LexSTATE OF M.P. versus MAHALAXMI FABRIC MILLS LTD. AND ORS.
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A STATE OF M.P. __;1_-,..- v. MAHALAXMI FABRIC MILLS LTD. AND ORS. FEBRUARY 1, 1995 B [KULDIP SINGH, B.L. HANSARIA AND S.B. MAJMUDAR, JJ.) Mines and Minerals (Regulation and Development) Act, 1957-Section ~ · 9-Validity of-Section 9 is within legislative competence of Parliament both c 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-lt was not a colourable devise. The respondents, purchasers of coal from Coal India Ltd. filed writ D 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 Ulegal and inoperative in law on various grounds;\ that before 1.8.1991 royalty was payable at the rate of Rs. 6.50 E per ton vi~e earlier Notification but the same was sought to be increased to Rs. 120. per ton by the new Notification; that Section 9(3) confers I unguided, ,unchannelized and arbitrary discretion to the Central Govern- - ment 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 _._ F 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 G 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 manufac- turers. 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 H in striking down the impugned Notification dated 1.8.1991; that once this 756 SI'ATEOFM.P.v. MAHALAXMIFABRICMILLSLTD. 757 ', court took the view in Orissa Cement Company's case that royalty cool~ A ~ ~ 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 Govern- ment 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 B c ..+ no guidelines for the Central Government to follow for increasing the rates D ;,... 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 Vllth 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 vire~ the E putpose 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 p 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
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