NATIONAL MINERAL DEVELOPMENT CORPN. LTD. versus STATE OF M.P. AND ANR.

Citation: [2004] SUPP. 2 S.C.R. 1 · Decided: 05-05-2004 · Supreme Court of India · Bench: R.C. LAHOTI · Disposal: Appeal(s) allowed

Judgment (excerpt)

NATIONAL MINERAL DEVELOPMENT CORPN. LTD. 
A 
V. 
STATE OF M.P. AND ANR. 
MAY 5, 2004 
[R.C. LAHOTI AND ASHOK BHAN, JJ.] 
B 
Mines & Minerals (Regulation and Development) Act, 1957, Section 
9 and Entry 23 of the Second Schedule-Slimes arising in extraction of 
iron-ore-Levy of Royalty-Validity of-Held : Slimes being a waste 
material consisting of impurities having no ci,Jmmercial value, it is different C 
from fines and concentrates-Entry 23 of the Second Schedule prescribes 
quantification and levy only with reference to the quantity of lumps, fines 
and concentrates and slimes is left out of consideration for the purpose-
Hence, levy of royalty on slimes by the Stare authorities not valid. 
Appellant had been holding mining le~ses over land for extracting 
iron ore. In the process of mining, the iron ore is extracted and 
separated into ore lumps, fines and waste material known as 'slimes'. 
Appellant challenged the action of State alithorities in levying royalty 
on slimes. High Court held 'slimes' exigible to charge of royalty. 
D 
E 
In appeal to this court, appellant contended that slime is the 
resultant waste material consisting of impi;irities and minute particles 
with ferrous content, the ferrous part of which can neither be retrieved 
nor utilized for production of iron/steel as, no technology for the said 
purpose is yet developed; that no other State in the country is collecting F 
royalty on slimes; that such action of t~e State is arbitrary and 
unreasonable as slimes are nothing but impurities left available to be 
discarded at the end of the process ofproduftion of iron-ore lumps and 
iron-ore fine and that in view of the provisions contained in Section 
9 of Mines & Minerals (Regulation and Development) Act, 1957 and G 
Entry 23 of the Second Schedule thereof, the State cannot levy 
royalty on slimes and hence the action of the State is liable to be struck 
down. 
' 
Respondent contended that slimes contain ferrous material, nearly 
in the same proportion as the lumps or the fines contain, hence on a H 
2 
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R. 
A reasonable interpretation of Entry 23, the "slimes" should be treated 
as included in the "fines" and that merely because slimes cannot be 
usefully utilized for the purpose of extracting out the ferrous contents 
thereof and have no commercial value, cannot be a ground for 
exempting them from payment of royalty when the Parli'ilment itself 
B has chosen not to exclude slimes from charge of royalty. 
Allowing the appeals, the Court 
Held : 1. The slime, including its ferrous contents, is a waste with 
C no commercial value as it can neither be used nor consumed and there 
are no takers of the same in business, commerce and industry. It is 
different from 'fines' and concentrates, hence not exigible to charge of 
royalty under section 9(1) r/w Entry 23 of Second Schedule of the Mines 
& Minerals (Regulation & Development) Act, 1957. [15-D; 22-EJ 
D 
E 
2.1. The royalty is to be quantified for the purpose of levy and 
that cannot be done unless the provisions of the Second Schedule of 
the Act are taken into con~ideration. For the purpose of levying any 
charge, not only the charge has to be authorized by law, it has also to 
be computed. The charging provision and the computation provision 
may be found at one place or at two different places depending on the 
draftman's art of drafting, and methodology employed. In the latter 
case, the charging provision and the computation provision, th.rngh 
placed in two parts of the enactment, shall have to be read together 
as constituting one integrated provision. Section 9 provides for levy of 
F royalty and does not prescribe the rate of royalty nor does it lay down 
how the royalty shall be computed~ The rate of royalty and its 
computation methodology are found in Entry 23 of the Second 
Schedule and therefore the reading of Section 9 which authorizes 
charging of royalty cannot be complete unless what is specified in the 
G Second Schedule is also read as part and parcel of Section 9. Entry 23 
mandates the quantification of royalty to await or be postponed until 
the processing has been carried out and the lumps, fines and concentrates 
are prepared. Once the result of processing is available, the lumps, 
fines and the concentrates are subjected to levy of royalty at different 
H rates applied by reference to the quantity of each of the three items 
NATIONAL MINERAL DEVELOPMENT CORPN. LTD. v. STATE 
3 

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