STATE OF ORISSA AND ORS. versus UNION OF INDIA AND ANR.

Citation: [2000] SUPP. 5 S.C.R. 57 · Decided: 24-11-2000 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Appeal(s) allowed

Judgment (excerpt)

ST A TE OF ORIS SA AND ORS. 
A 
v. 
UNION OF INDIA AND ANR. 
NOVEMBER 24, 2000 
[G.B. PATTANAIK AND B.N. AGRAWAL, JJ.] 
B 
Mines and Minerals (Regulation and Development) Act, 1957-Section 
2-0rissa Minor Mineral Concession Rules, 1990-Rule 3, Rule 2(o)-
Acquisilion of land by State for laying Railway line-Railway administration C 
using certain minor minerals while laying line-State initiating proceeding 
for recovery of royalty and cess-Held, Railway Administration bound to pay 
royalty and cess for carrying out quarrying operations-Constitution of 
India Entry 54 list I-Entry 22 of list II. 
Words and Phrases-'Person', '"bonafide domestic consumption"- D 
Meaning of. 
The Government of Orissa acquired a land for laying the railway line 
and handed over the same to the railway administration. When the Railway 
Administration utilised certain minor minerals like the rock cut spoils and 
earth from that land, the Revenue Authorities of the State of Orissa initiated E 
proceedings for realisation of royalty and cess under the provisions of Orissa 
Minor Mineral Concession Rules. The Railway Administration and the Union 
of and India challenged the same by filing a writ petition in the High Court. 
The Railway Administration contended that, royalty or cess could be levied 
against the lessee of any mineral and the railway administration not being F 
the lessee of the land or the minor minerals therein, no royalty is payable for 
utilisation of the aforesaid minor mineral for laying down the railway line. 
The State Government contended that the handing over of the land for laying 
of the railway track to the railway administration does not amount to 
conferring ownership right over the minerals existing on the land and in 
accordance with the provisions of the Mines and Minerals (Regulation and G 
Development) Act, 1957 as well as the Orissa Minor Mineral Concession 
Rules, 1990, and that the railway administration would be liable to pay royalty 
for use of any minerals from the land. The High Court held that the earth 
and rock cut spoils excavated by the railway administration are minerals, but 
however the State would not be justified in levying the royalty in respect of H 
57 
58 
SUPREME COURT REPORTS [2000] SUPP. 5 S.C.R. 
A the minerals on the land which had been acquired and possession of which 
has been delivered to the railway administration. In so far as the land 
belonging to the State Government the High Court held that since no formal 
transfer deed has been executed, it would be open to the State Government to 
incorporate in the formal transfer, a term as to the payment of royalty in view 
B of the admission of the railway administration in its letter dated 10.6.1987 
that they would abide by the terms and conditions to be decided by the State 
Government while sanctioning transfer of Government land. 
In appeal to this Court the Appellant-State contended that the State is 
the owner of the mines and minerals within the territory and right to levy 
C royalty or cess in respect of any minerals is governed by the provisions of 
the Act and the Rules framed thereunder, that under the provisions of Orissa 
Minor Mineral Concession Rules 1990, which has been framed in exercise 
of power under Section 15(1) of the Act, no person can undertake any 
quarrying operation or collect and/or remove any minor mineral except under 
and in accordance with the terms and conditions of quarry lease, permit and/ 
D or auction sale provided under the rules, that under the proviso to Rule 3 of 
the Rules, 1990 when extraction and collection of minor minerals is made by 
a person from his own land for normal agricultural operations or other bona 
fide domestic consumptions, then that would not tantamount to quarrying 
operations and it is excluded from the purview of Rule 3, that therefore if 
E minor minerals are extracted or removed from one's own land not for any 
domestic consumption or agricultural operations, but are sold to the public, 
then the State would be justified in levying the royalty on such extraction and 
or collection. 
The Respondent-Union of India, contended that unless and until the lease 
F deed is executed in favour of the Union of India, the State Government would 
not be entitled to levy royalty or cess for extraction of minerals from the land 
which had been acquired for the purpose of laying down railway track and 
possession whereof has been given to the Union of India itself and that the 
High Co

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