HC strikes down rule of additional royalty on mining by State Govt

S Shyam Prasad | NT

Bengaluru: Striking down Rule 4(10)(b) of the Karnataka Prevention of Illegal Mining, Transportation and Storage of Minerals Rules, the High Court has held that the rules framed by the Union Parliament will prevail when there is a conflict with the rules framed by the State Legislature.

“The impugned Rule 4(10)(b) of the Karnataka (Prevention of Illegal Mining, Transportation and Storage of Minerals) Rules, 2011 is unconstitutional. The same is declared ultra vires and we strike down the said rule,” the HC said striking down the rule made by the State imposing additional royalty on minerals mined in Karnataka. The said rule was enacted in 2011 by Karnataka imposing a royalty for the differential higher grade of iron ore after beneficiating process.

Several companies engaged in this activity approached the High Court of Karnataka challenging the new rule citing that such rules can be made only under the Mines and Minerals (Development and Regulation) Act. The Union Government had already framed rules for royalty.

The High Court bench of Chief Justice Prasanna B Varale and Justice Ashok S Kinagi in their judgment recently held that the State Government did not have the competency to introduce or frame rules regarding payment of difference of royalty under Section 23-C of the MMDR Act. The HC also found that the Rule made by the State was in conflict with the rule made by the Union Government.

“Rule 4(10) (b) of the impugned rules is directly in conflict and repugnant to the rules framed by the Government of India, namely, Rule 64B of the Rules of 1960 and Rule 39 of the Rules of 2016,” the HC said. As under Clause 1 of Article 254 of the Constitution of India, the rule made by the Parliament prevails over the law made by the State Legislature, Rule 4(10)(b) becomes Unconstitutional, the HC said.

“To sum up, we hold that the impugned Rules framed by the State Government is without competency and the impugned Rules to the extent of collection of additional royalty is repugnant to the corresponding provisions of the MMDR Act. The powers are vested with the Central Government to frame the Rule pertaining to royalty.” The HC however clarified that the striking down of the rule did not affect the royalty already paid.

“We clarify with abundant caution that our striking down of the impugned Rule in the present judgment will not, in any manner, affect the royalty which was paid earlier,” the HC said.