# FEDERATION OF INDIAN MINERAL INDUSTRIES & ORS v. UNION OF INDIA & ANR

- **Citation:** [2017] 12 S.C.R. 724
- **Court:** Supreme Court of India
- **Decided:** 2017-10-13
- **Bench:** Madan B. Lokur, Sanjay Kishan Kaul, Deepak Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/federation-of-indian-mineral-industries-ors-v-union-of-india-anr-31748
- **Pages:** 29

## Headnote

Mines and Minerals (Development and Regulation) Act, 1957:
s.98 and l 3(qqa) - Establishment of District Mineral
Foundation (DMF) provided by Ordinance dated 12.1.2015 - On
direction by Central Government the States established DMFs on
different dates - By Notification dated 17.09.2015, Ministry of Mines
promulgated Contribution Rules which were deemed to have come
into force on 12.1.2015 - By Notification dated 20.10.2015 Ministry
of Coal promulgated Contribution Rules in respect of coal, lignite
and sand for stowing, which were deemed to have come into force
on the date of their publication - Both the Notifications provided
payment to DMF an amount at the rate of 10% of the royalty in
respect of mining leases granted on or after date of their enforcement
and at the rate of 30% in respect of leases granted before the date
of their enforcement - Ministry of Coal by further Notification dated
31.8.2015 provided that paynu:nt under Notification dated
20.10.2015 shall be made to DMF ll~ef 12.1.2015 - Validity of the
Notifications challenged - Held: Mere(v because DMFs have been
established or deemed to have been established from a date prior
to issuance of relevant notifications, does not make their operation
retrospective - The establishment of the D}v!Fs even if assumed to
be retrospective does not prejudicially affect anyones vested rights
- Delegated legislation is ordinarily prospective and a right or
liability created for the first time cannot be given retrospective effect
G - Provisions of the Act do not give power to the State Government
or the Central Government to make rules with retrospective effect -
It is not obligatory to declare any not(fication ultra vires' the rule
making power of the State, if its validity can be saved without doing
violence to the law - In the present case, it is not obligat0ty to
H declare the notifications ultra vires the rule making power of the
724
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION
725
OF INDIA
Slate Government to the extent of their establishing the DMF with
retrospective effect - The court can save their validity by reading
them as operational from the date of their publication - The
contributions to the DMF cannot be insisted upon w.e.f 12.1.2015
- Co11trib11tions to the DMF. in the case of minerals other than coal,
lignite and sand for stowing are required to be made w.e.f 17.9.2015
A
B
- Contributions to the DMF in the case of coal, lignite and sand for
stowing are required to be made w.e.f 20.10.2015 when the rates
were prescribed by the Central Government o!" w.e.f the date on
which the DMF was established by the State Government by a
notification, whichever is later - The notification dated 31.8.2016
being retroactive substitution is ultra vircs the rule making power of C
the Central Government under the MMDR Act and hence invalid -
Mines and A1inerals (Contribution to District Mineral Foundation)
Rules, 2015.
Disposing of the transferred cases/petitions, the Court
HELD: 1.1 The notifications establishing the District D
Mineral Foundation (DMF) in the States were issued pursuant
to the provisions of Section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957. The intention of
Parliament appears to have been for the State Governments to
establish the DMF with effect from 12•h January, 2015 since its
object is to work for the interest and benefit of persons and areas
affected by mining related operations. The object being the welfare
of those adversely affected by mining operations, the DMFs ought
to have been established on 12•h January, 2015. However, every
State Government took it easy compelling the Central
Government to issue a direction u/s. 20A of the MMDR Act on
1611' September, 2015 requiring the State Governments to issue
a notification that the DMF shall be deemed to have come into
existcn.ce with effect from the 12•h January, 2015. [Para 18)(742C-E]
E
F
A. Thangal K11nj11 Musaliar v. M Venkitachalam Patti
G
[1955] 2 SCR 1196; Commissioner of

## Text

_Characters 0–39,945 of 64,132. This is a partial read: ask again with offset=39945 for what follows._

[2017] 12 S.C.R. 724
A
FEDERATION OF INDIAN MINERAL INDUSTRIES & ORS.
B
c
D
E
F
v.
UNION OF INDIA & ANR.
(Transferred Case (Civil) No. 43 of2016)
OCTOBER 13, 2017
[MADAN B. LOKUR, SANJAY KISHAN KAUL AND
DEEPAK GUPTA, JJ.]
Mines and Minerals (Development and Regulation) Act, 1957:
s.98 and l 3(qqa) - Establishment of District Mineral
Foundation (DMF) provided by Ordinance dated 12.1.2015 - On
direction by Central Government the States established DMFs on
different dates - By Notification dated 17.09.2015, Ministry of Mines
promulgated Contribution Rules which were deemed to have come
into force on 12.1.2015 - By Notification dated 20.10.2015 Ministry
of Coal promulgated Contribution Rules in respect of coal, lignite
and sand for stowing, which were deemed to have come into force
on the date of their publication - Both the Notifications provided
payment to DMF an amount at the rate of 10% of the royalty in
respect of mining leases granted on or after date of their enforcement
and at the rate of 30% in respect of leases granted before the date
of their enforcement - Ministry of Coal by further Notification dated
31.8.2015 provided that paynu:nt under Notification dated
20.10.2015 shall be made to DMF ll~ef 12.1.2015 - Validity of the
Notifications challenged - Held: Mere(v because DMFs have been
established or deemed to have been established from a date prior
to issuance of relevant notifications, does not make their operation
retrospective - The establishment of the D}v!Fs even if assumed to
be retrospective does not prejudicially affect anyones vested rights
- Delegated legislation is ordinarily prospective and a right or
liability created for the first time cannot be given retrospective effect
G - Provisions of the Act do not give power to the State Government
or the Central Government to make rules with retrospective effect -
It is not obligatory to declare any not(fication ultra vires' the rule
making power of the State, if its validity can be saved without doing
violence to the law - In the present case, it is not obligat0ty to
H declare the notifications ultra vires the rule making power of the
724
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION
725
OF INDIA
Slate Government to the extent of their establishing the DMF with
retrospective effect - The court can save their validity by reading
them as operational from the date of their publication - The
contributions to the DMF cannot be insisted upon w.e.f 12.1.2015
- Co11trib11tions to the DMF. in the case of minerals other than coal,
lignite and sand for stowing are required to be made w.e.f 17.9.2015
A
B
- Contributions to the DMF in the case of coal, lignite and sand for
stowing are required to be made w.e.f 20.10.2015 when the rates
were prescribed by the Central Government o!" w.e.f the date on
which the DMF was established by the State Government by a
notification, whichever is later - The notification dated 31.8.2016
being retroactive substitution is ultra vircs the rule making power of C
the Central Government under the MMDR Act and hence invalid -
Mines and A1inerals (Contribution to District Mineral Foundation)
Rules, 2015.
Disposing of the transferred cases/petitions, the Court
HELD: 1.1 The notifications establishing the District D
Mineral Foundation (DMF) in the States were issued pursuant
to the provisions of Section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957. The intention of
Parliament appears to have been for the State Governments to
establish the DMF with effect from 12•h January, 2015 since its
object is to work for the interest and benefit of persons and areas
affected by mining related operations. The object being the welfare
of those adversely affected by mining operations, the DMFs ought
to have been established on 12•h January, 2015. However, every
State Government took it easy compelling the Central
Government to issue a direction u/s. 20A of the MMDR Act on
1611' September, 2015 requiring the State Governments to issue
a notification that the DMF shall be deemed to have come into
existcn.ce with effect from the 12•h January, 2015. [Para 18)(742C-E]
E
F
A. Thangal K11nj11 Musaliar v. M Venkitachalam Patti
G
[1955] 2 SCR 1196; Commissioner of Income Tax
(Central) - 1 v. Vatika Township Private Limited (2015)
I sec I : [2014] 12 SCR 1037 - followed.
1.2 Even assuming that since the DMFs were established
H
726
SUPREME COURT REPORTS
[2017] 12 S.C.R.
, A from a date anterior to the date of the notification, and, therefore
they were established' with retrospective effect, their
, establishment did not adversely affect anybody's vested rights.
Therefore, there can be no real objection to the operation of the
notifications from 12'h January, 2015. The DMFs were not
B ,established from a date prior to 12•h January, 2015 and to that
extent cannot be said to have been established with retrospective
effect. [Para 191(742-F-G]
c
D
E
F
1.3 The Central Government or the State Government (or
any other authority) cannot make a subordinate legislation having
retrospective effect unless the parent statute, expressly or by
necessary implication, authorizes it to do so. Delegated legislation
is ordinarily prospective in nature and a right or a liability created
for the first time cannot be given retrospective effect. As regards
a subordinate legislation concerning a fiscal statute, it would not
be pro,per to hold that in the absence of an express provision a
delegated authority can impose a tax or a fee. There is no scope
or any room for intendment in respect of a compulsory exaction
from a citizen. [Para 211(743-C, D, El
Hukum Chand v. Union of India (1972) 2 SCC 601
: [1973] 1 SCR 896; Mahabir Vegetable Oils (P) Ltd. v.
State of Haryana (2006) 3 SCC 620 : [2006] 2
SCR 1172; Panchi Devi v. State of Rajasthan (2009) 2
SCC 589 : [2008] 17 SCR 1325; Ahmedabad Urban
Development Authority v. Sharadkumar Jayantikumar
Pasawalla (1992) 3 SCC 285 : [1992) 3 SCR 328; State
of Rajashtan v. Basant Agrotech (India) Limited (2013)
15 sec 1 : [2013) 11 SCR 395 - relied on.
1.4 Section 15 of the MMDR Act empowers the State
Government to make rules for regulating the grant of quarry
leases, mining leases or other mim~ral concessibns in respect of
minor minerals and for purposes connected therewith. Under
G
t~e provisions of the MMDR Act, no State Government has the
power to frame a rule with retrospective effect or to create a
deeming fiction, either specifically or by necessary intendment.
Similarly, Section 13 of the MMDR Act does not confer any
specific power on the Central Government to frame any rule with
H retrospective effect. Section 9B(5) and (6) read with clause (qqa)
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION
727
OF INDIA
inserted in Section 13(2) of the MMDR Act enable the Central A
Government to make rules to provide for the amount of payment
to be made to the DMF established by the State Government
under Section 9B(l) of the MMDR Act. None of these provisions
confer any power on the Central Government to require the holder
of a mining lease or a prospecting licence-cum-mining lc.asc to
contribute to the DMF with retrospective effect. Therefore, even
the scope and extent of the rule making power of the Central
Government is limited. Therefore, the notifications issued by the
State Governments must be understood to mean (assuming the
DMF could not be established with effect from 12'h January, 2015
B
by a notification issued on a later date) that the DMF was C
established on the date of publication of each notification. (Paras
23, 24 and 25][744-B-D, G]
1.5 It is not obligatory to declare any notification ultra vires
the rule making power of the State Government if its validity can
be saved without doing violence to the law. In the present cases, D
it is not obligatory to declare the notifications 11/tra vires the rule
making power of the State Governments to the extent of their
establishing the DMF from a retrospective date, since the Court
can save their validity by reading them as operational from the
date of their publication. In any event, no prayer was made before
the Court for striking down the establishment of the DMF as . E
such. (Para 25] [744-H; 745-A-B]
2. Specification of the rate of tax (or any compulsory levy
for that matter) is an essential component of the tax regime.
Specifying the maximum amount of compensation to be paid to
the DMF in terms of Section 9B of the MMDR Act, being an
amount not exceeding one-third of the royalty, docs not specify
the requirements of law. What is required by the law is certainty
and not vagueness - not exceeding one-third could. mean oncfourth or one-fifth or some other fraction. It is this uncertainty
that is objectionable. Therefore, the petitioners are not liable to
make any contribution to the DMF from l21h January, 2015. (Paras
32, 33][747-D-F]
Commissioner of Income Tax (Central) - I v. Vatika
Township Private Limited (2015) 1 SCC 1 : (2014] 12
SCR 1037 - followed.
F
G
H
728.
SUPREME COURT REPORTS
[2017] 12 S.C.R.
A
Mis Govind Saran Ganga Saran v. Commissioner of
Sales Tax (1985) Suppl. SCC 205 : (1985] SCR 985 -
referred to.
B
Principles of Statutory Interpretation by Justice GP.
Singh 1411' edition revised by Justice A.K. Patnaik,
former Judge, Supreme Court of India - referred to.
3.1 The object of the DMF is "to work for the interest and
benefit of persons, and areas affected by mining related
operations". The purpose of Section 9B of the MMDR Act and
the object of the DMF are in furtherance of the cause of social
c justice for those affected by the mining related operations -
including tribals who may be dislocated or displaced from their
. habitat. To deny them a benefit that is rightfully theirs only because
the State Government has been lax in establishing the DMF would
be doing injustice to them. Additionally, Section 9B of the MMDR
Act creates a liability and only the quantum of the liability remained
D
to be determined. That determination came on the issuance of
the notification of 17'h September, 2015.
The fact that it would
take time (even more than a year as in the case of Tamil Nadu
and Uttar Pradesh) for the benefit to reach the affected persons
cannot detract from the liability of the petitioners to contribute
E nor does it absolve them of their liability to pay the contribution.
F
Therefore, the effective date of payment of contribution to the
DMF in the case of those petitioners who are (or were) holders
of a mining lease or a prospecting licence-cum-mining lease for
minerals other than coal, lignite and sand for stowing would be
17'" September, 2015. [Paras 37, 38 and 41][748-D-G; 749-D)
A. Prabhakara Reddy v. State of Madhya Pradesh
(2016) 1 sec 600 - relied on.
3.2 The position with regard to contribution to the DMF by
the holders of a mining lease or a prospecting licence-cum-mining
G lease for coal, lignite and sand for stowing is quite different from
the situation of the other holders of a mining lease or a prospecting
licence-cum-mining lease. The notification of 201h October, 2015
provides that the contribution, though payable, shall be paid only
from the date of the notification (20'" October, 2015) or from the
date of establishment of the DMF in the concerned State,
H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION
729
OF INDIA
whichever is later. Therefore, only Madhya Pradesh, Odisha and
A
Telangana would be entitled to the contribution from holders of a
mining lease or a prospecting licence-cum-mining lease from 20'h
October, 2015 since their DMF was established much earlier. As
far as all other States are concerned, the holders of a mining lease
or a prospecting licence-cum-mining lease could claim to
B
postpone payment to the DMF till it was established, as per the
notification issued by the State Government. [Para 421(749-E-GJ
3.3 It is true that many notifications establishing the DMF
provided the date of establishment as 12'h January, 2015. Since
the rule making power of the Central Government and the State
Government under the MMDR Act docs not permit retrospective
C
operation of subordinate legislation, the Contribution Rules also
do not have retrospective operation by necessary implication .
. Furthermore, the rate at which the contribution was to be paid,
came to be notified only on 20'h October, 2015. Therefore, it
cannot be said that the contribution should be paid by the holders D
of a mining lease or a prospecting licence-cum-mining lease with
effect from l21h January, 2015. [Para 43)(750-A-CJ
3.4 The subsequent notification dated 31'' August, 2016
which substituted paragraph 3 in the notification of 20'h October,
2015 with the requirement that the contribution "shall be paid
with effect from the 12'h January, 2015", being a retroactive
substitution, is ultra vires the rule making power of the Central
Government. The notification dated 31'' August, 2016 is clearly
beyond the rule making power of the Central Government.
Therefore, in respect of coal, lignite and sand for stowing, the
holder of a mining lease or a prospecting licence-cum-mining lease
shall pay the contribution to the DMF from 201h October, 2015 or
the date of establishing the DMF, whichever is later. [Para 44] [750D-E)
4. Section 9B of the MMDR Act cannot be said to be a
conditional legislation. Section 9B of the MMDR Act delegates
power to the State Governments to establish the DMF without
any pre-condition. Similarly, it delegates power to the Central
Government to prescribe the rate at which the contribution should
be made to the DMF. This again is without any pre-condition.
[Para 45][750-F]
E
F
G
H
730
SUPREME COURT REPORTS
[2017] 12 S.C.R.
A
Case Law Reference
[1955) 2 SCR 1196
followed
·Para 16
[1973) 1 SCR 896
relied on
Para 21
[2006] 2 SCR 1172
relied on
Para 21
B
· [2008] 17 SCR 1325
relied on
Para 21
[1992) 3 SCR 328
relied on
Para 21
[2013) 17 SCR 395
relied on
Para 21
[2014) 12 SCR 1037
followed
Para 22
c
[1985] SCR 985
referred to
Para 27
(2016) 1 sec 600
relied on
Para 39
CIVIL ORIGINAL JURISDICTION: Transferred Case (Civil)
,..
No.43 of2016.
D
Under Article 139-A ofthe Constitution of India.
WITH
W.P. (C) No. 989 of2016, T.C. (C) No.1003 of2016, W.P. (C)
No.1014 of2016, W.P. (C) No.1028 of2016, T. P. (C) Nos. 74-76 of
E
2016, W.P. (C) No.67 of2017, W.P. (C)No.69 of2017, W.P. (C)No.205
. of2017, W.P. (C) No. 201 of2017, S.L.P. (C) No.12099 of2017, S.L.P.
(C) No.12184-12185 of2017, S.L.P. (C) No.14693 of2017, S.L.P. (C)
No.16885 of2017, W.P. (C) No.886 of2016, W.P. (C) No. 912 of2016,
W.P. (C) No. 27 of2017.and W.P. (C) No. 112 of2017.
F
Maninder Singh, A.N.S. Nadkarnani, ASGs, M. L. Sharma,
Dr. AbhishekManu Singhvi, DhruvMchta, SubramoniumPrasad,Arvind
Datar, K. V. Vishwanthan, C. L. Pandey, A. K. Panda, Jagdeep
Dhankhar, Prashanto Chandra. Sen, Sr. Advs., Manish Kumar Saran,
Rekha Bankar, Sunil Dogra, Vivek Vishnoi, Abhishek Sharma, Pallav
Mongia, Gagan Sanghi, Rameshwar Prasad Goyal, Priya Puri, Sharad
G Puri, Vaibhav Srivastav, Ranjay Kr. Dubey, Swatantra Rai, Devashish
Bharuka, Ravi Bharuka, Justine George, Himanjali Gautam, Ms. Vanita
Bhargava (For E.C. Agrawala and For Mis Khaitan & Co.), Praveen
Kumar, Ms. Babita Pant, Asccm Chaturvedi, Sarangan Arvindkasan {For ·
Mis Khaitan & Co.), Aakash Bajaj, Gaurav Juneja, Sanjeev K. Kapoor
(For Mis Khaitan & Co.), Sushmit Pushkar, Akshay Sapre, Abhijcet
H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION
731
OF INDIA
Swaroop, Ms. Esha Sandhu, Sachin Mittal, Ms. Ananya Pandey, R.
A
Balasubramanian, Prabhas Bajaj, S.A. Haseeb, Vibhu Shankar Mishra,
Gurmeet Singh Makker, Merusagar Samantaray, Ms. Viddusshi, Ms.
Lhinghveivah, M. K. Maroria, Kuldeep Chmihan,R K. Rathore, Akshay
Amritanshu, Ms. Aarti Sharma, Deepak Goel, Ms. Supriya, Vaibhav
Agnihotri, Gp. Capt. Karan Singh BHati, Hemendra Sharma, Kuna! A.
B
Cheema, Nishant R. Katneshwarkar, Ms. Hemantika Wahi, Ms. Jesal
Wahi, Ms. Puja Singh, Shodhika Sharma, Atul Jha, Sandeep Jha,
Dharmendra Kumar Sinha, Ms. Prachi Mishra, C. D. Singh, Ms. Sakshi
Kakkar, Gaurav Shukla, Chaitanya, Ms. Pragya Garg, Suneet Padhi,
Mishra Saurabh, Ms. Vanshaja Shukla,Anupam Lal Das,Anirudh Singh,
Krishanu Barua, P. S. Sudheer, Rishi Maheshwari, Ms. Sanah Batta,
Abhinav Goyal, Saurabh Jain, Gautam Singh, Kaushik Poddar, Anip
Sachthey, Anjali Chauhan, Ms. Ria Sachthey, U. A. Rana, Himanshu
Mehta, Avirat Kumar (Mis Gagrat& Co.), Anuj Tyagi, Ms. Sugandha
Khaitan, Ms. Mai try Kakade, Anshurnan Shri vastava, B. Ramana Murthy
(For Anantha Narayana), Advs. for the appearing parties.
c
D
The Judgment of the Court was delivered by
MADAN B. LOKUR, J. I. This batch of petitions (including
transfer cascstpetitions) relate to the establishment ofthc District Mineral
Foundation under the Miries and Minerals (Development and Regulation)
Act, 1957 and the.contribution required to be made to the District Mineral
E
Foundation by the holder of a mining lease or a prospecting licencecum-mining _lease in addition to the payment of royalty.
Ordinance of l21h January, 2015
2. On l 21h January, 2015 the President promulgated an Ordinance
making several amendments to the Mines and Minerals (Development
F
and Regulation) Act, 1957 (for short 'the MMDR Act').
We are
concerned with only a few of these amendments which are detailed
below:
(i) Section 9 of the Ordinance inserted Section 9B in the MMDR
Act. This section provides that the State Government shall establish
G
a non-profit trust called the District Mineral Foundation (for short
'the DMF') in any district affected by mining operations. The
DMF shall have the object of working for the interest and benefit
of persons and areas affected by mining related operations.
H
732
A
B
c
D
E
F
SUPREME COURT REPORTS
[2017] 12 S.C.R.
What is of significance is that this provision requires the holder of
a mining lease or a prospecting licence-cum-mining lease, in addition to
payment of royalty, to pay to the DMF concerned an amount equivalent
to a percentage of royalty not exceeding one-third thereof, as may be
prescribed by the Central Government. Section 9B of the MMDRAct,
as inserted by the Ordinance, reads as follows:
"9B. District Mineral Foundation - (l) In any district
affected by mining related operations, the State Government
shall, by notification, establish a trust, as a non-profit body, to
be called the District Mineral Foundation.
(2) The object of the District Mineral Foundation shall be to
work for the interest and benefit of persons, and areas affected
by mining related operations in such manner as may be
prescribed by the State Government.
(3) The composition and functions of the District Mineral
Foundation shall be such as may be prescribed by the State
Government.
(4) The holder of a mining lease or a prospecting licencecum-mining lease shall, in addition to the royalty, pay to the
District Mineral Foundation of the district in which the mining
operations are carried on, an amount which is equivalent to
such percentage of the royalty paid in terms of the Second
Schedule, not exceeding one-third of such royalty, as may be
prescribed by the Central Government."
(ii) Section 14 of the Ordinance inserted sub-clause ( qqa) in Section
13(2) of the MMDR Act relating to the power of the Central
Government to make rules in respect of minerals. Clause (qqa)
as inserted in the MMDR Act reads as follows:
"(qqa) the amount of payment to be made to the District
Mineral Foundation under sub-section (4) of section 9B;"
G
(iii) Section 15 of the Ordinance inserted sub-section (4) in Section
15 of the MMDR Act relating to the power of the State
Governments to make mies in respect of minor minerals. Subsection ( 4) as inserted in Section 15 of the MMDR Act reads as
follows:
H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION
733
OF INDIA [MADAN B. LOKUR, J.]
"15. Amendment of section 15. - In section 15 of the principal
A
Act, after sub-section (3), the following sub-section shall be.
inserted, namely:-
"( 4) Without prejudice to sub-sections (I), (2) and sub-section
(3), the State Government may, by notification, make rules for
regulating the provisions of this Act for the following, namely:-
B
(a) the manner in which the District Mineral Foundation shall
work for the interest and benefit of persons and areas affected
by mining under sub-section (2) of section 9B;
(b) the composition and functions of the District Mineral
Foundation under sub-section (3) of section 9B; and
(c) the amount of payment to be made to the District Mineral
Foundation by concession-holders of minor minerals under
section ! SA."
c
(iv) Section 18 of the Ordinance inserted Section 20A in the
D
MMDRAct relating to the power of the Central Government to
issue directions. It is not necessary to reproduce the provisions
of Section 20A of the MMDR Act except to say that the section
enables the Central Government to issue appropriate directions to
the State Governments for the conservation of mineral resources,
or on any policy matter in the national interest, and for the scientific
E
and sustainable development and exploitation of mineral resow·ces.
Amendments to the MMDR Act
3. On 27'
11 March,2015 the Ordinance was replaced by the Mines
and Minerals (Development and Regulation) Amendment Act, 2015 with
effect from 12'" January, 2015. However, Section 9B and Section 13(2)
clause (qqa) were further amended and they now read as follows:
·
F
"9B. District Mineral Foundation. - ( 1) In any district affected
by mining related operations, the State Government shall, by
notification, establish a trust, as a non-profit body, to be called the
District Mineral Foundation.
G
(2) The object of the District Mineral Foundation shall be to work
for the interest and benefit of persons, and areas affected by
mining related operations in such manner as may be prescribed
by the State Government.
H
734
SUPREME COURT REPORTS
[2017) 12 S.C.R.
A
(3) The composition and functions of the District Mineral ·
Foundation shall be such as may be prescribed by the State
Government.
B
D
E
F
( 4) The State Government while making rules under sub-sections
(2) and (3) shall be guided by the provisions contained in article
244 read with Fifth and Sixth Schedules to the Constitution relating
to administration of the Scheduled Areas and Tribal Areas and
the Provisions of the Panchayats (Extension to the Scheduled
Areas) Act, 1996 and the Scheduled Tribes and Other Traditional
Forest Dwellers (Recognition of Forest Rights) Act, 2006.
(5) The holder of a mining lease or a prospecting licence-cummining lease granted on or after the date of commencement of
the Mines and Minerals (Development and Regulation)
Amendment Act, 2015, shall, in addition to the royalty, pay to the
District Mineral Foundation of the district in which the mining
operations arc carried on, an amount which is equivalent to such
percentage of the royalty paid in terms of the Second Schedule,
not exceeding one-third of such royalty, as may be prescribed by
the Central Government.
(6) The holder of a mining lease granted before the date of
commencement of the Mines and Minerals (Development and
Regulation) Amendment Act, 2015, shall, in addition to the royalty,
pay to the District Mineral Foundation of the district in which the
mining operations are carried on, an amount not exceeding the
royalty paid in terms of the Second Schedule in sucl,i manner and
subject to the categorisation of the mining leases and the amounts
payable by the various categories of lease holders, as may be
prescribed by the Central Government."
"(qqa) the amount of payment to be made to the District Mineral
Foundation under sub-sections (5) and (6) of section 9B."
. 4. Very broadly, the MMDR Act required the State Government
G
to establish a District Mineral Foundation and the Central Government
was required to prescribe the rate of contribution to the DMF, provided
the contribution did not.exceed one-third of the royalty payable by the
holder .of a mining lease or a prospecting licence-cum-mining lease.
H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION . 735
OF INDIA [MADAN B. LOKUR, J.]
Notifications issued
A
5. On 16'h September, 2015 the Central Government, in exercise
of its power under Section 20A of the MMDR Act issued a direction to
all the State Governments that the notification establishing the DMF
· shall state that the DMF shall be deemed to have come into existence
with effect from 12'h January, 2015. The direction dated 16'h September,
B
2015 reads as follows:
"No. 16/7/2015 -M.VI (Part)
Government oflndia
Ministry of Mines
New Delhi, Shastri Bhawan
Dated the 16'
11 September, 2015
ORDER
WHEREAS in terms of the provisions of sub-section ( 1) of section
9B of the Mines and Minerals (Development and Regulation)
(MMDR) Act, 1957 (67of1957), the State Governments shall,.
by notification, establish a District Mineral Foundation in every
district in the country.affected by mining related operations.
AND WHEREAS the said provision is deemed to have come
into force on the 12'h day of January, 2015.
NOW THEREFORE, the Central. Government in exercise of the
powers conferred under section 20A of the MMDR Act, 1957, in
the national interest hereby directs the concerned State
Governments that the notification establishing the District Mineral
Foundations shall state that such District Mineral Foundations shall
be deemed to have come into existence with effect from the 12'h
day ofJanuary, 2015.
(R Sridharan)
Additi?nal Secretary to the Government oflndia"
c
D
E
F
6. It is not necessary for us to examine the validity of the direction
G
except to note that pursuant thereto, several State Governments did
establish a DMF as per the table below:
H
736
A
B
c
D
SUPREME COURT REPORTS
[2017] 12 S.C.R.
Date of Notification and Establishment ofDMF
&ate
Date of Nitification
DateofFstablishmcnt
I
Andina Praresh
14.3.2016
14.3.2.016
2
Chhattisgarh
22.12.2.015
12.1.2015
3
Goa
15.1.2016
12.1.2.015
4
Harvana
17.11.2.016
121.2015
5
Jharkffind
22.3.2016
12.1.2015
6
Kamataka
11.1.2016
12.1.2015
7
Mtclhva Pradesh
15.5.2015
15.5.2015
8
Maharashtra
l.9.2016
16.9.2015
9
Odis ha
18.8.2015
18.8.2015
10
Rajasthan
31.5.2016
12.1.2015
11
Tamil Nachl
19.5.2017
19.5.2.017
12
Telaill!ana
21.8.2015
21.8.2015
13
Uttar Pradesh
25.4.2017
12.1.2015
14
W:stBawal
3.3.2016
3.3.2016
7. On J7 1h September, 2015 the Ministry of Mines issued a
notification promulgating the Mines and Minerals (Contribution to District
·Mineral Foundation) Rules, 2015. 1 In terms of the notification, the
E
Contribution Rules were deemed to have come into force on 121h January,
2015. Paragraph 2 of the notification provides, inter alia, for payment
to the DMF an amount of 10% of the royalty payable by the holder of a
mining lease or prospecting licence-cum-mining lease granted on or after
12'h January, 2015 and 30% of the royalty payable in respect of mining
F
G
leases granted before I 2'h January, 2015.
8. Since the administration of MMDR Act with the Ministry of
Mines is limited to minerals other than coal, lignite and sand for stowing,
it is assumed that the notification did not relate to these three minerals.
9. The notification dated 17th September, 2015 reads as follows:
"MINISTRY OF MINES
NOTIFICATION
New Delhi, the 17'h September, 2015
' The administration of the MMDR Act is with the Ministry of Mines for minerals
H
other than coal, lignite and sand for stowing
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION
737
OF INDIA [MADAN B. LOKUR, J.]
GS.R. 715(E).-In exercise of the powers conferred by subA
sections (5) and (6) of Section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957 (67 of 1957), the Central
Government hereby makes the following rules specifying the
amount to be paid by holder of a mining lease or a prospecting
licence-cum-mining lease, in addition to the royalty, to the District
B
Mineral Foundation of the district established by the concerned
State Government by notification, in which the mining operations
are carried on, namely:-
1. Short title and commencement.-(!) These rules may be
called as the Mines a.nd Minerals (Contribution to District
Mineral Foundation) Rules, 2015.
C
(2) These rules shall be deemed to have come into force on the
12'h day of January, 2015.
•
2. Amount of contribution to be made to District Mineral
Foundation.-Every holder of a mining lease or a prospecting
licence-cum-mining lease shall, in addition to the royalty, pay to
D
the District Mineral Foundation of the district in which the mining
operations are carried on, an amount at the rate of -
·
(a) ten per cent of the royalty paid in terms of the Second Schedule
to the Mines and Minerals (Development and Regulation) Act,
1957 (67of1957) (herein referred to as the said Act) in respect
E
of mining leases or, as the case may be, prospecting licencecum-mining lease granted on or after 12'11January, 2015; and
(b) thirty per cent of the royalty paid in term of the Second
Schedule to the said Act in respect of mining leases granted
before 121h January, 2015."
F
10. On 20th October, 2015 the Ministry of Coal issued a notification
promulgating the Mines and Minerals (Contribution to District Mineral
Foundation) Rules, 2015.2 The Contribution Rules are deemed to have
come into force on the date of their publication in the Official Gazette.
These rules pertain to payment to the DMF at the same rate and on the
same terms as mentioned in the notification dated 17'11 September, 2015.
The subject notification, having been issued by the Ministry of Coal,
specifically mentioned that the rules were in respect of coal, lignite and
sand for stowing.
2 The administration of the MMDR Act is with the Ministry of Coal for coal, lignite
G
~~~b~~
H
738
A
B
c
D
E
F
G.
H
SUPREME COURT REPORTS
[2017] 12 S.C.R.
11. What is of significance in the notification dated 201h October,
2015 is paragraph 3 thereof. This provides that the amount payable to
the DMF shall be paid from the date of the notification issued under
Section 9B( 1) of the MMDR Act by the State Government establishing
the DMF or the date of coming into force of the Contribution Rules,
whichever is later. The notification dated 20'" October, 2015 reads as
follows:
"MINISTRY OF COAL
NOTIFICATION
New Delhi, the 20'h October, 2015
GS.R. 792(E).-ln exercise of the powers conferred by subsections (5) and (6) of Section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957 (67of1957), the Central
Government hereby makes the following rules in r/o of coal and
lignite and sand for stowing specifying the amount to be paid by
holder of a mining lease or a prospecting licence-cum-mining lease,
in addition to the royalty, to the District Mineral Foundation of the
district established by the concerned State Government by
notification, in which the mining operation are carried on, namely:-
1. Short title and commencement.-{ 1) These rules may be
called as the Mines and Minerals (Contribution to District
Mineral Foundation) Rules, 2015.
(2) These rules shall be deemed to have come into force on the
date of their publication in the Official Gazette.
2. Amount of contribution to be made to District Mineral
Foundation.-,-Every holder of a mining lease or a prospecting
licence-cum-mining lease in respect of coal and lignite and sand
for stowing shall, in addition to the royalty, pay to the District
Mineral Foundation of the district in which the mining operation
are carried on, an amount at the rate of:-
( a) ten per cent of the royalty paid in term of the second schedule
to the Mines and Minerals (Development and Regulation) Act,
1957 ( 67of1957) (herein referred to as the said Act) in respect
of mining lease or, as the case may be, prospecting licencecum-mining lease granted on or after 12'hJanuary, 2015; and
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION
739
OF INDIA [MADAN B.LOKUR, J.]
(b) thirty per cent of the royalty paid in term of the Second A
Schedule to the said Act in respect of mining lease granted
before 12'h January, 2015.
3. Date from which contribution to be made.-The amount
calculated at the rate prescribed in rule 2 shall be paid from the
date of notification issued under Section 9B( 1) of the Act by the
B
State Government establishing District Mineral Foundation or the
date of coming into force of these rules, whichever is later."
12. The Ministry of Coal issued another notification on 31 ''August,
2016 substituting paragraph 3 of the notification dated 20'h October, 2015.
The substituted paragraph provided that payment under the notification
C
dated 2o•h October, 2015 shall be made to the DMF with effect from
12'h January, 2015. The notification dated 31 ''August, 2016 reads as
follows:
"MINISTRY OF COAL
NOTIFICATION
New Delhi, the 31" August, 2016
D
GS.R. 837(E).-In exercise of the powers conferred by subsections (5) and (6) of section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957, (67of1957), the Central
E
Government hereby makes the following rules in respect of coal,
lignite and sand for stowing, to amend the Mines and Minerals
(Contribution to District Mineral Foundation) Rules, 2015, namely:-
!. These rules may be called as the Mines and Minerals
(Contribution to District Mineral Foundation) (Amendment) Rules,
2016.
In the Mines and Minerals (Contribution to District Mineral
Foundation) Rules, 2015, for r11le 3, the following rule shall be
substituted, namely:-
. '
"3. Date from which contribution to be made. - The amount
calculated at the rate specified in rule 2 shall be paid with
effect from the 12'h January, 2015."
Questions raised by the petitioJlers
F
G
H
740
A
B
c
D
E
F
SUPREME COURT REPORTS
[2017) 12 S.C.R.
13. On the basis of these notifications, the questions raised by
learned counsel for the petitioners are: Firstly, whether the DMFs could
be established with effect from 12'h January, 2015? Secondly, whether
contributions to the DMFs were required to be made by the petitioners
at the rate mentioned in both sets of Contribution Rules with effect from
12d• January, 2015? The validity of the notifications was challenged or
was under challenge to this extent depending on their interpretation and
their impact and effect.
(i) The first question
14. In terms of sub-section (1) of Section 9B the State Government
is required to establish a trust as a non-profit body and that trust would
be called the District Mineral Foundation. For establishing the trust the
State Government is required to issue a notification. It is entirely for the
State Government to decide the date from which to set up the trust. The
Central Government has no role to play in this, although a direction was
issued by the Central Government to the State Governments to establish
a trust with effec~ from 12th January, 2015. But be that as it may, the
State Governments did issue a notification establishing the DMF - some
with effect from 12'h January, 2015 and some with effect from the date
of the notification establishing the DMF.
15. The submission of learned counsel for the petitioners is that
the DMF could not have been established from a retrospective date
prior to the date of the notification.
16. To answer this issue, it is necessary to first ofall decide whether
the DMF has in fact been established retrospectively. The learned
Additional Solicitor Genernl submitted that the DMFs were not established
with retrospective effect. His contention was that under Section 98 of
the MMDR Act the DMF could be established with effect from 12'"
January, 2015 or any date thereafter. Some States chose to issue a
notification establishing the DMF from an anterior date (12'" January,
2015) while some others did not, notwithstanding the direction of the
Central Government. According to the learned Additional Solicitor
G General establishing the DMF from a date anterior to the date of the
notification did not mean that the DMF was established with retrospective,
effect. He relied on a decision of the Constitution Bench of this Court in
A .. Tltangal Kunju .Musa liar v. M. Venkitachalam Potti3 in support of
his contention.
H
3 (l955)2SCR 1196
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION
741
OF INDIA [MADAN B. LOKUR, J.]
17. Musaliar advances the case of the I earned Additional Solicitor
A
General. The Constitution Bench acknowledged that the general law is
that a statute comes into force on the day it received the assent of the
competent authority. However that date could be postponed if so provided
in the statute. In Musaliar the statute provided that it was to come into
force on a date notified in the Government Gazette. Since the statute
B
was passed by the Legislature on 7'h March, l 949 it would have ordinarily
come into force on that date but by virtue of Section 1 (3) of the statute,
a notification was issued on 26'" July, 1949 bringing the statute into force
on 22•<1 July, 1949 a date obviously later than 7•h March, 1949. The
Constitution Bench held that the notification did not prejudicially affect
any vested rights and (by implication) its retrospective operation could
C
not be looked upon with disfavour. Moreover, the operation of the statute
was not from a date prior to its passing and so it could not be said to
have retrospective operation. Fixing a date anterior to the date of the
notification bringing the statute into force did not attract the principle of
disfavouring retrospective operation. The Constitution Bench however
D
did not consider the further submission of the learned Attorney General
that the notification was good to bring the statute into operation from the
date of issue of the notification. The law laid down by the Constitution
Bench is quite explicit when it was held:
"The reason for which the Court disfavours retroactive operation
of laws is that it may prejudicially affect vested rights. No such
reason is involved in this case. Section l (3) authorises the
Government to bring the Act into force on such date as it may, by
notification, appoint. In exercise of the power conferred by this
section the Govcmmerit surely had the power to issue the
notification bringing the Act into force on any date subsequent to
the passing of the Act. There can therefore, be no objection to the
notification fixing the commencement of the Act on the 22nd July,
1949 which was a date subsequent to the passing of the Act. So
the Act has not been given retrospective operation, that is to say,
it has not been made to commence from a date prior to the date
of its passing. It is true that the date of commencement as
fixed by the notification is anterior to the date of the
notification but that circumstance docs not attract the
principle disfavouring the retroactive operation of a statute.
E
F
G
H
742
A
B·
c
·n
E
SUPREME COURT REPORTS
[2017] 12 S.C.R.
~
.
Here there is no. question of affecting vested rights. The
operation of the notification itselfis not retrospective. It only brings
the Act into operation on and from.an earlier date. In any case it
was in terms authorised to issue the notification bringing the Act
into force on any date subsequent to the passing ofthe Act and
that is all that the Government did. In'this view of the matter, the
further argument advanced by the learned Attorney- ·
General and which found favour with the Court below,
namely, that the notification was at any rate good to bring
the Act into operation as on and from. the date of its issue
need not be considered." (Emphasis supplied by us)
18. The notifications establishing the DMF in the States mentioned
· in the table above were issued pursuant to the provisions of Section 9B
of the MMDR Act. The intention of Parliament appears to have been
for the State Governments to establish the DMF with effect from 12'h
January, 2015 since its object is to work for the interest and benefit of
persons and areas affected by mining related operations. The object
being the welfare of those adverseiy affected by mining operations, the
DMFs ought to have been established on 12•h January, 2015.