LexKIRLOSKAR FERROUS INDUSTRIES LIMITED & ANR. versus UNION OF INDIA & ORS.
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[2024] 12 S.C.R. 68 : 2024 INSC 848 Kirloskar Ferrous Industries Limited & Anr. v. Union of India & Ors. (Writ Petition No. 715 of 2024) 07 November 2024 [Dr Dhananjaya Y Chandrachud, CJI, J.B. Pardiwala* and Manoj Misra, JJ.] Issue for Consideration Whether, the Explanation(s) appended to Rule 38 of the Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016 and Rule 45 of the Mineral Conservation and Development Rules, 2017 respectively are unreasonable and manifestly arbitrary and in consequence of violation of Article 14 of the Constitution. Headnotes† Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016 – Explanation to r.38 – Mineral Conservation and Development Rules, 2017 – Explanation to r.45 – Validity challenged – Computation of royalty levied for the extraction or consumption of mined ores – Change in the methodology/formula of computation of royalty – Compounding effect on the rate of royalty for every subsequent month – Petitioner argued that the inclusion of the royalty and contributions towards District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) paid previously for computation of the requisite royalty for subsequent months has a cascading effect on the rate of royalty for every subsequent month – New methodology of computation of royalty, if unreasonable or arbitrary: Held: No – Merely because the methodology or formula for computation of royalty has been altered from what it was under the erstwhile MCR, 1960 will not make the new mechanism or methodology unreasonable or arbitrary and liable to be struck down – It is possible that at the relevant time in respect of some of the minerals, royalty was being computed without inclusion of the royalty, DMF and NMET contributions previously paid, however, that *Author [2024] 12 S.C.R. 69 Kirloskar Ferrous Industries Limited & Anr v. Union of India & Ors. does not mean that the Central Government’s power is restricted and it cannot alter the mode of computation of royalty – Matters such as computation of royalty or the levy of such royalty on different minerals is entirely a matter of policy making beyond the expertise and domain of the Courts – Whether a particular policy is wise or a better public policy can be evolved is purely the domain of the executive – Judicial review of policy decisions is limited to assessing the legality of the decision making process rather than the substantive merits of the policy itself – Court should confine itself to the question of legality as to whether the policy making authority exceeded its powers, or committed an error of law or breached the rules of natural justice or reached a decision which no reasonable authority would have reached or whether it abused its powers – Though the mechanism for computation of royalty in terms of r.38, MCR, 2016 and r.45, MCDR, 2017 might have onerous implications in monetary terms on the mining leaseholders as there is a compounding effect on the rate of royalty for every subsequent month however, in absence of anything to show that the policy was in excess of the powers or domain of the respondents or in breach of any statutory provision, it cannot be struck down – Mineral (Development and Regulation) Amendment Act, 2015. [Paras 50, 51, 61] Economic policies/laws relating to economic activities – Mineral (Development and Regulation) Amendment Act, 2015 – Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016 – Explanation to r.38 – Mineral Conservation and Development Rules, 2017 – Explanation to r.45 – Different mechanism for computation of royalty for coal and other minerals – Whether the exclusion of royalty, and contributions towards DMF and NMET paid previously for coal but not for other minerals is unreasonable and manifestly arbitrary: Held: No – The exclusion of royalty, and contributions towards DMF and NMET paid previously for coal but not for other minerals cannot be termed as arbitrary or unreasonable, merely because the computation for one differs from the other in certain aspects – Deference needs to be shown to the legislature in deciding how royalty must be computed in respect of different mineral grades/ concentrates – Although, the computation of royalty for different minerals is purely a matter of policy yet, it cannot be ignored that prima facie there is anomaly both in the very computat
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