Case title: GAMBHIRSINH RATHOD VS STATE OF GUJARAT
Case no: R/SPECIAL CIVIL APPLICATION NO. 882 of 2021
Order on: 04/05/2021
Qoram: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH WITH HONOURABLE MR. JUSTICE R.M.CHHAYA
Fact of the case:
Gambhirsinh Rathod was granted a lease for mining sand over 4.900 hectares in Surendranagar District, Gujarat, on 30.09.2009. The lease deed was executed on 03.11.2010, initially for 3 years. The lease was renewed twice, first on 03.11.2013 and then on 10.03.2016, each time for 3 years. In 2015, during the second lease period, Rathod found a new type of mineral called BLACKTRAP on the land. He informed the authorities and asked for permission to mine BLACKTRAP as well. The authorities took some time to respond but eventually, in 2018, they gave Rathod permission to mine BLACKTRAP. Rathod started mining BLACKTRAP in August 2018 and paid the required royalty (a kind of mining tax) for it, which the government accepted. In 2017, the state of Gujarat made new rules about mining and said that if new minerals were found, miners would have to pay extra charges. According to these rules, an additional fee of 80% of the regular royalty was imposed for newly discovered minerals. From August 2018 to June 2020, Rathod mined 576,000 MT of BLACKTRAP and paid Rs. 2.60 crores in royalties. On 21.07.2020 and 07.11.2020, the Geologist, Geology Assessment and Mining Department, Surendranagar, issued demand letters for an additional Rs. 2,07,11,613/- as per the Government Resolution. Rathod challenged the demand notices, Rule 15(1) of the Gujarat Mineral Concession Rules, 2017, and the Government Resolution. He argued that the new 2017 rules should not apply to his lease since his mining permissions and discoveries were under the older rules from 2010, arguing they were ultra vires, unconstitutional, and not applicable to his case.
Issues framed by court:
- Whether Reporters of Local Papers may be allowed to see the judgment ?
- To be referred to the Reporter or not ?
- Whether their Lordships wish to see the fair copy of the judgment ?
- Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?
Legal provisions:
Article 226 of the Constitution of India: Allows individuals to file a petition in High Court to enforce fundamental rights and for other legal rights.
Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act): Section 15: Empowers state governments to make rules for minor minerals.
Gujarat Minor Mineral Concession Rules, 2017: a) Rule 15(1): Deals with new mineral discovery and levy of auction premium.
b) Rule 56(5): Specifies the payment of royalty when more than one minor mineral is mined in the same leasehold area.
Contentions of Appellant:
In this case, Rathod (Appellant) contended that this rule is ultra vires under Section 15 of the MMDR Act, 1957, and violative of Article 14 of the Constitution of India, which guarantees equality before the law. The resolution imposing an additional 80% royalty on newly discovered minerals was challenged as being arbitrary and unfair. Rathod argued that the proviso to Rule 15(1) and the Government Resolution dated 18.10.2017 should not apply to his lease, which was granted and renewed under the 2010 Rules. The additional royalty demand was unjust as he was already paying the stipulated royalty for BLACKTRAP as per the existing lease agreement and the 2010 Rules. Rathod highlighted that his application to include BLACKTRAP in the lease was made in 2015, long before the 2017 Rules came into effect. Appellant argued that if the lease was not upheld, both he and the government would lose a lot of money. Also, it would be impractical for the government to manage two different mining leases on the same piece of land.
Contentions of Respondents:
The state (Respondent) defended the validity and applicability of Rule 15(1) and the Government Resolution dated 18.10.2017, asserting their power under Section 15 of the MMDR Act to regulate mineral concessions. The respondents argued that the lease deed executed on 02.08.2018 included a stipulation for the additional 80% royalty as per the Government Resolution. Rathod accepted this lease and therefore should comply with the extra fee. The respondent contended that the demand notices for the extra payment were legally correct according to the new 2017 rules and should be paid by Rathod.
Court analysis & Judgement:
The court agreed with Rathod that Rule 15(1) of the 2017 Rules and the associated Government Resolution dated 18.10.2017 do not apply to his lease, which was governed by the 2010 Rules. The court recognized that Rathod’s application for inclusion of BLACKTRAP was made in 2015, under the 2010 Rules, and was pending when the 2017 Rules came into effect. The court noted that Rathod had been paying the stipulated royalty for BLACKTRAP since 2018, and this payment was accepted by the state. The additional 80% royalty demand was deemed unjust. The court emphasized that if the lease deed was not upheld, the state would lose substantial revenue already collected as royalty from Rathod. Managing two different lease deeds for the same plot of land was considered impractical. The court referred to Rule 56(5) to emphasize that Rathod was liable to pay royalty for each minor mineral mined, which he was already doing. The court allowed Rathod’s petition, quashing the demand notices dated 21.07.2020 and 07.11.2020. The court held that the proviso to Rule 15(1) of the 2017 Rules and the Government Resolution dated 18.10.2017 did not apply to Rathod’s case. The challenge to the ultra vires of Rule 15(1) was considered insignificant as the court concluded that the rule did not apply to the petitioner’s lease under the circumstances.
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Judgement Reviewed By- Antara Ghosh
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