SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LIMITEDversusTHE UNION OF INDIA AND ANR.

             SAURASHTRA CEMENT AND CHEMICAL                                    A
                    INDUSTRIES LIMITED
                             v.
                THE UNION OF INDIA AND ANR.

                          NOVEMBER 23, 1993
                                                                               B
              [R.M. SAHAI AND DR. AS. ANAND, JJ.)

      Mines and Minerals (Regulation and Development) Act, 1957-Sec-
tions 9(1) and 9(3)-Fi.xation of royalty-Notifications issued by Central
Government-Rate of royalty for limestone-Revision of-Taking into account       C
average sale price-Not Unit-wise-Validity of the Notifications.

      The appellant, a manufacturer of cement, held a mining lease for
excavating limestone. It was required to pay royalty on it at the rate
specified in Second Schedule to the Mines and Minerals (Regulation an4
Development) Act, 1957. From time to time notifications were issued by D
the Central Government under S.9 of the Act, modifying the rate of royalty.
Validity of these notifications was challenged by the appellant and it was
claimed that the power to amend the Second Schedule and to t:nhance the
rate of royalty was circumscribed-and limited by proviso to sub-section (3)
of Section 9 in two respects, viz., (i) the rate of royalty could not -exceed E
20% of the sale price of the mineral at the pit's head, and (ii) the Central
Government could not enhance it more than once during four years. The
High Court upheld the second challenge and negatived the first.

     Against the High Court's. order, the appellant preferred the present
appeal.                                                                        F
      Dismissing the appeal, this Court

      HELD : Payment of royalty under sub-section (1) of S.9 of the Mjnes
and Minerals (Regulation) Act, 1957 is in respect of r-:11eral removal from
area but fixation. under clause (a) of proviso to sub-section (3) is related   G
to mineral and not to area leased or the unit. The rate did not admittedly
exceed 20% of the sale price of the mineral at the pit's head if the average
sale price of the mineral for the entire country is taken into account. The
law does not require that fixation of royalty should be made unit-wise only.
It cannot, therefore, be said that the notifications issued by the Govern-     H
                                    841
   842                    SUPREME COURT REPORTS (1993) SUPP. 3 S.C.R.

A ment were violative of the proviso to sub-section (3) of Section 9 of the Act.
                                                                                   .
                                                                                   •,




                                                                      [844-A-B]
            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2048 of
    1979.

            From the Judgment and Order dated 19.1.79 of the Gujarat High
B Court in Special Civil Application No. 367 of 1971.

            P.H. Par~kh for the Appellant.

            V.C. Mahajan, R. Singhvi, S.N. Terdol and Ms. A. Subhashini for the
C Respondents.
            C.B. Babu and Anip Sachthey for the State of Gujarat.

            The Judgment of the Court was delivered by

         R.M. SAHAI, J. The only question that survives for consideration in
D this appeal directed against judgment and order of the Gujarat· High Court
    is if the fJXation of royalty under the Mines and Minerals (Regulation and
    Development) Act of 1957, (referred to as 'the Act') was contrary to clause
    (a) of the proviso to sub-section (3) of Section 9 of the Act.

            The appellant, a manufacturer of cement held a mining lease for
E excavating limestone. It was required to pay royalty on it at the rate
  specified in Second Schedule. Limestone appeared at item no. 8. The rate
  of royalty on it in the Act, when enacted was, 5% of the sale price at the
  pit's mouth subject to minimum of thirty seven naya paise per tonne. The
  Schedule was amended in October 1962. It substituted item no. 8 and
F provided for payment of royalty at Rs. 0.75 per tonne subject to rebate of
  Rs. 0.38 per tonne to be given on limestone beneficiated by forth flotation
  method. The entry was again amended in 1968 and limestone was
  categorised as superior grade with 45% or more of CAO and inferior grade
  with less than 45% with CAO. The rate provided was at Rs. 1.25 per tonne
  for the superior grade and seventy five paise for the inferior grade. The
G Schedule was amended, again, in January 1970 and the categorisation made
  in 1968 was done away with and the rate of royalty was fixed at Rs. 1.25
  per tonne. Validity of these notifications issued under Section 9 of the Act
  by the Central Government fJXing royalty was challenged by the appellant
  and it was claimed that the power to amend the Second Schedule and to
H enhance the rate of royalty was circumscribed and limited by proviso. to
                 SAURASHTRACEMENT v. U.O.L [SAHAI,J.]                        843

sub-section (3) of Section 9 in two respects, one, the rate of royalty could        A
nor exceed 20% of the sale price of the mineral at the pit's head. second,
the Central Government could not enhance it more than once during four
years. The High Court accepted the second challenge and held it lo be
contrary to clause (b) of the proviso to sub-section (3) of Section 9.

       As regards first, !.;nee facts were not clear and claim of the appellant     B
was that the fixation of royalty at pit's head was more than 20% the Union
of India was directed to file a detailed affidavit explaining the manner of
fixation of royalty for the limestone. The affidavit has been filed. It is stated
that the restriction of 20% of the sale price of the mineral at the pit's head
was worked out by taking the average sale price of the minerals at the pit's        c
head for the entire country and the fixation royalty by taking sale price of
each unit in the country was not visualised by clause (a) nor it was
practicable. It is also stated that in the case of appellant's mine there was
no sale involved since the limestone produced by the appellant was con-
sumed in its own cement factory. These allegations are not denied.
                                                                                    D
      Sub-sections (1) and (3) of Section 9 read as under :

         "Section 9(1) - The holder of a mining lease granted before the
         commencement of this Act shall, notwithstanding anything con-
         tained in the instrument of lease or in any law in force at such           E
         commencement, pay royalty in respect of any mineral removed by
         him 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)      x x     x   x     x    x                                          F
         (3) The tentral 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.
                                                                                    G
               Provided that the Central Government shall not -

         (a) fix the rate of royalty in respect of any mineral so as to exceed
         twenty percent of the sale price of the mineral at the pit's head or

         (b) enhance the rate of royalty in respect of any mineral more than H
    844                   SUPREME COURT REPORTS (1993) SUPP. 3 S.C.R.

A            once during any period of four years."

    Payment of royalty under sub-section (1) is in respect of mineral removal
    from area but fixation under clause (a) of proviso to sub-section (3) is
    related to mineral and not to area leased or the unit. It did not admittedly
    exceed 20% of t.he sale price of the mineral at the pit's head if the average
B   sale price of the mineral for the entire country is taken into account. From
    the provisions extracted earlier it is apparent that the law does not require
    that fixation of royalty should be unitwise. In fact it could not be as
    demonstrated in the counter-affidavit. It cannot therefore, be said that the
    notifications issued by the Government were violative of the proviso.

           In the result this appeal fails and is dismissed with costs.

    G.N.                                                       Appeal dismissed.