Government of Bihar, Vikas Bhawan, Bailey Road, Patna.
4. Sri Vinod Duhan, the Director, Mines and Geology Department,
Government of Bihar, Vikas Bhawan, Bailey Road, Patna.
Patna High Court CWJC No.6873 of 2025 dt.19-03-2026
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5. Sri Arif Ahsan, the District Magistrate cum Collector, Sheikhpura.
6. Sri. Mukesh Kumar, The Mineral Development Officer, Sheikhpura.
... ... Opposite Parties
======================================================
with
Civil Writ Jurisdiction Case No. 14608 of 2025
======================================================
Arena Food and Agro Industries Private Limited a company incorporated
under the provisions of the Companies Act, 1956, having its registered office
at Village Nimi, P.S. Shekhopur, District Sheikhpura, through its director,
Radhey Sharma aged about 51 (male) Son of Late Harangi Singh, resident of
Village Nimmi, P.S. Shekhopur, District Sheikhpura.
... ... Petitioner
Versus
1. The State of Bihar through the Secretary cum Mines Commissioner, Mines
and Geology Department, Government of Bihar, Vikas Bhawan, Bailey
Road, Patna.
2. The Secretary cum Mines Commissioner, Mines and Geology Department,
Government of Bihar, Vikas Bhawan, Bailey Road, Patna.
3. The Additional Secretary, Mines and Geology Department, Government of
Bihar, Vikas Bhawan, Bailey Road, Patna.
4. The Director, Mines and Geology Department, Government of Bihar, Vikas
Bhawan, Bailey Road, Patna.
5. The District Magistrate cum Collector, Sheikhpura.
6. The Mineral Development Officer, Sheikhpura.
... ... Respondents
======================================================
Appearance :
(In Civil Writ Jurisdiction Case No. 6873 of 2025)
For the Petitioner/s : Mr. Suraj Samdarshi, Advocate
Mr. Avinash Shekhar, Advocate
Mr. Vijay Shanker Tiwari, Advocate
Ms. Simran Kumari, Advocate
Ms. Abhilasha Jha, Advocate
For the State : Mr. Mahendra Pd. Verma, A.C. to S.C.-20
For the Mines Department: Mr. Naresh Dikshit, Spl. P.P.
Mr. Brij Bihari Tiwari, Advocate
Ms. Shruti Singh, Advocate
Mr. Utkarsh Pathak, Advocate
(In Miscellaneous Jurisdiction Case No. 2212 of 2025)
For the Petitioner/s : Mr. Suraj Samdarshi, Advocate
Mr. Avinash Shekhar, Advocate
Mr. Vijay Shanker Tiwari, Advocate
Ms. Simran Kumari, Advocate
Ms. Abhilasha Jha, Advocate
For the State : Mr. Mahendra Pd. Verma, A.C. to S.C.-20
Patna High Court CWJC No.6873 of 2025 dt.19-03-2026
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For the Mines Department: Mr. Naresh Dikshit, Spl. P.P.
Mr. Brij Bihari Tiwari, Advocate
Ms. Shruti Singh, Advocate
Mr. Utkarsh Pathak, Advocate
(In Civil Writ Jurisdiction Case No. 14608 of 2025)
For the Petitioner/s : Mr. Suraj Samdarshi, Advocate
Mr. Avinash Shekhar, Advocate
Mr. Vijay Shanker Tiwari, Advocate
Ms. Simran Kumari, Advocate
Ms. Abhilasha Jha, Advocate
For the State : Mr. Swapnil Kumar Singh, A.C. to G.P.-19
For the Mines Department: Mr. Naresh Dikshit, Spl. P.P.
Mr. Brij Bihari Tiwari, Advocate
Ms. Shruti Singh, Advocate
Mr. Utkarsh Pathak, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE SANDEEP KUMAR
C.A.V. JUDGMENT
Date : 19-03-2026
The writ petition viz. C.W.J.C. No.6873 of 2025
titled ‘Arena Food & Agro Industries Private Limited thr.
Director Shreekrishna Kumar vs State of Bihar & Ors.’ was
earlier disposed of by a co-ordinate Bench of this Court vide
judgment and order dated 05.05.2025, which was challenged
before the Division Bench, whereupon, the aforesaid judgment
dated 05.05.2025 was set aside and the matter was remanded for
fresh consideration on merits. Upon such remand, the aforesaid
remanded C.W.J.C. No.6873 of 2025, the later filed C.W.J.C.
No. 14608 of 2025 titled ‘Arena Food & Agro Industries
Private Limited thr. Director Radhey Sharma vs. State of
Bihar & Ors.’, and the connected miscellaneous jurisdiction
case were heard together and are being disposed of by this
common judgment.
Patna High Court CWJC No.6873 of 2025 dt.19-03-2026
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2. The petitioner, a company incorporated
under the Companies Act, 1956 engaged in mining activity in
the State of Bihar, by the present writ proceedings, primarily
seeks quashing of the orders passed by the respondent
authorities whereby the challenge, by the petitioner, to the
additional royalty demand, has been rejected and a declaration
has been sought that no additional royalty is payable for the
settlement period under the agreement dated 30.03.2017, on the
ground that the settlement was through auction and the auction
amount itself constituted royalty, and the petitioner did not
exceed the permissible limit fixed under the Environmental
Clearance. The petitioner has also assailed the subsequent
auction notice bearing PR No.000159 (Mines) 2025-26
published on 04.04.2025 for auction of the mineral lying at the
lease site. The petitioner also seeks a declaration that the rates
under Schedule II of the 1972 Rules and Schedule III-A of the
2019 Rules, are applicable only for computation of royalty on
excess mineral, if any, beyond the permissible limit.
Consequentially, the petitioner seeks a direction permitting it to
pay the remainder of the disputed additional royalty in
installments and to remove the mineral lying at the mining site,
together with a finding that the respondents acted arbitrarily in
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refusing such permission and in moving to auction the mineral,
and that the failure to comply with the earlier installment
arrangement, on the part of the petitioner, under Memo No.5577
dated 24.11.2023 was attributable to the respondents themselves
and cannot be held against the petitioner.
3. For clarity, the prayer portion of the
aforesaid two writ petitions are reproduced hereunder :-
In C.W.J.C. No. 6873 of 2025
i. To issue an appropriate writ, order or direction
in the nature of certiorari for quashing letter no.
2005 dated 02.04.2025 issued by Respondent
Additional Secretary whereby petitioner's
representation dated 06.02.2025 has been
rejected.
ii. To issue an appropriate writ, order or direction
in the nature of certiorari for quashing notice
bearing no. PR No. 000159 (Mines) 2025 26
published in 2025 At sull Dainik Bhaskar
newspaper on 04.04.2024 whereby the
respondents have published a notice for auction
of 32,20,180.39 CFT mineral lying at Mauja
Mathokar Surdaspur, Circle Sheikhpura, P.O
Sheikhpura, Khata 272, and 132 Plot 1030 (P)
and 32 (P) Block 04.
iii. To issue an appropriate writ, order or direction
to the Respondents to permit the petitioner to
pay remainder of the additional royalty in
installments and remove the mineral lying at the
mining site.
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iv. This Hon'ble Court may adjudicate and hold
that the action of the Respondents in not
permitting the petitioner to pay the remainder of
the additional royalty amount and trying to
auction the mineral as much less consideration
is completely unjustified and arbitrary.
v. This Hon'ble Court may adjudicate and hold
that petitioner's failure to comply with the
earlier order of the Mines Commissioner
contained in memo no. 5577 dated 24.11.2023
was solely attributable to the Respondents and
the petitioner cannot be penalised for the same.
vi. To grant any other relief or reliefs which the
Petitioner may be found entitled to in the facts
and circumstances of the case.
In C.W.J.C. No. 14608 of 2025
i. To issue an appropriate writ order or direction
in the nature of certiorari for quashing order
dated 23.11.2023 contained in memo no. 5577
dated 24.11.2023 passed by the Respondent
Mines Commissioner in Revision Case No. 02 /
2023 whereby and whereunder the revision
application preferred by the Petitioner in light
of order dated 12.10.2023 passed by this
Hon'ble Court in CWJC No. 13532 of 2023 has
been rejected on wholly erroneous grounds
without considering the facts and circumstances
of the case.
ii. To issue an appropriate writ, order or direction
in the nature of certiorari for quashing order
dated 28.03.2023 contained in memo no. 362
dated 03.04.2023 passed by the Respondent
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Collector, Sheikhpura in Appeal No. 96/2022
whereby and whereunder appeal preferred by
the Petitioner under the Rule 67 of the Bihar
Minerals (Concession, Prevention of Illegal
Mining Transportation & Storage) 2019 Rules
against letter no. 731 dated 06.07.2022 issued
by the Respondent Mineral Development
Officer, Sheikhpura directing the petitioner to
deposit additional royalty of Rs. 6,25,34,581/-,
has been dismissed on wholly erroneous
consideration.
iii. This Hon'ble Court may adjudicate and hold
that the petitioner is not liable to pay any
additional royalty for the settlement period in
relation of agreement dated 30.03.2017
considering that fact that petitioner has not
exceeded its permissible limit as fixed in the
Environment Clearance.
iv. This Hon'ble Court may further adjudicate and
hold that according to Schedule II of Bihar
Minor Mineral Concession Rules, 1972, in case
settlement through auction, the royalty under
Rule 26 (1) (b) is the auction amount and that
no additional royalty is payable in case the total
quantity of mineral removed is within the
capping fixed in the environment clearance.
v. This Hon'ble Court may further adjudicate and
hold that the rates mentioned in Schedule II of
1972 Rules and Schedule III A of the 1972 can
only be applied to calculate the royalty for
excess mineral dispatched when a settee exceeds
the permissible limit as fixed in the Environment
Patna High Court CWJC No.6873 of 2025 dt.19-03-2026
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Clearance.
vi. To grant any other relief or reliefs which the
Petitioner may be found entitled to in the facts
and circumstances of the case.”
4. The nucleus of the present controversy is a
dispute as to whether, in a stone mining lease, settled through
public auction, the auction amount itself exhausts the royalty
liability, or whether the respondent-authorities can still lawfully
demand additional royalty on the ground that the mineral
extracted and dispatched exceeded the value equivalent to the
bid amount. The second and equally important limb of the
controversy concerns the already excavated mineral lying at the
mining site after expiry of the lease, and whether the petitioner
was entitled to lift the same on payment terms, or whether, upon
its failure to comply with the installment-linked arrangement,
the respondents were justified in recalling the permission,
seizing the stock, and proceeding to auction the same.
Brief Factual Matrix
5. The petitioner company, Arena Food & Agro
Industries Pvt. Ltd., participated in an auction for grant of a
stone mining lease over land situated at Mauja Mathokar
Surdaspur, Circle Sheikhpura, Khata Nos. 272 and 132, Plot
Patna High Court CWJC No.6873 of 2025 dt.19-03-2026
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Nos. 1030(P) and 32(P), Block 04, measuring about 12.50 acres.
It emerged as the highest bidder at Rs. 29 crores and was
granted a lease for five years from 30.03.2017 to 29.03.2022.
The petitioner deposited a security of Rs. 2,90,00,000/-,
obtained the necessary environment clearance from the SEIAA,
Bihar and thereafter executed the lease agreement on
30.03.2017 (Annexure P-1). Under Part V of the lease
arrangement, the bid amount of Rs. 29 crores were payable in
five equal yearly installments of Rs. 5.80 crores each. The
aforesaid lease expired on 29.03.2022. According to the
petitioner, the entire amount of Rs.29 crores along with
applicable interest for delayed payment were duly made.
6. It is the case of the petitioner that it had
obtained the prior environment clearance from the SEIAA,
Bihar on 19.12.2016 (Annexure P-3) and the proposed capacity
of production, thereunder, was capped at 11,41,250 Tonnes per
annum which would translate to 57,06,250 Tonnes of mineral
corresponding to 14,26,56,250 CFT of minerals during the
entire five-year lease period. However, according to the
petitioner, it had produced only 12,02,59,361.7 CFT minerals
(48,10,374 MT) and actually dispatched only 11,54,47,915.6
CFT of minerals (46,17,916.624 MT). The breakup during the
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five-year lease period are as under :-
period Total Production Total Dispatch
(CFT) (CFT)
April, 2017 – 1,97,36,440 26,89,855.25
December, 2017
January, 2018 – 2,84,41,085 1,10,31,886.55
December, 2018
January, 2019 – 2,78,81,836.65 2,18,85,021.95
December, 2019
January, 2020 – 2,81,50,000 3,23,64,207.6
December, 2020
January, 2021 – 1,34,65,000 3,18,38,094.45
December, 2021
January, 2022 – 25,85,000 1,56,38,849.75
March, 2022
Total 12,02,59,361.7 CFT 11,54,47,915.6 CFT
7. Therefore, it is the case of the petitioner that
after expiry of the lease term, there still remained about
1,92,457.376 MT of boulder/stone at the mining site.
8. After the expiry of the lease period on
29.03.2022, the respondent-authorities undertook a post-
settlement assessment of the equivalent value of mineral
extracted and dispatched by the petitioner during the currency of
the lease and found that although the petitioner had deposited
the auction/settlement amount of Rs.29 crores and had also paid
Rs.1,18,23,487/- towards additional royalty, the mineral
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dispatched by the petitioner during the lease period had an
equivalent royalty value of Rs. 36,43,58,068/, and therefore a
further sum of Rs. 6,25,34,581/- remained payable as additional
royalty.
9. In that background, the Mineral
Development Officer, Sheikhpura issued demand letters and
reminder letters calling upon the petitioner to deposit the alleged
balance additional royalty over and above the auction amount.
From the records, it appears that the Mineral Development
Officer, Sheikhpura demanded payment of balance extra royalty
of Rs.6,25,34,581/- with interest and other taxes against the
petitioner drawing strength from Rule-22(3) of Bihar Minerals
(Concession, Prevention of Illegal Mining, Transportation &
Storage) Rules, 2019, Rule-52(4) of Bihar Minor Minerals
Concession Rules, 1972 and Clause-36 of Part-VII of the
executed lease deed agreement. The following letters were
issued by the respondent-Mineral Development Officer,
Sheikhpura demanding the payment of balance extra royalty of
Rs.6,25,34,581/- with interest and other taxes against the
Petitioner.
i. Letter no.489 dated 02.05.2022,
ii. Letter no.648 dated 16.06.2022,
iii. Letter no.722 dated 04.07.2022,
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iv. Letter no.731 dated 06.07.2022
v. Letter no.1004 date 24.08.2022,
vi. Letter no.1007 dated 24.08.2022 and
vii. Letter no.1069 dated 01.09.2022
10. It is this demand for additional royalty raised
on the ground that the petitioner had dispatched mineral
exceeding the value equivalent to the auction bid amount and
the remaining quantity of the boulder/ stone which forms the
nucleus of the present lis.
11. It is the case of the petitioner that the
Mineral Development Officer, Sheikhpura, vide his letter No.
722 dated 04.07.2022 directed the petitioner to deposit Rs.
6,25,34,581/- as additional royalty on the ground that the
petitioner had dispatched mineral worth Rs.36,43,58,068/-
during the settlement term, that is, till 29.03.2022 and against
the aforesaid, the petitioner had only deposited
Rs.30,18,23,487/- and therefore the petitioner was liable to pay
an additional royalty of Rs. 6,25,34,581/-. The petitioner vide
letter dated 05.07.2022 replied to the above demand letter,
however the reply was rejected vide letter no. 731 dated
06.07.2022 and the petitioner was again directed to deposit the
aforementioned additional royalty of Rs. 6,25,34,581/- along
with Income Tax and District Mineral Foundation (DMF)
Patna High Court CWJC No.6873 of 2025 dt.19-03-2026
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amount. The petitioner thereafter preferred the remedy of
statutory appeal under Rule-67 of the 2019 Rules assailing the
order dated 06.07.2022 passed by the MDO, Sheikhpura before
the Collector, Sheikpura in Appeal Case No. 96 of 2022,
however the aforesaid appeal was dismissed vide order dated
28.03.2023 and the petitioner was directed to deposit an amount
of Rs.8,67,12,590/- with the following break-up :-
Additional Royalty Rs. 6,25,34,581/-
Interest on delayed payment of Additional royalty Rs. 96,34,471/-
Income Tax Rs. 15,31,777/-
DMF Rs. 14,87,162/-
Interest on delayed payment on installment Rs. 1,01,50,905/-
Interest on DMF Rs. 13,73,694/-
TOTAL Rs. 8,67,12,590/-
12. Parallelly, during the pendency of the appeal,
the Senior Additional Collector-cum-Mineral Development
Officer, Sheikhpura instituted Sheikhpura P.S. Case No.396 of
2022 under sections 419, 420 and 406 of the Indian Penal Code,
section 4 of the Minor Mineral (Development & Regulation)
Act, 1957 and Rules 11, 43 and 56 of the Bihar Mineral Rules,
2019, against the petitioner alleging non-payment of the
additional royalty of Rs.6,25,34,581/- and unlawful handling /
transport of stock. It was alleged by the M.D.O, Sheikhpura that
the petitioner had stocked 52,07,192 CFT & 5,39,280.75 CFT
Patna High Court CWJC No.6873 of 2025 dt.19-03-2026
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minerals at its K-license site which upon inspection, carried out
on 08.07.2022, the stock at the storage point were found to be
NIL. Thus, it was alleged that the stock was sold of illegally.
13. Thereafter, the Director of the petitioner
Company, one Radhey Sharma, was enlarged on anticipatory
bail vide order dated 06.02.2023 passed in Cr. Misc. No. 53870
of 2022, titled ‘Radhey Sharma vs State of Bihar & Anr.’, by a
coordinate Bench of this Court in the backdrop of the
submission that the petitioner was ready to deposit Rs. 50 lakhs
per month for six months, subject to the outcome of the civil
proceedings. Since the petitioner later alleged that lifting of the
already excavated minerals lying at the site, was not being
permitted, the aforesaid order dated 06.02.2023 was modified
by this Court in Cr. Misc. No. 24766 of 2023 titled ‘Radhey
Sharma vs. State of Bihar & Anr.’, vide order dated
19.04.2023, that the deposit condition was itself contingent on
permission to lift the mineral being granted by the Respondent-
authorities.
14. The petitioner thereafter vide his
representation dated 08.06.2023 addressed to the District
Magistrate, objected to the levy of interest on non-payment of
additional royalty, delayed payment of installment and interest
Patna High Court CWJC No.6873 of 2025 dt.19-03-2026
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on DMF and further offered to deposit the additional royalty
under protest in six monthly installments, if permission is given
to remove minerals already excavated and lying at the mining
site, however the aforesaid representation was not responded to
by the respondent-authorities.
15. Thereafter, in Cr. Misc. No. 44436 of 2023,
titled ‘Radhey Sharma vs. State of Bihar & Anr.’, the said
monthly deposit condition was ultimately removed vide order
dated 19.07.2023. The aforesaid order dated 19.07.2023 reads as
under :-
“The present modification application
has been filed for modification of the order
dated 06.02.2023 passed in Cr. Misc. No.53870
of 2022, as modified by order dated 19.04.2023
passed in Cr. Misc. No.24766/2023 to the extent
of removing the condition of paying Rs.50 Lakhs
per month for the next six months to the Mining
department and also to extend the period to
surrender.
2. It is submitted by learned counsel for
the petitioner that vide order dated 06.02.2023
passed in Cr. Misc. No.53870 of 2022, this
Court has granted anticipatory bail to the
petitioner with a condition to deposit Rs.50
Lakhs per month for the next six months in the
Mines Department, which shall be subject to
final outcome of the civil proceeding, where
after, the same was modified vide order dated
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19.04.2023 passed in Cr. Misc. No.24766/2023
and a condition was imposed that the said
amount shall also be subject to the condition
that the Mines Department will permit the
petitioner to remove the stock of already
excavated mineral lying at the mining site.
3. Learned counsel for the petitioner
submits that in compliance of the said orders,
the petitioner approached the mining
department and expressed his desire to pay
Rs.50 Lakhs per month for the next six months
and requested to open the generation of e-
transit challans, so that the petitioner may lift
the materials but the officials of the district
mining refused to accept the aforesaid payment
and also refused to permit the petitioner from
lifting the materials lying at the mining site.
Therefore, the petitioner, who is ready to
comply the condition imposed by this Court
while granting of his anticipatory bail, is not
being given the permission by the Mines
Department for payment of Rs.50 Lakhs after
opening of e-transit challans lifting the
minerals. As such, the condition of payment of
Rs.50 Lakhs in the Mines Department may be
removed from both the orders.
4. Learned counsel for the Mines
Department has not denied this fact.
5. Considering the submission of
learned counsel for the petitioner, the orders
dated 06.02.2023 passed in Cr. Misc. No.53870
of 2022 and 19.04.2023 passed in Cr. Misc.
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No.24766/2023 are modified to the extent that
the condition of deposit of Rs.50 Lakhs per
month for the next six months to the Mining
Department and related conditions be deemed
to be omitted.
6. Further, in the interest of justice, the
period to surrender is extended by four weeks
from today in connection with Sheikhpura P.S.
Case No.396 of 2022, pending in the court of
learned Chief Judicial Magistrate, Sheikhpura.
7. Rest order shall remain intact.
8. The order dated 06.02.2023 passed in
Cr. Misc. No.53870 of 2022 and 19.04.2023
passed in Cr. Misc. No.24766/2023 are modified
to the extent as indicated above. Let this order
be read along with the orders aforesaid.
9. Accordingly, this modification
application stands disposed of.”
16. The petitioner had preferred C.W.J.C. No.
7134 of 2023, titled as ‘Arena Food and Agro Industries Pvt.
Ltd. thr. Director Radhey Sharma vs. State of Bihar & Ors.’
seeking permission to remove/sell royalty-paid minerals, i.e.,
stone chips and dust, lying at K-Licence Nos. K-
Sheikhpura/28/2022 and K-Sheikhpura/30/2022. That aforesaid
writ petition was disposed of on 22.08.2023 with liberty to
move the Mines Commissioner, leading to Misc. Case No. 08 of
2023. The relevant portion of the aforesaid order dated
22.08.2023 passed in C.W.J.C. No. 7134 of 2023 reads thus :-
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“13. Having given anxious consideration
to the submissions made on behalf of the
parties, prima facie, it appears that there is
apparent dispute with regard to availability of
adequate mineral at site, in question. A huge
variance has been shown in the report of
inspection committee vis-a-vis departmental
portal. That apart, the petitioner successfully
able to show from the materials that the
inspection of the sites, which was approximately
spread in four acres, was done in a haste.
14. Further, the petitioner being
aggrieved by letter no. 731 dated 06.07.2022
issued by the Mineral Development Officer,
Sheikhpura preferred an appeal under Rule 67
of the 2019 Rules before the Collector,
Sheikhpura, bearing Appeal Case No. 96 of
2022 challenging the demand of additional
royalty of Rs.6,25,34,581/-, which also came to
be dismissed vide order dated 28.03.2023 and
thus he intends to assail the same before the
Principal Secretary, Mines and Geology
Department, Government of Bihar.
15. Though, the issue in respect to
additional royalty and the present one is
somewhat different, but certainly connected to
each other and is obvious dispute with regard to
the availability of mineral, thus, in the opinion
of this Court it would be just and proper to
relegate this matter also to the Principal
Secretary, Mines and Geology Department.
16. The parties are also in consensus
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with the observations made by this Court.
17. Needless to observe that if the
petitioner files application/petition in support of
his claim, including the claim for removal of his
stone crusher machine from the site within a
period of four weeks from today, the same shall
be considered and disposed of by a reasoned
and speaking order preferably within a period
of further eight weeks.”
17. Separately, the petitioner also filed C.W.J.C.
No. 13532 of 2023 titled as ‘Arena Food and Agro Industries
Pvt. Ltd. thr. Director Radhey Sharma vs. State of Bihar &
Ors.’ against the appellate order passed by the Collector,
Sheikhpura dated 28.03.2023 and vide order dated 12.10.2023.
A co-ordinate Bench of this Court disposed of the aforesaid writ
with a liberty to file revision and also permitted lifting of
already excavated minerals subject to payment of the additional
royalty of Rs.6,25,34,581 in six equal monthly installments. The
relevant portion of the aforesaid order dated 12.10.2023 passed
in C.W.J.C. No. 12532 of 2023 reads thus -:
“6. Considering the submissions made on
behalf of the parties and taking note of the
bonafide undertaking of the petitioner that he is
ready to deposit the additional royalty amount
within a period of six months, this Court deems
it apt and proper to allow the petitioner to pay
the amount in six equal instalments on monthly
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basis.
7. However, it is needless to observe that
the permission to lift the boulder/stones shall be
issued only after payment of first installment,
before 10th of November, 2023. It is also made
clear that within six months i.e. upto 10.04.2023
the entire payment of additional royalty of
Rs.6,25,34,581/- must be made within six equal
monthly installments. Failure of any installment
in any month would lead to cancellation of the
order, giving liberty to respondents to take
appropriate action. Further, this order will not
prevent the Mines Department to make any
settlement with any lessee in connection with the
site, in question, but during this period of six
months, the site, in question, will not be handed
over to the successful bidder.
8. Any payment shall be made by the
petitioner is subject to the final outcome of the
litigation.
9. Mr. Suraj Samdarshi, learned counsel
for the petitioner further submits that the
petitioner also undertakes to file revision
application before the Commissioner against the
order dated 28.03.2023 passed by the Collector,
Sheikhpura within two weeks pursuant to the
order of this Court dated 22.08.2023 passed in
C.W.J.C. No. 7134 of 2023. 10. In view of the
prayer made by the petitioner, in the interest of
justice, as a last chance, further two weeks time
is extended.”
18. Acting on the liberty granted by this Court,
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the petitioner preferred Revision Case No.02 of 2023 (Annexure
P-15) before the Mines Commissioner against the order dated
28.03.2023 passed by the Collector, Sheikhupura.
19. Earlier, the petitioner had preferred C.W.J.C
No. 14879 of 2022, titled as ‘Arena Food and Agro Industries
Pvt. Ltd. thr. Director Radhey Sharma vs. State of Bihar &
Ors.’, seeking permission to continue mining activity for 317
days on the ground that the petitioner had been prevented from
mining for various reasons. The aforesaid writ petition was
disposed of vide order dated 02.11.2022 with a direction to the
respondent-Principal Secretary, Mines and Geology Department,
to decide the representation of the petitioner dated 03.09.2022,
while also allowing the petitioner to raise the issue of lifting
material lying at the lease area. Pursuant thereto, a
supplementary representation dated 10.11.2022 (Annexure P-
17) was made seeking six months’ time to remove 1,92,457.376
MT of already excavated minerals lying at the site.
20. The Mines Commissioner vide common
order dated 23.11.2023 passed in Misc. Case No. 08 of 2023 and
Revision Case No.02 of 2023, communicated by Memo No.
5577 dated 24.11.2023, directed the petitioner to deposit Rs.
1,99,65,771 every month for six months and, in turn, allowed
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lifting of 8,01,907.03 CFT each month. It is the case of the
petitioner that it deposited the first installment on 28.11.2023
and the second on 20.02.2024, but departmental delay in giving
“capping” or operational permission caused serious prejudice to
the petitioner. According to the petitioner, capping after the first
deposit was given only on 02.01.2024, i.e., after 34 days and
after the second deposit on 20.02.2024, the capping was given
after lapse of 48 days on 09.04.2024.
21. The aforesaid second capping, according to
the petitioner, was valid till 08.05.2024, however owing to
certain technical problems in its current account, the third
installment could not be deposited in time by the petitioner. The
petitioner, had, however duly communicated this issue with the
current account vide letter dated 06.05.2024. In response
thereto, the Assistant Director, Department of Mines vide Memo
No. 585 dated 29.06.2024 recalled the lifting arrangement,
seized the remaining 32,07,628.14 CFT of minerals from the
site, and directed removal of the machinery of the petitioner.
Thereafter, the petitioner sought relaxation by representation
dated 23.09.2024, requested that the time period to deposit the
royalty be extended and the monthly installment be reduced to
Rs. 1,00,00,000/-. The aforesaid representation seeking
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relaxation was rejected vide Memo No.4526 dated 24.10.2024
of the Director, Mines, and on the same day vide Memo No.
4525 it was directed to seize and auction the minerals lying
within the lease area.
22. Being aggrieved by the aforesaid letter dated
22.10.2024 rejecting the representation for relaxation, the
petitioner preferred revision vide Revision Case No. 05 of 2024
before the Mines Commissioner, however vide order dated
14.01.2025, the revision was dismissed as not maintainable
against an order of the Director, though liberty was granted to
make a representation before the Mines Commissioner. Acting
on the aforesaid liberty, the petitioner moved the Principal
Secretary by representation dated 06.02.2025 requesting
extension of time to deposit the royalty. Thereafter, a reminder
letter dated 28.02.2025 was also sent by the petitioner. However,
it is the case of the petitioner that, instead of a fresh decision by
the Principal Secretary, the Director, Mines, by letter no. 2005
dated 02.04.2025, merely informed the petitioner that its request
had already been rejected earlier by letter no.4526 dated
24.10.2024. Therefore, it is the case of the petitioner that no
fresh orders were passed on the representation dated 06.02.2025
preferred by the petitioner. Shortly thereafter, a fresh auction
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notice, PR No.000159 (Mines) 2025-26, was published in
Dainik Bhaskar on 04.04.2025 for auction of 32,20,180.39 CFT
lying at the site and the date for auction was scheduled as
21.05.2025.
23. The aforesaid letter dated 02.04.2025 passed
by the Director Mines and the auction notice PR No. 000159
(Mines) 2025-26 were challenged by the petitioner in the first
writ petition, being C.W.J.C No. 6873 of 2025, which upon
remand by the Division Bench, is before this Court, and had
prayed allowing the payment of the remaining additional royalty
in installments and also permit it to remove the minerals lying at
the mining site. The petitioner thereafter preferred the second
writ petition, being, C.W.J.C. No. 14608 of 2025, pursuant to the
liberty granted by the learned Single Judge vide judgment dated
05.05.2025 passed in C.W.J.C. 6873 of 2025, and challenged the
very imposition of additional royalty.
Submissions of the parties
24. The main thrust of submission of the learned
Counsel for the petitioner is that under Schedule-II of the Bihar
Minor Mineral Concession Rules, 1972, and correspondingly
under Schedule III-A of the 2019 Rules, whenever settlement is
made by auction, the auction amount itself is the royalty.
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Therefore, according to the petitioner, once the auction amount
stood paid, the Respondent-Authorities could not have
separately raised any additional royalty demand unless the
petitioner had crossed the permissible quantitative ceiling as
described under the Environmental Clearance issued in favour
of the petitioner. Adverting to Rule 26(1)(b) of the Bihar Minor
Mineral Concession Rules, 1972, the learned counsel for the
petitioner has submitted that in case of settlement being made
through auction, the royalty would be the auction amount and
therefore once the petitioner paid the bid amount of Rs. 29
crores, the royalty liability stood discharged and the Department
could not, by a later accounting exercise, raise a separate
demand of additional royalty. It is argued by the learned counsel
for the petitioner that since the settlement in the case was
through auction and the petitioner did not exceed the
permissible limit as defined under the environmental clearance,
the demand for additional royalty from the petitioner is
therefore de hors the statutory rules and accordingly illegal.
25. Learned counsel for the petitioner further
submits that the petitioner had obtained the environmental
clearance dated 19.12.2016 with annual production capacity of
11,41,250 tonnes, which, over five years came to 57,06,250
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tonnes, i.e. about 14,26,56,250 CFT of minerals. It is
emphasised by the learned counsel for the petitioner that during
the entire lease period of five years the total dispatch was only
11,54,47,915.6 CFT, which admittedly remained below the
aforesaid ceiling. It is, therefore, argued that there was no excess
removal beyond the permissible limit, and hence no additional
royalty could lawfully be levied upon the petitioner.
26. Learned counsel for the petitioner next
submits that the respondents are misreading the statutory
framework by treating the schedule rates as a tool to
retrospectively convert the entire auction settlement into a “per
CFT royalty” regime. It is argued by the learned counsel for the
petitioner that the rates under Schedule II of the 1972 Rules and
Schedule III-A of the 2019 Rules can, if at all, apply only for
computation of royalty on excess mineral dispatched beyond the
permissible limit fixed by the Environmental Clearance, and not
for minerals dispatched within that limit, however, the Mineral
Development Officer had demanded an additional royalty of
Rs.6,25,34,581/- which was subsequently revised by the
Collector, Sheikhpura in Appeal to Rs.8,67,12,590/- by
imposing interest over delayed payment and D.M.F.
27. Learned counsel submits that the prior
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payment of Rs. 1,18,23,487/- towards additional royalty cannot
be treated as an admission of liability. It is categorically argued
that the said amount was deposited under wrong advice and
under pressure of the Mineral Development Officer, and a
payment made in such circumstances cannot estop the petitioner
from asserting that the very demand was unsustainable in law.
Therefore, according to the petitioner, that payment does not
validate the demand for additional royalty nor could it amount
to an acknowledgment that the demand was lawful. It is argued
that the test of legality of the demand for additional royalty must
be based upon the rules and the lease, and not on the basis of a
coerced or mistaken payment.
28. Assailing the orders of the Collector and the
Mines Commissioner, learned counsel submits that both
authorities have approached the matter mechanically and have
failed to consider the central legal contentions put forth by the
petitioner. It is argued that the impugned orders dated
28.03.2023 and 23.11.2023 proceed merely on the assumption
that any dispatch beyond bid-equivalent quantity must attract
extra royalty, without examining the case that in an auction
settlement the bid amount itself was royalty and that the
petitioner did not exceed the environmentally permissible
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threshold.
29. It is next submitted by the learned counsel
for the petitioner that after the expiry of the lease, the petitioner
was not seeking permission to undertake any fresh mining, but
only to lift already excavated stock lying at the mining site. The
learned counsel draws a distinction between extracting minerals
and the later act of transporting already extracted/raised mineral.
The mineral already mined, purchased, processed and royalty
paid upon did not amount to “mining operations,” and therefore
the removal of already excavated mineral stands on a different
footing from fresh extraction.
30. Learned counsel next submits that the
petitioner initially complied with the installment-based payment
modality in pursuance of the order of the Mines Commissioner
by depositing the first installment on 28.11.2023 and the second
installment on 20.02.2024. However, the respondents delayed
issuance of capping / operational permissions after both
deposits, first by 34 days and then by 48 days. It is the
submission that such delays had two consequences: firstly, large
sums paid by the petitioner remained blocked without any
corresponding ability to sell the mineral and secondly, the
delayed capping itself undermined the viability of the
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installment-based lifting arrangement. Therefore, it is argued by
the learned counsel for the petitioner that the later default in the
third installment cannot be viewed in isolation from the conduct
of the respondent-authorities themselves.
31. It is further submitted that the petitioner had
specifically informed the respondents by letter dated 06.05.2024
that there were technical problems in its current account, and
therefore the delayed third installment was not willful. It is
argued on behalf of the petitioner that instead of dealing with
that explanation and the earlier departmental delays in a fair and
pragmatic manner, the respondent-authorities straightway
arbitrarily recalled the lifting arrangement by Memo No. 585
dated 29.06.2024, seized the balance stock, and thereafter
rejected the request for extension through Memo No. 4526 dated
24.10.2024.
32. Learned counsel also submits that once the
Revision Case No. 05 of 2024 was dismissed on 14.01.2025
with liberty to make a representation, it was incumbent upon the
competent authority to take a fresh decision on the
representation dated 06.02.2025 preferred by the petitioner.
Instead, according to the petitioner, the Director, Mines, vide
letter no. 2005 dated 02.04.2025, merely referred back to the
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earlier rejection dated 24.10.2024 and did not decide the matter
afresh. This, according to the learned counsel for the petitioner,
it amounts to non-application of mind and failure to exercise the
authority reserved by the earlier liberty.
33. Lastly, learned counsel for the petitioner
submits that the proposed auction, under challenge, is itself
arbitrary since the petitioner has always been willing to deposit
the remainder of the disputed additional royalty amount in
installments and remove the excavated mineral lying at the site.
In those circumstances, the decision to auction the same mineral
at a much lower reserve valuation is grossly unjustified even
from the standpoint of protection of public revenue. The learned
counsel for the petitioner, therefore, submits that the respondent-
authorities cannot first frustrate the installment-cum-lifting
arrangement by delaying capping / operational permission and
then penalise the petitioner for the very failure to which the
respondent themselves materially contributed.
34. Mr. Naresh Dikshit, learned Special P.P. for
the Mines Department submits, at the outset, that the entire case
of the petitioner is founded on a misreading of the Bihar Minor
Mineral regime. According to the answering respondents, even
in an auction settlement the auction amount does not foreclose
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liability for extra royalty where the quantity extracted and
dispatched exceeds the quantity equivalent to the bid amount.
35. Adverting to Rule 52(4) of the 1972 Rules,
Rule 22(3) of the 2019 Rules, and Clause 36 of Part VII of the
lease deed, it is argued by the learned Special P.P. for the Mines
Department that the statutory text is explicit and the proviso
inserted into Rule 52(4) of the 1972 Rules clearly states that
“the settlee shall pay extra royalty for the quantity of stone
extracted and dispatched in excess of the quantity equivalent to
bid amount,” further the second proviso to Rule 22(3) of the
2019 Rules repeats in substance to the same effect. It is
emphasised by the learned counsel for the answering
respondents that these provisions expressly provide that the
settlee shall pay extra royalty for the excess quantity of stone
extracted and dispatched beyond the quantity equivalent to the
bid amount. It is argued that the petitioner cannot isolate the
expression “auction amount is royalty” and ignore the
immediately operative extra-royalty provisions.
36. Further Adverting to Rule 26(1)(b) and Rule
26(4) of the 1972 Rules and Rule 51(1)(b) and Rule 51(4) of the
2019 Rules, it is submitted by the learned counsel for the
answering respondents that the mineral concession holder is
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bound to pay royalty for mineral won, extracted and removed at
the prescribed rate and in cases where the royalty on dispatched
quantity exceeds the auction amount, the extra royalty for the
excess quantity of mineral extracted shall be payable.
37. It is next submitted by the answering
respondents that the petitioner during the five-year lease period
extracted total stone whose royalty value was Rs.
36,43,58,068/-, while the petitioner had deposited only the
auction amount of Rs. 29 crores plus Rs. 1,18,23,487/- already
paid towards extra royalty, totalling Rs. 30,18,23,487/-. It is,
therefore, the submission of the answering respondents that the
balance Rs. 6,25,34,581/- was correctly demanded as additional
royalty.
38. The respondents next submit that the reliance
on the Environmental Clearance (E.C.) by the petitioner is
misplaced. It is argued by the learned counsel for the answering
respondents that the environmental clearance and royalty
accounting serve different purposes. The EC prescribes an
environmental ceiling, but the royalty liability is governed by
the Bihar Mineral Rules and the lease deed. Therefore, even if
the petitioner remained within the environmental cap, that by
itself does not discharge the statutory liability to pay extra
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royalty if the extracted/dispatched quantity exceeded the
quantity equivalent to the bid amount.
39. Adverting to clause-36 of the lease deed
executed between the petitioner and the answering respondents,
it is submitted that the petitioner was bound to pay the
additional royalty in case of extraction/mining stone for the
excess quantity in comparison to bid amount. It is, therefore,
argued that the case of the petitioner is contrary not only to the
rules but also to the express covenant in the very agreement
under which it operated. The answering respondents have also
point out the petitioner’s own conduct in paying
Rs.1,18,23,487/- towards extra royalty amounts to admission.
40. It is next submitted by the learned counsel
for the answering respondents that there is no provision in the
rules or the lease deed allowing payment of excess royalty in
instalments as a matter of right. It is categorically submitted that
dispatch through e-challan and payment of excess royalty are
expected to proceed parallelly. The installment-based
arrangement later structured by the co-ordinate bench of this
Court and the Mines Commissioner is merely an act of
indulgence or concession, not as recognition of any legal
entitlement in the petitioner.
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41. On the question of post-expiry rights, the
respondents rely on Clause 6 of Part IX of the deed, under
which, the petitioner was bound to remove its setup within six
months of the expiry of the settlement period. However
according to the respondents, even after nearly 40 months, the
petitioner had not cleared its setup from the site, which not only
destroys its equity but also gives rise to apprehension of illegal
mining under the pretext of clearing leftover mineral.
42. It is the next submission of the learned
counsel for the answering respondents that under the
installment-based lifting scheme, the petitioner admittedly
deposited only the first two installments and thereafter failed to
deposit the third installment in time, which, according to the
petitioner, was caused on account of departmental delays, but it
is submitted by the learned counsel for the answering
respondents that the petitioner availed the benefit of the
arrangement, lifted mineral twice, and then defaulted and it had
already sold 63,270.41 MT, i.e. 98.63% of the allotted capping
quantity of 64,152.56 MT, which belies the plea of the petitioner
that delayed capping caused serious prejudice to the petitioner.
43. Learned counsel for the answering
respondents, therefore, submits that once the petitioner
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defaulted the third installment, the respondent authorities were
justified in recalling the lifting arrangement by Memo No. 585
dated 29.06.2024, seizing the remaining stock and rejecting the
later request for extension/reduction.
44. The respondents further submit that the later
communication dated 02.04.2025 is legally valid because the
representation of the petitioner dated 06.02.2025 did not seek
any genuinely new relief and the same request had already been
rejected earlier.
45. In response to the Counter Affidavit, the
petitioner has filed a rejoinder affidavit, stating therein that the
respondents in their counter-affidavits have failed to address
true effect of auction settlement under the Bihar and in
substance, have admitted to the production and dispatch figures
of the petitioner and the existence of the quantity lying at the
site.
46. With regard to the certificate proceedings, it
is the submission of the petitioner that if the underlying demand
of additional royalty itself is illegal, the institution of certificate
proceedings for recovery of that very amount is also untenable,
unjustified and unsustainable.
Findings
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47. I have considered the submissions of the
parties and perused the materials on record.
48. At the outset, it would be gainful to refer to
the relevant provisions of the Rules governing the imposition of
royalty.
49. Rule 52(4) of the Bihar Minor Mineral
Concession Rules, 1972, reads as under:-
“(4) Payment of bid amount-The bid amount shall
be deposited in yearly basis in equal instalments
and each instalment shall be deposited before
31st January:
Provided that notwithstanding anything
repugnant in these Rules or otherwise the
settlee shall pay extra royalty for the quantity
of stone extracted and dispatched in excess of
the quantity equivalent to bid amount.”
50. The aforesaid proviso to Rule-52(4) was
added by the Bihar Minor Mineral Concession (Amendment)
Rules, 2008.
51. Further, Rule 22(3) of the Bihar Minerals
(Concession, Prevention of Illegal Mining, Transportation &
Storage) Rules, 2019 reads as under:-
“(3) Payment of bid amount.-The bid amount shall
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be deposited in yearly basis in equal
installments and each installment shall be
deposited sixty days before the completion of
one year from the date of execution of the lease
during the first year followed by the same
procedure in the consecutive years.
Provided that leases executed before the
commencement of this rule shall continue to
deposit yearly instalments before 31st January of
every year.
Provided further that notwithstanding
repugnant in these Rules or otherwise the
settlee shall pay extra royalty for the quantity
of mineral extracted and dispatched in excess
of the quantity equivalent to bid amount.”
52. The proviso to Rule-52(4) of the Bihar
Minor Mineral Concession Rules, 1972 and the second proviso
to Rule-22(3) of the Bihar Mineral Rules, 2019 in express terms
states that additional royalty can be imposed upon the lease
holder, when the stone extracted and dispatched is in excess of
the quantity equivalent to the bid amount.
53. The relevant provisions of the Rule 51 which
is titled ‘Rent/royalty assessment’ and falls under Chapter-XIII,
‘Mining Revenue’ of the Bihar Minerals (Concession,
Prevention of Illegal Mining, Transportation & Storage) Rules,
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2019 reads as under:-
“51. Rent/royalty and assessment.— 1. When a
Mineral Concession is granted:-
(a) Dead rent shall be charged at the
rates specified in Schedule II;
(b) Royalty shall be charged at the rates
specified in Schedule III(A); and
(c) Surface rent shall be charged at the
rate specified by the Collector from time
to time for the area occupied or used by
the lessee.
2. On and from the date of commencement of
these rules, the provisions of sub-rule (1) shall
also apply to the leases granted or renewed
prior to the date of such commencement and
subsisting on such date.
3. If the Mineral Concession Holder permits the
working of more than one mineral in the same
area, the Collector may charge separate dead
rent in respect of each mineral. Provided that
the lessee shall be liable to pay the dead rent or
royalty in respect of each mineral, whichever be
higher in amount.
4. Notwithstanding anything contained in any
instrument of lease the Mineral Concession
Holder shall pay rent/royalty in respect of any
minor mineral own, extracted and removed at
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the rate specified from time to time in Schedule
II and III(A).
5. The State Government may, by notification in
the official Gazette, amend the Schedule II,
III(A) & III(B) so as to enhance or reduce the
rate at which rents/royalties shall be payable in
respect of any minor mineral with effect from
the date of publication of the notification in the
official Gazette.
6. The Mining Officer, after such enquiry and
verification as he may deem necessary of the
monthly returns furnished by the lessee in
Form “I” and Annual Return in Form “J”
shall assess the amount of rent/royalty payable
by the Mineral Concession Holder at the end
of the prescribed period.
7. Notwithstanding anything contained in these
Rules, the royalty in case of auction of the
minor minerals shall be the amount of auction.
In cases where the royalty on dispatched
quantity exceeds the auction amount, the extra
royalty for the excess quantity of mineral
extracted shall also be payable.
8. The Mineral Concession Holder shall also pay all
assessments and imposition whatsoever being in
the natures of public demands which shall from
time to time be charged, assessed or imposed by
the authority of the State Govt.”
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54. From the reading of the aforementioned
provisions, it is clear that the quantity of stone/mineral extracted
is compared with the bid amount. Therefore, it is clear that the
thrust for determining the excess is not on the quantum / amount
of mineral extracted rather, the quantity equivalent to the bid
amount i.e. to say the equivalent money value of the extracted
minerals as compared with the bid amount.
55. Upon bare perusal of Rule- 51(7) of the
Bihar Minerals Rules, 2019, it is clear that royalty in case of
auction of minor minerals shall be the amount of auction itself,
however, the aforesaid position is qualified, i.e. when excess
quantity of mineral is extracted, extra royalty shall be payable.
56. Further, Rule 26 (1)(b) of the Bihar Minor
Mineral Concession Rules, 1972 provides for charging of
royalty at the rate specific in schedule-II and Rule 26(4), Bihar
Minor Mineral Concession Rules, 1972 provides that the lessee
shall pay rent/royalty in respect of any minor mineral won,
extracted and removed at the rate specified from time to time in
Schedules I and II.
57. Under Schedule- II of the Bihar Minor
Mineral Concession Rules, 1972, it has been provided that, in
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the case of boulder, gravel, shingle, that the settlee shall pay
extra royalty for the quantity of stone extracted and dispatched
in excess of the quantity equivalent to bid amount.
58. Under Rule 51(1)(b) and 51(4) of the Bihar
Minerals (Concession, Prevention of Illegal Mining,
Transportation & Storage) Rules, 2019, it has been provided that
royalty shall be charged at the rates specified in the respective
schedules specified thereunder.
59. The Hon’ble Supreme Court in the case of S.
Sundaram Pillai & Ors. vs. V.R. Pattabiraman & Ors.,
reported as (1985) 1 SCC 591 had held as under
“27. The next question that arises for
consideration is as to what is the scope of a
proviso and what is the ambit of an
Explanation either to a proviso or to any
other statutory provision. We shall first take
up the question of the nature, scope and
extent of a proviso. The well-established
rule of interpretation of a proviso is that a
proviso may have three separate functions.
Normally, a proviso is meant to be an
exception to something within the main
enactment or to qualify something enacted
therein which but for the proviso would be
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within the purview of the enactment. In
other words, a proviso cannot be torn apart
from the main enactment nor can it be used
to nullify or set at naught the real object of
the main enactment.” (emphasis supplied)
60. Further in the case of J.K. Industries Ltd. &
Ors. vs. Chief Inspector of Factories & Boilers & Ors.,
reported as (1996) 6 SCC 665, the Hon’ble Supreme Court held
as under -
“33. A proviso to a provision in a statute has
several functions and while interpreting a
provision of the statute, the court is required
to carefully scrutinise and find out the real
object of the proviso appended to that
provision. It is not a proper rule of
interpretation of a proviso that the enacting
part or the main part of the section be
construed first without reference to the
proviso and if the same is found to be
ambiguous only then recourse may be had to
examine the proviso as has been canvassed
before us. On the other hand, an accepted
rule of interpretation is that a section and
the proviso thereto must be construed as a
whole, each portion throwing light, if need
be, on the rest. A proviso is normally used
to remove special cases from the general
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enactment and provide for them specially.
34. A proviso qualifies the generality of the main
enactment by providing an exception and
taking out from the main provision, a
portion, which, but for the proviso would be
a part of the main provision. A proviso must,
therefore, be considered in relation to the
principal matter to which it stands as a
proviso. A proviso should not be read as if
providing something by way of addition to
the main provision which is foreign to the
main provision itself.” (emphasis supplied)
61. From the reading of the aforesaid provisions,
it is clear that in case of extracted minerals exceeding the
quantity equivalent to the bid amount / auction amount, the
respondent- State can lawfully impose additional royalty upon
the lease holder. In the present case, admittedly the mineral
dispatched by the petitioner during the lease period had a
royalty value of Rs. 36,43,58,068/- and against which, the
petitioner had paid an amount of Rs.29,00,00,000/- and had also
paid Rs.1,18,23,487/- towards additional royalty, totaling
Rs.30,18,23,487/-. The respondent authorities, accordingly,
raised demand from the petitioner to pay the additional royalty
amount, which cannot be said to be de horse the statutory Rules.
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Moreover, from perusal of the lease deed, it appears that the
clause-36 of Part VII of the executed lease deed clearly states
that the lessee i.e. the petitioner in this case, is bound to pay for
the excess quantity in comparison to the bid amount.
62. In view of the aforesaid, the imposition of
additional royalty upon the petitioner is lawful and in
accordance with the provisions under proviso to Rule 52(4) of
the Bihar Minor Mineral Concession Rule, 1972 and the second
proviso to Rule 22(3) of the Bihar Mineral Rule, 2019.
63. However, this Court has noted the peculiar
situation in the present case where the petitioner had initially
duly complied with the installment-based arrangement and in
pursuance thereof, he had, in fact, paid two out of six
installments of Rs.1,99,65,771/- each. It is not disputed by the
respondent authorities that there was indeed a considerable
delay in granting capping / procedural permissions. The mere
fact that the petitioner has utilized the significant fraction of the
capping amount would not condone the delay caused by the
respondent authorities. It is noted that the aforesaid installments
were monthly installments, however, the respondent authorities
granted the aforesaid permissions at a delay of almost a month
itself. Further, before rescinding the installment-based
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arrangement neither did the respondent authorities call for a
show-cause from the petitioner nor duly considered the
representation filed by the petitioner before the competent
authority seeking relaxation in payment of the installment and
extension of time period.
64. It is also underscored that in the subsequent
auction notice the respondent authorities had prescribed the
reserve price as Rs.1,36,85,767/- which is, in fact, even less than
the single monthly installment of Rs.1,99,65,771/- which has
twice been paid by the petitioner.
65. In view of the aforesaid, having held that the
imposition of additional royalty upon the petitioner was lawful
and in accordance with the Rules, this Court, in the peculiar
facts of this case, in the interest of justice and even financial
prudence keeping in view the public revenue, deems it fit and
appropriate to bring a quietus to the multiple litigation by
passing the following directions:-
i. The respondent Mines Commissioner shall
draw up a detailed calculation of the
outstanding amount and the quantum of the
monthly installment, after affording an
opportunity of hearing to the petitioner, and
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thereafter pass a fresh reasoned order, within
6 weeks from today specifically mentioning
the monthly installment to be paid by the
petitioner and the quantum of minerals
which the petitioner can lift in lieu thereof.
ii. The petitioner shall pay the aforesaid balance
amount calculated by the respondent Mines
Commissioner in equal monthly installments.
iii. The petitioner in lieu of payment can lift the
already excavated minerals (stone chips and
dust) lying at the mining site.
iv. The procedural permissions including the
capping shall be granted by the respondent
authorities expeditiously but not beyond one
week from the day on which the payment of
the respective installment is made by the
petitioner. In case of delay, attributable to the
respondent authorities in granting procedural
permissions including capping, the due date
of the next monthly payments shall
accordingly be adjusted.
v. As a consequence of the above direction, the
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petitioner cannot conduct fresh mining on
the mining site and can only lift / remove the
already excavated minerals.
vi. Once the entire payment is made, the
petitioner shall expeditiously remove the
machines lying at the mining site in
accordance with law. In case the petitioner
fails to remove its machines present on the
site, the respondent-authorities shall be at
liberty to proceed against the petitioner in
accordance with law.
vi. Failure or delay to pay any of the installment
by the petitioner shall result in cancellation
of the installment-based arrangement and the
respondent authorities shall be at full and
complete liberty to take all appropriate
action / steps in accordance with law.
66. Accordingly, the impugned order dated
02.04.2025 issued by the respondent- Additional Secretary,
auction notice bearing PR No.000159 (Mines) 2025-26 are
quashed and set aside.
67. With the aforesaid observations and
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directions, these writ petitions are allowed and disposed of.
Consequently, the connected M.J.C. No.2212 of 2025 is also
disposed of.
(Sandeep Kumar, J)
pawan/-
AFR/NAFR N.A.F.R.
CAV DATE 22.12.2025
Uploading Date 24.03.2026
Transmission Date
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