LexSTATE OF RAJASTHAN & ORS. versus HINDUSTAN ZINC LTD. & ANR.
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A B [2013] 4 S.C.R. 704 STATE OF RAJASTHAN & ORS. v. HINDUSTAN ZINC LTD. & ANR. (Civil Appeal No. 1494 of 2008) MARCH 11, 2013 [R.M. LODHA AND ANIL R. DAVE, JJ.] Mines and Minerals (Development and Regulation) Act, 1957 - s.9 - Mineral Concession Rules, 1960 - rr. 64A, 648, C 64C & 640 - Mining lease for extracting lead and zinc - Recovery of royalty in respect of minerals extracted by the lessee - Methodology fOr calculation of royalty -Notifications issued by the Central Government from time to time - Notification dated 11th April, 1997 substituted by Notification D dated 12th September, 2000 - High Court held that lessee- company was not liable to pay royalty on the tailings as they had not been taken out of the leased area and that as per r. 64C, unless dumped tailings or rejects are consumed by the lessee, no royalty can be collected on such tailings or rejects E - Held: Conclusion arrived at by the High Court is correct - Negligible contents of metal remaining in the mining area by way of tailings, slimes or rejects, which are returned to the mother earth cannot be said to be the part of metal content in the ore produced - By virtue of Notification dated 12th F September, 2000 read with the relevant Rules, lessee- company supposed to pay royalty only on the contents of metal in the ore produced and not on the metal contained in the tailings, rejects or slimes which had not been taken out of the leased area and which had been dumped into dumping G ground of the leased area. Mines and Minerals (Development and Regulation) Act, 1957 - s.9 - Mineral Concession Rules, 1960 - rr. 64A, 648, 64C & 640 - Mining lease for extracting lead and zinc - Recovery of royalty in respect of the minerals extracted by the H 704 STATE OF RAJASTHAN & ORS. v. HINDUSTAN ZINC 705 LTD. & ANR. lessee - Dispute over methodology for calculation of royalty A - Direction issued by High Court remitting the matter to the mining engineer for re-computing the royalty payable on lead and zinc contained in the ore produced - Held: As the metal concentrate taken out from the leased area was known to the parties, it was not necessary to have any further details B regarding the ore produced by the lessee-company - Direction accordingly quashed. Mis Hindustan Zinc Limited had been leased land by the State of Rajasthan for the purpose of extracting lead C and zinc therefrom under the provisions of Mines and · Minerals (Development and Regulation) Act, 1957. Section 9 of the Act enables the State to recover royalty iri respect of the minerals extracted by the holder of a mining lease. Rules 64A, 648, 64C & 640 of the Mineral Concession Rules, 1960 pertain to calculation of the D amount of royalty payable. Under Notification dated 11th April, 1997, royalty in respect of lead and zinc was to be charged on the basis of mineral concentrate produced. But thereafter, by virtue E of another Notification dated 12th September, 2000, substituting the Notification dated 11th April, 1997, royalty in respect of the afore-stated two minerals became payable on ad valorem basis on the contents of metal found in the ore produced. F Accordingly notices were issued to the lessee company (M/s Hindustan Zinc Limited) for recovery of additional royalty in respect of lead and zinc extracted by the company. The company raised contention that unless the ores are taken out of the leased premises, G royalty would not be leviable and that negligible contents of lead and zinc contained in tailings, which is not taken out of the leased area and which is dumped within the leased area, can never be taken into account for the purpose of calculating royalty. H 706 SUPRl=ML: COUR"'." R:PORTS [2013] 4 S.C.R. A Tha additioni!I damand for royalty was quashed by the High Court. The High Court held that the lessee- com?any was not lid:>le to pay royalty on the tailings as they had not been t;:;.ken out of the leased area and further that as per Rule 64C of the Rules, unless dumped B tailings or r:ljects ara consumed by the lessee, no royalty can be collected on .i;uch tailings or rejects. The High Court also directed that the royalty payable on lead and zinc conU;inecl in >.h" ore produced be re-calculated by the mining engir.e1Y. c Against the jud;imcnt deltverad b:• the High Court, the instant two app,,ab were filed- one by the State of Raj<'sthan wherac.s the other by Mis Hindustan Zinc Lir.1i1~.d.
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