Chandra Bhan Singh vs The State Of Uttar Pradesh

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.12314 OF 2024

CHANDRA BHAN SINGH … APPELLANT

VERSUS

STATE OF UTTAR PRADESH & OTHERS ... RESPONDENT (S)

WITH

CIVIL APPEAL NO.12315 OF 2024 AND CIVIL APPEAL NO.12316 OF 2024

JUDGMENT

AUGUSTINE GEORGE MASIH, J.

1. The instant batch of appeals challenge the respective

Demand Notices issued by the District

Magistrate/District Officer to the Appellants demanding Signature Not Verified Digitally signed by ASHISH KONDLE Date: 2025.05.23 15:52:34 IST 10% of the total bid amount to be deposited with the Reason: CIVIL APPEAL No.12314 OF 2024 Page 1 of 17 concerned District Mineral Foundation(s) (hereinafter,

“DMF”).

2. Since the issue involved in all these appeals is common,

the facts are being taken from Civil Appeal No.12314 of

2024, which assails the Judgement dated 15.11.2017

passed by the High Court of Allahabad (hereinafter,

“Impugned Judgment”) and has been taken as the lead

case.

3. The facts, as culled out from the said Civil Appeal are that

Chandra Bhan Singh, who was a successful bidder for

mining of minor minerals i.e., sand (hereinafter,

“Appellant”) was allotted a tender. In pursuance to this

tender and in consonance with the requirements as has

been laid down by the Policy decision dated 22.04.2017,

the Appellant had been called upon to deposit an amount

of ₹54,12,960/- being 10% amount of the deposited title

amount of ₹5,41,29,600/- in favour of the District

Mineral Foundation Trust, Kanpur (hereinafter, “DMF

Trust”) apart from 2% stamp fee on the same vide

Demand Notice dated 25.10.2017. It needs mention here

CIVIL APPEAL No.12314 OF 2024 Page 2 of 17 that as per the terms for allotment and the Mining Permit

dated 16.10.2017, the Appellant as required, had

deposited the amount payable for the approved mining

quantity at the rate of ₹630/- per cubic meter of sand as

per his bid totalling ₹5,41,29,600/-.

4. This Demand Notice dated 25.10.2017 had been

challenged by the Appellant before the High Court

through a writ petition asserting that the said amount as

has been claimed would be contrary to the provisions of

Section 9B of the Mines and Minerals (Development and

Regulation) Act, 1957 (hereinafter, “1957 Act”), which

required deposit of the amount as per the royalty fixed in

Second Schedule of the 1957 Act. The said challenge

before the High Court failed vide the Impugned Judgment

dated 15.11.2017 leading to the filing of the present

appeal.

5. The learned Senior Counsel for the Appellant has

asserted that the Policy decision dated 22.04.2017 itself

is not sustainable as the due process for issuance thereof

as provided for in Rule 68 of the Uttar Pradesh Minor

CIVIL APPEAL No.12314 OF 2024 Page 3 of 17 Minerals (Concession) Rules, 1963 (hereinafter, “1963

Rules”) have not been adhered to. Going by and referring

to the said Rule, it has been submitted that it enables

relaxation of the Rules whereas by way of the impugned

Policy in fact the amount which has been claimed is much

more than the one which has been fixed in First Schedule,

as appended along with the 1963 Rules. He, therefore,

asserts that the Policy as well as the Demand Notice is

unsustainable.

6. Referring to Section 9B of the 1957 Act, it has been

contended that the DMF, as has been formulated and

conceptualized, provides for charging and deposit of

amount in addition to the royalty equivalent to such

percentage of the royalty paid in terms of the Second

Schedule of the 1957 Act which would not be exceeding

one-third of such royalty, as may be prescribed by the

Central Government. He asserts that going by the said

Schedule, when rate has been fixed by the State at 10%

of the royalty, the amount payable would be limited to

that extent and the demand on the bid amount as a whole

CIVIL APPEAL No.12314 OF 2024 Page 4 of 17 is unsustainable. Apart from that, reference has also

been made to Section 15 of the 1957 Act, which confers

powers on the State Government to make Rules in respect

of minor minerals. He on the basis of sub-Section (4)

thereof asserts that Section 9B would be applicable for all

intents and purposes and not merely for constitution,

composition and functioning of the DMF, which includes

the amount in addition to the royalty required to be

deposited with it. State cannot claim an amount which is

contrary to the rate as has been fixed by the Central Act.

7. The learned Senior Counsel for the Appellant has made

reference to Rule 54 which deals with deposit of royalty

for the total quantity of the mineral allowed to be

extracted under the Permit. It is further submitted that

under Rule 21 of the 1963 Rules, royalty had to be paid

at the rates specified in First Schedule of the 1963 Rules.

Counsel on this basis has asserted that the High Court

erred in coming to a conclusion that Rule 21 and Rule 54

would not be applicable. On the above grounds, prayer

CIVIL APPEAL No.12314 OF 2024 Page 5 of 17 has been made for setting aside the Impugned Judgment

and allowing the appeal.

8. On the other hand, learned Additional Solicitor General

for the Respondent-State has defended the Impugned

Judgment by asserting that the provisions of Sections 9

and 9B of the 1957 Act would not be applicable to the

case in hand in light of Section 14 of the said Act, which

provides that Sections 5 to 13 would not apply to minor

minerals. She, on this basis submits that reliance on

Section 9B by the Appellant is misplaced. That apart,

with reference to Section 15 of the 1957 Act, it is asserted

that the State Government, by Notification in the Official

Gazette, stands empowered to make Rules for regulating

the grant of quarry leases, mining leases or other mineral

concessions in respect of minor minerals and for

purposes connected therewith. Under sub-Section (4) of

Section 15, Government without prejudice to sub-

Sections (1), (2) and (3), by Notification could make Rules

for regulating the provisions of the Act, which includes

the manner in which the DMF Trust shall work for the

CIVIL APPEAL No.12314 OF 2024 Page 6 of 17 interest and benefit of the persons and affected areas

as provided in sub-Section (2) of Section 9B. Similarly, for

composition and functions of the DMF Trust, reference

has been made to sub-Section (3) of Section 9B. She, on

this basis, asserts that applicability of Section 9B is

restricted to and for the purposes as have been specified

in Section 15 and nothing beyond that. This, in any case,

has to be regulated on the basis of the Rules to be framed

by the State Government. Reference has further been

made to Clause (c) of sub-Section (4) of Section 15 which

empowers the State Government to fix and regulate the

amount of payment to be made to the DMF Trust by the

mining concession holders of minor minerals as provided

in Section 15A which, in turn, empowers the State to

prescribe the payment to be made of the amount to the

DMF Trust. On this basis, it is asserted that the rate of

10% of the amount as has been fixed by the State to be

deposited with the DMF Trust, cannot be faulted with.

9. Reference has also been made to sub-Rule (2) of Rule 10

of District Mineral Foundation Trust Rules, 2017

CIVIL APPEAL No.12314 OF 2024 Page 7 of 17 (hereinafter, “2017 Rules”) as have been framed by the

State Government, where in addition to the royalty every

Permit holder is required to deposit with the DMF Trust,

an amount which is equivalent to the 10% of the royalty

or as may be prescribed by the State Government from

time to time. On this basis, it is asserted by her that 10%

of the royalty amount would be payable in case no other

amount is prescribed by the State Government. In

situations where amount or rate has been prescribed

other than 10% of the royalty, the said amount or rate

shall prevail. In the present case, what has been fixed

and prescribed is 10% of the total amount deposited by

the bidder.

10. As regards the challenge to the Policy decision dated

22.04.2017, the learned ASG has asserted that the said

Policy had not been challenged before the High Court and

thus, the same cannot be challenged before this Court

now. Furthermore, it is under this Policy which is now

sought to be questioned that the e-tender was floated in

which the Appellant had participated and succeeded. The

CIVIL APPEAL No.12314 OF 2024 Page 8 of 17 Appellant, therefore, cannot be permitted to turn around

and challenge the very Policy under which he had sought

benefit and had actually availed as well. The terms and

conditions were clear from the very beginning, with there

being no ambiguity. On the above referred basis, prayer

has been made for dismissal of the appeals.

11. We have considered the submissions as have been made

by the Counsel for the parties and with their assistance

have gone through the pleadings and records.

12. For the sake of brevity, the facts are not being reiterated,

as they are not in dispute.

13. Broadly speaking the challenge in the present appeal to

the Demand Notice is based upon the Policy decision

dated 22.04.2017 as issued by the Respondent-State

under which the e-tender process was initiated leading to

the Appellant participating therein and succeeding

followed by the allotment of the tender and issuance of

the Mining Permit. The ground pressed into service is of

non-compliance/violation of the procedure as required to

be followed under Rule 68 of the 1963 Rules which

CIVIL APPEAL No.12314 OF 2024 Page 9 of 17 enabled the State Government to, in relaxation of the

1963 Rules, grant mining lease.

14. In pursuance of the order passed by this Court on

24.09.2024, the original records relating to the process of

finalising the decision resulting in the issuance of the

communication dated 22.04.2017 with reference to Rule

68 of the 1963 Rules were produced before the Court on

15.10.2024 which was perused and a copy of the original

file was retained on record.

15. On considering the records as produced, the process

which has been followed while considering, evaluating

and deliberating the factors which weighed while

assigning reasons for coming to the conclusion have been

perused by us. The same finds reflected, projected and

mentioned in the letter dated 22.04.2017 after due

consideration at different levels upto the highest

competent authority leading to a reasoned decision at the

end of the State for exercising its powers under Rule 68

of the 1963 Rules which is found to be fulfilling the

requirement of the Rule. It would not be out of way to

CIVIL APPEAL No.12314 OF 2024 Page 10 of 17 mention here that an Order dated 18.04.2017 was passed

by the Lucknow Bench of the High Court in a Public

Interest Litigation which had permitted and required the

exercise of powers under Rule 68 of 1963 Rules by the

State. This was because of the peculiar situation which

was being faced by the State for the total ban on mining

activity having been imposed leading to the stopping and

delaying of construction and other development works,

both in the Government sector as well as the private

sector. Exercise of such power in those circumstances

when the vital projects were being adversely affected

would fall within the purview of Rule 68 empowering the

State to proceed to frame such a Policy and therefore, we

find no fault in the whole process and procedure adopted

by the State.

16. The challenge, thus, is limited to the extent of the amount

required to be deposited at the end of the Appellant in the

DMF Trust. The Appellant asserts that the amount

payable would be 10% of the amount of royalty as have

been laid down in Second Schedule of the 1957 Act with

CIVIL APPEAL No.12314 OF 2024 Page 11 of 17 reference to Section 9B(5) or under sub-Rule (2) of Rule

10 of the 2017 Rules as framed by the State of Uttar

Pradesh. On this basis, it is being sought to be asserted

that nothing beyond 10% of the royalty amount as

provided under the Schedule referred to above could be

called upon to be deposited in the DMF Trust. Demand

Notice dated 25.10.2017 requiring the Appellant to

deposit 10% of the amount of the title amount would be

much beyond the liability of the Appellant as per the

Statute. Demand cannot be in excess of the one which is

prescribed under the Statute or the Rules.

17. This contention of the Appellant is unsustainable firstly

on the ground that Section 9B of the 1957 Act would not

be applicable in the light of Section 14 of the said Act,

which reads as follows:-

“14. Sections 5 to 13 not to apply to minor minerals – The provisions of sections 5 to 13 inclusive shall not apply to quarry leases, mining leases or other mineral concessions in respect of minor minerals.”

18. A perusal of Section 14 would make it clear that Sections

5 to 13 of the 1957 Act would not be applicable to the

present case as the mineral which is sought to be mined

CIVIL APPEAL No.12314 OF 2024 Page 12 of 17 is a minor mineral i.e., sand. The plea therefore of the

Appellant based on Section 9B(5) is misplaced and thus,

unacceptable.

19. The applicability and the effect of Section 9B (2) and (3)

is limited to the extent as has been mentioned in Clause

(a) and (b) of sub-Section (4) of Section 15 of the 1957 Act,

which reads as follows:-

“15. Power of State Government to make rules in respect of minor minerals – … (4) Without prejudice to sub-sections (1), (2) and sub-section (3), the State Government may, by notification, make rules for regulating the provisions of this Act for the following, namely:-

(a) the manner in which the District Mineral Foundation shall work for the interest and benefit of persons and areas affected by mining under sub-section (2) of section 9B;

(b) the composition and functions of the District Mineral Foundation under sub-section (3) of section 9B; and

(c) the amount of payment to be made to the District Mineral Foundation by concession holders of minor minerals under section 15A.”

20. A perusal of the above would itself make it clear that

Clauses (a) and (b) are to operate within the domain for

which they have been incorporated and permitted to

function. The said sub-Clauses do not deal with the

amount to be charged or deposited in the DMF. This

CIVIL APPEAL No.12314 OF 2024 Page 13 of 17 aspect has been dealt with and provided for under Clause

(c) of sub-Section (4) of Section 15, which refers to

amount of payment to be made by the concession holder

in the DMF under Section 15A. Meaning thereby, the

State Government has been empowered under Section

15A to determine and fix the amount. Section 15A reads

as follows:-

“15A. Power of State Government to collect funds for District Mineral Foundation in case of minor minerals. - The State Government may prescribe the payment by all holders of concessions related to minor minerals of amounts to the District Mineral Foundation of the district in which the mining operations are caried on.”

21. The empowerment being there under the Statute

conferred on the State to determine the amount and the

fixation thereof for minor minerals cannot be faulted with.

The impugned Demand Notice thus being in consonance

with the Statutory provisions cannot be said to be illegal

or unsustainable.

22. Reference with regard to sub-Rule (2) of the Rule 10 of

2017 Rules would also not come to the rescue of the

Appellant. The same reads as follows:-

"10. Contribution to the Trust Fund. … CIVIL APPEAL No.12314 OF 2024 Page 14 of 17 (2) In case of minor minerals-

The holder of every mineral concession/permit shall in addition to the royalty, pay to the Trust of the district in which the mining operations are carried on, an amount which is equivalent to 10% of royalty or as may be prescribed by the State Government from time to time."

23. A perusal of above Rule 10(2) would show that apart from

the royalty, an amount of 10% of the royalty is payable to

the DMF Trust of the district in absence of any prescribed

amount by the State Government. However, in case an

amount is prescribed by the State Government then the

said rate or amount would prevail and be payable at the

end of the holder of the mineral concession or permit.

24. In the present case, the tender notice dated 11.05.2017,

the Approval Letter (Letter of Intent) dated 01.06.2017

and the Mining Permit dated 16.10.2017, it was made

amply clear with regard to the amount required to be

deposited by the Appellant. The Demand Notice dated

25.10.2017 issued to the Appellant requiring him to

deposit 10% of the title amount i.e. the total amount

payable for the minor minerals to be extracted was under

CIVIL APPEAL No.12314 OF 2024 Page 15 of 17

and in accordance with the statutory Rules i.e., Rule

10(2) of the 2017 Rules.

25. As regards the applicability of Rules 21 and 54 of the

1963 Rules, which have been sought to be pressed into

service by the Appellant to support his claim, the same

would not cut any ice in the light of Rule 23(3) of the 1963

Rules. For ready reference Rule 23(3) is reproduced

hereinbelow:-

“23. Declaration of area for auction/tender/auction- cum-tender lease … (3) On the dec1aration of the area or areas under sub-

rule (1) the provisions of chapters II, III and VI of these rules shall not apply to the area of areas in respect of which the declaration has been issued. Such area or areas may be leased out according to the procedure described in this Chapter.”

A perusal of the above makes it clear that in case of e-

tender process is being followed, Chapter II, III and VI of

these Rules would not apply. Rule 21 falls in Chapter III

whereas Rule 54 falls in Chapter VI and, therefore, the

said Rules would not be operative, rather not available to

be used. This argument, therefore, also fails.

CIVIL APPEAL No.12314 OF 2024 Page 16 of 17

26. In view of the above, we do not find any merit in the

appeal and, therefore, the same is dismissed. The

Impugned Judgment dated 15.11.2017 passed by the

Division Bench of the High Court of Allahabad is upheld

along with the Demand Notice dated 25.10.2017,

implying liability of the Appellant as towards the DMF

Trust.

27. In light of the decision in Civil Appeal No.12314 of 2024,

the other two connected appeals, being Civil Appeal

Nos.12315-16 of 2024 also stand dismissed.

28. There shall be no orders as to costs.

29. Pending application(s), if any, shall stand disposed of.

.......………………………………. J.

[ ABHAY S. OKA ]

………………………………………J. [ AUGUSTINE GEORGE MASIH ]

NEW DELHI;

MAY 23, 2025

CIVIL APPEAL No.12314 OF 2024 Page 17 of 17