IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF JULY, 2019 PRESENT THE HON’BLE MR. JUSTICE L.NARAYANA SWAMY AND THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR WRIT PETITION NO.53514/2018 (GM-MM-S) BETWEEN:
NMDC LIMITED FORMERLY KNOWN AS NATIONAL MINERAL DEVELOPMENT CORPORATION LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT 10-3-311/A, CASTLE HILLS MASAB TANK, HYDERABAD–560 028 TELANGANA REPT. BY ITS GENERAL MANAGER ... PETITIONER (BY SHRI. MOHAN PARASARAN, SENIOR ADVOCATE FOR SHRI. K. RAGHAVA CHARYULU & SHRI. D.R. RAVISHANKAR & SHRI. MOHAMED RIZWAN AHAMED, ADVOCATES) AND:
1. THE STATE OF KARNATAKA REPRESENTED BY THE CHIEF SECRETARY VIDHANA SOUDHA DR.B.R.AMBEDKAR VEEDHI BENGALURU–560 001 2. SECRETARY COMMERCE & INDUSTRIES DEPARTMENT MSME & MINES GOVERNMENT OF KARNATAKA DR.B.R.AMBEDKAR VEEDHI BENGALURU–560 001 3. THE DIRECTOR DEPARTMENT OF MINES & GEOLOGY KHANIJA BHAVAN RACE COURSE ROAD BANGALORE–560 001 ... RESPONDENTS (BY SHRI. UDAYA HOLLA, ADVOCATE GENERAL A/W SHRI. BHANUPRAKASH.V.G., AGA) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA A) DECLARE THAT MINING LEASE OF THE PETITION IN ML.NO.2396 IS DEEMED EXTENDED FOR 50 YEARS FROM 2008 AND THEREFORE THE LEASE IS VALID TILL 2058. B) CONSEQUENTLY DIRECT THE RESPONDENTS NOT TO LEVY PREMIUM OF AN AMOUNT OF 80% OF SALE VALUE OR ANY OTHER CONDITION ON DISPATCH OF IRON ORE, LAWFULLY MIND AND DISPATCHED/ SOLD BY THE PETITIONER WITH REFERENCE TO ML.NO.2396 AND ETC.,.
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 26.02.2019 AND COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, P.S.DINESH KUMAR J., MADE THE FOLLOWING:-
O R D E R This writ petition is filed by NMDC Limited (‘NMDC’ for short), challenging order No.CI 78 MMM 2016 dated 2.11.2018 (Annexure-J) passed by the Secretary to the Government, Department of Commerce & Industries, Government of Karnataka, amended by Corrigendum No.CI 78 MMM 2016 dated 15.11.2018 (Annexure-M), culminating into proceedings No.DMG/MLS/ML-2396/2018- 19/6360 dated 23.11.2018 (Annexure-S) passed by the Director, Department of Mines & Geology, Bengaluru, imposing additional premium.
2. The issue involved in this writ petition is, whether State Government, while extending period of lease, can impose a condition to pay premium equivalent to 80% of average sale price of iron ore.
3. Briefly stated the facts of the case are, on 03.04.1968, NMDC Limited, a Government Company registered under the provisions of the Companies Act, 1956 was granted iron ore mining lease over 2,000 hectares under M.L.No.2396 for a period of 20 years with effect from 04.11.1968. The lease was extended for a further period of 20 years on 17.09.2002 with effect from 03.11.1988.
4. On 20.04.2017, NMDC submitted an application seeking extension of lease under Rule 3(2) of the Mineral (Mining by Government Companies) Rules, 2015 (for short ‘2015 Rules’).
5. State Government, on 02.11.2018 extended the mining lease for a period of 20 years with certain additional conditions, the principal among them being a direction to pay a premium equivalent to 80% of average sale price of iron ore published by the Indian Bureau of Mines. Feeling aggrieved by imposition of additional conditions, NMDC has presented this writ petition.
6. Principal submissions made by Shri Mohan Parasaran, learned Senior Advocate for NMDC are summarised as follows:
State Government have attempted to create discretion for themselves which is not permissible in law. Therefore, the condition to pay premium equivalent to 80% of sale value is without jurisdiction;
Mines and Minerals(Development and Regulation) Act, 1957(for short ‘MMDR Act’) has been passed by the Parliament under Article 246 of the Constitution of India. Regulation of mines and mineral development is declared by the Parliament by law to be expedient in public interest;
MMDR Act is a special enactment and self contained code. Section 2 of the MMDR Act declares that Union has control over mines and development of minerals to the extent provided under the MMDR Act;
Section 8A of the MMDR Act recognises minerals used for captive purpose. The statute classifies the mining leases pertaining to Government companies differently;
Section 9 of the MMDR Act contemplates payment of royalty stipulated as per Entry 24 of the Second Schedule. As per Section 9(3), the Second Schedule can be amended only by the Central Government;
As per Sections 9, 9A, 9B, 9C read with Section 17A(2C) of the MMDR Act, only following can be levied.
i) Royalty under Section 9 in terms of Entry 24 of Second Schedule (15% of average sale price on ad valorem basis;
ii) Dead rent under Section 9A;
iii) DMF under Section 9B;
iv) NMET under Section 9C;
v) Payment under Section 17A(2C);
Sub-rule (1) of Rule 3 of 2015 Rules casts an obligation on the State Government to grant extension of mining lease. Sub-rule (2) of Rule 3 does not contemplate payment of any sum as premium. To facilitate continuation of merchant mining or non-captive mining by the Government companies, Sub-section (8) of Section 8A of MMDR Act read with 2015 Rules have been introduced. It is a beneficial legislation for the benefit of the Government companies;
The State Government have no power to impose any condition to pay any additional amount other than what is contemplated in MMDR Act.
7. Shri Parasaran placed reliance on following authorities:
a. (1990) 1 SCC 12 (paras 15 & 34 India Cement Ltd. and others Vs. State of Tamil Nadu and others.
b. 1991 supp (1) SCC 430 Orissa Cement Ltd. Vs. State of Orissa and others.
c. 1989 supp (1) SCC 487 (para 14) Provash Chandra Dalui and another Vs. Biswanath Banerjee and another.
8. Shri Udaya Holla, learned Advocate General for the State supporting the additional conditions imposed by the State made following submissions:
that as per Rule 3 of the 2015 Rules, the lease granted to the NMDC is deemed to have been granted for 50 years with effect from 04.11.1968;
that NMDC has carried out mining activities beyond the lease area to an extent of 35 hectares and illegally extracted 14.48 lakh MT of iron ore worth about Rs.154 Crores. Upon a notice issued by the Deputy Director of Mines, NMDC has admitted working beyond leased area. The Monitoring Committee, in its report dated 23.06.2018 has also indicated that the NMDC has worked outside leased area. Thus, NMDC has come to this Court with unclean hands and hence not entitled for any relief;
that Rule 3(2) of 2015 Rules gives a discretion to the State Government either to extend lease or otherwise;
that the offer made by the State Government to NMDC for extension of mining lease subject to payment of premium of 80% of IBM sale value, not having been accepted, no right accrues in its favour. Consequently, no petition seeking writ of mandamus is maintainable;
that NMDC has participated and quoted premium of 95% and 105% of the IBM sale value respectively, in respect of two other mining areas;
that several areas having iron ore deposits in and around Donimalai have been put to auction. The successful bidders have offered to pay premium ranging from 55.50% to 102.52% over and above the IBM sale value in respect of the iron ore having ‘Fe’ content between 52% and 58%;
that iron ore available in the mine in question is of 62% grade. Therefore, a reasonable premium of 80% has been imposed on the NMDC and same would yield Rs.1,500 Crores per year to the State Government and in all a sum of Rs.30,000 Crores during the period of lease.
that State Government had imposed a condition ‘not to export’ the mineral in respect of the very same mine while extending the lease for a period of 20 years with effect from 04.11.1988. The NMDC has accepted the said condition without any demur. Therefore, the plea now raised with regard to imposition of condition is untenable;
that NMDC’s writ petition is liable to be rejected as public interest suffers if the relief sought for is granted. The State Government are the guardian of their assets and duty bound to protect the same;
that no writ of mandamus can be issued without any vested right. There is no vested unconditional right in favour of NMDC warranting interference by this Court.
9. Shri Holla placed reliance on following authorities:
a. AIR 1962 SC 1210 Dr Rai Shivendra Bahadur Vs. Governing Body of the Nalanda College, Bihar Sharif and Others;(Paragraph No.5) and b. (2013) 5 SCC 427 Rajasthan State Industrial Development and Investment Corporation Vs. Subhash Sindhi Cooperative Housing Society, Jaipur and Others; (Paragraph No.24) and urged that petitioner must show it has a legal right under the Statute to enforce performance.
c. AIR 1964 SC 892 General Assurance Society Ltd., Vs. Life Insurance Corporation of India; (Paragraph No.5) and urged that when one party makes a composite offer, each part being dependent on the other, the other party cannot by accepting a part of the offer, compel the other to confine its dispute only to that part not accepted, unless the party offering the composite offer agrees to that.
d. AIR 1964 SC 1687 Labour Commissioner, Madhya Pradesh Vs. Burhanpur Tapti Mills Limited and others; (Paragraph No.8) and e. AIR 1968 SC 178 Jamatraj Kewalji Govani Vs. State of Maharashtra; (paragraph No.10) and argued with regard to the implication of the words ‘shall’ and ‘may’.
f. (2002) 4 SCC 638 Director of Settlements, A.P and Others Vs. M.R.Apparao and Another; (Paragraph No.17) and argued that no mandamus can be issued without a legal right.
g. (2005) 6 SCC 138 Master Marine Services (P) Ltd. Vs. Metcalfe & Hodgkinson (P) Ltd. and Another; (Paragraph No.15) and argued that Court must exercise discretionary power under Article 226 with great caution and keep larger public interest in mind.
h. (2008)12 SCC 481 K.D. Sharma Vs. Steel Authority of India Limited and Others; (Paragraph No.34) and argued that writ petition is liable to be dismissed in case of suppression of material fact.
i. (2012)11 SCC 1 Monnet Ispat and Energy Limited Vs. Union of India and Others; (Paragraph No.134 to 141) and j. (2013)9 SCC 725 Thressiamma Jacob and Others Vs. Geologist, Department of Mining and Geology and Others; (Paragraph No.58) and argued that State is a owner of mines.
10. We have carefully considered rival contentions and perused the records.
11. The principal argument of Shri Parasaran is that State Government cannot impose any condition to pay additional premium.
12. The main defence urged by Shri Udaya Holla is that Sub-rule (2) of Rule 3 provides discretion to the State Government to impose any condition. He placed strong reliance on the word ‘may’ used in the Sub-rule.
13. Rule 3 of 2015 Rules reads as follows:
“3. Period of mining lease granted to Government companies or corporations before 12th January, 2015.-
(1) All mining leases for minerals granted to a Government company or corporation before the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 (10 of 2015), namely, the 12th January , 2015 shall be deemed to have been granted for a period of fifty years.
(2) The State Government, upon an application made to it in this behalf by the Government company or corporation at least twelve months prior to the expiry of the mining lease, may for reasons to be recorded in writing, extend the period of the mining lease for further periods of upto twenty years at a time.
(3) Subject to sub-rule (1), all applications made by a government company or corporation for renewal of mining leases and which were pending as on the date of commencement of the Mines and Minerals (Development and Regulation)Amendment Act, 2015(10 of 2015) shall be deemed to be applications for extension of the period of the mining lease and shall be disposed of in accordance with the provisions of sub-rule (2).”
(Emphasis supplied) 14. In Burhanpur Tapti Mills Limited(supra), the Supreme Court of India has held as follows:
“8. It has to be noticed that while on a reference by the State Government the State Industrial court or a District Industrial court “shall” decide the question of legality of the strike or lockout, it “may” decide the question on an application by the employer or employee or any other person mentioned in the section. The use of the word “shall” in connection with the action to be taken on a reference by the State Government and “may” in connection with the action on an application by others in the same section compel the conclusion that on an application by anybody other than the State Government, the State Industrial court or a District Industrial court may also refuse to take action. The suggested construction of the words “rendered illegal” as “held illegal” might therefore have the curious result that even though the strike is in fact illegal within the meaning of Section 40 of the Act no action can at any time be taken against an employee for participation in it. We have accordingly come to the conclusion that the words “rendered illegal” does not mean “held illegal” and the employer is free to take action against the employee as soon as he thinks that the strike in which he has participated comes within the provisions of Section 40 of the Act.”
15. In Jamatraj Kewalji Govani (supra), it is held has follows:
“10. Section 540 is intended to be wide as the repeated use of the word ‘any’ throughout its length clearly indicates. The section is in two parts. The first part gives a discretionary power but the latter part is mandatory. The use of the word ‘may’ in the first part and of the word ‘shall’ in the second firmly establishes this difference. Under the first part, which is permissive, the court may act in one of three ways: (a) summon any person as a witness, (b) examine any person present in court although not summoned, and (c) recall or re-examine a witness already examined. The second part is obligatory and compels the Court to act in these three ways or any one of them, if the just decision of the case demands it.
. ”
16. In Sub-rule 1 of Rule 3 of 2015 Rules, the word used is ‘shall’. It applies to the deeming fiction with regard to definite term of lease for a period of 50 years. Parties have proceeded on the footing that reckoned from 1968, the benefit of deemed extension shall be for 50 years which expired on 03.11.2018.
17. The renewal of lease can be considered under Sub-rule 2 of Rule 3 of 2015 Rules, whereunder, the State Government, may, for reasons to be recorded in writing, extend the mining lease for further periods of 20 years at a time.
18. Thus, in our considered view, the Parliament having consciously employed the word ‘shall’ in Sub-rule (1) and ‘may’ in Sub-rule (2), the authority in the case of Jamatraj Kewalji Govani is applicable. Hence, State Government have discretion to extend the lease or otherwise.
19. It is settled that the State Government are the owners of the mine and the mineral. It may be useful to extract the following passages from Monnet Ispat1 which read as follows:
“138. I do not agree. In the first place, the declaration made by Parliament in Section 2 and the provisions that follow 1 (2012)11 SCC 1 Section 2 in the 1957 Act have left untouched the State's ownership of mines and minerals within its territory although the regulation of mines and the development of minerals have been taken under the control of the Union. Section 4 deals with activities in relation to land and does not extend to extinguish the State's right of ownership in such land. Section 4 regulates the right to transfer but does not divest ownership of minerals in a State and does not preclude the State Government from exploiting its minerals. Section 4(1) can have no application where the State Government wants to undertake itself mining operations in the area owned by it. On consideration of Section 5, I am of the view that the same conclusion must follow. Section 5 or for that matter Sections 6, 9, 10, 11 and 13(2)(a) also do not take away the State's ownership rights in the mines and minerals within its territory. The power to legislate for regulation of mines and development of minerals under the control of the Union may definitely imply power to acquire mines and minerals in the larger public interest by appropriate legislation, but by the 1957 Act that has not been done. There is nothing in the 1957 Act to suggest even remotely—and there is no express provision at all—that the mines and minerals that vested in the States have been acquired. Rather, the scheme and the provisions of the 1957 Act themselves show that Parliament itself contemplated State legislation for vesting of lands containing mineral deposits in the State Government and that Parliament did not intend to trench upon the powers of the State Legislatures under List II Entry 18. As noted above, the declaration made by Parliament in Section 2 of the 1957 Act states that it is expedient in the public interest that the Union should take under its control the regulation of mines and development of minerals to the extent provided in the Act itself.
The declaration made in Section 2 is, thus, not all- comprehensive.”
(Emphasis supplied) 20. Section 10B of MMDR Act as inserted by Act 10 of 2015 with effect from 12.01.2015 requires grant of mining lease in respect of notified minerals specified in Fourth Schedule. Iron ore finds its place in the said Schedule and therefore, mining lease of iron ore can be granted only through auction to any private person or enterprise.
21. In Natural Resources Allocation, In Re, Special Reference No.1 of 20122, adverting to Article 39(b), the Supreme Court of India has held as follows:
“190. Before adverting to anything else, it is essential to refer to Article 39(b) of the Constitution of India:
“39. Certain principles of policy to be followed by the State.—The State shall in particular, direct its policy towards securing— (a)*** 2 (2012)10 SCC 1 (b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;”
(emphasis supplied in original) The mandate contained in the Article extracted above envisages that all material resources ought to be distributed in a manner which would “best to subserve the common good”. It is therefore apparent that governmental policy for distribution of such resources should be devised by keeping in mind the “common good” of the community i.e. the citizens of this country. It has been expressed in the main opinion, that matters of policy fall within the realm of the legislature or the executive, and cannot be interfered with, unless the policy is in violation of statutory law, or is ultra vires the provision(s) of the Constitution of India. It is not within the scope of judicial review for a court to suggest an alternative policy, which in the wisdom of the court could be better suited in the circumstances of a case. Thus far, the position is clearly unambiguous.”
22. The judgment has been concluded as follows:
“200. I would, therefore, conclude by stating that no part of the natural resource can be dissipated as a matter of largesse, charity, donation or endowment, for private exploitation. Each bit of natural resource expended must bring back a reciprocal consideration. The consideration may be in the nature of earning revenue or may be to “best subserve the common good”. It may well be the amalgam of the two. There cannot be a dissipation of material resources free of cost or at a consideration lower than their actual worth. One set of citizens cannot prosper at the cost of another set of citizens, for that would not be fair or reasonable.”
23. Iron ore is a precious natural resource. It must inure to the benefit of its owner namely, the State of Karnataka. It was vehemently contended by the Shri Udaya Holla, learned Advocate General that State Government would stand to lose Rs.30,000 Crores during the lease period of 20 years now granted to NMDC and the said estimated loss is on the basis of premium at the rate of 80% of IBM sale value imposed upon NMDC.
24. Shri Parasaran also contended that if the premium demanded by the State Government is to be fulfilled, NMDC’s interest would be seriously jeopardised and it would suffer an estimated loss of Rs.1,348 per MT which would amount to Rs.944 Crore per annum.
25. Though State owned, NMDC is undeniably a corporate body. It functions to further its business plan. It was contended on behalf of the State that NMDC has participated in auctions and submitted its bids in respect of two other mines situated in the same vicinity. In respect of Hothur Mines(ML No.2313), NMDC has offered a premium of 95% of the IBM sale value. In respect of another mine which was earlier leased to one H.G.Rangangoud (M.L.No.2148), NMDC has offered premium of 105% of IBM sale value. This submission is not controverted.
26. Shri Holla also pointed out that State Government have auctioned following mines on premia ranging between 55.50% to 102.52% above the IBM sale value which works out to an average of 75.45%.
27. It is not in dispute that while extending period of lease with effect from 04.11.1988, State Government had imposed a condition that the iron ore should not be exported but used only for value addition. The relevant Government Order reads as follows:
“GOVERNMENT OF KARNATAKA NO.CI.349:MMM.2008 Karnataka Government Secretariat Vikasa Soudha Bangalore, Dated 23.10.2008 From, The Secretary to Government (Mines, SSI & Textiles) Commerce & Industries Department BANGALORE-560 001.
To The Chairman and Managing Director M/s. National Mineral Development Corporation Limited (A Government of India Undertaking) No.109, Suryakiran, Kasturba Gandhi Marg NEW DELHI-110 001 Sir, Sub: Renewal of Mining lease No.2396 held by M/s.NMDC – regarding.
******** With reference to the above subject, I am directed to state that M/s.NMDC is having M.L.No.2396 in Donimalai range of Sandur Taluk, Bellary District, over an extent of 608.00 hectares for Iron ore. This was first renewed on 04.11.1988 for a period of 20 years. The approval is hereby accorded in principle to renew the mining lease No.2396 for further period of 20 years, w.e.f. 04.11.2008, with the condition that the iron ore should not be exported but shall be used only for value addition/supply to units doing value addition only and subject to other general conditions. A formal notification will be issued later in accordance with rules.
Yours faithfully, Sd/-
(M.VASUDEVAMURTHY) (Under Secretary to Government Mines) Commerce & Industries Department.”
(Emphasis supplied) 28. The NMDC has accepted the condition ‘not to export’ and thus acquiesced that State Government may impose conditions while considering an application for extension of lease. Undoubtedly, a condition ‘not to export’ mineral would have adversely affected the financial returns of NMDC. The condition now imposed to pay premium of 80% shall also affect the financial returns of NMDC. Perhaps, the condition, ‘not to export’, imposed while extending the lease in the year 1988 suited its business strategy. Be that as it may, undeniable fact remains that NMDC has accepted the power of State Government to impose conditions while renewing the mining lease.
29. The authoritative pronouncement of Supreme Court of India in the case of In Natural Resources Allocation, is that no part of natural resource can be dissipated as a matter of largesse, charity, donation, or endowment, for private exploitation. Each bit of natural resources expended must bring back a reciprocal consideration. It cannot be gainsaid that NMDC is not a corporate business house. Therefore, any reduction or complete waiver in the premium imposed by the State Government will result in filling the coffers of a Corporate entity, whereas the State Government though being the legitimate owner of the valuable mineral would be deprived of the revenue recoverable if the mine was offered through public auction.
30. The Supreme Court of India in the case of Orissa Cement3, after considering India Cement’s 4 case has held as follows:
“53. ........................... These observations establish on the one hand that the distinction sought to be made between mineral development and mineral area development is not a real one as the two types of development are inextricably and integrally interconnected and, on the other, that, fees of the nature we are concerned with squarely fall within the scope of the provisions of the Central Act. The object of Section 9 of the Central Act cannot be ignored. The terms of Section 13 of the Central Act extracted earlier empower the Union to frame rules in regard to matters concerning roads and environment. Section 18(1) empowers the Central Government to take all such steps as may be necessary for the conservation and development of minerals in India and for protection of environment. These, in the very nature of things, cannot mean such amenities only in the mines but take in also the areas leading to and all around the mines. The development of mineral areas is implicit in them. Section 25 implicitly authorises the levy of rent, royalty, taxes and fees under the Act and the rules. The scope of the powers thus conferred is very wide. Read as a whole, the purpose of the Union control envisaged by Entry 54 and the MMRD Act, 1957, is to provide for proper development of mines and mineral areas and also to bring about a uniformity all over the country in regard to the minerals specified in Schedule I in the matter of 3 1991 supp (1) SCC 430 4 (1990) 1 SCC 12 royalties and, consequently prices. Sri Bobde, who appears for certain Central Government undertakings, points out that the prices of their exports are fixed and cannot be escalated with the enhancement of the royalties and that, if different royalties were to be charged in different States, their working would become impossible. There appears to be force in this submission. As pointed out in India Cement [India Cement Ltd. v. State of T.N., (1990) 1 SCC 12] , the Central Act bars an enhancement of the royalty directly or indirectly, except by the Union and in the manner specified by the 1957 Act, and this is exactly what the impugned Act does. We have, therefore, come to the conclusion that the validity of the impugned Act cannot be upheld by reference to Entry 23 or Entry 50 of List II.”
(emphasis supplied) 31. In paragraph No.55, the Apex Court has held that levy of cess under Sections 5 to 7 of Orissa Cess Act, 1962 is beyond the competence of State legislature. In Orissa Cement’s case, the issue involved was validity of levy of cess based on the royalty derived from mining lands by the states of Bihar, Orissa, and Madhya Pradesh. It was argued in that case that the issue was covered by the decision in India Cement’s case. As recorded above, in India Cement, the Apex Court has held that enhancement of the royalty directly or indirectly, except by the Union and in the manner specified by the 1957 Act, is not permissible.
In the case on hand, the State Government have sought to impose premium by an executive order. The reason mentioned in paragraph No.9 of the impugned executive order dated 02.01.2018 is as follows:
“9. The lease held by M/s. NMDC (ML.2396) will expire on 03.11.2018 after completing 50 years from the date of original grant. The area held by M/s.NMDC under this mining lease is 608 Hectare, which is second largest extent in the state. The grade of iron ore is also very high compared to other leases. The estimated resources as per IBM report are 143.41 MMT. The State Government is not getting any proportional financial benefit as in the case compared to auctioned blocks where the State will get a huge revenue apart from royalty and other taxes.”
(Emphasis supplied) 32. Thus, additional premium has been imposed on the ground that State Government are not getting proportional financial benefits vis-a-vis the auctioned blocks. When viewed from State Government’s angle, their object to augment revenue could be though laudable, the condition to pay premium is not sustainable for want of statutory power. Therefore, the decision of State Government to impose premium by an executive order is clearly opposed to law laid down in Orissa Cement.
33. It was very vehemently contended by the learned Advocate General that State Government have been able to get average premium of 75.45% on the IBM sale value in cases where mining leases have been granted through auction and in the instant case, if the premium is not loaded, there would be an estimated loss of Rs.30,000 Crores to the State exchequer.
34. Though while opposing this writ petition, it is argued by the learned Advocate General that State exchequer may lose revenue to the tune of Rs.30,000 Crores, it is not understandable as to why State did not bestow their attention to this aspect while considering NMDC’s application for renewal and passing the impugned executive order. It is held by the Supreme Court of India that natural resources cannot be dissipated as a matter of largesse and each bit of Natural Resource expended must bring back reciprocal consideration. However, in view of law laid down in Orissa Cement, imposition of premium based on an executive order cannot be sustained unless State demonstrate that they have power to impose premium. In the circumstances, it may be appropriate for the State Government to take any action, such as withdrawing the impugned order, if permissible in law to achieve their object of augmenting revenue. We hasten to add that we express no opinion on the legal sustainability of this option.
35. For the reasons recorded hereinabove, we are of the considered view that impugned condition to levy premium equivalent to 80% of average sale price of iron ore published by the Indian Bureau of Mines while extending the period of lease contained in order dated 02.11.2018 (Annexure-J) and the communication dated 23.11.2018 (Annexure-S) are unsustainable in law and liable to be quashed. Hence, the following:
ORDER i) Writ petition is allowed;
ii) The condition imposed to levy premium equivalent to 80% of average sale price of iron- ore published by the Indian Bureau of Mines while extending the period of lease vide Communication/Order No.CI 78 MMM 2016 dated
amended by Corrigendum No.CI 78 MMM 2016 dated 15.11.2018 (Annexure-M) and intimating the same through the letter No.DMG/MLS/ML- 2396/2018-19/6360 dated 23.11.2018 (Annexure-S) passed by the Director, Department of Mines & Geology, Bengaluru, is set aside.
No costs.
Sd/-
JUDGE Yn.
Sd/- JUDGE