Judgment:
B.N. Kirpal, C.J.
1. The challenge in this writ petition is to the vires of Section 9(3) of the Mines and Minerals (Regulation and Development) Act, 1957, inter alia, on the ground that the same is ultra vires Articles 14, 19(1)(g) of the Constitution and is also beyond the legislative competence of the Parliament.
2. Section 9 of the said Act empowers levy of royalty in respect of mining lease at the rate to be specified, from time to time, in the Second Schedule in respect of that mineral. Prior to 1972, proviso to Sub-section (1) stipulated that the Central Government shall not fix the rate of royalty in respect of any mineral so as to exceed 20% of the sale price of the mineral at the pit's head. By virtue of amendment made in the said Act in the year 1972, the said proviso (a) was deleted. After 1972, Section 9 as it now stands, is as follows:
9. (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, 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 four years.
3. The petitioner was granted a mining lease vide order dated 8th August, 1993 for mining chalk. By notification dated 5th May, 1987 the Central Government had increased the royalty charges in respect of chalk from Rs. 5/- to Rs. 10/- per M.T. By another notification dated 17th February, 1992 the royalty charges were increased to Rs. 25/- per M.T. The grievance of the petitioner is that this increase is excessive.
4. It appears that a large number of writ petitions are filed in this Court, some of them in the year 1988 and the same are still pending. At that time, the state of the law was unsettled. The contention which had been raised in those writ petitions, and as has been urged by the Learned Counsel before us today, are two-fold. Firstly, it is submitted that the Parliament had no legislative competence to enact Section 9(3) of the said Act, inasmuch as royalty can be charged only by the State legislature by virtue of Entry 23 and Entry 50 of List II. It is further submitted that the said provision, specially after its amendment in 1972, which takes away the ceiling of 20%, is ultra vires Articles 14 and 19(1)(g) of the Constitution and there was no justification for enhancement of the rate of royalty to Rs. 25/- per M.T.
5. The question with regard to the validity of the said provision is no longer res-integra. The Supreme Court was called upon to decide this issue in the case of India Cement Ltd. v. State of Tamil Nadu : [1991]188ITR690(SC) . In that case the question arose with regard to the validity of Section 115 of the Madras Panchayats Act, under which royalty was required to be paid at the rate of 45 paise per rupee by way of local cess. The challenge was to the legislative competency of the State to enact such a law. The Seven Judges Bench of the Supreme Court, in India Cement's case, came to the conclusion that because of Section 9 of the Central Act which covers the entire field, the State legislature was denuded of its competency under Entries 23 and 50 of List II of the Seventh Schedule. Section 115 of the Tamil Nadu Panchayats Act, was accordingly quashed. It follows from this that it is only the Parliament which has the power to levy and fix the rate of royalty and it gets the jurisdiction to enact the said law by virtue of Entry 54 of List I, read with Entry 97 of the said List.
6. The aforesaid decision of India Cement's case was reiterated and followed by a Division Bench of the Supreme Court in the case of Federation of Mining Associations of Rajasthan v. State of Rajasthan - : AIR1992SC103 . Following the decision in India Cement's case, it was held that the State legislature did not have the competence to legislate for the levy of a tax on mineral being lands based on the royalty derived from the land. The conclusion which was arrived at was that it is only the central legislature who was competent to levy and recover royalty under Section 9 of the said Act. From the aforesaid, it follows that there is no merit in the contention that the Parliament had no legislative competence to enact Section 9 of the Act.
7. It was then sought to be contended that by removing 20% ceiling as had been provided by the proviso to Section 9 prior to 1972, the legislature bad acted in a manner which was ultra vires Articles 14, 19(1)(g) of the Constitution. It is also submitted that there were no justification for enhancement of the royalty to Rs. 25/- per M.T. We see no merit in this contention. The scheme of the Act is that when mining lease is given as a consideration royalty is required to be paid. Merely because no ceiling of tax or royalty is fixed can be no ground for the Court to hold the said action to be ultra vires. What is the rate of tax, has to be decided by the legislature. The Learned Counsel has not been able to draw our attention to any judicial precedence wherein it has been held that on the ground of high rate of tax, the Court can strike down the tax so fixed. In matters relating to taxation, the Parliament and the authorities under the Act have greater discretion to act and determine the rate of tax or royalty which is payable. It is not necessary for the authorities concerned to justify the rate of royalty or tax. What is the rate to be fixed is within their exclusive domain. In any case, in a matter like the present where the royalty which is fixed is really not borne by the lessee, but is passed on to the ultimate consumer, it is not the case of the petitioner that the burden of royalty has not been transferred to the consumer. Therefore, the impact of the enhancement of the royalty is really felt by the ultimate consumer. Be that as it may. Section 9 clearly enables the Central Government to fix rate of royalty and we are unable to come to the conclusion that the increase is either unreasonable or such a challenge can be made.
8. It was lastly contended that Section 9(3) should be struck down on the ground that it gives excessive delegation. In a similar case, namely, Special Civil Application No. 108 of 1979 - Dhirajlal Amritlal Vyas v. Union of India, decided on 21-1-1991 by Division Bench of this Court, it had been contended that Section 9 does not provide any guideline or standard and that, gave a blanket permit to the Central Government to fix the royalty in an arbitrary manner and therefore, it was ultra vires. This Court after taking into consideration various judicial pronouncements and after examining the scheme of the Act, came to the conclusion that Section 9(3) was not ultra vires and did not suffer from the vice of excessive delegation. We are in respectful agreement with the aforesaid decision.
9. No other contention has been raised. For the aforesaid reasons, this writ petition is dismissed. The interim stay which was granted is vacated. The respondents will be at liberty to recover from the petitioner the balance amount of royalty. This Court had passed interim orders directing the petitioner to pay at the rate of Rs. 13.75 per M.T. and to furnish bank guarantee at the rate of Rs. 11.25 per M.T. The respondents will be at liberty to encash the said bank guarantee immediately. The petitioner shall also pay to the respondent interest at the rate of 18% per annum on the said amount of Rs. 11.25 per M.T. with yearly rests. The respondent shall also be entitled for costs and Counsel fee of Rs. 1,000/-. Rule is discharged accordingly.
10. Learned Counsel for the petitioner requests for staying the operation and implementation of this order for few weeks. We see no reason to grant any stay in view of the authoritative pronouncement of Supreme Court on the points in issue.