Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Mines and Minerals (Regulation and Development) Act 1957-Section ยท 9 |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Disposed Off |
Headnote | Mines and Minerals (Regulation and Development) Act, 1957-Section 9-Validity of-Section 9 is within legislative competence of Parliament both under entry 54 of Union List as well as entry 97 thereof - Section 9(3) does not suffer from any excessive delegation of legislative power-Notification dated 1-8-91 issued u/s 9(3)-Whether beyond the scope of Sec. 9(3)-Held, No-It was not a colourable devise.The respondents, purchasers of coal from Coal India Ltd. filed writ petitions before the High Court, complaining that the Notification dated 1.8.1991 issued by the Union of India u/s 9(3) of the Mines and Minerals (Regulation and Development) Act, 1957, fixing new rates of royalty on various varieties of coal was illegal and inoperative in law on various grounds; that before 1.8.1991 royalty was payable at the rate of Rs. 6.50 per ton vide earlier Notification but the same was sought to be increased to Rs. 120 per ton by the new Notification; that Section 9(3) confers unguided, ,unchannelized and arbitrary discretion to the Central Government to increase the rates of royalty to any higher amount and as no guidelines were provided for effecting the said increases, the Section itself is an instance of excessive delegation of essential legislative power and hence it was void. The Division Bench of the High Court quashed the Notification while holding that Section 9(3) of the Act was not invalid or illegal on any ground, however, the Notification was lacking in bona fides and as it was issued for meeting the financial deficiency suffered by States, it was outside the scope of Section 9(3) of the Act. No direction for refund of any amount was issued as according to the High Court the burden of enhanced royalty was already passed on to the customers by the manufacturers. The State as well as the Union of India and also some consumers filed these appeals against the order of the High Court.The appellants contended that the High Court was patently in error in striking down the impugned Notification dated 1.8.1991; that once this court took the view in Orissa Cement Company's case that royalty could not be imposed by States, that it was within the domain of the Central Legislature in view of Entry 54 of List I of Schedule VII of the Constitution and when the Parliament had already occupied the field pertaining to regulation and development of mines and minerals in the country by enacting the Act in 1957, if the rates of royalty were to be increased, it was only the Central Government which could exercise power u/s 9(3) of the Act and as the royalty had to be paid to the States, there was nothing wrong in issuing the impugned notification under which increased rates of royalty would be made available to the concerned states; that there was nothing wrong in Section 9(3) which gives enough guidance to the Central Government for issuing such Notification and that such Notification could not be said to be ultra vires or illegal or unconstitutional.The respondents submitted that Section 9(3) of the Act was a piece of excessive delegation of legislative power of Parliament, that it laid down no guidelines for the Central Government to follow for increasing the rates of royalty; that even otherwise it sought to tax mineral rights, the Section was beyond the legislative competence of the Parliament as such legislation would be covered by Entry 50 of list 2 of the VIIth Schedule and therefore, legislative competence in connection with tax on mineral rights would be exclusively of State Legislature and not of Parliament; that the impugned Notification enhancing the royalty by almost 200 percent was ultra vires the purpose and object of the Act as the purpose of the Notification was to increase the revenues of the State Governments and as it had nothing to do with the development of the mines, the Notification was beyond the scope and ambit of Section 9(3) of the Act; that the Notification issued u/s 9(3) must have direct nexus with royalty which would be a payment made for the privilege of removing the minerals and it had to be charged on the quantity removed; that no Notification u/s 9(3) could be issued by the Central Government only for increasing the general revenues of the States, that such a purpose is outside the scope of Section 9(3) and in substance, by the impugned Notification, the Central Government had imposed a tax for the purpose of swelling the revenues of the States and not for the purpose of increasing royalty on any permissible ground which may be within the scope of Section 9(3) of the Act; that Section 9 of the Act had nothing to do with mineral development and, therefore, enactment of Section 9 could not be supported under entry 54 of the Union List but would be covered by the sweep of Entry 50 of the State List; that royalty is a tax and there was no Entry in the Union List which could support such a tax and it would clearly fall within the scope and ambit of entry 50 of the State List; that every tax should have a tax entry and as there was no specific entry regarding imposition of tax by way of royalty in the Union List such tax could be governed by Entry 50 of the State List; and so, impugned Section 9(3) is beyond the legislative power of the Parliament; that the impugned Notification, even if assumed partly to be based on relevant grounds, it was not wholly issued for the purpose of development of minerals but for the purpose of development of State coffers and, therefore, the entire Notification had to be struck down as invalid and incompetent as an alien purpose cannot be mixed with the relevant purpose for exercising any statutory power even including the power to exercise delegated legislative function.The issues raised for determination were (i) whether Section 9(3) of the Act is ultra vires the Constitution and/or is illegal on any other ground; (ii) whether the impugned Notification is beyond scope of Section 9(3) of the Act and, therefore, incompetent and invalid? (iii) whether the impugned Notification is a piece of colourable exercise of power? and (iv) whether the impugned Notification is arbitrary and confiscatory in nature? |
Judge | Hon'ble Mr. Justice S.B. Majmudar |
Neutral Citation | 1995 INSC 89 |
Petitioner | State Of M.p. |
Respondent | Mahalaxmi Fabric Mills Ltd. And Ors. |
SCR | [1995] 1 S.C.R. 756 |
Judgement Date | 1995-02-01 |
Case Number | 275 |
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